2023 Annual Reportballard.com 1
CAUTION REGARDING FORWARD LOOKING STATEMENTSThis document contains forward-looking statements concerninganticipated markets for our products, implementation ofgovernment policy initiatives, planned manufacturing capacityexpansion, product cost reduction activities and plannedinvestments. These forward-looking statements reflect Ballard’scurrent expectations as contemplated under section 27A of theSecurities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended. Any such statementsare based on Ballard’s assumptions relating to its financial forecastsand expectations regarding its product development efforts,manufacturing capacity, and market demand. For a detaileddiscussion of the factors and assumptions that these statementsare based upon, and factors that could cause our actual results oroutcomes to differ materially, please refer to Ballard’s most recentmanagement’s discussion & analysis.Other risks and uncertainties that may cause Ballard’s actual resultsto be materially different include general economic and regulatorychanges, detrimental reliance on third parties, successfullyachieving our business plans and achieving and sustainingprofitability. For a detailed discussion of these and other riskfactors that could affect Ballard’s future performance, please referto Ballard’s most recent Annual Information Form. These forward-looking statements are provided to enable external stakeholders tounderstand Ballard’s expectations as at the date of this documentand may not be appropriate for other purposes. Readers should notplace undue reliance on these statements and Ballard assumes noobligation to update or release any revisions to them, other thanas required under applicable legislation.Contents2023 Highlights & Select Financial Information1Evolution into a Commercial Products Company3Target Verticals & Markets4Ballard’s People6Sustainability & ESG7Letter from the CEO10Management’s Discussion and Analysis12Financial Statements6 JanuaryBallard powered fuel cell electric vehicles achieved industry-leading total of more than 150 million kilometers, equivalent to circling the Earth over 3,700 times. Ballard fuel cells powered over 3,800 buses and trucks in ~15 countries.Order from First Mode for 30 hydrogen fuel cell modules – totalling 3 MW – to power several zero-emission ultra-class mining haul trucks - equivalent to approximately 4,000 horsepower.MarchOrder for 3.6 MW from a European customer for critical stationary power applications, including construction sites, EV charging stations, and data centers. JuneBallard announces plan to materially reduce costs and scale production capacity of next generation, proprietary graphite bipolar plates, including the introduction of advanced manufacturing technology.Ballard holds bi-annual Capital Markets Day and presents long-term outlook.JulyCPKC places follow-on order for 3.6 MW of Ballard fuel cells for expansion of Hydrogen Locomotive Program.Publication of Ballard’s fourth annual ESG Report, capturing ESG performance towards Ballard’s ESG strategy, sustainability commitments and supporting initiatives.AugustOrder from Solaris for almost 100 hydrogen fuel cell engines to power buses in Europe.Signing of LOI with Ford Trucks to supply fuel cell system as part of hydrogen fuel cell powered vehicle prototype to be integrated into Ford F-MAX 44-ton long-haul tractor truck.OctoberFollow-on order from Solaris for 177 hydrogen fuel cell engines to power buses in Europe.NovemberThird major order in 2023 from Solaris for 62 additional hydrogen fuel cell engines to power buses in Europe – nearly 350 engines ordered year to date.Highlights of 2023Ballard’sFCmove®-HD Ballard Power Systems 2023 Annual Report1 (160,371)
975,600
Core TechnologyBallard is a global leader in PEM fuel cell technology, with proprietary, patented technology in the fuel cell building blocks of Membrane Electrode Assemblies and Bipolar Plates. Ballard is currently deploying its 13th generation of fuel cell stacks. In addition to fuel cell stack technology, Ballard designs and manufactures fuel cell modules that have industry leading performance and durability. Ballard’s latest module, the FCmove® XD is the 9th generation of module product.Core TechnologyBallard is a global leader in PEM fuel cell technology, with proprietary, patented technology in the fuel cell building blocks of Membrane Electrode Assemblies and Bipolar Plates. Ballard is currently deploying its 13th generation of fuel cell stacks. In addition to fuel cell stack technology, Ballard designs and manufactures fuel cell modules that have industry leading performance and durability. Ballard’s latest module, the FCmove® XD is the 9th generation of module product.Select annual fi nancial information refl ects results from continuing operations. Results attributed to Ballard Motive Solutions have been removed from continuing operations in 2023 and 2022 as a result of Select Annual Financial Information(Expressed in thousands of U.S. dollars, except per share amounts and gross margin %)20232022202120202019Results of OperationsRevenues 102,368 81,860 104,367 103,877 105,723 Gross margin (loss) (21,831)(13,308)14,066 20,984 22,338 Gross margin % -21%-16%13%20%21%Total Operating Expenses141,073 132,020 100,731 60,745 47,784 Cash Operating Costs119,327 111,992 82,630 50,029 38,801 Adjusted EBITDA(150,088)(132,635)(80,981)(38,944)(26,608)Net loss from continuing operations(144,210)(113,282)49,469 (35,291)Net loss from continuing operations per share(0.48)(0.54)(0.38)(0.20)(0.15)Financial PositionTotal Assets1,077,542 1,247,077 1,440,943 340,319 Total non-current liabilities15,740 14,998 29,567 22,621 25,540 Cash, cash equivalents and short-term investments753,243 915,741 1,126,899 765,430 147,792 Ballard's FCmove®-XD a restructuring of operations at Ballard Motive Solutions that occurred during Q4 2023, effectively closing the operation.Ballard Power Systems 2023 Annual Report2 Ballard’s Evolution Into a Commercial Products CompanyIn 2023, Ballard made signifi cant strides in commercial partnerships, volume scale and product cost reduction. The longstanding goal of Ballard is to take our industry leading core technology and leverage it across multiple verticals. Over this past year, we have seen this begin to materialize across our market verticals, resulting in a material shift in our order backlog, as orders for power products make up over 80% of the total, up from only 7% in early 2019. In less than fi ve years, we have successfully transitioned into a fuel cell products focused company. This trend highlights the shift underway within the hydrogen industry towards increased fuel cell adoption, and we are confi dent this is only the fi rst step towards industry scaling. While we are excited about the increase in fuel cell adoption, we have seen an increase in competition as markets increasingly recognize the value proposition of hydrogen fuel cells. We will continue to focus on driving down product costs by building scale and investing in next generation fuel cells.Product Revenue % of TotalTotal Revenue12010080204060$-50607080US$M%40301020020232022202120202019Evolution of Product RevenueTechnology Solutions%PPPower Products$250100%80%60%40%20%0%$200$150$100$507%84%$-Q1-19Q2-19Q3-19Q4-19Q1-20Q2-20Q3-20Q4-20Q1-21Q2-21Q3-21Q4-21Q1-22Q2-22Q3-22Q4-22Q1-23Q2-23Q3-23Q4-23$MillionsPower Product Driving Order Backlog Growth ($M)Ballard Power Systems 2023 Annual Report3 Target Verticals
Ballard’s Contribution to Decarbonizing Mobility
With transportation contributing approximately 23% of global emissions1,
Ballard’s hydrogen fuel cell technology and commercial-ready products
are poised to support the low carbon economy across key mobility and
stationary power sectors.
Bus
Truck
Rail
Public transit leaders know that zero-emission buses are critical to the future of transit.
Hydrogen is ideal for centralized refuelling of long range and transit fleets. Quick refuelling
means buses have less downtime and higher utilization. In many cases, agencies can install
hydrogen refuelling infrastructure with a similar footprint to CNG refuelling.
Hydrogen is ideal for centralized and corridor refuelling of heavy-duty commercial trucks.
Fuel cell technology offers longer range, greater power, more payload capability, and
faster refuelling. Quick refuelling means commercial trucks have less downtime and
higher utilization.
Fuel cell trains will play a key role in the transition to a zero emission economy. Hydrogen
powered trains are poised to disrupt certain segments of the commuter rail and freight
markets as a cost-effective, high performing, zero-emission alternative to diesel, without
the need for expensive catenary infrastructure.
1. IPCC (2022), HYPERLINK “https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_FullReport.pdf”Climate Change 2022
4
Ballard Power Systems 2023 Annual Report
Key Markets Europe North America ChinaMarineEmerging MarketsStationary PowerHydrogen fuel cells are an affordable, effi cient, and sustainable drop-in replacement for diesel-powered material handling equipment including mining trucks, construction equipment, forklifts, etc.Hydrogen fuel cells systems are a reliable zero emission power solution for backup, standby, and peak shaving stationary applications, as well as EV charging and distributed power generation. The fuel cell system converts hydrogen into cost-effective electricity that may be used onsite by the customer or sold back to the grid.Marine certifi ed fuel cells are set to play a key role in helping the industry address GHG emissions on the water and in ports. Hydrogen and fuel cell technology offers promising, reliable, and scalable power solution that can meet future emission requirements and decarbonize the industry. Ballard Power Systems 2023 Annual Report5 Our People Drive our SuccessUnderstanding the level of engagement within Ballard has been a critical element of our People & Culture activities. For the past 17 years we have measured employee engagement through our annual employee survey, collecting feedback on different categories, such as business, leadership, communication, recognition, and workplace environment.Years of Employee Engagement SurveysFeel they can count on their co-workersParticipation rate for past five yearsFeel they are well supported by their managerWould recommend Ballard as a great place to workFeel their opinions are valuedConsistent Engagement Participation and Valuable Insight*metrics from 2023Ballard Power Systems 2023 Annual Report6 Ballard’s ESG Strategy,
Sustainability Commitments
and Supporting Initiatives
For the past four decades, we have invested in Proton-
Exchange Membrane (PEM) research, engineering,
manufacturing, and real-world testing to prove
Ballard’s PEM fuel cells operate safely, reliably,
efficiently, and durably. We have successfully grown
our experience from developing some of the world’s
first fuel cell concepts and prototypes to real-world
experience in field deployment.
We offer leading fuel cell solutions for select mobile
and stationary power applications.
Vision
We deliver fuel cell power for a sustainable planet.
Mission
We use our fuel cell expertise to deliver valuable
and innovative solutions to our customers globally,
create rewarding opportunities for our team, provide
extraordinary value to our shareholders, and power
the hydrogen society.
Values
Listen and Deliver
We listen to our customers, understand their
business and deliver valuable and innovative
solutions for lasting partnerships.
Quality Always
We deliver quality in everything we do.
Inspire Excellence
We live with integrity, passion, urgency,
agility and humility.
Row Together
We achieve success through respect,
trust and collaboration.
Own It
We step up, take ownership for our results and
trust others to do the same.
Ballard Power Systems 2023 Annual Report
7
ESGAt Ballard, sustainability and ESG means generating positive social and environmental impact and business value through the delivery of our products and solutions, while at the same time ensuring that sustainability considerations are embedded throughout our operations and daily business practice. We are excited for the progress we are making and look forward to sharing more information in our next annual ESG Report, expected to be issued in June 2024. Details can be found at: ballard.com/about-ballard/our-sustainabilityMaterial ESG Focus AreasEnvironment –Energy Transition Impact –Climate and Greenhouse Gas EmissionsSocial –Employee Attraction, Engagement and Retention –Health and Safety –Diversity, Equity, and InclusionGovernance –Corporate and ESG Governance –Business Ethics and Anti-CorruptionONGOING BALLARD ESG COMPETENCYBallard Power Systems 2023 Annual Report8 100% Renewable fuelsAll building fuel consumption transitions to renewable or zero-carbon fuelsToday1: 14.5% renewableTarget: 100% renewableTransition to Low-Carbon H2Reduce the value-chain emissions from our R&D activities by transitioning to low-carbon hydrogen (H2)Today1: 2,251 tCO2eTarget: Neutral100% Low Carbon FleetTransition all company vehicles to be low or zero-carbon vehiclesToday1: 7% Target: 100% Reduce Business Travel EmissionsReduce emissions from business travel by 25% from pre-COVID levels2Today1: 1,208 tCO2e Target: Neutral 100% Renewable electricityAll operating sites consume renewable or zero-carbon electricityToday1: 98% Target: 100% Reduce Employee Commuting EmissionsReduce our emissions from employee commuting by 25%Today1: 877 tCO2e Target: Neutral 1. Values are as of December 31, 20222. Baseline of 2019 emissionsOur Path to Carbon Neutrality by 2030Achieving carbon neutrality by 2030 will require action across six primary goals:123456Ballard Power Systems 2023 Annual Report9 Letter from the CEOFellow Shareholders:Upon reflection, 2023 was very much a tale of two cities for the hydrogen industry. On one hand, we saw ambitious climate policies translate into actionable programs and regulations; the US awarded support for seven hydrogen hubs and issued guidance on hydrogen production tax credits, while the EU launched the first auction of hydrogen subsidies and finalized the definition of green hydrogen under its Renewable Energy Directive. On the other hand, financial markets were deeply constrained to many clean energy and hydrogen companies, leading to existential liquidity concerns for some participants.Ballard was able to not only navigate these stormy seas, but also capitalize as we continued to build on our momentum in delivering fuel cell products to our customers. We are pleased to see additional progress with our customers in bus, truck, rail, marine, stationary power, and off-highway markets. We believe our core technology provides value to customers in their decarbonization journey in all our verticals, where they prioritize durability, reliability, and high availability, while requiring power solutions that maintain similar operating practices and minimize infrastructure challenges. As customers and end users increasingly understand this value, we are better positioned to achieve product scale, and thereby provide a cost advantage for our customers and long-term profitability for our shareholders.Revenues for the year amounted to $102 million, representing growth of 25% from the prior year. While our reported gross margin underperformed expectations at negative 21%, after stripping out the impact of non-cash write-downs, our gross margin was negative 9%, demonstrating the margin improvement we expected would occur as revenues scaled. We exercised cost discipline by holding our total and cash operating costs to inflationary increases as we focused on high-value product development opportunities. Adjusted EBITDA was ($150) million and our net loss was ($178) million. We ended the year with $751 million in cash reserves.In addition to growing revenue, our backlog for power products grew year-over-year to $109 million, a substantial achievement after shipping our highest volume of products in company history in the fourth quarter. While our total backlog declined modestly, this was driven by our technology solutions business, which we don’t consider indicative of our current strategy. We believe our backlog figures indicate increasing interest in deploying hydrogen fuel cell engines at scale in our key markets.Growth in our revenues and product backlog reflects progress on our key imperative of increasing the volume of fuel cell engines sold. We saw numerous customers mature their platforms built on fuel cell power, resulting in growing orders in our bus, rail, stationary power, and emerging market verticals. We also secured new platform wins across our market verticals, launched our next-generation bipolar plate project, and further proved the maturity of our technology with outstanding field reliability.We saw robust growth in our bus market in 2023, as revenues for the segment increased close to 20% compared to the prior year. Our growth was driven primarily by the success of Solaris in Europe and New Flyer in North America. Our expectation is that growth Ballard Power Systems 2023 Annual Report10 will continue to be strong for the fuel cell bus market,
as evidenced by our backlog, and the increasing
acceptance of fuel cell buses for transit operators as
a viable alternative to decarbonize their fleets.
conclusion of the Audi technology solutions program
in 2022. We are encouraged, however, with progress
in the off-highway segment, including for ultra-class
mining haul trucks.
The truck market opportunity continues to require
patience while Tier 1 OEMs develop truck platforms to
bring to the market. In the interim, we have established
a partnership with Ford Trucks for their European
heavy-duty truck platform, and another engine
manufacturer in Europe. We believe these partnerships
offer routes to scaled commercial volumes in
the segment.
Our customers in the rail market continue to surprise
to the upside. Revenue from rail customers was more
than three times higher in 2023 compared to 2022,
supported by shipments to customers in both the
freight and passenger rail applications. Our order
backlog for rail customers also suggests continued
progress from this segment.
We also experienced significant growth in our marine
vertical, with revenues in 2023 roughly three times
greater than the prior year. Growth in the marine
segment was driven by our customers Amogy and
Future Proof Shipping, who are both providing
solutions to reduce emissions in maritime transport.
We are also thrilled with the performance of Norled’s
MF Ferry, the world’s first hydrogen fuel cell powered
ferry, as it continues to accumulate 100 operating
hours each week.
In stationary power, we saw moderate growth in
2023 as a result of demand for our fuel cells in
grid balancing, EV charging, TV/film production
sites, outdoor events, and grid-constrained power
applications. We believe the combination of increasing
power demand, limitations in electrical transmission
infrastructure and zero-emission mandates will fuel
demand for our stationary segment in the future.
Our emerging markets vertical had material year-
over-year revenue declines, driven primarily by the
Geographically, we saw resilience across our key
markets of Europe, North America, and China, with
revenues growing by roughly 30% in each market.
The sustained commitment to net zero policies and
related funding schemes from the European Union and
Member States continues to translate into meaningful
commercial activity for us, as the region remains our
biggest market as measured by sales. However, North
America is catching up quickly thanks to US federal
and state-level policies and end user demand for
zero carbon power. The modest recovery in our China
business is a step in the right direction, and we look
for continued progress once the central government
restructures its policy approach to support hydrogen
market development in the region.
There is much in 2023 for Ballard to celebrate, and
we have much more to do. We will continue to focus
on our customers, talent, technology and products,
product cost reduction, and corporate costs discipline
in service of delivering fuel cell products for a
sustainable planet.
Lastly, I would like to thank our entire global team for
their commitment to our values. I also want to thank
you, our shareholders, for your continued confidence.
The passion of our team remains high as we strive to
build Ballard into a leading, profitable, and sustainable
fuel cell company.
RANDY MACEWEN
President & CEO Ballard Power Systems Inc.
Ballard Power Systems 2023 Annual Report
11
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BALLARD POWER SYSTEMS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOURTH QUARTER AND FISCAL YEAR 2023
12
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CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This document contains forward -looking statements about expected events and the fi nancial and operating performance of Ballard Power Systems Inc.
(“Ballard”, “the Company”, “we”, “us” or “our”). Forward-looking statements include any statements that do not refer to historical facts. Forward-looking
statements are based on the beliefs of management and reflect our current expectations as contemplated under the safe harbor provisions of Section 21E
of the United States Securities Exchange Act of 1934, as amended. Words such as "estimate", "project", "believe", "anticipate", "intend", "expect", "plan",
"predict", "may", "should", "will", the negatives of these words or other variations thereof and comparable terminology are intended to identify forward-
looking statements. Such statements include, but are not limited to, statements with respect to our objectives, goals, liquidity, sources and uses of capital,
including statements that describe any anticipated offering of securities under our Shelf Prospectus and Registration Statement or the filing of a Prospectus
supplement, outlook including our estimated revenue and gross margins, cash flow from operations, Cash Operating Costs, EBITDA and Adjusted EBITDA
(see Non-GAAP measures), strategy, order backlog, order book of expected deliveries, future product roadmap cost s and selling prices, future product
sales, future production capacities and volumes, th e markets for our products, expenses / costs, contr ibutions and cash requirements to and from joint
venture operations and research and development act
ivities, as well as statements with respect to our
beliefs, plans, objectives, expectation s,
anticipations, estimates and intentions. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that
are difficult to predict. In particular, these forw ard-looking statements are based on certain factors and assumptions relating to our expectations with
respect to new and existing customer and partner relationships, the generation of new sales, producing, delivering, and selling the expected product and
service volumes at the expected prices and controlling our costs. They are also based on a variety of general factors and assumptions including, but not
limited to, our expectations regarding technology and product development efforts, manufacturing capacity and cost, product and service pricing, market
demand, and the availability and prices of raw mate rials, labour, and supplies. These assumptions have been derived from info rmation available to the
Company including information obtained by the Company from third parties. These assumptions may prove to be incorrect in whole or in part. In addition,
actual results may differ materially from those expressed, implied, or forecasted in such forward-looking statements. Factors that could cause our actual
results or outcomes to differ materially from the r esults expressed, implied or forecasted in such for ward-looking statements include, but are not limited
to: challenges or delays in our technology and product development activities; changes in the availability or price of raw materials, labour, supplies and
shipping; costs of integration, and the integration failing to achieve the expected benefits of the tr ansaction; our ability to attract and retain busine ss
partners, suppliers, employees and customers; our a bility to extract value from joint venture operatio ns; global economic tre nds and geopolitical risks
(such as conflicts in Ukraine and the Middle East), including changes in the rates of investment, inflation or economic growth in our key markets, or an
escalation of trade tensions such as those between the U.S. and China; investment in hydrogen fueling infrastructure and competitive pricing of hydrogen
fuel; the relative strength of t he value proposition that we offer our customers wi
th our products or services; changes in competitive technologies,
including internal combustion engine, battery and f uel cell technologies; challenges or delays in our
technology and product development ac tivities;
changes in our customers’ requirements, the competi tive environment and/or related market conditions; product safety, liabili ty or warranty issues;
warranty claims, product performance guarantees, or indemnification claims; changes in product or service pricing or cost; market developments or
customer actions that may affect levels of demand a nd/or the financial performance of the major indust ries, regions and custo mers we serve, such as
secular, cyclical and competitive pressures in the bus, truck, rail, marine and stationary sectors; the rate of mass adoption of our products or related
ecosystem, including the availability of cost-effective hydrogen; cybersecurity threats; our ability to protect our intellectual property; climate risk; changing
government or environmental regulations, including s ubsidies or incentives associated with the adoption of clean energy produc ts, including hydrogen
and fuel cells; currency fluctuations, including th e magnitude of the rate of change of the Canadian d ollar versus the U.S. dollar; our access to funding
and our ability to provide the capital required for product development, operations and marketing efforts, working capital requirements, and joint venture
capital contributions; changes in U.S. tax laws and tax status related to “passive foreign investment company” designation; the severity, magnitude and
duration of the on-going COVID-19 pandemic, including impacts of the pandemic and of businesses’ and governments’ responses to the pandemic on our
operations, personnel and joint venture operations, and on comm ercial activity and demand across our and our custo mers’, partners’ and joint venture
businesses, and on global supply chains; potential merger and acquisition activities, including risks related to integr ation, loss of key personnel and
disruptions to operations; and the general assumpti on that none of the risks identified in the Risks a nd Uncertainties section of this document or in our
most recent Annual Information Form will materializ e. Readers should not place undue reliance on Ballard's forward -looking statements. The forward -
looking statements contained in this document speak only as of the date of this Management Discussion and Analysis (“MD&A”). Except as required by
applicable legislation, Ballard does not undertake any obligation to release publicly any updates or revisions to these forward-looking statements to reflect
events or circumstances after the date of this MD&A including the occurrence of unanticipated events.
13
MANAGEMENT’S DISCUSSION AND ANALYSIS
March 8, 2024
Section
1.
Introduction
2.
3.
4.
Core Strategy and Business
Select Annual Financial Information
and 2024 Business Outlook
Recent Developments
(Including Contractual Updates)
5.
Results of Operations
6.
Cash Flow, Liquidity and Capital Resources
7.
Other Financial Matters
8.
9.
Use of Proceeds
Accounting Matters
10. Supplemental Non-GAAP Measures and
Reconciliations
Description
1.1 Preparation of the MD&A
1.2 Management’s Report on Disclosure Controls and
Procedures and Internal Controls over Financial
Reporting
1.3 Risks and Uncertainties
2.1 Core Business
2.2 Strategic Imperatives
3.1 Select Annual Financial Information
3.2 2023 Performance Compared to 2023
Business Outlook
3.3 2024 Business Outlook
4.1 Corporate
4.2 Europe
4.3 North America and Rest of World
4.4 China
5.1 Operating Segments
5.2 Summary of Key Financial Metrics –
Three months ended December 31, 2023
5.3 Summary of Key Financial Metrics –
Year ended December 31, 2023
5.4 Operating Expenses and Other Items –
Three months and year ended December 31, 2023
5.5 Summary of Quarterly Results
6.1 Summary of Cash Flows
6.2 Cash Provided by (Used by) Operating Activities
6.3 Cash Provided by (Used by) Investing Activities
6.4 Cash Provided by (Used by) Financing Activities
6.5 Liquidity and Capital Resources
7.1 Off Balance Sheet Arrangements and Contractual
Obligations
7.2 Related Party Transactions
7.3 Outstanding Share and Equity Information
8.1 Reconciliation of Use of Proceeds from Previous
Financings
9.1 Overview
9.2 Critical Judgments in Applying Accounting Policies
9.3 Key Sources of Estimation Uncertainty
9.4 Recently Adopted Accounting Policy Changes
9.5 Future Accounting Policy Changes
10.1 Overview
10.2 Cash Operating Costs
10.3 EBITDA and Adjusted EBITDA
14
1. INTRODUCTION
1.1 Preparation of the MD&A
This discussion and analysis of financial condition and results of operations of Ballard Power
Systems Inc. (“Ballard”, “the Company”, “we”, “us” or “our”) is prepared as of March 8, 2024
and should be read in conjunction with our audited consolidated financial statements and
accompanying notes for the year ended December 31, 2023. The results reported herein are
presented in U.S. dollars unless otherwise stated and have been prepared in accordance with
International Financial Reporting Standards (“IFRS”
Accounting Standards Board. Additional informa tion relating to the Company, including our
www.sedarplus.ca) and U.S. securities
Annual Information Form, is filed with Canadian (
regulatory authorities (
www.ballard.com.
www.sec.gov) and is also available on our website at
) as issued by the International
1.2 Management’s Report on Disclosure Controls and
Controls over Financial Reporting
Procedures and Internal
Disclosure controls and procedures
Our disclosure controls and procedures are designed to provide reasonable assurance that
relevant information is gathered and reported to se nior management, including the Chief
Executive Officer (“CEO”) and the Chief Financial O fficer (“CFO”), on a timely basis so that
appropriate decisions can be made regarding public disclosures.
As of the end of the period covered by this report, we evaluated, under the supervision and
with the participation of management, including the CEO and the CFO, the effectiveness of
the design and operation of our disclosure controls and procedures, as defined in Rules 13a–
15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (“Exch ange Act”). The CEO and
CFO have concluded that as of December 31, 2023, ou r disclosure controls and procedures
were effective to ensure that information required to be disclosed in reports we file or submit
under the Exchange Act is recorded, processed, summ arized, and reported within the time
periods specified therein, and accumulated and repo rted to management to allow timely
discussions regarding required disclosure.
Internal control over financial reporting
The CEO and CFO, together with other members of man
establishing and maintaining adequate internal cont
reporting. Internal control over financial reportin g is designed under our supervision, and
overseen by the Company’s board of directors, management, and other personnel, to provide
reasonable assurance regarding the reliability of f
financial statements for external purposes in accordance with IFRS.
inancial reporting and the preparation of
rol over the Company’s financial
agement, are responsible for
There are inherent limitations in the effectiveness of internal control over financial reporting,
including the possibility that misstatements may no t be prevented or detected. Accordingly,
even effective internal controls over financial reporting can provide only reasonable assurance
with respect to financial statement preparation. Fu rthermore, the effectiveness of internal
controls can change with circumstances.
Management, including the CEO and CFO, have evaluated the effectiveness of internal control
over financial reporting, as defined in Rules 13a –15(f) of the Exchange Act, in relation to
criteria described in Internal Control–Integrated Framework (2013) issued by the Committee
15
of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation,
management has determined that internal control over financial reporting was effective as of
December 31, 2023.
KPMG LLP, our independent registered public account ing firm, has audited our consolidated
financial statements and expressed an unqualified o
expressed an unqualified opinion on the effectivene ss of our internal control ove r financial
reporting as of December 31, 2023.
pinion thereon. KPMG LLP has also
Changes in internal control over financial reporting
During the year ended December 31, 2023, there were no changes in internal control over
financial reporting that have materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial reporting. Our design of disclosure controls and
procedures and internal controls over financial rep
procedures covering our subsidiaries including Ball ard Power Systems Europe A/S, Ballard
Fuel Cell Systems Inc., and Guangzhou Ballard Power Systems Co., Ltd.
orting includes controls, policies and
1.3 Risks and Uncertainties
An investment in our common shares involves risk. I nvestors should carefully consider the
risks and uncertainties described below and in our Annual Information Form. The risks and
uncertainties described in our Annual Information F orm are not the only ones that we face.
Additional risks and uncertainties, including those that we do not know about now or that we
currently deem immaterial, may also adversely affec t our business. For a more complete
discussion of the risks and uncertainties which apply to our business and our operating results,
please see our Annual Information Form and other filings with Canadian (www.sedarplus.ca)
and U.S. (www.sec.gov) securities regulatory authorities.
A summary of our identified risks and uncertainties are as follows:
• We may not be able to successfully execute our business plan.
• We depend on a limited number of customers for the majority of our revenues and are
subject to risks associated with early-stage market activities related to fuel cell bus, truck,
rail, marine and stationary applications.
• We are dependent on third party suppliers for the supply of key materials and components
for our products and services and may be subject to supply chain disruption.
• We are dependent upon Original Equipment Manufactur ers and Systems Integrators to
purchase certain of our products.
•
In China, a significant amount of operations are co nducted by a joint venture that we do
not control. In addition, we provide most of our technology solutions services to that joint
venture.
• We have limited experience manufacturing fuel cell products on a commercial basis and
our experience has been limited to relatively low production volumes.
• We are subject to risks inherent in international o perations, including restrictions on the
conversion of currencies and restrictions on repatriation of funds, including out of China.
• Certain of our customer supply agreements are subject to certain conditions
or risks,
including achievement of certain product performanc e milestones, completion of product
development programs, or customer cancellation provisions.
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Public policy and regulatory changes, including reg ulations relating to perfluoroalkyl and
polyfluoroalkyl substances (“PFAS”) used in our pro ducts, could hurt the market for our
products and services.
• Global macro -economic conditions are beyond our control and may have an adverse
impact on our business, our joint venture, our key suppliers, and/or customers , and our
ability to raise capital.
• Adequate investment in hydrogen fueling infrastruct
ure and competitive pricing of
hydrogen fuel is beyond our control.
• Geopolitical conditions are beyond our control and may have an adverse impact on our
business, our joint venture, our key suppliers, and/or customers.
• We currently face inflationary pressures.
• We currently face and will continue to face significant competition, and many current and
future competitors may have significantly more resources.
• We could be adversely affected by risks associated with capital investments and new
business processes.
• Our technology and products may not meet the market
requirements, including
requirements relating to performance, integration and / or cost.
• We may not be able to sell our products on a commer cially viable basis on the timetable
we anticipate, or at all.
• We could lose or fail to attract the personnel necessary to operate our business.
• Warranty claims, product performance guarantees, or
indemnification claims could
negatively impact our gross margins and financial performance.
• We expect our cash reserves will be reduced due to
future operating losses, working
capital requirements, capital expenditures
ydrogen infrastructure and growth
investments by our business, including in certain h
equity funds, and we cannot provide certainty as to how long our cash reserves will last
or that we will be able to access additional capital when necessary.
, and potential acquisitions and other
•
Potential fluctuations in our financial and busines s results make forecasting difficult and
may restrict our access to funding for our commercialization plan.
• A mass market for our products may never develop or may take longer to develop than
we anticipate.
• We may experience cybersecurity threats to our information technology infrastructure and
systems, and unauthorized attempts to gain access t
information, as may our customers, suppliers and/or partners.
o our proprietary or confidential
• We depend on our intellectual property, and our failure to protect that intellectual property
could adversely affect our expected future growth and success.
• Climate change risks may adversely affect our opera
tions, or the operations of our
suppliers, customers and/or partners.
• Regulatory agencies could require us to modify or t
erminate existing investments,
acquisitions or joint ventures and could delay or prevent future opportunities.
• Additional issuance of securities by Ballard may di
lute existing securityholders, reduce
some or all of Ballard’s financial measures on a pe r share basis, reduce the trading price
of the Common Shares or other Ballard securities or impede Ballard’s abilityto raise future
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capital.
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Proposed legislation in the U.S. Congress, includin g changes in U.S. tax law, and the
Inflation Reduction Act of 2022 may adversely impac t Ballard and the value of common
shares.
Exchange rate fluctuations are beyond our control and may have a material adverse effect
on our business, operating results, financial condition and profitability.
• Commodity price fluctuations are beyond our control and may have a material adverse
effect on our business, operating results, financial condition and profitability.
• Our products use flammable fuels and some generate high voltages, which could subject
our business to product safety, product liability or other claims.
• We could be liable for environmental damages result ing from our research, development
or manufacturing operations.
• Ballard believes that it was a “passive foreign investment company” (“PFIC”) for our most
recently completed tax year, which may have adverse
consequences for U.S. Holders.
U.S. federal income tax
•
Emerging diseases, like COVID -19, may adversely affect our operations (including our
joint venture in China), our suppliers, our customers and/or partners.
• We could be adversely affected by risks associated with mergers and acquisitions.
2. CORE BUSINESS AND STRATEGY
2.1 Core Business
At Ballard, our vision is to deliver fuel cell power for a sustainable planet. We are recognized
as a world leader in proton exchange membrane (“PEM”) fuel cell power system development
and commercialization.
Our principal business is the design, development, manufacture, sale and service of PEM fuel
cell products for a variety of applications, focusi ng on power products for bus, truck, rail,
marine, stationary and emerging market (material handling, off-road and other) applications,
as well as the delivery of services, including tech nology solutions, after sales services and
training.
A fuel cell is an environmentally clean electrochem ical device that combines hydrogen fuel
with oxygen (from the air) to produce electricity. The hydrogen fuel can be obtained from
natural gas, kerosene, methanol, ammonia, or other hydrocarbon fuels, or from water through
electrolysis. Ballard ’s PEM fuel cell products are typically designed to feature high fuel
efficiency, relatively low operating temperature, high durability, low noise and vibration,
compact size, quick response to changes in electrical demand, and modular design. Embedded
in each Ballard fuel cell product lies a stack of u nit cells designed with our proprietary PEM
fuel cell technology. This technology includes membrane electrode assemblies, catalysts,
plates, and other key components, and drawon intellectual property from our patent portfolio,
together with our extensive experience and know -how, in key areas of PEM fuel cell stack
design, operation, production processes and systems integration.
We are based in Canada, with head office, research , technology and product development,
engineering services, testing, manufacturing and after-sale service facilities in Burnaby,
, certain
British Columbia. We also have
sales, assembly, research and development
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engineering services and after -sale service facilities in Hobro, Denmark, a module assembly
facility in Bend, Oregon, and a sales, quality , supply chain, and after -sales service office in
Guangzhou, Guangdong Province, China.
We also have a non-controlling, 49% interest in Weichai Ballard Hy-Energy Technologies Co.,
Ltd. (“Weichai Ballard JV”) , located in Weifang, Shandong Province, China. Weichai Ballard
JV’s business is to manufacture certain fuel cell products utilizing Ballard’s LCS fuel cell stack
and LCS-based power modules for bus, commercial truck, and forklift applications with certain
exclusive rights in China.
Furthermore, we have certain non-controlling and non -equity accounted investments : (i) a
3% equity interest in Quantron AG (“Quantron”), a global electric vehicle integrator and an
emerging specialty OEM, to accelerate fuel cell tru ck adoption; (ii) a 6.7% equity interest in
Wisdom Group Holdings Ltd. (“Wisdom”), a Cayman Island holding company with operating
subsidiaries whose business includes the design and manufacture of vehicles, including zero
emission fuel cell electric buses, trucks, and battery-electric vehicles; and (iii) a 7.3% equity
interest in Forsee Power SA (“Forsee Power”), a Fre nch company specializing in the design,
development, manufacture, commercialization , and financing of smart battery systems for
sustainable electric transport. We have also invested in two hydrogen infrastructure and
growth equity funds: (i) a 1 0.4% interest in the HyCap Fund I SCSP (“HyCap”), a sp
ecial
limited partnership registered in Luxembourg; and (ii) a 1.5% interest in Clean H2 Infra Fund
(“Clean H2”), a special limited partnership registe red in France. During the first quarter of
2024, we invested in a decarbonization and climate technolog y and growth equity fund by
acquiring a 2% interest in Templewater Decarbonization I, L.P.,
a limited partnership
registered in Cayman Islands, for an initial investment of $0.5 million on a total commitment
of $1.0 million.
2.2
Strategic Imperatives
shareholders by developing, manufacturing, selling,
and
We strive to build value for our
servicing zero-emission, industry-leading PEM fuel cell technology products and servi ces to
meet the needs of our customers in target markets. More specifically, our business plan is to
leverage our core competencies of PEM fuel cell sta ck technology and engine development
and manufacturing, our investments in advanced manufacturing and production capacity, and
our product portfolio by marketing our products and services across select large and attractive
addressable market applications and select geographic regions.
We typically select our target market applications based on use cases where the comparative
user value proposition for PEM fuel cells powered by hydrogen are strongest – such as where
operators value low emission vehicles that require high utilization, long driving range, heavy
payload, fast refueling, and similar user experiences to legacy diesel vehicles – and where the
barriers to entry for hydrogen refueling infrastruc ture are lowest – such as use cases where
fuel cell vehicles typically return to a depot or hydrogen hub for centralized refueling and don’t
require a distributed hydrogen refueling network. Our current target markets include certain
medium- and heavy -duty mobility applications for bus, truck, rail, and marine, along with
certain off-road mobility and stationary power applications.
We select our target geographic markets based on a variety of factors, including addressable
market sizes of the target market applications in t
deployments and expected market adoption rates for hydrogen and fuel cells, supp ortive
he geographic markets, historic
19
government policies, existing and potential partner , customer, and end user relationships,
and competitive dynamics. Our current target markets are the geographic regions of Europe,
North America, and China.
cations and geographic markets in
While we recognize addressing multiple market appli
parallel increases our near-term cost structure and investments, we believe offering the same
core PEM fuel cell technologies and substantially s
cell products
across multiple mobility and power market applicati ons and select geographic regions will
significantly expand and strengthen our long -term business prospects by increasing volume
scaling in our operations, enabling lower product a nd production costs for the benefit of all
markets, improving our competitive positioning and market share, enabling richly diversified
revenue streams and profit pools, and improving our return on investment in our technology
and product development programs and our investments in manufacturing.
imilar derivative PEM fuel
Our strategy is built on four key themes:
• Double down in the fuel cell stack & module: invest
in leading PEM fuel cell technology
and products to provide leading value to our custom ers and end users on a total cost of
ownership basis;
• Accelerate market development : deepen and create new partnerships to accelerate
hydrogen and fuel cell market adoption and grow volumes for product sales;
• Win in key regions: prioritize investments in North America and Europe, and monitor China
before materially deepening our investment in China; and
• Here for Life : deliver a compelling environmental, social and go
vernance (“ESG”)
proposition for our stakeholders.
nancial position through equity
In 2020 and 2021, we materially strengthened our fi
financings, thereby providing additional flexibility to fund our growth strategy. Following these
financings, given strong indicators of long -term market adoption of hydrogen and zero
-
emission mobility, given growing customer interest in our fuel cell products, given a growing
opportunity set, and given an increasingly competitive environment, we strategically decided
to significantly increase and accelerate our invest ments a head of the adoption curv e. As a
result, over the past three years, we increased and accelerated our investments in technology
and product innovation,
localization, strategic pricing for select customer demonstration programs, and customer
experience. Our increased investments include : next generation products and technology,
including our proprietary membrane electrode assemb lies (“MEAs”), bipolar plates, stacks,
and modules; advanced manufacturing processes, technologies, equipment, and production
capacity expansion activities primarily in Canada, Europe and the United States; and
technology and product cost reduction.
production capacity expansion and
product cost reduction,
Given challenging and dynamic macroeconomic and geo political conditions, given continued
delays in hydrogen and fuel cell market adoption, a nd given changes in investor sentiment
towards pre-profitability clean energy companies with long-duration investment horizons, we
sharpened our focus in 2023 to protect our balance sheet. While we continue to invest against
our long-term strategy, we rationalized our product portfoli o, reduced the number of active
dev elopment investments, and
product development programs, dropped new corporate
discontinued certain legacy products and non
-core activities, including Ballard Motive
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Solutions in the U .K. We also suspended our proposed $130 million investment for the
localization of a new MEA production facility in China.
3. SELECT ANNUAL FINANCIAL INFORMATION AND 2024 BUSINESS OUTLOOK
3.1 Select Annual Financial Information
Results of Operations
Year ended,
(Expressed in thousands of U.S. dollars, except per share
amounts and gross margin %)
2023
2022
2021
Revenues
Gross margin
Gross margin %
Total Operating Expenses
Cash Operating Costs (1)
Adjusted EBITDA (1)
Net loss from continuing operations
Net loss from continuing operations per share
Financial Position
(expressed in thousands of U.S. dollars)
Total assets
Total non-current liabilities
Cash, cash equivalents and short-term investments
$
$
$
$
$
$
$
102,368
(21,831)
(21%)
141,073
119,327
(150,088)
(144,210)
(0.48)
$
$
$
$
$
$
$
81,860
(13,308)
(16%)
132,020
111,992
(132,635)
(160,371)
(0.54)
$
$
$
$
$
$
$
104,367
14,066
13%
100,731
82,630
(80,981)
(113,282)
(0.38)
At December 31,
2023
2022
2021
$
$
$
1,077,542
15,
740
753,243
$
$
$
1,247,077
14,998
915,741
$
$
$
1,440,943
29,567
1,126,899
1 Cash Operating Costs and Adjusted EBITDA are non-GAAP measures. We use certain Non-GAAP measures to assist in assessing our financial
performance. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar
measures presented by other companies. See reconciliation to GAAP in the Supplemental Non-GAAP Measures section.
3.2 2023 Performance compared to 2023 Business Outlook
Consistent with the Company’s past practice, and in view of the early stage of hydrogen fuel
cell market development and adoption, we did not pr ovide specific revenue or net income
(loss) guidance for 2023. We did however provide certain quantitative and qualitative outlook
expectations for 2023 as we continued our plan to i
including extensive research and product development, expanding our product offerings, and
investments in manufacturing capabilities. In particular:
ncrease investments in the business,
•
Total Operating Expenses: 2023 outlook range of $135 million to $155 million – Total
Operating Expenses in fiscal 2023 of $14 9.0 million (including $7. 9 million of operating
expenses from discontinued operations) were at the higher end of our outlook range of
between $135 million and $155 million (compared to $145.8 million in fiscal 2022including
$13.8 million of operating expenses from discontinued ope rations) as we continue d to
invest in research and product development by advancing new technology, product cost
reduction, product innovation, and development acro
stationary power markets, including next-generation MEAs, plates, stacks, and modules.
ss bus, truck, rail, marine, and
• Capital Expenditures: 2023 outlook range of $40 million to $60 million – T otal Capital
Expenditures (being additions to property, plant an d equipment and investment in other
intangible assets) in fiscal 2023 of $41. 4 million were at the lower end of our outlook
range of between $40 million and $60 million (compared to $34.5 million in fiscal 2022)
as we continue d to invest in testing, advanced manufacturing, and p roduction. Capital
allocation in 2023 included increasing testing and prototyping capabilities, in cluding new
advanced test station equipment and refurbishments
of existing testing equipment,
21
advanced manufacturing equipment in Canada for next
positioning our manufacturing capabilities in Canada, Denmark, and the United States to
support anticipated scale in key markets. We also c ontinued to look at opportunities to
expand our presence in growing markets.
-generation bipolar plates, and
3.3 2024 Business Outlook
Consistent with the Company’s past practice, and in view of the early stage of hydroge n fuel
cell market development and adoption, we are not providing specific revenue or net income
(loss) guidance for 202 4. In 202 4, we plan to continue invest ments in next generation
products, advanced manufacturing, and production capacity expansion . We also expect
revenue in 2024 will be back-half weighted, with roughly 30% in the first half and 70% in the
second half, similar to 2023. Our 2024 outlook includes:
•
Total Operating Expenses: 2024 outlook range of $145 million to $165 million – We expect
total Operating Expenses (excluding discontinued op
between $145 million and $165 million (compared to $141.1 million in fiscal 2023) as we
continue to invest in research and product developm ent across our markets, including
rationalization of our product portfolio, accelerating product cost reduction initiatives, and
increased investment to accelerate development of our next-generation core products
including MEAs, plates, stacks, and modules.
erations) for fiscal 2024 to be
• Capital Expenditures: 2024 outlook range of $50 million to $70 million – We expect total
Capital Expenditures (being additions to property, plant and equipment and investment in
other intangible assets) for fiscal 2024 to be betw
(compared to $41.4 million in fiscal 2023)
manufacturing capacity in support of our ‘local for
investments in testing, advanced manufacturing and production.
as we continue to expand our production
local’ strategy , including planned
een $50 million and $70 million
Our expectations for 2024 are in part supported by our 12-month Order Book of approximately
$66.6 million which is derived from our Order Backlog of approximately $130.5 million as of
December 31 , 202 3 (during the fourth quarter of 2024, we removed appr
oximately $22
experiencing liquidity issues and
million from the Order Backlog
resulting program delays) . Our Order Backlog represents the estimated aggregat e value of
orders at a given time for which customers have made contractual commitments and our 12-
month Order Book represents the aggregate expected
Backlog that the Company expects to deliver in the subsequent 12-month period.
value of that portion of the Order
for a specific customer
Our expectations are based on our internal forecast which reflects an as sessment of overall
business conditions and takes into account actual s
capital
expenditures, and financial results in the first two months of 2024; sales orders received for
units and services expected to be de livered in the remainder of 202 4; purchase and cost
commitments currently in existence for fiscal 2024; an estimate with respect to the generation
of new sales and the timing of deliveries in each o f our markets for the balance of 202 4; an
estimate of purchase and cost commitments to be generated in ea ch of our locations for the
balance of 202 4; and assumes an average U.S. dollar exchange rate
in the mid $0.70’s in
relation to the Canadian dollar for 2024.
ales, operating expenses,
The primary risk factors to our business expectations for 202 4 are customer, production, or
program delays or cancellations in delivering against existing power products and technology
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solutions orders and delays from forecast in terms of closing and delivering expected sales ;
adverse macro-economic and political conditions including trade and other geopolitical risks;
changes in government subsidy and incentive programs; inadequate investment in hydrogen
infrastructure and / or excessive hydrogen fuel costs, all of which could negatively impactour
customers’ access to capital and the success of their program plans which could adversely
impact our business including potential changes, delays or acceleration s in our expected
operating and capital equipment requirements ; disruptions due to delays of supply of key
materials and components from third party suppliers ; disruptions as a result of our reliance
on a limited number of technology service customers including Weichai Ballard JV, which are
reliant on their internal commercialization plans and budget require ments; disruptions as a
result of delays in achieving technology solutions program milestones; disruptions as a result
of our reliance on a limited number of customers and certain of those customer’s internal
stack development and commercialization plans ; and fluctuations in the Canadian dollar
relative to the U.S. dollar, as a significant portion of our operating expense commitments and
capital expenditure commitments are priced in Canadian dollars.
of cancellation, deferral or non
Our Order Backlog and our 12 -month Order Book are currently comprised of a relat
ively
limited number of contracts and a relatively limited number of customers. Given the relative
immaturity of our industry and customer deployment programs, our Order Backlog and 12 -
-
month Order Book are potentially vulnerable to risk
performance by our customers for a variety of reasons, including: risks related to continued
customer commitment to a fuel cell program; risks related to customer liquidity; credit risks;
risks related to changes, reductions or elimination s in government policies, subsidies and
incentives; risks related to macro -economic and political conditions including trade, public
health, and other geopolitical risks; risks related to slower market adoption; risks rela ted to
vehicle integration challenges; risks related to th
refueling infrastructure; risks related to the ability of our products to meet evolving market
requirements; and supplier-related risks. Certain of our customer supply agreements arealso
subject to certain conditions or risks, including a chievement of certain product performance
milestones, completion of product development progr
provisions, and it is likely that some future supply agreemen ts will also be subject to similar
conditions and risks. There can be no assurance that we will achieve or satisfy such conditions
or that customers will not cancel their orders. In addition, our supply agreements may include
various pricing structures or reduced pricing tiers based on various factors, including volumes
and the timing of deliveries. In setting these reduced pricing tiers, we may assu me certain
future product cost reductions which are subject to execution risk, including future commodity
costs, supply chain costs, and production costs, an d we may not be successful in achieving
the planned cost reductions. In such circumstances, thes e agreements may become future
onerous contracts if our gross margins become negative and the value of carried inventory to
support product delivery under such contracts may also be adversely impacted.
e development of effective hydrogen
ams, or customer cancellation
Furthermore, potential fluctuations in our financial results make financial forecasting difficult.
In addition, due to the early stage of development
products, it is difficult to accurately predict future revenues, operating expenses, cash flows,
or results of operations on a quarterly basis. The Company’s revenues, operating expenses,
cash flows, and other operating results can vary significantly from quarter to quarter. As a
result, quarter -to-quarter comparisons of re venues, operating expenses, cash flows , and
of the market for hydrogen fuel cell
23
other operating results may not be meaningful; instead, we believe our operating performance
should be assessed over a number of quarters and years. It is likely that in one or more future
quarters, financial results will fall below the expectations of securities analysts and investors
and the trading price of the Company's shares may be materially and adversely affected.
4.
RECENT DEVELOPMENTS (Including Contractual Updates)
4.1 Corporate
Update on global manufacturing strategy
On September 30, 2022, we announced our strategy ‘l ocal for local’ where we summarized
our plan to deepen our global manufacturing footprint in Europe, the United States, and China
to support expected global market demand growth through 2030. As part of this strategy, we
entered into an investment agreement with the Gover nment of Anting in Shanghai’s Jiading
District to establish our new China headquarters, M EA manufacturing facility, and an R&D
center, at a site strategically located at the Jiad ing Hydrogen Port, located in one of China’s
leading automotive industry clusters, with the plan to invest approximately $130 million over
the next three years.
However, as a result of the increasingly constructive hydrogen policy landscape and increased
market activity in the U.S. and Europe; and given the continued hydrogen and fuel cell policy
uncertainties and market delays in China, as well as geopolitical risks, we decided to suspend
our MEA localization plan in China
comparative analysis on
manufacturing capacity expansion options and possib le sequencing prioritization in the U .S.
and/or European markets. We expect to conclude this review in 2024.
while we continue with a
4.2 Europe
15 MW order for stationary power products in Europe
On March 5, 2024, we announced an order for 15 megawatts (MW) of fuel ce ll systems from
a UK-based company specializing in renewable off-grid power generation. We expect to deliver
150 FCmove®-HD+ 100 kW systems beginning in late 2024 and continuing through 2025.
The current order of 15 MW of fuel cell systems follows prior cumulative orders for roughly 5
MW of fuel cell systems from this customer. The purchase order is the first order under a new
multi-year supply agreement. The agreement also provides
purchase up to an additional 296 systems by March 2 026, which, if fully exercised, would
bring the total number of systems ordered to 446.
the customer an option to
Orders from Solaris for over 62 hydrogen fuel cell engines to power buses in Europe
On November 6, 2023, we announced multiple purchase orders totaling 62 hydrogen fuel cell
engines from long -standing customer Solaris Bus & Coach sp. z o.o. (“ Solaris”), a leading
European bus manufacturer deploying hydrogen -powered city buses across the continent.
Ballard expects delivery of the majority of the fuel cell engines to occur in 2024.
The hydrogen fuel cell engines will power buses in
engines ordered by Solaris in 2024 approximate 350, representing substantial growth over
the more than 140 fuel cell city buses that Solaris has deployed with customers in Europe to
date.
Germany and Poland. The number of
24
Orders from Solaris for over 170 hydrogen fuel cell engines to power buses in Europe
On October 10, 2023, we announced multiple purchase orders totaling 177 hydrogen fuel cell
engines from long -standing customer Solaris. Ballard commenced deliveries of these orders
in late 2023 and expect the remainder to ship in 2024 and 2025.
The orders include the supply of fuel cell engines
deployment of a fleet of fuel cell city buses in Eu rope, with 127 Solaris fuel cell buses to be
deployed in Bologna, Italy. Ballard also received o rders for a further 50 modules to power
Solaris fuel cell buses in Germany and Italy.
to support the largest announced
4.3 North America and Rest of World
Long-Term Supply Agreement with NFI Group and purchase o rder for 100 fuel cell engines
for bus deployments in North America
On January 3, 2024, we announced the signing of a ne
(“LTSA”) with NFI Group Inc. (“NFI”), a leading independent bus and coach manufacturer and
a leader in electric mass mobility solutions in Nor
marks a new phase in the established partnership between
deployment-level volumes of fuel cell powered buses across all of NFI’s major brands including
New Flyer, Alexander Dennis, and MCI.
th America and Europe. The agreement
Ballard and NFI, focused on
w Long -Term Supply Agreement
As part of the LTSA, NFI has placed its first purch
minimum of 100 FCmove® -HD+ modules for planned delivery in 2024. The modul
es will
primarily be produced in Ballard’s Bend, Oregon fac ility with Buy America compliance, a nd
will power New Flyer’s next generation Xcelsior CHA RGE FC ™ hydrogen fuel cell buses for
deployment across the US and Canada, including Cali
fornia, Manitoba, Nevada, New York,
Ohio, and Pennsylvania.
ase order under the agreement for a
Canadian Pacific Kansas City places follow-on order for 2.4 MW of Ballard fuel cell engines for
active service locomotives
On November 6, 2023, we announced an order for 2.4 MW of additional fuel cell engines from
Canadian Pacific Kansas City (“CPKC”). These twelve, 200 kW fuel cell engines were delivered
in 2023 as expected and will support the development of CPKC’s additional hydrogen-powered
locomotives planned for regular switching and local freight service applications in Alberta.
The additional locomotives will be partially funded through the Emissions Reduction Alberta
(“ERA”) program that helps the province deliver on its environmental and economic goals and
will in turn support the decarbonization of rail transport by funding hydrogen production and
refueling infrastructure along with hydrogen-powered locomotives.
Over the past two years, Ballard has supplied CPKC with 38 fuel cell engines for use in its
hydrogen locomotives, with combined fuel cell power of 7.6 MW. The additional locomotives
are expected to enter service in late 2024.
4.4 China
Weichai Power Co., Ltd. and Weichai Ballard Hy-Energy Technologies Co., Ltd.
On November 13, 2018, we announced the closing of a strategic collaboration transaction
with Weichai. Ballard’s strategic collaboration with Weichai included:
25
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Equity Investment – an equity investment in Ballard made by Weichai rep
19.9% interest in the Company at that time. Weichai
15.4% interest in Ballard.
currently holds an approximate
resenting a
Ballard entered into an investor rights agreement with Weichai under which: (a) so long
as Weichai directly or indirectly holds at least 10% of Ballard’s outstanding shares, it has
an anti -dilution right entitling it to maintain its percent
subscribing for Common Shares from treasury at the same price as Ballard distributes
Common Shares to other investors (to date, Weichai’s anti-dilution rights with respect to
all previous offerings of the Company have expired
Weichai directly or indirectly holds at least 15% of Ballard’s outstanding Common Shares,
it has the right to nominate two directors to Balla rd’s board of directors; and (c) if there
is a third-party offer to buy Ballard, Weichai has the right t o make a superior proposal or
otherwise it must vote its Common Shares in accordance w ith the recommendation of
Ballard’s board of directors.
unexercised); (b) for so long as
age ownership in Ballard by
• China Joint Venture and Technology Transfer Agreeme
nt – Weichai and Ballard have
established a joint venture company in Shandong Pro vince to support China’s Fuel Cell
Electric Vehicle market, with Weichai holding a controlling ownership interest of 51% and
Ballard holding a 49% ownership position. Weichai Ballard JV was established in the fourth
quarter of 2018. During fiscal 2018 through fiscal
capital contributions totaling RMB 561.0 million an d Ballard made its committed capital
contributions totaling RMB 539.0 million (equivalent to $79.4 million). Weichai holds three
of five Weichai Ballard JV board seats and Ballard holds two, with Ballard having certain
shareholder protection provisions.
2022, Weichai made its committed
transfer technology to Weichai Ballard JV in order
The Weichai Ballard JV develops and manufactures fu el cell modules and components
including Ballard’s LCS bi -polar plates, fuel cell stacks and FCgen
®-LCS-based power
modules for bus, commercial truck, and forklift applications with exclusive rights (subject
to certain conditions) in China and is to pay Ballard a total of $90 million under a program
to develop and
manufacturing activities. Revenue earned from the $
technology transfer agreement ($2.3 million in the fourth quarter of 2023; $0.9 million in
the fourth quarter of 2022; $4.9 million in fiscal 2023; $6.0 million in fiscal 2022; $18.2
million in fiscal 2021; $6.0 million in fiscal 2022; $18.2 million in fiscal 2021; $21.2 million
in fiscal 2020; $22.5 million in fiscal 2019; $1.2 million in fiscal 2018) is recorded primarily
as technology solutions revenues in our Heavy-Duty Mobility Truck market. During the
fourth quarter of 2018, we received an initial 10%
Weichai Ballard JV for this program with additional
developed
milestones are successfully completed. We retain an exclusive right to the
technologies outside China, subject to certain rest rictions on sublicensing outside China.
The Weichai Ballard JV will also purchase MEAs for FCgen®-LCS fuel cell stacks exclusively
from Ballard under a long-term supply agreement.
or $9.0 million prepayment from
amounts paid to us as program
90 million Weichai Ballard JV
to enable these
•
Fuel Cell Sales – On December 16, 2019, we announced the receipt of a purchase order
from Weichai Ballard JV for the delivery of MEAs valued at approximately $19 million under
a long-term MEA supply agreement. Revenue earned from this agreement ($1.5 million in
the fourth quarter of 2023; $0.2 million in the fourth quarter of 2022; $2.1 million in fiscal
2023; $1.0 million in fiscal 2022) is recorded primarily as product revenue in our Heavy-
Duty Mobility Truck market . As of December 31 , 202 3, an additional $ 5.1 million of
26
•
•
•
revenue associated with shipments on this order to Weichai Ballard JV
unrecognized until these products are ultimately sold by Weichai Ballard JV.
remain
The Weichai Ballard JV operation, located in Weifan
has
commenced production activities of LCS bi -polar plates, LCS fuel cell stacks and LCS -based
market. The Weichai Ballard JV is
modules to power bus and truck FCEVs for the China
expected to have annual production capacity of 40,000 fuel cell stacks and 20,000 engines.
g, Shandong Province, China,
5. RESULTS OF OPERATIONS
5.1 Operating Segments
We report our results in the single operating segment of Fuel Cell Products and Services. For
2023, we have made certain changes in the presentat
comprising our Fuel Cell Products and Services operating segment. Our Fuel Cell Products and
Services segment consists of the sale of PEM fuel c ell products and services for a variety of
applications, including Heavy-Duty Mobility ( consisting of bus, truck, rail
, and marine
applications), Stationary Power, and Emerging and Other Markets ( consisting of material
handling, off-road, and other applications). Revenues from the delivery of Services, including
technology solutions, after sales services and training, are included in each of the respective
markets.
ion of revenues by application
estructuring of operations at Ballard
During the fourth quarter of 2023, we completed a r
Motive Solutions in the U.K. and effectively closed
the operation. As such, the historic
operating results (including revenue and operating expenses) of the Ballard Motive Solutions
business for both 2023 and 2022 have been removed f rom continuing operating results and
are instead presented separately in the statement o f comprehensive income (loss) as loss
from discontinued operations.
5.2 Summary of Key Financial Metrics – Three Months Ended December 31, 2023
Revenue and Gross Margin
(Expressed in thousands of U.S. dollars)
Three months ended December 31,
2023
2022
$ Change
% Change
Heavy-Duty Mobility
$
29 ,004
$
9,079
$
19,925
Bus
Truck
Rail
Marine
Stationary
Emerging and Other
11,978
5,991
7,039
3,996
12,805
4,942
2,718
2,544
2,676
1,141
6,234
4,870
9,260
3,447
4,363
2,855
6,571
72
Revenues
$
46,751
$
20,1
83
$
26, 568
China
Europe
North America
Rest of World
Revenues
Cost of goods sold
Gross Margin
Gross Margin %
$
$
(
5,496
24,907
15,106
1,242
46,751
56,918
$
2,009
9,080
8,168
926
20,183
26,276
$
3,487
15,827
6,938
316
26,568
30,642
( 10,167)
$
(
6,093)
$
(4,074)
22%)
(
30%)
n/a
219%
341%
135%
163%
250%
105%
1%
132%
174%
174%
85%
34%
132%
117%
67%
8 pts
27
Fuel Cell Product s and Services Revenues of $ 46.8 million for the fourth quarter of 2023
increased 132%, or $26.6 million, compared to the fourth quarter of 2022. The 132% increase
was driven by higher Heavy-Duty Mobility and Stationary market revenues as Emerging and
Other and Stationary market revenues were effectively flat. Revenue increased in each region
with the largest increases in Europe and North America followed by China and Rest of World.
Heavy-Duty Mobility revenues of $29.0 million in the fourth quarter of 2023 increased $20.0
million, or 219%, due to higher sales of fuel cell products in each of our sub-markets of bus,
rail, truck and marine. Heavy-Duty Mo bility revenues on a quarter-to-quarter basis are
impacted by product mix due to varying customer requirements and various fuel cell products,
including numerous power configurations required by our customers (and the resulting impact
on selling price) of our fuel cell modules, fuel ce ll stacks, MEAs, and related component and
fourth quarter of 202 3
parts kits. Heavy -Duty Mo bility revenues of $ 29.0 million in the
includes service revenues of $2.3 million earned on the Weichai Ballard JV technology transfer
program; $ 2.3 million from Weichai Ballard JV for the supply of a mix of certa
in fuel cell
products and components that will be used in the assembly of modules to power zero-emission
FCEVs in China; and $24.4 million from a variety of customers in Europe, North America,
China, and the rest of the world , primarily for shipments of FCwave™, FCmove™-HD+,
FCmove™-HD FCmove™-XD, and FCveloCity®-HD7 fuel cell modules and related components
for their respective bus, truck, rail and marine programs.
Heavy-Duty Mobility revenues of $ 9.0 million in the fourth quarter of 2022 includes service
revenues of $0.9 million earned on the Weichai Ballard JV technology transfer program; $0.3
million to Weichai Ballard JV for the supply of a m
components that will be used in the assembly of mod ules to power zero -emission FCEVs in
China; and $7.8 million to a variety of customers in North America, Europe, and Other areas,
primarily for shipments of FCveloCity®-HD7 and FCveloCity ®-HDv8 fuel cell modules
and
related components for their respective bus and train programs.
ix of certain fuel cell products and
Stationary revenues of $12.8 million increased $6.6 million, or 105%, due to higher sales of
stationary power generation fuel cell modules, stac
ks, products and services primarily in
Europe and North America . Stationary revenues also include technology solutions program
revenues from a variety of customer programs for stationary applications.
Emerging and Other market revenues of $ 4.9 million in creased $ 0.1 million, or 1%, due
primarily to higher sales of fuel cell modules primarily for mining applications, partially offset
by lower fuel cell stack shipments and lower service revenues . Emerging and Other market
revenues include technology solutions program revenues on th e completed Audi program of
nil in the fourth quarter of 2023, compared to $1.0 million in the fourth quarter of 2022.
Fuel Cell Products and Service s gross margins were ($10.2) million, or (22%) of revenues,
for the fourth quarter of 202 3, compared to ($6.1) million, or (30%) of revenues, for the
fourth quarter of 2022. The negative gross margin in the fourth quarter of 2023 was driven
primarily by significantly higher inventory impairment and onero us contract provisions, and
by a shift to lower overall product margin and service revenue mix including the impacts of
pricing strategy, higher fixed overhead costs due primarily to the expansion of manufacturing
capacity, and increases in supply costs.
Gross margin in the
fourth quarter of 202 3 was negatively impacted by net increases in
28
inventory impairment and onerous contract provision adjustments of ($ 10.7) million, and
$0.3 million. Negative inventory and
positively impacted by net warranty adjustments of
related impairment adjustments of ($10.7) million in the fourth quarter of 2023 were primarily
due to (i) customer specific heavy-duty mobility inventory no longer expected to be ut ilized
due to a certain customer’s liquidity issues and resulting program delays; (ii) excess and slow
moving small stationary inventory located primarily in Europe due to product rationalization
and potential divestiture activities ; and (iii) excess and slow moving legacy and customer
service inventory no longer expected to be utilized . Gross margin in the fourth quarter of
2022 was negatively impacted by net inventory and onerous contract provision adjustments
of ($ 4.1) million due primarily to excess and impaired
service inventory; and positively
impacted by net warranty adjustments of $0.5 million.
Operating Expenses and Cash Operating Costs
(Expressed in thousands of U.S. dollars)
Three months ended December 31,
2023
2022
$ Change
% Change
Research and Product
Development
General and Administrative
Sales and Marketing
Operating Expenses
Research and Product
Development (cash operating cost)
General and Administrative
(cash operating cost)
Sales and Marketing (cash operating
cost)
Cash Operating Costs
$
24,459
$
$
5,042
3,716
33,217
21,337
4,233
3,380
$
$
$
21,506
$
2,953
4,982
3,295
60
421
29,783
$
3,434
20,586
$
751
5,361
3,091
(1,128)
289
(88)
14%
1%
13%
12%
4%
(21%)
9%
(0%)
$
28,950
$
29,038
$
Cash Operating Costs and its components of Research and Product Development (cash operating cost), Gen eral and Administrative (cash operating cost),
and Sales and Marketing (cash operating cost) are non-GAAP measures. We use certain Non-GAAP measures to assist in assessing our financial performance.
Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented
by other companies. See the reconciliation of Cash Operating Costs to GAAP in the Supplemental Non-GAAP Measures and Reconciliations section and the
reconciliation of Research and Product Development (cash operating cost), General and Administrative (cash operating cost), and Sales and Marketing (cash
operating cost) to GAAP in the Operating Expense se
ction. Cash Operating Costs adjusts operating expen ses for stock -based compensation expense,
depreciation and amortization, impairment losses on trade receivables, restructuring charges, the impact of unrealized gains or losses on foreign exchange
contracts, acquisition related costs, and financing charges.
Total Operating Expenses (excluding Other operating expenses) for the fourth quarter of 2023
were $33.2 million, an increase of $ 3.4 million, or 12%, compared to the fourth quarter of
2022. The increase was driven by higher research and product development expenses of $3.0
million and higher sales and marketing expenses of $0.4 million.
Cash Operating Costs (see Supplemental Non -GAAP Measures and Reconciliations ) for the
fourth quarter of 2023 were $29.0 million, a decrease of ($0.1) million, or (0%), compared
to the fourth quarter of 2022. The minor decrease was driven by lower general and
administrative cash operating costs of ($1.1) milli on, partially offset by higher research and
product development cash operati ng costs of $ 0.8 million, and higher sales and marketing
cash operating costs of $0.3 million.
The minor decrease in cash operating costs in the fourth quarter of 2023 was driven primarily
by lower general and administrative costs due to lower contractor services, recruiting, and
insurance costs. These cost reductions were partially offset by
increased expenditure on
technology and product development activities, including the design and development of next
generation fuel cell stacks and engines for bus, truck, rail, marine and stationary applications,
and continuation engineering investment in our existing fuel cell products, including activities
29
related to product cost reduction. Program investme nt includes expenditures related to our
FCmove™-HD+ and FCmove XD fuel cell modules designed for buses and medium and heavy-
-medium-and
duty trucks, our FCgen® -HPS High -Power Density Fuel Cell Stack for light
heavy-duty vehicles, our FCwave ™ Fuel Cell Module for marine applications, and on th
e
ongoing improvement of all of our fuel cell product s including our high performance fuel cell
module, the FCmove ™-HD, and our high performance liquid
-cooled fuel cell stack, the
FCgen®-LCS.
Adjusted EBITDA
(Expressed in thousands of U.S. dollars)
Three months ended December 31,
2023
2022
$ Change
% Change
Adjusted EBITDA
$
(44,083)
$ (
40,148)
$ (
3,935)
(
10%)
EBITDA and Adjusted EBITDA are non-GAAP measures. We use certain Non-GAAP measures to assist in assessing our financial performance. Non-GAAP
measures do not have any standardized meaning presc ribed by GAAP and are therefore unlikely to be comp arable to similar measu res presented by
other companies. See reconciliation of Adjusted EBITDA to GAAP in the Supplemental Non-GAAP Measures and Reconciliations section. Adjusted EBITDA
adjusts EBITDA for stock-based compensation expense, transactional gains and losses, acquisition related costs, finance and other income, recovery on
settlement of contingent consideration, asset impairment charges, and the impact of unrealized gains and losses on foreign exchange contracts.
Adjusted EBITDA (see Supplemental Non-GAAP Measures and Reconciliations) for the fourth
quarter of 202 3 was ($44.1) million, compared to ($40.1) million for the fourth quarter of
2022. The increase i n Adjust ed EBITDA loss of ($ 3.9) million was driven primarily by the
increase in gross margin loss of ($4.1) million, higher impairment loss on trade receivables
of ($1.4) million, and higher restructuring expenses of ($0.2) million, partially offset by the
decrease in Cash Operating Costs of $0.1 million, a nd lower equity in loss of investment in
joint venture and associates of $2.4 million attributed to the operations of Weichai Ballard JV.
Net Loss from Continuing Operations
(Expressed in thousands of U.S. dollars)
Three months ended December 31,
2023
2022
$ Change
%
Change
Net loss from Continuing Operations
$
(48,889)
$ (27
,572)
$ (21
,317)
(77%)
Net loss from continuing operations for the fourth quarter of 202 3 was ($48.9) million, or
($0.16) per share, compared to a net loss from continuing operations of ($27.6) million, or
($0.09) per share, in the fourth quarter of 2022. The ($21.3) million increase in net loss in
the fourth quarter of 2023 was driven primarily by the increase in Adjusted EBITDA loss of
($3.9) million and by lower finance and other income of ($13.9) million.
Net Loss from Discontinued Operations
(Expressed in thousands of U.S. dollars)
Three months ended December 31,
2022
$ Change
% Change
Revenues
Cost of goods sold
Gross margin
$
2023
323
108
215
$
281
107
174
$
Operating expenses
(
2,699)
(
6,938)
Finance and other (income) loss
Impairment charges on
intangible assets
Recovery on settlement of
contingent consideration
Income tax recovery (expense)
Net loss from discontinued
operations
125
-
-
-
(3)
(13,017)
891
3,038
9,
$
(2,359)
$ (
6,855)
$
4, 496
66%
30
42
1
41
4, 239
128
13,017
15%
1%
24%
61%
4267%
100%
(9,891)
(
100%)
(3,038)
(100%)
Net loss from discontinued operations for the fourt h quarter of 202 3 was ($2.4) million, or
($0.01) per share, compared to ($6.9) million, or ($0.02) per share, in the fourth quarter of
2022.
During the fourth quarter of 2023, we completed a r
Motive Solutions in the U.K. and effectively closed
operating results of the Ballard Motive Solutions business for both 2023 and 2022 have been
removed from continuing operating results and are i
statement of comprehensive income (loss) as loss from discontinued operations.
estructuring of operations at Ballard
the operation. As such, the historic
nstead presented separately in the
5.3 Summary of Key Financial Metrics – Year Ended December 31, 2023
Revenue and Gross Margin
(Expressed in thousands of U.S. dollars)
Year ended December 31,
2023
2022
$ Change
% Change
Heavy-Duty Mobility
$
66,657
$
43,679
$ 22,
978
Bus
Truck
Rail
Marine
Stationary
Emerging and Other
29,265
10,961
19,100
7,331
21,707
14,004
24,917
11,472
5,106
2,184
18,872
19,309
4,348
(511)
13,994
5,147
2,835
(5,305)
Revenues
$
102,368
$
81,860
$
20,508
China
Europe
North America
Rest of World
Revenues
Cost of goods sold
Gross Margin
Gross Margin %
$
11,980
48,958
37,736
3,694
102,368
124,199
$
9,127
38,444
28,572
5,717
81,860
95,168
$
2,853
10,514
9,164
(2,023)
20,508
29,031
$
(2 1,831)
$ (
13,308)
$
(
8,523)
(21%)
(16%)
n/a
53%
17%
(4%)
274%
236%
15%
(27%)
25%
31%
27%
32%
(35%)
25%
31%
(64%)
(5 pts)
Fuel Cell Products and Services Revenues of $102.4 million for 2023 increased 25%, or $20.5
million, compared to 2022. The 25% increase was driven by higher Heavy-Duty Mobility and
Stationary market revenues, partially offset by lower Emerging and Other market revenues.
Revenue increases in Europe, North America and Chin
revenues in Rest of World.
a, were partially offset by lower
Heavy-Duty Mobility revenues of $66.7 million in 2023 increased $23.0 million, or 53%, due
primarily to higher sales of rail , marine, and bus fuel cell products . Heavy -Duty Mobility
revenues on a quarter-to-quarter basis are impacted by product mix due to varying customer
requirements and various fuel cell products, includ
required by our customers (and the resulting impact on selling price) of our fuel cell modules,
fuel cell stacks, MEAs, and related component and parts kits. Heavy -Duty Mobility revenues
of $66.7 million in 2023 includes service revenue of $4.9 million earned on the Weichai Ballard
JV technology transfer program; $3.2 million from Weichai Ballard JV for the supply of a mix
of certain fuel cell products and components that will be used in the assembly of modules to
power zero -emission FCEVs in China ; $1.7 million of product and service revenues from
Europe, North
Synergy Ballard JVCo; and $ 56.9 million from a variety of customers in
ing numerous power configurations
31
America, China, and the rest of the world
, primarily for shipments of FCmove ™-HD,
FCmove™-HD+, FCmove ™-XD, FCwave™, and FCveloCity ®-HD7, and FCmove ™-MD fuel cell
modules and related components for their respective bus, truck, rail and marine programs.
Heavy-Duty Mo bility revenues of $ 43.7 million in 2022 includes service revenues of $ 6.0
million earned on the Weichai Ballard JV technology transfer program; $2.1 million to Weichai
Ballard JV for the supply of a mix of certain fuel cell products and components that will be
used in the assembly of modules to power zero -emission FCEVs in China ; and $35.6 million
to a variety of customers in North America, Europe, and Other areas, primarily for shipments
of FCveloCity®-HD7 and FCveloCity®-HDv8 fuel cell modules and related components for their
respective bus and train programs.
Stationary revenues of $21.7 million increased $2.8 million, or 15%, due to higher sales of
stationary power generation fuel cell modules, stac
Europe and North America. Stationary revenues also
revenues from a variety of customer programs for stationary applications.
ks, products and services primarily in
include technology solu tions program
Emerging and Other market revenues of $ 14.0 million decreased ($ 5.3) million, or ( 27%),
due primarily to lower service revenues and lower fuel cell stack shipments , partially offset
by higher sales of fuel cell modules for mining app
lications. Emerging and Other market
revenues include technology solutions program reven ues on the complete Audi program of
$0.3 million in 2023, compared to $5.6 million earned in 2022.
Fuel Cell Products and Services gross margins were ($21.8) million, or ( 21%) of revenues,
for 2023, compared to ($ 13.3) million, or ( 16%) of revenues, for 2022. The negative gross
margin in 2023 was driven primarily by significantly higher inventory impairment and onerous
contract provisions, and by a shift to lower overal l product margin and service revenue mix
including the impacts of pricing strategy, higher f
ixed overhead costs due primarily to the
expansion of manufacturing capacity, and increases in supply costs.
ventory and related impai
Gross margin in 2023 was negatively impacted by net increases in inventory impairment and
onerous contract provision adjustments of ($15.0) m illion, and negatively impacted by net
rment
warranty adjustments of ($0.3 million). Negative in
adjustments of ($15.0) million in 2023 were primarily due to (i) customer specific heavy-duty
mobility inventory no longer expected to be utilized due to a certain customer’s liquidity issues
and resulting program delays; (ii) excess and slow moving small stationary inventory located
and potential divestiture activities; (iii)
primarily in Europe due to product rationalization
excess stationary and heavy -duty mobility product inventory; and (i v) excess and slow
moving legacy and customer service inventory no longer expected to be utilized. Gross margin
in 2022 was negatively impacted by net inventory and onerous contract provision adjustments
of ($7.5) million due primarily to excess and impaired heavy-duty mobility product and service
inventory; and negatively impacted by net warranty adjustments of ($0.4) million related
primarily to increased service costs.
32
Operating Expenses and Cash Operating Costs
(Expressed in thousands of U.S. dollars)
Year ended December 31,
Research and Product
Development
General and Administrative
Sales and Marketing
Operating Expenses
Research and Product
Development (cash operating cost)
General and Administrative
(cash operating cost)
Sales and Marketing (cash operating
cost)
Cash Operating Costs
2023
2022
$ Change
% Change
$ 98,306
$ 89,715
$
8,591
23,874
26,355
15,110
12,538
(2,481)
2,572
10%
(9%)
21%
$ 137,290
$ 128,608
$
8,682
$ 86,248
$ 79,806
$
6,442
7%
8%
19,513
20,842
(1,329)
(6%)
13,566
11,344
2,222
20%
$ 119,327
$ 111,992
$
7,335
7%
Cash Operating Costs and its components of Research and Product Development (cash operating cost), Gen eral and Administrative (cash operating cost),
and Sales and Marketing (cash operating cost) are non-GAAP measures. We use certain Non-GAAP measures to assist in assessing our financial performance.
Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented
by other companies. See the reconciliation of Cash Operating Costs to GAAP in the Supplemental Non-GAAP Measures and Reconciliations section and the
reconciliation of Research and Product Development (cash operating cost), General and Administrative (cash operating cost), and Sales and Marketing (cash
ction. Cash Operating Costs adjusts operating expen ses for stock -based comp ensation expense,
operating cost) to GAAP in the Operating Expense se
depreciation and amortization, impairment losses on trade receivables, restructuring charges, the impact of unrealized gains or losses on foreign exchange
contracts, acquisition related costs, and financing charges.
Total Operating Expenses (excluding Other operating expenses) for 2023 was $137.3 million,
an increase of $ 8.7 million, or 7%, compared to 2022. The increase was driven by hig her
research and product development expenses of $ 8.6 million and higher sales and marketing
expenses of $ 2.6 million, partially offset by lower general and administrative expenses of
($2.5) million.
Cash Operating Costs (see Supplemental Non -GAAP Measures and Reconciliations) for 2023
were $119.3 million, an increase of $7.3 million, or 7%, compared to 2022. The increase was
driven by higher research and product development cash operating costs of $6.4 million and
by higher sales and marketing cash operating costs of $2.2 million, partially offset by lower
general and administrative cash operating costs of ($1.3) million.
The increase in operating expenses and cash operating costs in 2023 was driven primarily by
increased expenditure on technology and product development activities including the design
and development of next generation fuel cell stacks and engines for bus, truck, rail, marine
and stationary applications, and continuation engineering investment in our existing fuel cell
products, including activities related to product c ost reduction. Program investment includes
expenditures related to our FCmove ™-HD+ and FCmove XD fuel cell modules designed for
buses and medium and heavy -duty trucks, our FCgen® -HPS High -Power Density Fuel Cell
Stack for light -medium-and heavy-duty vehicles, our FCwave ™ Fuel Cell Module for marine
applications, and on the ongoing improvement of all of our fuel cell products including our
high performance fuel cell module, the FCmove™-HD, and our high performance liquid-cooled
fuel cell stack, the FCgen® -LCS. In addition , sales a nd marketing costs increased due to
increased commercial expenditures and staffing primarily in Europe and North America.
Operating expenses also include the impact of infla tionary wage pressures. These operating
expense increases were partially offset by relatively lower labour costs in Canada in 2023 on
our Canadian operating cost base as the Canadian do
approximately (4%) lower in 2023, compared to 2022.
llar, relative to the U.S. dollar, was
33
Adjusted EBITDA
(Expressed in thousands of U.S. dollars)
Year ended December 31,
2023
2022
$ Change
% Change
Adjusted EBITDA
$
(150,088)
$ (1
32,635)
$ (17
,453)
(13
%)
EBITDA and Adjusted EBITDA are non-GAAP measures. We use certain Non-GAAP measures to assist in assessing our financial performance. Non-GAAP
measures do not have any standardized meaning presc ribed by GAAP and are therefore unlikely to be comp arable to similar measu res presented by
other companies. See reconciliation of Adjusted EBITDA to GAAP in the Supplemental Non-GAAP Measures and Reconciliations section. Adjusted EBITDA
adjusts EBITDA for stock-based compensation expense, transactional gains and losses, acquisition related costs, finance and other income, recovery on
settlement of contingent consideration, asset impairment charges, and the impact of unrealized gains and losses on foreign exchange contracts.
Adjusted EBITDA (see Supplemental Non -GAAP Measures and Reconciliations) for 2023 was
($151.1) million, compared to ($132.6) million for 2022. The ($1 7.5) million increase in
Adjusted EBITDA loss was driven primarily by the de crease in gross margin of ($ 8.5), the
increase in Cash Operating Costs of ($
receivables of ($1.4) million, and higher restructu ring expenses of ($1.0) million, partially
offset and lower equity in loss of investment in joint venture and a ssociates of $ 1.5 million
attributed to the operations of Weichai Ballard JV.
7.3) million, higher impairment loss on trade
Net Loss from Continuing Operations
(Expressed in thousands of U.S. dollars)
Year ended December 31,
2023
2022
$ Change
% Change
Net loss from Continuing Operations
$
(144,210)
$ (160, 371)
$ 16,
161
10%
Net loss from continuing operations for 2023 was ( $144.2) million, or ($0. 48) per share,
compared to a net loss from continuing operations of ($160.4) million, or ($0.54) per share,
in 2022. The $16.2 million decrease in net loss in 2023 was driven primarily by higher finance
and other income of $ 33.2 million due to primarily to increased investment in come of $23.7
million, improved mark to market and foreign exchange impacts of $4.0 million on our long-
term investments including Forsee Power , Wisdom, Quantron , and hydrogen infrastructure
and growth equity funds, and by higher foreign exchange gains on net monetary assets of
$5.4 million. These net loss improvements were partially offset b y the increase in Adjusted
EBITDA loss of ($17.5) million.
In addition, operating margins, and costs in 2023 were also impacted by the positive impact
of a weaker Canadian dollar, relative to the U.S. dollar, as compared to 2022. As a significant
amount of our net operating costs (primarily labour ) are denominated in Canadian dollars,
gross margin, operating expenses, Adjusted EBITDA, and net loss are impacted by changes
in the Canadian dollar relative to the U.S. dollar. As the Canadian dollar relative to the U.S.
dollar was approximately ( 4%), or ( 300) basis points, lower in 2023 as compared to 2022 ,
positive foreign exchange impacts on our Canadian o perating margins and cost base were
elative to the U.S.
approximately $ 3.9 million. A $0.01 decrease in the Canadian dollar, r
dollar, positively impacts annual operating margins and costs by approximately $1.3 million.
34
Net Loss from Discontinued Operations
(Expressed in thousands of U.S. dollars)
Year ended December 31,
Revenues
Cost of goods sold
Gross margin
Operating expenses
Finance and other (income) loss
Impairment charges on
intangible assets
Impairment charges on goodwill
Recovery on settlement of
contingent consideration
Income tax recovery (expense)
Net loss from discontinued
operations
$
2023
934
607
327
(7,913)
337
(2,266)
(23,991)
-
-
2022
$ Change
% Change
$
9,
1,926
1,713
213
(13,784)
(4)
(13,017)
-
891
3,578
$
(992)
(1,106)
114
5,871
341
10,751
(52%)
(65%)
54%
43%
8525%
83%
(23,991)
(100%)
(9,891)
(
100%)
(3,578)
(100%)
$
(33,506)
$ (
13,123)
$
(20, 383)
(
155%)
Net loss from discontinued operations for 2023 was
compared to ($13.1) million, or ($0.04) per share, in 2022.
($33.5) million, or ($0.11) per share,
During the fourth quarter of 2023, we completed a r
Motive Solutions in the U.K. and effectively closed
operating results of the Ballard Motive Solutions business for both 2023 and 2022 have been
removed from continuing operating results and are i
statement of comprehensive income (loss) as loss from discontinued operations.
estructuring of operations at Ballard
the operation. As such, the historic
nstead presented separately in the
5.4 Operating Expenses and Other Items
December 31, 2023
Research and product development expenses
– Three Months and Year ended
(Expressed in thousands of U.S. dollars)
Research and product development
Three months ended December 31,
2023
2022
$ Change
% Change
Research and product development expense
$ 24,459
$
21,506
$
2,953
Less: Depreciation and amortization expense
$ (1,832)
$ 18
$ (1,850)
Less: Stock-based compensation expense
Research and Product Development (cash
$
$
(1,290)
21,337
$
$
(938)
$ (352)
20,586
$
751
14%
(1,278%)
(38%)
4%
operating cost)
(Expressed in thousands of U.S. dollars)
Research and product development
Year ended December 31,
2023
2022
$ Change
% Change
Research and product development expense
$ 98,306
$ 89,715
Less: Depreciation and amortization expense
$ (6,538)
$ (4,894)
$ 8,
$
591
1,644
10%
34%
Less: Stock-based compensation expense
$ (5,520)
Research and Product Development (cash
$
86,248
$
$
(5,015)
$ (505)
(10%)
79,806
$
6,442
8%
operating cost)
Research and Product Development (cash operating co st) is a non-GAAP measure. We use certain Non -GAAP measures to assist in assessing our financial
performance. Non -GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be
comparable to similar
measures presented by other companies. Research and Product Development (cash operating cost) adjusts Research and product development expense
for depreciation and amortization expense and stock -based compensation expense. See the reconciliation of the adjustments to Research and product
development expense in the table above.
Research and product development expenses for the three months ended December
31, 202 3, were $ 24.5 million, a n increase of $ 3.0 million, or 14%, compared to
the
corresponding period of 2022. Excluding depreciation a nd amortization expense and stock-
based compensation expense, research, and product development cash operating costs (see
35
Supplemental Non -GAAP Measure s and Reconciliations) were $ 21.3 million in the fourth
quarter of 2023, an increase of $0.8 million, or 4%, compared to the fourth quarter of 2022.
Research and product development expenses for the year ended December 31 ,
2023, were $98.3 million, an increase of $8.6 million, or 10%, compared to the corresponding
stock-based
period of 202 2. Excluding depreciation and amortization expense and
compensation expense, research and product developm
Supplemental Non -GAAP Measures and Reconciliations) were $
increase of $6.4 million, or 8%, compared to 2022.
ent cash operating costs (see
86.2 million in 202 3, an
Non-GAAP Measures and
The respective $ 0.8 million, or 4%, and $ 6.4 million, or 8%, increases in research and
development cash operating costs (see Supplemental
Reconciliations) in the fourth quarter and fiscal year of 202 3, as compared to the
fourth
quarter and fiscal year of 2022, was driven primarily by increased expenditure on technology
and product development activities including the design and development of next generation
fuel cell stacks and engines for bus, truck, rail, marine and stationary applica
tions, and
cell products, including activities
continuation engineering investment in our existing fuel
related to product cost reduction . Program investment includes expenditures related to our
FCmove™-HD+ and FCmove XD fuel cell modules designed for buses and medium and heavy-
duty trucks , our FCgen® -HPS High -Power Density Fuel Cell Stack for light
-medium-and
e
heavy-duty vehicles, our FCwave™ Fuel Cell Module for marine applications, and on th
ongoing improvement of all of our fuel cell product s including our high performance fuel cell
module, the FCmove ™-HD, and our high performance liquid
FCgen®-LCS.
-cooled fuel cell stack, the
Research and product development expenses also include the impact of inflationary wage
pressures. These operating expense increases were partially offset by relatively lower labour
costs in Canada in 2023 on our Canadian operating cost base as the Canadian dollar, relative
to the U.S. dollar, was approximately (4%) lower in 2023, compared to 2022.
Depreciation and amortization expense included in r
expense for the three months and year ended December 31, 2023, was $1.8 million and $6.5
million, respectively, compared to nominal amounts and $ 4.9 million, respectively, for the
corresponding periods of 2022 . Depreciation and amortization expense relate primarily to
amortization expense on our intangible assets and depreciation expense on our research and
product development facilities and equipment.
esearch and product development
Stock-based compensation expense included in research and product development expense
for the three months and year ended December 31, 2023, was $1.3 million and $5.5 million,
respectively, compared to $0.9 million and $5.0 million, respecti vely, for the corresponding
periods of 2022. The increase in 2023 was due primarily to new equit y awards granted to a
wider employee base and to help retain key personnel.
36
General and administrative expenses
(Expressed in thousands of U.S. dollars)
General and administrative
General and administrative expense
2023
$
5,042
Less: Depreciation and amortization expense
$ (556)
Three months ended December 31,
2022
4,982
(449)
$
$
1,057
$ Change
% Change
$
$
$
$
60
(107)
(720)
(361)
1%
(24%)
(314%)
(34%)
Less: Stock-based compensation expense
$ (949)
$ (229)
Add: Impact of unrealized gains (losses) on
$ 696
foreign exchange contracts
General and Administrative (cash operating
$
4,233
$
$
cost)
(Expressed in thousands of U.S. dollars)
General and administrative
General and administrative expense
2023
$
23,874
Less: Depreciation and amortization expense
$ (1,997)
2022
26,355
(1,915)
$
$
Less: Stock-based compensation expense
Add: Impact of unrealized gains (losses) on
$
$
(3,660)
$ (2,736)
1,296
$ (862)
foreign exchange contracts
5,361
$ (
1,128)
(21%)
Year ended December 31,
$ Change
% Change
$ (
2,481)
(9%)
$
$
$
(82)
(924)
2,158
(4%)
(34%)
250%
General and Administrative (cash operating
$ 19,
513
$ 20,
842
$ (
1,329)
(6%)
cost)
General and Administrative (cash operating cost) is
a non -GAAP measure. We use certain Non -GAAP measures to assist in assessing our financial
performance. Non -GAAP measures do not have any standardized meaning prescribed by GAAP an d are therefore unlikely to be comparable to simila
r
measures presented by other companies. General and Administrative (cash operating cost) adjusts Genera l and administrative ex pense for depreciation
and amortization expense, stock -based compensation expense and the impact of unreal
See the
reconciliation of the adjustments to General and administrative expense in the table above.
ized gains or losses on foreign exchange contracts.
General and administrative expenses for the three months ended December 31 ,
2023, were $5.0 million, an increase of $0.1 million, or 1%, compared to the corresponding
period of 2022. Excluding depreciation and amortization expense, stock-based compensation
expense, and the impact of unrealized gains (losses ) on foreign exchange contracts, general
and administrative cash operating costs (see Supple
Reconciliations) were $4.2 million in the fourth quarter of 2023, a decrease of ($1.1) million,
or (21%), compared to the fourth quarter of 2022.
mental Non -GAAP Measures and
General and administrative expenses for the year ended December 31, 2023, were
$23.9 million, a decrease of ($2.5) million, or (9%), compared to the corresponding period of
2022. Excluding depreciation and amortization expense, stock-based compensation expense,
and the impact of unrealized gains (losses) on fore
administrative cash operating costs (see Supplement
Reconciliations) were $19.5 million in 2023, a decrease of ($1.3) million, or (6%), compared
to 2022.
ign exchange contracts, general and
al Non -GAAP Measures and
The respective ($ 1.1) million, or (21%), and ($1.3) million, or (6%), decreases in general
and administrative cash
operating costs (see Supplemental Non
Reconciliations) in the fourth quarter and fiscal year of 202 3, as compared to the
fourth
quarter and fiscal year of 202 2, was due primarily to lower contractor services , recruiting,
and insurance costs. The impact of inflationary wage pressures were offset by relatively lower
labour costs in Canada in 2023 on our Canadian oper ating cost base as the Canadian dollar,
relative to the U.S. dollar, was approximately (4%) lower in 2023, compared to 2022.
-GAAP Measures and
Depreciation and amortization expense included in g eneral and administrative expense for
the three months and year ended December 31 , 202 3, was $0. 6 million and $ 2.0 million,
37
respectively, relatively consistent with the corresponding period s of 2022 . Depreciation and
amortization expense relate primarily to our office
assets including our ongoing investment in our ERP system.
and information technology intangible
Stock-based compensation expense included in general and administrative expe nse for the
three months and year ended December 31 , 202 3, was $ 0.9 million and $ 3.7 million,
respectively, compared to $0.2 million and $2.7 million, respecti vely, for the corresponding
periods of 2022. The increase in 2023 was due primarily to new equity awards granted to a
wider employee base and to help retain key personnel.
The impact of unrealized gains (losses) on foreign exchange contracts included in general and
administrative expense for the three months and yea r ended December 31, 2023, was $0.7
million and $ 1.3 million, respectively, compared to $
1.1 million and ($ 0.9) million,
respectively, for the corresponding periods of 202
contracts to help manage our exposure to currency r
contracts at their fair value as of the balance sheet date as either assets or liabilities with any
fit or loss (general and administrative
changes in fair value in the period recorded in pro
expense) as these contracts are not designated or qualified under hedge accounting criteria.
2. We use forward foreign exchange
ate fluctuations. We record these
Sales and marketing expenses
(Expressed in thousands of U.S. dollars)
Sales and marketing
Sales and marketing expense
Three months ended December 31,
2023
2022
$ Change
% Change
Less: Depreciation and amortization expense
$ -
Less: Stock-based compensation expense
Sales and Marketing (cash operating cost)
$ (
$
336)
3,380
$
$
$
(4)
(200)
3,091
$
3,716
$
3,295
$
$
$ (
$
421
4
136)
289
13%
100%
(68%)
9%
(Expressed in thousands of U.S. dollars)
Sales and marketing
Sales and marketing expense
Year ended December 31,
2023
2022
$ Change
% Change
$ 15,110
$
12,538
$
2,572
21%
Less: Depreciation and amortization expense
$ (4)
Less: Stock-based compensation expense
$ (1,540)
Sales and Marketing (cash operating cost)
$
13,566
$
$
$
(6)
$ 2
33%
(1,188)
11,344
$
$
(352)
2,222
(30%)
20%
Sales and Marketing (cash operating cost) is a non -GAAP measure. We use certain Non -GAAP measures to assist in assessing our financial performance.
Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented
by other companies. Sales and Marketing (cash operating cost) adjusts Sales and marketing expense for depreciation and amortization expense and stock-
based compensation expense. See the reconciliation of the adjustments to Sales and marketing expense in the table above.
Sales and marketing expenses for the three months ended December 31, 2023, were
$3.7 million, an increase of $ 0.4 million, or 13%, compared to the corresponding period of
2022. Excluding stock -based compensation expense, sales and marketing cas h operating
costs (see Supplemental Non -GAAP Measures and Reconciliations) was $ 3.4 million in the
fourth quarter of 2023, an increase of $0.3 million, or 9%, compared to the fourth quarter of
2022.
Sales and marketing expenses for the year ended December 31 , 202 3, were $ 15.1
million, an increase of $ 2.6 million, or 21%, compared to the corresponding period of 2022.
Excluding stock-based compensation expense, sales and marketing cash operating costs (see
Supplemental Non -GAAP Measures and Reconciliations) was $
13.6 million in 202 3, an
increase of $2.2 million, or 20%, compared to 2022.
38
The respective $ 0.3 million, or 9%, and $ 2.2 million, or 20%, increases in general and
administrative cash operating costs (see Supplement
Reconciliations) in the fourth quarter and fiscal year of 202 3, as compared to the
fourth
quarter and fiscal year 2022, was due primarily to increased commercial expenditures and
staffing primarily in Europe and North America.
al Non -GAAP Measures and
Stock-based compensation expense included in sales and ma rketing expense for the three
months and year ended December 31, 2023, was $0.3 million and $1.5 million, respectively,
compared to $0.2 million and $1.2 million, respecti
2022. The increase in 2023 was due primarily to new equit
employee base and to help retain key personnel.
vely, for the corresponding periods of
y awards granted to a wider
Other operating expenses for the three months and year ended December 31, 2023,
was $1.8 million and $3.8 million, respectively, compared to $ 0.3 million and $ 3.4 million,
respectively, for the corresponding periods of 2022. The following table provides a breakdown
of other operating expense for the reported periods:
(Expressed in thousands of U.S. dollars)
Three months ended December 31,
2023
2022
$ Change
% Change
Impairment loss on trade receivables
$
1,436
$
Restructuring and related costs (recovery)
Acquisition related costs
322
(3)
Other expenses (recovery)
$
1,755
$
73
137
106
316
$
1,363
1,867%
185
135%
109)
(
103%)
1,439
455%
(
$
(Expressed in thousands of U.S. dollars)
Year ended December 31,
Impairment loss on trade receivables
$
1,498
$
Restructuring and related costs (recovery)
Acquisition related costs
1,512
773
2023
2022
73
482
2,857
Other expenses (recovery)
$
3,783
$
3,412
$ Change
% Change
$
1,425
1,952%
1,030
214%
2,084)
73%
371
11%
(
$
ended
Impairment loss (recovery) on trade receivables for
December 31 , 2023 were $1.4 million and $1.5 million, respectiv ely, compared to nominal
amounts in 2022. If we recover on an impaired trade receivable through legal or other means,
the recovered amount is recognized in the period of recovery as a reversal of the impairment
loss.
the three months and year
Restructuring and related costs (recovery) for the three months and year ended December
31, 2023 were $0.3 million and $1.5 million, respectively, compared to $0.1 million and $0.5
million for each of the corresponding period s of 2022, and consist of certain cost cutting
measures and related personnel change costs.
Acquisition related costs for the three months and
year ended December 31 , 202 3 were
nominal and $0. 8 million, respectively, compared to $ 0.1 million and $ 2.9 million,
respectively, for the corresponding periods of 2022 , and consist primarily of legal, advisory,
and transaction related costs incurred due to corporate development activities.
Finance income (loss) and other for the three months and year ended December 31,
2023 was $1.9 million and $31.1 million, respectively, compared to $15.7 million and ($2.1)
39
million for the corresponding periods of 202 2. The following table provides a breakdown of
finance and other income (loss) for the reported periods:
(Expressed in thousands of U.S. dollars)
Three months ended December 31,
2023
2022
$ Change
% Change
Employee future benefit plan expense
$ (15)
$
(22)
$ 7
Investment and other income (loss)
10,906
9,791
1,115
32%
11%
Mark to Market gain (loss) on financial assets
(10,329)
2,900
(
13,229)
(
456%)
Foreign exchange gain (loss)
1,309
3,059
(1,750)
(57%)
Government levies
-
-
-
-%
Finance income (loss) and other
$
1,871
$
15,728
$
(13,857)
(88%)
(Expressed in thousands of U.S. dollars)
Year ended December 31,
2023
2022
$ Change
% Change
Employee future benefit plan expense
$ (109)
$
(189)
$
80
42%
Investment and other income (loss)
43,340
19,606
23,
734
Mark to Market gain (loss) on financial assets
(1
2,897)
(16,877)
Foreign exchange gain (loss)
Government levies
821
(100)
(4,552)
(100)
3,980
5,373
-
-%
121%
24%
118%
Finance income (loss) and other
$
31,055
$
(2,112)
$
33,167
1,570%
Employee future benefit plan expense for the three months and year ended December 31 ,
2023 and 2022 were nominal and consist primarily of interest cost on plan obligations over
the expected return on plan assets on a curtailed defined benefit pension plan for certai n
former United States employees.
Investment and other income for the three months and year ended December 31, 2023 was
$10.9 million and $ 43.3 million, respectively, compared to $ 9.8 million and $ 19.6 million,
respectively, for the corresponding periods of 2022. Amounts were earned on our cash, cash
equivalents and short -term investments and have changed proportionately w ith the overall
increase in market interest rates during 2023 and t he relative change in our overall average
monthly cash balances.
Mark to market gain (loss) on financial assets for the three months and year ended December
31, 2023, was ($10.3) million and ($12.9) million, respectively, compared to $2.9 million and
($16.9) million, respectively, for the corresponding period s of 202 2. Mark to market gain
(loss) consist primarily of changes in the fair val ue of our long -term financial investments
including Forsee Power , Wisdom, Quantron, and hydrogen infrastructure and growth equity
funds. Mark to market gains and losses are also imp acted by the conversion of these long -
term financial assets from their respective European Euro or Great British pound denominated
investment to the U.S. dollar.
Foreign exchange gains (losses) for the three month s and year ended December 31 , 2023
were $1.3 million and $0.8 million, respectively, compared to $3.1 million and ($4.6) million,
respectively, for the corresponding periods of 202 2. Foreign exchange gains and losses are
attributable primarily to the effect of changes in the value of the Canadian dollar, relative to
the U.S. dollar, on our Canadian dollar-denominated net monetary position. Foreign exchange
gains and losses are also i mpacted by the conversion of Ballard Power Systems Europe A/S’
40
assets and liabilities from the Danish Kroner to th e U.S. dollar at exchange rates in effect at
each reporting date which are recorded in other comprehensive income (loss).
Government levies for the year ended December 31, 2023 was ($0.1) million, consistent with
the corresponding period of 202 2. Government levies relate primarily to withholding taxes
deducted from proceeds earned on certain commercial contracts.
Finance expense for the three months and year ended December 31, 2023 was ($0.3)
million and ($ 1.1) million, respectively, compared to ($0.3) million a
nd ($ 1.3) million,
respectively, for the corresponding periods of 2022. Finance expense represents the interest
expense incurred on our right -of-use assets with a lease term of greater than 12 -months,
including our head office building, manufacturing f acility, and related storage facilities in
Burnaby, British Columbia, as well as similar right-of-use assets in all of our subsidiaries.
Equity in income (loss) of investment in joint venture and associates for t he three
months and year ended December 31 , 2023, was ($ 4.3) million and ($ 10.1) million,
respectively, compared to ($
corresponding periods of 2022. Equity in loss of investment in joint venture and a ssociates
relates to the pickup of 49% of the net income (loss) of Weichai Ballard JV in China due to
our 49% ownership position which is accounted for using the equity method of accounting.
11.6) million, respectively, for the
6.8) million and ($
The loss of investment in joint venture and associates in the operations of Weichai Ballard JV
includes research and product development expenses in the pe riods consisting primarily of
amounts expended on the ongoing $90 million technology transfer agreement with Ballard as
continues to establish operations. Weichai Ballard JV manufacture s
Weichai Ballard JV
Ballard’s next-generation LCS bi-polar plates, fuel cell stacks and LCS-based power modules
for bus, commercial truck, and forklift applications with certain exclusive rights in China.
Impairment charges on property, plant and equipment for the three months and
year ended December 31 , 2023 was ($ 1.0) million in each of the periods and consists
primarily of a write-down of assets in China as we have decided to suspend investment in our
previously announced MEA localization facility in China while we continue with a comparative
analysis on manufacturing capacity expansion option s and possible sequencing prioritization
in the U.S. and/or European markets.
41
5.5 Summary of Quarterly Results
The following table provides summary financial data for our last eight quarters:
(Expressed in thousands of U.S. dollars, except per share amounts
and weighted average shares outstanding which are expressed in
Quarter ended,
thousands)
Revenues
Net loss from continuing operations
Net loss from continuing operations per share,
basic and diluted
Dec 31,
2023
46,751
(48,889)
(0.16)
$
$
$
Sep 30,
2023
27,060
(34,720)
Jun 30,
2023
15,314
(28,213)
$
$
Mar 31,
2023
13,243
(32,388)
$
$
(0.12)
$
(0.09)
$
(0.11)
$
$
$
Weighted average common shares outstanding
298,826
298,705
298,679
298,429
Revenues
Net loss from continuing operations
Net loss from continuing operations per share,
basic and diluted
Dec 31,
2022
20,183
(27,572)
(0.09)
$
$
$
Sep 30,
2022
21,155
(41,295)
(0.14)
$
$
$
Jun 30,
2022
20,666
(51,795)
Mar 31,
2022
19,856
(39,709)
$
$
(0.17)
$
(0.13)
$
$
$
Weighted average common shares outstanding
298,324
298,181
298,155
297,825
Summary of Quarterly Results : There were no significant seasonal variations in
our
quarterly results. Variations in our net loss for t he above periods were affected primarily by
the following factors:
• Revenues: Variations in fuel cell product and service revenues reflect the demand and
timing of our customers’ fuel cell vehicle, bus, and fuel cell product deployments as well
as the demand and timing of their engineering servi ces projects. Variations in fuel cell
product and service
and the
achievements of milestones under long-term fixed price contracts.
revenues also reflect the timing of work performed
• Operating expenses: Operating expenses include the impact of changes in the value of
the Canadian dollar, versus the U.S. dollar, on our Canadian dollar denominated operating
expenses.
• Net loss from continuing operations: Net loss from continuing operations is impacted
by the above noted impacts on Revenues and Operatin g expenses. Net loss in the fourth
quarter of 2023, third quarter of 2023, second quarter of 2023, first quarter of 2023, the
fourth quarter of 2022, the third quarter of 2022, the second quarter of 2022, and the
first quarter of 2022 , was also impacted by m ark to market gains (losses) on financial
assets of ($10.3) million, ($2.5) million, $0.3 million, ($0.5) million, $2.9 million, $1.7
our
million, ($12.9) million, and ($8.6) million , respectively, related primarily to
investments in Forsee Power, Wisdom, Quantron, and hydrogen infrastructure and growth
equity funds.
6.
CASH FLOWS, LIQUIDITY AND CAPITAL RESOURCES
6.1 Summary of Cash Flows
Cash and cash equivalents were $751.1 million as of December 31, 2023, compared to $913.7
million as of December 31, 2022. The ($162.6) million decrease in cash and cash equivalents
in 202 3 was driven primarily by net cash operating losses (ex cluding no n-cash items) of
($87.5) million, net working capital outflows of ($17.1) million, purchases of property, plant
42
•
•
•
and equipment and intangible assets of ($41.4) million, subsequent milestone cash acquisition
lion, long-term net financial
investment payments for Ballard Motive Solutions of ($2.0) mil
investments of ($ 10.9) million consisting of new investments in Quantron and hydrogen
infrastructure and growth equity funds, and by finance lease repayments of ($4.0) million.
6.2 Cash Provided by (Used by) Operating Activities
(Expressed in thousands of U.S. dollars)
Three months ended December 31,
Cash Operating Loss
$ ( 17,485)
$
(22,956)
$ 5,
472
2023
2022
$ Change
Change in Working Capital:
Trade and other receivables
Inventory
Prepaid expenses and other current assets
Trade and other payables
Deferred revenue
Warranty provision
(
16,271)
14,
986
3,522
(954)
(4,030)
1,893
(854)
654
(744)
(142)
(1
6,925)
15,730
3,664
4,9
82
(5,936)
(2,677)
(300)
(1,353)
2,
193
1,
773
(2,627)
Cash Used by Operating Activities
$ ( 18,339)
$
(21,183)
$ 2,
844
For the three months ended December 31 , 202 3, cash used by operating activities was
($18.3) million, compared to ($21.2) million for the three months ended December 31, 2022.
The $2.8 million decrease in cash used by operating activities in the fourth quarter of 2023,
fourth quarter of 202 2, was driven by the relative decrease in cash
as compared to the
operating losses of $5.5 million, partially offset
working capital
requirements of ($2.6) million.
by the increase in
The relative $5.5 million decrease in cash operating losses in the fourth quarter of 2023 was
driven primarily by the increase in Adjusted EBITDA loss of ($3.9) million and by several items
included in cash operating losses but excluded from Adjusted EBITDA loss or vice -versa
including: lower loss from discontinued operations (excluding
related charges) of $3.5 million, higher impairment loss on trade receivables of $1.4 million,
higher inventory impairment and onerous contracts p rovisions adjustment of $6.6 million,
higher restructuring expenses of $0.2 million, lower finance and other income (excluding mark
to market fair value changes on investments) of ($0.6) million, lower equity investment losses
in joint venture and associates of ($2.4) million.
the impact of impairment
The total change in working capital of ($0.9) million in the fourth quarter of 2023 was driven
by lower inventory of $ 15.0 million due primarily to higher product shipments i n the period,
lower prepaid expenses of $3.5 million primarily du
renewals, and by higher warranty provisions of $1.9 million. These fourth quarter of 2023
inflows were partially offset by higher accounts and contract receivables of ($16.3) millio n
ated customer collections , and lower
primarily due to the timing of revenues and the rel
deferred revenue of ($4.0) million as pre-payments on certain product and service contracts
were recognized.
e to the timing of annual insurance
The total change in working capital of $1.8 million in the fourth quarter of 2022 was driven
by higher accounts payable and accrued liabilities of $5.0 million primarily due to the timing
43
of supplier payments, by lower accounts and contrac t receivables of $0.7 million primarily
due to the timing of revenues and the related custo mer collections. These fourth quarter of
2022 inflows were partially offset by lower deferred revenue of ($2.7) million as pre-payments
on certain product and service contracts were recog nized, and higher inventory of ($0.7)
million.
(Expressed in thousands of U.S. dollars)
Year ended December 31,
Cash Operating Loss
$ ( 87,484)
$
(114,230)
$
26,747
2023
2022
$ Change
Change in Working Capital:
Trade and other receivables
(
12,913)
(2,945)
(9,968)
Inventory
Prepaid expenses and other current assets
(898)
76
Trade and other payables
(
3,580)
Deferred revenue
Warranty provision
(3,442)
3,671
(
11,145)
10,
247
(1,668)
(718)
(4,079)
2,614
1,744
(
2,862)
637
1,057
855
(
17,086)
(17,941)
Cash Used by Operating Activities
$ ( 104,570)
$
(132,171)
$ 27,
602
For the year ended December 31, 2023, cash used by operating activities was ($104.6) million
compared to ($132.2) million for 2022. The $27.6 million decrease in cash used by operating
activities in 2023, as compared to 2022, was driven by the relative decrease in cash operating
losses of $26.7 million, and by the relative decrease in working capital requirements of $ 0.9
million.
The relative $26.7 million decrease in cash operating losses in 202 3 was driven primarily by
the increase in Adjusted EBITDA loss of ($17.5) million which was more than offset by several
items included in cash operating losses but excluded from Adjusted EBITDA loss or vice-versa
including: lower loss from discontinued operations (excluding
related charges) of $3.3 million higher finance and other income (excluding mark to market
fair value changes on investments) of $ 29.1 million, lower equity investment losses in joint
venture and associates of ($1.5) million, higher impairment of trade receivables of $1. 5
million, higher inventory impairment and onerous contracts provisions adjustment of $7.5
million, higher restructuring expenses of $1.0 million, and lower acquisition related costs of
$2.1 million.
the impact of impairment
The total change in working capital of ($17.1) million in 2023 was driven by higher accounts
and contract receivables of ($12.9) million primari ly due to the timing of revenues and the
related customer collections, lower accounts payable and accrued liabilities of ( $3.6) million
primarily as a result of the timing of supplier pay ments and annual compensation awards,
lower deferred revenue of ($3.4) million as pre -payments on certain product and service
contracts were recognized, and higher inventory of ($0.9) million. These 2023 outflows were
partially offset by higher warranty provisions of $3.7 million.
The total change in working capital of ($17.9) million in 2022 was driven by higher inventory
of ($ 11.1) million primarily to support expected
mitigate ongoing supply chain disruptions, by lower deferred revenue of ($4.1) million as pre-
payments on certain product and service contracts were recognized, by higher accounts and
product shipments in 2023 and to help
44
contract receivables of ($2.9) million primarily as a result of the timing of revenues and the
related customer collections, and by higher prepaid expenses of ($1.7) million primarily due
to the timing of annual insurance renewals. These 2
higher warranty provisions of $2.6 million.
022 outflows were partially offset by
6.3 Cash Provided by (Used by) Investing Activities
Investing activities resulted in net cash outflows
of ($1 0.8) million and ($ 54.3) million,
respectively, for the three months and year ended December 31, 2023, compared to net cash
outflows of ($20.1) million and ($75.6) million, respectively, for the corresponding periods of
2022.
capital
Investing activities in the
t equipment and
expenditures of ($ 7.4) million incurred primarily for production and tes
certain intangible assets, and additional long-term investments in the HyCap and Clean H2
hydrogen infrastructure and growth equity funds of ($3.5) million.
fourth quarter of 202 3 of ($ 10.8) million consist of
Investing activities in the fourth quarter of 2022 of ($20.1) million consist of additional long-
term investments in Quantron of ($5.2) million and
in certain hydrogen infrastructure and
growth equity funds of ($0.1) million, and by capital expenditures of ($14.8) million incurred
primarily for production and test equipment and certain intangible assets.
Investing activities in 2023 of ($54.3) million consist of capital expenditures of ($41.4) million
incurred primarily for production and test equipment and certain intangible assets, additional
long-term investments in Quantron of ($3.3) million, additional investment in the HyCap and
Clean H2 hydrogen infrastructure and growth equity funds of ($8.6) million, and subsequent
milestone attainment cash acquisition investment in Ballard Motive Solutions of ($2.0) million.
These 2023 cash outflows were partially offset by a recovery of contributions in our long-term
investment in Wisdom of $1.0 million.
Investing activities in 2022 of ($75.6) million con sist of additional long -term investments in
Quantron, Wisdom, and in certain hydrogen infrastructure and growth equity funds of ($17.9)
million, subsequent Milestone cash acquisition inve
Solutions of ($14.9) million, investments in associ ated companies of ($9.3) million for the
twelfth, thirteenth and fourteenth and final contra
investment in Weichai Ballard JV, and by capital ex
primarily for production and test equipment and cer tain intangible assets, partially offset by
proceeds received on the sale of short-term investments of $1.0 million.
cted equity contributions in our 49%
penditures of ($34.5) million incurred
stment payments for Ballard Motive
6.4 Cash Provided by (Used by) Financing Activities
of ($1.1) million and ($ 3.7) million,
Financing activities resulted in net cash outflows
respectively, for the three months and year ended December 31, 2023, compared to net cash
outflows of ($0. 8) million and ($2.4) million, respectively, for the corresponding period s of
2022.
Financing activities in the fourth quarter of 202 3 of ($1.1) million consist of finance lease
payments of ($1.2) million, partially offset by proceeds from the exercise of share purchase
options of $0.1 million . Financing activities in the fourth quarter of 2022 of ($0.8) million
consist of finance lease payments of ($1.0) million , partially offset by proceeds from the
exercise of share purchase options of $0.1 million.
45
Financing activities in 202 3 of ($ 3.7) million consist of finance lease payments of ($
million, partially offset by proceeds from the exer
million. Financing activities in 2022 of ($2.4) million cons ist of finance lease payments of
($3.3) million, partially offset by proceeds from the exercise of share purchase options of $0.9
million.
4.0)
cise of share purchase options of $0. 3
6.5 Liquidity and Capital Resources
As of December 31, 2023, we had total l iquidity of $753.2 million. We measure liquidity as
our net cash and short -term investment position, consisting of the sum of our cash, cash
equivalents and short-term investments of $753.2 million, as we have no bank debt.
We have a Letter of Guarantee Facility (the “LG Facility”) enabling our bank to issue letters
of guarantees, standby letters of credit, performan ce bonds, counter guarantees, counter
standby letter of credit or similar credits on our behalf to from time to time up to a maximum
of $2.0 million. As of December 31 , 202 3, issued letters of credit of euro 1.0 million were
outstanding under the LG Facility. We also have a $25 million Foreign Exchange Facility (the
“FX Facility”) enabling us to enter into foreign ex change currency contracts (at face value
amounts in excess of the FX Facility)
Canada. As of December 31, 2023, we had outstanding foreign exchange currency contracts
to purchase a total of Canadian $31.5 million under the FX Facility.
secured by a guarantee from Export Development
Our liquidity objective is to maintain cash balances suf ficient to fund at least six quarters of
forecasted cash used by operating activities and contractual commitments. Our strategy to
attain this objective is to continue our drive to attain profitable operations that are sustainable
by executing a business plan that continues to focu
revenue growth, improving overall gross margins, maintaining discipline over Cash Operating
Costs, managing working capital and capital expend
additional financing to fund our operations as needed until we do achieve profitable operations
that are sustainable. We believe that we have adequate liquidity in cash and working capital
to achieve our liquidity objective.
s on Fuel Cell Products and Services
iture requirements, and securing
he market acceptance and rate of
Failure to achieve or maintain this liquidity objective could have a material adverse effect on
our financial condition and results of operations i ncluding our ability to continue as a going
concern. There are also various risks and uncertain ties affecting our ability to achieve this
liquidity objective including, but not limited to, t
commercialization of our products, the ability to s uccessfully execute our business plan, and
general global economic conditions, certain of w
continue to make significant investments in product development and market development
activities necessary to commercialize our products, make increased investments in working
capital and capital expenditures as we grow our business,
and make ongoing capital
contributions in support of our investment in cert ain hydrogen infrastructure and growth
equity funds, our actual liquidity requirements will also vary an d will be impacted by future
acquisitions and strategic partnerships and investm ents, our relationships with our lead
customers and strategic partners including their ability to successfully finance and fund their
operations and programs and agreements with us , our success in developing new channels
to market and relationships with customers, our suc cess in generating revenue growth from
near-term product, service and licensing opportunities, our success in managing our operating
expense and working capital requirements, foreign e xchange fluctuations, and the progress
hich are beyond our control. While we
46
and results of our research, development and demonstration programs.
We may also choose to pursue additional liquidity thro ugh the issuance of debt or equity in
private or public market financings. To enable the timely issuance of equity securities in the
public market, we renewed our Base Shelf Prospectus on file with the securities regulators in
Canada on May 9, 2023. The Base Shelf Prospectus, which is effective for 25-months ending
in June 2025, was filed in each of the provinces and territories of Canada, and a corresponding
shelf registration statement on Form F-10 was also filed with the United States Securities and
Exchange Commission. These filings will enable offerings of securities at any time during the
25-month period that the Base Shelf Prospectus remains effective. No offerings of securities
under this Base Shelf Prospectus have been issued to date.
that any such additional liquidity will be availabl
No assurance can be given
available, it can be obtained on terms favorable to the Company. If any securities are offered
under the Base Shelf Prospectus, the terms of any such securities and the intended use of the
net proceeds resulting from such offering would be established at the time of any offering and
Base Shelf Prospectus filed with applicable
would be described in a supplement to the
Canadian securities regulators and/or the SEC, respectively, at the time of such an offering.
e or that, if
7.
OTHER FINANCIAL MATTERS
7.1 Off-Balance Sheet Arrangements and Contractual Obligations
Periodically, we use forward foreign exchange contracts to manage our exposure to currency
rate fluctuations. We record these contracts at their fair value as either assets or liabilities on
our statement of financial position. Any changes in fair value are either (i) recorded in other
comprehensive income if formally designated and qua lified under hedge accounting criteria;
or (ii) recorded in profit or loss (general and administrative expense) if either not designated,
or not qualified, under hedge accounting
outstanding foreign exchange currency contracts to purchase a total of Canadian $31.5 million
at an average rate of 1. 3457 Canadian per U.S . dollar, resulting in an unrealized gain of
Canadian $0.5 million as of December 31, 2023. The outstanding foreign exchange currency
contracts have not been designated under hedge accounting.
criteria. A s of December 31 , 202 3, we had
As of December 31, 2023, we did not have any other material obligations un der guarantee
contracts, retained or contingent interests in tran
instruments, or non-consolidated variable interests.
sferred assets, outstanding derivative
As of December 31 , 202 3, we had the following contractual obligations and
commitments calculated on a non-discounted basis (with the exception of Finance leases):
commercial
(Expressed in thousands of U.S. dollars)
Contractual Obligations
Total
Payments due by period,
1-3 years
Less than
one year
4-5 years
After 5
years
Finance leases
$ 22,261
$ 5,667
$ 7,551
$ 4,206
$ 4,837
Asset retirement obligations
2,407
-
2,407
-
-
Long-term investment (HyCap)
17,818
17,818
-
-
-
Long-term investment (Clean
H2)
27,955
6,630
21,325
-
-
Total contractual obligations
$ 70,441
$ 30,115
$ 31,283
$ 4,206
$ 4,837
Long-term investments include an investment committing us to be a limited partner in HyCap,
47
a hydrogen infrastructure and growth equity fund. HyCap is to invest in a combination of
hydrogen infrastructure projects and investments in companies along the hydrogen value
chain. We have committed to investing £25.0 million (inclu ding £11.0 million invested as of
December 31, 2023) into HyCap.
Long-term investments also include an investment committ ing us to be a limited partner in
Clean H2, another hydrogen infrastructure and growth equity fund. Clean H2 is to invest in a
combination of hydrogen infrastructure projects and investments in compan ies along the
hydrogen value chain. We have committed to investin g €30.0 million (including € 4.7 million
invested as of December 31, 2023) into Clean H2.
Long-term investments also include an investment committ ing us to be a limited partner in
Templewater, a decarbonization climate technology and growth equ
ity fund . We have
invested as of December 31, 2023) in
committed to investing $1.0 million (including nil
Templewater.
In addition, we have outstanding commitments of $22.0 million as of December 31 , 2023,
related primarily to purchases of property, plant, and equipment. Capital expenditures and
expenditures on other intangible assets pertain to our regular operations and are expected to
be funded through cash on hand.
In connection with the acquisition of intellectual property from UTC in 2014, we have a royalty
obligation in certain circumstances to pay UTC a portion of any future intellectual pro perty
sale and licensing income generated from certain of our intellectual p roperty portfolio for a
period of 15-years expiring in April 2029. No royalties were paid to UTC for the years ended
December 31, 2023 and 2022.
As of December 31, 2023, we retain a previous funding obligation to pay ro yalties of 2% of
revenues (to a maximum of Canadian $5.4 million) on sales of certain fuel cell product s for
commercial distributed utility applications. No royalties have been incurred to date due to this
agreement.
We also retain a previous funding obligation to pay royalties of 2% of revenues (to a maximum
of Canadian $2.2 million) on sales of
applications. No royalties have been incurred to date due to this agreement.
certain fuel cell products for commercial transit
In the ordinary course of business or as required b
agreements, we are periodically required to provide certain indemnities to other parties. A s
of December 31, 2023, we have not accrued any significant amount owing, or receivable, due
to any indemnity agreements undertaken in the ordinary course of business.
y certain acquisition or disposition
7.2 Related Party Transactions
Related parties now only include our 49% owned equity accounted investee, Weichai Ballard
JV, as we disposed of our 10% owned equity accounted investee, Synergy Ballar d JVCo, in
2023. Transactions between us and our subsidiaries are el iminated on consolidation. For the
three months and year ended December 31, 2023, and 2022, related party transactions and
balances with Weichai Ballard JV are as follows:
48
•
•
•
(Expressed in thousands of U.S. dollars)
Transactions with related parties
Revenues
Cost of goods sold and operating expense
(Expressed in thousands of U.S. dollars)
Transactions with related parties
Revenues
Cost of goods sold and operating expense
(Expressed in thousands of U.S. dollars)
Balances with related parties
Accounts receivable
Investments
Deferred revenue
Three Months Ended December 31,
2023
$
$
4,655
583
2022
1,178
1,253
$
$
Year Ended December 31,
2023
$
$
8,099
1,996
2022
8,115
3,225
$
$
As at Dec 31,
As at Dec 31,
2023
2022
$ 13, 697
$ 13 ,901
$ 13,320
$ 24,026
$ ( 1,904)
$
(2,095)
We also provide key management personnel, being boa rd directors and executive officers,
certain benefits, in addition to their salaries. Ke y management personnel also participate in
the Company’s share-based compensation plans. Key management personnel compensation
is summarized in note 29 to our annual consolidated financial statements for the year ended
December 31, 2023.
7.3 Outstanding Share and Equity Information
As of March 8, 2024
Common share outstanding
Options outstanding
DSUs outstanding
RSUs / PSUs outstanding (subject to vesting and performance criteria)
8.
USE OF PROCEEDS
8.1 Reconciliation of Use of Proceeds from Previous Financings
299,036,564
4,263,427
737,369
3,134,099
During 2021 and 2020, we completed the following offerings of
(“Common Shares”):
our common shares
• On February 23, 2021, we closed a bought deal offering of 14.87 million Common Shares
at a price of $37.00 per Common Share for gross pro
proceeds of $527.3 million (the “2021 Offering”).
ceeds of $550.2 million and net
• On November 27, 2020, we closed a bought deal offering of 20.9 million Common Shares
at a price of $19.25 per Common Share for gross pro
proceeds of $385.8 million (the “2020 Offering”).
ceeds of $402.5 million and net
• On September 1, 2020, we announced an at-the-market equity program to issue a total
of 16.45 million Common Shares from treasury (the “ $250 million ATM Program”). The
16.45 million Common Shares issued under the $250 million ATM Program were sold in
the third and fourth quarters of 2020 at prevailing market prices at the time of sale for
total gross proceeds of $250 million and total net proceeds of $244.1 million.
49
• On March 10, 2020, we announced an at-the-market equity program to allow the issuance
of up to $75 million of Common Shares from treasury (the “$75 million ATM Program” and
together with the $250 million ATM Program, the “2020 ATM Programs”). The 8.2 million
Common Shares issued under the $75 million ATM Program were sold in the first half of
2020 at prevailing market prices at the time of sale for
million and total net proceeds of $64.7 million.
total gross proceeds of $66.7
The net proceeds from the 2021 Offering and the 2020 Offering of $527.3 million and $385.8
million, respectively, were intended to be used to further strengthen the Company’s financial
position, thereby providing additional flexibility to fund growth strategies, including through
activities such as product innovation, investments
localization, future acquisitions and strategic partnerships and investments. The net proceeds
from the 2020 ATM Programs of $308.8 million were intended to be used for general corporate
purposes. Pending their use, we disclosed our inten tion to invest the net proceeds from the
2021 Offering and the 2020 Offering in short
instruments or to hold them as cash and cash equivalents.
-term, investment grade, interest bearing
in production capacity expansion and
The following table s sets out a comparison of the Company’s disclosed ex pected use of net
proceeds from the 2020 Offering, the 2021 Offering,and the 2020 ATM Programs to the actual
use of such net proceeds to December 31, 2023. As of December 31, 2023, the residual net
proceeds from the 2021 Offering and the 2020 ATM Pr ograms were held in interest bearing
cash accounts . The net proceeds of $385.8 million from the 2020 Offeri ng have now been
fully expended.
2020 Offering Net Proceeds $385.8M (fully expended)
Intended Use of Net Proceeds: Further strengthen the Company’s balance sheet, thereby
providing additional flexibility to fund growth strategies, including through activities such as product
innovation, investments in production capacity expansion and localization, future acquisitions and
strategic partnerships and investments.
Actual Use of Net Proceeds (expressed in thousands of U.S.
dollars)
Explanation of
Variance
Variance –
(Over)/Under
Expenditures
Research and Product Development (cash
Operating cost) expenditures including product
development of next generation fuel cell stacks and
modules
Investments in property, plant and equipment and
other intangible assets including production
capacity expansion and localization
Ballard Motive Solutions acquisition (initial and
subsequent cash costs) and acquisition related
expenses
Strategic partnerships and investments including
Quantron, Wisdom, Forsee Power, HyCap, Clean
H2, Weichai Ballard JVCo, and acquisition related
expenses
Total expended to December 31, 2023
$182,227
N/A
N/A
N/A
N/A
$83,174
$26,768
$93,631
$385,800
N/A
N/A
N/A
N/A
2021 Offering Net Proceeds $527.3M
Intended Use of Net Proceeds: Further strengthen the Company’s balance sheet, thereby
providing additional flexibility to fund growth strategies, including through activities such as product
innovation, investments in production capacity expansion and localization, future acquisitions and
strategic partnerships and investments.
50
•
Actual Use of Net Proceeds (expressed in thousands of U.S.
dollars)
Variance –
(Over)/Under
Expenditures
Explanation of
Variance
Research and Product Development (cash
Operating cost) expenditures including product
development of next generation fuel cell stacks and
modules
Investments in property, plant and equipment and
other intangible assets including production
capacity expansion and localization
Strategic partnerships and investments including
Quantron, Wisdom, Forsee Power, HyCap, Clean
H2, Weichai Ballard JVCo, and acquisition related
expenses
Total expended to December 31, 2023
$9,477
N/A
N/A
N/A
$7,380
$3,467
$20,324
N/A
N/A
N/A
2020 ATM Programs Net Proceeds $308.8M
Intended Use of Net Proceeds: General Corporate Purposes
Actual Use of Net Proceeds (expressed in thousands of U.S.
dollars)
Variance –
(Over)/Under
Expenditures
Explanation of
Variance
Gross Margin loss expenditures (net of inventory
impairment charges)
General and Administration (cash Operating cost)
expenditures
Sales and Marketing (cash Operating cost)
expenditures
Restructuring related expenditures
Working capital requirements
Lease liability principal repayments
Total expended to December 31, 2023
$19,733
$50,667
$28,370
$8,399
$30,414
$8,068
$145,651
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
9.
ACCOUNTING MATTERS
9.1 Overview
Our consolidated financial statements are prepared in accordance with IFRS, which require us
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
those estimates. Estimates and underlying assumptio ns are reviewed on an ongoing basis .
Revisions to accounting estimates are recognized in the perio d in which the estimates are
revised and in any future periods affected.
9.2 Critical Judgments in Applying Accounting Policies
Critical judgments that we have made in the process of applying our accounting policies and
that have the most significant effect on the amounts recognized in the consolidated financial
statements is limited to our assessment of our ability to continue as a going concern (See
Note 2 (e) to our annual consolidated financial statements).
Our material accounting policies are detailed in note 4 to our a nnual consolidated financial
statements for the year ended December 31, 2023. Effective January 1, 2023, we adopted a
number of new standards and interpretations, but they did not have a material impact on our
financial statements.
9.3 Key Sources of Estimation Uncertainty
The following are key assumptions concerning the future and other key sources of estimation
uncertainty that have a significant risk of resulti ng in a material adjustment to the reported
51
•
•
amount of assets, liabilities, income, and expenses within the next financial year.
REVENUE RECOGNITION
Revenues are generat ed primarily from product sales , the license and sale of intellectual
property and fundamental knowledge , and the provision of engineering services
and
technology transfer services. Product revenues are derived primarily from standard product
sales contrac ts and from long
Intellectual property and
fundamental knowledge license revenues are derived primarily from standard licensing and
technology transfer agreements. Engineering s ervice and technology transfer service
revenues are derived primarily from cost -plus reimbursable con tracts and from long -term
fixed price contracts.
price contracts.
-term fixed
Revenue is recognized when a customer obtains control of the goods or services. Determining
the timing of the transfer of control, at a point in time or over time, requires judgment.
On standard product sales contracts, revenues are recognized when customers obtain control
of the product, which is when transfer of title and risks and rewards of own ership of goods
Invoices are generated and
have passed, and when obligation to pay is considered certain.
revenue is recognized at that point in time. Provisions for warranties are made at the time of
sale. Revenue recognition for standard product sales cont
significant estimates.
racts does not usually involve
On standard licensing and technology transfer agree ments, revenues are recognized on the
transfer of rights to a licensee, when it is determin ed to be distinct from other performance
ubstantially all of the
obligations, and if the customer can direct the use of, and obtain s
remaining benefits from the license as it exists at the time of transfer.
In other cases, the
proceeds are considered to relate to the right to use the asset over the license period and the
revenue is recognized over that period. If it is determined that the license is not distinct from
other performance obligations, revenue is recognize
simultaneously receives and consumes the benefit. Revenue recognition for standard license
and sale agreements does not usually involve significant estimates.
d over time as the customer
On cost -plus reimbursable contracts, revenues are recognize d as costs are incurred, and
include applicable fees earned as services are prov ided. Revenue recognition for cost -plus
reimbursable contracts does not usually involve significant estimates.
On long-term fixed price contracts, the customer controls a ll of the work in progress as the
services are being provided. This is because under these contracts, the deliverables are made
to a customer’s specification , and if a contract is terminated by the customer, th
en the
Company is entitled to reimbursement of the costs incurred to date plus the applicable gross
margin. Therefore, revenue from these contracts and the a ssociated costs are recognized as
the costs are incurred over time. On long-term fixed price contracts, revenues are recognized
over time using cumulative costs incurred to date relative to
erformance obligations. Generally,
completion to measure progress towards satisfying p
revenue is recognized by multiplying the expected c onsideration by the ratio of cumulative
imated costs for completing the
costs incurred to date to the sum of incurred and est
performance obligation. The cumulative effect of changes to
estimated revenues and
estimated costs for completing a contract are recognized in the period in which the revisions
are identified. If the estimated costs for completing the contract exc
total estimated costs at
eed the expected
52
revenues on a contract, such loss is recognized in its entirety in the period it becomes known.
Deferred revenue (i.e., contract liabilities) represents cash received from customers in excess
of revenue recognized on uncompleted contracts.
•
•
The determination of expected costs for completing a contract is based on estimates that
can be affected by a variety of factors such as variances in the timeline to completion, the
cost of materials, the availability and cost of labour, as well as productivity.
The determination of potential revenues includes th e contractually agreed amount and
may be adjusted based on the estimate of our attain ment on achieving certain defined
contractual milestones. Management’s estimation is required in determining the amount
of consideration for which the Company expects to be entitled and in determining when a
performance obligation has been met.
Estimates used to determine revenues and costs of l ong-term fixed price contracts involve
uncertainties that ultimately depend on the outcome of future events and are periodically
revised as projects progress. There is a risk that a customer may ultimately disagree with
management’s assessment of the progress achieved against milestones, or that our estimates
of the work required to complete a contract may change.
During the three months and year ended December 31,
significant adjustments to revenues relating to revenue recognized in a prior period.
202 3, and 202 2, there were no
ASSET IMPAIRMENT
The carrying amounts of our non-financial assets other than inventories are reviewed at each
reporting date to determine whether there is any in
indication exists, then the asset’s recoverable amo
intangible assets that have indefinite useful lives
annually, or whenever events or circumstances indicate that the carrying amount may not be
recoverable.
dication of impairment.
unt is estimated. For goodwill and
, the recoverable amount is estimated
If any such
The recoverable amount of an asset or cash -generating unit is the greater of its value in use
and its fair value less costs to sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risk s specific to the asset. In assessing fair
value less costs to sell, the price that would be received on the sale of an asset in an orderly
he
transaction between market parti cipants at the measurement date is estimated. For t
purposes of impairment testing, assets that cannot
together into the smallest group of assets that gen erates cash inflows from continuing use
that are largely independ ent of the cash inflows of other groups of assets. The allocation of
goodwill to cash-generating units reflects the lowest level at which goodwill is moni tored for
internal reporting purposes. Many of the factors us ed in assessing fair value are outside the
control of management and it is reasonably likely that assumptions and estimates will change
future impairments. For example, our
from period to period. These changes may result in
revenue growth rate could be lower than projected d ue to economic, industry or competitive
factors, or the discount rate used in our value in use model could increase due to a change in
market interest rates. In addition, future goodwill impairment charges may be necessary if
our market capitalization declines due to a decrease in the trading price of our common stock,
which could negatively impact the fair value of our business.
be tested individually are grouped
53
An impairment loss is recognized if the carrying am ount of an asset or its cash -generating
unit exceeds its estimated recoverable amount. Impairment losses are recognized in net loss.
Impairment losses recognized in respect of the cash -generating units are allocated first to
reduce the carrying amount of any goodwill allocate d to the units, and then to reduce the
carrying amounts of the other assets in the unit on a pro-rata basis.
An impairment loss in respect of goodwill is not re
impairment losses recognized in prior periods are a ssessed at each reporting date for any
indications that the cumulative loss has decreased or no longer exists. An impairment loss is
reversed only to the extent that the asset’s carryi ng amount does not exceed the carrying
amount that would have been determined, net of depr
impairment loss had been recognized.
versed. In respect of other assets,
eciation or amortization, if no
As of December 31, 2023, our consolidated goodwill balance of $40.3 million relates solely to
our Fuel Cell Products and Services segment. We perform the annual review of goodwill as at
December 31 of each year, more often if events or c hanges in circumstances indicate that it
might be impaired. Under IFRS, the annual r eview of goodwill requires a comparison of the
carrying value of the asset to the higher of (i) va lue in use; and (ii) fair value less costs to
sell. Value in use is defined as the present value of future cash flows expected to be derived
from the asset in its current state. Our fair value less costs to sell test is in effect a modified
market capitalization assessment, whereby we calculate the fair value of the Fuel Cell Products
and Services segment by first calculating the value of the Company at December 31, 202 3
based on the average closing share price in the mon
th of December, add a reasonable
estimated control premium to determine the Company’ s enterprise value on a controlling
basis after adjusting for excess cash balances, deducting the fair value of long-term financial
investments, and then deducting the estimated costs to sell from this enterprise value to
arrive at the fair value of the Fuel Cell Products and Services segment. As a r esult of this
assessment, we have determined that the fair value of the Fuel Cell Products and Services
segment exceeds its carrying value as of December 3 1, 202 3, indicating that no goodwill
impairment charge is required for 2023.
In addition to the above goodwill impairment test, we perform a quarterly assessment of the
carrying amounts of our non -financial assets (other than inventories) to determ ine whether
there is any indication of impairment. During the three months and year ended December 31,
2023, impairment charges of ($1.0) million were recognized on our non-financial assets (other
than inventories) related to impaired property, plant and equipment in China as we have
decided to suspend our previously announced MEA localization plan in China.
WARRANTY PROVISION
A provision for warranty costs is recorded on produ
establishing the accrued warranty liabilities, we estimate the likelihood that products sold will
experience warranty claims and the cost to resolve claims received.
ct sales at the time of shipment. In
In making such determinations, we use estimates bas ed on the nature of the contract and
past and projected experience with the products. Sh
incorrect, we may incur costs different from those provided for in our warranty prov isions.
During the three months and year ended December 31 , 202 3, we recorded provisions to
accrued warranty liabilities of $2.5 million and $6.0 million, respectively, for new product
ould these estimates prove to be
54
sales, compared to $0.9 million and $4.6 million, respectively, for the three months and year
ended December 31, 2022.
We review our warranty assumptions and make adjustm ents to accrued warranty liabilities
quarterly based on the latest information available and to reflect the expiry of contractual
obligations. Adjustments to accrued warranty liabil ities are recorded in co st of product and
service revenues. As a result of these reviews and the resulting adju stments, our warranty
provision and cost of revenues for the three months and year ended December 31 , 202 3,
were adjusted downwards ( upwards) by $0.3 million and ($0.4) million, respectively,
compared to adjustments of $0.5 million and ($0.4) million, respectively, for the three months
and year ended December 31, 2022.
INVENTORY AND ONEROUS CONTRACT PROVISIONS
e, we estimate the likelihood that
In determining the lower of cost and net realizable value of our inventory and establishing
the appropriate provision for inventory obsolescenc
inventory carrying values will be affected by chang es in market pricing or demand for our
ch could make inventory on hand
products and by changes in technology or design whi
obsolete or recoverable at less than cost. We perform regular reviews to assess the impact of
changes in technology and design, sales trends, and other changes on the carrying value of
inventory. Where we determine that such changes hav e occurred and will have a negative
impact on the value of inventory on hand, appropria
subsequent increase in the value of inventory on ha nd, reversals of previous write-downs to
net realizable value are made. Unforeseen changes in these factors could result in additional
inventory provisions, or reversals of previous provisions, being required.
te provisions are made. If there is a
A provision for onerous contracts is also assessed and measured at the present value of the
lower of the expected cost of terminating the contract and the expected net cost of continuing
incremental costs of fulfilling the
with the contract, which is determined based on the
obligation under the contract and an allocation of other costs directly related to fulfilling the
contract. Before an onerous contract provision is e stablished, we recognize any impairment
loss on the assets (including through an inventory provision) associated with that contract.
During the three months and year ended December 31, 2023, negative inventory impairment
and onerous contract
provision adjustments of ($ 10.7) million and ($ 15.0) million,
respectively, were recorded as a charge to cost of product and se rvice revenues, compared
impairment and onerous contract provision adjustments of ($4.1)
to negative inventory
million and ($7.5) million, respectively, in the three months and year ended December 31,
2022.
FAIR VALUE MEASUREMENT (INCLUDING INVESTMENTS)
Fair value is the price that would be received to s ell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date in the principal
or, in its absence, the most advantageous market to which the Company has access at that
date. The fair value of a liability reflects its non-performance risk. A number of the Company’s
accounting policies and disclosures require the measurement of fair values, for both financial
and non-financial assets and liabilities.
When one is available, the Company measures the fair value of an instrument using the
t. A market is regarded as “active” if
quoted price in an active market for that instrumen
55
•
•
transactions for the asset or liability take place with sufficient frequency and volume to provide
pricing information on an ongoing basis. If there is no quoted price in an active market, then
the Company uses valuation techniques that maximize the use of relevant observable inputs
and minimize the use of unobservable inputs.
assumptions consistent with how market participants
Management bases its assumptions on observable data as far as possible, but this is not
always available. In that case, management uses the best information available. Where they
are available, the fair value of investments is bas
transactions. Estimated fair values may vary from the actual prices that would be achieved in
an arm’s length transaction at the reporting date.
This involves developing estimates and
would price the instrument.
ed on observable market
valuation technique for which any
The best evidence of the fair value of a financial instrument (including investments) on initial
recognition is usually the transaction price – i.e., the fair value of the consideration given or
received. If the Company determines that the fair value on initial recognition differs from the
transaction price and the fair value is evidenced neither by a quoted price in an active market
for an identical asset or liability nor based on a
unobservable inputs are judged to be insignificant in relation to the measurement, then the
financial instrument is initially measured at fair
between the fair value on initial recognition and t he transaction price. Subsequently, that
difference is recognized in profit or loss on an appropriate basis over the life of the instrument
but no later than when the valuation is wholly supp
orted by observable data, or the
transaction is closed out . During the three months and year ended December 31, 2023, we
recognized mark to market gain (loss) on financial
assets of ($10.3) million and ($ 12.9)
million, respectively, compared to $2.9 million and ($16.9) million, respectively, for the three
months and year ended December 31, 2022. Mark to market gain (loss) in 2023 and 2022
consist primarily of changes in the fair value of our long-term financial investments including
Forsee Power, Wisdom, Quantron, and in our HyCap and Clean H2 hydrogen infrastructure
and growth equity funds.
value, adjusted to defer the difference
9.4 Recently Adopted Accounting Policy Changes
Effective January 1, 202 3, we adopted a number of new standards and interpretations, but
they did not have a material impact on our financial statements.
9.5 Future Accounting Policy Changes
The following is an overview of accounting standard changes that we will be required to adopt
in future years. We do not expect to adopt any of these standards before their effective dates
and we continue to evaluate the impact of these sta
statements.
ndards on our consolidated financial
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
On January 23, 2020, the IASB issued amendments to
Statements (the “2020 Amendments”), to clarify the classification of liabilities as cur rent or
non-current. On October 31, 2022, the IASB issued Non-current Liabilities with Covenants
(Amendments to IAS 1) (the “2022 Amendments”), to improve the information a company
provides about long-term debt with covenants.
IAS 1 Presentation of Financial
For the purposes of non
Amendments (collectively “the Amendments”) removed the requirement for a right to defer
2020 Amendments and the 2022
-current classification, the
56
settlement or roll over of a liability for at least twelve months to be unconditional. Instead,
such a right must exist at the end of the reporting period and have substance.
The Amendments reconfirmed that only covenants with which a company must comply on or
before the reporting date affect the classification of a liability as current or non
-current.
Covenants with which a company must comply after th
liability’s classification at that date. The Amendments also clarify how a company classifies a
liability that includes a counterparty conversion option. The Amendments state that:
e reporting date do not affect a
•
settlement of a liability includes transferring a c ompany’s own equity instruments to the
counterparty, and
• when classifying liabilities as current or non -current a company can ignore only those
conversion options that are recognized as equity.
The Amendments are effective for annual periods beginning on or after January 1, 2024. The
adoption of the amendments to IAS 1 are not expected to have a material impact on the
Company’s financial statements.
roduct development (operating cost), g
10. SUPPLEMENTAL NON-GAAP MEASURES AND RECONCILIATIONS
10.1 Overview
In addition to providing measures prepared in accordance with GAAP, we present certain
supplemental non-GAAP measures. These measures are Cash Operating Co sts (including its
components of research and p
eneral and
administrative (operating cost) and s ales and marketing (operating cost)) , EBITDA and
Adjusted EBITDA. These non -GAAP measures do not have any standardized meaning
prescribed by GAAP and therefore are unlikely to be
presented by other companies. We believe these meas
operating performance of the Company’s ongoing busi
considered in addition to, and not as a substitute for, operating expenses, net income, cash
flows and other measures of financial performance a nd liquidity reported in accordance with
GAAP. The calculation of these non-GAAP measures has been made on a consistent basis for
all periods presented.
comparable to similar measures
ures are useful in evaluating t he
ness. These measures should be
10.2 Cash Operating Costs
This supplemental non -GAAP measure is provided to assist readers in deter
operating costs on a n ongoing cash basis. We believe this measure is useful in as
performance and highlighting trends on an overall basis.
mining our
sessing
We also believe Cash Operating Costs is frequently used by securities analysts and investors
when comparing our results with those of other companies. Cash Operating Costs differs from
the most comparable GAAP measure, total operating expenses, primarily because it does not
include stock-based compensation expense, depreciation and amortization, impairment losses
or recoveries on trade receivables, restructuring and related costs, acquisition related costs,
the impact of unrealized gains and losses on forei gn exchange contracts, and financing
charges. The following tables show a reconciliation
Operating Costs for the three months and year ended December 31, 2023, and 2022:
of total operating expenses to Cash
57
(Expressed in thousands of U.S. dollars)
Cash Operating Costs
Total Operating Expenses
Stock-based compensation expense
Impairment recovery (losses) on trade
receivables
Acquisition related costs
Restructuring and related (costs) recovery
Impact of unrealized gains (losses) on foreign
exchange contracts
Depreciation and amortization
$
(
(
2023
34,972
2,575)
1,436)
3
(322)
696
(2,388)
Three months ended December 31,
2022
$ Change
$
30,099
$
4,873
(1,367)
(73)
(106)
(137)
1,057
(435)
(
(
1,208)
1,363)
109
(1
85)
(361)
(
1,953)
Cash Operating Costs
$
28,950
$
29,038
$
(88)
(Expressed in thousands of U.S. dollars)
Cash Operating Costs
Year ended December 31,
2023
2022
Total Operating Expenses
$ 14
1,073
$ 132,022
Stock-based compensation expense
Impairment recovery (losses) on trade
receivables
Acquisition related costs
(
(
1,498)
(773)
10,720)
(
8,939)
Restructuring and related (costs) recovery
Impact of unrealized gains (losses) on foreign
exchange contracts
Depreciation and amortization
Cash Operating Costs
(1,512)
1,296
8,539)
119,327
(
$
(
$
(73)
(2,857)
(482)
(862)
6,815)
$ Change
$ 9,
053
(
(
(
1,781)
1,425)
2,084
1,030)
2,158
(1,724)
111,992
$
7,335
and product development (cash
The components of Cash Operating Costs of research
operating cost), general and administrative (cash o perating cost), and sales and marketing
(cash operating cost) differ from their respective most comparable GAAP measure of research
and product development expense, g eneral and administrative expense, and sales and
clude stock -based compensation
marketing expense, primarily because they do not in
expense, depreciation and amortization expense, and acquisit
. A
reconciliation of these respective operating expenses to the respective components of Cash
Operating Costs for the three months and year ended December 31 , 202 3, and 20 22 is
included in Section 5.4 Operating Expenses and Other Items.
ion related costs
A breakdown of total stock-based compensation expense for the three months and year ended
December 31, 2023, and 2022 are as follows:
(Expressed in thousands of U.S. dollars)
Stock-based compensation expense
Total stock-based compensation expense
recorded as follows:
Cost of goods sold
Research and product development expense
General and administrative expense
Sales and marketing expense (recovery)
Three months ended December 31,
2023
2022
$ Change
$
-
1,290
949
336
$
-
938
229
200
$
-
352
7
20
136
Stock-based compensation expense
$
2,575
$
1,367
$
1,208
58
Year ended December 31,
2023
2022
$ Change
(Expressed in thousands of U.S. dollars)
Stock-based compensation expense
Total stock-based compensation expense
recorded as follows:
Cost of goods sold
Research and product development expense
General and administrative expense
Sales and marketing expense (recovery)
$
-
5,520
3,660
1,540
$
$
-
5,015
2,736
1,188
8,939
$
-
505
924
352
$
1,781
Stock-based compensation expense
$
10,720
A breakdown of total depreciation and amortization expense for the three months and year
ended December 31, 2023, and 2022 are as follows:
(Expressed in thousands of U.S. dollars)
Depreciation and amortization expense
Total depreciation and amortization expense
recorded as follows:
Cost of goods sold
Research and product development expense
General and administrative expense
Sales and marketing expense
Three months ended December 31,
2023
2022
$ Change
$
1,136
1,832
556
-
$
1,966
$
(830)
(18)
449
4
1
,850
107
(4)
Depreciation and amortization expense
$
3,524
$
2,401
$
1,123
(Expressed in thousands of U.S. dollars)
Depreciation and amortization expense
Total depreciation and amortization expense
recorded as follows:
Cost of goods sold
Research and product development expense
General and administrative expense
Sales and marketing expense
Year ended December 31,
2023
2022
$ Change
$
4,211
6,538
1,997
4
$
4,837
4,894
1,915
6
$ (
626)
1,644
82
(2)
Depreciation and amortization expense
$
12,750
$
11,652
$
( 1,098)
10.3 EBITDA and Adjusted EBITDA
seful in assessing performance and
These supplemental non -GAAP measures are provided to assist readers in det ermining our
operating performance. We believe this measure is u
highlighting trends on an overall basis. We also be lieve EBITDA and Adjusted EBITDA are
frequently used by securities analysts and investor s when comparing our results with those
of other companies. EBITDA differs from the most comparable GAAP measur e, net loss from
continuing operations, primarily because it does not include finance expense, income taxes,
depreciation of property, plant and equipment, and amortization of intangible assets. Adjusted
EBITDA adjusts EBITDA for stock -based compensation expense, transactional gains and
losses, acquisition related costs, finance and other income
, recovery on settlement of
contingent consideration, asset impairment charges, and the impact of unrealized gains and
losses on foreign exchange contracts. The following tables show a reconciliation of net loss to
EBITDA and Adjusted EBITDA for the three months and year ended December 31, 2023, and
2022:
59
(Expressed in thousands of U.S. dollars)
EBITDA and Adjusted EBITDA
Three months ended December 31,
2023
2022
$ Change
Net loss from continuing operations
$
(48,889)
$
(27,572)
$
(21,317)
Depreciation and amortization
Finance expense
Income taxes (recovery)
EBITDA
3,524
270
40
2,401
294
34
1,123
(24)
6
$ (
45,055)
$ (
24,843)
$ (
20,212)
Stock-based compensation expense
Acquisition related costs
2,575
(3)
Finance and other (income) loss
Impairment charge on property, plant and
equipment
Impact of unrealized (gains) losses on foreign
exchange contracts
(
1,871)
967
(696)
1,367
106
(15,728)
7
(1,057)
1,208
(
109)
13,857
960
361
Adjusted EBITDA
$ (
44,083)
$ (
40,148)
$
( 3,935)
(Expressed in thousands of U.S. dollars)
EBITDA and Adjusted EBITDA
Year ended December 31,
2023
2022
$ Change
Net loss from continuing operations
$ (
144,210)
$ (
160,371)
$ 16,
161
Depreciation and amortization
Finance expense
Income taxes (recovery)
EBITDA
12,750
1,105
158
11,652
1,265
42
1,098
(160)
116
$ (1
30,197)
$ (
147,412)
$ 1
7,215
Stock-based compensation expense
Acquisition related costs
Finance and other (income) loss
Impairment charge on property, plant and
equipment
Impact of unrealized (gains) losses on foreign
exchange contracts
Adjusted EBITDA
10,720
773
(
31,055)
967
1,296)
(
$
8,939
2,857
2,112
7
862
1,781
(
2,084)
(
33,167)
960
(2,158)
(150,088)
$ (13
2,635)
$
(1 7,453)
60
Consolidated Financial Statements
(Expressed in U.S. dollars)
BALLARD POWER SYSTEMS INC.
Years ended December 31, 2023 and 2022
61
MANAGEMENT’S REPORT
Management’s Responsibility for the Financial Statements and Report on Internal Control over Financial
Reporting
The consolidated financial statements contained in this Annual Report have been prepared by management in
accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board. The integrity and objectivity of the data in these consolidated financial statements are
management’s responsibility. Management is also responsible for all other information in the Annual Report and for
ensuring that this information is consistent, where appropriate, with the information and data contained in the
consolidated financial statements.
Management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of consolidated financial statements for external reporting
purposes in accordance with IFRS. Internal control over financial reporting may not prevent or detect fraud or
misstatements because of limitations inherent in any system of internal control. Management has assessed the
effectiveness of the Corporation’s internal control over financial reporting based on the framework in Internal Control
– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and concluded that the Corporation’s internal control over financial reporting was effective as of
December 31, 2023. Some of the assets and liabilities include amounts, which are based on estimates and
judgments, as their final determination is dependent on future events.
The Board of Directors oversees management’s responsibilities for financial reporting through the Audit Committee,
which consists of eight directors who are independent and not involved in the daily operations of the Corporation.
The Audit Committee meets on a regular basis with management and the external and internal auditors to discuss
internal controls over the financial reporting process, auditing matters and financial reporting issues. The Audit
Committee is responsible for appointing the external auditors (subject to shareholder approval), and reviewing and
approving all financial disclosure contained in our public documents and related party transactions.
The external auditors, KPMG LLP, have audited the financial statements and expressed an unqualified opinion
thereon. KPMG has also expressed an unqualified opinion on the effective operation of the internal controls over
financial reporting as of December 31, 2023. The external auditors have full access to management and the Audit
Committee with respect to their findings concerning the fairness of financial reporting and the adequacy of internal
controls.
“RANDALL MACEWEN”
“PAUL DOBSON”
RANDALL MACEWEN
President and
Chief Executive Officer
March 8, 2024
PAUL DOBSON
Vice President and
Chief Financial Officer
March 8, 2024
62
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Ballard Power Systems Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Ballard Power Systems Inc. and
subsidiaries (the Corporation) as of December 31, 2023 and 2022, the related consolidated statements of loss and
comprehensive income (loss), changes in equity, and cash flows for each of the years then ended, and the related
notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Corporation as of December 31, 2023 and 2022,
and the results of its operations and its cash flows for each of the years then ended, in conformity with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2023, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated March 8, 2024 expressed an unqualified opinion
on the effectiveness of the Corporation’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility
is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the
risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our
opinion.
MANAGEMENT’S REPORT
Reporting
Management’s Responsibility for the Financial Statements and Report on Internal Control over Financial
The consolidated financial statements contained in this Annual Report have been prepared by management in
accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board. The integrity and objectivity of the data in these consolidated financial statements are
management’s responsibility. Management is also responsible for all other information in the Annual Report and for
ensuring that this information is consistent, where appropriate, with the information and data contained in the
consolidated financial statements.
Management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of consolidated financial statements for external reporting
purposes in accordance with IFRS. Internal control over financial reporting may not prevent or detect fraud or
misstatements because of limitations inherent in any system of internal control. Management has assessed the
effectiveness of the Corporation’s internal control over financial reporting based on the framework in Internal Control
– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and concluded that the Corporation’s internal control over financial reporting was effective as of
December 31, 2023. Some of the assets and liabilities include amounts, which are based on estimates and
judgments, as their final determination is dependent on future events.
The Board of Directors oversees management’s responsibilities for financial reporting through the Audit Committee,
which consists of eight directors who are independent and not involved in the daily operations of the Corporation.
The Audit Committee meets on a regular basis with management and the external and internal auditors to discuss
internal controls over the financial reporting process, auditing matters and financial reporting issues. The Audit
Committee is responsible for appointing the external auditors (subject to shareholder approval), and reviewing and
approving all financial disclosure contained in our public documents and related party transactions.
The external auditors, KPMG LLP, have audited the financial statements and expressed an unqualified opinion
thereon. KPMG has also expressed an unqualified opinion on the effective operation of the internal controls over
financial reporting as of December 31, 2023. The external auditors have full access to management and the Audit
Committee with respect to their findings concerning the fairness of financial reporting and the adequacy of internal
controls.
“RANDALL MACEWEN”
“PAUL DOBSON”
RANDALL MACEWEN
President and
Chief Executive Officer
March 8, 2024
PAUL DOBSON
Vice President and
Chief Financial Officer
March 8, 2024
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Ballard Power Systems Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Ballard Power Systems Inc. and
subsidiaries (the Corporation) as of December 31, 2023 and 2022, the related consolidated statements of loss and
comprehensive income (loss), changes in equity, and cash flows for each of the years then ended, and the related
notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Corporation as of December 31, 2023 and 2022,
and the results of its operations and its cash flows for each of the years then ended, in conformity with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2023, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated March 8, 2024 expressed an unqualified opinion
on the effectiveness of the Corporation’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility
is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the
risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our
opinion.
63
Critical Audit Matter
The critical audit matter communicated below is the matter arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the
accounts or disclosures to which they relate.
Estimated costs to complete engineering and technology transfer services for long-term fixed-price contracts
As discussed in Notes 4(j) and 5(a) to the consolidated financial statements, the Corporation recognizes
engineering and technology transfer service revenues from long-term fixed-price contracts over time by multiplying
the expected consideration from the contract by the ratio of the cost incurred to date to estimated costs to complete
the contract. Engineering and technology transfer service revenues from long-term fixed-price contracts are
inherently uncertain in that total revenue from these contracts is fixed while the amount recognized to a period end
requires estimates of costs to complete these contracts which estimates are subject to significant variability. As
discussed in Note 23 to the consolidated financial statements, engineering and technology transfer service
revenues from long-term fixed-price contracts totaled $23,599 thousand for the year ended December 31, 2023.
We identified the evaluation of the estimate of costs to complete engineering and technology transfer services for
long-term fixed-price contracts as a critical audit matter. A higher degree of auditor judgment was required to
evaluate the significant assumptions used to estimate costs to complete the contracts, including the estimated
labour hours and cost of materials to complete the contracts.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of internal controls related to the Corporation’s determination of
estimated costs to complete long-term fixed-price contracts, including the determination of significant assumptions.
For a selection of long-term fixed-price contracts we compared the Corporation’s historical estimated costs to
complete contracts to actual labour hours and cost of materials incurred to assess the Corporation’s ability to
accurately forecast. We evaluated the estimated costs to completion for a selection of customer contracts, by (1)
inspecting contractual documents with customers to understand the timing of services; (2) interviewing operational
personnel of the Corporation to evaluate progress to date, the estimate of costs to complete contracts, and factors
impacting the estimated labour hours and cost of material to complete the contracts; (3) evaluating contract
progress by inspecting correspondence between the Corporation and the customer; (4) evaluating the cost to
complete the contracts for consistency with the status of delivery and the underlying contractual terms; (5)
comparing the Corporation’s current estimate of costs to complete the contracts to those estimated in prior periods
and investigating changes during the period; and (6) comparing labour hours and cost of materials incurred
subsequent to the Corporation’s year-end date to assess the consistency with the estimated costs for the period.
/s/ KPMG LLP
Chartered Professional Accountants
We have served as the Corporation’s auditor since 1999.
Vancouver, Canada
March 8, 2024
64
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Ballard Power Systems Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Ballard Power Systems Inc.’s and subsidiaries’ (the Corporation) internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Corporation
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated statements of financial position of the Corporation as of December 31, 2023 and
2022, the related consolidated statements of loss and comprehensive income (loss), changes in equity, and cash
flows for each of the years then ended, and the related notes (collectively, the consolidated financial statements),
and our report dated March 8, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Corporation’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Responsibility for the Financial Statements and Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our
audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect
to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is the matter arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the
accounts or disclosures to which they relate.
Estimated costs to complete engineering and technology transfer services for long-term fixed-price contracts
As discussed in Notes 4(j) and 5(a) to the consolidated financial statements, the Corporation recognizes
engineering and technology transfer service revenues from long-term fixed-price contracts over time by multiplying
the expected consideration from the contract by the ratio of the cost incurred to date to estimated costs to complete
the contract. Engineering and technology transfer service revenues from long-term fixed-price contracts are
inherently uncertain in that total revenue from these contracts is fixed while the amount recognized to a period end
requires estimates of costs to complete these contracts which estimates are subject to significant variability. As
discussed in Note 23 to the consolidated financial statements, engineering and technology transfer service
revenues from long-term fixed-price contracts totaled $23,599 thousand for the year ended December 31, 2023.
We identified the evaluation of the estimate of costs to complete engineering and technology transfer services for
long-term fixed-price contracts as a critical audit matter. A higher degree of auditor judgment was required to
evaluate the significant assumptions used to estimate costs to complete the contracts, including the estimated
labour hours and cost of materials to complete the contracts.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of internal controls related to the Corporation’s determination of
estimated costs to complete long-term fixed-price contracts, including the determination of significant assumptions.
For a selection of long-term fixed-price contracts we compared the Corporation’s historical estimated costs to
complete contracts to actual labour hours and cost of materials incurred to assess the Corporation’s ability to
accurately forecast. We evaluated the estimated costs to completion for a selection of customer contracts, by (1)
inspecting contractual documents with customers to understand the timing of services; (2) interviewing operational
personnel of the Corporation to evaluate progress to date, the estimate of costs to complete contracts, and factors
impacting the estimated labour hours and cost of material to complete the contracts; (3) evaluating contract
progress by inspecting correspondence between the Corporation and the customer; (4) evaluating the cost to
complete the contracts for consistency with the status of delivery and the underlying contractual terms; (5)
comparing the Corporation’s current estimate of costs to complete the contracts to those estimated in prior periods
and investigating changes during the period; and (6) comparing labour hours and cost of materials incurred
subsequent to the Corporation’s year-end date to assess the consistency with the estimated costs for the period.
Chartered Professional Accountants
We have served as the Corporation’s auditor since 1999.
/s/ KPMG LLP
Vancouver, Canada
March 8, 2024
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Ballard Power Systems Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Ballard Power Systems Inc.’s and subsidiaries’ (the Corporation) internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Corporation
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated statements of financial position of the Corporation as of December 31, 2023 and
2022, the related consolidated statements of loss and comprehensive income (loss), changes in equity, and cash
flows for each of the years then ended, and the related notes (collectively, the consolidated financial statements),
and our report dated March 8, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Corporation’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Responsibility for the Financial Statements and Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our
audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect
to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
65
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
/s/ KPMG LLP
Chartered Professional Accountants
Vancouver, Canada
March 8, 2024
66
BALLARD POWER SYSTEMS INC.
Consolidated Statements of Financial Position
(Expressed in thousands of U.S. dollars)
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Trade and other receivables
Inventories
Prepaid expenses and other current assets
Total current assets
Non-current assets:
Property, plant and equipment
Intangible assets
Goodwill
Equity-accounted investments
Long-term financial investments
Other long-term assets
Total assets
Liabilities and Equity
Current liabilities:
Trade and other payables
Deferred revenue
Provisions and other current liabilities
Current lease liabilities
Total current liabilities
Non-current liabilities:
Non-current lease liabilities
Deferred gain on finance lease liability
Other non-current liabilities and employee future benefits
Total liabilities
Equity:
Share capital
Contributed surplus
Accumulated deficit
Foreign currency reserve
Total equity
Total liabilities and equity
Approved on behalf of the Board:
“Doug Hayhurst”
Director
See accompanying notes to consolidated financial statements.
“Jim Roche”
Director
December 31,
December 31,
Note
2023
2022
$
751,130 $
913,730
864,741
1,028,507
2,113
58,565
45,870
7,063
116,325
1,406
40,277
13,901
40,345
547
4,588
21,797
4,505
70,586
13,393
485
1,862
86,326
2,011
48,696
58,050
6,020
82,361
5,214
64,268
24,026
42,331
370
40,333
8,030
20,910
3,895
73,168
11,836
902
2,260
88,166
$
1,077,542 $
1,247,077
$
39,696 $
8
9
10
11
12
13
14
16
17
18
19
19
19
20
21
21
2,425,641
306,042
2,420,396
300,764
(1,737,505)
(1,560,759)
(2,962)
991,216
(1,490)
1,158,911
$
1,077,542 $
1,247,077
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
BALLARD POWER SYSTEMS INC.
Consolidated Statements of Financial Position
(Expressed in thousands of U.S. dollars)
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Trade and other receivables
Inventories
Prepaid expenses and other current assets
Total current assets
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
Non-current assets:
procedures may deteriorate.
/s/ KPMG LLP
Chartered Professional Accountants
Vancouver, Canada
March 8, 2024
Property, plant and equipment
Intangible assets
Goodwill
Equity-accounted investments
Long-term financial investments
Other long-term assets
Total assets
Liabilities and Equity
Current liabilities:
Trade and other payables
Deferred revenue
Provisions and other current liabilities
Current lease liabilities
Total current liabilities
Non-current liabilities:
Non-current lease liabilities
Deferred gain on finance lease liability
Other non-current liabilities and employee future benefits
Total liabilities
Equity:
Share capital
Contributed surplus
Accumulated deficit
Foreign currency reserve
Total equity
Total liabilities and equity
See accompanying notes to consolidated financial statements.
Approved on behalf of the Board:
“Doug Hayhurst”
Director
“Jim Roche”
Director
67
Note
December 31,
2023
December 31,
2022
8
9
10
11
12
13
14
16
17
18
19
19
19
20
21
21
$
751,130 $
913,730
2,113
58,565
45,870
7,063
2,011
48,696
58,050
6,020
864,741
1,028,507
116,325
1,406
40,277
13,901
40,345
547
82,361
5,214
64,268
24,026
42,331
370
$
1,077,542 $
1,247,077
$
39,696 $
4,588
21,797
4,505
70,586
13,393
485
1,862
86,326
40,333
8,030
20,910
3,895
73,168
11,836
902
2,260
88,166
2,425,641
306,042
2,420,396
300,764
(1,737,505)
(1,560,759)
(2,962)
991,216
(1,490)
1,158,911
$
1,077,542 $
1,247,077
BALLARD POWER SYSTEMS INC.
Consolidated Statements of Loss and Comprehensive Income (Loss)
For the years ended December 31
(Expressed in thousands of U.S. dollars, except per share amounts and number of shares)
Revenues:
Product and service revenues
Cost of product and service revenues
Gross margin
Operating expenses:
Research and product development
General and administrative
Sales and marketing
Other expense
Total operating expenses
Results from operating activities
Finance income (loss) and other
Finance expense
Net finance income (loss)
Equity in loss of investment in joint venture and associates
Impairment charges on property, plant and equipment
Loss before income taxes
Income tax expense
Net loss from continued operations
Net loss from discontinued operations
Net loss
Other comprehensive income (loss):
Items that will not be reclassified to profit or loss:
Actuarial gain on defined benefit plans
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences
Other comprehensive loss, net of tax
Total comprehensive loss
Basic and diluted loss per share
Continued operations
Discontinued operations
Loss per share
Note
2023
23 & 31
$
102,368 $
124,199
(21,831)
98,306
23,874
15,110
3,783
2022
Restated *
81,860
95,168
(13,308)
89,715
26,355
12,538
3,412
BALLARD POWER SYSTEMS INC.
Consolidated Statements of Changes in Equity
(Expressed in thousands of U.S. dollars except number of shares)
Balance, December 31, 2021
297,700,295 $ 2,416,256 $ 297,819 $ (1,388,779) $ 1,721 $ 1,327,017
—
—
—
(173,494)
(173,494)
Number of
shares
Share
capital
Contributed
Accumulated
surplus
deficit
Foreign
currency
reserve
Total
equity
Defined benefit plan actuarial gain (note 20)
Foreign currency translation for foreign operations
—
—
1,514
—
(3,211)
Balance, December 31, 2022
298,394,203 $ 2,420,396 $ 300,764 $ (1,560,759) $ (1,490) $ 1,158,911
—
—
—
(177,716)
(177,716)
Net loss
(notes 7 & 21)
Deferred share consideration related to acquisition
DSUs redeemed (note 21)
RSUs redeemed (note 21)
Options exercised (note 21)
Share-based compensation (note 21)
Other comprehensive income (loss):
Deferred share consideration related to acquisition
Net loss
(notes 7 & 21)
DSUs redeemed (note 21)
RSUs redeemed (note 21)
Options exercised (note 21)
Share-based compensation (note 21)
Other comprehensive income (loss):
Defined benefit plan actuarial gain (note 20)
Foreign currency translation for foreign
operations
See accompanying notes to consolidated financial statements.
112,451
58,990
217,832
304,635
—
—
—
—
—
—
224,902
31,736
132,745
152,120
1,762
244
785
1,349
—
—
—
3,053
194
1,494
504
—
—
—
(1,782)
(997)
(3,251)
(433)
9,408
(3,068)
(365)
(2,079)
(169)
10,959
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(20)
(753)
(2,466)
916
9,408
1,514
(3,211)
(15)
(171)
(585)
335
10,959
970
—
—
—
—
—
—
—
—
—
—
970
—
(1,472)
(1,472)
141,073
132,020
(162,904)
(145,328)
31,055
(1,105)
29,950
(10,131)
(967)
(144,052)
(158)
(144,210)
(2,112)
(1,265)
(3,377)
(11,617)
(7)
(160,329)
(42)
(160,371)
(33,506)
(13,123)
Balance, December 31, 2023
298,935,706 $ 2,425,641 $ 306,042 $ (1,737,505) $ (2,962) $
991,216
$
(177,716) $
(173,494)
970
970
(1,472)
(1,472)
(502)
1,514
1,514
(3,211)
(3,211)
(1,697)
$
$
$
$
(178,218) $
(175,191)
(0.48) $
(0.11) $
(0.59) $
(0.54)
(0.04)
(0.58)
25
26
26
13 & 29
10 & 27
28
7
20
Weighted average number of common shares outstanding
298,661,041
298,093,270
* Comparative information has been restated due to a discontinued operation (note 7).
See accompanying notes to consolidated financial statements.
68
Revenues:
Product and service revenues
Cost of product and service revenues
Gross margin
Operating expenses:
Research and product development
General and administrative
Sales and marketing
Other expense
Total operating expenses
Results from operating activities
Finance income (loss) and other
Finance expense
Net finance income (loss)
Equity in loss of investment in joint venture and associates
Impairment charges on property, plant and equipment
Loss before income taxes
Income tax expense
Net loss from continued operations
Net loss from discontinued operations
Net loss
Other comprehensive income (loss):
Items that will not be reclassified to profit or loss:
Actuarial gain on defined benefit plans
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences
Other comprehensive loss, net of tax
Total comprehensive loss
Basic and diluted loss per share
Continued operations
Discontinued operations
Loss per share
13 & 29
10 & 27
25
26
26
28
7
20
2022
Restated *
81,860
95,168
(13,308)
89,715
26,355
12,538
3,412
(2,112)
(1,265)
(3,377)
(11,617)
(7)
(160,329)
(42)
(160,371)
124,199
(21,831)
98,306
23,874
15,110
3,783
31,055
(1,105)
29,950
(10,131)
(967)
(144,052)
(158)
(144,210)
141,073
132,020
(162,904)
(145,328)
$
(177,716) $
(173,494)
970
970
(1,472)
(1,472)
(502)
1,514
1,514
(3,211)
(3,211)
(1,697)
$
$
$
$
(178,218) $
(175,191)
(0.48) $
(0.11) $
(0.59) $
(0.54)
(0.04)
(0.58)
BALLARD POWER SYSTEMS INC.
Consolidated Statements of Loss and Comprehensive Income (Loss)
For the years ended December 31
(Expressed in thousands of U.S. dollars, except per share amounts and number of shares)
BALLARD POWER SYSTEMS INC.
Consolidated Statements of Changes in Equity
(Expressed in thousands of U.S. dollars except number of shares)
Note
2023
Number of
shares
Share
capital
Contributed
surplus
Accumulated
deficit
Foreign
currency
reserve
Total
equity
Balance, December 31, 2021
297,700,295 $ 2,416,256 $ 297,819 $ (1,388,779) $ 1,721 $ 1,327,017
23 & 31
$
102,368 $
Net loss
—
—
—
(173,494)
Deferred share consideration related to acquisition
(notes 7 & 21)
DSUs redeemed (note 21)
RSUs redeemed (note 21)
Options exercised (note 21)
Share-based compensation (note 21)
Other comprehensive income (loss):
Defined benefit plan actuarial gain (note 20)
Foreign currency translation for foreign operations
112,451
58,990
217,832
304,635
—
—
—
1,762
244
785
1,349
—
—
—
(1,782)
(997)
(3,251)
(433)
9,408
—
—
Balance, December 31, 2022
298,394,203 $ 2,420,396 $ 300,764 $ (1,560,759) $ (1,490) $ 1,158,911
Net loss
—
—
—
(177,716)
Deferred share consideration related to acquisition
(notes 7 & 21)
DSUs redeemed (note 21)
RSUs redeemed (note 21)
Options exercised (note 21)
Share-based compensation (note 21)
Other comprehensive income (loss):
Defined benefit plan actuarial gain (note 20)
Foreign currency translation for foreign
operations
224,902
31,736
132,745
152,120
—
—
—
3,053
194
1,494
504
—
—
—
(3,068)
(365)
(2,079)
(169)
10,959
—
—
—
(3,211)
—
—
—
—
—
—
—
(173,494)
(20)
(753)
(2,466)
916
9,408
1,514
(3,211)
—
—
—
—
—
—
—
(177,716)
(15)
(171)
(585)
335
10,959
970
—
—
—
—
—
1,514
—
—
—
—
—
970
—
(1,472)
(1,472)
(33,506)
(13,123)
Balance, December 31, 2023
298,935,706 $ 2,425,641 $ 306,042 $ (1,737,505) $ (2,962) $
991,216
See accompanying notes to consolidated financial statements.
Weighted average number of common shares outstanding
298,661,041
298,093,270
* Comparative information has been restated due to a discontinued operation (note 7).
See accompanying notes to consolidated financial statements.
69
BALLARD POWER SYSTEMS INC.
Consolidated Statements of Cash Flows
For the years ended December 31
(Expressed in thousands of U.S. dollars)
Cash provided by (used in):
Operating activities:
Net loss for the year
Adjustments for:
Depreciation and amortization
Deferred gain amortization
Impairment loss on trade receivables
Inventory impairment and onerous contracts provision adjustments
Unrealized (gain) loss on forward contracts
Equity in loss of investment in joint venture and associates
Net decrease in fair value of investments
De-recognition of lease
Impairment charges on property, plant and equipment
Impairment charges on intangible assets
Impairment charges on Goodwill
Recovery on settlement of contingent consideration
Accretion (dilution) on decommissioning liabilities
Employee future benefits
Employee future benefits plan contributions
Share-based compensation
Deferred income tax recovery
Changes in non-cash working capital:
Trade and other receivables
Inventories
Prepaid expenses and other current assets
Trade and other payables
Deferred revenue
Warranty provision
Cash used in operating activities
Investing activities:
Net decrease in short-term investments
Contributions to long-term investments
Recovery of contributions to long-term investments
Additions to property, plant and equipment
Investment in intangible assets
Investment in joint venture and associates
Consideration paid related to acquisition
Cash used in investing activities
Financing activities:
Principal payments of lease liabilities
Net proceeds on issuance of share capital from share option exercises
Cash used in financing activities
Effect of exchange rate fluctuations on cash and cash equivalents held
Decrease in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
Note
2023
2022
1. Reporting entity:
The principal business of Ballard Power Systems Inc. (the “Corporation”) is the design, development,
manufacture, sale and service of proton exchange membrane ("PEM") fuel cell products for a variety of
applications, focusing on power products for bus, truck, rail, marine, stationary and emerging market (material
handling, off-road and other) applications, as well as the delivery of services, including technology solutions,
$
(177,716) $
(173,494)
after sales services and training. A fuel cell is an environmentally clean electrochemical device that combines
hydrogen fuel with oxygen (from the air) to produce electricity.
25
9 & 18
13 & 29
14 & 32
10
10 & 27
7 & 11
7 & 12
7 & 18
20
20
20
21
7
32
14
14
10
11
13
7 & 18
19
21
13,527
(417)
1,537
14,978
(1,296)
10,131
12,897
120
967
2,266
23,991
—
532
48
(8)
10,959
—
13,773
(416)
73
7,513
862
11,617
16,877
—
7
13,017
—
(9,891)
(73)
82
(7)
9,408
(3,578)
(87,484)
(114,230)
(b) Basis of measurement:
(12,913)
(898)
76
(3,580)
(3,442)
3,671
(17,086)
(104,570)
—
(11,911)
1,000
(41,214)
(154)
—
(2,000)
(54,279)
(4,013)
335
(3,678)
(73)
(2,945)
(11,145)
(1,668)
(718)
(4,079)
2,614
(17,941)
(132,171)
1,010
(17,913)
—
(33,932)
(550)
(9,272)
(14,900)
(75,557)
(3,322)
916
(2,406)
(31)
(162,600)
(210,165)
913,730
1,123,895
$
751,130 $
913,730
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 consolidated financial statements of the
Corporation as at and for the years ended December 31, 2023 and 2022 comprise the Corporation and its
subsidiaries (note 4(a)).
2. Basis of preparation:
(a) Statement of compliance:
These consolidated financial statements of the Corporation have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) accounting standards as issued by the International
Accounting Standards Board (“IASB”).
The consolidated financial statements were authorized for issue by the Board of Directors on March 8, 2024.
Details of the Corporation's material accounting policies are included in note 4.
The consolidated 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 consolidated financial statements are presented in U.S. dollars, which is the Corporation’s functional
currency.
(d) Use of estimates:
these estimates.
The preparation of the consolidated financial statements in conformity with IFRS accounting standards 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
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 and onerous contract provision, and fair value measurement (including investments).
These estimates and judgments are discussed further in note 5.
Supplemental disclosure of cash flow information (note 30). See accompanying notes to consolidated financial statements.
70
BALLARD POWER SYSTEMS INC.
Consolidated Statements of Cash Flows
For the years ended December 31
(Expressed in thousands of U.S. dollars)
Cash provided by (used in):
Operating activities:
Net loss for the year
Adjustments for:
Depreciation and amortization
Deferred gain amortization
Impairment loss on trade receivables
Inventory impairment and onerous contracts provision adjustments
Unrealized (gain) loss on forward contracts
Equity in loss of investment in joint venture and associates
Net decrease in fair value of investments
De-recognition of lease
Impairment charges on property, plant and equipment
Impairment charges on intangible assets
Impairment charges on Goodwill
Recovery on settlement of contingent consideration
Accretion (dilution) on decommissioning liabilities
Employee future benefits
Employee future benefits plan contributions
Share-based compensation
Deferred income tax recovery
Changes in non-cash working capital:
Trade and other receivables
Inventories
Prepaid expenses and other current assets
Trade and other payables
Deferred revenue
Warranty provision
Cash used in operating activities
Investing activities:
Net decrease in short-term investments
Contributions to long-term investments
Recovery of contributions to long-term investments
Additions to property, plant and equipment
Investment in intangible assets
Investment in joint venture and associates
Consideration paid related to acquisition
Cash used in investing activities
Financing activities:
Principal payments of lease liabilities
Note
2023
2022
$
(177,716) $
(173,494)
25
9 & 18
13 & 29
14 & 32
10
10 & 27
7 & 11
7 & 12
7 & 18
20
20
20
21
7
32
14
14
10
11
13
19
21
7 & 18
13,527
(417)
1,537
14,978
(1,296)
10,131
12,897
120
967
2,266
23,991
—
532
48
(8)
10,959
—
(87,484)
(12,913)
(898)
76
(3,580)
(3,442)
3,671
(17,086)
(104,570)
—
(11,911)
1,000
(41,214)
(154)
—
(2,000)
(54,279)
(4,013)
335
(3,678)
(73)
13,773
(416)
73
7,513
862
11,617
16,877
—
7
—
13,017
(9,891)
(73)
82
(7)
9,408
(3,578)
(114,230)
(2,945)
(11,145)
(1,668)
(718)
(4,079)
2,614
(17,941)
(132,171)
1,010
(17,913)
—
(33,932)
(550)
(9,272)
(14,900)
(75,557)
(3,322)
916
(2,406)
(31)
Net proceeds on issuance of share capital from share option exercises
Cash used in financing activities
Effect of exchange rate fluctuations on cash and cash equivalents held
Decrease in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
(162,600)
(210,165)
913,730
1,123,895
$
751,130 $
913,730
Supplemental disclosure of cash flow information (note 30). See accompanying notes to consolidated financial statements.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
1. Reporting entity:
The principal business of Ballard Power Systems Inc. (the “Corporation”) is the design, development,
manufacture, sale and service of proton exchange membrane ("PEM") fuel cell products for a variety of
applications, focusing on power products for bus, truck, rail, marine, stationary and emerging market (material
handling, off-road and other) applications, as well as the delivery of services, including technology solutions,
after sales services and training. 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 consolidated financial statements of the
Corporation as at and for the years ended December 31, 2023 and 2022 comprise the Corporation and its
subsidiaries (note 4(a)).
2. Basis of preparation:
(a) Statement of compliance:
These consolidated financial statements of the Corporation have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) accounting standards as issued by the International
Accounting Standards Board (“IASB”).
The consolidated financial statements were authorized for issue by the Board of Directors on March 8, 2024.
Details of the Corporation's material accounting policies are included in note 4.
(b) Basis of measurement:
The consolidated 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 consolidated financial statements are presented in U.S. dollars, which is the Corporation’s functional
currency.
(d) Use of estimates:
The preparation of the consolidated financial statements in conformity with IFRS accounting standards 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 and onerous contract provision, and fair value measurement (including investments).
These estimates and judgments are discussed further in note 5.
71
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
2. Basis of preparation (cont'd):
(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
achieve its liquidity objective. 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 cash operating expenses, managing working capital and capital
expenditure 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. Changes in accounting policies:
The Corporation has consistently applied the accounting policies set out in note 4 to all periods presented in
these consolidated financial statements.
A number of new standards and interpretations became effective from January 1, 2023 however, they did not
have a material impact on the Corporation's consolidated financial statements.
4. Material accounting policies:
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements, unless otherwise indicated.
(a) Basis of consolidation:
The consolidated financial statements include the accounts of the Corporation and its principal subsidiaries as
follows:
Percentage ownership
are recognized in other comprehensive income (loss).
Ballard Motive Solutions
Guangzhou Ballard Power Systems Co., Ltd.
Ballard Power Systems Europe A/S
Ballard Hong Kong Ltd.
Ballard US Inc.
Ballard Services Inc.
Ballard Fuel Cell Systems Inc.
Ballard Power Corporation
Subsidiary Entities
2023
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
2022
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
Subsidiaries are entities controlled by the Corporation. The Corporation controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
though its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases. Intercompany
balances and transactions are eliminated in the consolidated financial statements.
72
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
4. Material accounting policies (cont'd):
(a) Basis of consolidation (cont'd):
Subsidiary Entities (cont'd)
During the year ended December 31, 2023, the Corporation completed a further restructuring of operations at
Ballard Motive Solutions ("BMS") and effectively closed the operation. As such, the historic operating results of
the BMS business for both 2023 and 2022 have been removed from continuing operating results and are
instead presented separately in the statement of comprehensive income (loss) as loss from discontinued
The Corporation also has a non-controlling, 49% interest (2022 - 49%), in Weichai Ballard Hy-Energy
Technologies Co., Ltd ("Weichai Ballard JV"). This associated company is accounted for using the equity
On completion of an Equity Transfer Agreement in October 2023, the Corporation disposed of its 10%
investment in Guangdong Synergy Hydrogen Power Co., Ltd. ("Synergy Ballard JVCo") valued at $nil as of
operations.
Equity Investment Entities
method of accounting.
December 31, 2023.
(b) Foreign currency:
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the Corporation
and its subsidiaries at the exchange rate in effect at the transaction date. Monetary assets and liabilities
denominated in other than the functional currency are translated at the exchange rates in effect at the
statement of financial position date. The resulting exchange gains and losses are recognized in earnings.
Non-monetary assets and liabilities denominated in other than the functional currency that are measured at
fair value are translated to the functional currency at the exchange rate at the date that the fair value was
determined. Non-monetary items that are measured in terms of historical cost in other than the functional
currency are translated using the exchange rate at the date of the transaction.
The assets and liabilities of foreign operations are translated to the presentation currency using exchange
rates at the reporting date. The income and expenses of foreign operations are translated to the
presentation currency using exchange rates at the dates of the transactions. Foreign currency differences
(ii) Foreign operations
(c) Financial instruments:
(i) Financial assets
The Corporation initially recognizes loans and receivables and deposits on the date that they originated and
all other financial assets on the trade date at which the Corporation becomes a party to the contractual
provisions of the instrument. The Corporation de-recognizes a financial asset when the contractual rights to
the cash flows from the asset expire, or when it transfers substantially all the risks and rewards of
ownership of the financial asset.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
2. Basis of preparation (cont'd):
(e) Future operations:
4. Material accounting policies (cont'd):
(a) Basis of consolidation (cont'd):
The Corporation is required to assess its ability to continue as a going concern or whether substantial doubt
Subsidiary Entities (cont'd)
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
achieve its liquidity objective. 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 cash operating expenses, managing working capital and capital
expenditure 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. Changes in accounting policies:
The Corporation has consistently applied the accounting policies set out in note 4 to all periods presented in
these consolidated financial statements.
A number of new standards and interpretations became effective from January 1, 2023 however, they did not
have a material impact on the Corporation's consolidated financial statements.
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements, unless otherwise indicated.
The consolidated financial statements include the accounts of the Corporation and its principal subsidiaries as
4. Material accounting policies:
(a) Basis of consolidation:
follows:
Ballard Motive Solutions
Guangzhou Ballard Power Systems Co., Ltd.
Ballard Power Systems Europe A/S
Ballard Hong Kong Ltd.
Ballard US Inc.
Ballard Services Inc.
Ballard Fuel Cell Systems Inc.
Ballard Power Corporation
Subsidiary Entities
Percentage ownership
2023
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
2022
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
During the year ended December 31, 2023, the Corporation completed a further restructuring of operations at
Ballard Motive Solutions ("BMS") and effectively closed the operation. As such, the historic operating results of
the BMS business for both 2023 and 2022 have been removed from continuing operating results and are
instead presented separately in the statement of comprehensive income (loss) as loss from discontinued
operations.
Equity Investment Entities
The Corporation also has a non-controlling, 49% interest (2022 - 49%), in Weichai Ballard Hy-Energy
Technologies Co., Ltd ("Weichai Ballard JV"). This associated company is accounted for using the equity
method of accounting.
On completion of an Equity Transfer Agreement in October 2023, the Corporation disposed of its 10%
investment in Guangdong Synergy Hydrogen Power Co., Ltd. ("Synergy Ballard JVCo") valued at $nil as of
December 31, 2023.
(b) Foreign currency:
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the Corporation
and its subsidiaries at the exchange rate in effect at the transaction date. Monetary assets and liabilities
denominated in other than the functional currency are translated at the exchange rates in effect at the
statement of financial position date. The resulting exchange gains and losses are recognized in earnings.
Non-monetary assets and liabilities denominated in other than the functional currency that are measured at
fair value are translated to the functional currency at the exchange rate at the date that the fair value was
determined. Non-monetary items that are measured in terms of historical cost in other than the functional
currency are translated using the exchange rate at the date of the transaction.
(ii) Foreign operations
The assets and liabilities of foreign operations are translated to the presentation currency using exchange
rates at the reporting date. The income and expenses of foreign operations are translated to the
presentation currency using exchange rates at the dates of the transactions. Foreign currency differences
are recognized in other comprehensive income (loss).
(c) Financial instruments:
(i) Financial assets
The Corporation initially recognizes loans and receivables and deposits on the date that they originated and
all other financial assets on the trade date at which the Corporation becomes a party to the contractual
provisions of the instrument. The Corporation de-recognizes a financial asset when the contractual rights to
the cash flows from the asset expire, or when it transfers substantially all the risks and rewards of
ownership of the financial asset.
Subsidiaries are entities controlled by the Corporation. The Corporation controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
though its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases. Intercompany
balances and transactions are eliminated in the consolidated financial statements.
73
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
4. Material accounting policies (cont'd):
(c) Financial instruments (cont'd):
(i) Financial assets (cont'd)
Financial assets are classified as measured at: amortized cost; fair value through other comprehensive
income ("FVOCI") or fair value through profit or loss ("FVTPL"). The classification of financial assets is
generally based on the business model in which a financial asset is managed and its contractual cash flow
characteristics. Derivatives embedded in contracts where the host is a financial asset in the scope of the
standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for
classification. The Corporation's financial assets which consist primarily of cash and cash equivalents,
short-term investments, trade and other receivables, contract assets and long-term financial investments
are classified at amortized cost.
The Corporation also periodically enters into foreign exchange forward contracts to limit its exposure to
foreign currency rate fluctuations. These derivatives are recognized initially at fair value and are recorded as
either assets or liabilities based on their fair value. Subsequent to initial recognition, these derivatives are
measured at fair value and changes to their value are recorded through profit or loss.
(ii) Financial liabilities
Financial liabilities comprise the Corporation’s trade and other payables. The financial liabilities are initially
recognized on the date they are originated and are derecognized when the contractual obligations are
discharged or cancelled or expire. These financial liabilities are recognized initially at fair value and
subsequently are measured at amortized cost using the effective interest method, when materially different
from the initial amount. Fair value is determined based on the present value of future cash flows, discounted
at the market rate of interest.
(d) Inventories:
Inventories are recorded at the lower of cost and net realizable value. The cost of inventories is based on
the first-in first-out principle, and includes expenditures incurred in acquiring the inventories, production or
conversion costs and other costs incurred in bringing them to their existing location and condition. In the
case of manufactured inventories and work in progress, cost includes materials, labor and appropriate
share of production overhead based on normal operating capacity. Costs of materials are determined on an
average per unit basis.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and selling expenses. In establishing any impairment of inventory, management
estimates the likelihood that inventory carrying values will be affected by changes in market demand,
technology and design, which would impair the value of inventory on hand.
(e) Property, plant and equipment:
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any
accumulated impairment losses. The cost of self-constructed assets includes the cost of materials, costs
directly attributable to bringing the assets to a working condition for their intended use, and the costs of
dismantling and removing items and restoring the site on which they are located. If significant parts of an
item of property, plant and equipment have different useful lives, then they are accounted for as separate
items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.
74
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
4. Material accounting policies (cont'd):
(e) Property, plant and equipment (cont'd):
(ii) Depreciation (cont'd)
Depreciation is calculated to write-off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives, and is recognized in profit or
The estimated useful lives of property, plant and equipment for current and comparative periods are as
loss.
follows:
Computer equipment
Furniture and fixtures
Leasehold improvements
Production and test equipment
Right-of-use asset - Property
Right-of-use asset - Office equipment
Right-of-use asset - Vehicles
appropriate.
(f) Leases:
previous accounting policies.
exchange for consideration.
i.
As a Lessee
Leased assets are depreciated over the shorter of the lease term or their useful lives unless it is reasonably
certain that the Corporation will obtain ownership by the end of the lease term.
The shorter of initial term of the respective lease and
3 to 10 years
5 to 10 years
estimated useful life
4 to 15 years
1 to 15 years
4 to 7 years
1 to 5 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
IFRS 16 Leases introduced a single, on-balance sheet accounting model for lessees. As a result, the
Corporation, as a lessee, has recognized right-of-use assets representing its rights to use the underlying assets,
and lease liabilities representing its obligation to make lease payments. Lessor accounting remains similar to
At inception of a contract, the Corporation assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
The Corporation recognizes a right-of-use asset and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted
for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated
useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In
addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Corporation’s incremental borrowing rate. Generally, the Corporation uses its incremental
borrowing rate as the discount rate.
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
4. Material accounting policies (cont'd):
(c) Financial instruments (cont'd):
(i) Financial assets (cont'd)
Financial assets are classified as measured at: amortized cost; fair value through other comprehensive
income ("FVOCI") or fair value through profit or loss ("FVTPL"). The classification of financial assets is
generally based on the business model in which a financial asset is managed and its contractual cash flow
characteristics. Derivatives embedded in contracts where the host is a financial asset in the scope of the
standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for
classification. The Corporation's financial assets which consist primarily of cash and cash equivalents,
short-term investments, trade and other receivables, contract assets and long-term financial investments
are classified at amortized cost.
The Corporation also periodically enters into foreign exchange forward contracts to limit its exposure to
foreign currency rate fluctuations. These derivatives are recognized initially at fair value and are recorded as
either assets or liabilities based on their fair value. Subsequent to initial recognition, these derivatives are
measured at fair value and changes to their value are recorded through profit or loss.
(ii) Financial liabilities
Financial liabilities comprise the Corporation’s trade and other payables. The financial liabilities are initially
recognized on the date they are originated and are derecognized when the contractual obligations are
discharged or cancelled or expire. These financial liabilities are recognized initially at fair value and
subsequently are measured at amortized cost using the effective interest method, when materially different
from the initial amount. Fair value is determined based on the present value of future cash flows, discounted
at the market rate of interest.
(d) Inventories:
Inventories are recorded at the lower of cost and net realizable value. The cost of inventories is based on
the first-in first-out principle, and includes expenditures incurred in acquiring the inventories, production or
conversion costs and other costs incurred in bringing them to their existing location and condition. In the
case of manufactured inventories and work in progress, cost includes materials, labor and appropriate
share of production overhead based on normal operating capacity. Costs of materials are determined on an
average per unit basis.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and selling expenses. In establishing any impairment of inventory, management
estimates the likelihood that inventory carrying values will be affected by changes in market demand,
technology and design, which would impair the value of inventory on hand.
(e) Property, plant and equipment:
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any
accumulated impairment losses. The cost of self-constructed assets includes the cost of materials, costs
directly attributable to bringing the assets to a working condition for their intended use, and the costs of
dismantling and removing items and restoring the site on which they are located. If significant parts of an
item of property, plant and equipment have different useful lives, then they are accounted for as separate
items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
4. Material accounting policies (cont'd):
(e) Property, plant and equipment (cont'd):
(ii) Depreciation (cont'd)
Depreciation is calculated to write-off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives, and is recognized in profit or
loss.
The estimated useful lives of property, plant and equipment for current and comparative periods are as
follows:
Computer equipment
Furniture and fixtures
Leasehold improvements
Production and test equipment
3 to 10 years
5 to 10 years
The shorter of initial term of the respective lease and
estimated useful life
4 to 15 years
Leased assets are depreciated over the shorter of the lease term or their useful lives unless it is reasonably
certain that the Corporation will obtain ownership by the end of the lease term.
Right-of-use asset - Property
Right-of-use asset - Office equipment
Right-of-use asset - Vehicles
1 to 15 years
4 to 7 years
1 to 5 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
(f) Leases:
IFRS 16 Leases introduced a single, on-balance sheet accounting model for lessees. As a result, the
Corporation, as a lessee, has recognized right-of-use assets representing its rights to use the underlying assets,
and lease liabilities representing its obligation to make lease payments. Lessor accounting remains similar to
previous accounting policies.
At inception of a contract, the Corporation assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
i.
As a Lessee
The Corporation recognizes a right-of-use asset and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted
for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated
useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In
addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Corporation’s incremental borrowing rate. Generally, the Corporation uses its incremental
borrowing rate as the discount rate.
75
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
4. Material accounting policies (cont'd):
(f) Leases (cont'd):
i.
As a Lessee (cont'd)
The lease liability is subsequently measured at amortized cost using the effective interest method. It is
remeasured when there is a change in future lease payments arising from a change in an index or rate, if there
is a change in the Corporation’s estimate of the amount expected to be payable under a residual value
guarantee or if the Corporation changes its assessment of whether it will exercise a purchase, extension or
termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to
the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-
use asset has been reduced to zero.
The Corporation presents right-of-use assets in ‘Property, plant and equipment’ and lease liabilities in ‘Lease
liability’ in the statement of financial position.
The Corporation has elected not to recognize right-of-use assets and lease liabilities for short-term leases of
properties, equipment and vehicles that have a lease term of 12 months or less. The Corporation has elected
not to recognize right-of-use assets and lease liabilities for low value leases that have initial values of less than
$5,000. The Corporation recognizes the lease payments associated with these leases as an operating expense
on a straight-line basis over the lease term.
(g) Goodwill and intangible assets:
(i) Recognition and measurement
Goodwill
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated
impairment losses.
Research and development
Expenditure on research activities is recognized in profit or loss as incurred.
Development expenditure is capitalized only if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are
probable and the Corporation intends to and has sufficient resources to complete development
and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent
to initial recognition, development expenditure is measured at cost less accumulated
amortization and any accumulated impairment losses.
Intangible assets, including patents, know-how, in-process research and development,
trademarks and service marks, customer contracts and
relationships, non-compete
agreements, and software systems that are acquired or developed by the Corporation and
have finite useful lives are measured at cost less accumulated amortization and any
accumulated impairment losses.
Intangible assets
(ii) Amortization
Amortization is calculated to write-off the cost of intangible assets less their estimated residual values using
the straight-line method over their estimated useful lives, and is recognized in profit or loss. Goodwill is not
amortized.
The estimated useful lives for current and comparative periods are as follows:
for internal reporting purposes.
Acquired patents, know-how and in-process research & development
ERP management reporting software system
Acquired customer contracts and relationships
Acquired non-compete agreements
Domain names
Acquired trademarks and service marks
Internally generated fuel cell intangible assets
5 to 20 years
5 to 10 years
7 to 10 years
1 to 3 years
15 years
15 years
3 to 5 years
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
76
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
4. Material accounting policies (cont'd):
(h) Impairment:
(i) Financial assets
An ‘expected credit loss’ ("ECL") model applies to financial assets measured at amortized cost and debt
investments at FVOCI, but not to investments in equity instruments. The Corporation's financial assets
measured at amortized cost and subject to the ECL model consist primarily of trade receivables and
contract assets.
In applying the ECL model, loss allowances are measured on either of the following bases:
12-month ECLs: these are ECLs that result from possible default events within the 12
•
•
months after the reporting date; and
life of a financial instrument.
lifetime ECLs: these are ECLs that result from all possible default events over the expected
The Corporation measures loss allowances for trade receivables and contract assets at an amount equal to
lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Corporation considers reasonable and supportable information
that is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on historical experience and informed credit assessment and including
forward-looking information.
(ii) Non-financial assets
The carrying amounts of the Corporation’s non-financial assets other than inventories are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then
the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful
lives, the recoverable amount is estimated annually or whenever events or circumstances indicate that the
carrying amount may not be recoverable.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. Fair value less costs to sell is defined as the estimated price that
would be received on the sale of the asset in an orderly transaction between market participants at the
measurement date. For the purposes of impairment testing, assets that cannot be tested individually are
grouped together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other groups of assets.
The allocation of goodwill to cash-generating units reflects the lowest level at which goodwill is monitored
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its
estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses
recognized in respect of the cash generating units are allocated first to reduce the carrying amount of any
goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit on a
pro-rata basis.
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
4. Material accounting policies (cont'd):
(f) Leases (cont'd):
i.
As a Lessee (cont'd)
The lease liability is subsequently measured at amortized cost using the effective interest method. It is
remeasured when there is a change in future lease payments arising from a change in an index or rate, if there
is a change in the Corporation’s estimate of the amount expected to be payable under a residual value
guarantee or if the Corporation changes its assessment of whether it will exercise a purchase, extension or
termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to
the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-
use asset has been reduced to zero.
The Corporation presents right-of-use assets in ‘Property, plant and equipment’ and lease liabilities in ‘Lease
liability’ in the statement of financial position.
The Corporation has elected not to recognize right-of-use assets and lease liabilities for short-term leases of
properties, equipment and vehicles that have a lease term of 12 months or less. The Corporation has elected
not to recognize right-of-use assets and lease liabilities for low value leases that have initial values of less than
$5,000. The Corporation recognizes the lease payments associated with these leases as an operating expense
on a straight-line basis over the lease term.
(g) Goodwill and intangible assets:
(i) Recognition and measurement
Intangible assets
(ii) Amortization
amortized.
Research and development
Expenditure on research activities is recognized in profit or loss as incurred.
Development expenditure is capitalized only if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are
probable and the Corporation intends to and has sufficient resources to complete development
and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent
to initial recognition, development expenditure is measured at cost less accumulated
amortization and any accumulated impairment losses.
Intangible assets, including patents, know-how, in-process research and development,
trademarks and service marks, customer contracts and
relationships, non-compete
agreements, and software systems that are acquired or developed by the Corporation and
have finite useful lives are measured at cost less accumulated amortization and any
accumulated impairment losses.
Amortization is calculated to write-off the cost of intangible assets less their estimated residual values using
the straight-line method over their estimated useful lives, and is recognized in profit or loss. Goodwill is not
The estimated useful lives for current and comparative periods are as follows:
Acquired patents, know-how and in-process research & development
ERP management reporting software system
Acquired customer contracts and relationships
Acquired non-compete agreements
Domain names
Acquired trademarks and service marks
Internally generated fuel cell intangible assets
5 to 20 years
5 to 10 years
7 to 10 years
1 to 3 years
15 years
15 years
3 to 5 years
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
4. Material accounting policies (cont'd):
(h) Impairment:
(i) Financial assets
An ‘expected credit loss’ ("ECL") model applies to financial assets measured at amortized cost and debt
investments at FVOCI, but not to investments in equity instruments. The Corporation's financial assets
measured at amortized cost and subject to the ECL model consist primarily of trade receivables and
contract assets.
In applying the ECL model, loss allowances are measured on either of the following bases:
•
•
12-month ECLs: these are ECLs that result from possible default events within the 12
months after the reporting date; and
lifetime ECLs: these are ECLs that result from all possible default events over the expected
life of a financial instrument.
The Corporation measures loss allowances for trade receivables and contract assets at an amount equal to
lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Corporation considers reasonable and supportable information
that is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on historical experience and informed credit assessment and including
forward-looking information.
Goodwill
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated
(ii) Non-financial assets
impairment losses.
The carrying amounts of the Corporation’s non-financial assets other than inventories are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then
the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful
lives, the recoverable amount is estimated annually or whenever events or circumstances indicate that the
carrying amount may not be recoverable.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. Fair value less costs to sell is defined as the estimated price that
would be received on the sale of the asset in an orderly transaction between market participants at the
measurement date. For the purposes of impairment testing, assets that cannot be tested individually are
grouped together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other groups of assets.
The allocation of goodwill to cash-generating units reflects the lowest level at which goodwill is monitored
for internal reporting purposes.
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its
estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses
recognized in respect of the cash generating units are allocated first to reduce the carrying amount of any
goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit on a
pro-rata basis.
77
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
4. Material accounting policies (cont'd):
(h) Impairment (cont'd):
(ii) Non-financial assets (cont'd)
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognized in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.
(i) Provisions:
A provision is recognized if, as a result of a past event, the Corporation has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required
to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risk specific to the liability. The
unwinding of the discount is recognized as a finance expense.
Warranty provision
A provision for warranty costs is recorded on product sales at the time the sale is recognized. In establishing the
warranty provision, management estimates the likelihood that products sold will experience warranty claims and
the estimated cost to resolve claims received, taking into account the nature of the contract and past and
projected experience with the products.
recognized on uncompleted contracts.
(k) Finance income and expense:
Decommissioning liabilities
Legal obligations to retire tangible long-lived assets are recorded at the net present value of the expected costs
of settlement at acquisition with a corresponding increase in asset value. These include assets leased under
operating leases. The liability is accreted over the life of the asset to the ultimate settlement amount and the
increase in asset value is depreciated over the remaining useful life of the asset.
Finance income comprises interest income on funds invested, gains (losses) on the disposal of available-for-
sale financial assets, foreign exchange gains (losses), and changes in the fair value of financial assets at fair
value through profit or loss, pension administration expense, and employee future benefit plan expense. Interest
income is recognized as it accrues in income, using the effective interest method.
Finance expense comprises interest expense on leases and the unwinding of the discount on provisions.
(j) Revenue recognition:
(l)
Income taxes:
The Corporation generates revenues primarily from product sales, the license and sale of intellectual property
and fundamental knowledge, and the provision of engineering services and technology transfer services.
Product revenues are derived primarily from standard product sales contracts and from long-term fixed price
contracts. Intellectual property and fundamental knowledge license revenues are derived primarily from
standard licensing and technology transfer agreements. Engineering service and technology transfer services
revenues are derived primarily from cost-plus reimbursable contracts and from long-term fixed price contracts.
Revenue is recognized when a customer obtains control of the goods or services. Determining the timing of the
transfer of control, at a point in time or over time, requires judgment. On standard product sales contracts,
revenues are recognized when customers obtain control of the product, that is when transfer of title and risks
and rewards of ownership of goods have passed and when obligation to pay is considered certain. Invoices
are generated and revenue is recognized at that point in time. Provisions for warranties are made at the time of
sale.
On standard licensing and technology transfer agreements, revenues are recognized on the transfer of rights
to a licensee, when it is determined to be distinct from other performance obligations, and if the customer can
direct the use of, and obtain substantially all of the remaining benefits from the license as it exists at the time of
transfer. In other cases, the proceeds are considered to relate to the right to use the asset over the license
period and the revenue is recognized over that period. If it is determined that the license is not distinct from
other performance obligations, revenue is recognized over time as the customer simultaneously receives and
consumes the benefit.
78
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
4. Material accounting policies (cont'd):
(j) Revenue recognition (cont'd):
On cost-plus reimbursable contracts, revenues are recognized as costs are incurred, and include applicable
fees earned as services are provided.
On long-term fixed price contracts, the customer controls all of the work in progress as the services are being
provided. This is because under these contracts, the deliverables are made to a customer’s specification, and
if a contract is terminated by the customer, then the Corporation is entitled to reimbursement of the costs
incurred to date plus the applicable gross margin. Therefore, revenue from these contracts and the associated
costs are recognized as the costs are incurred over time.
On long-term fixed price contracts, revenues are recognized over time using cumulative costs incurred to date
relative to total estimated costs at completion to measure progress towards satisfying performance obligations.
Generally, revenue is recognized by multiplying the expected consideration by the ratio of cumulative costs
incurred to date to the sum of incurred and estimated costs for completing the performance obligation. The
cumulative effect of changes to estimated revenues and estimated costs for completing a contract are
recognized in the period in which the revisions are identified. In the event that the estimated costs for
completing the contract exceed the expected revenues on a contract, such loss is recognized in its entirety in
the period it becomes known.
Deferred revenue (i.e. contract liabilities) represents cash received from customers in excess of revenue
The Corporation follows the asset and liability method of accounting for income taxes. Under this method,
deferred income taxes are recognized for the deferred income tax consequences attributable to differences
between the financial statement carrying values of assets and liabilities and their respective income tax bases
(temporary differences) and for loss carry forwards. The resulting changes in the net deferred tax asset or
liability are included in income.
Deferred tax assets and liabilities are measured using enacted, or substantively enacted, tax rates expected to
apply to taxable income in the years in which temporary differences are expected to be recovered or settled.
The effect on deferred income tax assets and liabilities, of a change in tax rates, is included in income in the
period that includes the substantive enactment date. Deferred income tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
4. Material accounting policies (cont'd):
(h) Impairment (cont'd):
(ii) Non-financial assets (cont'd)
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognized in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.
(i) Provisions:
Warranty provision
A provision is recognized if, as a result of a past event, the Corporation has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required
to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risk specific to the liability. The
unwinding of the discount is recognized as a finance expense.
A provision for warranty costs is recorded on product sales at the time the sale is recognized. In establishing the
warranty provision, management estimates the likelihood that products sold will experience warranty claims and
the estimated cost to resolve claims received, taking into account the nature of the contract and past and
projected experience with the products.
Decommissioning liabilities
Legal obligations to retire tangible long-lived assets are recorded at the net present value of the expected costs
of settlement at acquisition with a corresponding increase in asset value. These include assets leased under
operating leases. The liability is accreted over the life of the asset to the ultimate settlement amount and the
increase in asset value is depreciated over the remaining useful life of the asset.
The Corporation generates revenues primarily from product sales, the license and sale of intellectual property
and fundamental knowledge, and the provision of engineering services and technology transfer services.
Product revenues are derived primarily from standard product sales contracts and from long-term fixed price
contracts. Intellectual property and fundamental knowledge license revenues are derived primarily from
standard licensing and technology transfer agreements. Engineering service and technology transfer services
revenues are derived primarily from cost-plus reimbursable contracts and from long-term fixed price contracts.
Revenue is recognized when a customer obtains control of the goods or services. Determining the timing of the
transfer of control, at a point in time or over time, requires judgment. On standard product sales contracts,
revenues are recognized when customers obtain control of the product, that is when transfer of title and risks
and rewards of ownership of goods have passed and when obligation to pay is considered certain. Invoices
are generated and revenue is recognized at that point in time. Provisions for warranties are made at the time of
sale.
On standard licensing and technology transfer agreements, revenues are recognized on the transfer of rights
to a licensee, when it is determined to be distinct from other performance obligations, and if the customer can
direct the use of, and obtain substantially all of the remaining benefits from the license as it exists at the time of
transfer. In other cases, the proceeds are considered to relate to the right to use the asset over the license
period and the revenue is recognized over that period. If it is determined that the license is not distinct from
other performance obligations, revenue is recognized over time as the customer simultaneously receives and
consumes the benefit.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
4. Material accounting policies (cont'd):
(j) Revenue recognition (cont'd):
On cost-plus reimbursable contracts, revenues are recognized as costs are incurred, and include applicable
fees earned as services are provided.
On long-term fixed price contracts, the customer controls all of the work in progress as the services are being
provided. This is because under these contracts, the deliverables are made to a customer’s specification, and
if a contract is terminated by the customer, then the Corporation is entitled to reimbursement of the costs
incurred to date plus the applicable gross margin. Therefore, revenue from these contracts and the associated
costs are recognized as the costs are incurred over time.
On long-term fixed price contracts, revenues are recognized over time using cumulative costs incurred to date
relative to total estimated costs at completion to measure progress towards satisfying performance obligations.
Generally, revenue is recognized by multiplying the expected consideration by the ratio of cumulative costs
incurred to date to the sum of incurred and estimated costs for completing the performance obligation. The
cumulative effect of changes to estimated revenues and estimated costs for completing a contract are
recognized in the period in which the revisions are identified. In the event that the estimated costs for
completing the contract exceed the expected revenues on a contract, such loss is recognized in its entirety in
the period it becomes known.
Deferred revenue (i.e. contract liabilities) represents cash received from customers in excess of revenue
recognized on uncompleted contracts.
(k) Finance income and expense:
Finance income comprises interest income on funds invested, gains (losses) on the disposal of available-for-
sale financial assets, foreign exchange gains (losses), and changes in the fair value of financial assets at fair
value through profit or loss, pension administration expense, and employee future benefit plan expense. Interest
income is recognized as it accrues in income, using the effective interest method.
Finance expense comprises interest expense on leases and the unwinding of the discount on provisions.
(j) Revenue recognition:
(l)
Income taxes:
The Corporation follows the asset and liability method of accounting for income taxes. Under this method,
deferred income taxes are recognized for the deferred income tax consequences attributable to differences
between the financial statement carrying values of assets and liabilities and their respective income tax bases
(temporary differences) and for loss carry forwards. The resulting changes in the net deferred tax asset or
liability are included in income.
Deferred tax assets and liabilities are measured using enacted, or substantively enacted, tax rates expected to
apply to taxable income in the years in which temporary differences are expected to be recovered or settled.
The effect on deferred income tax assets and liabilities, of a change in tax rates, is included in income in the
period that includes the substantive enactment date. Deferred income tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
79
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
4. Material accounting policies (cont'd):
(m) Employee benefits:
Defined benefit plans
A defined benefit plan is a post-employment pension plan other than a defined contribution plan. The
Corporation’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by
estimating the amount of future benefit that employees have earned in return for their service in the current and
prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and
the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on AA credit-
rated bonds that have maturity dates approximating the terms of the Corporation’s obligations and that are
denominated in the same currency in which the benefits are expected to be paid. The calculation is performed
annually by a qualified actuary using the projected unit credit method.
When the calculation results in a benefit to the Corporation, the recognized asset is limited to the total of any
unrecognized past service costs and the present value of economic benefits available in the form of any future
refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of
economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the
Corporation. An economic benefit is available to the Corporation if it is realizable during the life of the plan, or on
settlement of the plan liabilities.
The Corporation recognizes all remeasurements arising from defined benefit plans, which comprise actuarial
gains and losses, immediately in other comprehensive income (loss). Remeasurements recognized in other
comprehensive income (loss) are not recycled through profit or loss in subsequent periods.
Other long-term employee benefits
The Corporation’s net obligation in respect of long-term employee benefits other than pension plans is the
amount of future benefit that employees have earned in return for their service in the current and prior periods;
that benefit is discounted to determine its present value, and the fair value of any related assets is deducted.
The discount rate is the yield at the reporting date on AA credit-rated bonds that have maturity dates
approximating the terms of the Corporation’s obligations. The calculation is performed using the projected unit
credit method. Any actuarial gains and losses are recognized in other comprehensive income or loss in the
period in which they arise.
Termination benefits
Termination benefits are recognized as an expense (restructuring expense recorded in other operating
expense) when the Corporation is committed demonstrably, without realistic possibility of withdrawal, to a formal
detailed plan to either terminate employment before the normal retirement date, or to provide termination
benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary
redundancies are recognized as an expense if the Corporation has made an offer of voluntary redundancy, it is
probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits
are payable more than 12 months after the reporting period, then they are discounted to their present value.
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
4. Material accounting policies (cont'd):
(n) Share-based compensation plans:
The Corporation uses the fair-value based method of accounting for share-based compensation for all awards
of shares, share options, restricted share units, and deferred share units granted. The resulting compensation
expense, based on the fair value of the awards granted, excluding the impact of any non-market service and
performance vesting conditions, is charged to income over the period that the employees unconditionally
become entitled to the award, with a corresponding increase to contributed surplus.
Fair values of share options are calculated using the Black-Scholes valuation method as of the grant date and
adjusted for estimated forfeitures. Restricted share units and deferred share units are valued at the fair-value
price at grant date. For awards with graded vesting, the fair value of each tranche is calculated separately and
recognized over its respective vesting period. Non-market vesting conditions are considered in making
assumptions about the number of awards that are expected to vest. At each reporting date, the Corporation
reassesses its estimates of the number of awards that are expected to vest and recognizes the impact of any
revision in the income statement with a corresponding adjustment to contributed surplus. For awards with
market conditions, the fair value is determined at grant date using a complex financial simulation model and
there is no subsequent true-up to actual.
The Corporation issues shares, share options, restricted share units, and deferred share units under its share-
based compensation plans as described in note 21. Any consideration paid by employees on exercise of share
options or purchase of shares, together with the amount initially recorded in contributed surplus, is credited to
share capital. The redemption of restricted share units and deferred share units are non-cash transactions that
are recorded in contributed surplus and share capital.
(o) Earnings (loss) per share:
treasury stock method.
Basic earnings (loss) per share is computed using the weighted average number of common shares
outstanding during the period, adjusted for treasury shares. Diluted earnings per share is calculated using the
Under the treasury stock method, the dilution is calculated based upon the number of common shares issued
should deferred share units (“DSUs”), restricted share units (“RSUs”), and “in the money” options, if any, be
exercised. When the effects of outstanding stock-based compensation arrangements would be anti-dilutive,
diluted loss per share is not shown separately.
(p) Segment reporting:
An operating segment is a component of the Corporation that engages in business activities from which it may
earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Corporation’s other components. Segment results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, head
office expenses, and income tax assets and liabilities.
Short-term employee benefits
5. Critical judgments in applying accounting policies and key sources of estimation uncertainty:
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided.
Critical judgments in applying accounting policies:
A liability is recognized for the amount expected to be paid under short-term cash bonus or profit sharing plans if
the Corporation has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee, and the obligation can be estimated reliably.
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:
The following are 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 financial year.
80
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
4. Material accounting policies (cont'd):
(m) Employee benefits:
Defined benefit plans
A defined benefit plan is a post-employment pension plan other than a defined contribution plan. The
Corporation’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by
estimating the amount of future benefit that employees have earned in return for their service in the current and
prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and
the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on AA credit-
rated bonds that have maturity dates approximating the terms of the Corporation’s obligations and that are
denominated in the same currency in which the benefits are expected to be paid. The calculation is performed
annually by a qualified actuary using the projected unit credit method.
When the calculation results in a benefit to the Corporation, the recognized asset is limited to the total of any
unrecognized past service costs and the present value of economic benefits available in the form of any future
refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of
economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the
Corporation. An economic benefit is available to the Corporation if it is realizable during the life of the plan, or on
settlement of the plan liabilities.
The Corporation recognizes all remeasurements arising from defined benefit plans, which comprise actuarial
gains and losses, immediately in other comprehensive income (loss). Remeasurements recognized in other
comprehensive income (loss) are not recycled through profit or loss in subsequent periods.
The Corporation’s net obligation in respect of long-term employee benefits other than pension plans is the
amount of future benefit that employees have earned in return for their service in the current and prior periods;
that benefit is discounted to determine its present value, and the fair value of any related assets is deducted.
The discount rate is the yield at the reporting date on AA credit-rated bonds that have maturity dates
approximating the terms of the Corporation’s obligations. The calculation is performed using the projected unit
credit method. Any actuarial gains and losses are recognized in other comprehensive income or loss in the
period in which they arise.
Termination benefits
Termination benefits are recognized as an expense (restructuring expense recorded in other operating
expense) when the Corporation is committed demonstrably, without realistic possibility of withdrawal, to a formal
detailed plan to either terminate employment before the normal retirement date, or to provide termination
benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary
redundancies are recognized as an expense if the Corporation has made an offer of voluntary redundancy, it is
probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits
are payable more than 12 months after the reporting period, then they are discounted to their present value.
Short-term employee benefits
related service is provided.
A liability is recognized for the amount expected to be paid under short-term cash bonus or profit sharing plans if
the Corporation has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee, and the obligation can be estimated reliably.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
4. Material accounting policies (cont'd):
(n) Share-based compensation plans:
The Corporation uses the fair-value based method of accounting for share-based compensation for all awards
of shares, share options, restricted share units, and deferred share units granted. The resulting compensation
expense, based on the fair value of the awards granted, excluding the impact of any non-market service and
performance vesting conditions, is charged to income over the period that the employees unconditionally
become entitled to the award, with a corresponding increase to contributed surplus.
Fair values of share options are calculated using the Black-Scholes valuation method as of the grant date and
adjusted for estimated forfeitures. Restricted share units and deferred share units are valued at the fair-value
price at grant date. For awards with graded vesting, the fair value of each tranche is calculated separately and
recognized over its respective vesting period. Non-market vesting conditions are considered in making
assumptions about the number of awards that are expected to vest. At each reporting date, the Corporation
reassesses its estimates of the number of awards that are expected to vest and recognizes the impact of any
revision in the income statement with a corresponding adjustment to contributed surplus. For awards with
market conditions, the fair value is determined at grant date using a complex financial simulation model and
there is no subsequent true-up to actual.
The Corporation issues shares, share options, restricted share units, and deferred share units under its share-
based compensation plans as described in note 21. Any consideration paid by employees on exercise of share
options or purchase of shares, together with the amount initially recorded in contributed surplus, is credited to
share capital. The redemption of restricted share units and deferred share units are non-cash transactions that
are recorded in contributed surplus and share capital.
Other long-term employee benefits
(o) Earnings (loss) per share:
Basic earnings (loss) per share is computed using the weighted average number of common shares
outstanding during the period, adjusted for treasury shares. Diluted earnings per share is calculated using the
treasury stock method.
Under the treasury stock method, the dilution is calculated based upon the number of common shares issued
should deferred share units (“DSUs”), restricted share units (“RSUs”), and “in the money” options, if any, be
exercised. When the effects of outstanding stock-based compensation arrangements would be anti-dilutive,
diluted loss per share is not shown separately.
(p) Segment reporting:
An operating segment is a component of the Corporation that engages in business activities from which it may
earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Corporation’s other components. Segment results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, head
office expenses, and income tax assets and liabilities.
5. Critical judgments in applying accounting policies and key sources of estimation uncertainty:
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
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:
The following are 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 financial year.
81
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
5. Critical judgments in applying accounting policies and key sources of estimation uncertainty (cont'd):
5. Critical judgments in applying accounting policies and key sources of estimation uncertainty (cont'd):
Key sources of estimation uncertainty (cont'd):
(a) Revenue recognition:
Key sources of estimation uncertainty (cont'd):
(d) Inventory and onerous contracts provision:
On long-term fixed price contracts, revenues are recorded over time using costs incurred to date relative to total
estimated costs at completion to measure progress towards satisfying performance obligations. Revenue is
recognized by multiplying the expected consideration by the ratio of cumulative costs incurred to date to the
sum of incurred and estimated costs for completing the performance obligation. The cumulative effect of
changes to expected revenues and expected costs for completing a contract are recognized in the period in
which the revisions are identified. If the expected costs exceed the expected revenues on a contract, such loss
is recognized in its entirety in the period it becomes known.
In determining the lower of cost and net realizable value of inventory and in establishing the appropriate
provision for inventory obsolescence, management estimates the likelihood that inventory carrying values will
be affected by changes in market pricing or demand for the products and by changes in technology or design
which could make inventory on hand obsolete or recoverable at less than the recorded value. Management
performs regular reviews to assess the impact of changes in technology and design, sales trends and other
changes on the carrying value of inventory. Where it is determined that such changes have occurred and will
have a negative impact on the value of inventory on hand, appropriate provisions are made.
(i)
(ii)
The determination of expected costs for completing a contract is based on estimates that can be
affected by a variety of factors such as variances in the timeline to completion, the cost of materials,
the availability and cost of labour, as well as productivity.
If there is a subsequent increase in the value of inventory on hand, reversals of previous write-downs to net
realizable value are made. Unforeseen changes in these factors could result in additional inventory provisions,
or reversals of previous provisions, being required.
The determination of potential revenues includes the contractually agreed amount and may be
adjusted based on the estimate of the Corporation’s attainment on achieving certain defined
contractual milestones. Management’s estimation
the amount of
consideration to which the Corporation expects to be entitled and in determining when a performance
obligation has been met.
in determining
is required
Estimates used to determine revenues and costs of long-term fixed price contracts involve uncertainties that
ultimately depend on the outcome of future events and are periodically revised as projects progress. There is a
risk that a customer may ultimately disagree with management’s assessment of the progress achieved against
milestones, or that the Corporation's estimates of the work required to complete a contract may change.
(b) Asset impairment:
Many of the factors used in assessing fair value are outside the control of management and it is reasonably
likely that assumptions and estimates will change from period to period.
These changes may result in future impairments. For example, the revenue growth rate could be lower than
projected due to economic, industry or competitive factors, or the discount rate used in the value in use model
could increase due to a change in market interest rates. In addition, future goodwill impairment charges may be
necessary if the market capitalization decreased due to a decline in the trading price of the Corporation’s
common stock, which could negatively impact the fair value of the Corporation’s cash generating units.
(c) Warranty provision:
A provision for warranty costs is recorded on product sales at the time of shipment. In establishing the warranty
provision, management estimates the likelihood that products sold will experience warranty claims and the cost
to resolve claims received. In making such determinations, the Corporation uses estimates based on the nature
of the contract and past and projected experience with the products. Should these estimates prove to be
incorrect, the Corporation may incur costs different from those provided for in the warranty provision.
Management reviews warranty assumptions and makes adjustments to the provision at each reporting date
based on the latest information available, including the expiry of contractual obligations. Adjustments to the
warranty provision are recorded in cost of product and service revenues.
82
A provision for onerous contracts is also assessed and measured at the present value of the lower of the
expected cost of terminating the contract and the expected net cost of continuing with the contract, which is
determined based on the incremental costs of fulfilling the obligation under the contract and an allocation of
other costs directly related to fulfilling the contract. Before an onerous contract provision is established, the
Corporation recognizes any impairment loss on the assets (including through an inventory provision) associated
with that contract.
(e) Fair value measurement (including investments):
A number of the Corporation’s accounting policies and disclosures require the measurement of fair values, for
both financial and non-financial assets and liabilities.
When one is available, the Corporation measures the fair value of an instrument using the quoted price in an
active market for that instrument. A market is regarded as “active” if transactions for the asset or liability take
place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no
quoted price in an active market, then the Corporation uses valuation techniques that maximize the use of
relevant observable inputs and minimize the use of unobservable inputs. This involves developing estimates
and assumptions consistent with how market participants would price the instrument. Management bases its
assumptions on observable data as far as possible, but this is not always available. In that case, management
uses the best information available. Where they are available, the fair value of investments is based on
observable market transactions. Estimated fair values may vary from the actual prices that would be achieved in
an arm’s length transaction at the reporting date.
The best evidence of the fair value of a financial instrument (including investments) on initial recognition is
usually the transaction price – i.e., the fair value of the consideration given or received. If the Corporation
determines that the fair value on initial recognition differs from the transaction price and the fair value is
evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a
valuation technique for which any unobservable inputs are judged to be insignificant in relation to the
measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference
between the fair value on initial recognition and the transaction price. Subsequently, that difference is
recognized in profit or loss on an appropriate basis over the life of the instrument but no later than when the
valuation is wholly supported by observable data, or the transaction is closed out.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
5. Critical judgments in applying accounting policies and key sources of estimation uncertainty (cont'd):
5. Critical judgments in applying accounting policies and key sources of estimation uncertainty (cont'd):
Key sources of estimation uncertainty (cont'd):
(a) Revenue recognition:
Key sources of estimation uncertainty (cont'd):
(d) Inventory and onerous contracts provision:
On long-term fixed price contracts, revenues are recorded over time using costs incurred to date relative to total
estimated costs at completion to measure progress towards satisfying performance obligations. Revenue is
recognized by multiplying the expected consideration by the ratio of cumulative costs incurred to date to the
sum of incurred and estimated costs for completing the performance obligation. The cumulative effect of
changes to expected revenues and expected costs for completing a contract are recognized in the period in
which the revisions are identified. If the expected costs exceed the expected revenues on a contract, such loss
is recognized in its entirety in the period it becomes known.
In determining the lower of cost and net realizable value of inventory and in establishing the appropriate
provision for inventory obsolescence, management estimates the likelihood that inventory carrying values will
be affected by changes in market pricing or demand for the products and by changes in technology or design
which could make inventory on hand obsolete or recoverable at less than the recorded value. Management
performs regular reviews to assess the impact of changes in technology and design, sales trends and other
changes on the carrying value of inventory. Where it is determined that such changes have occurred and will
have a negative impact on the value of inventory on hand, appropriate provisions are made.
(i)
The determination of expected costs for completing a contract is based on estimates that can be
affected by a variety of factors such as variances in the timeline to completion, the cost of materials,
the availability and cost of labour, as well as productivity.
If there is a subsequent increase in the value of inventory on hand, reversals of previous write-downs to net
realizable value are made. Unforeseen changes in these factors could result in additional inventory provisions,
or reversals of previous provisions, being required.
(ii)
The determination of potential revenues includes the contractually agreed amount and may be
adjusted based on the estimate of the Corporation’s attainment on achieving certain defined
contractual milestones. Management’s estimation
is required
in determining
the amount of
consideration to which the Corporation expects to be entitled and in determining when a performance
obligation has been met.
Estimates used to determine revenues and costs of long-term fixed price contracts involve uncertainties that
ultimately depend on the outcome of future events and are periodically revised as projects progress. There is a
risk that a customer may ultimately disagree with management’s assessment of the progress achieved against
milestones, or that the Corporation's estimates of the work required to complete a contract may change.
(b) Asset impairment:
Many of the factors used in assessing fair value are outside the control of management and it is reasonably
likely that assumptions and estimates will change from period to period.
These changes may result in future impairments. For example, the revenue growth rate could be lower than
projected due to economic, industry or competitive factors, or the discount rate used in the value in use model
could increase due to a change in market interest rates. In addition, future goodwill impairment charges may be
necessary if the market capitalization decreased due to a decline in the trading price of the Corporation’s
common stock, which could negatively impact the fair value of the Corporation’s cash generating units.
(c) Warranty provision:
A provision for warranty costs is recorded on product sales at the time of shipment. In establishing the warranty
provision, management estimates the likelihood that products sold will experience warranty claims and the cost
to resolve claims received. In making such determinations, the Corporation uses estimates based on the nature
of the contract and past and projected experience with the products. Should these estimates prove to be
incorrect, the Corporation may incur costs different from those provided for in the warranty provision.
Management reviews warranty assumptions and makes adjustments to the provision at each reporting date
based on the latest information available, including the expiry of contractual obligations. Adjustments to the
warranty provision are recorded in cost of product and service revenues.
A provision for onerous contracts is also assessed and measured at the present value of the lower of the
expected cost of terminating the contract and the expected net cost of continuing with the contract, which is
determined based on the incremental costs of fulfilling the obligation under the contract and an allocation of
other costs directly related to fulfilling the contract. Before an onerous contract provision is established, the
Corporation recognizes any impairment loss on the assets (including through an inventory provision) associated
with that contract.
(e) Fair value measurement (including investments):
A number of the Corporation’s accounting policies and disclosures require the measurement of fair values, for
both financial and non-financial assets and liabilities.
When one is available, the Corporation measures the fair value of an instrument using the quoted price in an
active market for that instrument. A market is regarded as “active” if transactions for the asset or liability take
place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no
quoted price in an active market, then the Corporation uses valuation techniques that maximize the use of
relevant observable inputs and minimize the use of unobservable inputs. This involves developing estimates
and assumptions consistent with how market participants would price the instrument. Management bases its
assumptions on observable data as far as possible, but this is not always available. In that case, management
uses the best information available. Where they are available, the fair value of investments is based on
observable market transactions. Estimated fair values may vary from the actual prices that would be achieved in
an arm’s length transaction at the reporting date.
The best evidence of the fair value of a financial instrument (including investments) on initial recognition is
usually the transaction price – i.e., the fair value of the consideration given or received. If the Corporation
determines that the fair value on initial recognition differs from the transaction price and the fair value is
evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a
valuation technique for which any unobservable inputs are judged to be insignificant in relation to the
measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference
between the fair value on initial recognition and the transaction price. Subsequently, that difference is
recognized in profit or loss on an appropriate basis over the life of the instrument but no later than when the
valuation is wholly supported by observable data, or the transaction is closed out.
83
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
6. Recent accounting pronouncements and future accounting policy changes:
7. Discontinued operations (cont'd):
The following is an overview of accounting standard changes that the Corporation will be required to adopt in
future years. The Corporation expects to adopt these standards as at their effective dates and will continue to
evaluate the impact of these standards on the consolidated financial statements.
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
On January 23, 2020, the IASB issued amendments to IAS 1 Presentation of Financial Statements (the "2020
amendments"), to clarify the classification of liabilities as current or non-current. On October 31, 2022, the IASB
issued Non-current Liabilities with Covenants (Amendments to IAS 1) (the “2022 amendments”), to improve the
information a company provides about long-term debt with covenants.
For the purposes of non-current classification, the 2020 amendments and the 2022 amendments (collectively
"the amendments") removed the requirement for a right to defer settlement or roll over of a liability for at least
twelve months to be unconditional. Instead, such a right must have substance and exist at the end of the
reporting period.
The amendments reconfirmed that only covenants with which a company must comply on or before the
reporting date affect the classification of a liability as current or non-current. Covenants with which a company
must comply after the reporting date do not affect a liability’s classification at that date. The amendments also
clarify how a company classifies a liability that includes a counterparty conversion option. The amendments
state that:
•
•
settlement of a liability includes transferring a company’s own equity instruments to the counterparty,
and
when classifying liabilities as current or non-current a company can ignore only those conversion
options that are recognized as equity.
The amendments are effective for annual periods beginning on or after January 1, 2024. Early adoption is
permitted. A company that applies the 2020 amendments early is required to also apply the 2022 amendments.
The adoption of the Amendments to IAS 1 is not expected to have a material impact on the Corporation's
financial statements.
7. Discontinued operations:
On November 11, 2021, the Corporation acquired BMS (formerly Arcola Energy Limited), a UK-based systems
engineering company specializing in hydrogen fuel cell systems and powertrain integration. The Corporation
acquired 100% of Arcola for total consideration of up to $40,000,000, consisting of up-front net cash
consideration of $7,157,000, and including 337,353 shares of the Corporation with an acquisition date fair value
of approximately $4,851,000 (all shares have been issued as of December 31, 2023) vesting over a two year
period from the acquisition date, and $26,258,000 in earn-out cash contingent consideration based on the
achievement of certain performance milestones over an up to three year period from the acquisition date.
Subsequent to the acquisition, the Corporation re-evaluated the business model of BMS and during the year
ended December 31, 2022, the Corporation decided to exit the vehicle integration business of BMS and made
certain restructuring changes to its operations. As a result of the post-acquisition restructuring of BMS'
operations during the year ended December 31, 2022, the Corporation recognized a net charge to restructuring
costs of $4,835,000 consisting primarily of contract exit and modification costs, grant adjustment charges,
personnel change costs, and legal and advisory costs, net of expected recoveries; recovery on settlement of
contingent consideration of $9,891,000 related to the cancellation of certain contingent and outstanding cash
milestones no longer payable; and intangible asset impairment of $13,017,000 consisting of a write-down of
acquired technology, customer contracts, and non-compete intangible assets to their estimated fair value of
$2,500,000.
84
During the year ended December 31, 2023, the Corporation completed a further restructuring of operations at
BMS and effectively closed the operation. As such, the historic operating results of the BMS business for both
2023 and 2022 have been removed from continuing operating results and are instead presented separately in
the statement of loss and comprehensive income (loss) as loss from discontinued operations.
The Corporation reviewed its remaining BMS related intangible assets and goodwill for impairment indicators
and concluded that impairment indicators on certain assets did exist as of December 31, 2023. During the year
ended December 31, 2023, the Corporation recorded impairment charges of $2,266,000 (2022 - $13,017,000)
on intangible assets (note 11) and impairment charges of $23,991,000 (2022 - $nil) on goodwill (note 12) related
to the closure of operations at BMS. As a result of the impairment charges, intangible assets and goodwill for
BMS were both written down to $nil as of December 31, 2023.
intangible assets December 31, 2023
Cost
amortization
amount
Impairment
Accumulated
Net carrying
2,500 $
2,500 $
234 $
234 $
2,266 $
2,266 $
2,266 $
2,266 $
intangible assets at December 31, 2022
Cost
amortization
amount
Impairment
Accumulated
Net carrying
Customer contracts and relationships
Non-compete agreement
15,976 $
1,498 $
14,478 $
11,978 $
1,048
255
168
96
880
159
880
159
17,279 $
1,762 $
15,517 $
13,017 $
2,500
Net loss from discontinued operations for the years ended December 31, 2023 and 2022 is comprised of the
Acquired
Technology
Acquired
Technology
following:
$
$
$
$
Product and service revenues
Cost of product and service revenues
Gross margin
Total operating expense
Finance income and other
Impairment charges on intangible assets
Impairment charges on goodwill
Recovery on settlement of contingent consideration
Income tax recovery
Net loss from discontinued operations
Cash used in operating activities
Cash provided by (used in) investing activities
Cash used in financing activities
Cash used in discontinued operations
Net cash flows from discontinued operations for the years ended December 31, 2023 and 2022 is as follows:
Ending
Balance
—
—
Ending
Balance
2,500
—
—
2022
1,926
1,713
213
(13,784)
(4)
(13,017)
—
9,891
3,578
2023
934 $
607
327
(7,913)
337
(2,266)
(23,991)
—
—
$
$
$
$
(33,506) $
(13,123)
2023
2022
(3,601) $
(12,259)
47
(234)
(78)
(210)
(3,788) $
(12,547)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
6. Recent accounting pronouncements and future accounting policy changes:
7. Discontinued operations (cont'd):
During the year ended December 31, 2023, the Corporation completed a further restructuring of operations at
BMS and effectively closed the operation. As such, the historic operating results of the BMS business for both
2023 and 2022 have been removed from continuing operating results and are instead presented separately in
the statement of loss and comprehensive income (loss) as loss from discontinued operations.
The Corporation reviewed its remaining BMS related intangible assets and goodwill for impairment indicators
and concluded that impairment indicators on certain assets did exist as of December 31, 2023. During the year
ended December 31, 2023, the Corporation recorded impairment charges of $2,266,000 (2022 - $13,017,000)
on intangible assets (note 11) and impairment charges of $23,991,000 (2022 - $nil) on goodwill (note 12) related
to the closure of operations at BMS. As a result of the impairment charges, intangible assets and goodwill for
BMS were both written down to $nil as of December 31, 2023.
Acquired
Accumulated
Net carrying
intangible assets December 31, 2023
Cost
amortization
amount
Impairment
Technology
Acquired
intangible assets at December 31, 2022
Technology
Customer contracts and relationships
Non-compete agreement
$
$
$
$
2,500 $
2,500 $
234 $
234 $
2,266 $
2,266 $
2,266 $
2,266 $
Accumulated
Net carrying
Cost
amortization
amount
Impairment
15,976 $
1,498 $
14,478 $
11,978 $
1,048
255
168
96
880
159
880
159
Ending
Balance
—
—
Ending
Balance
2,500
—
—
17,279 $
1,762 $
15,517 $
13,017 $
2,500
Net loss from discontinued operations for the years ended December 31, 2023 and 2022 is comprised of the
following:
Product and service revenues
Cost of product and service revenues
Gross margin
Total operating expense
Finance income and other
Impairment charges on intangible assets
Impairment charges on goodwill
Recovery on settlement of contingent consideration
Income tax recovery
Net loss from discontinued operations
$
2023
934 $
607
327
(7,913)
337
(2,266)
(23,991)
—
—
2022
1,926
1,713
213
(13,784)
(4)
(13,017)
—
9,891
3,578
$
(33,506) $
(13,123)
Net cash flows from discontinued operations for the years ended December 31, 2023 and 2022 is as follows:
Cash used in operating activities
Cash provided by (used in) investing activities
Cash used in financing activities
Cash used in discontinued operations
2023
2022
(3,601) $
(12,259)
47
(234)
(78)
(210)
(3,788) $
(12,547)
$
$
85
The following is an overview of accounting standard changes that the Corporation will be required to adopt in
future years. The Corporation expects to adopt these standards as at their effective dates and will continue to
evaluate the impact of these standards on the consolidated financial statements.
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
On January 23, 2020, the IASB issued amendments to IAS 1 Presentation of Financial Statements (the "2020
amendments"), to clarify the classification of liabilities as current or non-current. On October 31, 2022, the IASB
issued Non-current Liabilities with Covenants (Amendments to IAS 1) (the “2022 amendments”), to improve the
information a company provides about long-term debt with covenants.
For the purposes of non-current classification, the 2020 amendments and the 2022 amendments (collectively
"the amendments") removed the requirement for a right to defer settlement or roll over of a liability for at least
twelve months to be unconditional. Instead, such a right must have substance and exist at the end of the
reporting period.
The amendments reconfirmed that only covenants with which a company must comply on or before the
reporting date affect the classification of a liability as current or non-current. Covenants with which a company
must comply after the reporting date do not affect a liability’s classification at that date. The amendments also
clarify how a company classifies a liability that includes a counterparty conversion option. The amendments
state that:
•
•
and
settlement of a liability includes transferring a company’s own equity instruments to the counterparty,
when classifying liabilities as current or non-current a company can ignore only those conversion
options that are recognized as equity.
The amendments are effective for annual periods beginning on or after January 1, 2024. Early adoption is
permitted. A company that applies the 2020 amendments early is required to also apply the 2022 amendments.
The adoption of the Amendments to IAS 1 is not expected to have a material impact on the Corporation's
financial statements.
7. Discontinued operations:
On November 11, 2021, the Corporation acquired BMS (formerly Arcola Energy Limited), a UK-based systems
engineering company specializing in hydrogen fuel cell systems and powertrain integration. The Corporation
acquired 100% of Arcola for total consideration of up to $40,000,000, consisting of up-front net cash
consideration of $7,157,000, and including 337,353 shares of the Corporation with an acquisition date fair value
of approximately $4,851,000 (all shares have been issued as of December 31, 2023) vesting over a two year
period from the acquisition date, and $26,258,000 in earn-out cash contingent consideration based on the
achievement of certain performance milestones over an up to three year period from the acquisition date.
Subsequent to the acquisition, the Corporation re-evaluated the business model of BMS and during the year
ended December 31, 2022, the Corporation decided to exit the vehicle integration business of BMS and made
certain restructuring changes to its operations. As a result of the post-acquisition restructuring of BMS'
operations during the year ended December 31, 2022, the Corporation recognized a net charge to restructuring
costs of $4,835,000 consisting primarily of contract exit and modification costs, grant adjustment charges,
personnel change costs, and legal and advisory costs, net of expected recoveries; recovery on settlement of
contingent consideration of $9,891,000 related to the cancellation of certain contingent and outstanding cash
milestones no longer payable; and intangible asset impairment of $13,017,000 consisting of a write-down of
acquired technology, customer contracts, and non-compete intangible assets to their estimated fair value of
$2,500,000.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
8. Trade and other receivables:
Trade accounts receivable
Other receivables
Contract assets
Contract assets
December 31,
2023
December 31,
2022
$
$
37,490 $
7,806
13,269
58,565 $
25,812
10,103
12,781
48,696
Contract assets primarily relate to the Corporation's rights to consideration for work completed but not billed as
at December 31, 2023 for engineering services and technology transfer services.
Contract assets
At January 1, 2023
Additions to contract assets
Invoiced during the year
At December 31, 2023
December 31,
2023
$
$
12,781
8,435
(7,947)
13,269
Information about the Corporation's exposure to credit and market risks, and impairment losses for trade
receivables and contract assets is included in note 32.
9. Inventories:
December 31,
2023
December 31,
2022
Raw materials and consumables
$
15,085 $
Work-in-progress
Finished goods
Service inventory
15,041
7,169
8,575
$
45,870 $
29,016
17,171
8,502
3,361
58,050
In 2023, the amount of raw materials and consumables, finished goods and work-in-progress recognized as
cost of product and service revenues amounted to $103,850,000 (2022 - $68,870,000).
In 2023, the Corporation recorded negative inventory impairment and onerous contract provision adjustments of
$17,181,000 (2022 - $8,702,000) and reversed previously recorded adjustments of $2,203,000 (2022 -
$1,189,000), resulting in net negative inventory impairment and onerous contract provision adjustments of
$14,978,000 (2022 - $7,513,000). Write-downs and reversals are included in either cost of product and service
revenues, or research and product development expense, depending on the nature of inventory.
10. Property, plant and equipment:
Property, plant and equipment owned
Right-of-use assets
December 31,
2023
December 31,
2022
$
$
102,206 $
14,119
116,325 $
70,344
12,017
82,361
86
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
10. Property, plant and equipment (cont'd):
Property, plant and equipment owned
Net carrying amounts
Computer equipment
Furniture and fixtures
Leasehold improvements
Production and test equipment
December 31,
December 31,
$
1,405 $
2023
1,436
2,245
97,120
$
102,206 $
Effect of
movements in
exchange rates
December 31,
2022
1,207
1,323
1,550
66,264
70,344
2023
936
7,356
2,764
10,780
146,097
2023
936
5,951
1,328
8,535
48,977
Cost
Building
Computer equipment
Furniture and fixtures
Leasehold improvements
December 31,
2022
Additions
Disposals
Transfers
$
— $
936 $
— $
6,741
2,406
9,650
745
328
1,103
38,102
—
—
—
— $
(130)
—
—
— $
—
30
27
(55)
Production and test equipment
109,202
(111)
(1,041)
$
127,999 $
41,214 $
(111) $
(1,171) $
2 $
167,933
Accumulated depreciation
2022 Depreciation
Disposals
Impairment
Transfers
December 31,
Building
$
— $
— $
936 $
— $
— $
Computer equipment
Furniture and fixtures
Leasehold improvements
5,534
1,083
8,100
—
491
245
431
Production and test equipment
42,938
7,132
(23)
—
—
—
—
—
—
31
(73)
(12)
4
(1,090)
(1)
12
—
(11)
Effect of
movements
in exchange
rates
December 31,
$
57,655 $
8,299 $
(23) $
967 $
(1,171) $
— $
65,727
During the year ended December 31, 2023, impairment charges of $967,000 (2022 - $7,000) consist primarily
of a write-down of assets of $936,000 (2022 - $nil), as the Corporation has decided to suspend investment in a
planned facility in China (note 27), and an impairment loss of $31,000 (2022 - $7,000) for production and test
equipment.
Cost
Computer equipment
Furniture and fixtures
Leasehold improvements
Production and test equipment
Effect of
movements in
exchange
December 31,
December 31,
2021
Additions
Impairment
Transfers
rates
$
6,852 $
181 $
— $
(290) $
(2) $
1,914
9,450
77,644
700
388
32,663
—
—
(7)
(208)
(185)
(1,109)
—
(3)
11
2022
6,741
2,406
9,650
109,202
$
95,860 $
33,932 $
(7) $
(1,792) $
6 $
127,999
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
8. Trade and other receivables:
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
10. Property, plant and equipment (cont'd):
Property, plant and equipment owned
Contract assets primarily relate to the Corporation's rights to consideration for work completed but not billed as
at December 31, 2023 for engineering services and technology transfer services.
Net carrying amounts
Computer equipment
Furniture and fixtures
Leasehold improvements
Production and test equipment
Cost
Building
Computer equipment
Furniture and fixtures
Leasehold improvements
Trade accounts receivable
Other receivables
Contract assets
Contract assets
Contract assets
At January 1, 2023
Additions to contract assets
Invoiced during the year
At December 31, 2023
9. Inventories:
Work-in-progress
Finished goods
Service inventory
December 31,
December 31,
2023
37,490 $
7,806
13,269
58,565 $
2022
25,812
10,103
12,781
48,696
$
$
December 31,
2023
12,781
8,435
(7,947)
13,269
$
$
December 31,
December 31,
2023
15,041
7,169
8,575
$
45,870 $
2022
29,016
17,171
8,502
3,361
58,050
Raw materials and consumables
$
15,085 $
Building
$
— $
Computer equipment
Furniture and fixtures
Leasehold improvements
5,534
1,083
8,100
—
491
245
431
Information about the Corporation's exposure to credit and market risks, and impairment losses for trade
receivables and contract assets is included in note 32.
$
127,999 $
41,214 $
(111) $
(1,171) $
2 $
167,933
Accumulated depreciation
2022 Depreciation
Disposals
Impairment
Transfers
December 31,
Effect of
movements
in exchange
rates
December 31,
2023
Production and test equipment
109,202
(111)
(1,041)
December 31,
2023
December 31,
2022
$
1,405 $
1,436
2,245
97,120
$
102,206 $
1,207
1,323
1,550
66,264
70,344
December 31,
2022
Additions
Disposals
Transfers
Effect of
movements in
exchange rates
December 31,
2023
$
— $
936 $
— $
6,741
2,406
9,650
745
328
1,103
38,102
—
—
—
— $
(130)
—
—
— $
—
30
27
(55)
936
7,356
2,764
10,780
146,097
Production and test equipment
42,938
7,132
(23)
— $
936 $
— $
— $
—
—
—
—
—
—
31
(73)
(12)
4
(1,090)
(1)
12
—
(11)
936
5,951
1,328
8,535
48,977
In 2023, the amount of raw materials and consumables, finished goods and work-in-progress recognized as
cost of product and service revenues amounted to $103,850,000 (2022 - $68,870,000).
In 2023, the Corporation recorded negative inventory impairment and onerous contract provision adjustments of
$17,181,000 (2022 - $8,702,000) and reversed previously recorded adjustments of $2,203,000 (2022 -
$1,189,000), resulting in net negative inventory impairment and onerous contract provision adjustments of
$14,978,000 (2022 - $7,513,000). Write-downs and reversals are included in either cost of product and service
revenues, or research and product development expense, depending on the nature of inventory.
10. Property, plant and equipment:
Property, plant and equipment owned
Right-of-use assets
December 31,
December 31,
2023
102,206 $
14,119
116,325 $
$
$
2022
70,344
12,017
82,361
$
57,655 $
8,299 $
(23) $
967 $
(1,171) $
— $
65,727
During the year ended December 31, 2023, impairment charges of $967,000 (2022 - $7,000) consist primarily
of a write-down of assets of $936,000 (2022 - $nil), as the Corporation has decided to suspend investment in a
planned facility in China (note 27), and an impairment loss of $31,000 (2022 - $7,000) for production and test
equipment.
Cost
Computer equipment
Furniture and fixtures
Leasehold improvements
Production and test equipment
December 31,
2021
Additions
Impairment
Transfers
Effect of
movements in
exchange
rates
December 31,
2022
$
6,852 $
181 $
— $
(290) $
(2) $
1,914
9,450
77,644
700
388
32,663
—
—
(7)
(208)
(185)
(1,109)
—
(3)
11
6,741
2,406
9,650
109,202
$
95,860 $
33,932 $
(7) $
(1,792) $
6 $
127,999
87
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
10. Property, plant and equipment (cont'd):
Property, plant and equipment owned (cont'd)
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
10. Property, plant and equipment (cont'd):
Right-of-use assets (cont'd)
Accumulated depreciation
Computer equipment
Furniture and fixtures
Leasehold improvements
Production and test equipment
Right-of-use assets
December 31,
2021
Depreciation
Transfers
Effect of
movements in
exchange rates
December 31,
2022
$
5,253 $
574 $
(290) $
(3) $
1,152
7,932
37,668
139
353
6,368
(208)
(185)
(1,109)
—
—
11
$
52,005 $
7,434 $
(1,792) $
8 $
5,534
1,083
8,100
42,938
57,655
The Corporation leases certain assets under lease agreements, comprising primarily of leases of land and
buildings, office equipment and vehicles (note 19).
Net carrying amounts included in property, plant and equipment
December 31,
2023
December 31,
2022
13,691 $
11,487
70
358
116
414
14,119 $
12,017
$
$
Property
Equipment
Vehicle
Cost
Property
Equipment
Vehicle
December 31,
2022
Additions
De-recognition
Effect of
movements in
exchange rates
December 31,
2023
$
28,844 $
5,676 $
(73) $
— $
34,447
188
637
—
150
(11)
(135)
(1)
(15)
176
637
$
29,669 $
5,826 $
(219) $
(16) $
35,260
At December 31, 2023
$
79,381 $
77,975 $
Accumulated depreciation
Property
Equipment
Vehicle
Cost
Property
Equipment
Vehicle
December 31,
2022
Depreciation
De-recognition
Effect of
movements in
exchange rates
December 31,
2023
$
17,357 $
3,382 $
(3) $
21 $
20,757
72
223
41
109
(7)
(58)
—
4
106
278
$
17,652 $
3,532 $
(68) $
25 $
21,141
December 31,
2021
Additions
De-
recognition
Transfer
Effect of
movements in
exchange
rates
December 31,
2022
$
26,427 $
2,746 $
— $
(341) $
12 $
28,844
175
372
13
290
$
26,974 $
3,049 $
—
(25)
(25) $
—
—
—
—
188
637
(341) $
12 $
29,669
88
Accumulated depreciation
2021
Depreciation
recognition
Transfer
rates
2022
December 31,
De-
exchange
December 31,
Property
Equipment
Vehicle
$
14,590 $
3,108 $
(341) $
— $
17,357
36
142
36
87
—
—
—
—
72
223
$
14,768 $
3,231 $
(341) $
— $
17,652
— $
—
(6)
(6) $
Effect of
movements in
11. Intangible assets:
ERP management reporting software system
Intellectual property acquired from Ballard Motive Solutions (note 7)
At January 1, 2022
Additions to intangible assets
Amortization expense
At December 31, 2022
Additions to intangible assets
Amortization expense
Impairment on intangible assets (note 7)
Impairment on intangible assets (note 7)
December 31,
December 31,
$
$
2023
1,406 $
—
1,406 $
Accumulated
Net carrying
Cost
amortization
$
78,677 $
57,889 $
79,227
550
—
—
154
—
—
—
3,107
13,017
74,013
—
1,696
2,266
2022
2,714
2,500
5,214
amount
20,788
550
(3,107)
(13,017)
5,214
154
(1,696)
(2,266)
1,406
During the year ended December 31, 2023, impairment charges on intangible assets of $2,266,000 (2022 -
$13,017,000) were recognized primarily as a result of the post-acquisition restructuring of operations and
ultimate closure of BMS (note 7).
Additions to intangible assets in 2023 of $154,000 (2022 - $550,000) consist primarily of costs to enhance the
capabilities of the ERP management reporting software system.
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. During the year ended
December 31, 2023, amortization of $1,696,000 (2022 - $3,107,000) was recorded.
12. Goodwill:
For the purpose of impairment testing, goodwill is allocated to the Corporation’s cash-generating units which
represent the lowest level within the Corporation at which the goodwill is monitored for internal management
purposes, which is not higher than the Corporation’s operating segments (note 31).
As of December 31, 2023, the aggregate carrying amount of the Corporation’s goodwill is $40,277,000 (2022 -
$64,268,000). The impairment of goodwill related to the closure of BMS of $23,991,000 (2022 - $nil) was
recorded before the impairment test effective December 31, 2023.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
10. Property, plant and equipment (cont'd):
Property, plant and equipment owned (cont'd)
10. Property, plant and equipment (cont'd):
Right-of-use assets (cont'd)
December 31,
December 31,
Accumulated depreciation
Property
Equipment
Vehicle
11. Intangible assets:
December 31,
2021
Depreciation
De-
recognition
Transfer
Effect of
movements in
exchange
rates
December 31,
2022
$
14,590 $
3,108 $
36
142
36
87
$
14,768 $
3,231 $
— $
—
(6)
(6) $
(341) $
— $
17,357
—
—
—
—
72
223
(341) $
— $
17,652
ERP management reporting software system
Intellectual property acquired from Ballard Motive Solutions (note 7)
December 31,
2023
December 31,
2022
$
$
1,406 $
—
1,406 $
2,714
2,500
5,214
Accumulated
Net carrying
$
29,669 $
5,826 $
(219) $
(16) $
35,260
At December 31, 2023
$
79,381 $
77,975 $
At January 1, 2022
Additions to intangible assets
Amortization expense
Impairment on intangible assets (note 7)
At December 31, 2022
Additions to intangible assets
Amortization expense
Impairment on intangible assets (note 7)
Cost
amortization
$
78,677 $
57,889 $
550
—
—
79,227
154
—
—
—
3,107
13,017
74,013
—
1,696
2,266
amount
20,788
550
(3,107)
(13,017)
5,214
154
(1,696)
(2,266)
1,406
During the year ended December 31, 2023, impairment charges on intangible assets of $2,266,000 (2022 -
$13,017,000) were recognized primarily as a result of the post-acquisition restructuring of operations and
ultimate closure of BMS (note 7).
Additions to intangible assets in 2023 of $154,000 (2022 - $550,000) consist primarily of costs to enhance the
capabilities of the ERP management reporting software system.
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. During the year ended
December 31, 2023, amortization of $1,696,000 (2022 - $3,107,000) was recorded.
12. Goodwill:
For the purpose of impairment testing, goodwill is allocated to the Corporation’s cash-generating units which
represent the lowest level within the Corporation at which the goodwill is monitored for internal management
purposes, which is not higher than the Corporation’s operating segments (note 31).
As of December 31, 2023, the aggregate carrying amount of the Corporation’s goodwill is $40,277,000 (2022 -
$64,268,000). The impairment of goodwill related to the closure of BMS of $23,991,000 (2022 - $nil) was
recorded before the impairment test effective December 31, 2023.
89
Accumulated depreciation
2021
Depreciation
Transfers
Computer equipment
Furniture and fixtures
Leasehold improvements
Production and test equipment
$
5,253 $
574 $
(290) $
(3) $
1,152
7,932
37,668
139
353
6,368
(208)
(185)
(1,109)
—
—
11
$
52,005 $
7,434 $
(1,792) $
8 $
2022
5,534
1,083
8,100
42,938
57,655
Effect of
movements in
exchange rates
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 19).
Net carrying amounts included in property, plant and equipment
December 31,
December 31,
2023
13,691 $
70
358
2022
11,487
116
414
14,119 $
12,017
$
$
December 31,
2022
Additions
De-recognition
Effect of
movements in
exchange rates
December 31,
2023
$
28,844 $
5,676 $
(73) $
— $
34,447
188
637
—
150
(11)
(135)
(1)
(15)
176
637
Accumulated depreciation
2022
Depreciation
De-recognition
December 31,
Effect of
movements in
exchange rates
December 31,
2023
$
17,357 $
3,382 $
(3) $
21 $
20,757
72
223
41
109
(7)
(58)
—
4
106
278
$
17,652 $
3,532 $
(68) $
25 $
21,141
Effect of
movements in
December 31,
De-
exchange
December 31,
2021
Additions
recognition
Transfer
rates
2022
$
26,427 $
2,746 $
— $
(341) $
12 $
28,844
175
372
13
290
—
—
—
—
188
637
$
26,974 $
3,049 $
(341) $
12 $
29,669
—
(25)
(25) $
Property
Equipment
Vehicle
Cost
Property
Equipment
Vehicle
Property
Equipment
Vehicle
Cost
Property
Equipment
Vehicle
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
12. Goodwill (cont'd):
The goodwill impairment testing requires a comparison of the carrying value of the asset to the higher of (i)
value in use; and (ii) fair value less costs to sell. Value in use is defined as the present value of future cash
flows expected to be derived from the asset in its current state. The Corporation’s fair value less costs to sell
test is a modified market capitalization assessment, whereby the fair value of the Fuel Cell Products and
Services segment is determined by first calculating the value of the Corporation at December 31, 2023 based
on the average closing share price in the month of December, adding a reasonable estimated control premium
to determine the Corporation’s enterprise value on a controlling basis after adjusting for excess cash balances,
deducting the fair value of long-term financial investments, and then deducting the estimated costs to sell to
arrive at the fair value of the Fuel Cell Products and Services segment. Based on the fair value less costs to sell
test, the Corporation has determined that the fair value of the Fuel Cell Products and Services segment
exceeds its carrying value as of December 31, 2023, indicating that no goodwill impairment charge is required
for 2023 ($nil in 2022).
13. Equity-accounted Investments:
For the year ended December 31, 2023, the Corporation recorded $10,131,000 (2022 - $11,617,000) in equity
loss of investment in JV and associates, consisting of equity loss in Weichai Ballard JV of $9,931,000 (2022 -
$11,599,000) and equity loss in Synergy Ballard JVCo of $200,000 (2022 - $18,000).
Investment in Weichai Ballard JV
Investment in Weichai Ballard JV
Beginning balance
Capital contribution to JV
Recognition of 49% profit on inventory not yet sold to third party, net
Equity in loss
Cumulative translation adjustment due to foreign exchange
Ending balance
December 31,
2023
December 31,
2022
$
24,026 $
—
1,205
(9,931)
(1,399)
$
13,901 $
28,982
9,272
549
(11,599)
(3,178)
24,026
Weichai Ballard JV is an associate in which the Corporation has significant influence and a 49% ownership
interest. During the year ended December 31, 2023, the Corporation made committed capital contributions of
$nil (2022 - $9,272,000 (RMB 62,475,000 equivalent)) to Weichai Ballard JV. At December 31, 2023, as
specified in the Equity Joint Venture Agreement, the Corporation has fulfilled its capital contribution
commitments to Weichai Ballard JV.
The following tables summarize the financial information of Weichai Ballard JV as included in its own financial
statements as of December 31, 2023, adjusted for foreign exchange differences, the application of the
Corporation's accounting policies, and the Corporation's incorporation costs.
December 31,
2023
December 31,
2022
Percentage ownership interest (49%)
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets (100%)
Corporation's share of net assets (49%)
Incorporation costs
Elimination of unrealized profit on downstream sales, net of sale to third party
$
63,023 $
132
(29,265)
—
33,890
16,607
324
(3,030)
Carrying amount of investment in Weichai Ballard JV
$
13,901 $
80,088
2,618
(23,460)
(2,314)
56,932
27,895
324
(4,193)
24,026
90
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
13. Equity-accounted Investments (cont'd):
Investment in Weichai Ballard JV (cont'd)
Revenue (100%)
Net loss (100%)
Corporation's share of net loss (49%)
Investment in Synergy Ballard JVCo
Investment in Synergy Ballard JVCo
Beginning balance
Recognition of 10% profit on inventory sold to third party, net
Equity in loss
Ending balance
December 31,
December 31,
2023
12,705 $
20,268
9,931 $
2022
6,476
23,672
11,599
December 31,
December 31,
2023
— $
200
(200)
— $
2022
—
18
(18)
—
$
$
$
$
On completion of an Equity Transfer Agreement in October 2023, the Corporation disposed of its 10%
investment in Synergy Ballard JVCo valued at $nil as of December 31, 2023. All remaining deferred revenue
and profit on past downstream transactions totalling $736,000 were fully recognized in the year ended
In addition to the above equity-accounted investments, the Corporation has also acquired ownership interest in
December 31, 2023 .
14. Long-term financial investments:
various other investments.
Net carrying value
Long-term investment - Forsee Power
Long-term investment - Wisdom Motor
Long-term investment - Quantron AG
Long-term investment - HyCap Fund
Long-term investment - Clean H2 Fund
Net carrying value
Long-term investment - Forsee Power
Long-term investment - Wisdom Motor
Long-term investment - Quantron AG
Long-term investment - HyCap Fund
Long-term investment - Clean H2 Fund
December 31,
2022
Contributions
(Proceeds)
Change in Fair
December 31,
$
— $
(3,501) $
18,470 $
10,000
5,333
7,963
565
(1,000)
3,304
4,624
3,983
—
—
7,636
339
10,000
5,183
1,924
806
Value
(4,900)
(4,237)
214
(473)
Value
—
150
(1,597)
(580)
2023
14,969
4,100
4,400
12,801
4,075
40,345
2022
18,470
10,000
5,333
7,963
565
$
42,331 $
10,911 $
(12,897) $
December 31,
2021
Contributions
(Proceeds)
Change in Fair
December 31,
$
33,335 $
— $
(14,865) $
$
41,310 $
17,913 $
(16,892) $
42,331
During the year ended December 31, 2023, changes in fair value and foreign exchange adjustments for long -
term investments totalling $12,897,000 (2022 - $16,877,000) were comprised of decreases in long-term
investments of $12,897,000 (2022 - $16,892,000) offset by increases in short-term investments of $nil (2022 -
$15,000) and were recognized as an unrealized loss in the consolidated statements of loss and comprehensive
income (loss) and included in finance loss and other (notes 26 and 32).
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
12. Goodwill (cont'd):
13. Equity-accounted Investments (cont'd):
The goodwill impairment testing requires a comparison of the carrying value of the asset to the higher of (i)
Investment in Weichai Ballard JV (cont'd)
value in use; and (ii) fair value less costs to sell. Value in use is defined as the present value of future cash
flows expected to be derived from the asset in its current state. The Corporation’s fair value less costs to sell
test is a modified market capitalization assessment, whereby the fair value of the Fuel Cell Products and
Services segment is determined by first calculating the value of the Corporation at December 31, 2023 based
on the average closing share price in the month of December, adding a reasonable estimated control premium
to determine the Corporation’s enterprise value on a controlling basis after adjusting for excess cash balances,
deducting the fair value of long-term financial investments, and then deducting the estimated costs to sell to
arrive at the fair value of the Fuel Cell Products and Services segment. Based on the fair value less costs to sell
test, the Corporation has determined that the fair value of the Fuel Cell Products and Services segment
exceeds its carrying value as of December 31, 2023, indicating that no goodwill impairment charge is required
for 2023 ($nil in 2022).
13. Equity-accounted Investments:
For the year ended December 31, 2023, the Corporation recorded $10,131,000 (2022 - $11,617,000) in equity
loss of investment in JV and associates, consisting of equity loss in Weichai Ballard JV of $9,931,000 (2022 -
$11,599,000) and equity loss in Synergy Ballard JVCo of $200,000 (2022 - $18,000).
Investment in Weichai Ballard JV
Investment in Weichai Ballard JV
Beginning balance
Capital contribution to JV
Recognition of 49% profit on inventory not yet sold to third party, net
Equity in loss
Ending balance
Cumulative translation adjustment due to foreign exchange
December 31,
December 31,
2023
—
1,205
(9,931)
(1,399)
2022
28,982
9,272
549
(11,599)
(3,178)
24,026
$
13,901 $
Weichai Ballard JV is an associate in which the Corporation has significant influence and a 49% ownership
interest. During the year ended December 31, 2023, the Corporation made committed capital contributions of
$nil (2022 - $9,272,000 (RMB 62,475,000 equivalent)) to Weichai Ballard JV. At December 31, 2023, as
specified in the Equity Joint Venture Agreement, the Corporation has fulfilled its capital contribution
commitments to Weichai Ballard JV.
The following tables summarize the financial information of Weichai Ballard JV as included in its own financial
statements as of December 31, 2023, adjusted for foreign exchange differences, the application of the
Corporation's accounting policies, and the Corporation's incorporation costs.
Percentage ownership interest (49%)
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets (100%)
Corporation's share of net assets (49%)
Incorporation costs
Elimination of unrealized profit on downstream sales, net of sale to third party
Carrying amount of investment in Weichai Ballard JV
$
13,901 $
December 31,
December 31,
2023
2022
$
63,023 $
132
(29,265)
—
33,890
16,607
324
(3,030)
80,088
2,618
(23,460)
(2,314)
56,932
27,895
324
(4,193)
24,026
Revenue (100%)
Net loss (100%)
Corporation's share of net loss (49%)
Investment in Synergy Ballard JVCo
Investment in Synergy Ballard JVCo
Beginning balance
Recognition of 10% profit on inventory sold to third party, net
Equity in loss
Ending balance
December 31,
2023
December 31,
2022
12,705 $
20,268
9,931 $
6,476
23,672
11,599
December 31,
2023
December 31,
2022
— $
200
(200)
— $
—
18
(18)
—
$
$
$
$
On completion of an Equity Transfer Agreement in October 2023, the Corporation disposed of its 10%
investment in Synergy Ballard JVCo valued at $nil as of December 31, 2023. All remaining deferred revenue
and profit on past downstream transactions totalling $736,000 were fully recognized in the year ended
December 31, 2023 .
$
24,026 $
14. Long-term financial investments:
In addition to the above equity-accounted investments, the Corporation has also acquired ownership interest in
various other investments.
Net carrying value
Long-term investment - Forsee Power
Long-term investment - Wisdom Motor
Long-term investment - Quantron AG
Long-term investment - HyCap Fund
Long-term investment - Clean H2 Fund
Net carrying value
Long-term investment - Forsee Power
Long-term investment - Wisdom Motor
Long-term investment - Quantron AG
Long-term investment - HyCap Fund
Long-term investment - Clean H2 Fund
December 31,
2022
Contributions
(Proceeds)
Change in Fair
Value
December 31,
2023
$
18,470 $
10,000
5,333
7,963
565
— $
(3,501) $
(1,000)
3,304
4,624
3,983
(4,900)
(4,237)
214
(473)
$
42,331 $
10,911 $
(12,897) $
14,969
4,100
4,400
12,801
4,075
40,345
December 31,
2021
Contributions
(Proceeds)
Change in Fair
Value
December 31,
2022
$
33,335 $
— $
(14,865) $
—
—
7,636
339
10,000
5,183
1,924
806
—
150
(1,597)
(580)
18,470
10,000
5,333
7,963
565
$
41,310 $
17,913 $
(16,892) $
42,331
During the year ended December 31, 2023, changes in fair value and foreign exchange adjustments for long -
term investments totalling $12,897,000 (2022 - $16,877,000) were comprised of decreases in long-term
investments of $12,897,000 (2022 - $16,892,000) offset by increases in short-term investments of $nil (2022 -
$15,000) and were recognized as an unrealized loss in the consolidated statements of loss and comprehensive
income (loss) and included in finance loss and other (notes 26 and 32).
91
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
14. Long-term financial investments (cont'd):
During the first three months of 2024, the Corporation invested in a decarbonization and climate technology and
growth equity fund by acquiring a 2% interest in Templewater Decarbonization I, L.P. (“Templewater”), a limited
partnership registered in Cayman Islands, for an initial investment of $495,000 on a total commitment of
$1,000,000.
Investment in Forsee Power
In October 2021, the Corporation acquired a non-controlling 9.8% equity interest in Forsee Power SA ("Forsee
the design, development, manufacture,
Power"), a publicly
commercialization, and financing of smart battery systems for sustainable electric transport.
traded French company specializing
in
During the year ended December 31, 2023, changes in fair value and foreign exchange adjustments totalling
$(3,501,000) (2022 - $(14,865,000)) were recognized as an unrealized loss in the consolidated statements of
loss and comprehensive income (loss) and included in finance loss and other (notes 26 and 32), resulting in net
fair value investment in Forsee Power of $14,969,000 as of December 31, 2023 (2022 - $18,470,000), now
representing a non-controlling 7.3% equity interest.
Investment in Wisdom Motor
In June 2022, the Corporation invested $10,000,000 and acquired a non-controlling 7.2% interest in Wisdom
Group Holdings Ltd. ("Wisdom Motor"), a privately held Cayman Island holding company with operating
subsidiaries whose business includes the design and manufacture of vehicles, including zero emission fuel cell
electric buses, trucks, and battery-electric vehicles. During the year ended December 31, 2023, the Corporation
assigned its option held to purchase additional Series A Preferred Shares in Wisdom for consideration of
$1,000,000, resulting in recovery of contributions of $1,000,000. The exercise of this option by the acquiring
counterparties, diluted the Corporation's ownership interest from 7.2% to 6.7% as of December 31, 2023.
During the year ended December 31, 2023, changes in fair value totalling $(4,900,000) (2022 - $nil) were
recognized as an unrealized loss in the consolidated statements of loss and comprehensive income (loss) and
included in finance loss and other (notes 26 and 32), resulting in net fair value investment in Wisdom Motor of
$4,100,000 as of December 31, 2023 (2022 - $10,000,000).
Investment in Quantron AG
In September 2022, the Corporation invested €5,000,000 ($5,183,000) and acquired a non-controlling 1.9%
equity interest in Quantron AG, a global electric vehicle integrator and an emerging specialty OEM to accelerate
fuel cell truck adoption. During the year ended December 31, 2023, the Corporation made a committed
additional contribution of €3,000,000 ($3,304,000) to exercise its option to purchase an additional 793 shares,
resulting in a non-controlling ownership interest of 3.0% in Quantron AG as of December 31, 2023.
During the year ended December 31, 2023, changes in fair value and foreign exchange adjustments totalling
$(4,237,000) (2022 -$150,000) were recognized as an unrealized loss in the consolidated statements of loss
and comprehensive income (loss) and included in finance loss and other (notes 26 and 32), resulting in net fair
value investment in Quantron AG of $4,400,000 as of December 31, 2023 (2022 - $5,333,000).
Investment in Hydrogen Funds
HyCap Fund
In August 2021, the Corporation invested in HyCap Fund I SCSp (“HyCap”), a special limited partnership
registered in Luxembourg. During the year ended December 31, 2023, the Corporation made additional
contributions of £3,771,000 ($4,624,000) (2022 - £1,550,000 ($1,924,000)) for total contributions of
£10,987,000 ($14,210,000).
92
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
14. Long-term financial investments (cont'd):
Investment in Hydrogen Funds (cont'd)
HyCap Fund (cont'd)
During the year ended December 31, 2023, changes in fair value and foreign exchange adjustments totalling
$214,000 (2022 - $(1,597,000)) were recognized as an unrealized gain in the consolidated statements of loss
and comprehensive income (loss) and included in finance loss and other (notes 26 and 32), resulting in net fair
value investment in HyCap of $12,801,000 as of December 31, 2023 (2022 - $7,963,000).
Clean H2 Infrastructure Fund
In December 2021, the Corporation invested in Clean H2 Infrastructure Fund I ("Clean H2"), a special limited
partnership registered in France. During the year ended December 31, 2023, the Corporation made additional
contributions of €3,705,000 ($3,983,000) (2022 - €696,000 ($806,000)) for total contributions of €4,701,000
($5,146,000).
During the year ended December 31, 2023, changes in fair value and foreign exchange adjustments totalling
$(473,000) (2022 - $(580,000)) were recognized as an unrealized loss in the consolidated statements of loss
and comprehensive income (loss) and included in finance loss and other (notes 26 and 32), resulting in net fair
value investment in Clean H2 of $4,075,000 as of December 31, 2023 (2022 - $565,000).
15. Bank facilities:
The Corporation has the following bank facilities available to it.
Letter of Guarantee Facility
The Corporation has a Letter of Guarantee Facility (“LG Facility”), enabling the bank to issue letters of
guarantees, standby letters of credit, performance bonds, counter guarantees, counter standby letters of credit
or similar credits on the Corporation's behalf from time to time up to a maximum of $2,000,000.
At December 31, 2023, EUR 979,000 (CDN $1,433,000) (2022 - $nil) was outstanding on the LG Facility.
Foreign Exchange Facility
The Corporation also has a $25,000,000 Foreign Exchange Facility (“FX Facility”) that enables the Corporation
to enter into foreign exchange currency contracts (at face value amounts in excess of the FX facility) secured by
a guarantee from Export Development Canada.
At December 31, 2023, the Corporation had outstanding foreign exchange currency contracts to purchase a
total of CDN $31,500,000 (2022 – CDN $38,000,000) at an average rate of 1.35 CDN per U.S. dollar, resulting
in an unrealized gain of CDN $542,000 at December 31, 2023 (2022 – CDN $(1,201,000)). The unrealized gain
on forward foreign exchange contracts is presented in prepaid expenses and other current assets on the
statement of financial position.
16. Trade and other payables:
Trade accounts payable
Compensation payable
Other liabilities
Taxes payable
December 31,
December 31,
$
13,724 $
2023
19,235
5,628
1,109
$
39,696 $
2022
20,440
13,248
6,059
586
40,333
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
14. Long-term financial investments (cont'd):
During the first three months of 2024, the Corporation invested in a decarbonization and climate technology and
growth equity fund by acquiring a 2% interest in Templewater Decarbonization I, L.P. (“Templewater”), a limited
partnership registered in Cayman Islands, for an initial investment of $495,000 on a total commitment of
$1,000,000.
Investment in Forsee Power
In October 2021, the Corporation acquired a non-controlling 9.8% equity interest in Forsee Power SA ("Forsee
Power"), a publicly
traded French company specializing
in
the design, development, manufacture,
commercialization, and financing of smart battery systems for sustainable electric transport.
During the year ended December 31, 2023, changes in fair value and foreign exchange adjustments totalling
$(3,501,000) (2022 - $(14,865,000)) were recognized as an unrealized loss in the consolidated statements of
loss and comprehensive income (loss) and included in finance loss and other (notes 26 and 32), resulting in net
fair value investment in Forsee Power of $14,969,000 as of December 31, 2023 (2022 - $18,470,000), now
representing a non-controlling 7.3% equity interest.
Investment in Wisdom Motor
In June 2022, the Corporation invested $10,000,000 and acquired a non-controlling 7.2% interest in Wisdom
Group Holdings Ltd. ("Wisdom Motor"), a privately held Cayman Island holding company with operating
subsidiaries whose business includes the design and manufacture of vehicles, including zero emission fuel cell
electric buses, trucks, and battery-electric vehicles. During the year ended December 31, 2023, the Corporation
assigned its option held to purchase additional Series A Preferred Shares in Wisdom for consideration of
$1,000,000, resulting in recovery of contributions of $1,000,000. The exercise of this option by the acquiring
counterparties, diluted the Corporation's ownership interest from 7.2% to 6.7% as of December 31, 2023.
During the year ended December 31, 2023, changes in fair value totalling $(4,900,000) (2022 - $nil) were
recognized as an unrealized loss in the consolidated statements of loss and comprehensive income (loss) and
included in finance loss and other (notes 26 and 32), resulting in net fair value investment in Wisdom Motor of
$4,100,000 as of December 31, 2023 (2022 - $10,000,000).
Investment in Quantron AG
In September 2022, the Corporation invested €5,000,000 ($5,183,000) and acquired a non-controlling 1.9%
equity interest in Quantron AG, a global electric vehicle integrator and an emerging specialty OEM to accelerate
fuel cell truck adoption. During the year ended December 31, 2023, the Corporation made a committed
additional contribution of €3,000,000 ($3,304,000) to exercise its option to purchase an additional 793 shares,
resulting in a non-controlling ownership interest of 3.0% in Quantron AG as of December 31, 2023.
During the year ended December 31, 2023, changes in fair value and foreign exchange adjustments totalling
$(4,237,000) (2022 -$150,000) were recognized as an unrealized loss in the consolidated statements of loss
and comprehensive income (loss) and included in finance loss and other (notes 26 and 32), resulting in net fair
value investment in Quantron AG of $4,400,000 as of December 31, 2023 (2022 - $5,333,000).
Investment in Hydrogen Funds
HyCap Fund
In August 2021, the Corporation invested in HyCap Fund I SCSp (“HyCap”), a special limited partnership
registered in Luxembourg. During the year ended December 31, 2023, the Corporation made additional
contributions of £3,771,000 ($4,624,000) (2022 - £1,550,000 ($1,924,000)) for total contributions of
£10,987,000 ($14,210,000).
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
14. Long-term financial investments (cont'd):
Investment in Hydrogen Funds (cont'd)
HyCap Fund (cont'd)
During the year ended December 31, 2023, changes in fair value and foreign exchange adjustments totalling
$214,000 (2022 - $(1,597,000)) were recognized as an unrealized gain in the consolidated statements of loss
and comprehensive income (loss) and included in finance loss and other (notes 26 and 32), resulting in net fair
value investment in HyCap of $12,801,000 as of December 31, 2023 (2022 - $7,963,000).
Clean H2 Infrastructure Fund
In December 2021, the Corporation invested in Clean H2 Infrastructure Fund I ("Clean H2"), a special limited
partnership registered in France. During the year ended December 31, 2023, the Corporation made additional
contributions of €3,705,000 ($3,983,000) (2022 - €696,000 ($806,000)) for total contributions of €4,701,000
($5,146,000).
During the year ended December 31, 2023, changes in fair value and foreign exchange adjustments totalling
$(473,000) (2022 - $(580,000)) were recognized as an unrealized loss in the consolidated statements of loss
and comprehensive income (loss) and included in finance loss and other (notes 26 and 32), resulting in net fair
value investment in Clean H2 of $4,075,000 as of December 31, 2023 (2022 - $565,000).
15. Bank facilities:
The Corporation has the following bank facilities available to it.
Letter of Guarantee Facility
The Corporation has a Letter of Guarantee Facility (“LG Facility”), enabling the bank to issue letters of
guarantees, standby letters of credit, performance bonds, counter guarantees, counter standby letters of credit
or similar credits on the Corporation's behalf from time to time up to a maximum of $2,000,000.
At December 31, 2023, EUR 979,000 (CDN $1,433,000) (2022 - $nil) was outstanding on the LG Facility.
Foreign Exchange Facility
The Corporation also has a $25,000,000 Foreign Exchange Facility (“FX Facility”) that enables the Corporation
to enter into foreign exchange currency contracts (at face value amounts in excess of the FX facility) secured by
a guarantee from Export Development Canada.
At December 31, 2023, the Corporation had outstanding foreign exchange currency contracts to purchase a
total of CDN $31,500,000 (2022 – CDN $38,000,000) at an average rate of 1.35 CDN per U.S. dollar, resulting
in an unrealized gain of CDN $542,000 at December 31, 2023 (2022 – CDN $(1,201,000)). The unrealized gain
on forward foreign exchange contracts is presented in prepaid expenses and other current assets on the
statement of financial position.
16. Trade and other payables:
Trade accounts payable
Compensation payable
Other liabilities
Taxes payable
December 31,
2023
December 31,
2022
$
13,724 $
19,235
5,628
1,109
$
39,696 $
20,440
13,248
6,059
586
40,333
93
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
17. Deferred revenue:
Deferred revenue (i.e. contract liabilities) represents cash received from customers in excess of revenue
recognized on uncompleted contracts.
18. Provisions (cont'd):
Contingent Consideration
December 31,
2023
December 31,
2022
$
$
8,030 $
21,790
(25,232)
4,588 $
12,109
21,650
(25,729)
8,030
Deferred revenue
Beginning Balance
Additions to deferred revenue
Revenue recognized during the year
Ending Balance
18. Provisions:
Balance
At January 1, 2022
Opening retained earnings adjustment
Provisions made during year
Provisions used/paid during year
Provisions reversed/expired during year
Effect of movements in exchange rates
At December 31, 2022
Provisions made during year
Provisions used/paid during year
Provisions reversed/expired during year
Effect of movements in exchange rates
Restructuring
provision
Warranty
provision
Onerous
Contingent
Legal
contracts consideration
provision
8,712 $
300 $
26,258 $
$
5 $
—
455
(320)
—
(3)
—
5,851
(2,391)
(860)
15
137
11,327
1,459
(1,176)
—
2
7,210
(2,652)
(910)
22
1,200
2,900
—
—
—
4,400
2,600
—
(700)
—
—
—
(14,900)
(9,280)
—
— $
—
2,968
—
—
—
2,078
2,968
—
—
(2,000)
(2,968)
Total
35,275
1,200
12,174
(17,611)
(10,140)
12
20,910
11,269
(8,796)
(1,610)
24
—
—
78 $
—
—
— $
21,797
At December 31, 2023
$
422 $
14,997 $
6,300 $
Restructuring provision
Restructuring charges primarily relate to certain cost cutting measures and primarily include employee
termination benefits. Restructuring charges are recognized in other operating expense. As of December 31,
2023, restructuring costs totalling $422,000 remain accrued.
Warranty provision
The Corporation recorded warranty provisions of $7,210,000 (2022 - $5,851,000), comprised of $5,916,000
(2022 - $4,580,000) related to new product sales and $1,294,000 (2022 - $1,271,000) related to upward
warranty adjustments. This was offset by warranty expenditures of $2,652,000 (2022 - $2,391,000) and
downward warranty adjustments of $910,000 (2022 - $860,000), due primarily to contractual expirations and
changes in estimated and actual costs to repair. As of December 31, 2023, total warranty provision of
$14,997,000 has been accrued in provisions and other current liabilities.
Onerous Contracts
The Corporation adopted a new standard for onerous contracts on January 1, 2022 which resulted in an
increase in the onerous contract provisions of $1,200,000. On completion of a review of the Corporation's
"open" contracts as of December 31, 2023, total onerous contract costs of $6,300,000 have been accrued in
provisions and other current liabilities.
The Corporation will continue to review open contracts on a quarterly basis to determine if any ongoing or new
contracts become onerous, and if any of the underlying conditions or assumptions change which would require
an adjustment to the accrued provision.
94
As part of the acquisition of BMS in November 2021 (note 7), total consideration included 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. As part of the post-acquisition restructuring of operations at Ballard
Motive Solutions in the UK in 2022, there was a change in estimate in the fair value of contingent consideration
due to changes in expectation of achieving milestones. This resulted in a recovery on settlement of contingent
consideration of $9,891,000 related to the cancellation of certain contingent and outstanding cash milestones no
longer payable. The contingent consideration provision now comprises the last remaining milestone at its
estimated value of $78,000.
During the year ended December 31, 2023, cash payments of $2,000,000 (2022 - $14,900,000) were made by
the Corporation upon successful achievement of certain performance milestones.
As part of the post-acquisition restructuring of operations at BMS in 2022 (note 7), the Corporation recorded a
legal provision for various contract exit and modification costs, grant adjustment charges, and legal and
advisory costs, net of expected recoveries. As at December 31, 2023, costs totalling $nil remain accrued.
Legal provision
19. 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 2.95% to 8.56%
per annum and expire between January 2024 and October 2033.
Lease Liability, Current
Property
Equipment
Vehicle
Property
Equipment
Vehicle
Lease Liability, Non-current
Lease Liability
Maturity Analysis
Less than one year
Between one and five years
More than five years
Total undiscounted lease liabilities
The Corporation is committed to minimum lease payments as follows:
December 31,
December 31,
2022
3,743
39
113
3,895
73
258
2023
4,368 $
38
99
4,505 $
32
283
13,078 $
11,505
13,393 $
11,836
17,898 $
15,731
$
$
$
$
$
December 31,
2023
5,667
11,757
4,837
22,261
$
$
During the year ended December 31, 2023, the Corporation made principal payments on its lease liabilities of
$4,013,000 (2022 - $3,322,000).
Deferred gains were also recorded on closing of the finance lease agreement and are amortized over the lease
term. At December 31, 2023, the outstanding deferred gain was $485,000 (2022 – $902,000).
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
17. Deferred revenue:
Deferred revenue
Beginning Balance
Additions to deferred revenue
Revenue recognized during the year
Ending Balance
18. Provisions:
Balance
At January 1, 2022
Opening retained earnings adjustment
Provisions made during year
Provisions used/paid during year
Provisions reversed/expired during year
Effect of movements in exchange rates
At December 31, 2022
Provisions made during year
Provisions used/paid during year
Provisions reversed/expired during year
Effect of movements in exchange rates
Restructuring provision
Deferred revenue (i.e. contract liabilities) represents cash received from customers in excess of revenue
recognized on uncompleted contracts.
December 31,
December 31,
2023
8,030 $
21,790
(25,232)
4,588 $
2022
12,109
21,650
(25,729)
8,030
$
$
Restructuring
provision
Warranty
provision
Onerous
Contingent
Legal
contracts consideration
provision
$
8,712 $
300 $
26,258 $
5 $
—
455
(320)
—
(3)
1,459
(1,176)
—
2
—
5,851
(2,391)
(860)
15
7,210
(2,652)
(910)
22
1,200
2,900
—
—
—
4,400
2,600
—
(700)
—
(14,900)
(9,280)
—
—
—
—
—
—
78 $
137
11,327
2,078
2,968
(2,000)
(2,968)
— $
—
2,968
—
—
—
—
—
—
Total
35,275
1,200
12,174
(17,611)
(10,140)
12
20,910
11,269
(8,796)
(1,610)
24
At December 31, 2023
$
422 $
14,997 $
6,300 $
— $
21,797
Restructuring charges primarily relate to certain cost cutting measures and primarily include employee
termination benefits. Restructuring charges are recognized in other operating expense. As of December 31,
2023, restructuring costs totalling $422,000 remain accrued.
Warranty provision
Onerous Contracts
The Corporation recorded warranty provisions of $7,210,000 (2022 - $5,851,000), comprised of $5,916,000
(2022 - $4,580,000) related to new product sales and $1,294,000 (2022 - $1,271,000) related to upward
warranty adjustments. This was offset by warranty expenditures of $2,652,000 (2022 - $2,391,000) and
downward warranty adjustments of $910,000 (2022 - $860,000), due primarily to contractual expirations and
changes in estimated and actual costs to repair. As of December 31, 2023, total warranty provision of
$14,997,000 has been accrued in provisions and other current liabilities.
The Corporation adopted a new standard for onerous contracts on January 1, 2022 which resulted in an
increase in the onerous contract provisions of $1,200,000. On completion of a review of the Corporation's
"open" contracts as of December 31, 2023, total onerous contract costs of $6,300,000 have been accrued in
provisions and other current liabilities.
The Corporation will continue to review open contracts on a quarterly basis to determine if any ongoing or new
contracts become onerous, and if any of the underlying conditions or assumptions change which would require
an adjustment to the accrued provision.
18. Provisions (cont'd):
Contingent Consideration
As part of the acquisition of BMS in November 2021 (note 7), total consideration included 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. As part of the post-acquisition restructuring of operations at Ballard
Motive Solutions in the UK in 2022, there was a change in estimate in the fair value of contingent consideration
due to changes in expectation of achieving milestones. This resulted in a recovery on settlement of contingent
consideration of $9,891,000 related to the cancellation of certain contingent and outstanding cash milestones no
longer payable. The contingent consideration provision now comprises the last remaining milestone at its
estimated value of $78,000.
During the year ended December 31, 2023, cash payments of $2,000,000 (2022 - $14,900,000) were made by
the Corporation upon successful achievement of certain performance milestones.
Legal provision
As part of the post-acquisition restructuring of operations at BMS in 2022 (note 7), the Corporation recorded a
legal provision for various contract exit and modification costs, grant adjustment charges, and legal and
advisory costs, net of expected recoveries. As at December 31, 2023, costs totalling $nil remain accrued.
19. 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 2.95% to 8.56%
per annum and expire between January 2024 and October 2033.
Property
Equipment
Vehicle
Lease Liability, Current
Property
Equipment
Vehicle
Lease Liability, Non-current
Lease Liability
The Corporation is committed to minimum lease payments as follows:
Maturity Analysis
Less than one year
Between one and five years
More than five years
Total undiscounted lease liabilities
December 31,
2023
December 31,
2022
$
$
$
$
$
4,368 $
38
99
4,505 $
3,743
39
113
3,895
13,078 $
11,505
32
283
73
258
13,393 $
11,836
17,898 $
15,731
December 31,
2023
$
$
5,667
11,757
4,837
22,261
During the year ended December 31, 2023, the Corporation made principal payments on its lease liabilities of
$4,013,000 (2022 - $3,322,000).
Deferred gains were also recorded on closing of the finance lease agreement and are amortized over the lease
term. At December 31, 2023, the outstanding deferred gain was $485,000 (2022 – $902,000).
95
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
20. Other non-current liabilities and employee future benefits:
20. Other non-current liabilities and employee future benefits (cont'd):
Employee future benefits (cont'd)
The measurement date used to determine pension and other post-retirement benefit obligations and expense is
December 31 of each year. The most recent actuarial valuation of the employee future benefit plans for funding
purposes was as of January 1, 2023. The next actuarial valuation of the employee future benefit plans for
funding purposes is expected to be performed as of January 1, 2024.
The Corporation expects contributions of $nil to be paid to its defined benefit plans in 2024.
The following tables reconcile the opening balances to the closing balances for the net defined benefit liability
and its components for the two plans. The expense recognized in statement of loss and comprehensive income
(loss) is recorded in finance loss and other (note 26).
Included in other comprehensive income (loss)
Defined benefit pension plan
Balance at January 1
Included in profit or loss
Current service cost
Interest cost (income)
Benefits payable
Remeasurements loss (gain):
Actuarial loss (gain) arising from:
Demographic assumptions
Financial assumptions
Experience adjustment
income
Plan expenses
Settlements
Other
Benefits paid
Contributions paid by the employer
Defined benefit obligation
Fair value of plan assets Net defined benefit liability
2023
2022
2023
2022
2023
2022
$
14,402 $
19,187 $
(14,054) $
(17,373) $
348 $
1,814
26
700
—
726
30
518
—
548
(683)
—
—
(683)
(468)
—
—
(468)
—
113
(600)
—
(54)
(7,326)
(7,867)
—
(558)
(558)
—
(4,547)
(91)
—
(24)
—
—
(671)
(671)
—
—
—
54
7,326
6,894
—
558
558
—
—
—
24
—
—
671
671
26
17
—
43
—
—
—
—
—
—
113
(600)
(486)
—
(4,547)
(91)
3,092
30
50
—
80
—
—
—
—
—
(4,662)
3,116
(973)
(1,546)
Return on plan assets excluding interest
(486)
3,092
Balance at December 31
$
6,703 $
14,402 $
(7,285) $
(14,054) $
(582) $
348
Other non-current liabilities
Employee future benefits
Other non-current liabilities and employee future benefits
Other non-current liabilities: Decommissioning liabilities
December 31,
2023
December 31,
2022
$
$
2,337 $
(475)
1,862 $
1,805
455
2,260
A provision for decommissioning liabilities has been recorded for the Corporation’s head office building in
Burnaby, British Columbia and is related to estimated site restoration obligations at the end of the lease term.
The Corporation has made certain modifications to the leased building to facilitate the manufacturing and testing
of its fuel cell products. Consequently, the site restoration obligations relate primarily to dismantling and
removing various manufacturing and test equipment and restoring the infrastructure of the leased building to its
original state of when the lease was entered into.
Due to the long-term nature of the liability, the most significant uncertainty in estimating the provision is the
costs that will be incurred. The Corporation has determined a range of reasonably possible outcomes of the
total costs for the head office building. In determining the fair value of the decommissioning liabilities, the
estimated future cash flows have been discounted at 3.17% per annum (2022 – 3.41%).
The Corporation performed an assessment of the estimated cash flows required to settle the obligations for the
building as of December 31, 2023. Based on the assessment, an increase of $449,000 in the provision (2022 -
$nil) was recorded against decommissioning liabilities, in addition to accretion costs of $43,000 (2022 -
$44,000) and the effect of movements in exchange rates of $40,000 (2022 - $(117,000)).
The net discounted amount of estimated cash flows required to settle the obligation for the building as of
December 31, 2023 is $2,337,000 (2022 - $1,805,000) which is expected to be settled at the end of the lease
term in 2025.
Employee future benefits
Net defined benefit pension plan liability
Net other post-retirement benefit plan liability
Employee future benefits
December 31,
2023
December 31,
2022
$
$
(582) $
107
(475) $
348
107
455
The Corporation maintained a defined benefit pension plan covering existing and former employees in the
United States. The benefits under the pension plan were based on years of service and salary levels accrued as
of December 31, 2009. In 2009, amendments were made to the defined benefit pension plan to freeze benefits
accruing to employees at their respective years of service and salary levels obtained as of December 31, 2009.
During the year ended December 31, 2023, the Corporation completed a settlement agreement with an external
party to transfer 100% of its liability for the plan retiree population of the plan. On final settlement, $7,326,000
of the plan assets were distributed to this external party who then assumed the full liability of the retiree group.
The Corporation also filed formal plan termination documents and once formal approval is obtained later in
2024, the Corporation anticipates settling the remaining plan liability through cash settlement and annuity
purchases from the remaining plan assets.
Certain employees in the United States are also eligible for post-retirement healthcare, life insurance, and other
benefits.
The Corporation accrues the present value of its obligations under employee future benefit plans and related
costs, net of the present value of plan assets.
96
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
20. Other non-current liabilities and employee future benefits:
20. Other non-current liabilities and employee future benefits (cont'd):
Employee future benefits (cont'd)
The measurement date used to determine pension and other post-retirement benefit obligations and expense is
December 31 of each year. The most recent actuarial valuation of the employee future benefit plans for funding
purposes was as of January 1, 2023. The next actuarial valuation of the employee future benefit plans for
funding purposes is expected to be performed as of January 1, 2024.
The Corporation expects contributions of $nil to be paid to its defined benefit plans in 2024.
The following tables reconcile the opening balances to the closing balances for the net defined benefit liability
and its components for the two plans. The expense recognized in statement of loss and comprehensive income
(loss) is recorded in finance loss and other (note 26).
Defined benefit pension plan
Balance at January 1
Included in profit or loss
Current service cost
Interest cost (income)
Benefits payable
Included in other comprehensive income (loss)
Remeasurements loss (gain):
Actuarial loss (gain) arising from:
Demographic assumptions
Financial assumptions
Experience adjustment
Return on plan assets excluding interest
income
Plan expenses
Settlements
Other
Contributions paid by the employer
Benefits paid
Defined benefit obligation
Fair value of plan assets Net defined benefit liability
2023
2022
2023
2022
2023
2022
$
14,402 $
19,187 $
(14,054) $
(17,373) $
348 $
1,814
26
700
—
726
30
518
—
548
—
113
(600)
—
(54)
(7,326)
(7,867)
—
(558)
(558)
—
(4,547)
(91)
—
(24)
—
(4,662)
—
(671)
(671)
—
(683)
—
(683)
—
—
—
—
(468)
—
(468)
—
—
—
(486)
3,092
24
—
54
7,326
6,894
—
558
558
26
17
—
43
—
113
(600)
(486)
—
—
30
50
—
80
—
(4,547)
(91)
3,092
—
—
3,116
(973)
(1,546)
—
671
671
—
—
—
—
—
—
Balance at December 31
$
6,703 $
14,402 $
(7,285) $
(14,054) $
(582) $
348
97
Other non-current liabilities
Employee future benefits
Other non-current liabilities and employee future benefits
Other non-current liabilities: Decommissioning liabilities
December 31,
December 31,
2023
2,337 $
(475)
1,862 $
2022
1,805
455
2,260
$
$
A provision for decommissioning liabilities has been recorded for the Corporation’s head office building in
Burnaby, British Columbia and is related to estimated site restoration obligations at the end of the lease term.
The Corporation has made certain modifications to the leased building to facilitate the manufacturing and testing
of its fuel cell products. Consequently, the site restoration obligations relate primarily to dismantling and
removing various manufacturing and test equipment and restoring the infrastructure of the leased building to its
original state of when the lease was entered into.
Due to the long-term nature of the liability, the most significant uncertainty in estimating the provision is the
costs that will be incurred. The Corporation has determined a range of reasonably possible outcomes of the
total costs for the head office building. In determining the fair value of the decommissioning liabilities, the
estimated future cash flows have been discounted at 3.17% per annum (2022 – 3.41%).
The Corporation performed an assessment of the estimated cash flows required to settle the obligations for the
building as of December 31, 2023. Based on the assessment, an increase of $449,000 in the provision (2022 -
$nil) was recorded against decommissioning liabilities, in addition to accretion costs of $43,000 (2022 -
$44,000) and the effect of movements in exchange rates of $40,000 (2022 - $(117,000)).
The net discounted amount of estimated cash flows required to settle the obligation for the building as of
December 31, 2023 is $2,337,000 (2022 - $1,805,000) which is expected to be settled at the end of the lease
term in 2025.
Employee future benefits
Net defined benefit pension plan liability
Net other post-retirement benefit plan liability
Employee future benefits
December 31,
December 31,
2023
(582) $
107
(475) $
2022
348
107
455
$
$
The Corporation maintained a defined benefit pension plan covering existing and former employees in the
United States. The benefits under the pension plan were based on years of service and salary levels accrued as
of December 31, 2009. In 2009, amendments were made to the defined benefit pension plan to freeze benefits
accruing to employees at their respective years of service and salary levels obtained as of December 31, 2009.
During the year ended December 31, 2023, the Corporation completed a settlement agreement with an external
party to transfer 100% of its liability for the plan retiree population of the plan. On final settlement, $7,326,000
of the plan assets were distributed to this external party who then assumed the full liability of the retiree group.
The Corporation also filed formal plan termination documents and once formal approval is obtained later in
2024, the Corporation anticipates settling the remaining plan liability through cash settlement and annuity
purchases from the remaining plan assets.
Certain employees in the United States are also eligible for post-retirement healthcare, life insurance, and other
benefits.
The Corporation accrues the present value of its obligations under employee future benefit plans and related
costs, net of the present value of plan assets.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
20. Other non-current liabilities and employee future benefits (cont'd):
20. Other non-current liabilities and employee future benefits (cont'd):
Employee future benefits (cont'd)
Defined benefit obligation
Fair value of plan assets Net defined benefit liability
The significant actuarial assumptions adopted in determining net expense for the years ended December 31
Other post-retirement benefit plan
2023
2022
2023
2022
2023
Balance at January 1
Included in profit or loss
Interest cost (income)
Included in other comprehensive income (loss)
Remeasurements loss (gain):
Actuarial loss (gain) arising from:
Demographic assumptions
Financial assumptions
Experience adjustment
Other
Contributions paid by the employer
Benefits paid
$
107 $
80 $
— $
— $
107 $
5
5
—
1
2
3
—
(8)
(8)
2
2
—
(23)
55
32
—
(7)
(7)
—
—
—
—
—
—
(8)
8
—
—
—
—
—
—
—
(7)
7
—
5
5
—
1
2
3
(8)
—
(8)
2022
80
2
2
—
(23)
55
32
(7)
—
(7)
Balance at December 31
$
107 $
107 $
— $
— $
107 $
107
Included in other comprehensive income (loss)
Defined benefit pension plan actuarial gain
Other post-retirement benefit plan actuarial loss
Pension plan assets comprise:
Cash and cash equivalents
Equity securities
Debt securities
Total
December 31,
2023
December 31,
2022
$
$
973 $
(3)
970 $
1,546
(32)
1,514
2023
100 %
— %
— %
100 %
2022
3 %
60 %
37 %
100 %
The significant actuarial assumptions adopted in measuring the fair value of benefit obligations at December
31 were as follows:
Discount rate
Rate of compensation increase
Pension plan
4.88 %
n/a
2023
Other benefit
plan
4.67 %
n/a
Pension plan
5.00 %
n/a
2022
Other benefit
plan
4.89 %
n/a
(b) Share options:
98
Employee future benefits (cont'd)
were as follows:
Discount rate
Rate of compensation increase
2023
Other benefit
Pension plan
plan
Pension plan
5.00 %
n/a
4.67 %
n/a
2.76 %
n/a
Other benefit
2022
plan
4.89 %
n/a
Impacts of assumed health care cost trend rates applicable to the other post-retirement benefit plan at
December 31, 2023 including a one-percentage-point change in assumed health care cost trend rates would
not have a material impact on the Corporation’s financial statements.
21. Equity:
Share-based compensation
Option Expense
DSU Expense
RSU Expense
Discontinued operations
Total share-based compensation for continuing operations (per statement of loss)
Total share-based compensation (per statement of equity)
(a) Share capital:
December 31,
December 31,
2023
3,035 $
397
7,288
10,720 $
239
10,959 $
$
$
$
2022
5,931
529
2,479
8,939
469
9,408
Upon acquisition of BMS in November 2021 (note 7), part of the total consideration paid included the issuance
of 337,353 shares of the Corporation in three future tranches at a fair value of $18.30 per share discounted for
the timing delay in receiving the shares using an Asian put option pricing model, or $4,851,000.
During the year ended December 31, 2023, the Corporation issued the second and final third tranches of
224,902 (2022 - 112,451) common shares with a fair value of $3,068,000 (2022 - $1,782,000) as per the
acquisition date, offset by miscellaneous deferred financing costs of $15,000 (2022 - $20,000).
During March 2021, the Corporation filed a short form base Shelf Prospectus, which provides the flexibility to
make offerings of securities up to an aggregate initial offering price of $1,500,000,000 during the effective period
of the Prospectus, until April 2023. This was renewed in May 2023 for a period of two years until April 2025.
At December 31, 2023, 298,935,706 ( 2022 - 298,394,203) common shares were issued and outstanding.
The Corporation has options outstanding under a consolidated share option plan. All directors, officers and
employees of the Corporation, and its subsidiaries, are eligible to participate in the share option plans although
as a matter of policy, options are currently not issued to directors. Option exercise prices are denominated in
either Canadian or U.S. dollars, depending on the residency of the recipient. Canadian dollar denominated
options have been converted to U.S. dollars using the year-end exchange rate for presentation purposes.
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.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
20. Other non-current liabilities and employee future benefits (cont'd):
20. Other non-current liabilities and employee future benefits (cont'd):
Employee future benefits (cont'd)
Employee future benefits (cont'd)
Balance at December 31
$
107 $
107 $
— $
— $
107 $
107
Other post-retirement benefit plan
2023
2022
2023
2022
2023
$
107 $
80 $
— $
— $
107 $
Defined benefit obligation
Fair value of plan assets Net defined benefit liability
5
5
—
1
2
3
—
(8)
(8)
2
2
—
(23)
55
32
—
(7)
(7)
—
—
—
—
—
—
(8)
8
—
—
—
—
—
—
—
(7)
7
—
5
5
—
1
2
3
(8)
—
(8)
$
$
2023
973 $
(3)
970 $
2023
100 %
— %
— %
100 %
2022
80
2
2
—
(23)
55
32
(7)
—
(7)
2022
1,546
(32)
1,514
2022
3 %
60 %
37 %
100 %
Included in other comprehensive income (loss)
Balance at January 1
Included in profit or loss
Interest cost (income)
Remeasurements loss (gain):
Actuarial loss (gain) arising from:
Demographic assumptions
Financial assumptions
Experience adjustment
Contributions paid by the employer
Other
Benefits paid
Included in other comprehensive income (loss)
Defined benefit pension plan actuarial gain
Other post-retirement benefit plan actuarial loss
Pension plan assets comprise:
Cash and cash equivalents
Equity securities
Debt securities
Total
31 were as follows:
Discount rate
Rate of compensation increase
The significant actuarial assumptions adopted in measuring the fair value of benefit obligations at December
2023
Other benefit
Pension plan
plan
Pension plan
4.88 %
n/a
4.67 %
n/a
5.00 %
n/a
Other benefit
2022
plan
4.89 %
n/a
The significant actuarial assumptions adopted in determining net expense for the years ended December 31
were as follows:
Discount rate
Rate of compensation increase
Pension plan
5.00 %
n/a
2023
Other benefit
plan
4.67 %
n/a
Pension plan
2.76 %
n/a
2022
Other benefit
plan
4.89 %
n/a
Impacts of assumed health care cost trend rates applicable to the other post-retirement benefit plan at
December 31, 2023 including a one-percentage-point change in assumed health care cost trend rates would
not have a material impact on the Corporation’s financial statements.
21. Equity:
Share-based compensation
Option Expense
DSU Expense
RSU Expense
December 31,
December 31,
Total share-based compensation for continuing operations (per statement of loss)
Discontinued operations
Total share-based compensation (per statement of equity)
(a) Share capital:
December 31,
2023
December 31,
2022
$
$
$
3,035 $
397
7,288
10,720 $
239
10,959 $
5,931
529
2,479
8,939
469
9,408
Upon acquisition of BMS in November 2021 (note 7), part of the total consideration paid included the issuance
of 337,353 shares of the Corporation in three future tranches at a fair value of $18.30 per share discounted for
the timing delay in receiving the shares using an Asian put option pricing model, or $4,851,000.
During the year ended December 31, 2023, the Corporation issued the second and final third tranches of
224,902 (2022 - 112,451) common shares with a fair value of $3,068,000 (2022 - $1,782,000) as per the
acquisition date, offset by miscellaneous deferred financing costs of $15,000 (2022 - $20,000).
During March 2021, the Corporation filed a short form base Shelf Prospectus, which provides the flexibility to
make offerings of securities up to an aggregate initial offering price of $1,500,000,000 during the effective period
of the Prospectus, until April 2023. This was renewed in May 2023 for a period of two years until April 2025.
At December 31, 2023, 298,935,706 ( 2022 - 298,394,203) common shares were issued and outstanding.
(b) Share options:
The Corporation has options outstanding under a consolidated share option plan. All directors, officers and
employees of the Corporation, and its subsidiaries, are eligible to participate in the share option plans although
as a matter of policy, options are currently not issued to directors. Option exercise prices are denominated in
either Canadian or U.S. dollars, depending on the residency of the recipient. Canadian dollar denominated
options have been converted to U.S. dollars using the year-end exchange rate for presentation purposes.
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.
99
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
21. Equity (cont'd):
(b) Share options (cont'd):
As at December 31, options outstanding from the consolidated share option plan were as follows:
Balance
At January 1, 2022
Options granted
Options exercised
Options forfeited
Options expired
At December 31, 2022
Options exercised
Options forfeited
Options expired
At December 31, 2023
Options for
common shares
Weighted average
exercise price
4,041,567 $
1,263,685
(304,635)
(184,496)
(8,501)
4,807,620
(152,120)
(263,253)
(2,025)
4,390,222 $
8.70
8.97
2.87
12.75
2.20
9.19
2.25
10.39
1.36
9.36
The following table summarizes information about the Corporation’s share options outstanding as at
December 31, 2023:
Range of exercise price
$1.33 - $3.08
$3.64 - $5.62
$7.07 - $10.73
$12.91 - $26.13
Options outstanding
Options exercisable
Weighted
average
remaining
contractual life
(years)
1.7
2.1
4.2
4.1
3.4
$
$
Number
outstanding
1,038,671
440,140
2,043,418
867,993
4,390,222
Weighted
average
exercise
price
2.84
4.05
10.14
18.02
9.36
Number
exercisable
Weighted
average
exercise price
1,038,671 $
393,037
1,403,784
729,625
3,565,117 $
2.84
3.86
10.43
17.43
8.93
During 2023, compensation expense of $3,035,000 (2022 – $5,931,000) was recorded in net loss based on the
grant date fair value of the awards recognized over the vesting period.
During 2023, 152,120 (2022 - 304,635) options were exercised for an equal amount of common shares for
proceeds of $335,000 (2022 -$916,000).
During 2023, options to purchase nil common shares were granted with a weighted average fair value of $nil
(2022 – 1,263,685 options and $4.92 fair value). The granted options vest annually over three years.
As at December 31, 2023, options to purchase 4,390,222 common shares were outstanding (2022 –
4,807,620).
(c) Share distribution plan:
RSU performance factor adjustment
The Corporation has a consolidated share distribution plan that permits the issuance of common shares for no
cash consideration to employees of the Corporation to recognize their past contribution and to encourage future
contribution to the Corporation. At December 31, 2023, there were 17,140,498 (2022 – 18,844,127) shares
available to be issued under this plan.
During 2022 and 2023, no shares were issued under this plan and therefore no compensation expense was
recorded against profit or loss.
100
21. Equity (cont'd):
(d) Deferred share units:
share distribution plan.
Balance
At January 1, 2022
DSUs granted
DSUs exercised
At December 31, 2022
DSUs granted
DSUs exercised
At December 31, 2023
$753,000).
(e) Restricted share units:
Balance
At January 1, 2022
RSUs granted
RSUs exercised
RSUs forfeited
At December 31, 2022
RSUs granted
RSUs exercised
RSUs forfeited
At December 31, 2023
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 in the capital of the Corporation after the
director or executive ceases to provide services to the Corporation. Shares will be issued from the Corporation’s
During 2023, compensation expense of $397,000 (2022 - $529,000) was recorded in net loss relating to 93,188
DSUs (2022 - 80,319) granted during the year.
During 2023, 65,499 DSUs (2022 – 126,862) were exercised, net of applicable taxes, which resulted in the
issuance of 31,736 common shares (2022 – 58,990), resulting in an impact on equity of $171,000 (2022 -
As at December 31, 2023, 737,369 deferred share units were outstanding (2022 – 709,680).
Restricted share units (“RSUs”) are granted to employees and executives. Each RSU is convertible into one
common share. The RSUs vest after a specified number of years from the 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. Certain RSUs granted in 2023 include an additional market criteria
with weighted vesting over three years.
The Corporation has two plans under which RSUs may be granted, the consolidated share distribution plan and
the market purchase RSU plan. Awards under the consolidated share distribution plan are satisfied by the
issuance of treasury shares on maturity.
DSUs for common shares
756,223
80,319
(126,862)
709,680
93,188
(65,499)
737,369
RSUs for common shares
966,220
567,693
(29,004)
(460,681)
(42,148)
1,002,080
2,996,387
(279,668)
(577,353)
3,141,446
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
21. Equity (cont'd):
(b) Share options (cont'd):
Balance
At January 1, 2022
Options granted
Options exercised
Options forfeited
Options expired
At December 31, 2022
Options exercised
Options forfeited
Options expired
At December 31, 2023
December 31, 2023:
Range of exercise price
$1.33 - $3.08
$3.64 - $5.62
$7.07 - $10.73
$12.91 - $26.13
As at December 31, options outstanding from the consolidated share option plan were as follows:
Options for
Weighted average
common shares
exercise price
4,041,567 $
1,263,685
(304,635)
(184,496)
(8,501)
4,807,620
(152,120)
(263,253)
(2,025)
4,390,222 $
8.70
8.97
2.87
12.75
2.20
9.19
2.25
10.39
1.36
9.36
The following table summarizes information about the Corporation’s share options outstanding as at
Options outstanding
Options exercisable
Weighted
average
remaining
Number
contractual life
outstanding
(years)
1,038,671
440,140
2,043,418
867,993
4,390,222
Weighted
average
exercise
price
2.84
4.05
10.14
18.02
9.36
1.7
2.1
4.2
4.1
3.4
$
$
Number
Weighted
average
exercisable
exercise price
1,038,671 $
393,037
1,403,784
729,625
3,565,117 $
2.84
3.86
10.43
17.43
8.93
During 2023, compensation expense of $3,035,000 (2022 – $5,931,000) was recorded in net loss based on the
grant date fair value of the awards recognized over the vesting period.
During 2023, 152,120 (2022 - 304,635) options were exercised for an equal amount of common shares for
proceeds of $335,000 (2022 -$916,000).
During 2023, options to purchase nil common shares were granted with a weighted average fair value of $nil
(2022 – 1,263,685 options and $4.92 fair value). The granted options vest annually over three years.
As at December 31, 2023, options to purchase 4,390,222 common shares were outstanding (2022 –
4,807,620).
(c) Share distribution plan:
The Corporation has a consolidated share distribution plan that permits the issuance of common shares for no
cash consideration to employees of the Corporation to recognize their past contribution and to encourage future
contribution to the Corporation. At December 31, 2023, there were 17,140,498 (2022 – 18,844,127) shares
available to be issued under this plan.
recorded against profit or loss.
During 2022 and 2023, no shares were issued under this plan and therefore no compensation expense was
21. Equity (cont'd):
(d) Deferred share units:
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 in the capital of the Corporation after the
director or executive ceases to provide services to the Corporation. Shares will be issued from the Corporation’s
share distribution plan.
Balance
At January 1, 2022
DSUs granted
DSUs exercised
At December 31, 2022
DSUs granted
DSUs exercised
At December 31, 2023
DSUs for common shares
756,223
80,319
(126,862)
709,680
93,188
(65,499)
737,369
During 2023, compensation expense of $397,000 (2022 - $529,000) was recorded in net loss relating to 93,188
DSUs (2022 - 80,319) granted during the year.
During 2023, 65,499 DSUs (2022 – 126,862) were exercised, net of applicable taxes, which resulted in the
issuance of 31,736 common shares (2022 – 58,990), resulting in an impact on equity of $171,000 (2022 -
$753,000).
As at December 31, 2023, 737,369 deferred share units were outstanding (2022 – 709,680).
(e) Restricted share units:
Restricted share units (“RSUs”) are granted to employees and executives. Each RSU is convertible into one
common share. The RSUs vest after a specified number of years from the 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. Certain RSUs granted in 2023 include an additional market criteria
with weighted vesting over three years.
The Corporation has two plans under which RSUs may be granted, the consolidated share distribution plan and
the market purchase RSU plan. Awards under the consolidated share distribution plan are satisfied by the
issuance of treasury shares on maturity.
Balance
At January 1, 2022
RSUs granted
RSU performance factor adjustment
RSUs exercised
RSUs forfeited
At December 31, 2022
RSUs granted
RSUs exercised
RSUs forfeited
At December 31, 2023
101
RSUs for common shares
966,220
567,693
(29,004)
(460,681)
(42,148)
1,002,080
2,996,387
(279,668)
(577,353)
3,141,446
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
23. Disaggregation of revenue (cont'd):
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
In the following table, revenue is disaggregated by geographical market, by market application, and by timing of
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
21. Equity (cont'd):
(e) Restricted share units (cont'd):
During 2023, compensation expense of $7,288,000 (2022 - $2,479,000) was recorded in net loss.
During 2023, 2,996,387 RSUs were issued (2022 – 567,693). The fair value of RSU grants is measured based
on the stock price of the shares underlying the RSU on the date of grant or by using a complex simulation
model, depending on the type of RSU.
During 2023, 279,668 RSUs (2022 – 460,681) were exercised, net of applicable taxes, which resulted in the
issuance of 132,745 common shares (2022 – 217,832), resulting in an impact on equity of $585,000 (2022 -
$2,466,000).
As at December 31, 2023, 3,141,446 RSUs were outstanding (2022 – 1,002,080).
22. Commitments and contingencies:
As at December 31, 2023, the Corporation is committed to minimum lease payments (note 19).
Long-term investments include two investments committing the Corporation to be a limited partner in hydrogen
infrastructure and growth equity funds (note 14). The Corporation has committed to investing £25,000,000
(including £10,986,000 invested as of December 31, 2023) into HyCap. The Corporation has committed to
investing €30,000,000 (including €4,701,000 invested as of December 31, 2023) into Clean H2. Long-term
investments also include an investment committing the Corporation to be a limited partner in Templewater, a
decarbonization climate technology and growth equity fund. The Corporation has committed to investing
$1,000,000 (including $nil invested as of December 31, 2023) in Templewater.
As at December 31, 2023, the Corporation has outstanding commitments aggregating up to a maximum of
$22,031,000 relating primarily to purchases of property, plant and equipment.
In connection with the acquisition of intellectual property from UTC in April 2014, the Corporation retains a
royalty obligation in certain circumstances to pay UTC a portion of any future intellectual property sale and
licensing income generated from certain of the Corporation's intellectual property portfolio for a period of 15
years expiring in April 2029. No royalties were paid to UTC in the years ended December 31, 2023 and
December 31, 2022.
revenue recognition.
Geographical markets
China
Europe
North America
Other
Application
Bus
Truck
Rail
Marine
HD Mobility subtotal
Stationary
Emerging Markets and Other
Timing of revenue recognition
Products transferred at a point in time
Products and services transferred over time
24. Personnel expenses:
The Corporation retains a previous funding obligation to pay royalties of 2% of revenues, to a maximum of
$4,613,000 (CDN $5,351,000), on sales of certain fuel cell products for commercial distributed utility
applications. As of December 31, 2023, no royalties have been incurred to date for this agreement.
Salaries and employee benefits
Share-based compensation (note 21)
The Corporation also retains a previous funding obligation to pay royalties of 2% of revenues, to a maximum of
$1,896,000 (CDN $2,200,000), on sales of certain fuel cell products for commercial transit applications. As of
December 31, 2023, no royalties have been incurred to date for this agreement.
In the ordinary course of business or as required by certain acquisition or disposition agreements, the
Corporation is periodically required to provide certain indemnities to other parties. As of December 31, 2023, the
Corporation has not accrued any significant amount owing, or receivable, due to any indemnity agreements
undertaken in the ordinary course of business.
25. Other operating expense:
Net impairment loss on trade receivables
Restructuring and related costs
Acquisition related costs
December 31,
December 31,
2023
2022
$
11,980 $
48,958
37,736
3,694
102,368 $
29,265 $
10,961
19,100
7,331
66,657
21,707
14,004
102,368 $
78,769 $
23,599
102,368 $
9,127
38,444
28,572
5,717
81,860
24,917
11,472
5,106
2,184
43,679
18,872
19,309
81,860
52,749
29,111
81,860
December 31,
December 31,
2023
103,868 $
10,720
2022
92,743
8,939
114,588 $
101,682
December 31,
December 31,
2023
1,498 $
1,512
773
3,783 $
2022
73
482
2,857
3,412
$
$
$
$
$
$
$
$
$
Personnel expenses are included in cost of product and service revenues, research and product development
expense, general and administrative expense, sales and marketing expense, and other expense.
23. Disaggregation of revenue:
The Corporation's operations and main revenue streams are the same as those described in note 4. The
Corporation's revenue is derived from contracts with customers.
During the year ended December 31, 2023, the Corporation recorded a net impairment loss on trade
receivables of $1,498,000 (2022 - $73,000), consisting primarily of various receivables no longer deemed
collectible. In the event that the Corporation recovers any amounts previously recorded as impairment losses,
the recovered amount will be recognized as a reversal of the impairment loss in the period of recovery.
102
21. Equity (cont'd):
(e) Restricted share units (cont'd):
During 2023, compensation expense of $7,288,000 (2022 - $2,479,000) was recorded in net loss.
During 2023, 2,996,387 RSUs were issued (2022 – 567,693). The fair value of RSU grants is measured based
on the stock price of the shares underlying the RSU on the date of grant or by using a complex simulation
model, depending on the type of RSU.
During 2023, 279,668 RSUs (2022 – 460,681) were exercised, net of applicable taxes, which resulted in the
issuance of 132,745 common shares (2022 – 217,832), resulting in an impact on equity of $585,000 (2022 -
$2,466,000).
As at December 31, 2023, 3,141,446 RSUs were outstanding (2022 – 1,002,080).
22. Commitments and contingencies:
As at December 31, 2023, the Corporation is committed to minimum lease payments (note 19).
Long-term investments include two investments committing the Corporation to be a limited partner in hydrogen
infrastructure and growth equity funds (note 14). The Corporation has committed to investing £25,000,000
(including £10,986,000 invested as of December 31, 2023) into HyCap. The Corporation has committed to
investing €30,000,000 (including €4,701,000 invested as of December 31, 2023) into Clean H2. Long-term
investments also include an investment committing the Corporation to be a limited partner in Templewater, a
decarbonization climate technology and growth equity fund. The Corporation has committed to investing
$1,000,000 (including $nil invested as of December 31, 2023) in Templewater.
As at December 31, 2023, the Corporation has outstanding commitments aggregating up to a maximum of
$22,031,000 relating primarily to purchases of property, plant and equipment.
In connection with the acquisition of intellectual property from UTC in April 2014, the Corporation retains a
royalty obligation in certain circumstances to pay UTC a portion of any future intellectual property sale and
licensing income generated from certain of the Corporation's intellectual property portfolio for a period of 15
years expiring in April 2029. No royalties were paid to UTC in the years ended December 31, 2023 and
December 31, 2022.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
23. Disaggregation of revenue (cont'd):
In the following table, revenue is disaggregated by geographical market, by market application, and by timing of
revenue recognition.
Geographical markets
China
Europe
North America
Other
Application
Bus
Truck
Rail
Marine
HD Mobility subtotal
Stationary
Emerging Markets and Other
Timing of revenue recognition
Products transferred at a point in time
Products and services transferred over time
24. Personnel expenses:
December 31,
2023
December 31,
2022
$
11,980 $
48,958
37,736
3,694
102,368 $
29,265 $
10,961
19,100
7,331
66,657
21,707
14,004
102,368 $
78,769 $
23,599
102,368 $
$
$
$
$
$
9,127
38,444
28,572
5,717
81,860
24,917
11,472
5,106
2,184
43,679
18,872
19,309
81,860
52,749
29,111
81,860
Personnel expenses are included in cost of product and service revenues, research and product development
expense, general and administrative expense, sales and marketing expense, and other expense.
The Corporation retains a previous funding obligation to pay royalties of 2% of revenues, to a maximum of
$4,613,000 (CDN $5,351,000), on sales of certain fuel cell products for commercial distributed utility
applications. As of December 31, 2023, no royalties have been incurred to date for this agreement.
Salaries and employee benefits
Share-based compensation (note 21)
The Corporation also retains a previous funding obligation to pay royalties of 2% of revenues, to a maximum of
$1,896,000 (CDN $2,200,000), on sales of certain fuel cell products for commercial transit applications. As of
December 31, 2023, no royalties have been incurred to date for this agreement.
In the ordinary course of business or as required by certain acquisition or disposition agreements, the
Corporation is periodically required to provide certain indemnities to other parties. As of December 31, 2023, the
Corporation has not accrued any significant amount owing, or receivable, due to any indemnity agreements
undertaken in the ordinary course of business.
25. Other operating expense:
Net impairment loss on trade receivables
Restructuring and related costs
Acquisition related costs
December 31,
2023
December 31,
2022
103,868 $
10,720
92,743
8,939
114,588 $
101,682
December 31,
2023
December 31,
2022
1,498 $
1,512
773
3,783 $
73
482
2,857
3,412
$
$
$
$
23. Disaggregation of revenue:
The Corporation's operations and main revenue streams are the same as those described in note 4. The
Corporation's revenue is derived from contracts with customers.
During the year ended December 31, 2023, the Corporation recorded a net impairment loss on trade
receivables of $1,498,000 (2022 - $73,000), consisting primarily of various receivables no longer deemed
collectible. In the event that the Corporation recovers any amounts previously recorded as impairment losses,
the recovered amount will be recognized as a reversal of the impairment loss in the period of recovery.
103
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
25. Other operating expense (cont'd):
During the year ended December 31, 2023, total restructuring and related charges of $1,512,000 (2022 -
$482,000) relate primarily to certain cost cutting measures and related personnel costs.
Acquisition related costs of $773,000 (2022 - $2,857,000) for the year ended December 31, 2023 consist
primarily of other legal, advisory, and transaction related costs incurred due to corporate development activities.
26. Finance income and expense:
Employee future benefit plan expense (note 20)
Investment income
Mark to market and foreign exchange loss on financial assets (notes 14 & 32)
Foreign exchange gain (loss)
Government levies
Finance income (loss) and other
Finance expense
27. Impairment charges on property, plant, and equipment:
2023
(109) $
43,340
(12,897)
821
(100)
31,055 $
(1,105) $
2022
(189)
19,606
(16,877)
(4,552)
(100)
(2,112)
(1,265)
$
$
$
During the year ended December 31, 2023, the Corporation recognized impairment charges on property, plant,
and equipment of $967,000 (2022 - $7,000).
During the year ended December 31, 2023, the Corporation decided to suspend investment in a planned facility
in China . As a result of this decision, the Corporation will not be able to recover any costs totalling $936,000 as
the plant was still in the design phase and the costs incurred are not directly transferable to any other planned
location. Consequently, the Corporation recognized property, plant and equipment impairment charges of
$936,000 during the year ended December 31, 2023.
During the year ended December 31, 2023, the Corporation also recorded an impairment loss of $31,000 (2022
- $7,000) for production and test equipment that was never placed in service and was determined not required
to support the Corporation's future manufacturing or testing capabilities.
(b) Unrecognized deferred tax asset:
28. Income taxes:
(a) Current tax expense:
The components of income tax benefit (expense) included in the determination of the profit (loss) from
continuing operations comprise of:
At December 31, 2023, the Corporation did not recognize any deferred tax assets resulting from the following
deductible temporary differences for financial statement and income tax purposes.
Deferred tax assets have not been recognized in respect of these deductible temporary differences because it is
not currently probable that future taxable profit will be available against which the Corporation can utilize the
benefits.
104
The Corporation’s effective income tax rate differs from the combined Canadian federal and provincial statutory
income tax rate for companies. The principal factors causing the difference are as follows:
28. Income taxes (cont'd):
(a) Current tax expense (cont'd):
Current tax expense
Current period income tax
Withholding tax
Total current tax expense
Deferred tax expense
Origination and reversal of temporary differences
Adjustments for prior periods
Change in unrecognized deductible temporary differences
Total deferred tax expense
Total income tax expense from continuing operations
Net loss before income taxes (from continuing operations)
Expected tax recovery at 27.00% (2022 – 27.00% )
Increase (reduction) in income taxes resulting from:
Non-deductible expenses (non-taxable income)
Expiry of losses and ITC
Investment tax credits earned
Foreign tax rate and tax rate differences
Change in unrecognized deductible temporary differences
Other
Income taxes from continuing operations
Scientific research expenditures
Investments
Share issuance costs
Losses from operations carried forward
Capital losses carried forward
Investment tax credits
Property, plant and equipment and intangible assets
$
$
$
$
$
$
$
2023
2022
(45,050) $
(12,264)
64 $
94
158 $
2,174
42,876
— $
158 $
2023
2022
(144,052) $
(160,329)
(38,894) $
(43,289)
39
3
42
—
42
277
11,987
12,712
1,515
(3,782)
4,636
28,247
3
42
(993)
96
(4,009)
4,165
39,674
119
$
158 $
2023
2022
$
143,663 $
127,482
36,315
14,145
394,599
10,703
46,810
221,365
$
867,600 $
21,463
23,588
284,468
—
43,451
208,991
709,443
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
25. Other operating expense (cont'd):
28. Income taxes (cont'd):
During the year ended December 31, 2023, total restructuring and related charges of $1,512,000 (2022 -
(a) Current tax expense (cont'd):
$482,000) relate primarily to certain cost cutting measures and related personnel costs.
Acquisition related costs of $773,000 (2022 - $2,857,000) for the year ended December 31, 2023 consist
primarily of other legal, advisory, and transaction related costs incurred due to corporate development activities.
26. Finance income and expense:
Employee future benefit plan expense (note 20)
Investment income
Mark to market and foreign exchange loss on financial assets (notes 14 & 32)
Foreign exchange gain (loss)
Government levies
Finance income (loss) and other
Finance expense
27. Impairment charges on property, plant, and equipment:
2023
(109) $
43,340
(12,897)
821
(100)
31,055 $
(1,105) $
2022
(189)
19,606
(16,877)
(4,552)
(100)
(2,112)
(1,265)
$
$
$
During the year ended December 31, 2023, the Corporation recognized impairment charges on property, plant,
and equipment of $967,000 (2022 - $7,000).
During the year ended December 31, 2023, the Corporation decided to suspend investment in a planned facility
in China . As a result of this decision, the Corporation will not be able to recover any costs totalling $936,000 as
the plant was still in the design phase and the costs incurred are not directly transferable to any other planned
location. Consequently, the Corporation recognized property, plant and equipment impairment charges of
$936,000 during the year ended December 31, 2023.
During the year ended December 31, 2023, the Corporation also recorded an impairment loss of $31,000 (2022
- $7,000) for production and test equipment that was never placed in service and was determined not required
to support the Corporation's future manufacturing or testing capabilities.
28. Income taxes:
(a) Current tax expense:
The components of income tax benefit (expense) included in the determination of the profit (loss) from
continuing operations comprise of:
Current tax expense
Current period income tax
Withholding tax
Total current tax expense
Deferred tax expense
Origination and reversal of temporary differences
Adjustments for prior periods
Change in unrecognized deductible temporary differences
Total deferred tax expense
Total income tax expense from continuing operations
2023
2022
64 $
94
158 $
39
3
42
(45,050) $
(12,264)
2,174
42,876
— $
158 $
277
11,987
—
42
$
$
$
$
$
The Corporation’s effective income tax rate differs from the combined Canadian federal and provincial statutory
income tax rate for companies. The principal factors causing the difference are as follows:
Net loss before income taxes (from continuing operations)
Expected tax recovery at 27.00% (2022 – 27.00% )
Increase (reduction) in income taxes resulting from:
Non-deductible expenses (non-taxable income)
Expiry of losses and ITC
Investment tax credits earned
Foreign tax rate and tax rate differences
Change in unrecognized deductible temporary differences
Other
Income taxes from continuing operations
(b) Unrecognized deferred tax asset:
2023
2022
$
$
(144,052) $
(160,329)
(38,894) $
(43,289)
(993)
96
(4,009)
4,165
39,674
119
$
158 $
12,712
1,515
(3,782)
4,636
28,247
3
42
At December 31, 2023, the Corporation did not recognize any deferred tax assets resulting from the following
deductible temporary differences for financial statement and income tax purposes.
Scientific research expenditures
Investments
Share issuance costs
Losses from operations carried forward
Capital losses carried forward
Investment tax credits
Property, plant and equipment and intangible assets
2023
2022
$
143,663 $
127,482
36,315
14,145
394,599
10,703
46,810
221,365
$
867,600 $
21,463
23,588
284,468
—
43,451
208,991
709,443
Deferred tax assets have not been recognized in respect of these deductible temporary differences because it is
not currently probable that future taxable profit will be available against which the Corporation can utilize the
benefits.
105
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
28. Income taxes (cont'd):
(b) Unrecognized deferred tax asset (cont'd):
The Corporation has available to carry forward the following as at December 31:
Canadian scientific research expenditures
Canadian losses from operations
Canadian capital losses from operations
Canadian investment tax credits
German losses from operations for corporate tax purposes
US federal losses from operations
Denmark losses from operations
Hong Kong losses from operations
UK losses from operations
UK research and development tax credits
2023
$
143,663 $
262,887
12,958
46,810
46
46,784
65,786
116
13,085
122
2022
127,482
165,647
—
40,877
501
49,237
50,495
61
14,304
115
The Canadian scientific research expenditures may be carried forward indefinitely. The Canadian losses from
operations may be used to offset future Canadian taxable income and expire over the period from 2033 to 2043.
The German, Hong Kong, Denmark and UK losses from operations may be used to offset future taxable income
in Germany, Hong Kong, Denmark and UK for corporate tax and trade tax purposes and may be carried forward
indefinitely.
The US federal losses from operations incurred prior to January 1, 2018 may be used to offset future US
taxable income and expire over the period from 2023 to 2037 and may be carried forward indefinitely for losses
incurred after January 1, 2018.
The Canadian investment tax credits may be used to offset future Canadian income taxes otherwise payable
and expire over the period from 2023 to 2043. The UK scientific research and development tax credits may be
carried forward indefinitely.
29. 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 13).
For the year ended December 31, 2023 and 2022, related party transactions and balances with the
Corporation's 49% owned equity accounted investee, Weichai Ballard JV, were as follows:
Balances with related party - Weichai Ballard JV
Trade and other receivables
Investments
Deferred revenue
Transactions during the year with related party - Weichai Ballard JV
Revenues
Cost of goods sold and operating expense
2023
$
13,697 $
13,901
1,904
2023
$
8,099 $
1,996
2022
13,320
24,026
2,095
2022
8,115
3,225
106
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
29. Related party transactions (cont'd):
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
On completion of an Equity Transfer Agreement in October 2023, the Corporation disposed of its 10%
investment in Synergy Ballard JVCo valued at $nil as of December 31, 2023.
Corporation Directors and Executive Officers
The Corporation provides key management personnel, being board directors and executive officers, certain
benefits, in addition to their salaries. Key management personnel also participate in the Corporation’s share-
based compensation plans (note 21).
In addition to cash and equity compensation, the Corporation provides the executive officers with certain
personal benefits, including car allowance, medical benefit program, long and short-term disability coverage, life
insurance and an annual medical, financial planning allowance and relocation allowances and services as
necessary.
The employment agreements for the executive officers are substantially the same with slight variations by
individual. The maximum obligation that is required to be provided in the event of termination is notice of 12
months plus one month for every year of employment completed with the Corporation (to a maximum of 24
months), or payment in lieu of such notice, consisting of the salary, bonus and other benefits that would have
been earned during such notice period. If there is a change of control, and if the executive officer’s employment
is terminated, including a constructive dismissal, within 2 years following the date of a change of control, the
executive officer is entitled to a payment equivalent to payment in lieu of a 24 month notice period. The
minimum obligation that is required is limited to that required by employment standards legislation plus one day
for every full month of employment since hire date, with no distinction made for a change of control situation.
Key management personnel compensation is comprised of:
Salaries and employee benefits
Post-employment retirement benefits
Termination benefits
Share-based compensation (note 21)
$
3,817 $
2023
65
—
2,622
$
6,504 $
2022
3,416
61
247
1,793
5,517
30. Supplemental disclosure of cash flow information:
Non-cash financing and investing activities:
Compensatory shares
2023
$
1,688 $
2022
1,029
31. Operating segments:
The Corporation operates in a single segment, Fuel Cell Products and Services, which consists of the design,
development, manufacture, sale and service of PEM fuel cell products for a variety of applications, focusing on
power products for bus, truck, rail, marine, stationary and emerging market (material handling, off-road and
other) applications, as well as the delivery of services, including technology solutions, after sales services and
training.
In 2023, revenues included sales to one individual customer of $10,882,000 which exceeded 10% of total
revenue. In 2022, revenues included sales to two individual customers of $9,426,000 and $8,115,000,
respectively, which exceeded 10% of total revenue.
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
28. Income taxes (cont'd):
(b) Unrecognized deferred tax asset (cont'd):
The Corporation has available to carry forward the following as at December 31:
German losses from operations for corporate tax purposes
Canadian scientific research expenditures
Canadian losses from operations
Canadian capital losses from operations
Canadian investment tax credits
US federal losses from operations
Denmark losses from operations
Hong Kong losses from operations
UK losses from operations
UK research and development tax credits
$
143,663 $
2023
262,887
12,958
46,810
46
46,784
65,786
116
13,085
122
2022
127,482
165,647
—
40,877
501
49,237
50,495
61
14,304
115
The Canadian scientific research expenditures may be carried forward indefinitely. The Canadian losses from
operations may be used to offset future Canadian taxable income and expire over the period from 2033 to 2043.
The German, Hong Kong, Denmark and UK losses from operations may be used to offset future taxable income
in Germany, Hong Kong, Denmark and UK for corporate tax and trade tax purposes and may be carried forward
indefinitely.
The US federal losses from operations incurred prior to January 1, 2018 may be used to offset future US
taxable income and expire over the period from 2023 to 2037 and may be carried forward indefinitely for losses
incurred after January 1, 2018.
The Canadian investment tax credits may be used to offset future Canadian income taxes otherwise payable
and expire over the period from 2023 to 2043. The UK scientific research and development tax credits may be
carried forward indefinitely.
29. Related party transactions:
subsidiaries and affiliates, and the Corporation’s equity accounted investees: Weichai Ballard JV and Synergy
Ballard JVCo (note 13).
For the year ended December 31, 2023 and 2022, related party transactions and balances with the
Corporation's 49% owned equity accounted investee, Weichai Ballard JV, were as follows:
Balances with related party - Weichai Ballard JV
Trade and other receivables
Investments
Deferred revenue
Transactions during the year with related party - Weichai Ballard JV
Revenues
Cost of goods sold and operating expense
$
13,697 $
2023
13,901
1,904
2023
1,996
2022
13,320
24,026
2,095
2022
8,115
3,225
$
8,099 $
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
29. Related party transactions (cont'd):
On completion of an Equity Transfer Agreement in October 2023, the Corporation disposed of its 10%
investment in Synergy Ballard JVCo valued at $nil as of December 31, 2023.
Corporation Directors and Executive Officers
The Corporation provides key management personnel, being board directors and executive officers, certain
benefits, in addition to their salaries. Key management personnel also participate in the Corporation’s share-
based compensation plans (note 21).
In addition to cash and equity compensation, the Corporation provides the executive officers with certain
personal benefits, including car allowance, medical benefit program, long and short-term disability coverage, life
insurance and an annual medical, financial planning allowance and relocation allowances and services as
necessary.
The employment agreements for the executive officers are substantially the same with slight variations by
individual. The maximum obligation that is required to be provided in the event of termination is notice of 12
months plus one month for every year of employment completed with the Corporation (to a maximum of 24
months), or payment in lieu of such notice, consisting of the salary, bonus and other benefits that would have
been earned during such notice period. If there is a change of control, and if the executive officer’s employment
is terminated, including a constructive dismissal, within 2 years following the date of a change of control, the
executive officer is entitled to a payment equivalent to payment in lieu of a 24 month notice period. The
minimum obligation that is required is limited to that required by employment standards legislation plus one day
for every full month of employment since hire date, with no distinction made for a change of control situation.
Key management personnel compensation is comprised of:
Salaries and employee benefits
Post-employment retirement benefits
Termination benefits
Share-based compensation (note 21)
2023
$
3,817 $
65
—
2,622
$
6,504 $
2022
3,416
61
247
1,793
5,517
Related parties include shareholders with a significant ownership interest in the Corporation, including its
30. Supplemental disclosure of cash flow information:
Non-cash financing and investing activities:
Compensatory shares
2023
$
1,688 $
2022
1,029
31. Operating segments:
The Corporation operates in a single segment, Fuel Cell Products and Services, which consists of the design,
development, manufacture, sale and service of PEM fuel cell products for a variety of applications, focusing on
power products for bus, truck, rail, marine, stationary and emerging market (material handling, off-road and
other) applications, as well as the delivery of services, including technology solutions, after sales services and
training.
In 2023, revenues included sales to one individual customer of $10,882,000 which exceeded 10% of total
revenue. In 2022, revenues included sales to two individual customers of $9,426,000 and $8,115,000,
respectively, which exceeded 10% of total revenue.
107
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
31. Operating segments (cont'd):
Revenues from continuing operations by geographic area, which are attributed to countries based on customer
location for the years ended December 31, are as follows:
32. Financial instruments (cont'd):
(a) Fair value (cont'd):
Revenues
United States
Germany
Canada
China
Poland
United Kingdom
Netherlands
France
Denmark
Belgium
India
Taiwan
Spain
Norway
Australia
Japan
Other countries
2023
$
25,702 $
14,490
12,034
11,980
11,262
8,178
4,812
3,307
2,240
2,089
2,034
1,381
857
779
51
76
1,096
2022
24,052
13,685
4,520
9,127
1,769
7,967
103
6,903
2,529
3,430
656
640
763
591
3,711
541
873
$
102,368 $
81,860
Non-current assets by geographic area are as follows:
December 31,
December 31,
(iii) Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable
Non-current assets
Canada
China
United States
Denmark
United Kingdom
32. Financial instruments:
(a) Fair value:
2023
$
186,109 $
13,916
8,600
4,176
—
2022
180,421
24,047
6,791
4,398
2,913
$
212,801 $
218,570
inputs).
investments are all categorized as Level 3.
(b) Financial risk management:
risk, and credit risk.
Foreign currency exchange rate risk
The Corporation’s financial instruments consist of cash and cash equivalents, short-term investments, trade and
other receivables, long-term financial 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"). During the year
ended December 31, 2022, the Corporation sold its remaining Green Hydrogen shares for net proceeds of
$1,010,000.
108
Long-term financial investments (note 14) comprise newly-created hydrogen infrastructure and growth equity
funds: HyCap Fund and Clean H2 Fund, and an investment in Forsee Power, Wisdom Motor, and Quantron
AG, as well as equity-accounted investments. Changes in fair value and foreign exchange adjustments are
recognized as gains or losses in the consolidated statements of loss and comprehensive income (loss) and
included in finance loss and other (note 26). During the year ended December 31, 2023, the Corporation
recognized net mark to market and foreign exchange losses of $12,897,000 (2022 - $16,877,000).
Increase (decrease) in fair value due to MTM and foreign exchange
December 31,
December 31,
$
2023
— $
2022
15
(14,865)
—
150
(1,597)
(580)
(3,501)
(4,900)
(4,237)
214
(473)
$
(12,897) $
(16,877)
Short-term investment - Green Hydrogen
Long-term investment - Forsee Power
Long-term investment - Wisdom Motor
Long-term investment - Quantron AG
Long-term investment - HyCap Fund
Long-term investment - Clean H2 Fund
Decrease in fair value of investments
with the following levels:
Fair value measurements recognized in the statement of financial position must be categorized in accordance
(i) Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
(ii) Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices);
The Corporation's above-mentioned investment in Forsee Power is categorized as Level 1 whereas the other
The Corporation primarily has exposure to foreign currency exchange rate risk, commodity risk, interest rate
Foreign currency exchange rate risk is the risk that the fair value of deferred cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates. The Corporation is exposed to currency risks
primarily due to its holdings of Canadian dollar denominated cash equivalents and its Canadian dollar
denominated purchases and accounts payable. Substantially all receivables are denominated in U.S. dollars.
Periodically, the Corporation uses foreign exchange currency contracts to manage exposure to currency rate
fluctuations. These contracts are recorded at their fair value as either assets or liabilities on the statement of
financial position. Any changes in fair value are either (i) recorded in the statement of comprehensive income
(loss) if formally designated and qualified under hedge accounting criteria; or (ii) recorded in the statements of
loss and comprehensive income (loss) if either not designated, or not qualified, under hedge accounting
criteria.The outstanding foreign exchange currency contracts are not qualified under hedge accounting.
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
31. Operating segments (cont'd):
32. Financial instruments (cont'd):
Revenues from continuing operations by geographic area, which are attributed to countries based on customer
(a) Fair value (cont'd):
location for the years ended December 31, are as follows:
Revenues
United States
Germany
Canada
China
Poland
United Kingdom
Netherlands
France
Denmark
Belgium
India
Taiwan
Spain
Norway
Australia
Japan
Other countries
Non-current assets
Canada
China
United States
Denmark
United Kingdom
Non-current assets by geographic area are as follows:
$
25,702 $
2023
14,490
12,034
11,980
11,262
8,178
4,812
3,307
2,240
2,089
2,034
1,381
857
779
51
76
1,096
2023
13,916
8,600
4,176
—
2022
24,052
13,685
4,520
9,127
1,769
7,967
103
6,903
2,529
3,430
656
640
763
591
3,711
541
873
2022
180,421
24,047
6,791
4,398
2,913
Long-term financial investments (note 14) comprise newly-created hydrogen infrastructure and growth equity
funds: HyCap Fund and Clean H2 Fund, and an investment in Forsee Power, Wisdom Motor, and Quantron
AG, as well as equity-accounted investments. Changes in fair value and foreign exchange adjustments are
recognized as gains or losses in the consolidated statements of loss and comprehensive income (loss) and
included in finance loss and other (note 26). During the year ended December 31, 2023, the Corporation
recognized net mark to market and foreign exchange losses of $12,897,000 (2022 - $16,877,000).
Increase (decrease) in fair value due to MTM and foreign exchange
Short-term investment - Green Hydrogen
Long-term investment - Forsee Power
Long-term investment - Wisdom Motor
Long-term investment - Quantron AG
Long-term investment - HyCap Fund
Long-term investment - Clean H2 Fund
Decrease in fair value of investments
December 31,
2023
December 31,
2022
$
— $
(3,501)
(4,900)
(4,237)
214
(473)
15
(14,865)
—
150
(1,597)
(580)
$
(12,897) $
(16,877)
Fair value measurements recognized in the statement of financial position must be categorized in accordance
with the following levels:
$
102,368 $
81,860
(i) Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
(ii) Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices);
December 31,
December 31,
(iii) Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
$
186,109 $
The Corporation's above-mentioned investment in Forsee Power is categorized as Level 1 whereas the other
investments are all categorized as Level 3.
$
212,801 $
218,570
The Corporation primarily has exposure to foreign currency exchange rate risk, commodity risk, interest rate
risk, and credit risk.
(b) Financial risk management:
32. Financial instruments:
(a) Fair value:
The Corporation’s financial instruments consist of cash and cash equivalents, short-term investments, trade and
other receivables, long-term financial 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"). During the year
ended December 31, 2022, the Corporation sold its remaining Green Hydrogen shares for net proceeds of
$1,010,000.
Foreign currency exchange rate risk
Foreign currency exchange rate risk is the risk that the fair value of deferred cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates. The Corporation is exposed to currency risks
primarily due to its holdings of Canadian dollar denominated cash equivalents and its Canadian dollar
denominated purchases and accounts payable. Substantially all receivables are denominated in U.S. dollars.
Periodically, the Corporation uses foreign exchange currency contracts to manage exposure to currency rate
fluctuations. These contracts are recorded at their fair value as either assets or liabilities on the statement of
financial position. Any changes in fair value are either (i) recorded in the statement of comprehensive income
(loss) if formally designated and qualified under hedge accounting criteria; or (ii) recorded in the statements of
loss and comprehensive income (loss) if either not designated, or not qualified, under hedge accounting
criteria.The outstanding foreign exchange currency contracts are not qualified under hedge accounting.
109
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
32. Financial instruments (cont'd):
(b) Financial risk management (cont'd):
Foreign currency exchange rate risk (cont'd)
32. Financial instruments (cont'd):
(b) Financial risk management (cont'd):
Credit risk (cont'd)
The Corporation limits its exposure to foreign currency risk by holding Canadian denominated cash and cash
equivalents in amounts up to 100% of forecasted twelve month Canadian dollar net expenditures and up to 50%
of the following twelve months of forecasted Canadian dollar net expenditures, thereby creating an economic
hedge. Periodically, the Corporation also enters into forward foreign exchange contracts to further limit its
exposure. At December 31, 2023, the Corporation held Canadian dollar denominated cash and cash
equivalents of CDN $64,383,000 and outstanding forward foreign exchange contracts to buy a total of CDN
$31,500,000 in 2023 at an average rate of CDN $1.35 to US $1.00.
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.
The following exchange rates applied during the year ended December 31, 2023:
As a result of this review for the year ended December 31, 2023, the Corporation did not recognize any
additional estimated ECL impairment losses.
January 1, 2023 Opening rate
December 31, 2023 Closing rate
Fiscal 2023 Average rate
$US to $1.00 CDN
$CDN to $1.00 US
$0.784
$0.755
$0.741
$1.354
$1.325
$1.350
Based on cash and cash equivalents and forward foreign exchange contracts held at December 31, 2023, a
10% increase in the Canadian dollar against the U.S. dollar, with all other variables held constant, would result
in an increase in foreign exchange gains of approximately $7,236,000 recorded against net income.
If the Canadian dollar weakened 10% against the US dollar, there would be an equal, and opposite impact, on
net income. This sensitivity analysis includes foreign currency denominated monetary items, and adjusts their
translation at year-end, for a 10% change in foreign currency rates.
Commodity risk
Commodity risk is the risk of financial loss due to fluctuations in commodity prices, in particular, for the price of
platinum and palladium, which are key components of the Corporation’s fuel cell products. Platinum and
palladium are scarce natural resources and therefore the Corporation is dependent upon a sufficient supply of
these commodities. To manage its exposure to commodity price fluctuations, the Corporation may include
platinum and or palladium pricing adjustments directly into certain significant customer contracts.
Interest rate risk
Interest rate risk is the risk that the fair value of deferred cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Corporation is exposed to interest rate risk arising primarily
from fluctuations in interest rates on its cash and cash equivalents. The Corporation limits its exposure to
interest rate risk by continually monitoring and adjusting portfolio duration to align to forecasted cash
requirements and anticipated changes in interest rates.
Based on cash and cash equivalents at December 31, 2023, a 1.0% decline in interest rates, with all other
variables held constant, would result in a decrease in investment income of $7,511,000. If interest rates had
been 1.0% higher, there would be an equal and opposite impact on net income.
Credit risk
Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Corporation’s receivables from
customers.
110
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
BALLARD POWER SYSTEMS INC.
Notes to Consolidated Financial Statements
Years ended December 31, 2023, and 2022
(Tabular amounts expressed in thousands of U.S. dollars, except per share amounts and numbers of shares)
32. Financial instruments (cont'd):
(b) Financial risk management (cont'd):
Foreign currency exchange rate risk (cont'd)
32. Financial instruments (cont'd):
(b) Financial risk management (cont'd):
Credit risk (cont'd)
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 year ended December 31, 2023, the Corporation did not recognize any
additional estimated ECL impairment losses.
The Corporation limits its exposure to foreign currency risk by holding Canadian denominated cash and cash
equivalents in amounts up to 100% of forecasted twelve month Canadian dollar net expenditures and up to 50%
of the following twelve months of forecasted Canadian dollar net expenditures, thereby creating an economic
hedge. Periodically, the Corporation also enters into forward foreign exchange contracts to further limit its
exposure. At December 31, 2023, the Corporation held Canadian dollar denominated cash and cash
equivalents of CDN $64,383,000 and outstanding forward foreign exchange contracts to buy a total of CDN
$31,500,000 in 2023 at an average rate of CDN $1.35 to US $1.00.
The following exchange rates applied during the year ended December 31, 2023:
January 1, 2023 Opening rate
December 31, 2023 Closing rate
Fiscal 2023 Average rate
$US to $1.00 CDN
$CDN to $1.00 US
$0.784
$0.755
$0.741
$1.354
$1.325
$1.350
Based on cash and cash equivalents and forward foreign exchange contracts held at December 31, 2023, a
10% increase in the Canadian dollar against the U.S. dollar, with all other variables held constant, would result
in an increase in foreign exchange gains of approximately $7,236,000 recorded against net income.
If the Canadian dollar weakened 10% against the US dollar, there would be an equal, and opposite impact, on
net income. This sensitivity analysis includes foreign currency denominated monetary items, and adjusts their
translation at year-end, for a 10% change in foreign currency rates.
Commodity risk
Interest rate risk
Credit risk
customers.
Commodity risk is the risk of financial loss due to fluctuations in commodity prices, in particular, for the price of
platinum and palladium, which are key components of the Corporation’s fuel cell products. Platinum and
palladium are scarce natural resources and therefore the Corporation is dependent upon a sufficient supply of
these commodities. To manage its exposure to commodity price fluctuations, the Corporation may include
platinum and or palladium pricing adjustments directly into certain significant customer contracts.
Interest rate risk is the risk that the fair value of deferred cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Corporation is exposed to interest rate risk arising primarily
from fluctuations in interest rates on its cash and cash equivalents. The Corporation limits its exposure to
interest rate risk by continually monitoring and adjusting portfolio duration to align to forecasted cash
requirements and anticipated changes in interest rates.
Based on cash and cash equivalents at December 31, 2023, a 1.0% decline in interest rates, with all other
variables held constant, would result in a decrease in investment income of $7,511,000. If interest rates had
been 1.0% higher, there would be an equal and opposite impact on net income.
Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Corporation’s receivables from
111
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We have facilities in
Canada
USA
Denmark
China
Ballard Power Systems Inc.
9000 Glenlyon Parkway
Burnaby, BC V5J 5J8 Canada
(P) +1-604-454- 0900
ballard.com
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