Hello. Good morning. I hope you can see the presentation. I want to walk you through our Q4. My name is Rik Van Meirhaeghe. I've been with the project since 2013 and have been responsible for technology, now focusing more on business development. I want to start, of course you will see in the written presentation some warnings. I want to start with re-emphasizing the Pryme positioning in this market. Walk us through the developments we have done since the IPO. Reconfirm our expansion philosophy, which together leads to some funding needs that we will commence. My colleague, Stephan, will give you the Q4 financials, after which I will conclude.
In terms of positioning, it is very important to note that Pryme is focusing on a pure play pyrolysis, and that we are part of the supply chain, whereby we pass on a feedstock to the petrochemical companies. Saying that means that the petrochemical companies need a scalability of the volume going to them because the most valuable route for them to use our feedstock is to be able to transform it in their existing naphtha crackers, for which most of them will need to build some additional pretreatment capacity, and to support their investment case that requires substantial volumes of pyrolysis oil. Scalability is a key issue to deliver circular plastics in this world. The approach Pryme has taken is to try to limit the complexity of the technology and work with proven technology.
Our key differentiator is effectively in that scalability, leading also to cost efficiency. We have achieved that by not developing our own reactor, but working with existing technology and taking advantage of a long-term proven performance by a German manufacturer that has solved, I would say, the many technological challenges on other types of applications. We have an electrified solution, which of course will possibly lead us to additional, yeah, CO2 reduction, and so very low carbon footprint. It technologically gives us also a much higher control over the process conditions and a much faster time of reaction.
I want to say that this is technology very similar to what Plastic Energy has and is using, and for me, this is today the benchmark company in the market as it has been operational on this technology already for more than five years. This proven elements and of which we will get the validation in Rotterdam, plays in a market that today is extremely strongly driven by consumer sentiment that is requiring the fast-moving goods companies to get plastics that are of circular nature or at least have a very high recycling content. That is again supported by regulatory environment that forces these companies to do so.
We have seen in the past, especially the past three years, I would say, that the major oil majors and petrochemical companies have now taken over also that motivation, certainly driven partly by protecting their quite lucrative plastic business models. We see also a final piece in the chain converting more and more towards this on the I would say, waste collection and sorting capabilities, where EU regulation is forcing these companies to take more plastic out of any waste stream and in fact, trying to avoid incineration as a solution for plastics. All of this leads to a very favorable market with a significant volume potential.
Maybe focusing on what we have done since the IPO, I will focus more in detail on what's been happening on our Pryme One construction site. Of course, we are continuing to mature and stick to our rollout plans for which we've started on implementation and identified some interesting sites. One of the cornerstones in this all has been the strategic agreement we have signed with Shell over the summer. That is also accompanied by an offtake agreement, and we are at the moment fully in implementation of, let's say, adjusting logistics between the two companies and things like that. Also the ISCC PLUS certification reach, et cetera.
All of this is only possible because we've gathered a good team, with the right competencies, and we believe that now we have a quite complete team to deliver all of this. Maybe an element that we have expanded more than in the original plans is a very important collaboration on R&D, which I will also highlight a bit more. In terms of the Rotterdam development, one of the important things that has happened is that by end of the year last year, we saw that the lease agreement we had with the Pryme One, which is the name of the site where we are locating, was not adequate for the size of activities we were having. The original idea was that they would provide all the OSBL, the Outside Battery Limits of our process unit.
We noticed, or we came to the conclusion that it was risky to leave all that responsibility to them and decided to take more control over the facilities surrounding our equipment. It means now we have concluded a new lease agreement with them that we can fully proceed with the construction. The concrete slab was already poured. The steel structure was already manufactured and is waiting to be brought to site for construction. We are already in Factory Acceptance Tests with some of the equipment suppliers, but there's also some essential equipment that from German origin that have a few months delay, which altogether brings us in construction completion over the summer, starting of commissioning in Q3, and still first oil and potential commercial production as from Q4.
These are some of the pictures. It's a quite big walking floor. That is our waiting bunker, our steel structure that is ready for installation, and the full engineering of the plant that you see there. What does it mean if we compare CapEx intentions at the IPO and now? Yeah, there's a very significant change, but it is, of course, not just due to expansion of cost. It is mostly due to changes of scope. First one, of course, and the most major one is this renegotiated lease agreement on the facilities where we take responsibility of our Outside Battery Limits. That's an expansion of EUR 6 million.
During the final design reviews, and also taking some clues from competing installations, we see that very often the plastic melt, flow and transport to the reactor causes them problems. We've decided to shorten as much as possible the distance between our extruders and our reactors, but that has a significant cost increase because we need to put the extruders at a certain height, which increases a lot of engineering complexity. I would say it will certainly de-risk the plant in a further way. In the feedstock discussions, we've noticed that we need some more control over storage and pretreatment, which we have also done some additional CapEx. I explained already, the R&D was originally very low. We have increased it, but we see behind, of course, a very strong know-how development schedule.
It is also a strong generator of subsidy potential. We've already been able to get an invitation for a Horizon Europe project that will lead to substantial subsidies. All of this still, of course, results in the delays and CapEx estimation that due to the situation with COVID and general inflation has still increased also to some extent. One of the other elements that drives our additional CapEx is we've had the rare opportunity to book or to conclude the purchase of a site in Amsterdam. Why do we consider it a rare opportunity? Because, okay, it has all the features for the necessary facilities in this site, especially in terms of logistic with the quayside and good accessibility by road. Mostly it has already a permit for pyrolysis activities.
Although the permit is limited at the moment to so, let's say more or less the size of Pryme One, the discussions with the authorities have led us to confirm that they would be open to an extension of that permit to a typical size, which for us is 160,000 tons. All of this means that we now have a strong control over our potential development plan in the rollout. The fact that on top of that, there is already a concrete slab on which to produce the factory, and that the mere cost of that slab is higher than the price we are paying for all the assets together is, of course, an interesting element.
R&D center, the main point there is that we've noticed that we have a strong offer as a strategic partner to our off-takers and our waste suppliers if we can do fast testing of the relation between waste feedstock and the oil quantities. We've built a mini simulation plant of 10 kilos per hour at the research facilities in Ghent. The center in Ghent, where we are, is a center of excellence for the petrochemical industry with an extremely strong track record and about 80 researchers that both work on plastic feedstock, but conversion and there is even a naphtha pilot cracker on the site.
We'll be able to do a lot of testing in favor of our offtake partners and be able to develop a database that allows us to optimize a much more efficient value chain from feedstock to output pyrolysis oil. Okay, the team, especially the bottom line, you see a lot of very experienced people with relevant background in the trade of the petrochemical industry that will deliver, I would say on the technical and development side. I think in particular, my former CTO role has been taken over by Dominique Gemoets , who has both in terms of process engineering but also in project management construction of modular approach, the right experience to deliver this.
We stick to our expansion philosophy, and that is that upon validation of the engineering metrics through plant 1, we should be in an investment, final investment decision position, i.e., have access to permitted sites and the right development plans in the course of 2023, which will then lead to production sites end of 2024, early 2025. In terms of the discussions with our strategic partners, that is a very relevant timeline because it will also lead to adoptions in their assets. Of course, Amsterdam is now a piece of the puzzle.
We are simultaneously pursuing permitting actions in the Rotterdam two plant, for which will still, let's say convert to the potential mega plant in a phased approach and also in the harbor where both ExxonMobil and TotalEnergies have their assets nearby. Furthermore, we will still continue with permitting sites in Mediterranean, Baltic, Rhine, and U.K because that gives you a kind of distribution of access both to feedstock and oil markets and assets. All of this is still built on very attractive project economics. It is clear that the evolution in oil prices, energy prices in general, are having an influence on what we are doing.
I think the main con element we see is that the premium being paid for pyrolysis oil is robust and allows, I would say, to take at a good protected margin still the increase of feedstock prices, partly driven by the, it being an alternative in incineration potential still at the moment. Pryme One will of course be because of its limited scale, be less profitable, but our typical scale, I think, is our standard metric we have to be looking forward to. With a 32% EBITDA return on invested capital, it means that once also you consider some debt leverage in that construction, we can deliver very profitable projects.
All of this of course leads to some additional funding needs, which we believe is with EUR 15 million we can deliver absolutely the startup and profitability so cash flow positive situation with Rotterdam Pryme One. We will by then that time also have our different development projects for growth ready for investment decision, and our research center continues to help us to be at the forefront of the development and make us a very interesting strategic partner for the offtake markets. We have entrusted this fundraising to Pareto Securities, and we'll certainly be in touch about that with several of you in the coming week and weeks. I leave the words to Stephan for comments on the financials.
Thank you, Rik.
Yes, Stephan.
Good morning, everyone. Focusing on Q4 financials, for me, there's a few line items that jump out and need some clarification. The first one being the increased employee expenses, personal costs. Of course, we have hired two new people in Q4, our CTO/Roll-out Manager and our CQ director. Legal counsel and R&D manager joined in beginning of 2022, not in these figures. On the back of the new structure of the boards, there are some annual costs that related to that restructuring that are fully hit Q4, where normally it would hit the quarters before then as well be spread over the year. Impact on a run rate of the total on the employee expenses is about EUR 100,000 that we have more costs in Q4 than normally.
The other thing that jumps out, of course, the legal expenses. As Rik described, we renegotiated the contract with Pryme One, giving us a lot more control, and we also had the acquisition of the Amsterdam site in the port of Rotterdam, or the port of Amsterdam, sorry, both requiring quite a bit of legal support. Those are the two items that are special in the Q4 P&L. On the cash flow statement, in Q4, as you can see, we spent EUR 6.1 million. Of that EUR 6.1, EUR 5.2 was spent on CapEx.
If you look at the CapEx increase, there's only EUR 4 million, but there's EUR 1 million hidden in the movement on accounts payable due to an invoice, a large invoice of one of our equipment pieces having arrived just at the end of Q3, hence the increase in Q3, decrease in Q4, and the cash out in Q4. The remainder has been spent on CapEx, which you just detailed a little bit in the P&L discussion, so there's nothing more to add here. On the balance sheet. Rik, the balance sheet, please.
Ready. Yep.
The balance sheet reflects all of the above. As discussed, items continue to increase in our tangible fixed assets. You also see an increase in our intangibles. That's due to the reallocation from the tangibles of mainly the engineering related to development of our IP. That's now been reclassified to intangibles. Still a very sizable equity position, 83% of the balance sheet total. We're left with EUR 8.2 million cash at the end of 2021. Those are the highlights, you can go to the highlights of all of Q4. It's a sort of rehash of all of the above. The renegotiation agreement with Pryme One is essential for us and gives us a lot more control of what we're doing there. What about planning? Changing scopes? Rik's lighted the construction of the steel structure.
The main thing for me, I think it's, again, it's the EU Horizon project that we have been awarded. If you look at the total Q4, and you sort of take out the one-offs, the regular run rate of our OPEX is at about EUR 700 thousand per quarter.
I think that all re-concludes that in our investment case, we seek a position in a very large market or a market with a large potential, both in terms of supply and volume offtake, with a very narrow positioning on being a core competence and developing a cost-efficient conversion of waste plastics. We will have validation starting somewhere at the end of 2022 and confirmed in 2023 of our engineering metrics, which will then allow us to fine-tune the further investment and larger scale plans. Scalability is clearly an essential component for which makes that many of those oil majors are coming to see us.
It's after 10 years of hard trying to get them to the table, it's very interesting to see that they now invite themselves to my table. Of course, we respect the partners that were with us and helped us from the beginning, Shell is certainly one of them. As it is a non-exclusive relationship, we certainly will engage and do engage with other partners to see where we can, let's say, play our cards best in our rollout scenario. I would say the maturing of the pipeline, of course, remains important to make sure that by the time we get validation, we are in a position to take advantage of the value creation we are able to do in this market. I would like to thank you for listening to us.
In lieu of the fundraising exercise that is coming, we kindly ask you to direct your questions directly to Pareto, because they will be coordinating all the further steps in our process. Thank you very much, and I would say have a nice day.