Annual Report • Mar 21, 2023
Annual Report
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20 March 2023
Magnora creates, develops, and invests in clean energy companies that benefit from our combination of funding and support. We look across segments and markets for early stage opportunities and we aim to sell when a project is ready-to-build.
| INTRODUCTION | CEO and Chairman's Statement | 4 |
|---|---|---|
| Key Portfolio Figures | 5 | |
| Board of Directors' Report | 6 | |
| Board Of Directors' Statement On Policy For Corporate Governance | 22 | |
| Board Of Directors | 27 | |
| Senior Management | 28 | |
| ESG | Sustainability | 29 |
| FINANCIALS | Magnora Group Consolidated Statement of Profit or Loss | 30 |
| Magnora Group Consolidated Statement of Comprehensive Income | 31 | |
| Magnora Group Consolidated Statement of Financial Position | 32 | |
| Magnora Group Consolidated Statement of Changes in Equity | 34 | |
| Magnora Group Consolidated Cash Flow Statement | 35 | |
| Magnora Group Notes to the Consolidated Financial Statements | ||
| Magnora ASA Income Statement | 36 | |
| Magnora ASA Balance Sheet | 65 | |
| Magnora ASA Cash Flow Statement | 66 67 |
|
| Magnora ASA Notes to the Financial Statements | 68 | |
| Independent Auditor's Report | 81 | |
| Magnora Remuneration Report 2022 | 87 | |
| Responsibility Statement | 96 |
Looking back at 2022, it is easy to feel energised. Our optimism relates back to five rapid changes that have proven our strategy and business model.
First, the fundamental outlook on energy has shifted. A few years ago, renewable energy was the right thing to do, but not necessarily a profitable proposal. During 2022, carbon free energy came five years closer. Renewable assets turned out to be profitable and the influx of professional money grew. Magnora benefitted through a healthy capital increase, but also from a new sense of urgency among regulators. In Norway, solar power is no longer a far-fetched idea and Hafslund Magnora Sol saw a marked shift in the willingness to offer land in return for a future cut of revenues. Energy is no longer just energy – it matters where the energy comes from and how it was produced.
Gradually at first, then rapidly, an industry architecture has emerged that greatly benefit Magnora. A decade ago, renewable energy was mostly a play inside vertically integrated companies. In recent years, these giants have increasingly come to rely on specialists in the entrepreneurial early stages of a project. A market has emerged for ready-to-build projects with observable standards and price levels. Hence, our portfolio companies spend less time educating the market and more time creating value. Helios Nordic Energy AB, our Swedish solar PV project developer for example, delivered beyond expectation. Thirdly, we experience an
entrepreneurial shift in the outlook of energy majors. The large companies that dominate energy supply are capable of running large and complex projects, but may not master the high-speed, high-risk business of sorting out early-stage renewable projects. Frequently, such projects require a speed of execution beyond the capacity of a major corporation. Magnora has become a partner in demand. In 2022 Hafslund Vekst took an ownership stake in the Group. TechnipFMC and Magnora won the ScotWind N3 495 MW floating wind license (aka "Talisk") in early 2022. Our portfolio company Evolar AB (enhancing solar cells) is also meeting increased interest from much larger partners.
At the end of 2022, our risk profile looks very different from previous years. Magnora is no longer dependent on the performance of individual ventures or key individuals. Rather, we see a diversified portfolio logic at work. Magnora may shift attention onto businesses that face challenges and shift resources onto those that face opportunities. Geographical risk is also diversified through our presence in South Africa, Norway, Sweden, Scotland and England. We have a portfolio of battery storage, solar and wind assets, some offshore and some onshore. No single segment or market can risk the health of the business.
A final shift is internal to Magnora: the shift to pure play green electricity. Since 2019, Magnora has invested and operated exclusively in renewable energy, as the oil and gas business with all technology rights was sold in 2018. Two license agreements remain in the Group, providing late revenues from a proprietary design. From 2022 onward, however, renewable portfolio is also generating cash. We expect green revenues to exceed legacy revenue during 2023.
Finally, we would like to underpin that we depend on, and have been very fortunate to attract, a team of industry-leading experts from the renewable industry, which has allowed us to select the right investments and manage them efficiently and in a competitive way. Diversification coupled with a professional team is what allows us to quickly choose the best project opportunities and to create value.
On our way to a carbon neutral Europe, we believe green energy prices will stay higher than in the previous decades for many years to come.
Torstein Sanness Executive chairman
Erik Sneve CEO
KEY
MW, net share of project capacity 1 for projects under development
MW, net share of project capacity 1 for projects under development
| Market | Net share of project capacity (MW) |
Technology | |
|---|---|---|---|
| Sweden | 1 170 MW | ||
| Scotland | 396 MW | ||
| England | 80 MW | ||
| Norway | 1 000 MW ambition | ||
| South Africa | 2 000 MW | ||
| 1) 2) |
MW x Magnora Ownership = Net share | Economic interest, at end of 2022 owned 37.5% with option to increase to 50% | |
| Market Cap MNOK 1 417 As of market close 30 December 2022 |
Share Price* NOK 21.20 |
||
| M | A G N O R A A S A A |
||
Figures for 2021 are presented in parenthesis.
The Group continued to grow in 2022. During the year, a series of significant events played out:
has allowed Evolar to consider various financial alternatives with a focus both on return for Magnora's shareholders and continued industrial progress.
» In September 2022, the Group raised a total of NOK 200 million at a price of NOK 22.35 per share, of which NOK 100 million was pre-allocated to Hafslund. The private placement was seven times oversubscribed.
» In September 2022, the Group also concluded an agreement with Hafslund and Helios to establish a solar PV development company for the Norwegian market.
Hafslund Magnora Sol AS has entered into multiple option agreements with landowners to develop solar PV parks in Norway.
The Group continues to grow its portfolio of renewable energy companies and projects and has over the past year expanded its portfolio within solar PV, offshore wind, onshore wind and solar PV enhancing technology market across the Nordics, UK and South Africa. New markets and investments are evaluated continuously.
The original strategy of building a robust portfolio across several segments and geographical areas has proven effective, as it reduces political and country specific risks. We see an increasing appetite for our portfolio companies and projects from leading energy companies and infrastructure funds.
Resistance against onshore wind remains high in Norway and Sweden but attitudes are changing gradually against a backdrop of record-high electricity prices in the region. EU has continued to press hard for increased production of renewable energy to secure future needs and stabilise energy prices at acceptable levels. Such pressure from regulators helps the Group, creates licensing opportunities for areas to develop and increases the pot of available capital from investors that seek out green and sustainable investments.
The Group continues to build a portfolio of offshore wind projects through its cooperation with TechnipFMC in Magnora Offshore Wind. The Talisk (ScotWind) project is in early development phase, and additional projects are planned for or licensing application under development. The Scottish authorities are determined to achieve the goals they have set, and the Office of Gas and Electricity Market has already published a proposal for a link to Beauly by 2030, which is expected to have a significant impact on our Talisk project. We see floating wind as a more attractive supply of green energy with also better wind resources in Europe as there is still local opposition against onshore wind in many countries.
Although all associated companies are in an early phase of executing their business plans, there is an increasing interest from industrial and institutional investors to invest prior to Ready-to-Build phase. Helios's divestment of several projects totaling 577 MW during 2022 illustrates this market interest.
The Group used its last option to increase ownership in Evolar during 2022 and owned 63.5% at year end. In addition to equity increases, the Group has funded Evolar through convertible loans while Evolar continues to consider IPO and other financial alternatives. Evolar has several ongoing discussions with investors and companies interested in the perovskite technology. Three joint development agreements have been secured so far. We believe solar PV has significantly increased in importance within the renewable power production mix, and we are increasingly focusing on near term development opportunities within this segment which also has a shorter time-to-market.
In addition to the general interest in renewable energy projects, we see a growing interest from institutional investors and energy companies to invest in platforms capable of developing and operating renewable energy power plants. Although we have on-going negotiations, this type of partnership requires a strategic alignment and a more comprehensive due diligence process by both parties, which normally takes longer than project divestments.
With tumultuous markets in 2022,
we focused on a closer cooperation with our banking partners to provide the funding needed during the past year. In addition to this, the private placement in September 2022 strengthened our balance sheet for investments ahead.
The Q2 2022 targets (below) on net share from the portfolio companies are due for revision in Q2 2023 following the strong growth achieved during 2022:
*Sales to Earnings Per Share Conversion is subject to IFRS, size of upfront payment, grid connection, all permits in place etc. Sales targets are subject to potential delays due to high volumes and complex negotiations, which could affect timing of closing.
MW, net share of project capacity 1
Magnora provides capital, management and strategic support to its portfolio companies to help them develop and grow. We look for companies with result-oriented and humble teams, with high integrity and a proven track-record. Below is an overview for each company or investment group within the Magnora Group.
GW, net share of project capacity 1
Commercialising a disruptive turn-key solution that enhances efficiency in solar PV by way of perovskite technology
www.evolarab.se
Magnora acquired 28.44 percent of the shares in Evolar through a share issue in the fourth quarter of 2020 and has since increased its ownership to 63.5 percent through additional share issues.
Evolar is developing a perovskitebased PV power booster technology with a potential to increase the efficiency of conventional silicon-based solar panels at low cost. The investment in Evolar gives Magnora access to a unique technology in a growing market. The Evolar team has led the world in developing thin film solutions such as a copper indium gallium selenide (CIGS) solar cell delivering an efficiency of 24 percent and a thin film module record of 21 percent efficiency. The Evolar team has previously developed multiple factories in Germany and China and sold solar cells directly in Europe through IKEA.
The company has a unique industrial scale R&D prototype production line, which is fully operational in Evolar's manufacturing facilities in Uppsala, Sweden. This allows the team to quickly scale and test solar cells and modules and thereby shorten the time-to-market. Perovskite can have a transformational effect on the solar cell market as well as the
green transition due to its potential disruptive performance compared to conventional solar cells. Evolar's business model is to develop and sell design, hardware, software and consumables for solar cell manufacturers which want to implement Perovskite tandem technologies to their current offerings.
The Evolar team is in discussions with several industry players across the value chain who are eager to investigate the use of their perovskite technology for potential cooperation, testing, and scale-up of technology in the multi-billion dollar solar cell market.
Evolar's organisation is growing in line with its strategy. The company maintains an advisory board that includes the Dean of Uppsala University, Anders Hagfeldt, a recognized expert in the global perovskite community.
More details are available on Evolar's home page: www.evolarab.se.
Greenfield developer of large-scale solar PV projects in the Nordics and Baltics
Magnora participated in a share issue acquiring 25 percent of Helios Nordic Energy AB (Helios) in February 2021 and increased its ownership to 40 percent in the third quarter of 2021.
Helios is a greenfield developer of large-scale PV projects in the Nordics and Baltics. The company has developed a project portfolio by signing options for land leases in well suited locations and subsequently obtained grid connection agreements and building permits to install utility scale PV plants. The company has land lease agreements for 82 projects with a total installed capacity potential of approximately 2.3 GW.
During the fourth quarter 2022, the company closed yet another transaction with Commerz Real for divestment of five projects. Helios has so far divested more than 600 MW to reputable takers such as OX2, Commerz Real, Nordic Solar,
and Solgrid.
We note a significant interest in the marketplace for solar PV projects and expect several projects in.
More details are available on Helios's home page: www.heliosnordic.com.
www.heliosnordic.com
Magnora South Africa Development AS - Renewable development company; African Green Ventures (AGV)
Magnora entered the South African market in 2021, acquiring 100 percent of the shares in a South African company with a development portfolio consisting of approximately 450 MW wind power and 400 MW solar PV.
In Q1 2022, Magnora acquired 92 percent of African Green Ventures (AGV), a renewable energy development company. With the acquisition, Magnora has a local team in South Africa to develop existing projects and expand the portfolio of wind and solar PV projects in South Africa. At the end of 2022, the potential generating capacity of its portfolio was approximately 1,950 MW.
South Africa plans to source minimum 20-30 GW of renewable projects over the next decade to address and acute power shortage. The government has removed a previous 100 MW limit for corporate and industry (C&I) projects and is aiming to make the approval processes more efficient.
Magnora considers options for South Africa that are driven in part by interest from investors. Management is continuing commercial discussions with potential partners, investors and PPA customers.
In South Africa, grid is a significant constraint that requires constant risk management. Several projects are applying for permits. One solar PV project was granted Environmental Authorisation in the second half of 2022. All projects under development are expected to meet the criteria needed in public tender rounds ("REIPPP") and potential C&I power purchasing agreements (PPAs).
Shallow water offshore wind project of 500 MW located
in southern Sweden Magnora had a 37.5 percent ownership stake in Kustvind AB (Kustvind) at the end of 2022 and has an option to acquire up to 50 percent of the company.
Kustvind is a 500 MW shallow-water offshore wind project located in an area with attractive wind conditions 8 - 15 km off the southern coast of Sweden. The wind farm has a potential to produce 2 TWh annually and can potentially provide 250,000 homes with electricity.
The project is close to relevant infrastructure and in an area of Sweden with very attractive electricity prices both historically and recently. The project is about to finalise environmental impact assessments and technical design. The work is progressing as planned, with results from wildlife and marine environmental studies as expected so far and without red flags. Permit application is anticipated to be
ready for submission shortly. Development work for the grid connection route is also progressing according to plan.
More details are available on the project's home page: www.kustvind.se.
Offshore Wind development company in collaboration
www.magnoraoffshorewind.com
with TechnipFMC Magnora established Magnora Offshore Wind in partnership with TechnipFMC, and the company submitted its first applications for licenses to develop offshore wind farms in the ScotWind leasing round.
In April 2022, Magnora Offshore Wind signed an Option Lease Agreement with the Crown Estate Scotland for area N3. The planned development will have a total capacity of 495 MW which is estimated to produce 2.4 TWh per year. In Q4, this initiative was
entered into a cooperation agreement with Hiraeth Energy for participation in the upcoming leasing round for floating offshore wind projects in the Celtic Sea, targeting exclusivity for a 1000 MW project.
The company plans to participate in the first offshore wind application round in Norway, and other markets are under consideration. TechnipFMC has already played a key role in the floating wind industry since inception and has participated in developments such as the Hywind projects.
named Talisk. Magnora Offshore Wind has also The partnership with TechnipFMC has already provided several synergies in the ScotWind project. TechnipFMC has over 4,500 employees in England, Scotland, and Norway, with several of the key resources available locally.
Magnora has established Hafslund Magnora Sol AS with Hafslund and Helios to develop large-scale solar parks in Norway. Magnora and Hafslund own 40 percent each, and Helios holds the remaining 20 percent.
The company aims to develop 1,000 MW of solar power in Norway and will develop projects from the start and until they are ready for construction, after which Hafslund will have a first right to buy the projects.
OWNERSHIP Hafslund is one of Europe's largest and Norway's second largest producer of renewable power, and wholly or partially owns more than 80 hydropower plants in Norway. The company's own power production is approx. 18 TWh and in total the group operates a production of over 21 TWh. Hafslund has more than 100 years of experience in hydropower, owns half of Norway's largest grid company, Elvia, and invests heavily
in heating, cooling, carbon capture and offshore wind.
In early 2023, the company signed landowner agreements and kicked off projects totaling 150 MW. Environmental surveys and permit processes are initiated on the projects.
The company is in the process of building its own organization and has launched a recruiting process.
Magnora holds 33 percent ownership in Neptun Tromsø AS which develop a large-scale facility for production of green ammonia in Tromsø, Norway. The green ammonia will be supplied to the maritime industry as green fuel. We see the Neptun project as a significant effort towards the green shift.
The carbon-free ammonia is produced by capturing nitrogen from the air and combining it with green hydrogen. The energy used in the hydrogen (H2) and ammonia (NH3) production processes is supplied from regional hydro and wind power plants providing reliable renewable and clean energy.
Tromsø is an ideal location for the production of green maritime fuels, benefitting from a strong power surplus from local wind and hydropower plants which gives favourable electricity rates and green energy. It is also Northern Norway's main transport hub with 8,500 annual ship calls. Moreover, the port of Tromsø is Norway's largest fishing port, and has an increasing number of cruise ship calls.
The planned site for the facility is 10 kilometres from Tromsø city centre and located along the main shipping lane into the port of Tromsø. Port of Tromsø (No: Tromsø Havn) has developed and owns the area, which is regulated for industry. The existing quay at the location offers deep-sea quay and logistic facilities, and it is therefore a natural location for the bunkering of green fuels. The green ammonia can be easily shipped from the production facility to locations in Norway and Europe or loaded on bunkering ships, either for maritime use or to chemical industry.
The project is currently planning for ready to build milestone in phase 1 of the project and has signed LOIs with Posten Bring (national postal service) and other potential offtakers for the green ammonia to be produced by the planned facility. These are being matured, with expectation to agree on off-take agreements during H1 2023. The project has also initiated dialogue with potential suppliers for the project, gaining significant interest.
The Group sold its assets and intellectual property rights to cylinder vessel design to Sembcorp Marine Integrated Yard Pte. Ltd. (SMIY) in 2018. Magnora retained the financial benefits from two licensing agreements.
Magnora is entitled to a performancebased license fee from Dana for the lifetime of the vessel. The associated license income for 2022 was NOK 13.5 million (NOK 13.8 million in 2021).
The agreement is still expected to generate revenue for Magnora for two more decades. As this is a long-term asset with a considerable value, the Group is considering various exit strategies to maximise value through a sale.
Magnora is entitled to license fees from the use of a proprietary circular hull design and received payment for the first milestone of USD 2,625 million in Q1 2018. The second payment was triggered when the vessel left yard, which took place in December 2022. This milestone released USD 7.5 million, which was paid to Magnora by Shell in February 2023.
The remaining license income of the Penguins agreement is approximately USD 8.5 million and subject to milestone achievements when the vessel enters active service and operates as intended.
MAGNORA ASA | Q1 REPORT 2022 16
Figures for 2021 are presented in parentheses.
The Group operates with two segments: Corporate and Projects. Revenues and expenses from their respective business activities are tracked separately.
Magnora share of the financial results from each portfolio company is recognized in proportion to ownership share in accordance with IFRS. For subsidiaries, the full net profit/loss is recognised as these companies are consolidated into the Group's financial reports. The development costs in these companies are expensed, not capitalised, reflecting their early development phase.
The Corporate segment consists of the corporate staff and represents the cost base of the Group. All licensing revenues from legacy oil and gas contracts are managed and reported as part of the corporate segment.
Operating revenue for the corporate segment was NOK 102.6 million (NOK 18.7 million) and operating expenses NOK 30.6 million (NOK 30.8 million). The increase in operating revenue is mainly due to the milestone payment of USD 7.5 million from the Shell Penguins project. EBITDA was NOK 72 million (negative NOK 12.5 million) for the corporate segment.
The project segment consists of the portfolio companies, projects, and all related activities. Development and M&A related expenses are assigned to the project segment, excluding M&A related expenses for acquisitions that have not materialised. These expenses are assigned to the corporate segment.
There was NOK 0.3 million from subsidiaries in operating revenues in the project segments. Most projects are early-phase and not yet generating revenues. Operating expense was NOK 1.2 million (NOK 3.5 million), and development and M&A expense was NOK 60.6 million (NOK 22.4 million) in the project segment. The increase in development and M&A expense is mainly due to higher ownership and increased activity level in subsidiaries and associated companies. EBITDA was negative 61.5 million (negative NOK 26 million) for the project segment.
Operating revenues for the year ended at NOK 91.7 million, up from NOK 15.2 million last year, mainly due to achievement of the second milestone of USD 7.5 million in the Shell Penguins project. Future revenues from our license agreements will depend on the timing of production drilling, currency rates, maintenance, uptime and more.
Adjusted EBITDA ended at NOK 10.5 million (negative NOK 38.5 million). EBITDA result has been positively affected by higher operating revenues as noted above, although development and M&A expense has increased significantly due to higher activity level and consolidating more entities than in 2021. As the Group invests in more companies and projects and increases its ownership share in existing investments, the Group's share in the negative financial results from the investments will increase. This is only accounting effects but does affect the financial results of the Group. Net profit for 2022 was NOK 3.9 million (negative NOK 62.8 million). Not including the non-cash expenses of options, write-down of deferred tax asset, and profit/loss from associated companies, net profit was NOK 21.7 million for 2022. Earnings per share was negative NOK 0.02 (negative NOK 1.11 in 2021).
Profit before tax was NOK 12 million (negative NOK 55.1 million), mainly affected by higher operating revenues as noted above.
The Group has accumulated tax losses of over NOK 3.5 billion.
As of 31 December 2022, cash and cash equivalents amounted to NOK 171.9 million (NOK 96.9 million). Net cash from operating activities was negative NOK 67.7 million. Net cash from investment activities was negative NOK 125.3 million, and net cash from financing activities was NOK 268.0 million. The net cash flow for the year was NOK 75 million. The positive cash flow was mainly due to the equity private placement and operating revenues from the Dana contract, reduced by the investments and loans to subsidiaries and associated companies.
As of year-end 2022, total assets amounted to NOK 564.2 million (NOK 192.7 million) whereof cash and cash equivalents amounted to NOK 171.9 million (NOK 96.9 million). Total equity as of 31 December 2022 amounted to NOK 431.8 million (NOK 171.8 million), and the equity ratio was 77 percent (89 percent).
The Group had NOK 76.3 million (NOK 0) in interest-bearing debt as of 31 December 2022.
Distribution of quarterly dividends to shareholders was approved at the annual general meeting held on 26 April 2022.
Distribution of quarterly dividends to shareholders has been halted to conserve cash for investments in line with the Group's near-term strategy.
Magnora has approximately NOK 8.4 billion (NOK 159 per share) of paid-in capital in excess of par value available for distribution of equity back to its shareholders.
On 16 January 2019, Magnora initiated a share buyback program. The buyback program is carried out by market purchases in accordance with the authorisation granted by the extraordinary general meeting to the Board of directors on 18 December 2018.
Buyback transactions are executed according to the market price on the Oslo Stock Exchange. Extension of the share buyback program was approved by shareholders at the annual general meeting held on 26 April 2022. Magnora may at any time without further notice close or suspend the program. The maximum number of shares which may be purchased in any one day is limited to 50 percent of the average weighted daily volume of Magnora shares traded in the 20 trading days preceding the day of purchase. No Magnora shares were purchased during 2022, and as of the date of this report, Magnora owns 21,866 shares or 0.03 percent of total shares outstanding.
In accordance with section 3-3(a) of the Norwegian Accounting Act, the Board confirms that the annual accounts have been prepared on a going concern assumption, which the Board believes is appropriate based on the company's strategic plans and financial prognosis.
The Board proposes the following appropriation of the annual profit of NOK 70.5 million in the parent company Magnora ASA:
Magnora is exposed to market risk, electricity price risk, in-direct equipment price risk, customer risk, project risk, reservoir risk, credit risk, currency risk, renewable license risk, concession risk, interest rate risk, inflation risk, liquidity risk, climate risks, regulatory risks, and other indirect risks. The Group's overall risk management programme focuses on the uncertainty of financial markets and seeks to minimise potential adverse effects on its financial performance.
The Company selects its portfolio projects and companies with emphasis on diversification to mitigate the various inherent risks in each segment of the renewable energy production industry. This does not reduce the individual risks below but makes the Group less vulnerable to the effects of those risks.
The project development process for renewable energy plants is also exposed to risks. The process for obtaining concession from relevant authorities can vary in different countries, but most countries have required local acceptance, and in some countries the local municipality has veto rights. The public opinion and local municipality veto rights can affect the licensing decisions and has in some countries caused changes to the political process determining the regulatory framework for obtaining concession for building and operating renewable energy plants. These uncertainties can cause delays and rejection of the concession applications, and it can cause the economics of the projects to be worsened as the approved size of turbines may not be sufficient for an optimised wind park. There are also risks related to military installations and training areas in addition to wildlife risks.
The profitability and viability of projects can be influenced by outside factors, such as the global transportation constraints during the past months, and the war in Ukraine.
These types of events can have various effects on project costs, access to materials, transportation, and other goods and services relying on the same.
Market price of electricity can influence the profitability and value of Magnora's investments. The price of electricity is influenced by government subsidies, supply and demand, availability of alternative energy sources (oil, coal, natural gas, nuclear plants, etc.), development cost and cost of equipment for power plants, and efficiency improvements within renewable energy plants (wind and solar for Magnora). One significant influencing factor in electricity prices is the political developments pushing for renewable energy to take over for the use of fossil fuels and the shutting down of nuclear plants.
Although Magnora's remaining legacy customers are two major companies with a strong financial basis, as with suppliers and customers in general, there is a risk that unforeseen financial difficulties on the counterparty's side may arise and cause material adverse effects on the financial condition, cash flows and/or prospects of Magnora.
The Group is also subject to currency, field development and reservoir risk in situations where our legacy design is employed by customers in the oil and gas industry. The company and its group companies may sell project prior to ready to build, there is a risk that projects will never receive all permits needed to be finalised and customers might require a new project delivered. If not possible, we may need to return part of prepayments.
Competition is significant as companies in other industries are trying to benefit from the positive policy support from governments pushing for improvements in CO2 emissions. Several companies
Magnora competes with are parts of larger groups, with better access to key personnel and funding.
The recent Covid-19 virus could potentially affect revenues for a short period if the crew on vessels involved in the use of our legacy design is dismissed due to infection risk or similar.
The global climate appears to be changing, and the average temperature is predicted to rise globally, causing more extreme weather conditions, and impacting habitat. Governments are now focusing on reaching a net zero world, which is aligned with the Group's strategy of investing in renewable energy projects and companies developed in a sustainable way. The Group has evaluated climate risk and concluded that the overall effect on the Group's financial results is positive as the value of assets increases due to the increased demand for renewable energy.
Regulatory risks can be changes in the regulatory environment that have a material adverse effect on Magnora's operations and financial performance. This could be changes in renewable energy policies, tax policies, or the regulatory environment that could affect the industries the Group operates in. Changes in the licensing regulations can for instance cause delays in development and construction of projects.
The Group derive all its cash flow from financial investments, two legacy agreements and its subsidiaries and associated companies. Negative cash flow and lack of financial performance from those companies therefore affects the Group. The exposure is limited to the Group's invested amount in those companies and is closely linked to the companies' ability to execute its strategy and manage risk. Magnora is represented on all boards of its subsidiaries and associated companies and mitigates risks through normal governance processes.
Liquidity and access to capital is a risk now that the Group is investing in more capital-intensive projects. This is managed through close dialogues with financial institutions and a strict timeline for cash flow that matches future investment payments with investment gains from farm-downs and exits. As a mitigating measure, the Group has replaced a shorter-term overdraft facility with a NOK 100 million loan facility with longer term and has a total of NOK 150 million in loan facilities.
Loss of key personnel is a risk to the Group as it operates with a staff of highly specialised professionals that may take time to replace if needed. Mitigation of this risk is an ongoing process of identifying outsourcing alternatives and potential recruitment to cover the resource needs of the Group.
Sales of projects prior to the readyto-build phase and final payments are typically closed when all permits, grid connections and/or equipment and long lead items are secured. The full payment of a project sale might be at risk depending on the exact contract terms. Lack of progress in a project can lead to a project sale being cancelled if we or a group company are unable to replace it with an alternative project.
M A G N O R A A S A | A N N U A L R E P O R T 2 0 2 2 G R A O 0 210 Magnora's business is a sustainable business. We find compelling investment opportunities in businesses that contribute to the circular economy. Globally and within EU and Norway, there are a number of initiatives and policies aimed at making the economy greener and sustainable. The EU aims for a carbon neutral economy by 2050. EU also has a mid term target stating that 32% of all energy consumed within the region shall be derived from green and sustainable resources by 2030. More information about Magnora's sustainable development goals can be found on the Group's website: www.magnoraasa.com
The Group aims at maintaining sound corporate governance routines that provide the basis for long term value creation to the benefit of shareholders, employees, other stakeholders and society at large.
As a guiding basis for its conduct of corporate governance, the Group uses the national Norwegian Code of Practice for Corporate Governance, of 14 October 2021. The status of corporate governance is addressed on page 23 of this report.
Magnora had its annual general meeting on 26 April 2022, and the annual general meeting elected the following members to the Board of Directors: Torstein Sanness (Chairperson, re-elected), John Hamilton (Director, re-elected), Hilde Ådland (Director, reelected). Presentations of the Directors are available in a separate chapter in this Annual Report and on the Group's website: www.magnoraasa.com
Developing sound health, safety and environment (HSE) principles is a critical success factor for the Group.
Sick leave was 1.18% (2021: 0%) for the Group for the year. No serious work incidents or accidents resulting in personal injuries or damages to materials or equipment occurred in 2022. There were no Lost Time Incidents (LTI) during 2022.
The work environment is positive, and the Board and management continue to focus on equal opportunities for men and women. One of three Board members at year-end was female. The Group strives to ensure that there is no discrimination due to gender, ethnicity, national origin, descent, race, religion or functional disability. Currently, the Group has not implemented any specific measures in order to meet the objective of the Discrimination Act
and of the Anti-discrimination and Accessibility Act. The need for specific measures in this respect is continuously considered by the Board and management.
The Group has implemented formal guidelines, procedures, standards and routines in relation to anti- bribery and corruption in Magnora and its portfolio companies.
The Group has implemented formal guidelines, procedures, standards or routines regarding human rights.
The Group has implemented formal guidelines, procedures, standards, and routines for due diligence as required by the OECD Guidelines for Multinational Enterprises. Further information about this is available on the Group's website: www.magnoraasa.com
Torstein Sanness Chairman
Hilde Ådland
Board member John Hamilton Board member
M A G N O R A A S A | A N N U A L R E P O R T 2 0 2 2 21
Erik Sneve CEO
As a listed company on the main board of Oslo Stock Exchange (Oslo Børs), the Group aims to conduct its business in accordance with the Norwegian Code of Practice for Corporate Governance of 14 October 2021 (the "Code of Practice"). The Company's principles of corporate governance are in addition to the Code of Practice based on the Continuing Obligations of stock exchange listed companies from the Oslo Børs and relevant Norwegian background laws such as the Norwegian Accounting Act and the Norwegian Public Limited Liability Companies Act. The Code of Practice may be found at www. nues.no and the Continuing Obligations of stock exchange listed companies may be found at www. euronext.com/en/markets/oslo.
In addition to this foundation, the Company has established a set of principles (see www.magnoraasa.com) aimed at ensuring openness, integrity, and equal treatment of its shareholders. By practicing good corporate governance, appropriate division of roles between shareholders, the Board of Directors and Senior Management will be secured, thereby contributing to reduced business risk and better shareholder value over time.
The Group is committed to high ethical standards in its business dealings to ensure that the integrity of its employees and the organisation is maintained. Corporate social responsibility for the Group is an extension of the way the Group conducts its business.
In accordance with section 3-3 b of the Norwegian Accounting Act, the Group shall in connection with its annual financial statements provide a statement on how the Group has implemented the principles of, and account for any deviations from, the Code of Practice. Below is an outline on the Group's principles for corporate governance, in accordance with the categories listed in the Code of Practice. At the turn of the year 2022/23, the Group deviates from the Code of Practice on the following point:
» The Board of Directors has so far chosen not to adopt or publish any explicit guiding principles for how it will act in the event of a takeover bid (Section 14; Takeovers).
The Group's objective, as set out in § 3 of the Group's articles of association (the "Articles"), is "the conduct of industry, trade and business associated with energy, IT and commodities, and sectors directly or indirectly related to these, in addition to investments in and acquisitions of businesses, securities, financial instruments and other assets, and participating in other businesses, directly or indirectly linked to these".
The Board of Directors is of the opinion that the business objectives laid down in the Articles provide predictability and direction for the Group's business strategy and the activities that it may conduct, acquire, or initiate. The Articles are available at the Group's website.
The Board of Directors has defined clear objectives, strategies and risk profiles for the Group's business activities such that the Group creates value for shareholders in a sustainable manner. The Board of Directors considered financial, social and environmental consideration when they carried out this work. The Board of Directors annually evaluates the Group's objectives, strategies and risk profiles.
The Group seeks to maintain a healthy financial structure which is adjusted to its business as well as the duration of its contract portfolio. As of 31 December 2022, the Group had an equity share ratio of 77 percent.
The Board of Directors continually reviews and ensures that the Group has a capital structure that is appropriate to the Group's objectives, strategies, and risk profile. The Board of Directors has established and disclosed a dividend policy, which is considered clear and predictable.
Authorisations granted to the Board of Directors to increase the Company's share capital will normally be restricted to defined purposes and will in general be limited in time to no later than the date of the next Annual General Meeting. The background to any proposal for the Board of Directors to be given an authorization to approve the distribution of dividends will be explained.
At the annual general meeting held on 26 April 2022, shareholders approved capital distribution to shareholders. No distributions were performed in 2022 as capital distributions have been halted to retain funds needed for additional investments and development of
the Group's portfolio of companies and projects.
On 16 January 2019, Magnora initiated a share buyback program. The buyback program is carried out by market purchases in accordance with the authorisations granted by the general meeting.
Buyback transactions are executed according to the market price on the Oslo Stock Exchange. Extension of the share buyback program was approved by shareholders at the annual general meeting held on 21 May 2019, and again on 26 May 2020, 27 April 2021, and 26 April 2022. Magnora may at any time without further notice close or suspend the program. No Magnora shares were purchased during 2022 and as of the date of this report Magnora owns 21,866 shares, or 0.03 percent of total shares outstanding. Please also see "equal treatment of shareholders" below.
The Group has one class of shares only and each share entitles the holder to one vote at the Group's annual general meetings.
All shareholders shall be treated on an equal basis unless there is a just cause for treating them differently in accordance with applicable laws and regulations. In the event of an increase in share capital of the Company through issuance of new shares, a decision to waive the existing shareholders' pre-emptive rights to subscribe for shares shall be justified. If the Board of Directors resolves to issue new shares and waive the pre-emptive rights of existing shareholders pursuant to a Board authorization granted by the general meeting, the justification shall be publicly disclosed in a stock exchange announcement issued in connection with the shares issue.
The reasons for any deviation from equal treatment of all shareholders in capital transactions will be included in the stock exchange announcement made in connection with the transaction. Any transactions carried out by the Company in the Company's own shares shall be carried out through Oslo Børs and in any case at prevailing stock exchange prices. If there is limited liquidity in the Company's shares, the Company shall consider other ways to ensure equal treatment of shareholders. Any transactions in own shares will be evaluated in relation to the rules on the duty of disclosure, as well as in relation to the prohibition against illegal insider trading and market manipulation, the requirement for equal treatment of all shareholders, and the prohibition of unreasonable business methods.
Transactions with close associates shall be on arm's-length basis and always in compliance with the Norwegian Public Limited Liability Companies Act. The Board of Directors will arrange for a valuation to be obtained from an independent third party unless the transaction, agreement or arrangement in question is immaterial or covered by the provisions of section 3-16 of the Norwegian Public Limited Liability Companies Act.
The Group may engage in business activities with or in cooperation with its shareholders. Such activities shall be handled at the board level, with a view of securing a foreseeable and consistent practice which prevents potential conflict of interest situations, arm'slength treatment, and sound governance.
Directors, the CEO, and members of Senior Management shall notify the Board of Directors in advance if they have a significant interest in any agreement which may or is to be entered into by the Group.
For more information about transactions with related parties, please refer to note 23 of the consolidated financial statements of this report.
The Group's shares are listed on Oslo Børs and are freely negotiable. There are no restrictions on transferability of shares pursuant to the Articles.
The annual general meeting is the Group's supreme corporate body. The Articles and the Norwegian Public Limited Liability Companies Act set out the authority and mandate of the annual general meeting.
Among other things, the annual general meeting approves the Group's annual financial statements, elects the Directors and the auditor, and functions as a forum for presentation and discussion of other issues of general interest to shareholders. The calling notice for the annual general meeting will ensure that the resolutions and supporting information distributed are sufficiently detailed, comprehensive, and specific to allow shareholders to form a view on all matters to be considered at the meeting.
All shareholders of the Group have the right to attend the annual general meetings. Shareholders will normally be able to vote on each individual matter, including each individual candidate nominated for election to the Board of Directors, the Nomination Committee and any other corporate bodies to which members are elected by the general meeting.
The Board of Directors ensures that the members of the Board of Directors and the chairperson of the Nomination Committee attend the annual general meeting. Further, the Board of Directors ensures that the annual general meeting can elect an independent chairperson for the general meeting.
The date of the annual general meeting is published in the Group's financial calendar for the year, which is posted at the Group's website. Notice of annual general meetings, including documentation relating to the items on the agenda and the recommendation of the Group's nomination committee, is in accordance with the Articles published at the Group's website no later than 21 days before the annual general meeting is to be held. Individual shareholders are entitled to have the documents sent to them free of charge, upon request to the Group. The annual general meetings of the Group may be held in Oslo or Bærum, Norway.
Attendance forms for the annual general meeting may be sent to the Group up to the day before such annual general meeting to enable as many shareholders as possible to attend. Shareholders who are unable to attend in person may attend by proxy, and the Group provides the shareholders with proxy forms which enable the relevant shareholder to instruct its representative on each individual item on the agenda.
The shareholders may decide between granting proxy to a representative of their own choice, or to the Chairperson of the Board. The minutes from the annual general meeting are published on the Group's website as soon as possible following the annual general meeting.
The Nomination Committee is elected by the general meeting and currently consists of three members.
The Nomination Committee works under the mandate and authority of the annual general meeting, prepares, and recommends candidates for the annual general meeting's election of members of the Board of Directors and members of the Nomination Committee.
The Nomination Committee is encouraged to have contact with shareholders, the Board of Directors and the Company's executive personnel as part of its work on proposing candidates for election to the Board of Directors. Its recommendations will normally be explained. It also proposes the remuneration to the Directors. The Nomination Committee is governed by a provision in the Articles and Guidelines for the Nomination Committee adopted by the annual general meeting. The annual general meeting has stipulated guidelines for the duties of the Nomination Committee, elects the chairperson and members of the Nomination Committee and determines the remuneration of the members of the Nomination Committee. Information regarding the composition of the Nomination Committee, which members are up for election and how input and proposals can be submitted to the Nomination Committee are posted on the Group's website prior to the annual general meeting.
As of the date hereof, the Group is not required to and does not have a Corporate Assembly.
The Board of Directors is composed in a way that meets the Group's need for expertise, capacity, and diversity, and with the aim of ensuring that the Board of Directors can attend to the common interests of all shareholders and operate independently of any special interests and function effectively as a collegial body.
The Board of Directors shall pursuant to the Articles consist of three to seven members. All members shall be elected by the annual general meeting. The Chairperson is elected by the annual general meeting. The Board of Directors currently consists of three members: Torstein Sanness (Chairperson), John Hamilton and Hilde Ådland. Presentations of the Directors are available in a separate chapter in this Annual Report and on the Group's website. Members of the Board of Directors serve for a two-year period, or such shorter period as decided by the General Meeting, but directors may be re- elected.
The directors are deemed to be independent of the Group's main shareholders and material business contacts. At least two of the shareholder-elected members of the Board of Directors shall be independent of the Company's main shareholder(s). The Board of Directors does not include executive personnel.
The members of the Board of Directors are encouraged to own shares in the Company. Information on the Directors' shareholdings in the Group, their expertise and information on their attendance at board meetings is set out on the Group's website and note 18 of the Consolidated Financial Statements. In addition, the Consolidated Financial Statement identifies which members are considered independent.
The Board of Directors is ultimately responsible for administering the Group's affairs and for ensuring that the Group's operations are organised in a satisfactory manner.
Moreover, the Board of Directors is responsible for establishing supervisory systems and for overseeing that the business is run in accordance with the Group's core values and ethical guidelines.
The Board of Directors prepares an annual plan for its work, with emphasis on objectives, strategies, and implementation. Furthermore, the Board of Directors approves the budget for the Group.
The Group maintains a directors and officers liability insurance policy (D&O) for a maximum liability of NOK 75 million.
The Board of Directors meets minimum six times a year and more frequently if required. The Board of Directors held 16 board meetings in 2022, of which 4 were physical board meetings and the rest were held online. The average participation level was 100%. To ensure a more independent consideration of matters of a material character in which the Chairman of the Board of Directors is, or has been, personally involved, such matters will be chaired by some other member of the Board of Directors.
The Board of Directors will consider appointing a Remuneration Committee to ensure thorough and independent preparation of matters relating to compensation paid to the executive personnel. Membership of such committee will be restricted to members of the Board who are independent of the Company's executive personnel. The Board of Directors evaluates its performance and expertise annually.
The Board of Directors established an Audit Committee in 2010, which acts as a preparatory and advisory working committee regarding the financials of the Group. The Audit Committee further assists the Board of Directors in various matters relating to the Group's financial statements, financial reporting processes and internal controls, and the qualifications, independence, and performance of the external auditor. The members of the Audit Committee receive additional remuneration for duties relating to the committee responsibilities, such remuneration being subject to approval by the annual general meeting. Currently, the members of the audit committee are Torstein Sanness and John Hamilton.
The Board of Directors ensures that the Group has sound internal control functions and appropriate systems for risk management tailored to the extent and nature of its operations and in accordance with the Group's core values, ethical guidelines and social responsibility policy. A review of the Group's most important risk areas and its internal control functions is conducted by the Board of Directors on an annual basis.
The Group is exposed to a variety of risks, including market risks, currency risks, financial risks, and operational risks. The Group's overall risk management programme seeks to minimise the potential adverse effects on the Group's financial performance likely to be caused by its exposure to such risk factors, including but not limited to the use of derivative financial instruments and development of sound health, safety, and environment (HSE) principles as well as prudent monitoring of activities.
The Group prepares and publishes quarterly and annual financial statements. The Group's consolidated financial statements are prepared in accordance with IFRS and IFRIC interpretations as adopted by the EU.
The remuneration of the members of the Board of Directors reflects the Board's responsibilities, expertise, time commitment and the complexity of the Company's activities. The remuneration is determined on a yearly basis by the annual general meeting. The Directors are also reimbursed for travelling, hotel and other expenses incurred by them in attending board meetings or in connection with the business of the Group. Remuneration of the Board of Directors, as proposed by the Nomination Committee and
approved by the annual general meeting, is not linked to the Group's performance. In accordance with approval by the Annual General Meeting of 26 April 2022, the Board of Magnora issued 475,000 options during 2022 to provide long-term incentives to the Board and the Management team. The details regarding these awards are described in note 13 to the Group's consolidated financial statements. The Company currently does not grant share options to the members of the Board of Directors.
Members of the Board of Directors and/or companies with which they are associated will normally not take on specific assignments for the Group in addition to their appointment as a member of the Board of Directors. If they nonetheless do take on such assignments, this must be disclosed to the full Board of Directors. The remuneration for such additional duties shall be approved by the Board of Directors. Details of the remuneration to the Board of Directors are disclosed in note 18 to the Group's consolidated financial statements, included in the 2022 Annual Report. Any remuneration in addition to normal director's fee is also specifically identified in the annual report.
The Board of Directors has established guidelines for the remuneration of the members of Senior Management. These guidelines are presented to and approved by the annual general meeting and are described in the "Magnora Remuneration Report 2022" which is disclosed on page 87 of the 2022 Annual Report.
The guidelines on salary and other remuneration for the Senior Management are clear and easily understandable and they contribute to the Group's commercial strategy, long-term interests and financial viability.
The Group's arrangements in respect of salary and other remuneration shall help ensure the Senior Management and shareholders have convergent interests and are simple. The performance-related remuneration to executive personnel is subject to an absolute limit.
The Board of Directors has established guidelines for the Group's reporting of financial and other information based on openness and consider the requirements for equal treatment of all participants in the securities market.
In order to ensure equal treatment of its shareholders, an important objective for the Group is to make sure the securities market is in possession of correct, clear and timely information about the Group's operations and condition at all times. This is essential for an efficient pricing of the Group's shares and for the market's confidence in the Group. Initiatives taken to meet this equal treatment objective include timely and comprehensive reporting of the Group's interim results and publication of the annual and quarterly financial reports. In addition, information of significance for assessing the Group's underlying value and prospects are reported through Oslo Børs and are made available at the corporate website. Further details, such as contact details and general updates and news about the Group, are available at the Group's website.
The Group's CEO is responsible for investor relations and the Group seeks to provide relevant and updated information to its shareholders, Oslo Børs, analysts and investors in general. The Group seeks to clearly communicate its long-term potential, including its
strategy, value drivers and risk factors. The Board of Directors has further established guidelines for the Company's contract with shareholders beyond the scope of General Meetings.
The Group's financial calendar is available at the Group's website. Updated shareholder information is published at the website.
The Board of Directors will handle any possible takeover in accordance with Norwegian corporate law and its fiduciary duties. Neither the Articles of Association nor any underlying steering document prevent or limit the opportunity for investors to acquire shares in the Group, nor do they impose restrictions relative to takeover attempts or authorise measures to be taken by the Board of Directors to interfere.
The Board of Directors will not seek to hinder or obstruct an offer for the Group's activities or shares unless there are reasons for this. The Board of Directors has so far chosen not to adopt or publish any explicit guiding principles for how it will act in the event of a takeover bid.
Ernst & Young AS (EY) was elected external auditor in 2013. The auditor participates regularly in meetings with the Audit Committee throughout the year. In addition, the Board of Directors meets with the auditor, without any member of the Group being present, at least once a year to deal with the
annual accounts.
The Board of Directors makes sure that the auditor submits the main features of the plan for the audit to the Audit Committee annually. The auditor presents at least annually a review of the Group's internal control procedures, including identifying weaknesses and proposals for improvement to the Board of Directors.
In connection with the issue of the auditor's report, the auditor provides the Board of Directors with a declaration of independence and objectivity, and the auditor participates in the board meeting in which the annual financial statements are approved. The proposal for approval of the remuneration of the auditor provides a breakdown of remuneration relating to statutory audit tasks and other assignments and is reported to the annual general meeting.
At meetings where the annual accounts are dealt with, the auditor shall report on any material changes in the Group's accounting principles and key aspects of the audit, comment on any material estimated accounting figures and report all material matters on which there has been disagreement between the auditor and the executive management of the Company.
M A G N O R A A S A | A N N U A L R E P O R T 2 0 2 2 26 The Board of Directors has established guidelines in respect of the use of the auditor by the Company's executive management for services other than the audit
Torstein Sanness
Chairman Hilde Ådland Board member
John Hamilton
Board member Erik Sneve CEO
Torstein Sanness Hilde Ådland John Hamilton
Mr. Sanness is a Norwegian citizen residing in Norway, with extensive experience and technical expertise in the oil and gas industry. Mr. Sanness served as managing director of Lundin Petroleum Norway from 2004 to April 2015, whereafter he was elected Chairman of the same company until March 2017 when he moved to the board of International Petroleum Corp., another Lundin Group company.
Under his leadership Lundin Norway turned into one of the most successful players on the Norwegian Continental Shelf and added net discovered resources of close to a billion boe to its portfolio. Before joining Lundin Norway, Mr. Sanness was Managing Director of Det Norske Oljeselskap AS.
From 1975 to 2000, Mr. Sanness was at Saga Petroleum where he held executive positions in Norway, and the US, including responsibility for Saga's international operations and entry into Libya, Angola, Namibia, and Indonesia.
Mr. Sanness is a graduate of the Norwegian Institute of Technology in Trondheim where he obtained a master's degree in engineering (geology, geophysics, and mining engineering).
Mr. Sanness also serves as a board member for International Petroleum Corp., Lundin Energy AB, Carbon Transition ASA, and Panoro Energy ASA.
Mrs. Ådland holds a bachelor's degree in chemical engineering and a master's in Process Engineering has extensive experience from various technical and operational positions in Kværner, Statoil and Gas de France/GDF Suez/ Engie/Neptune.
Mrs. Ådland is currently working in Vår Energi as Vice President of Norwegian Sea Area. Mrs. Ådland is also a board member of Panoro Energy ASA and serves as the chairman of the board of NOFO (the Norwegian Clean Seas Association for Operating Companies).
Mr. Hamilton has considerable experience from various positions in the international oil and gas industry. Most recently, John was Chief Executive Officer of UK AIM listed President Energy PLC, a Latin American focused exploration company, which opened a new onshore basin in Paraguay.
Before joining President, John was Managing Director of Levine Capital Management, an oil and gas investment fund. He was also Chief Financial Officer of UK FTSE 250 listed Imperial Energy PLC, until its sale for over US\$ 2 billion in 2008.
John spent 15 years with ABN AMRO Bank in Europe, Africa, and the Middle East. Most of his time with ABN AMRO was spent in the energy group, with a principal focus on financing upstream oil and gas.
John has a BA from Hamilton College in New York, and an MBA from the Rotterdam School of Management and New York University. Today, John holds the position as CEO of Panoro ASA.
Mr. Sneve has considerable experience from various positions in the in the investment industry and renewable industry in Norway and abroad. Mr. Sneve has worked 25 years with investments and operationally in the VC industry, renewable industrial and in a family office in various positions and support services.
His experience from working as an analyst, consultant, COO and investment director is from EY, DnB Markets, Energy Future Invest (EFI – a Statkraft, Hafslund and Eidsiva Energi joint-venture) and for Fram. He has worked internationally in the US, Sweden, Germany and opened offices in the UK and Sri Lanka. He was also responsible for the Solibro AB (a Swedish solar technology company) development and sale to Q-cells AG, a Euro 84 million exit as an Investment Director in EFI.
Mr. Sneve has also worked as a COO in an early-stage 3D software company building an international organization working within the mobile telephony and health care industries. Mr. Sneve holds a B.Sc. in finance from Arizona State University with Summa Cum Laude (Dean's List).
Bård Olsen has several years of experience from various controller positions in the US. He has also worked as an external auditor at Henry & Horne, and internal auditor and responsible for regional SOX compliance at the NYSE listed dealership group Auto Nation.
Mr. Olsen has also worked at EY in a risk and internal control advisory role for banks and financial institutions in Oslo, Norway. Before joining Magnora, Mr. Olsen was Vice President of Global Compliance at MHWirth, a drilling equipment company within the Aker Group, and held various positions within the group during the nine years there, including Head of Internal Audit at Aker Solutions corporate. Mr. Olsen holds a B.Sc. in Finance and an MBA from Arizona State University.
Magnora's core business is to facilitate renewable energy. We create value by helping de-risk and speed up renewable energy solutions, such as wind -and solar power. Our strategy is to develop projects from early phase greenfield to ready-to-build. Our contribution is through developing renewable energy projects through the early stages to de-risk the projects and get all necessary permits and licenses in place as efficiently as possible. This allows larger and established energy companies to move swiftly into renewables and quickly enter construction phase.
We are fortunate to have a core business with a direct and positive impact on some essential sustainable development goals (SDGs). Our team is focused on growing our portfolio and managing our resources through channeling funds to the projects generating more megawatts for customers needing green energy. Avoiding bottlenecks and finding locations without serious environmental impact is also key. We do this because it is profitable, but also because it has a material and positive impact on our environment.
Our team brings decades of experience with proven operating and project execution models, leveraged as we support our portfolio companies building a presence within the wind and solar power industries. We strive to educate a wide network of partners making our model useful in various geographical markets.
We operate in countries and environments where focus on ethical business is essential. The risk of fraud and unethical practices are higher in some jurisdictions. We mitigate such practices through risk assessments, standards, extensive due diligence work, and a strong commitment to local stakeholders of our projects. It is critical for longterm value of all projects that trust and mutual benefits are built with landowners, local and national authorities, local communities and NGOs.
Magnora supports the UN Sustainable Development Goals (SDGs) and has identified three goals where we can make a difference:
Ensure access to affordable, reliable, sustainable and modern energy for all. According to the UN, an estimated 789 million people lacked electricity in 2018. Solutions for generating more electricity is viewed as important for developing better living conditions and better opportunities for a large group of people. Moreover, the need for renewable energy is of course important to lower global emissions.
Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation. Building new infrastructure for generation of renewable energy will enable existing industry to become more sustainable by replacing fossil and nuclear energy sources with renewable energy. Some of our power generation facilities are likely to be located closer to the end consumer, which will increase efficiency as less energy is lost in transmission.
Take urgent action to combat climate change and its impacts. According to the UN, investment in fossil fuels continues to be higher than investment in climate activities. By investing in renewable energy solutions that support the drop in global emissions, Magnora makes a positive contribution to combat the climate change. This is important as climate change continues to exacerbate the frequency and severity of natural disasters, and according to the UN, affected more than 39 million people in 2018.
Magnora has developed a governance framework to ensure our expectations to our stakeholders are communicated clearly through all relevant channels. Implementation of our governance framework includes training for our board and employees, as well as implementation of specific guidance and tools. We hire people based on our assessment of their experience and attitude to ensure they will promote our values and safety mechanisms that ensures the well-being of our employees, partners, and contractors.
Although challenging with a small team and specialist-focused hiring, we are actively pursuing gender diversity when hiring and promoting, and we have a zero tolerance for any form of discrimination. Our whistleblowing channel is established to ensure employees, partners, and contractors can report their concerns if violation of our code of conduct is suspected.
Although our current environmental impact is primarily through our investment choices, we believe our values will have long- term effects on the projects we build and invest in throughout their lifecycles.
The European Securities and Markets Authority (ESMA) issued guidelines on Alternative Performance Measures ("APMs") that came into force on 3 July 2016. Magnora has defined and explained the purpose of the following APMs:
EBITDA, as defined by Magnora, includes total operating revenue, and excludes profit/loss from associated companies, depreciation, amortization, and impairment loss.
Adjusted EBITDA is a measurement used in internal reporting to management and is considered to also be relevant for external stakeholders. Adjusted EBITDA shows the corporate activities and related expenses to operate the Group. This has been referred to as the Groups' cost base in previous reports. Adjusted EBITDA, as defined by Magnora, excludes development and M&A related expenses, and non-cash items and adjustments, such as options related expenses. Development and M&A related expenses are expenses related to investment transactions and development of projects.
| NOK million | 2022 | 2021 |
|---|---|---|
| Operations | ||
| Total operating revenue | 91.7 | 15.2 |
| Employee benefit expense | -32.1 | -20.4 |
| Other operating expense | -47.5 | -33.3 |
| EBITDA | 12.0 | -38.5 |
| Development and M&A expense | 49.4 | 22.9 |
| Share-based payments (non-cash) | 5.8 | 3.4 |
| Adjusted EBITDA | 67.2 | -12.2 |
| NOK million | Note | 2022 | 2021 |
|---|---|---|---|
| Operating revenue | 24 | 91.1 | 13.8 |
| Other operating revenue | 24 | 0.6 | 1.4 |
| Total operating revenue | 91.7 | 15.2 | |
| Depreciation, amortization and impairment | -1.6 | 0.0 | |
| Employee benefit expense | 18 | -32.1 | -20.4 |
| Profit/loss from associated companies | 7 | -3.9 | -21.6 |
| Other operating expense | 26 | -47.4 | -33.3 |
| Total operating expense | -85.0 | -75.3 | |
| Operating profit/(loss) | 6.7 | -60.1 | |
| Financial income | 19 | 8.1 | 22.4 |
| Financial expense | 19 | -10.2 | -17.4 |
| Foreign exchange gain/(loss) | 7.4 | 0.0 | |
| Net financial profit/(loss) | 5.3 | 5.0 | |
| Profit/(loss) before tax | 12.0 | -55.1 | |
| Tax income/(expense) | 15 | -8.1 | -7.7 |
| Annual net profit/(loss) | 3.9 | -62.8 |
| Profit attributable to: | Note | 2022 | 2021 |
|---|---|---|---|
| Net profit/(loss) attributable to equity holders | 12.5 | -62.8 | |
| Net profit/(loss) attributable to non-controlling interests |
-8.6 | 0.0 |
Earnings per share for profit/(loss) attributable to the equity holders of the Company during the year (NOK per share):
| Basic | 20 | 0.21 | -1.11 |
|---|---|---|---|
| Diluted | 20 | 0.21 | -1.11 |
| NOK million | 2022 | 2021 |
|---|---|---|
| Net profit/(loss) | 3.9 | -62.8 |
| Foreign currency translation to be classified to profit or loss in subsequent period |
1.9 | -2.3 |
| Total comprehensive income | 5.8 | -65.1 |
| Total comprehensive income attributable to equity holders | 13.5 | -65.1 |
| Total comprehensive income attributable to non-controlling interest |
-7.7 | 0.0 |
| MAGNORA GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||
|---|---|---|---|---|---|---|
| ------------------------------------------------------------ | -- | -- | -- | -- | -- | -- |
| NOK million | Note | 31.12.2022 | 31.12.2021 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 29 | 34.1 | 0.0 |
| Deferred tax assets | 15 | 15.1 | 23.4 |
| Fixed assets | 6 | 15.3 | 0.0 |
| Intangible assets | 29 | 170.9 | 2.0 |
| Right-of-use assets | 25 | 9.0 | 0.0 |
| Investment in associated companies | 7 | 26.4 | 61.4 |
| Loan to associates | 6.3 | 0.0 | |
| Other non-current assets | 0.0 | 1.3 | |
| Total non-current assets | 277.1 | 88.1 | |
| Current assets | |||
| Trade and other receivables | 10 | 91.5 | 6.8 |
| Other current financial assets | 28, 8 | 23.7 | 0.9 |
| Cash and cash equivalents | 11. 8 | 171.9 | 96.9 |
| Total current assets | 287.1 | 104.6 | |
| Total assets | 564.2 | 192.7 | |
| EQUITY | |||
| Capital and reserves attributable to equity holders of the Company | |||
| Share capital | 32.8 | 28.0 | |
| Treasury shares | -0.1 | -0.1 | |
| Other equity | 352.8 | 143.9 | |
| Total shareholder equity | 385.5 | 171.8 | |
| Non-controlling interest | 46.3 | 0.0 | |
| Total Equity | 431.8 | 171.8 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Deferred income tax liabilities | 15 | 4.9 | 0.0 |
| Other non-current liabilities | 25 | 5.2 | 0.0 |
| Total non-current liabilities | 10.1 | 0.0 | |
| Current liabilities | |||
| Trade payables | 6.2 | 1.9 | |
| Overdraft facility | 8 | 76.3 | 0.0 |
| Provisions | 17 | 0.6 | 2.3 |
| Other current liabilities | 14,25 | 39.1 | 16.7 |
| Total current liabilities | 122.3 | 20.9 | |
| Total liabilities | 132.4 | 20.9 | |
| Total equity and liabilities | 564.2 | 192.7 |
Torstein Sanness
Chairman Hilde Ådland Board member
John Hamilton Board member
Erik Sneve CEO
| NOK million | Share capital |
Treasury Shares |
Other equity |
Currency transl. reserve |
Non controlling interest |
Total equity |
|---|---|---|---|---|---|---|
| Equity as of 1 January 2022 | 28.0 | -0.1 | 146.2 | -2.3 | 171.8 | |
| Total comprehensive income for the period |
12.5 | 1.0 | -7.7 | 5.8 | ||
| Capital increase non-controlling interest |
0.0 | 54.0 | 54.0 | |||
| Capital increase | 4.8 | 0.0 | 189.7 | 0.0 | 194.4 | |
| Share based payments (Note 13) | 5.8 | 0.0 | 5.8 | |||
| Total changes in equity | 4.8 | 0.0 | 208.0 | 1.0 | 46.3 | 260.0 |
| Equity as of 31 December 2022 | 32.8 | -0.1* | 354.1 | -1.3 | 46.3 | 431.8 |
* As of 31 December 2022, Magnora owned 21,866 shares or 0.03 percent of total shares outstanding through the share buyback program.
| NOK million | Share capital |
Treasury Shares |
Other equity |
Currency transl. reserve |
Total equity |
|---|---|---|---|---|---|
| Equity as of 1 January 2021 | 25.8 | -0.1 | 92.4 | 0.0 | 118.1 |
| Total comprehensive income for the period |
-62.8 | -2.3 | -65.1 | ||
| Capital increase | 2.2 | 113.2 | 0.0 | 115.4 | |
| Share based payments (Note 11) | 3.4 | 0.0 | 3.4 | ||
| Total changes in equity | 2.2 | 0.0 | 53.9 | -2.3 | 53.7 |
| Equity as of 31 December 2021 | 28.0 | -0.1* | 146.2 | -2.3 | 171.8 |
* As of 31 December 2021, Magnora owned 63,540 shares or 0.11 percent of total shares outstanding through the share buyback program.
| NOK million | 2022 | 2021 | |
|---|---|---|---|
| Cash flow from operating activities | |||
| Cash from operations | 22 | -67.7 | -23.7 |
| Net cash generated from operating activities | -67.7 | -23.7 | |
| Cash flows from investment activities | |||
| Investments in associated companies | -22.7 | -77.4 | |
| Investment in fixed assets | 6 | -8.7 | 0.0 |
| Dividend received | 6.1 | 0.0 | |
| Sale of associated companies | 0.0 | 20.0 | |
| Investment in subsidiary net of cash acquired | -6.7 | 0.0 | |
| Scotwind lease option | 29 | -118.3 | 0.0 |
| Received loan related to Scotwind lease option | 23.7 | 0.0 | |
| Purchase/sale of marketable securities | 27 | 1.3 | 18.9 |
| Loan to Arendal Brygge AS | 0.0 | -1.2 | |
| Net cash from investment activities | -125.3 | -39.7 | |
| Cash flow from financing activities | |||
| Overdraft facility drawn | 76.3 | 0.0 | |
| Lease payment | 25 | -2.7 | 0.0 |
| Capital increase | 194.4 | 115.4 | |
| Net cash from financing activities | 268.0 | 115.4 | |
| Net cash flow from the period | 75.0 | 52.0 | |
| Cash balance at beginning of period | 96.9 | 44.8 | |
| Cash balance at end of period* | 171.9 | 96.9 |
* Restricted cash is NOK 1.7 million as of 31 December 2022.
The Group is a renewable energy development company, focusing on development of wind and Solar PV projects from early phase greenfield to ready-to-build.
At the general meeting held on 21 May 2019, it was approved to amend the objectives of the company as set out in the Articles of Association to reflect that the objective of the Group is the conduct of industry, trade and business associated with energy, IT and commodities, and sectors directly or indirectly related to these, in addition to investments in and acquisitions of businesses, securities, financial instruments and other assets, and participating in other businesses, directly or indirectly linked to these. The Group continuously considers potential organic growth and investment opportunities with the objective of generating further shareholder value.
The Group is a public limited liability company incorporated and domiciled in Norway and with its shares listed on the Oslo Stock Exchange. The address of its registered office is Karenslyst Allé 6, 0277 Oslo. These consolidated financial statements were approved by the Board of Directors on 20 March 2023.
| Subsidiaries | Registered office |
Shareholder | Shareholder interest 31.12.2021 |
Shareholder interest 31.12.2022 |
Ownership account method |
Equity | Profit/ (loss) 2022 |
|---|---|---|---|---|---|---|---|
| Magnora Holding AS |
Norway | Magnora ASA | 100% | 100% | Consolidating | -4.8 | 0.5 |
| Magnora Offshore Wind AS |
Norway | Magnora ASA | 100%* | 80% | Consolidating | 18.6 | 4.4 |
| Magnora South Africa Projects AS |
Norway/ South Africa |
Magnora ASA | 100% | 100% | Consolidating | -6.2 | -6.3 |
| Magnora South Africa Development AS |
Norway/ South Africa |
Magnora ASA | N/A | 92%** | Consolidating | 0.1 | 0.0 |
| African Green Ventures (pty) Ltd |
South Africa |
Magnora ASA |
N/A | 92% | Consolidating | 2.5 | -3.0 |
| Magnora UK PV Holding AS |
Norway/ UK |
Magnora ASA | N/A | 100% | Consolidating | -0.8 | -0.8 |
| AGV Projects (PTY) Ltd |
South Africa |
Magnora ASA |
100% | 100% | Consolidating | -11.1 | -2.9 |
| Magnora Offshore Wind Holding Ltd |
UK | Magnora Offshore Wind AS |
N/A | 100% | Consolidating | -35.6 | -35.6 |
| Magnora Offshore Wind N3 Ltd |
UK | Magnora Offshore Wind AS |
N/A | 100% | Consolidating | 0.0 | 0.0 |
| Hafslund Magnora Sol AS |
Norway | Magnora ASA | N/A | 48%*** | Equity Method | -1.7 | -1.7 |
| Neptun Tromsø AS | Norway | Magnora ASA | N/A | 33.33% | Equity Method | 0.0 | 0.0 |
| Arendal Brygge AS | Norway | Magnora ASA | 50% | 50% | Equity Method | -5.4 | 0.5 |
| Evolar AB | Sweden | Magnora ASA | 50% | 63.5% | Consolidating | 19.9 | -11.1 |
| Helios Nordic Energy AB |
Sweden | Magnora ASA | 40% | 40% | Equity Method | -2.7 | -3.5 |
| Kustvind AB | Sweden | Magnora ASA | 30% | 37.5% | Equity Method | 7.7 | -5.6 |
Amounts in the table above are prepared in local GAAP and presented in NOK million.
* TechnipFMC ownership of 20% not yet registered in the Corporate Register as of 31 December 2021.
Subsidiaries listed above of which the Group has a shareholder interest per 31.12.2022, are included in Magnora ASA's consolidated financial statements, as the control criteria in IFRS 10 are met.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. All numbers are in NOK million unless otherwise stated. Some totals may appear inconsistent due to rounding.
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union (EU) and valid as of 31 December 2022. The consolidated financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the Group's accounting policies. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.
The IASB has also adopted several minor changes and clarifications in several different standards. It is not expected that any of these changes will have considerable effect for the Group. The Group has not chosen to adopt early any standards, interpretations or amendments that have been issued but are not yet effective.
The Group is not aware of any future IFRS changes that could affect the consolidated financial statements.
Subsidiaries comprise all entities over which the Group has the power to control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and can affect those returns through its power over the investee.
Specifically, the Group controls an investee if and only if the Group has:
When the Group has less than a majority of the voting rights of an investee, the Group consider all relevant facts and circumstances in assessing whether it has power over an investee, including:
The Group re-assesses whether it controls an investee and if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control over the subsidiary.
A change in ownership interest of a subsidiary, without loss of control, is accounted for as an equity transaction.
The Group applies the acquisition method to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets transferred, equity instruments issued, and liabilities incurred assumed at the date of exchange. Acquisition- related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities incurred in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.
The excess of the cost of the acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised in the income statement immediately.
Intercompany transactions, balances, and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group.
Joint ventures are companies or entities where Magnora has joint control with one or several other investors.
Share of associates are companies where Magnora has considerable, but not controlling influence. Normally, considerable influence is defined as having an ownership between 20 % and 50 % of the voting rights.
Ownership in both joint ventures and associates are accounted for using the equity method of accounting.
When the Group ceases to have control or significant influence, any retained interest in the entity is re measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture, or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which each entity operates ('the functional currency'). The consolidated financial statements are presented in NOK, which is the Group's presentation currency. The functional currency for the parent company is NOK.
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from settlement of such transactions (realised items) and from translation at exchange rates prevailing at balance sheet date of monetary assets and liabilities denominated in foreign currencies (unrealised items) are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges.
The results and financial position of all Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency, are translated into the presentation currency as follows:
Assets and liabilities are translated at exchange rates prevailing at balance sheet date.
Income and expenses are translated at average exchange rates. All resulting exchange differences are recognised in Other Comprehensive Income.
Upon consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other
comprehensive income. When a foreign operation is sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non- current assets. Trade receivables and other financial assets are recognised initially at transaction price according to IFRS 15 and subsequently measured at amortised cost using the effective interest method, less provision for impairment. The Group recognises an allowance for expected credit losses (ECLs) for all financial assets not held at fair value through profit or loss (e.g., trade receivables). ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The provision for impairment of trade receivables is recognised in the income statement as 'other operating expense'. The provision for impairment of other financial assets is recognised in the income statement as 'financial expense'. Hedge accounting has not been applied in 2022 or 2021.
The Group measures financial assets at amortised cost if both of the following conditions are met: » The financial asset is held within a business model with the objective to hold financial assets to collect contractual cash flows and, » The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified, or impaired.
The Group's financial assets at amortised cost includes trade receivables and other short-term receivables. Trade receivables that do not contain a significant financing component are measured at the transaction price determined under IFRS 15 Revenue from contracts with customers.
Financial assets are included in current assets, except for those with maturities greater than 12 months after balance sheet date, in which case they are classified as non-current assets.
Financial assets also include marketable securities classified as other current financial assets. All securities acquired are sufficiently liquid shares to allow trading on short notice in case additional funds are needed for working capital. Furthermore, all securities are shares traded on the Oslo, Stockholm, or other major international stock exchanges, and as such, subject to market risks in addition to the specific risks relevant for the company each security represents. Risks related to marketable securities are managed by daily monitoring, weekly update of the portfolio overview, and through trading shares not meeting the risk tolerance set by the Group.
As further detailed in note 27 below, these items are in accordance with IFRS 9 adjusted to reflect the current market value of each security at the reporting date. Purchases and sales of marketable securities are accounted for at trade date. Marketable securities are accounted for at fair value and reflected in the Income Statement as financial gain or loss.
In the consolidated statement of cash flow, cash and cash equivalents includes cash in hand, bank deposits, other short-term highly liquid investments with original maturities of three months or less.
Ordinary shares are classified as equity. Incremental cost directly attributable to the issue of new shares is shown in equity as a deduction, net of tax, from the proceeds. Where any Group company acquires the Group's equity share capital (treasury shares), the consideration paid, including any directly attributable cost (net of income taxes) is deducted from equity attributable to the Group's equity holders until the shares are cancelled, reissued, or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable transaction cost and income tax, is included in equity attributable to the Group's equity holders.
The tax expense for the period comprises current and changes in deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate based on amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit and loss. Deferred income tax is determined using tax rates (and legislation) that have been enacted or substantially enacted by balance sheet date and are expected to apply when the deferred income tax asset is realised, or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits. Deferred income tax is provided on temporary differences arising from investments in subsidiaries and associates, except where the timing of the
reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. The tax base included in the calculation of deferred income tax is calculated in local currency and translated into NOK at foreign exchange rates prevailing at balance sheet date. Deferred income tax asset and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities related to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
As of year-end 2022 the Group operates a defined contribution plan. The plan is funded through payments to the pension company, and the Group has no further payment obligations once the contribution is paid. The contributions are recognised as employee benefit expenses when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
The Group recognises a provision where contractually obliged or where there is a constructive obligation. The provision considers the incurred portion of the measurement period and shall be based on a 'best estimate' of the expected achievements of the key performance indicators as set out in the actual bonus program.
The Group has share-based payment programs to management and employees. Bonus shares in these programs are awarded net after tax. The Group is obliged to withhold an amount for an employee's tax obligation associated with a share-based payment and transfer that amount, normally in cash, to the tax authority on the employee's behalf. These share-based payment programs, including tax, are considered as equity-settled share-based payments. In addition, the Group is obliged to make a provision for social security tax related to these programs, to be transferred to the tax authority, normally in cash. This part of the share-based payment arrangements is recognised as a cashsettled share-based payment. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed over the vesting period, based on the Group's estimate of the shares that will eventually vest, adjusted for the effect of non-market based vesting conditions. Cash-settled share-based payments are measured at fair value of the liability. The liability is remeasured at each reporting date.
A provision is recognised in the balance sheet when the Group has a legal or constructive obligation because of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses. Where there are several similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured as the present value of the expected expenditures required to settle the obligation using a pre-tax discount rate that accounts for time value of money and risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.
Revenue is recognised as follows:
The royalty is based on production and offloading of oil barrels and the revenue is recognised as the offloading occurs.
The Group recognizes the lease liability and the associated "right-of-use asset" for the use of the underlying asset over the lease term. All leases that transfer the right to control the use of an identifiable asset (the lessee decides the use and receives the financial (dis-) advantages) are recognized. The lease liability is measured as present value of future fixed lease payments. For lease agreements entered, the discount rate equivalent to the interest rate in the lease agreement is used, if present. Alternatively, the marginal loan rate will be used. The Group has chosen to apply the exemption rule for short-term leases up to 12 months durations and leases for which the underlying asset is of low value, as these contracts are expensed directly in the income statement. For contracts that also include other product or service deliveries, the Group has chosen to use the main rule where "non-lease components" are expensed as operating expenses separately from the lease component. In determining the lease period, the regular lease period is adjusted for extension options and termination rights, which with reasonable certainty is assessed that the Group will exercise.
The acquisition method of accounting applies to business combinations. Compensation is measured at fair value on the transaction date which is when risk and control is transferred and will normally coincide with the implementation date. An allocation of the acquisition price is based on fair value of assets and liabilities acquired. Additional value that cannot be allocated to identifiable assets and liabilities are allocated to goodwill. If fair value of identifiable assets and liabilities is higher than consideration given, the excess is charged to income. The principles on how to recognize acquisition of associates and joint ventures are the same as for acquisition of subsidiaries.
Intangible assets that have been acquired separately are carried at cost. The costs of intangible assets acquired through an acquisition are recognized at their fair value in the Group's opening balance sheet. Capitalized intangible assets are recognized at cost less any amortization and impairment losses. Internally generated intangible assets, excluding capitalized development costs, are not capitalized but are expensed as occurred. The economic life is either definite or indefinite. Intangible assets with a definite economic life are amortized over their economic life and tested for impairment if there are any indications. The amortization method and period are assessed at least once a year. Changes to the amortization method and/or period are accounted for as a change in estimate. Intangible assets with an indefinite economic life are tested for impairment at least once a year, either individually or as a part of a cash-generating unit. Intangible assets with an indefinite economic life are not amortized. The economic life is assessed annually with regard to whether the assumption of an indefinite economic life can be justified. If it cannot, the change to a definite economic life is made prospectively.
Expenses relating to research activities are recognised in the statement of comprehensive income as they incur. Expenses relating to development activities are capitalised to the extent that the product or process is technically and commercially viable and the Group has sufficient resources to complete the development work. Expenses that are capitalised include the costs of materials, direct wage costs and a share of the directly attributable common expenses. Capitalised development costs are recognised at their cost minus accumulated amortisation and impairment losses. Capitalised development costs are amortised on a straight-line basis over the estimated useful life of the asset.
Depreciable intangible assets as well as property, plant and equipment are considered for impairment when there are indications that future earnings cannot justify balance sheet value. Goodwill and intangible assets with indefinite useful life are not subject to depreciation but are tested annually for impairment. Impairment is recognized if the carrying amount is higher than the recoverable amount. The recoverable amount is the higher of fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). At each reporting date, one considers the possibilities for a reversal of prior impairments (except goodwill).
Dividend distribution to the Group's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividend is approved by the Group's shareholders.
Trade Payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
The cash flow statement is prepared in accordance with the direct method.
The Group is exposed to market risk, credit risk, currency risk, interest rate risk, inflation risk, liquidity risk. The Company's overall risk management programme focuses on the uncertainty of financial markets and seeks to minimise potential adverse effects on its financial performance. The Group selects its portfolio projects and companies with emphasis on diversification to mitigate the various inherent risks in each segment of the renewable energy production industry. This does not reduce the individual risks below but makes the Group less vulnerable to the effects of those risks.
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD as all operating revenues is in USD. Foreign exchange risk arises from future commercial transactions, recognised assets or liabilities, and net investments in foreign operations when such transactions, assets or liabilities are denominated in a currency that is not the entity's functional currency. The Group is also exposed to foreign exchange risk related to GBP, SEK and ZAR when assets in the UK, Sweden, and South Africa are divested. As most of the Group's revenue is in USD, the Group has sold bulks of USD during 2022 to reduce this currency risk.
The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's revenue. Any annualised increase or decrease in the USD/NOK foreign exchange by 10 percent would have increased or decreased the Group's 2022 profit before tax by NOK 1.2 million (2021: NOK 1.4 million).
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as loans and credit exposures to customers. The Group has one main banking relationship with a financial institution that is currently rated Aa3.
The Group's major customers are oil companies and global marine contractors with a strong financial basis, but, as with suppliers and customers in general, there is a risk that unforeseen financial difficulties on the counterparty's side may arise which could have material adverse effects on the financial condition, the cash flows and/or the prospects of the Group.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the ability to close out market positions.
The Group has implemented routines to continuously update its cash flow forecast with changes to main assumptions relating to payment schedules, license milestone payments etc and to be able to foresee the necessary actions required to rectify any potential adverse effects on its future liquidity position.
The Group is subject to currency, field development and reservoir risk in situations where the license fee is tied to the field development and production such as the Dana income and Shell Penguins license fee income paid in USD. The company also relies heavily on two customers, Dana Petroleum and Shell for most of its operating revenues over the next three to four years.
The Group derive all its cash flow from financial investments, two legacy agreements and it associated companies. Negative cash flow and lack of financial performance from those companies therefore affects the Group. The exposure is limited to the Group's invested amount in those companies and is closely linked to the associated companies' ability to execute its strategy and manage risks it is exposed to. Magnora is represented on all the boards of its associated companies and mitigates risks through normal governance processes.
Access to capital is a risk now that the Group is investing in more capital-intensive projects. This is managed through close dialogues with financial institutions and a strict timeline for cash flow that matches future investment payments with investment gains from farm-downs and exits.
At the balance sheet date, the Group has only the overdraft facility and no other borrowings, and both Trade receivable and payable mature within a normal 30-day cycle, with exception of some receivables towards the associated companies.
There were no significant overdue receivables as of 31 December 2022.
Magnora is in a solid liquidity position with a cash balance of NOK 171.9 million at balance sheet date.
The Group has NOK 100 million and NOK 50 million overdraft facility with two top tier Nordic banks, and NOK 76.3 million was drawn as of 31 December 2022. The facilities has the following financial covenants:
For the Group's capital management, capital means total equity and cash balance. The primary objective of the Group's capital management is to maximise shareholder value.
The Group manages its capital through budgeting and cost monitoring.
The Group has exercised a conservative capital and cash management during 2021 and 2022. A sound financial position, with limited interest-bearing debt and an asset light balance sheet reduces the capital and cash management risks.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are assumed to be reasonable under current circumstances.
The Group makes estimates and assumptions concerning the future. The estimates and assumptions that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed below.
Judgment is required in determining the provision for income taxes. During the ordinary course of business, transactions and calculations occur for which the ultimate tax effect is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the outcome of these matters is different from the amounts initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
The accounting for deferred income tax assets relies upon management's judgment of the Group's ability to generate future positive taxable income in each respective jurisdiction. Deferred tax assets are recognised in relation to the carry forward of unused tax losses only to the extent that it is probable that taxable profit will be available against which the losses can be utilised in the future. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits.
The companies within the Magnora Group have in sum material deductible temporary differences (reference note 15) which, dependent on meeting the recognition requirements according to IAS 12, could result in recognition of deferred tax assets in the balance sheet.
The deferred tax asset has been updated as of December 31, 2022, based on the expected revenues and expenses for the next five years. The recognised deferred tax asset is most sensitive to expected future royalty revenue from the production and offloading of the Dana Western Isles FPSO, and the Group's operating cost level going forward. An assumption has been made that the FPSO will produce according to the expected production profile based on field reserves and lifetime estimates, and that the cost level will continue based on current structure and activities of the Group. The deferred tax asset recognised is expected to be utilised within the next 5 years based upon on the Group's contract portfolio and cost base as of today. The book value of the deferred tax asset represents a minor part of the total accumulated tax losses. The book value of the deferred tax asset represents a minor part of the total accumulated tax losses of over NOK 3.5 billion.
The Group invested in Kustvind AB in March 2020 through a share issue and currently has 37.5 percent ownership. Magnora further has the right to increase its ownership to 50% according to a budget and milestone plan. The option to increase ownership is currently not exercisable, as the increase in ownership must come from a capital call from the Kustvind board due to a capital need in the project. The three founders of Kustvind own equal shares of the remaining shares in the company. Magnora has three out of five board members, and the founders have the remaining two members of the board. The other shareholders have the right to elect its third board member at any time, and it is expected that they will do so shortly. Magnora is a minority owner with three other owners and has significant influence of the company. Hence its ownership is accounted for using the equity method as an associated company.
The Group invested in Evolar AB in November 2020 through a share issue for 28.44 percent ownership, which was increased to 40.7 in June 2021 and to 50 percent in December 2021. The five founders of the company own equal shares of the remaining shares in the company. Magnora has two out of five board members, and the founders have the remaining three members of the board. Significant decisions (e.g., Issues of new shares, mergers or demergers, sale of all or substantially all the assets of a member of the group, amendments and revisions of the business plan) shall always require the consent and approval by the Board members nominated by Magnora. For other decisions Magnora did not have the majority of the votes and not significant control as of 31 December 2021. Magnora ASA acquired an additional 13.5% of the shares in April 2022 and owns a total of 63.5% of the company. As of 1 April 2022, the ownership in Evolar has been fully consolidated in the financial statements.
The Group invested in Helios AB in February 2021 through a share issue and owns 40 percent of the company at the balance sheet date. The remaining ownership of Helios is divided between the three founders of the company and other early investors. Magnora has one out of five board members, and the founders and other shareholders have the remaining four members of the board. Although Magnora is a majority owner, it exerts no strategic or operational influence on this company, as Helios operates in a segment Magnora has not explored prior to this investment. This company operates fully independent of Magnora. For up to two years after the First Investment from Magnora, significant resolutions (e.g. Annual budgets, amendments in the business plan, any merger/ demerger and so on) must be approved by the Board and supported by the director appointed by Magnora.
Magnora has significant influence in the company and its ownership is accounted for using the equity method as an associated company.
The Scotwind lease option signed by Magnora with The Crown Estate Scotland is considered to be an intangible asset in the statement of financial position. The agreement gives Magnora exclusive right to perform environmental studies on the area awarded. When the requirements in the option lease agreement, including key project consent, are met, the land lease will commence. The intangible asset will start amortizing when the lease commences and will be amortized over the duration of the land lease.
The Group has developed from being a former oil and gas engineering company with license revenues and transformed into a renewable energy development company with several projects and investments in companies in its portfolio. As the Group has grown, it has implemented an updated operating model to manage its increasing portfolio. As part of the new operating model, corporate and project related activities and expenses are followed up and reported separately. This is reflected in the tables below.
Both the project and corporate segments engage in business activities where it earns revenues and incur expenses. The project segment has not earned any revenues yet as all projects are in early-phase development. All licensing revenues from legacy oil and gas contracts are managed and reported as part of the corporate segment, and the renewable activities and investments are reported in the project segment. M&A related expenses for projects and transactions that do not materialise, are reported as an expense in the corporate segment, which is shown separately to show the cost base of the Group. Operating results of the segments are regularly reviewed by the entity's chief operating decision maker, which is the Magnora board, to make decisions about resources allocated to the segment and assess its performance. Segment performance is evaluated based on EBITDA and operating profit/ loss.
| NOK million | Note | Corporate | Projects | Elimination | Consolidated |
|---|---|---|---|---|---|
| Operations | |||||
| Operating revenue | 91.1 | 0.0 | 0.0 | 91.1 | |
| Other operating revenue | 11.6 | 0.3 | -11.2 | 0.6 | |
| Operating expense | -30.6 | -1.2 | 0.0 | -31.8 | |
| Development and M&A expense | 0.0 | -60.6 | 11.2 | -49.4 | |
| EBITDA | 72.0 | -61.5 | 0.0 | 10.5 | |
| Profit/loss from associated companies | 0.0 | -3.9 | 0.0 | -3.9 | |
| Operating profit/(loss) | 72.0 | -65.4 | 0.0 | 6.6 |
| NOK million | Note | Corporate | Projects | Elimination | Consolidated |
|---|---|---|---|---|---|
| Operations | |||||
| Operating revenue | 24 | 13.8 | 0.0 | 0.0 | 13.8 |
| Other operating revenue | 24 | 4.9 | 0.0 | -3.5 | 1.4 |
| Operating expense | 26 | -30.8 | -3.5 | 3.5 | -30.8 |
| Development and M&A expense | 26 | -0.5 | -22.4 | 0.0 | -22.9 |
| EBITDA | -12.6 | -25.9 | 0.0 | -38.5 | |
| Profit/loss from associated companies | 0.0 | -21.6 | 0.0 | -21.6 | |
| Operating profit/(loss) | -12.6 | -47.5 | 0.0 | -60.1 |
| Machinery and equipment |
Assets under construction |
Total | |
|---|---|---|---|
| Opening net book value | 0.0 | 0.0 | 0.0 |
| Acquisition of subsidiaries | 2.7 | 5.0 | 7,7 |
| Acc depr acq. of subsidiary |
-0.9 | 0.0 | -0,9 |
| Additions | 2.7 | 6.0 | 8.7 |
| Depreciations | -0.2 | 0.0 | -0.2 |
| Total | 4.3 | 11.0 | 15.3 |
| Associated company | Registered office |
Shareholder | Shareholder interest 01.01.2021 |
Shareholder interest 31.12.2021 |
Shareholder interest 31.12.2022 |
|---|---|---|---|---|---|
| Arendal Brygge AS | Norway | Magnora ASA | 50% | 50% | 50% |
| Kustvind AB | Sweden | Magnora ASA | 15% | 30% | 37.5% |
| Helios AB | Sweden | Magnora ASA | 0% | 40% | 40% |
| 2022 | Registered office |
Assets | Liabilities | Revenues | Profit/loss | % interest held |
|---|---|---|---|---|---|---|
| Arendal Brygge AS | Norway | 49.5 | 54.3 | 3.8 | 0.5 | 50% |
| Kustvind AB | Sweden | 7.0 | 0.1 | - | -5.6 | 37.5% |
| Helios Nordic Energy AB | Sweden | 24.7 | 27.4 | 9.4 | -3.7 | 40% |
| Total | 81.2 | 81.8 | 13.2 | -8.8 |
Amounts in the tables above are prepared in local GAAP and presented in NOK million.
| Associated companies (NOK million) | 2022 | 2021 |
|---|---|---|
| Book value 1 January | 61.4 | 24.5 |
| Acquisition of associates | 6.8 | 80.7 |
| Disposals/ -sale of associates | 0.0 | -20.0 |
| Share of profit/loss | -3.9 | -13.8 |
| Dividen received | -6.1 | 0.0 |
| Impairment | 0.0 | -7.7 |
| Currency translation difference | -2.2 | -2.2 |
| Realization due to gain of control | -29.6 | 0.0 |
| Net book value 31 December | 26.4 | 61.4 |
Magnora owns 50% of the shares in Arendal Brygge AS, and the regional bank Sparebanken Sør owns the other 50% of the shares. Arendal Brygge is classified as an associated company as Magnora does not exercise control over the activities of Arendal Brygge AS and therefore accounts for its shareholding in Arendal Brygge using the equity method. The book value of the investment has been written down to zero due to large losses incurred by Arendal Brygge AS, and the operating results of Arendal Brygge is therefore not accounted for. Arendal Brygge is part of Magnora's legacy business. Arendal Brygge was the Company's headquarter until it sold its previous business to Sembcorp Marine. Sparebanken Sør and Arendal Brygge is investigating possibilities for developing the Arendal Brygge waterfront property.
| Kustvind (NOK million) | 2022 | 2021 |
|---|---|---|
| Current assets | 0.5 | 2.0 |
| Non-current assets | 7.3 | 0.5 |
| Current liabilities | 0.1 | 0.0 |
| Equity | 7.7 | 1.9 |
| Magnora's share in equity | 2.9 | 0.6 |
| Goodwill | 10.8 | 10.7 |
| Magnora's carrying amount of investment | 13.7 | 11.3 |
| Profit/(loss) before tax | -5.6 | -9.0 |
| Total comprehensive income for the year | -5.6 | -9.0 |
| Magnora's share of profit/(loss) for the year | -2.0 | -1.6 |
Magnora invested in Kustvind AB in March 2020 and owns 37.5% as of 31 December 2022. The following table illustrates the summarised financial information for Magnora's investment in Kustvind AB:
Magnora invested in Helios Nordic Energy AB in February 2021 and owns 40 percent of the company as of 31 December 2022. The following table illustrates the summarised financial information for Magnora's investment in Helios:
| Helios Nordic Energy (NOK million) | 2022 | 2021 |
|---|---|---|
| Current assets | 24.1 | 6.3 |
| Non-current assets | 0.6 | 15.2 |
| Current liabilities | 27.4 | 1.8 |
| Non-current liabilities | 0.0 | 0.7 |
| Equity | -2.7 | 16.4 |
| Magnora's share in equity | -1.1 | 6.6 |
| Goodwill | 12.5 | 12.9 |
| Magnora's carrying amount of investment | 11.4 | 19.5 |
| Profit/(loss) before tax | -3.5 | -8.2 |
| Total comprehensive income for the year | -3.5 | -8.2 |
| Magnora's share of profit/(loss) for the year | -1.4 | -2.5 |
See note 3.1 above regarding development risks of the portfolio companies.
Impairment of associated companies is evaluated annually after year-end, and for financial year 2022 the Group has assessed if there are indicators for impairment. No indicators for impairment were identified as all associated companies are in an early phase of their development and progressing as planned.
Accounting principles for financial instruments were applied to the line items below as indicated:
| NOK million | 2022 | 2021 | |
|---|---|---|---|
| Category: | Asset: | ||
| Financial assets at amortised cost | Trade receivables | 91.5 | 6.8 |
| Financial assets at amortised cost | Other financial assets | 23.7 | 0.4 |
| Financial assets at fair value through profit/loss |
Listed equity investments | 0.0 | 0.5 |
| Fair value through profit and loss | Cash and cash equivalents | 171.9 | 96.9 |
| Total financial assets | 287.1 | 104.6 |
| NOK million | 2022 | 2021 | |
|---|---|---|---|
| Category: | Asset: | ||
| Fair value through profit and loss | Overdraft facility | 76.3 | 0.0 |
| Financial liabilities at amortised cost | Trade payables | 6.2 | 1.9 |
| Total financial liabilities | 82.5 | 1.9 |
Set out below is a comparison, by class, of the carrying amounts and fair values of Magnora's financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:
| 2022 | 2021 | |||||
|---|---|---|---|---|---|---|
| Financial assets | Carrying amount | Fair value | Carrying amount | Fair value | ||
| Non-listed equity investments | 0.0 | 0.0 | 0.0 | 0.0 | ||
| Listed equity investments | 0.0 | 0.0 | 0.5 | 0.5 |
Management has determined that the fair values of cash, short-term deposits, trade receivables, trade payables, bank overdrafts, and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The following methods and assumptions were used to estimate the fair values: » There is an active market for the Group's listed equity investments
The Group has a total available overdraft facility of NOK 150 million. As of 31 December 2022, NOK 76.3 of the overdraft facility has been drawn. See note 3.1.5 for covenants related to the overdraft facility.
The credit quality of trade receivables and cash that were neither past due nor impaired was assessed by reference to external credit ratings (where available) and by analysis of historical information about counterparty default rates:
| NOK million | 2022 | 2021 |
|---|---|---|
| No external rating | 3.7 | 1.1 |
| AA- | 75.3 | 0.0 |
| Total trade receivable and accrued income | 79.0 | 1.1 |
| NOK million | 2022 | 2021 |
|---|---|---|
| Aa3 | 171.9 | 96.9 |
| Total cash and cash equivalents | 171.9 | 96.9 |
| NOK million | 2022 | 2021 |
|---|---|---|
| Trade receivables | 3.7 | 1.1 |
| Contract Assets (accrued income)* | 75.3 | 0.0 |
| Other receivables | 12.5 | 5.7 |
| Trade and other receivables | 91.5 | 6.8 |
*Mainly related to Shell Penguins FPSO
| NOK million | 2022 | 2021 |
|---|---|---|
| Not Due | 2.8 | 1.1 |
| Due | 0.9 | 0.0 |
| Total trade receivables | 3.7 | 1.1 |
At balance sheet date, NOK 0.9 million was past due in 2022 (2021: NOK 0.0 million).
| NOK million | 2022 | 2021 |
|---|---|---|
| SEK | 1.0 | 0.0 |
| NOK | 2.7 | 1.1 |
| Total trade receivables | 3.7 | 1.1 |
| NOK million | 2022 | 2021 |
|---|---|---|
| Cash at bank and in hand | 170.2 | 95.9 |
| Restricted short-term bank deposits | 1.7 | 1.0 |
| Total cash and cash equivalents | 171.9 | 96.9 |
The total authorised number of ordinary shares was 66.8 million (2021: 57.1 million) with a par value of NOK 0.49 (2021: NOK 0.49) per share. All issued shares were fully paid at balance sheet date.
| NOK million | Number of shares |
Share capital | Share premium | Total |
|---|---|---|---|---|
| 1 January 2022 | 57,072,679 | 28.0 | 0.0 | 28.0 |
| Capital increase | 9,750,000 | 4.7 | 0.0 | 4.7 |
| 31 December 2022 | 66,822,679 | 32.7 | 0.0 | 32.7 |
| NOK million | Number of shares |
Share capital |
Share premium |
Total |
|---|---|---|---|---|
| 1 January 2021 | 52,586,698 | 25.8 | 0.0 | 25.8 |
| Capital increase | 4,485,981 | 2.2 | 0.0 | 2.2 |
| 31 December 2021 | 57,072,679 | 28.0 | 0.0 | 28.0 |
| 20 largest shareholder accounts 3 February 2023 (source: VPS) |
Number of shares | Percent ownership |
|---|---|---|
| HAFSLUND VEKST AS | 4,474,272 | 6.70 |
| KING KONG INVEST AS | 2,670,995 | 4.00 |
| GINNY INVEST AS | 2,469,144 | 3.70 |
| BEKKESTUA EIENDOM AS | 1,881,860 | 2.82 |
| CARE HOLDING AS | 1,750,000 | 2.62 |
| ALDEN AS | 1,729,829 | 2.59 |
| PHILIP HOLDING AS | 1,648,377 | 2.47 |
| F2 FUNDS AS | 1,585,000 | 2.37 |
| F1 FUNDS AS | 1,503,121 | 2.25 |
| ANDENERGY AS | 1,468,140 | 2.20 |
| INTERACTIVE BROKERS LLC | 1,371,482 | 2.05 |
| MP PENSJON PK | 1,327,138 | 1.99 |
| CLEARSTREAM BANKING S.A. | 1,319,078 | 1.97 |
| NORDNET LIVSFORSIKRING AS | 1,281,560 | 1.92 |
| ALTEA AS | 1,154,944 | 1.73 |
| AARSKOG, PHILLIP GEORGE | 1,000,000 | 1.50 |
| DNB BANK ASA | 878,137 | 1.31 |
| DANSKE BANK AS | 781,492 | 1.17 |
| BALLISTA AS | 760,372 | 1.14 |
| BAKLIEN, ÅSMUND | 756,100 | 1.13 |
| Total, 20 largest shareholders | 31,811,041 | 47.61 |
| Other shareholder accounts | 35,011,725 | 52.39 |
| Total number of shares | 66,822,766 | 100.00 |
| Foreign ownership | 9,926,510 | 14.86 |
In accordance with approval by the Annual General Meeting of 26 May 2020, 27 April 2021, and 26 April 2022, the Board of Magnora issued 475,000 options during 2022 to provide long-term incentives to the Board and employees. The options were awarded as follows:
| Options awarded | |
|---|---|
| Torstein Sanness, Executive Chairman | 100,000 |
| Erik Sneve, CEO | 200,000 |
| Bård Olsen, CFO | 50,000 |
| Haakon Alfstad, CEO Magnora Offshore Wind | 50,000 |
| Trond Gärtner, SVP, Business development | 75,000 |
| Total options awarded | 475,000 |
375,000 of the options issued in 2022 have a three-year vesting period and remaining 100,000 have a two-year vesting period. All options must be exercised within five years after vested.
This is an equity-settled share-based payment, and in accordance with IFRS 2, the value is determined as of the grant date. At balance sheet date there are 1,475,000 options (2021: 1,900,000). The cost of the options is recorded monthly over the vesting (service) period. See note 18 for expensed amount related to share-based payments.
The employee or board member receiving the options must stay in his or her position until vesting date to exercise the options. The options are expected to have limited value at the time they become vested, and therefore more likely to be exercised towards the end of the period exercisable. The Black-Scholes model is used to calculate the value of the options. The risk-free rate is set from the rate of five-year treasury bonds at the time of grant date, and this matches the full length of the options once vested. Volatility rate is derived from the daily share prices from 1 January 2019, and then annualised. Share prices from prior periods are considered irrelevant, as the Group significantly changed in Q4 2018 with the sale of its main business to Sembcorp.
| Exercise price (NOK/Share) 2022 | Number of options 2022 |
Exercise price (NOK/Share) 2021 |
Number of options 2021 |
|
|---|---|---|---|---|
| 1 January | ||||
| Granted | 19.03 | 100,000 | 24.39 | 125,000 |
| Granted | 23.70 | 200,000 | 26.47 | 300,000 |
| Granted | 22.22 | 175,000 | 25.68 | 100,000 |
| Granted | 26.65 | 125,000 | ||
| Granted | 18.27 | 25,000 | ||
| Granted | 17.56 | 50,000 | ||
| Exercised | 6.5 | 900,000 | ||
| Outstanding 31 December | 1,475,000 | 725,000 | ||
| Exercisable 31 December | 166,668 | 900,000 |
The weighted average remaining contractual life for the share options outstanding as of 31 December 2022 was 6.7 years (2021: 5.5 years). The weighted average fair value of options granted during the year was NOK 13.76 (2020: NOK 17.14). The range of exercise prices for options outstanding at the end of the year was NOK 7.92 to NOK 26.65 (2021: NOK 6.5 to NOK 26.65).
The following table lists the inputs to the models used for the plans for the years ended 31 December 2021 and 2020, respectively:
| NOK million | 2022 | 2021 |
|---|---|---|
| Weighted average fair values at the measurement date | 13.76 | 17.14 |
| Risk free interest | 2.83% / 3.13% / 3.13% | 0.82% / 1.42% / 1.47% / 1.47% / 1.36% / 1.47% |
| Volatility | 64% / 61% / 61% | 69% / 68% / 68% / 68% / 67% / 65% |
| Exercise price | 19.03 / 23.70 / 22.22 | 24.39 / 26.47 / 25.68 / 26.65 / 19.17 / 17.56 |
| Model for estimation of fair value | Black-Scholes model | Black-Scholes model |
| NOK million | 2022 | 2021 |
|---|---|---|
| Payroll liabilities | 2.7 | 0.9 |
| Employer's contribution tax and other taxes | 4.3 | 2.1 |
| Other payables | 32.1 | 13.7 |
| Total other current liabilities | 39.1 | 16.7 |
Deferred income tax assets and liabilities are offset when a legally enforceable right to offset current tax assets against current tax liabilities exists. For 2022 a tax rate of 22% has been used when calculating the deferred tax assets and liabilities (2021: 22%).
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Specification net deferred tax assets/(liabilities): | ||
| Deferred tax asset to be reversed after more than 12 months | 784.1 | 784.1 |
| Deferred tax liabilities to be reversed after more than 12 months | -4.9 | 0.0 |
| Net deferred tax asset/(liabilities) | 769.0 | 784.1 |
| Deferred tax assets not recognised in the balance sheet | -758.8 | -760.7 |
| Net deferred tax assets recognised in the balance sheet | 15.1 | 23.4 |
| Net deferred tax (liabilities) recognised in the balance sheet* | -4.9 | 0.0 |
*Deferred tax assets and liabilities are not offset as it is related to different tax jurisdictions.
| Reconciliation of deferred tax assets: | ||
|---|---|---|
| Book value 1 January | 23.4 | 31.1 |
| Income statement charge relating to deferred tax assets | -8.3 | -7.7 |
| Book value 31 December | 15.1 | 23.4 |
| Reconciliation of deferred tax liabilities: | |||
|---|---|---|---|
| Book value 1 January | 0.0 | 0.0 | |
| Intangible assets from acquisition of subsidiaries | -5.1 | 0.0 | |
| Tax income related to depreciation of intangible assets | 0.2 | 0.0 | |
| Book value 31 December | -4.9 | 0.0 |
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Deferred tax assets: | ||
| Investments and receivables | 0.5 | 0.5 |
| Fixed assets | 0.4 | 0.4 |
| Intangible assets | -4.9 | 0.0 |
| Losses carry forward | 773.1 | 783.2 |
| Deferred tax assets | 769.0 | 784.1 |
Deferred income tax assets are recognised for tax losses carried forward and deductible temporary differences to the extent that the realisation of the tax benefit through future taxable profits is probable.
Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits. The recognised deferred tax asset is most sensitive to expected future taxable profits.
At balance sheet date, the recognition criteria in IAS 12 were met. The deferred tax asset recognised is expected to be utilised within the next 5 years based upon on the Group's contract portfolio and cost base as of today. The book value of the deferred tax asset represents a minor part of the total accumulated tax losses. Reference is made to Note 4.1 for further information.
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Recognition of deferred tax asset | -8.3 | -7.7 |
| Tax income related to depreciation of intangible assets | 0.2 | 0.0 |
| Net tax income/(expense) | -8.1 | -7.7 |
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Profit/(loss) before tax: | 12.0 | -55.1 |
| Tax calculated (22%) | -2.6 | 12.1 |
| Income not subject to tax | 0.2 | 4.9 |
| Expenses not deductible | -0.2 | -3.6 |
| Results from associated companies | -0.9 | -4.8 |
| Tax losses for which no deferred income tax asset was recognised | -4.6 | -16.3 |
| Tax income/(expense) | -8.1 | -7.7 |
For 2022 a tax rate of 22% has been used when calculating the tax income / (expense), (2021: 22%).
Pension cost charged to the income statement in 2022 was NOK 2.4 million (2021: NOK 0.7 million). The defined contribution plan had 41 participants at 31.12.2022 (2021: 6 participants).
| NOK million | Payroll | Additional tax | Total |
|---|---|---|---|
| 1 January 2022 | 2.3 | 0.0 | 2.3 |
| Arising during the year | 0.0 | 0.0 | 0.0 |
| Reversed during the year | -1.7 | 0.0 | 0.0 |
| 31 December 2022 | 0.6 | 0.0 | 0.6 |
| NOK million | Payroll | Additional tax | Total |
|---|---|---|---|
| 1 January 2021 | 0.6 | 3.3 | 3.9 |
| Arising during the year | 1.7 | 0.0 | 1.7 |
| Reversed during the year | 0.0 | -3.3 | -3.3 |
| 31 December 2021 | 2.3 | 0.0 | 2.3 |
All provisions in 2022 and 2021 are current in nature.
Provision for 2022 and 2021 is for employment tax (AGA) for the options issued.
Provision for potential additional tax on adjustment to the 2014 tax assessment. This additional tax was settled in 2021.
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Salaries and vacation pay | 24.1 | 11.3 |
| Employer's contribution tax | 6.4 | 1.9 |
| Pension costs | 2.4 | 0.7 |
| Bonus | 3.0 | 2.9 |
| Share based payments | 6.3 | 3.4 |
| Other employee benefit expense | 0.4 | 0.2 |
| Capitalized development costs | -10.4 | 0.0 |
| Total employee benefit expense | 32.1 | 20.4 |
| Average number of man-years | 46 | 5 |
| NOK thousand | Salaries | Bonus | Retirement benefits | Other benefits |
|---|---|---|---|---|
| Erik Sneve, CEO | 2,150 | 2,290 | 184 | 18 |
| Bård Olsen, CFO | 1,652 | 147 | 184 | 18 |
| Total remuneration paid | 3,802 | 2,437 | 368 | 36 |
| NOK thousand | Salaries | Bonus | Retirement benefits | Other benefits |
|---|---|---|---|---|
| Erik Sneve, CEO | 2,027 | 2,559 | 176 | 17 |
| Bård Olsen, CFO | 1,538 | 284 | 168 | 17 |
| Total remuneration paid | 3,565 | 2,843 | 344 | 34 |
Retirement benefit plan was established in 2020 for the management team. No loans, pre-payments, or security were granted to current Senior Management or any member of the Board of Directors in 2022 and 2021.
At the balance sheet date there were 1,475,000 options held by the Board of Directors and Senior Management (2021: 1,900,000 options). See note 13 for more information.
Reference is made to the 'Statement regarding establishment of salary and other benefits for Senior Management' for further details of remuneration of Senior Management. Remuneration of the Board of Directors:
| NOK Thousand | Member from: | Member to: | 2022* | 2021 |
|---|---|---|---|---|
| Torstein Sanness, Executive Chairman |
24 May 2017 | 5,716 | 924 | |
| Hilde Ådland, Board Member | 24 May 2018 | 707 | 280 | |
| John Hamilton, Board Member | 18 Dec 2018 | 765 | 330 | |
| Total remuneration paid | 7,188 | 1,534 |
*Significant increase due to the board exercising options awarded in 2019.
As of 31 December 2022, the Board members and Senior Management owned or controlled the following shares in the Company:
| Options owned or controlled |
Shares owned or controlled |
|
|---|---|---|
| Torstein Sanness, Executive Chairman | 250,000 | 594,442 |
| Hilde Ådland, Board member | 10,000 | 39,011 |
| John Hamilton, Board member | 40,000 | 33,837 |
| Erik Sneve, CEO | 350,000 | 1,173,871 |
| Bård Olsen, CFO | 150,000 | 50,000 |
| Total remuneration paid | 800,000 |
Reference is made to the 'Magnora Remuneration Report 2022' for further details of remuneration of Senior Management.
| NOK million | 2022 | 2021 |
|---|---|---|
| Interest income | 7.2 | 0.3 |
| Gains from investments in marketable securities | 0.8 | 22.1 |
| Total financial income | 8.1 | 22.4 |
| NOK million | 2022 | 2021 |
|---|---|---|
| Interest cost | -9.7 | -0.4 |
| Losses from investments in marketable securities | -0.5 | -17.0 |
| Total financial expense | -10.2 | -17.4 |
Basic earnings per share were calculated by dividing the profit attributable to equity holders of the Group by the weighted average number of ordinary shares on issue during the year.
| 2022 | 2021 | |
|---|---|---|
| Net profit/(loss) attributable to equity holders (NOK million) | 12.5 | -62.8 |
| Weighted avg. no. of ordinary shares on issue (thousands) | 59,510 | 56,669 |
| Basic earnings per share for continued operations (NOK per share) |
0.21 | -1.11 |
| 2022 | 2021 | |
|---|---|---|
| Net profit/(loss) attributable to equity holders (NOK million) | 12.5 | -62.8 |
| Weighted avg. no. of ordinary shares for diluted earnings per share (thousands) |
59,695 | 56,669 |
| Basic earnings per share for continued operations (NOK per share) |
0.21 | -1.11 |
There were no distributions in 2022 and 2021.
| NOK million | 2022 | 2021 |
|---|---|---|
| Cash flow from operating activities | ||
| Profit/(loss) before tax | 12.0 | -55.1 |
| Adjustment for: | ||
| Depreciations | 1.6 | 0.0 |
| Share of associated companies' financial results | 3.9 | 21.6 |
| Share based payments | 6.3 | 3.4 |
| Change in marketable securities and forwards | -0.8 | -5.6 |
| Change in working capital: | ||
| Capitalization of development costs | -19.4 | 0.0 |
| Trade and other receivables | -106.0 | -2.7 |
| Trade and other payables | 1.2 | 1.1 |
| Other liabilities, provisions and charges | 32.5 | 13.6 |
| Cash generated from operations | -67.7 | -23.7 |
Magnora ASA has an agreement with all subsidiaries and associated companies that allows services to be provided between the companies at agreed upon hourly rates. Magnora had both operating revenues and expenses from services provided between the companies that are related parties to Magnora. The total operating revenues from associated companies in 2022 was NOK 0.6 million (2021: NOK 1.4 million).
| NOK million | 2022 | 2021 |
|---|---|---|
| Operating revenue from associated companies | 0.6 | 1.4 |
| Total operating revenue | 0.6 | 1.4 |
| NOK million | 2022 | 2021 |
|---|---|---|
| Operating expenses from associated companies | 0.0 | 0.0 |
| Operating expenses paid to other related parties | 0.0 | 0.5 |
| Total operating expense | 0.0 | 0.5 |
Magnora ASA and Sparebanken Sør each provided NOK 1 million in shareholder loan to Arendal Brygge in 2019 to support Arendal Brygge's liquidity needs related to needed investments and working cash. The book value of the loan was written down to zero in 2019 due to large losses incurred by Arendal Brygge AS, and a provision was made. In 2021 Magnora ASA provided NOK 1.4 million in a shareholder loan and received NOK 0.2 million in down payment in 2021 and NOK 0.1 million in 2022. The loan has a book value of NOK 1.1 million as of 31 December 2022 (NOK 1.2 million). Magnora does not exercise control over the activities of Arendal Brygge AS and accounts for its shareholding in Arendal Brygge using the equity method.
Operating revenue in 2022 consisted mainly of license revenue related to the Shell Penguins FPSO project and royalty income from the Dana Western Isles FPSO. The Group also had other revenue from Evolar in addition to operating revenue from providing services to associated companies. Royalty from the Dana Western Isles FPSO constitutes 15% (100%) of total external customer revenues. License revenue related to the Shell Penguins FPSO project constitutes 85% (0%) of total external customer revenues.
| NOK million | 2022 | 2021 |
|---|---|---|
| License fee (see also note 10) | 87.6 | 13.8 |
| Other revenue | 3.5 | 0.0 |
| Other operating revenue | 0.6 | 1.4 |
| Total operating revenue | 91.7 | 15.2 |
The revenue split, based on customer location was as follows:
| NOK million | 2022 | 2021 |
|---|---|---|
| Norway | 0.6 | 0.0 |
| Sweden | 3.5 | 1.4 |
| UK | 87.6 | 13.8 |
| Total operating revenue | 91.7 | 15.2 |
The Group has office rental agreements for its offices in Oslo as of 31 December 2022. The agreements can be terminated with six month's termination notice period. The Group has elected to apply the recognitions exemption in IFRS 16 for short term leases, therefore, the lease is expensed as other operating expense over the lease term.
The Group expensed NOK 1.4 million in lease and rental cost for 2022 (2021: 0.5).
The Group also has rental agreements in Sweden which are accounted for according to IFRS 16.
| Specification of changes in the period: | |||
|---|---|---|---|
| NOK million | Liability | Assets |
|---|---|---|
| Total opening balance right-to-use-assets/lease obligations as per 1 January 2022 |
0.0 | 0.0 |
| Addition due to acquisition of subsidiary | 11.3 | 11.6 |
| Depreciations | - | -2.7 |
| Lease payments | -2.6 | - |
| Other/currency effects | 0.0 | 0.1 |
| Total closing balance as of 31 December 2022 | 8.7 | 9.0 |
Interest expenses on the leasing obligation amounted to NOK 0.2 million in 2022.
| Liabilities (NOK million) | 2022 | 2021 |
|---|---|---|
| Short-term liability | 3.5 | 0.0 |
| Long-term liability | 5.2 | 0.0 |
| Total closing balance as of 31 December 2022 | 8.7 | 0.0 |
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Office cost (rental etc) | 3.4 | 1.4 |
| Consultancy (audit, tax and legal) * | 38.6 | 15.4 |
| Travel expenses | 0.9 | 0.2 |
| Other | 4.5 | 16.3 |
| Total other operating expense | 47.4 | 33.3 |
| * Specification of auditor's fee (excl. VAT): | ||
| Statutory audit | 0.9 | 0.7 |
| Other services | 0.3 | 0.2 |
| Other certification services | 0.1 | 0.1 |
| Total auditor's fees | 1.3 | 1.0 |
In accordance with authorisation from the Board of Directors, Magnora sold marketable securities during 2022 with a net gain of NOK 0.8 million (2021: NOK 5.6 million). The total value of other current financial assets held on the balance sheet is NOK 23.7 million at yearend. On 31 December 2022, the value of the marketable securities was NOK 0.0 million (2021: NOK 0.5 million).
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Marketable securities | 0.0 | 0.5 |
| Total value | 0.0 | 0.5 |
The financial assets are recognised in the Balance Sheet at fair value. Unrealised fair value changes are recognised in the profit and loss as financial income/(expense).
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Marketable securities | 0.0 | 0.5 |
| Other current financial assets | 23.7 | 0.4 |
| Total value | 23.7 | 0.9 |
| NOK million | Goodwill | Option lease |
Technology | Total |
|---|---|---|---|---|
| Book value 1 January 2022 | 2.0 | 0.0 | 0.0 | 2.0 |
| Additions | 0.0 | 120.3 | 0.0 | 120.3 |
| Acquisitions | 31.9 | 0.0 | 47.7 | 79.6 |
| Amortization | 0.0 | 0.0 | -0.9 | -0.9 |
| Currency translation | 0.2 | 3.8 | 0.0 | 4.0 |
| Book value 31 December 2022 | 34.1 | 124.1 | 46.8 | 205.0 |
Goodwill and intangible assets with indefinite useful lives are tested annually for impairment by comparing the carrying amount with the recoverable amount. The ratio is monitored based on what is considered as the natural cash-generating unit (CGU) associated with each acquisition. The recoverable amount is calculated based on the value the asset will add to it's CGU.
The carrying amount of goodwill allocated to Evolar amounts to NOK 23,7 million as of 31 December 2022. For Evolar, liquidity prognosis based on budgets approved by leadership for the next nine-year period, are used for the discounted cashflow analysis. There are no cash flow allocated beyond the forcasted period. The key assumptions on which the management has based its cash flow projections are launch year per production line (which corresponds to the expected commercialization of the product), price per production line and the SEK/EUR exchange rate. Launch year per production line is based on development progress so far and managements best estimate and price per production line are based on discussion with key market players and managements best estimate. The cash flow is discounted based on a WACC of 19.7%. The WACC is calculated based on a set of comparable listed companies identified by management. Magnora gained control of the company in April 2022 and the progress of the product development does not significantly divide from the plan. The company is in a development phase, and there will always be risk involved until commercialization has taken place. No reasonably possible change in key assumptions on which management has based its determination of the unit's recoverable amount would cause the unit's carrying amount to exceed its recoverable amount.
The carrying amount of goodwill allocated to the South African operations amounts to NOK 10,4 million as of 31 December 2022. For African Green Venture in South Africa the CGU is valued based on sum value of the project portfolio. In the project portfolio, each project is valued based on a milestone matrix which includes capacity, price per MW and completion status. The key assumptions on which the management has based its project valuation are price per MW (based on discussion with players in the market), capacity per project and remaining risk per project (incl. grid connection). No reasonably possible change in key assumptions on which management has based its determination of the unit's recoverable amount would cause the unit's carrying amount to exceed its recoverable amount.
The assumptions used for calculating value in use vary between the different CGU's and the discount rates take into account the specific risk connected to each CGU.
The ScotWind lease option signed by Magnora with The Crown Estate Scotland is considered to be an intangible asset in the statement of financial position. The agreement gives Magnora exclusive right to perform environmental studies on the area awarded. When the requirements in the option lease agreement, including key project consent, are met, the land lease will commence. The intangible asset will start amortizing when the lease commences and will be amortized over the duration of the land lease. There are no indications of impairment related to the option lease agreement as of 31 December 2022.
Technology is capitalized development related to the development of Evolar's photovoltaic technology, PV Power Booster. The development is according to plan and there are no indications of impairment related to the capitalized development costs as of 31 December 2022.
Magnora and Vindr decided to split the Nordic and South African activities and discontinue the development of Vindr Group. As part of this decision Magnora acquired African Green Venture (AGV) in January 2022 together with the local AGV team and continue developing its wind and solar PV projects in the region. Goodwill in the transaction is mainly related to synergies and competence of the staff, which do not qualify for separate recognition. Goodwill will not be tax deductible. The company's operating revenue for the period 1 February to 31 December 2022 is NOK 0.0 million and the loss after tax is NOK -3.0 million. If the acquisition had happened 1 January 2022, operating revenue would have been NOK 0.0 million and the loss after tax NOK -3.2 million. See portfolio section in Board of Directors Report above for more details.
| Cash flow regarding acquisition | 2022 |
|---|---|
| Consideration paid | 10.5 |
| Cash and bank deposit in the company at acquisition date | - |
| Net cashflow regarding acquisition | 10.5 |
| Minority share | 0.5 |
| Total value of acquired company | 11 |
| Identified assets and liabilities on the balance sheet recognized from the acquisition: |
2022 |
|---|---|
| Current assets | 0.3 |
| Property, plant and equipment | 0.2 |
| Current liabilities | 0.7 |
| Borrowings | -0.2 |
| Total net identifiable assets | 1.0 |
| Intangible assets | 2.0 |
| Deferred tax regarding intangible assets | -0.4 |
| Goodwill | 8.4 |
| Total | 11.0 |
The Group acquired in April 2022 13.5% of the shares in Evolar AB, making the total Magnora ownership 63.5%. As of this transaction the ownership is fully consolidated in Group financial statements. Until 31 March 2022 Evolar AB was accounted for as an associated company in the Group accounts. The allocation of intangible assets in the transaction is based on the cost approach according to IFRS 13. Goodwill in the transaction is mainly related to competence of the staff, which do not qualify for separate recognition. Goodwill from this transaction will not be tax deductible. The company's operating revenue for the period 1 April to 31 December is NOK 3.1 million and the loss after tax is NOK -10.4 million. If the acquisition had happened 1 January 2022, operating revenue would have been NOK 4.3 million and the loss after tax NOK -11.8 million.
| Cash flow regarding acquisition | 2022 |
|---|---|
| Consideration paid on 100% basis | 75.3 |
| Total value of acquired company | 75.3 |
| Identified assets and liabilities on the balance sheet recognized from the acquisition: | 2022 |
|---|---|
| Cash and bank deposits | 20.2 |
| Right-of-use-assets | 12.3 |
| Capitalized development costs | 5.5 |
| Financial assets | 2.1 |
| Trade and other receivables | 2.2 |
| Property, plant and equipment | 7.4 |
| Trade and other payables | -10.5 |
| Borrowings / lease liabilities | -8.4 |
| Total net identifiable assets | 30.7 |
| Intangible assets | 24.5 |
| Deferred tax regarding intangible assets | -5.1 |
| Goodwill | 25.0 |
| Total | 75.3 |
| Non-controlling interests | 27.5 |
| Majority interest | 47.8 |
| Book value of Magnora's share before the transaction | 43.9 |
| Gain/loss related to realization of the associated company | 3.9 |
Hafslund Magnora Sol AS has entered into option agreement contracts with landowners to develop solar PV parks in Norway.
| NOK million | Note | 2022 | 2021 |
|---|---|---|---|
| Operating revenue | 1, 10 | 87.7 | 13.8 |
| Other operating revenue | 11.9 | 16.4 | |
| Total operating revenue | 99.6 | 30.2 | |
| Employee benefit expense | 2 | -24.6 | -20.4 |
| Other operating expense | 4 | -15.1 | -27.1 |
| Total operating expense | -39.7 | -47.5 | |
| Operating Profit/(loss) | 59.9 | -17.3 | |
| Financial income | 6 | 17.3 | 22.4 |
| Financial expense | 6 | -4.6 | -27.4 |
| Foreign exchange gain/(loss) related to financing & operating revenue |
6.2 | 0.0 | |
| Net financial profit/(loss) | 18.9 | -5.0 | |
| Profit/(loss) before tax | 78.8 | -22.3 | |
| Tax expense/(income) | 7 | -8.3 | -7.7 |
| Annual net Profit/(loss) | 70.5 | -30.0 | |
| Attributable to: | |||
| Equity holders of the Company | 70.5 | -30.0 | |
| Distribution of net profit/(loss): | |||
| Capital distribution | 0.0 | 0.0 | |
| Transfer to/from equity | 70.5 | -30.0 | |
| Annual net profit/(loss) | 70.5 | -30.0 |
Earnings per share for profit/(loss) attributable to the equity holders of the Company during the year (NOK per share):
| Basic | 8 | 1.18 | -0.53 |
|---|---|---|---|
| Diluted | 8 | 1.18 | -0.53 |
| NOK million | Note | 31.12.2022 | 31.12.2021 | |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Deferred income tax assets | 7 | 15.1 | 23.4 | |
| Investment in Subsidiaries | 9 | 72.7 | 2.1 | |
| Investment in associated companies | 40.9 | 76.2 | ||
| Loan to associated companies and subsidiaries | 182.1 | 11.2 | ||
| Other non-current assets | 0.0 | 0.0 | ||
| Total non-current assets | 310.7 | 112.9 | ||
| Current assets | ||||
| Trade and other receivables | 11 | 87.2 | 21.4 | |
| Other current financial assets | 0.0 | 0.7 | ||
| Cash and cash equivalents | 13 | 167.3 | 94.3 | |
| Total current assets | 254.5 | 116.4 | ||
| Total assets | 565.2 | 229.4 | ||
| EQUITY | ||||
| Capital and reserves attributable to equity holders of | ||||
| the Company | ||||
| Share capital | 16 | 32.8 | 28.0 | |
| Treasury shares | 16 | -0.1 | -0.1 | |
| Other equity | 16 | 448.7 | 182.8 | |
| Total equity | 481.5 | 210.7 | ||
| LIABILITIES | ||||
| Current liabilities | ||||
| Overdraft facility | 76.3 | 0.0 | ||
| Trade payables | 2.3 | 0.6 | ||
| Provisions | 14 | 0.6 | 2.3 | |
| Other current liabilities | 15 | 4.5 | 15.8 | |
| Total current liabilities | 83.7 | 18.7 | ||
| Total liabilities | 83.7 | 18.7 | ||
| Total equity and liabilities | 565.2 | 229.4 | ||
| Oslo, Norway, 20 March 2023 | ||||
| The Board of Directors of Magnora ASA | ||||
| Torstein Sanness | Hilde Ådland | John Hamilton | Erik Sneve | |
| Chairman | Board member | Board member | CEO | |
| M A G N O R A A S A |
A N N U A L R E P |
O R T 2 0 2 2 |
||
Torstein Sanness
Chairman Hilde Ådland Board member
John Hamilton Board member
Erik Sneve CEO
| NOK million | 2022 | 2021 |
|---|---|---|
| Cash flow from operating activities | ||
| Profit/(loss) before tax | 78.8 | -22.3 |
| Adjustment for: | ||
| Items classified as investing and financing activities | 5.8 | -5.6 |
| Value change marketable securities and forwards | -0.8 | 0.0 |
| Write down of non-current assets | 0.0 | 10.0 |
| Trade and other receivable | -65.5 | -17.3 |
| Trade payables | 1.8 | -0.2 |
| Other liabilities, provisions, and charges | -12.9 | 16.1 |
| Cash generated from operations | 7.1 | -16.0 |
| Cash flow from investment activities | ||
| Net purchase of investment shares | 1.3 | 18.9 |
| Acquisition of associated companies | -35.1 | -77.4 |
| Sale of associated companies | 0.0 | 20.0 |
| Loan to subsidiaries | -170.9 | -11.2 |
| Net cash from investment activities | -204.8 | -49.7 |
| Cash flow from financing activities | ||
| Overdraft facility drawn | 76.3 | 0.0 |
| Capital increase/(distribution) | 194.1 | 115.4 |
| Treasury shares | 0.4 | 0.0 |
| Net cash from financing activities | 270.7 | 115.4 |
| Net cash flow from the period | 73.1 | 49.7 |
| Cash balance at beginning of period | 94.3 | 44.6 |
| Cash balance at end of period | 167.4 | 94.3 |
Magnora ASA's ('the Company') financial statements have been prepared in accordance with the Accounting Act and generally accepted accounting principles in Norway.
Magnora ASA is the parent company of the Magnora Group ('the Group').
The Company's functional currency is NOK. All numbers in the financial statements are in NOK 1,000,000 unless otherwise stated.
Assets intended for long term ownership or use, are classified as fixed assets. Assets relating to the operating cycle are classified as current assets. Receivables are classified as current assets if they are to be repaid within one year after balance sheet date. Equivalent criteria apply to liabilities.
Current assets are valued at the lower of purchase cost and net realisable value. Current liabilities are reflected in the balance sheet at nominal value at establishment date.
Fixed assets are valued at purchase cost. Fixed assets whose value will decline are depreciated on a straight-line basis over the asset's estimated useful life. Fixed assets are written down to net realisable value if a value reduction occurs that is expected to be permanent. Long-term liabilities are reflected in the balance sheet at nominal value on establishment date.
Trade receivables and other receivables are reflected in the balance sheet at nominal value less provision for estimated losses. Estimated losses are provided for on the basis of an individual assessment of each debtor.
Trade Payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
A provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured as the present value of the expected expenditures required to settle the obligation using a
pre-tax discount rate that accounts for time value of money and risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
Fixed assets are reflected in the balance sheet and depreciated over the assets expected useful life on a straight- line basis. Maintenance cost is expensed as incurred. Additions or improvements are added to the asset's cost price and depreciated with the asset. When changes in circumstances indicate that the carrying value of an asset may not be recoverable, an impairment charge is recognised, and the asset is written down to recoverable amount (being the highest of net sales value and value in use). Value in use is the net present value of the expected future cash flows generated from the asset.
Financial assets also include marketable securities classified as other current financial assets. All securities acquired are sufficiently liquid shares to allow trading on short notice in case additional funds are needed for working capital. Furthermore, all securities are shares traded on the Oslo, Stockholm, or other major international stock exchanges, and as such, subject to market risks in addition to the specific risks relevant for the company each security represents. Risks related to marketable securities are managed by daily monitoring, weekly update of the portfolio overview, and through trading shares not meeting the risk tolerance set by the Company. Purchases and sales of marketable securities are accounted for at trade date, and the assets are adjusted to reflect the current market value of each security at the reporting date. Marketable securities are accounted for at fair value and reflected in the Income Statement as financial gain or loss.
In the parent company's accounts, investments in subsidiaries and associated companies are recorded under the cost method. Investments are written down to fair value when a reduction in value is expected to be permanent.
Dividend is recognised as income in the year the provision is made in the subsidiary. If the dividend exceeds retained earnings, the excess represents repayment of invested capital, and dividend is deducted from the book value of the investment in the balance sheet.
Cash and bank deposits include cash in hand, bank deposits and other short-term highly liquid investments with original maturities of three months or less.
Cash and bank deposits, current assets, and current liabilities nominated in foreign currencies are converted to exchange rates prevailing at balance sheet date. Realised and unrealised exchange gains and losses on assets and liabilities in foreign currencies are included as financial items in the income statement.
As of year-end 2022 the Company operates a defined contribution plan. The plan is funded through payments to the pension company, and the Company has no further payment obligations once the contribution is paid. The contributions are recognised as employee benefit expenses when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
Deferred income taxes is provided using the liability method on temporary difference at balance sheet date between the tax basis of assets and liabilities and their carrying amounts for financial reporting purpose. Tax- reducing temporary differences and losses carry forward are offset against tax-increasing temporary differences that are reversed in the same time intervals. Taxes consist of taxes payable (taxes on current year taxable income) and change in net deferred taxes.
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. The book value of the deferred tax asset represents a minor part of the total accumulated tax losses of approximately NOK 1.0 billion.
Earnings per share are calculated by dividing net profit/loss by the weighted average of number of outstanding shares. Shares issued during the year are weighted in relation to the period they have been outstanding.
The cash flow statement is prepared in accordance with the indirect method.
Revenue comprises the fair value of the consideration receivable for the sale of goods and services in the ordinary course of business. Revenue is shown net of value-added tax and discounts.
The Company recognises revenue when the amount of revenue can be reliably measured and in accordance with the underlying contracts.
| License revenue: | License revenue is recognised in accordance with the underlying contracts. |
|---|---|
| Interest income: | Interest income is recognised on a time-proportion basis using the effective |
| interest method. | |
| Sales of services: | Service income is recognised in line with the underlying contracts and the |
| amount of work executed. |
Leases in which a significant portion of the risk and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.
The Company has office rental agreements for its offices in Oslo as of 31 December 2022 (see note 5).
The preparation of financial statements in accordance with generally accepted accounting principles requires management to use estimates and assumptions that impact the value of assets and liabilities as well as disclosure notes. Such estimates and assumptions may have significant impact on reported revenue and cost for a specific reporting period. Actual amounts may therefore deviate from the estimates.
Contingent losses, which are likely to occur as well as quantifiable, are expensed when incurred.
| NOK million | 2022 | 2021 |
|---|---|---|
| License fee | 87.7 | 13.8 |
| Other revenue | 11.9 | 16.4 |
| Total operating revenue | 99.6 | 30.2 |
The revenue split, based on customer location was as follows:
| NOK million | 2022 | 2021 |
|---|---|---|
| Norway | 8.6 | 8.0 |
| Sweden | 1.2 | 0.2 |
| South Africa | 2.1 | 8.2 |
| UK | 87.7 | 13.8 |
| Total operating revenue | 99.6 | 30.2 |
| Specification of employee expense: | ||
|---|---|---|
| (NOK million) | 2022 | 2021 |
| Salaries and vacation pay | 10.0 | 11.3 |
| Employer`s contribution tax | 4.1 | 1.9 |
| Pension costs | 1.1 | 0.7 |
| Bonus | 3.0 | 2.9 |
| Option cost | 5.8 | 3.4 |
| Other employee benefit expense | 0.6 | 0.2 |
| Total employee benefit expense | 24.6 | 20.4 |
| Average number of man-years | 7 | 5 |
| NOK thousand | Salaries | Bonus | Retirement benefits |
Other benefits |
|---|---|---|---|---|
| Erik Sneve, CEO | 2,150 | 2,290 | 184 | 18 |
| Bård Olsen, CFO | 1,652 | 147 | 184 | 18 |
| Total remuneration paid | 3,802 | 2,437 | 368 | 36 |
| NOK thousand | Salaries | Bonus | Retirement benefits |
Other benefits |
|---|---|---|---|---|
| Erik Sneve, CEO | 2,027 | 2,559 | 176 | 17 |
| Bård Olsen, CFO | 1,538 | 284 | 168 | 17 |
| Total remuneration paid | 3,565 | 2,843 | 344 | 34 |
The Group has a retirement benefit plan for all employees. No loans, prepayments or security were granted to a member of Management or any member of the Board of Directors in 2022 and 2021.
At the balance sheet date there were 1,475,000 options held by the Board of Directors and Senior Management (2021: 1,900,000 options). See note 20 for more information.
Reference is made to the 'Magnora Remuneration Report 2022' for further details of remuneration of Senior Management.
| NOK Thousand | Member from: | Member to: | 2022* | 2021 |
|---|---|---|---|---|
| Torstein Sanness, Chairman | 24 May 2017 | 5,716 | 924 | |
| Hilde Ådland | 24 May 2018 | 707 | 280 | |
| John Hamilton | 18 Dec 2018 | 765 | 330 | |
| Total remuneration paid | 7,188 | 1,534 |
*Significant increase due to the board exercising options issued in 2019.
The Company is required to maintain a pension plan for its employees, as minimum two persons are employed in positions of more than 75% of a fulltime position. Pension cost charged to the income statement in 2022 was NOK 1.1 million (2021: NOK 0.7 million). The defined contribution plan had 8 participants at 31.12.2022 (2021: 6 participants).
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Office cost (rental etc) | 2.6 | 1.2 |
| Consultancy (audit, tax and legal) * | 8.4 | 10.9 |
| Travel expenses | 0.6 | 0.2 |
| Other | 3.6 | 14.8 |
| Total other operating expense | 15.1 | 27.1 |
| * Specification of auditor's fee (excl. VAT): | ||
| Statutory audit | 0.8 | 0.7 |
| Other services | 0.3 | 0.2 |
| Other certification services | 0.1 | 0.1 |
| Total auditor's fees | 1.2 | 1.0 |
The Company has office rental agreements for its offices in Oslo as of 31 December 2022. The agreements are total NOK 0.9 million per year and with six month's termination notice period. The Company expensed NOK 1.4 million in lease and rental cost for 2022 (2021: 0.5).
Currency gains and losses relating to financing activities were presented as separate line item as a financial income/(expense) in the Income Statement.
| NOK million | 2022 | 2021 |
|---|---|---|
| Interest income | 10.3 | 0.3 |
| Dividend received | 6.1 | 0.0 |
| Other financial income | 0.8 | 22.1 |
| Total financial income | 17.3 | 22.4 |
| NOK million | 2022 | 2021 |
|---|---|---|
| Interest cost | -4.6 | -0.4 |
| Write-down investment in associate | 0.0 | -10.0 |
| Other financial expenses | 0.0 | -17.0 |
| Total financial expense | -4.6 | -27.4 |
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Specification net deferred tax assets/(liabilities): | ||
| Deferred tax asset to be reversed after more than 12 months | 201.5 | 217.3 |
| Deferred tax asset/(liability) to be reversed after more than 12 months |
0.0 | 0.0 |
| Net deferred tax asset/(liabilities) | 201.5 | 217.3 |
| Deferred tax assets not recognised in the balance sheet | -186.4 | -193.9 |
| Net deferred tax assets/(liabilities) recognised in the balance sheet |
15.1 | 23.4 |
| Specification of deferred tax assets/ (liabilities) | ||
| (NOK million) | 2022 | 2021 |
| Deferred tax assets: | ||
| Investments and receivables | 0.5 | 0.5 |
| Fixed assets | 0.3 | 0.4 |
| Deferred tax assets | 201.5 | 217.3 |
|---|---|---|
| Losses carry forward | 200.7 | 216.4 |
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Recognition of deferred tax asset | -8.3 | -7.7 |
| Net tax income/(expense) | -8.3 | -7.7 |
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Profit/(loss) before tax: | 78.8 | -22.3 |
| Tax calculated (22%) | -17.3 | 4.9 |
| Income not subject to tax | 1.5 | 4.9 |
| Expenses not deductible | 0.0 | -5.8 |
| Tax losses/gains for which no deferred income tax asset was recognised |
7.5 | -11.7 |
| Tax income/(expense) | -8.3 | -7.7 |
Deferred tax assets are recognised for unused tax losses only to the extent it is probable taxable profit will be available against which the losses can be utilised in the future. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits. The recognised deferred tax asset is most sensitive to expected future taxable profits.
The deferred tax asset recognised is expected to be utilised within the next 5 years based upon on the company's contract portfolio and cost base as of today. The book value of the deferred tax asset represents a minor part of the total accumulated tax losses.
Earnings per share were calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares on issue during the year.
| 2022 | 2021 | |
|---|---|---|
| Net profit/(loss) (NOK million) | -70.5 | -30.0 |
| Earnings per share (NOK) | 1.18 | -0.53 |
| Earnings per share diluted (NOK) | 1.18 | -0.53 |
| Average no. of outstanding shares (thousands) | 59,510 | 56,699 |
| Weighted avg. no. of ordinary shares for diluted earnings per share (thousands) |
59,695 | 56,699 |
| Subsidiaries/ associated companies |
Registered office |
Cost price |
No. of shares |
Equity | Book value |
Profit/ (loss) |
Shareholder interest |
|---|---|---|---|---|---|---|---|
| Magnora Holding AS | Norway | 2,099.8 | 10,000 | -4.8 | 0.0 | -0.5 | 100% |
| African Green Ventures (pty) Ltd |
South Africa | 14.9 | 920 | 2.5 | 15.0 | -3.0 | 92% |
| AGV Projects Limited South Africa | 2.0 | 1,000 | 0.0 | 2.0 | 0.0 | 100% | |
| Magnora Offshore Wind AS |
Norway | 0.1 | 1,000 | 18.6 | 0.1 | 4.4 | 80% |
| Magnora Offshore Wind Holding Limited |
UK | 0.0 | 1,000 | 0.0 | 0.0 | 0.0 | 80% |
| Magnora Offshore Wind N3 Limited |
UK | 0.0 | 1,000 | 0.0 | 0.0 | 0.0 | 80% |
| Evolar AB | Sweden | 55.3 | 1,043,836 | 19.9 | 55.3 | -11.1 | 63.5% |
| Magnora South Africa Projects AS |
Norway | 0.1 | 1,000 | -6.2 | 0.1 | -6.3 | 100% |
| Magnora South Africa Development AS |
Norway | 0.1 | 1,000 | 0.1 | 0.1 | -0.0 | 100% |
| Magnora UK PV Holding AS |
Norway | 0.0 | 30,000 | -0.8 | 0.1 | -0.8 | 100% |
| Total book value | 72.7 |
The book value of Magnora Holding AS was written down to zero in 2016. The company has a negative equity balance and a result of -0.5 for the year 2022 which does not cause reversal of the book value write down.
| Subsidiaries/ Associated companies |
Registered office |
Cost price | No. of shares |
Equity | Book value |
Profit/ (loss) |
Shareholder interest |
|---|---|---|---|---|---|---|---|
| Magnora Holding AS | Norway | 2,099.8 | 10,000 | -4.3 | 0.0 | 0.0 | 100% |
| AGV Projects Limited | South Africa |
2.0 | 1,000 | 0.0 | 2.0 | 0.0 | 100% |
| Magnora Offshore Wind AS |
Norway | 0.1 | 1,000 | -6.5 | 0.1 | -6.4 | 100% |
| Total book value | 2.1 |
| Associated companies |
Registered office |
Cost price | No. of shares | Equity | Book value | Profit/ (loss) |
Shareholder interest |
|---|---|---|---|---|---|---|---|
| Kustvind AB | Sweden | 18.0 | 4,500 | 8.3 | 18.0 | -5.6 | 37.5% |
| Helios Nordic Energy AB |
Sweden | 22.9 | 1,333,334 | -2.8 | 22.9 | -3.5 | 40% |
| Hafslund Magnora Sol AS |
Norway | 0.0 | 12,000 | -1.7 | 0.0 | -1.7 | 40% |
| Total book value | 40.9 |
Magnora has also invested NOK 22.9 million in Helios Nordic Energy AB for 40.00% ownership. As of 31 December 2022, the investment is accounted for using the cost method.
In addition to this, Magnora has invested NOK 18 million in Kustvind AB for 37.50% ownership. As of 31 December 2022, the investment is accounted for using the cost method.
Magnora ASA has an agreement with all subsidiaries and associated companies that allows services to be provided between the companies at agreed upon hourly rates. Magnora had both operating revenues and expenses from services provided between the companies that are related parties to Magnora. The total operating revenues from subsidiaries and associated companies in 2022 was NOK 11.9 million (NOK 16.4 million).
| NOK million | 2022 | 2021 |
|---|---|---|
| Operating revenue from associated companies | 0.6 | 0.0 |
| Operating revenue from subsidiaries | 10.9 | 16.4 |
| Total operating revenue | 11.5 | 16.4 |
| NOK million | 2022 | 2021 |
| Operating expenses from associated companies | 0.0 | 0.4 |
| Operating expenses paid to other related parties | 0.0 | 0.0 |
| Total operating expense | 0.0 | 0.4 |
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Magnora Holding AS | 3.7 | 3.2 |
| Magnora UK PV Holding AS | 6.0 | 0.0 |
| Kustvind AB | 0.9 | 0.8 |
| Magnora South Africa Projects AS | 6.3 | 0.0 |
| AGV Projects Ltd | 11.1 | 8.2 |
| Hafslund Magnora Sol | 1.7 | 0.0 |
| Magnora Offshore Wind AS | 142.0 | 10.5 |
| Evolar AB | 20.3 | 0.2 |
| Receivables from companies in the Group | 192.0* | 19.7 |
*The receivables from companies in the Group are split into NOK 182.1 million loan to related parties and NOK 9.9 other receivables.
Magnora ASA also owns 50% of the shares in Arendal Brygge AS, and Sparebanken Sør owns the other 50% of the shares. Magnora ASA and Sparebanken Sør each provided NOK 1 million in shareholder loan to Arendal Brygge in 2019 to support Arendal Brygge's liquidity needs related to needed investments and working cash. The book value of the loan was written down to zero in 2019 due to large losses incurred by Arendal Brygge AS, and a provision was made. In 2021 Magnora ASA has provided NOK 1.4 MNOK in a shareholder loan and received NOK 0.2 MNOK in down payment in 2021 and 0.1 in 2022. The loan has a book value of NOK 1.1 MNOK as of 31 December 2022.
| NOK million | 2022 | 2021 |
|---|---|---|
| Trade receivables | 11.2 | 19.7 |
| Accrued income, not invoiced | 75.4 | 1.2 |
| Prepayment | 0.6 | 0.5 |
| Total trade and other current receivables | 87.2 | 21.4 |
In accordance with authorisation from the Board of Directors, Magnora ASA sold marketable securities during 2022 with a net gain of NOK 0.8 million (NOK 5.6 million). The value of the marketable securities was NOK 0.0 million on 31 December 2022. The total value of other current financial assets held on the balance sheet is NOK 0.0 million (NOK 0.7 million) at year end.
The financial assets are recognised in the Balance Sheet at fair value. Unrealised fair value changes are recognised in the profit and loss as financial income/(expense).
| (NOK million) | 2022 | 2021 |
|---|---|---|
| Cash at bank and in hand | 165.7 | 93.3 |
| Restricted employees' tax deduction fund | 1.6 | 1.0 |
| Total cash and cash equivalents | 167.3 | 94.3 |
As of December 31, 2022, NOK 1.6 million was restricted cash (2021: 1.0).
| NOK million | Payroll | Total |
|---|---|---|
| 1 January 2022 | 2.3 | 2.3 |
| Arising during the year | 0.0 | 0.0 |
| Reversed during the year | -1.7 | -1.7 |
| 31 December 2022 | 0.6 | 0.6 |
| NOK million | Payroll | Total |
|---|---|---|
| 1 January 2021 | 0.6 | 0.6 |
| Arising during the year | 1.7 | 1.7 |
| Reversed during the year | 0.0 | 0.0 |
| 31 December 2021 | 2.3 | 2.3 |
All provisions in 2021 and 2022 are current in nature.
Provision for 2021 and 2022 is for employment tax (AGA) for the options issued.
| NOK million | Note 2022 |
2021 |
|---|---|---|
| Payroll liabilities | 1.2 | 0.9 |
| Employer's contribution tax and other taxes | 2.7 | 2.1 |
| Other payables | 0.6 | 12.8 |
| Total other current liabilities | 4.5 | 15.8 |
| NOK million | Share capital |
Treasury Shares |
Other equity |
Total equity |
|---|---|---|---|---|
| Equity as of 1 January 2022 | 28.0 | -0.1 | 182.8 | 210.7 |
| Annual profit for the period | 70.5 | 70.5 | ||
| Share based payments | 5.8 | 5.8 | ||
| Capital increase | 4.8 | 0.0 | 189.7 | 194.5 |
| Equity as of 31 December 2022 | 32.8 | -0.1* | 448.8 | 481.5 |
* As of 31 December 2022, Magnora owned 21,866 shares or 0.03 percent of total shares outstanding through the share buyback program.
| NOK million | Share capital |
Treasury Shares |
Other equity |
Total equity |
|---|---|---|---|---|
| Equity as of 1 January 2021 | 25.8 | -0.1 | 96.3 | 122.0 |
| Annual loss for the period | -30.0 | -30.0 | ||
| Acquired treasury shares* | 0.0 | |||
| Share based payments | 3.3 | 3.3 | ||
| Capital increase | 2.2 | 113.2 | 115.4 | |
| Equity as of 31 December 2021 | 28.0 | -0.1 | 182.8 | 210.7 |
* As of 31 December 2021, Magnora owned 63,540 shares or 0.11 percent of total shares outstanding through the share buyback program.
| 20 largest shareholder accounts 3 February 2023 (source: VPS) |
Number of shares | Percent ownership |
|---|---|---|
| HAFSLUND VEKST AS | 4,474,272 | 6.70 |
| KING KONG INVEST AS | 2,670,995 | 4.00 |
| GINNY INVEST AS | 2,469,144 | 3.70 |
| BEKKESTUA EIENDOM AS | 1,881,860 | 2.82 |
| CARE HOLDING AS | 1,750,000 | 2.62 |
| ALDEN AS | 1,729,829 | 2.59 |
| PHILIP HOLDING AS | 1,648,377 | 2.47 |
| F2 FUNDS AS | 1,585,000 | 2.37 |
| F1 FUNDS AS | 1,503,121 | 2.25 |
| ANDENERGY AS | 1,468,140 | 2.20 |
| INTERACTIVE BROKERS LLC | 1,371,482 | 2.05 |
| MP PENSJON PK | 1,327,138 | 1.99 |
| CLEARSTREAM BANKING S.A. | 1,319,078 | 1.97 |
| NORDNET LIVSFORSIKRING AS | 1,281,560 | 1.92 |
| ALTEA AS | 1,154,944 | 1.73 |
| AARSKOG, PHILLIP GEORGE | 1,000,000 | 1.50 |
| DNB BANK ASA | 878,137 | 1.31 |
| DANSKE BANK AS | 781,492 | 1.17 |
| BALLISTA AS | 760,372 | 1.14 |
| BAKLIEN, ÅSMUND | 756,100 | 1.13 |
| Total, 20 largest shareholders | 31,811,041 | 47.61 |
| Other shareholder accounts | 35,011,725 | 52.39 |
| Total number of shares | 66,822,766 | 100.00 |
| Foreign ownership | 9,926,510 | 14.86 |
The Company's activities expose it to a variety of financial risks; market risk (including currency risk, interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.
The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to USD. Foreign exchange risk arises from future commercial transactions, recognised assets or liabilities, and net investments in foreign operations when such transactions, assets or liabilities are
denominated in a currency that is not the entity's functional currency. Most of the Company's revenue is in USD. To reduce the currency risk, the Company hedged the exposure through selling USD in bulks when rates were favourable.
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers. The Company has one main banking relationship with a financial institution that is currently rated Aa3 and two customers currently rated at BB and AA-.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the ability to close out market positions.
The Company has implemented routines to continuously update its cash flow forecast, and the forecast is distributed and reviewed by the Board and Senior Management at minimum monthly to be able to foresee potential adverse effects on the liquidity and implement necessary actions to rectify the situation.
Magnora ASA is in a solid liquidity position with a cash balance of NOK 171.9 million at the balance sheet date.
At balance sheet date there are 1,475,000 options (2021: 1,900,000).
In accordance with approval by the Annual General Meeting of April 26, 2022, the Board of Magnora has issued 475,000 options during 2022 to provide long-term incentives to the Board and the Management team.
Board members and Senior Management ownership in the Company as of 31 December 2022:
| Options owned or controlled |
Shares owned or controlled |
|
|---|---|---|
| Torstein Sanness, Executive Chairman | 250,000 | 594,442 |
| Hilde Ådland, Board member | 10,000 | 39,011 |
| John Hamilton, Board member | 40,000 | 33,837 |
| Erik Sneve, CEO | 350,000 | 1,173,871 |
| Bård Olsen, CFO | 150,000 | 50,000 |
| Total options outstanding for the Board and Senior Management | 800,000 |
Reference is made to the 'Magnora Remuneration Report 2022' for further details of remuneration of Senior Management.
No distributions were made during 2022 and 2021.
Hafslund Magnora Sol AS has entered into option agreement contracts with landowners to develop solar PV parks in Norway.
Statsautoriserte revisorer Ernst & Young AS
Markens gate 9, 4610 Kristiansand Postboks 184, 4662 Kristiansand
Foretaksregisteret: NO 976 389 387 MVA Tlf: +47 24 00 24 00
www.ey.no Medlemmer av Den norske Revisorforening
To the Annual Shareholders' Meeting of Magnora ASA
We have audited the financial statements of Magnora ASA (the Company) which comprise the financial statements of the Company and the consolidated financial statements of the Company and its subsidiaries (the Group). The financial statements of the Company comprise the balance sheet as of 31 December 2022 and the income statement and statement of cash flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies. The consolidated financial statements of the Group comprise the balance sheet as of 31 December 2022, the statement of profit and loss, statement of comprehensive income, statement of cash flows and statement of changes in equity for the year then ended and notes to the financial statements, including a summary of significant accounting policies.
In our opinion
Our opinion is consistent with our additional report to the audit committee.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company and the Group in accordance with the requirements of the relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 9 years from the election by the general meeting of the shareholders on 9 July 2013 for the accounting year 2013.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for 2022. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the financial statements.
Magnora ASA increased its ownership in Evolar AB from 50% to 63,5 % in the second quarter of 2022, making Magnora ASA a controlling shareholder. The total consideration was NOK 75,3 million on a 100% basis.
Further, Magnora ASA acquired 95% of the shares in African Green Ventures Proprietary Limited (AGV) in the first quarter of 2022 with a total consideration of NOK 11,0 million on a 100% basis.
Based on the change of control management made a purchase price allocation in which the considerations were allocated to the identified assets and liabilities based on the evaluated fair values. The evaluation and identification of all assets and liabilities and the assumption used in the allocation of the purchase price requires significant judgement by management. The audit of the purchase price allocation is a key audit matter due to both the financial magnitude of the transactions and the significant judgments and assumptions involved in the recognition and measurement of the allocated values.
We, supported by valuation specialists, evaluated the documentation of management evaluation. We had meetings with management to understand their process, valuation methods and the assumption used for the allocation, including understanding their identification of and valuation of acquired assets and liabilities. Our audit procedures further included evaluation of the appropriateness of the acquisition accounting applied, including the management conclusion of when control was deemed to have passed,
We refer to note 30 in the consolidated financial statements related to the purchase price allocations.
Other information consists of the information included in the annual report other than the financial statements and our auditor's report thereon. Management (the board of directors and the general manager) is responsible for the other information. Our opinion on the financial statements does not cover the other information, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information, and, in doing so, consider whether the board of directors' report, the statement on corporate governance and the statement on corporate social responsibility contain the information required by applicable legal requirements and whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that the other information is materially inconsistent with the financial statements, there is a material misstatement in this other information or that the information
Independent auditor's report - Magnora ASA 2022
required by applicable legal requirements is not included in the board of directors' report, the statement on corporate governance or the statement on corporate social responsibility, we are required to report that fact.
We have nothing to report in this regard, and in our opinion, the board of directors' report, the statement on corporate governance and the statement on corporate social responsibility are consistent with the financial statements and contain the information required by applicable legal requirements.
Management is responsible for the preparation and fair presentation of the financial statements of the Company in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway and of the consolidated financial statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's and the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or the Group, or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Independent auditor's report - Magnora ASA 2022
We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
As part of the audit of the financial statements of Magnora ASA we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name "Magnoraasa-2022-12-31-en.zip", have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF Regulation.
Management is responsible for the preparation of the annual report in compliance with the ESEF Regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary.
Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material respects, the financial statements included in the annual report have been prepared in accordance with the ESEF Regulation. We conduct our work in accordance with the International Standard for Assurance Engagements (ISAE) 3000 – "Assurance engagements other than audits or reviews of historical financial information". The standard requires us to plan and perform procedures to obtain reasonable assurance about whether the financial statements included in the annual report have been prepared in accordance with the ESEF Regulation.
As part of our work, we perform procedures to obtain an understanding of the company's processes for preparing the financial statements in accordance with the ESEF Regulation. We test whether the financial statements are presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL tagging of the consolidated financial statements and assess management's use of judgement. Our procedures include reconciliation of the iXBRL tagged data with the audited financial statements in human-readable format. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Kristiansand, 20 March 2023 ERNST & YOUNG AS
The auditor's report is signed electronically
Espen Fyllingen State Authorised Public Accountant (Norway)
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This remuneration report (the "Report") is prepared by the board of directors of Magnora ASA (the "Group") in accordance with the Norwegian Public Limited Liability Companies Act (the "Companies Act") Section 6-16 b with regulations. The Report contains information regarding remuneration to previous, present and future leading personnel of the Group for the financial year of 2022 in line with the applicable requirements.
The Group considers the CEO and the CFO as its management team and to be comprised by the term leading personnel ("Directors") under the Companies Act. There are no employees who are members of the board of directors of the Group or the corporate assembly of the Group.
The Group continued growing its investment portfolio and hired several key personnel during 2022. The following key events during 2022 relates to the goals of the management team:
The CEO remuneration for 2022 was based on the following KPIs 1) manage and develop the organization, 2) financial performance of the Group, 3) manage and develop investment portfolio, 4) identify and close suitable acquisitions, and 5) share performance. The CFO remuneration was based on 1) development of finance function and support funding of Group, 2) follow-up of Group governance and internal control in the investment portfolio, 3) quality of financial reporting in the Group.
There was no deviation or derogation from the remuneration policy during the reported financial year.
The Group continued with significant growth and value creation in 2022. In January 2022, Magnora awarded an area
to develop a floating wind park on the northside of Scotland, and the option lease agreement was signed in April 2022 with the Crown Estate Scotland.
In February 2022, Magnora acquired AGV. AGV is a greenfield developer of wind, large-scale PV, and battery projects in the South Africa. The company has developed a project portfolio by signing options for land leases in well suited locations in South Africa and has land lease agreements for projects with a total installed capacity potential of approximately 2 GW.
In March 2022, Magnora entered the UK market through partnering with a local developer. At the end of 2022, the portfolio consists of a 60 MW solar PV project, and two BESS projects totalling 200MWh. The 80MW/160MWh BESS project is located on brown field land in an industrial area.
In September 2022, Magnora closed an equity private placement of 8,950 new shares with a subscription price per share of NOK 22.35 and a total offer size of NOK 200 million. This funding was key to continue the investments and activities planned. The Group also secured NOK 150 million in loan facilities with tier one banks during 2022 to secure financial flexibility.
In September 2022, Magnora established Hafslund Magnora Sol AS with Hafslund and Helios for development of largescale solar parks in Norway.
Kustvind AB has progressed according to the initial business plan, and Magnora has increased its ownership in the company to 37.5 percent during 2022.
The Group increased its ownership in Evolar AB to 63.5 percent during 2022. Evolar has a very disruptive technology which enables solar panel and glass manufacturers to boost performance on all solar cells at a very low cost with their tandem technology. Over the next decade Evolar can help the world develop solar cells with efficiency in the lowto- mid 30 percents.
The table in Section 2.2 below contains an overview of the total remuneration received by the Directors, as well as remuneration that were granted/awarded/due but not yet materialised, during the reported financial year. Only remuneration earned on the basis of the Directors' role as a leading person is comprised.
The Directors have not received remuneration from other companies within the Group.
| Fixed remuneration |
Variable remuneration |
|||||||
|---|---|---|---|---|---|---|---|---|
| NOK thousand | Year | Salary | Other benefits |
Bonus | Options | Pension | Total Remuneration |
Proportion fixed/variable |
| 2022 | 2,150 | 18 | 2,290 | 200,000 | 184 | 4,642 | 51%/49% | |
| Erik Sneve, | 2021 | 2,027 | 17 | 2,559 | 100,000 | 176 | 4,779 | 46%/54% |
| CEO | 2020 | 2,059 | 15 | 2,775 | 50,000 | 130 | 4,979 | 44%/56% |
| 2019* | 1,727 | 0 | 0 | 400,000 | 0 | 1,727 | 100%/0% |
* Employment with Magnora ASA started 2 January 2019 as a consultant and assumed CEO role 16 April 2019. Actual salary amount was 1,295,000 and has been adjusted to reflect what it would have been for the full year.
| Fixed remuneration |
Variable remuneration |
|||||||
|---|---|---|---|---|---|---|---|---|
| NOK thousand | Year | Salary | Other benefits |
Bonus | Options | Pension | Total Remuneration |
Proportion fixed/variable |
| 2022 | 1,652 | 18 | 147 | 50,000 | 184 | 2,001 | 93%/7% | |
| Bård Olsen, | 2021 | 1,538 | 17 | 284 | 50,000 | 168 | 2,007 | 86%/14% |
| CFO | 2020 | 1,250 | 15 | 216 | 50,000 | 129 | 1,610 | 87%/13% |
| 2019* | 1,100 | 0 | 0 | 0 | 0 | 1,100 | 100%/0% |
* Employment with Magnora ASA started 22 May 2019 with a three-month transition period with the former CFO and the two employees in the Finance Department that also were leaving the Company 31 August 2019. Position was not a full- time position in 2019. Actual salary amount was 381,000 and has been adjusted to reflect what it would have been for the full year if engaged full-time.
None.
The table(s) in Section 3.2 below contains information on the number of shares granted or offered to the Directors, whilst the table(s) in Section 3.3 below contains information on the number of share options granted or offered for the reported financial year. In both of the tables, the main conditions for the exercise of the rights including the exercise price and date and any change thereof appear.
None.
| The main conditions of share options plans | |||||||
|---|---|---|---|---|---|---|---|
| Name & position |
Specification of plan |
Performance period |
Award date |
Vesting date |
End of holding period |
Exercise period |
Strike price of share |
| 2019 Magnora ASA Share Option Plan |
21/5/2019 - 21/5/2020 |
21/5/2019 | 21/5/2020 | 21/5/2025 | 21/5/2020 - 21/5/2025 |
6.5 | |
| Erik Sneve, | Magnora ASA Share Option Plan |
1/4/2020 - 1/4/2023 |
1/4/2020 | 1/4/2023 | 1/4/2028 | 1/4/2023 - 1/4/2028 |
8 |
| CEO | Magnora ASA Share Option Plan |
2/6/2021 - 2/6/2024 |
2/6/2021 | 2/6/2024 | 2/6/2029 | 2/6/2024 - 2/6/2029 |
25.68 |
| Magnora ASA Share Option Plan |
27/11/2022 - 27/11/2025 |
27/11/2022 | 27/11/2025 | 27/11/2030 | 27/11/2025 - 27/11/2030 |
23.70 | |
| Information regarding the reported financial year | |||||
|---|---|---|---|---|---|
| Opening balance | During the year | Closing balance | |||
| Name & position |
Share options awarded at the beginning of the year |
Share options awarded |
Share options vested |
Share options subject to a performance condition |
Share options awarded and unvested |
| 400,000 | 400,000 | ||||
| Erik Sneve, | 50,000 | 50,000 | |||
| CEO | 100,000 | 100,000 | |||
| 200,000 | 200,000 | ||||
| Total | 550,000 | 200,000 | 400,000 | 350,000 |
| The main conditions of share options plans | |||||||
|---|---|---|---|---|---|---|---|
| Name & position |
Specification of plan |
Performance period |
Award date |
Vesting date |
End of holding period |
Exercise period |
Strike price of share |
| Magnora ASA Share Option Plan |
1/4/2020 - 1/4/2023 |
1/4/2020 | 1/4/2023 | 1/4/2028 | 1/4/2023 - 1/4/2028 |
8 | |
| Bård Olsen, | Magnora ASA Share Option Plan |
25/8/2020 - 25/8/2023 |
25/8/2020 | 25/8/2023 | 25/8/2028 | 25/8/2023 - 25/8/2028 |
9.65 |
| CFO | Magnora ASA Share Option Plan |
9/4/2021 - 9/4/2024 |
9/4/2021 | 9/4/2024 | 9/4/2029 | 9/4/2024 - 9/4/2029 |
26.47 |
| Magnora ASA Share Option Plan |
27/12/2022 - 27/12/2025 |
27/12/2022 | 27/12/2025 | 27/12/2030 | 27/12/2025 - 27/12/2030 |
22.22 |
| Total | ||
|---|---|---|
| Information regarding the reported financial year | |||||
|---|---|---|---|---|---|
| Opening balance During the year |
Closing balance | ||||
| Name & position |
Share options awarded at the Share options beginning of awarded the year |
Share options vested |
Share options subject to a performance condition |
Share options awarded and unvested |
|
| 25,000 | 25,000 | ||||
| Bård | 25,000 | 25,000 | |||
| Olsen, CFO |
50,000 | 50,000 | |||
| 50,000 | 50,000 | ||||
| Total | 100,000 | 50,000 | 150,000 |
No variable remuneration was reclaimed during 2022.
Please find below an explanation on how the total remuneration complies with the adopted remuneration policy, including how it contributes to the long-term performance of the Company and information on how the performance criteria were applied.
The Group has grown during 2022 with the increased ownerships in Evolar AB and Kustvind AB, and the acquisition of the South African company, AGV, and further development of the projects in South Africa. The successful private placement in September 2022 was key to secure the needed funding to implement the strategy approved by the board. In addition to further expanding into South Africa, the Group expanded into UK in the solar PV and battery segments. Senior Management has made specific deliverables in these achievements that has been instrumental for the Group achieving its goals.
The investments made since the Group changed from the Oil and Gas sector to the renewable energy sector, each investment has been selected to form a diversified portfolio of companies and projects. The diversification has been a key selection criterion to secure long-term growth of the Group and reduce its sensitivity to the performance of each individual investment.
| Information of performance targets | |||||
|---|---|---|---|---|---|
| Name and position |
Description of the performance criteria and type of applicable remuneration |
Relative weighting of the performance criteria |
a) Minimum target / threshold performance and b) Corresponding award |
a) Minimum target / threshold performance and b) Corresponding award |
a) Measured performance and b) actual award outcome |
| Criterion A: Manage and develop Group |
10% | Increase team to match increase in investments |
Achieved – 10% awarded |
||
| Criterion B: Financial performance of Group |
15% | Maintain cost focus and ensure adequate funding |
Achieved – 15% awarded |
||
| Erik Sneve, CEO |
Criterion C: Manage and develop investment portfolio |
30% | Ensure progress according to business plan agreed at time of investment |
Achieved – 30% awarded |
|
| Criterion D: Identify and close new investments |
25% | 2-3 investments closed per year |
Achieved – 25% awarded |
||
| Criterion E: Share performance vs peers |
20% | Match % change in share price with peers |
Achieved – 13% awarded |
||
| Criterion A: development of finance function and support Group funding |
30% | Develop finance function as Group grows |
Achieved – 30% awarded |
||
| Bård Olsen, CFO |
Criterion B: Group governance and internal control in portfolio companies |
30% | Follow up portfolio companies to ensure key controls are implemented |
Achieved – 30% awarded |
|
| Criterion C: Quality of Group financial reporting |
40% | Ensure accurate financial reporting |
Achieved – 40% awarded |
No deviations from the remuneration policy or the procedure for the implementation of the remuneration policy has been applied during 2022.
The table below in this Section 7 contains information on the annual change of remuneration of each individual Director, of the performance of the Group and average remuneration on a full-time equivalent basis of employees of the Company other than Directors since the Group was reorganised in 2019.
| Annual change | 2020 VS 2019 | 2021 VS 2020 | 2022 VS 2021 | Information regarding the recent financial year (RFY) |
|---|---|---|---|---|
| Director's remuneration | ||||
| Erik Sneve, CEO | 4,979,000 VS 1,727,000 | 4,779,000 VS 4,979,000 | 4,642,000 VS 4,779,000 |
4,642,000 |
| Bård Olsen, CFO | 1,610,000 VS 1,100,000 | 2,007,000 VS 1,610,000 | 2,001,000 VS 2,007,000 |
2,001,000 |
| Company performance | ||||
| Financial metric A | Successful investments portfolio companies: 3 VS 0 |
5 VS 3 | 4 VS 5 | |
| Financial metric B | Income from investments in marketable securities: 20.2 MNOK VS 1.5 MNOK |
4.9 MNOK VS 20.2 MNOK | 0.6 MNOK (6.4 MNOK distribution from Helios) VS 4.9 MNOK |
|
| Financial metric C** | MGN share price: 27.4 VS 7 |
18.78 VS 27.4 | 21.2 VS 18.78 | |
| Non-financial metric D* | Developing organization: 4 VS 2 |
Developing organization: 10 VS 4 |
10 VS 10 | |
| Average remuneration on a full-time equivalent basis of employees |
||||
| Employees of the Group | N/A – no other employees in Group until 2021 |
N/A – no other employees in Group until 2021 |
8 VS 6 |
* Reflects full-time resources of which some are hired-in consultants.
** Share price as of 31 December.
The Board of Directors of Magnora ASA
Torstein Sanness
M A G N O R A A S A | A N N U A L R E P O R T 2 0 2 2 86
Chairman Hilde Ådland Board member
John Hamilton Board member
Erik Sneve CEO
Statsautoriserte revisorer Ernst & Young AS
Markens gate 9, 4610 Kristiansand Postboks 184, 4662 Kristiansand
Foretaksregisteret: NO 976 389 387 MVA Tlf: +47 24 00 24 00
www.ey.no Medlemmer av Den norske Revisorforening
To the General Meeting of Magnora ASA
We have performed an assurance engagement to obtain reasonable assurance that Magnora ASA's report on salary and other remuneration to directors (the remuneration report) for the financial year ended 31 December 2022 has been prepared in accordance with section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation.
In our opinion, the remuneration report has been prepared, in all material respects, in accordance with section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation.
The board of directors is responsible for the preparation of the remuneration report and that it contains the information required in section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation and for such internal control as the board of directors determines is necessary for the preparation of a remuneration report that is free from material misstatements, whether due to fraud or error.
We are independent of the company in accordance with the requirements of the relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. Our firm applies International Standard on Quality Control 1 (ISQC 1) and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
Our responsibility is to express an opinion on whether the remuneration report contains the information required in section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation and that the information in the remuneration report is free from material misstatements. We conducted our work in accordance with the International Standard for Assurance Engagements (ISAE) 3000 – "Assurance engagements other than audits or reviews of historical financial information".
We obtained an understanding of the remuneration policy approved by the general meeting. Our procedures included obtaining an understanding of the internal control relevant to the preparation of the remuneration report in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. Further we performed procedures to ensure completeness and accuracy of the information provided in the remuneration report, including whether it contains the information required by the law and accompanying regulation. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Kristiansand, 20 March 2023 ERNST & YOUNG AS
The auditor's assurance report is signed electronically
Espen Fyllingen State Authorised Public Accountant (Norway)
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We confirm, to the best of our knowledge, that the financial statements for the period January 1 to December 31, 2022, have been prepared in accordance with current applicable accounting standards, and give a true and fair view of the assets, liabilities, financial position and profit and loss of Magnora ASA as well as the consolidated group.
We also confirm that the Board of Directors' Report includes a true and fair review of the development and performance of the business and the position of the Company and the Group, together with a description of the principal risks and uncertainties facing the Company and the Group.
Torstein Sanness
Chairman Hilde Ådland Board member
John Hamilton Board member
Erik Sneve CEO
Magnora ASA Karenslyst Allé 6, 0277 Oslo, Norway www.magnoraasa.com
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