Desert Control : Download Annual Report 2021 (NOR/ENG PDF)

annual report

2021

Contents

VISION AND MISSION .................................................................................................................. 4

CEO MESSAGE ............................................................................................................................... 6

2021 HIGHLIGHTS .......................................................................................................................... 8

FINANCIAL KEY FIGURES .............................................................................................................. 9

COMPANY PRESENTATION ......................................................................................................... 10

Who we are .................................................................................................................................................... 10

What we do ..................................................................................................................................................... 11

Our market ..................................................................................................................................................... 14

How we create value ....................................................................................................................................... 17

Megatrends ..................................................................................................................................................... 18

Our strategy .................................................................................................................................................... 21

History and important events ........................................................................................................................ 22

YEAR IN REVIEW ........................................................................................................................ 24

People ...................................................................................................................................................... 24

Technology ..................................................................................................................................................... 25

Partnerships .................................................................................................................................................... 26

Strategic priories ........................................................................................................................................... 27

Impact and response to the coronavirus pandemic ..................................................................................... 28

The DSRT share ............................................................................................................................................... 28

BOARD OF DIRECTORS ............................................................................................................... 30

REPORT FROM THE BOARD OF DIRECTORS ............................................................................. 32

CORPORATE GOVERNANCE ....................................................................................................... 35

RISK MANAGEMENT ................................................................................................................... 36

PEOPLE AND WORK ENVIRONMENT ......................................................................................... 37

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) ............................................................ 38

CONSOLIDATED FINANCIAL STATEMENTS DESERT CONTROL GROUP ................................... 39

FINANCIAL STATEMENT DESERT CONTROL AS ......................................................................... 76

STATEMENT OF THE BOARD OF DIRECTORS AND THE CEO OF DESERT CONTROL AS ........... 93

AUDITORS REPORT ..................................................................................................................... 94

OUR CORE VALUES ...................................................................................................................... 96

2

Vision and mission

Making earth green again to foster the prosperity of life

• • We aim to reclaim 100 million hectares of degraded land and desert by 2030

• • We strive to create sustainable social impact, immense water savings, global food security, and regeneraon of ecosystems to sequester carbon and balance our climate

• • We aim to establish a social impact iniave throughout the Sub Shahara region by 2025 to reduce poverty and hunger

Water, food, and a stable climate is the pathway to peace and prosperity for people and planet.

We combat deserficaon, land degradaon, and water scarcity by;

• • Restoring and protecng vital topsoil;

• • Reclaiming degraded land - turning sand into soil;

• • Regenerang soil biodiversity and natural ecosystems;

• • Reducing the consumpon of water, ferlizers, and natural resources; for agriculture, forests, and green landscapes

Desertification, loss of fertile soil, and growing water scarcity threaten all life on earth, further accelerated by climate change and overexploitation of natural resources.

Desert Control specializes in climate-smart Agri-tech soluons to combat deserficaon, soil degradaon, and water scarcity. Our patented Liquid Natural Clay (LNC) enables sustainable ecosystem management by restoring and protecng soil's ability to preserve water and increase yields for agriculture, forests, and green landscapes.

LNC enables sand and degraded soil to retain water and nutrients, thus increasing crop yields and ecosystem resilience while preserving water resources by up to 50%.

From sand to soil in 7 hours.

CEO message

CEO message

It's been two years since the pandemic brought the world to a standsll, and it connues to impact our lives and businesses. It became a crisis of an unimaginable magnitude.

At the same me, it's made us realize that we have shiſted from being a small world on a giant planet to being a big world on a small and uerly interconnected planet. As we emerge from the crisis, it's with a renewed sense of purpose that inspires acon to safeguard the future of this small planet we all depend on. The sense of urgency is increasing rapidly but sll needs to translate into acon and tangible results.

Therefore, we remain ambiously dedicated to execung our strategy driven by the vision of making earth green again to foster the prosperity of life. Although the world came to a standsll, it certainly didn't slow down at Desert Control. In 2021 the company grew from 6 to 51 passionate team members. We completed a successful IPO, warped from a single prototype to twelve LNC producon units in three clusters, and tripled producon capacity in the second half. Several pilot projects demonstrated significant impact and exceeded water-saving KPIs. We further secured a strategic partnership to accelerate commercializaon in theMiddle East and established Desert Control Americas in the United States.

Although covid-19 impacted people in our team, we are proud to report that health and safety remained the highest priority in maintaining a zero work-related injuries environment. As we founded our internal Desert Control Academy, lifesaving first aid training and health and safety programs were the first classes to be launched. The Academy will connue evolving to cover all aspects of people development programs as an integral part of our growth culture.

People and a uning culture is the foundaon of an organizaon, and the caliber of talented and enthusiasc people aracted to join our mission is truly inspiring.

Amongst our 51 colleagues at the end of 2021, we have 16 naonalies with an amazing mix of experience, experse, educaon, ages, and diverse cultural backgrounds that enrich our team. We do not have FTEs (Full-me equivalents); all our team members are FTIPPs - Full Time Intelligent and Passionate People.

At the me of publishing this report, we're amidst a war in Ukraine that will have devastang consequences for global food security. Millions

depend on food from Ukraine, and hunger catastrophes will threaten the most vulnerable as food price increases and supply chains falter. In early March, Chicago futures for wheat soared 40 percent in one week, reaching the highest levels since 2008. The cost of ferlizers has increased by 30 percent since January, and scarcity impacts the ability to respond for wealthy countries as well as low- and middle-income countries. Degradaon of land, accelerang loss of ferle soil, and increasing water scarcity further complicate the situaon.

The outlook may seem dire, but soluons inspire hope. We are seeing barren land brought back to life; desert sand turned into farmland, regeneraon of soil that preserves water and ferlizers, restoraon of biodiversity, planng of trees, and a growing movement dedicated to climate-smart regenerave agriculture. All we need is more united acon.

By joining forces across inclusive instuons, governments, investors, and purpose-driven businesses commied to the interconnected prosperity of nature, people and planet, we can overcome even the greatest threats to life on earth!

Ole Krisan Sivertsen President and Group CEO Desert Control

2021 Highlights

• • Raised NOK 200M and completed a successful IPO

• • Grew from 6 to 51 passionate team members

• • Awarded first commercial contract valued at NOK 3.4M

• • Exceeded water-saving KPIs for several pilot projects

• • Entered strategic partnership with Abu Dhabi based agriculture and nature conservaon giant Mawarid Holding Investment to accelerate commercializaon of LNC in the Middle East

• • Agreed to establish a joint venture company for sales and distribuon of LNC in the UAE

• • Founded Desert Control Americas Inc. in the United States

• • Established a new R&D center and innovaon lab in Norway

• • Launched the first high-capacity prototype for LNC producon in January

• • Warped from one prototype to twelve LNC producon units in three clusters

• • Increased producon capacity by 300% in the second half

• • Won global award for green innovaon

• • Gained global awareness as a selected Global Innovator by Expo Live, featured at EXPO 2020 Dubai

• • Awarded R&D grant of NOK 11.9M by Innovaon Norway for environmental technologyDesert Control concluded 2021 with a solid posion and remains well-funded to execute the planned acvies ahead. The company is moving toward full-scale commercializaon in the UAE, securing independent product validaon in the U.S., and building the team to ensure a robust and effecve organizaon to drive the transion from start-up to scale- up in 2022.

Financial key figures

Financial Highlights for the financial year 2021 (IFRS adjusted)

[2020 in brackets]

• • Net proceeds from capital injecon: NOK 190M

• • Total cash balance 31.12.21 (bank deposits and funds):

  NOK 179.3M

• • Equity 31.12.21 NOK 194M

  (equity rao 95%)

• • Revenue NOK 3.1M

  [NOK 1.0M]

• • EBITDA: NOK - 31.1M

  [NOK -11.1M]

Equity rao

• • Net Income: NOK -31.8M [NOK -11.2M]

• • Gross R&D Investments: NOK 14.4M [NOK 4.5M] transferred to P&L according to IFRS accounng policy

• • Innovaon Norway/ Skaefunn grants NOK 8.7M [NOK 1.1M] transferred to the P&L according to the IFRS accounng policy

51

passionate team members

300%

Increased producon capacity

"We started the year with a validated plan. To realize the plan, we needed capital to fund it, technology to deliver it, and people to execute the plan, says Group CEO Ole Krisan Sivertsen. Closing the year, we are proud to report progress in all areas."