Ballard Power : Financial Reports Fourth Quarter 2024

Published: 2025-03-13 09:06:07 ET BLDP.TO

Consolidated Financial Statements (Expressed in U.S. dollars)

BALLARD POWER SYSTEMS INC.

Years ended December 31, 2024 and 2023

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

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, 2024. 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""KATE IGBALODE"

RANDALL MACEWEN

KATE IGBALODE

President and

Senior Vice President and

Chief Executive Officer

Chief Financial Officer

March 12, 2025

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, 2024 and 2023, 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, 2024 and 2023, and its financial performance 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, 2024, 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 12, 2025 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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates 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 a 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 a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the recoverable amount of property, plant and equipment and goodwill

As discussed in Notes 4 (h) (ii), 5 (b), 9 and 11 to the consolidated financial statements, the carrying amounts of the Corporation's non-financial assets 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. An impairment loss is recognized if the carrying amount of an asset or cash generating unit ("CGU") exceeds its estimated recoverable amount. For the year ended December 31, 2024, the Corporation recognized impairment of its property, plant and equipment of $111,020 thousand and goodwill of $40,277 thousand.

We identified the evaluation of the recoverable amount of property, plant and equipment and goodwill as a critical audit matter. The Corporation's estimate of the recoverable amount involved significant estimation uncertainty. Significant assumptions in determining the recoverable amount included the control premium in determining the estimated fair value less costs to sell of the CGU and the residual fair value of the property, plant and equipment. Subjective auditor judgment was required to evaluate the Corporation's estimate of the recoverable amount and residual fair value of the property, plant and equipment as at September 30, 2024.

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 development of the recoverable amount, including the control premium, and the residual fair value of the property, plant and equipment. We inspected and recalculated the Corporation's estimate of the recoverable amount of the CGU using the Corporation's share price at September 30, 2024, the number of shares outstanding and considering a control premium. For a selection of assets, we agreed the estimated residual fair value to underlying supporting documentation provided by the Corporation's management's specialists. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Corporation's control premium applied in the Corporation's recoverable amount calculation by comparing to market data for comparable entities.

/s/ KPMG LLP

We have served as the Corporation's auditor since 1999.

Vancouver, Canada

March 12, 2025

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. and subsidiaries' (the Corporation) internal control over financial reporting as of December 31, 2024, 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, 2024, 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, 2024 and 2023, 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 12, 2025 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.

Definition and Limitations of Internal Control Over Financial Reporting

A corporation'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 corporation'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 corporation; (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 corporation are being made only in accordance with authorizations of management and directors of the corporation; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the corporation'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

Vancouver, Canada

March 12, 2025

BALLARD POWER SYSTEMS INC. Consolidated Statements of Financial Position (Expressed in thousands of U.S. dollars)

Note

December 31,

2024

2023

Assets

Current assets:

Cash and cash equivalents

603,948

751,130

Short-term investments

2,104

2,113

Trade and other receivables

31,983

58,565

Inventories

56,417

45,870

Prepaid expenses and other current assets

4,426

7,063

Total current assets

698,878

864,741

Non-current assets:

Property, plant and equipment

30,424

116,325

Intangible assets

1,757

1,406

Goodwill

40,277

Equity-accounted investments

8,238

13,901

Long-term financial investments

37,515

40,345

Other long-term assets

495

547

Total assets

777,307

1,077,542

Liabilities and Equity

Current liabilities:

Trade and other payables

35,637

39,696

Deferred revenue

6,643

4,588

Provisions and other current liabilities

30,407

21,797

Current lease liabilities

2,899

4,505

Total current liabilities

75,586

70,586

Non-current liabilities:

Non-current lease liabilities

20,995

13,393

Deferred gain on finance lease liability

485

Non-current deferred revenue

4,989

Other non-current liabilities and employee future benefits

2,678

1,862

Total liabilities

104,317

86,326

Equity:

Share capital

2,428,618

2,425,641

Contributed surplus

309,974

306,042

Accumulated deficit

(2,060,837)

(1,737,505)

Foreign currency reserve

(4,765)

(2,962)

Total equity

672,990

991,216

Total liabilities and equity

777,307

1,077,542

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board:

"Kathy Bayless"

"Jim Roche"

Director

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)

Note

2024

2023

Revenues:

Product and service revenues

22 & 30

69,731

102,368

Cost of product and service revenues

91,713

124,199

Gross margin

(21,982)

(21,831)

Operating expenses:

Research and product development

94,494

98,306

General and administrative

23,516

23,874

Sales and marketing

13,502

15,110

Other expense

29,806

3,783

Total operating expenses

161,318

141,073

Results from operating activities

(183,300)

(162,904)

Finance income and other

18,933

31,055

Finance expense

(2,146)

(1,105)

Net finance income

16,787

29,950

Equity in loss of investment in joint venture and associates

12 & 28

(4,941)

(10,131)

Impairment charges on property, plant and equipment

(111,020)

(967)

Impairment charges on intangible assets

(658)

Impairment charges on goodwill

(40,277)

Loss before income taxes

(323,409)

(144,052)

Income tax expense

(121)

(158)

Net loss from continued operations

(323,530)

(144,210)

Net loss from discontinued operations

(715)

(33,506)

Net loss

(324,245)

(177,716)

Other comprehensive income (loss):

Items that will not be reclassified to profit or loss:

Actuarial gain on defined benefit plans

913

970

Items that may be reclassified subsequently to profit or loss:

Foreign currency translation differences

(1,803)

(1,472)

Other comprehensive loss, net of tax

(890)

(502)

Total comprehensive loss

(325,135)

(178,218)

Basic and diluted loss per share

Continued operations

(1.08)

(0.48)

Discontinued operations

(0.11)

Loss per share for the period

(1.08)

(0.59)

Weighted average number of common shares outstanding

299,310,384

298,661,041

See accompanying notes to consolidated financial statements.

BALLARD POWER SYSTEMS INC. Consolidated Statements of Changes in Equity (Expressed in thousands of U.S. dollars except number of shares)

Number of

Contributed

Accumulated

Foreign

Total

currency

capital

surplus

deficit

reserve

equity

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

224,902

3,053

(3,068)

(15)

(note 20)

DSUs redeemed (note 20)

31,736

194

(365)

(171)

RSUs redeemed (note 20)

132,745

1,494

(2,079)

(585)

Options exercised (note 20)

152,120

504

(169)

335

Share-based compensation (note 20)

10,959

Other comprehensive income (loss):

Defined benefit plan actuarial gain (note 19)

970

Foreign currency translation for foreign operations

(1,472)

Balance, December 31, 2023

298,935,706

$ 2,425,641

306,042

(1,737,505)

$ (2,962)

991,216

Net loss

(324,245)

RSUs redeemed (note 20)

347,901

2,505

(3,360)

(855)

Options exercised (note 20)

154,509

472

(164)

308

Share-based compensation (note 20)

7,456

Other comprehensive income (loss):

Defined benefit plan actuarial gain (note 19)

913

Foreign currency translation for foreign

(1,803)

operations

Balance, December 31, 2024

299,438,116

$ 2,428,618

309,974

(2,060,837)

$ (4,765)

672,990

See accompanying notes to consolidated financial statements.

BALLARD POWER SYSTEMS INC.

Consolidated Statements of Cash Flows

For the years ended December 31

(Expressed in thousands of U.S. dollars)

Note

2024

2023

Cash provided by (used in):

Operating activities:

Net loss for the year

(324,245)

(177,716)

Adjustments for:

Depreciation and amortization

11,973

13,527

Deferred gain amortization

(416)

(417)

Impairment loss on trade receivables, net of cash recoveries

13,411

1,537

Inventory impairment and onerous contracts provision adjustments

5,657

14,978

Unrealized (gain) loss on forward contracts

1,095

(1,296)

Equity in loss of investment in joint venture and associates

12 & 28

4,941

10,131

Net decrease in fair value of investments

13 & 31

14,788

12,897

De-recognition of lease

(190)

120

Impairment charges on property, plant and equipment

111,020

967

Impairment charges on intangible assets

658

2,266

Impairment charges on Goodwill

40,277

23,991

Accretion on decommissioning liabilities

243

532

Employee future benefits

Employee future benefits plan contributions

(11)

(8)

Share-based compensation

7,456

10,959

(113,335)

(87,484)

Changes in non-cash working capital:

Trade and other receivables

13,349

(12,913)

Inventories

(16,946)

(898)

Prepaid expenses and other current assets

2,689

Trade and other payables

1,204

(3,580)

Deferred revenue

7,044

(3,442)

Warranty provision

(2,104)

3,671

5,236

(17,086)

Cash used in operating activities

(108,099)

(104,570)

Investing activities:

Contributions to long-term investments

(11,958)

(11,911)

Recovery of contributions to long-term investments

1,000

Additions to property, plant and equipment

(25,849)

(41,214)

Investment in intangible assets

(1,768)

(154)

Proceeds on sale of assets

3,170

Consideration paid related to acquisition

(100)

(2,000)

Cash used in investing activities

(36,505)

(54,279)

Financing activities:

Principal payments of lease liabilities

(3,327)

(4,013)

Net proceeds on issuance of share capital from share option exercises

308

335

Net proceeds on defined benefit obligation settlement

1,489

Cash used in (provided by) financing activities

(1,530)

(3,678)

Effect of exchange rate fluctuations on cash and cash equivalents held

(1,048)

(73)

Decrease in cash and cash equivalents

(147,182)

(162,600)

Cash and cash equivalents, beginning of year

751,130

913,730

Cash and cash equivalents, end of year

603,948

751,130

Supplemental disclosure of cash flow information (note 29). See accompanying notes to consolidated financial statements.

Disclaimer

Ballard Power Systems Inc. published this content on March 13, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on March 13, 2025 at 13:05:35.592.