Quarterly Report • Aug 20, 2014
Quarterly Report
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Semi-annual Report H1 2014
Badger Explorer ASA (BXPL) has signed a Co-operation Agreement concerning a potential long term agreement with CNPC DR, whereby CNPC DR will become a sponsoring partner in the development of the Badger Explorer autonomous drilling tool.
By entering this agreement, CNPC DR will be a partner on equal terms with the existing four partners, Statoil, ExxonMobil, Chevron and Wintershall, in the current Badger Explorer Demonstrator Program. In addition, CNPC DR has, according to the Cooperation Agreement, indicated potential support for the next phase of development as a sponsoring partner in the Badger Explorer Development Program.
CNPC DR has also expressed considerable interest in assisting in the planning and execution of the first Badger Explorer field pilots.
To become on equal terms with the existing partners in the Demonstrator Program, CNPC DR will pay a step-up fee equal to the financial contribution by each of the current 4 partners.
The amount of sponsorship grants each of the participants will release in support of the Badger Explorer Development Program through the period 2015-2017 has been proposed but is not yet fully agreed.
BXPL has to date reached all goals set for completing the Demonstrator Program (completion of the second generation pilot tool) around year end 2014. BXPL will at that time launch the final stage of the Development Program leading up to a commercial Badger Explorer Tool.
During the 2nd quarter of 2014, Badger Explorer ASA:
The main technical activities are discussed in more details below.
Preparations for Milestone 5 have been the main priority of the Demonstrator program, including design, manufacturing and assembly of a custom test jig. The test jig allows the entire tool to be tested in a multi lithographic environment at Badger Explorer's facilities. The test jig is customizable and will play an important role in qualifying current and new solutions in the tool.
Several new patent applications have been submitted for core technologies, most of which will be implemented in the next generation tool.
Since passing Milestone 4, all the modules in the tool have been put together as sub-systems and finally as one complete Badger Explorer tool. The systems tests have been encouraging and are in their final stages.
Milestone 5 is scheduled this autumn, followed by Milestone 6 that includes a full report of the test results and tool performance.
The revised Milestone 5 will include:
The revised Milestone 6 will include:
All the BXPL design, manufacturing and testing procedures are based on DNV Recommended Practice DNV-RP-A203.
In parallel with the preparations for Milestone 5, the work on planning the Development Program has continued. The Development Program will address the main challenges identified in the previous programs and aim to deliver a commercial tool at the end of the Program.
A technical workshop was held in June where Badger Explorer presented the Development Program to all the partners. Detailed discussions regarding the main challenges, risks and solutions were held; hence Badger Explorer have a good understanding of the partners' expectations and requirements for the Development Program, including operational requirements, logging requirements and schedules.
Badger Explorer is currently summarizing the conclusions into a scope of work document that will be presented to the partners this autumn. During the latest part of the Demonstrator Program, BXPL identified a few technical improvement opportunities. They will be addressed in the R&D projects and later integrated with the scope of work of the Badger Explorer Development Program.
The Badger Demonstrator tool will be used further to identify and mitigate technology risks, understand better how the overall system works and gain hands on operational experience with the tool.
The goal of the Development Program is to design and manufacture a third generation Badger tool, incorporating all lessons learned from the Demonstrator Program and including the outcome from the ongoing R&D activities.
a The Development Program will be launched late 2014 and run through 2017. The plan is to manufacture two Badger tools during the Development Program: run the first Field Test in 2015 and the second in 2016. Both Field Tests will be burial tests without recovery of the tools. This schedule will depend on the final program which will be agreed with our partners.
BXPL has initiated discussions with the current partners and CNPC DR regarding how the development of the Badger technology can be accelerated further and how funding for the Development Program and the Field Pilot Program can be achieved.
The definition of the scope of work, timeline and budget are essential for these discussions.
Badger Explorer ASA had 770 shareholders on 30th June 2014. Norwegian entities and individuals held 65.2% of the outstanding shares and the 20 largest shareholders held 71.6% of the outstanding shares.
The staff of Badger Explorer ASA consisted of 12 full-time employees as of 30th June 2014, compared to 13 employees as of 30th June 2013. Some of the roles, previously held by full-time employees, are currently fulfilled by consultants and contractors.
As of 30th June 2014, Badger Explorer ASA had 12 permanent employees, of whom 3 are female. In order to succeed, the Group is dependent upon engaging the best competence available; hence competence must be sourced where it is available. However, the Company emphasizes the importance of maintaining a balance and distribution of gender, equal compensation for similar work and equal opportunities for everyone in the development and running of the Company. The staff is multinational representing four nationalities.
The Board of Directors has five members of whom three are male and two are female.
Revenues for Q2 2014 were NOK 0.00 and NOK 0.00 for H1 2014, compared to NOK 46,869 for Q2 2013 and NOK 70,268 for H1 2013.
Operating expenses for Q2 2014 were NOK 5.254 million and NOK 10.059 million for H1 2014, compared to NOK 5.695 million for Q2 2013 and NOK 11.568 million for H1 2013.
EBITDA for Q2 2014 was NOK –5.254 million and NOK –10.059 million for H1 2014, compared to NOK -5.648 million for Q2 2013 and NOK –11.498 million in H1 2013.
Total development costs of the Badger Explorer project in Q2 2014 were NOK 6.271 million, of which NOK 5.337 million was capitalized. For H1 2014, development costs were NOK 15.248 million, of which NOK 13.213 million was capitalized. Total development costs of the Badger Explorer project in Q2 2013 were NOK 7.879 million, of which NOK 7.187 million was capitalized. For H1 2013, total development costs were NOK 13.856 million, of which NOK 12.418 million was capitalized.
Capitalized public grants for the Badger Explorer project were NOK 1.254 million for Q2 2014 and NOK 4.256 million for H1 2014,
compared to NOK 5.992 million for Q2 2013 and NOK 13.580 million for H1 2013. All public grants are booked as deductions to the capitalized project costs.
Earnings per share amounted to NOK –0.32 per share for Q2 2014 and NOK –0.60 for H1 2014, compared to NOK -0.45 per share for Q2 2013 and NOK – 0.73 per share for H1 2013.
The cash position at BXPL was NOK 2.425 million as of 30th June 2014, compared to NOK 18.887 million as of 30th June 2013. As of 30th June 2014, Badger Explorer ASA had a net equity of NOK 90.800 million (equity ratio of 60.1%), compared to NOK 112.636 million as of 30th June 2013 (equity ratio of 72.0%).
Net cash flow arising from the operating activities in the continuing operations for Q2 2014 was NOK –3.918 million and NOK -12.930 million for H1 2014, compared to NOK –4.733 million for Q2 2013 and NOK -10.792 million for H1 2013. Net cash outflow includes payments to vendors for goods and services received.
Net cash flow arising from the investment activities in the continuing operations for Q2 2014 was NOK –5.337 million and NOK –13.213 million for H1 2014, compared to NOK –7.014 million for Q2 2013 and NOK -12.245 million for H1 2013. Net cash outflow includes all the development costs related to the Badger Explorer Development project, which are eligible for capitalization.
Net cash flow arising from the financing activities in the continuing operations for Q2 2014 was NOK 1.305 million and NOK 3.625 million for H1 2014, compared to NOK 17.287 million for Q2 2013 and NOK 28.515 million for H1 2013. Net cash inflow includes contributions from the industry partners and public grants received from funding institutions. Net cash inflow also includes a bad debt repayment from US Seismic System Inc. (USSI) which had been written off in full in accordance with the Completion Accounts requirement in the Share Purchase Agreement. Due to contributions and public grants from continuing operations net cash flow from financing activities of Badger Explorer ASA was positive.
Total net changes in cash flow from continuing operations for Q2 2014 were NOK –7.949 million and NOK -22.519 million for H1 2014, compared to NOK 5.268 million in Q2 2013 and NOK 5.478 for H1 2013.
In June 2013, BXPL divested 70% of its interest in Severn Subsea Technologies Ltd. Consequently, revenues and operating expenses from continuing operations exclude the disposed business, which have been reclassified to discontinued operations for all periods presented. Any gain or loss from disposal of the business, together with the results of these operations until the date of disposal is reported separately as discontinued operations.
| Quarters | Year to date | |||||
|---|---|---|---|---|---|---|
| CONSOLIDATED SUMMARY (Unaudited figures in NOK 1000) | Q2 2014 | Q1 2014 | Q2 2013 | 30.06.2014 | 30.06.2013 | |
| Revenues | 0 | 0 | 47 | 0 | 70 | |
| Operating expenses | 5 254 | 4 804 | 5 695 | 10 059 | 11 568 | |
| EBITDA | -5 254 | -4 804 | -5 648 | -10 059 | -11 498 | |
| Earnings per share | -0.32 | -0.29 | -0.45 | -0.60 | -0.73 | |
| Projects development costs | 6 271 | 8 977 | 7 879 | 15 248 | 13 856 | |
| Public grants for projects development | 1 254 | 3 003 | 5 992 | 4 256 | 13 580 | |
| Capitalization of development costs and public grants | 4 083 | 4 874 | 1 195 | 8 957 | -1 162 |
| • | Demonstrator partner funding | NOK 6.980 million (NOK 4.335 million for Milestone 5 will be received in November |
|---|---|---|
| 2014; NOK 2.645 million for Milestone 6 in January 2015) | ||
| • | Skattefunn | NOK 1.554 million (October 2014) |
| • | Research Council of Norway | NOK 9.343 million (NOK 3.432 million received in H1 2014; NOK 5.911 million to be released during H2 2014) |
| • | Innovation Norway | NOK 6.0 million (July, September & November 2014) |
| • | CNPC DR | The step-up payment as new partner in the Demonstrator Program to be released during H2 2014. |
| The step-up payment equals the contribution given by each of the four other sponsors. |
||
As a contingency, BXPL has established an overdraft facility with its Norwegian bank Sparebanken Vest.
Based on the above, the cash need for the planned activities for 2014 is covered.
For a company dependent on ground breaking technological development, it is of the utmost importance to continuously monitor and analyze the risks, and manage them in a professional manner. BXPL continuously works to reduce the risk elements that could influence its success, through steady progress in the development project, securing competence, skills and capacities, securing cost control and cash management, and through funding and robust partnerships.
The risk elements highlighted in the Annual Report for 2013 were:
The elements listed above are still regarded as the main risk factors for the Company, although their relative priorities have been revised. To support and secure the ongoing technical development plan, BXPL has implemented processes to monitor cash tightly. Administrative overhead have been reduced by more than 40% since 2011, through a combination of cost savings and better cash management.
Cost efficient solutions are sought on technical deliveries. Furthermore, concrete steps have been taken during H1 2014 to secure more funding and to release such cash. The most important steps implemented:
The cash position has improved, but cash monitoring will remain an important task.
The Board of Directors is very pleased that a new and the fifth partner have joined the Demonstrator Program. The Board is convinced that CNPC DR will be a strong contributor to secure future commercial operations and sale of Badger Explorer services. The agreement with CNPC DR is regarded as a major step forward for BXPL.
The main focus for the BXPL organization during H2 2014 will be to finalize the Demonstrator Program, secure participation from the partners in the Development Program and kick off this program.
The Board of Directors is confident that the remaining Milestones of the Badger Explorer Demonstrator Program will be delivered as planned by the end of 2014. Furthermore, the Board is optimistic regarding our partners` continued support of the Badger Explorer Development Program which will reduce the time to market for the commercial Badger Explorer tool.
Stavanger, 20th August 2014 The Board of Directors Badger Explorer ASA
The Board of Directors and the CEO confirm that to the best of their knowledge the condensed set of financial statements (unaudited) for the first half year of 2014, which have been prepared in accordance with IAS 34 – Interim Financial Reporting, gives a true and fair view on the Group's consolidated assets, liabilities, financial position and results of the operation for the period, and that the interim management report includes a fair review of the information required under the Norwegian Securities Trading Act section 5-6 fourth paragraph.
Stavanger, 20th August 2014 The Board of Directors Badger Explorer ASA
Badger Explorer ASA is a public limited company registered in Norway and listed on the Oslo Stock Exchange (Oslo Axess list). The Company's head office is located at Forusskogen 1, 4033 Stavanger, Norway.
The consolidated financial statements of Badger Explorer ASA (the BXPL Group) have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
The consolidated financial statements have been prepared on an historical cost basis, except for investment in the associate Severn Subsea Technologies Ltd. (former Calidus Engineering Ltd.) which is initially recognised at fair value at the effective date of the disposal of the shares.
Severn Subsea Technologies Ltd. has been consolidated with the parent company Badger Explorer ASA starting from December 1, 2007. Intercompany sales and purchases, intercompany receivables and payables, intercompany investments and share capital were eliminated. BXPL sold 70% of shares of its subsidiary Severn Subsea Technologies Ltd. for a net amount of NOK 7.189 million with a loss of NOK 1.120 million in the BXPL Group on 30 June, 2013. Upon settling the completion accounts, BXPL realized a further loss of NOK 838,350. The results of the subsidiary disposed were included in the consolidated statement of income up to the effective date of the disposal. As of 30 June 2014, the BXPL Group consists of Badger Explorer ASA.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. It the BXPL Group losses control over a subsidiary, it:
Non-controlling interest represent the portions of profit and loss and net assets not held by the BXPL Group are presented separately in the consolidated income statement and within equity in the consolidated statement of financial position, separately from parent shareholder's equity.
The interim consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the consolidated financial statements as of 31 December 2013.
The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the consolidated financial statements as of 31 December 2013.
The BXPL Group's consolidated financial statements are presented in NOK. The consolidated income statement in foreign subsidiary is translated into NOK using the average exchange rate for the period (month). Assets and liabilities in foreign subsidiary, including goodwill and adjustments of fair value of identifiable assets and liabilities arising on the acquisition of subsidiary, are translated into NOK using exchange rate at the balance sheet date. The exchange differences arising from the translation are recognised directly as other comprehensive income in equity.
Financial assets within the scope IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables or available-for-sale financial assets, as appropriate.
Financial assets at fair value through profit and loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit and loss.
Financial liabilities within the scope IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, as appropriate.
Financial liabilities are recognised initially at fair value and in the case of loans and borrowings, directly attributable transaction costs are added.
Financial liabilities include trade and other payables, loans and borrowings.
Inventories are valued at the lower of cost and net realisable value.
Cash includes cash in hand and at bank.
Accounts receivable are recognised in the consolidated statement of financial position at nominal value less provisions for doubtful debts.
Fixed assets are carried at cost less accumulated depreciations and impairment losses.
The gross carrying amount of fixed assets is the purchase price, including duties/taxes and direct acquisition costs relating to making the asset ready for use.
Depreciation is calculated using the straight-line method.
Intangible assets are capitalised if it is probable that the expected future financial benefits referred to the asset will accrue to the Company, and that the cost can be calculated in a reliable matter.
a Development expenditures related to the Badger Explorer development project are recognised as an intangible asset when the BXPL Group can demonstrate:
When all the above criteria are met, the cost related to the development starts to be recognised in the consolidated statement of financial position.
Costs that have been charged as expenses in previous accounting periods are not recognised in the consolidated statement of financial position.
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.
Revenue is recognised to the extent when it is probable that the economic benefit will flow to the BXPL Group and the revenue can be reliably measured, regardless of when the payment is being made.
Interest income is recognised in the consolidated income statement based on the effective interest method as they are earned.
Public grants are recognised where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grants relate to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the cost it intends to compensate. Where the costs are related to a development project and capitalised, the belonging grants are capitalised together with the cost.
Contributions from partners are recognised in the consolidated statement of financial position under long term liabilities as the contributions are subject to repayment ref note 14 in the BXPL Group annual accounts.
The options granted in Q3 2009 were replaced with new options on 17 February 2014. The Board of Directors of BXPL implemented a new share option program for BXPL employees offering a total of 213,000 share options at a strike price of NOK 7.51, corresponding to 1.2% of all outstanding BXPL shares. The options granted will be vested in tranches and can be exercised at the earliest 12 months subsequent to the date of grant and thereafter at up to 2 occasions during each calendar year, between three and ten days after publications of the Company's Q1 and Q3 quarterly results. All options were "out of the money" as of 30 June 2014.
The consolidated statement of cash flow is prepared in accordance with the indirect method and based upon IAS 7.
| Quarters | Year to date | Year End | |||||
|---|---|---|---|---|---|---|---|
| Unaudited figures in NOK 1000 | Q2 2014 | Q1 2014 | Q2 2013 | Note | 30.06.2014 30.06.2013 | 31.12.2013 | |
| Revenues | |||||||
| Other Income | 0 | 0 | 47 | 0 | 70 | 70 | |
| Public grants | 1 254 | 3 003 | 5 992 | 1,2 | 4 256 | 13 580 | 22 375 |
| Capitalized public grants | -1 254 | -3 003 | -5 992 | 1,2 | -4 256 | -13 580 | -22 375 |
| Total Revenues | 0 | 0 | 47 | 0 | 70 | 70 | |
| Operating Expenses | |||||||
| External services for development project | 3 467 | 5 676 | 5 804 | 9 143 | 9 542 | 24 991 | |
| Payroll and related costs | 3 899 | 4 267 | 4 567 | 8 166 | 9 281 | 14 909 | |
| Other operating expenses | 3 225 | 2 738 | 2 511 | 5 963 | 5 163 | 10 729 | |
| Capitalized development costs | -5 337 | -7 876 | -7 187 | -13 213 | -12 418 | -31 523 | |
| Total Operating Expenses | 5 254 | 4 804 | 5 695 | 10 059 | 11 568 | 19 105 | |
| EBITDA | -5 254 | -4 804 | -5 648 | -10 059 | -11 498 | -19 036 | |
| Depreciation | 71 | 90 | 131 | 161 | 267 | 451 | |
| Operating profit (loss) | -5 325 | -4 894 | -5 779 | -10 220 | -11 765 | -19 486 | |
| Net financial income (loss) | -535 | -441 | 92 | 3,10 | -976 | 191 | 15 |
| Profit (loss) before taxes from continuing operations |
-5 860 | -5 335 | -5 687 | -11 196 | -11 575 | -19 471 | |
| Tax on ordinary result from continuing operations | 0 | 0 | 0 | 0 | 0 | 0 | |
| Net profit (loss) from continuing operations | -5 860 | -5 335 | -5 687 | -11 196 | -11 575 | -19 471 | |
| Discontinued operations: | |||||||
| Profit (loss) after tax for the period from discontinued operations |
0 | 0 | -4 296 | 10 | 0 | -3 506 | -4 344 |
| Net profit (loss) | -5 860 | -5 335 | -9 982 | -11 196 | -15 081 | -23 815 | |
| Profit (loss) attributable to non-controlling interests |
0 | 0 | -143 | 0 | 54 | 54 | |
| Profit (loss) attributable to equity holders of the parent |
-5 860 | -5 335 | -9 839 | -11 196 | -15 135 | -23 869 | |
| Earnings per share | -0.32 | -0.29 | -0.45 | -0.60 | -0.73 | -1.31 | |
| Earnings per share diluted | -0.32 | -0.29 | -0.45 | -0.60 | -0.73 | -1.31 |
| ASSETS (Unaudited figures in NOK 1000) | 30.06.2014 | 31.03.2014 | 30.06.2013 Note | 31.12.2013 | |
|---|---|---|---|---|---|
| NON-CURRENT ASSETS | |||||
| Capitalized development costs | 139 742 | 135 659 | 120 475 | 2,6 | 130 785 |
| Patent rights | 387 | 387 | 387 | 387 | |
| Goodwill | 0 | 0 | 0 3,10 | 0 | |
| Total intangible assets | 140 129 | 136 046 | 120 862 | 131 172 | |
| Property, plant & equipment | 441 | 483 | 738 | 10 | 573 |
| Total tangible assets | 441 | 483 | 738 | 573 | |
| Investments in associates | 1 503 | 2 214 | 3 081 3,10 | 2 701 | |
| Total investments in associates | 1 503 | 2 214 | 3 081 a |
2 701 | |
| TOTAL NON-CURRENT ASSETS | 142 073 | 138 742 | 124 681 | 134 446 | |
| CURRENT ASSETS | |||||
| Accounts receivables | 0 | 0 | 0 | 3,8 | 0 |
| Other receivables | 6 526 | 7 350 | 12 848 3,10 | 6 920 | |
| Total receivables | 6 526 | 7 350 | 12 848 | 6 920 | |
| Cash and cash equivalents | 2 425 | 10 374 | 18 887 3,8,10 | 24 943 | |
| TOTAL CURRENT ASSETS | 8 951 | 17 724 | 31 735 | 31 863 | |
| TOTAL ASSETS | 151 024 | 156 466 | 156 416 | 166 309 |
| EQUITY AND LIABILITIES (Unaudited figures in NOK 1000) | 30.06.2014 | 31.03.2014 | 30.06.2013 Note | 31.12.2013 | |
|---|---|---|---|---|---|
| EQUITY | |||||
| Share capital | 2 317 | 2 317 | 2 317 | 3 | 2 317 |
| Share premium | 218 070 | 218 070 | 218 070 | 4 | 218 070 |
| Other paid in capital | 3 333 | 3 122 | 5 240 | 3 | 2 966 |
| Total paid in equity | 223 720 | 223 509 | 225 627 | 223 353 | |
| Retained earnings | -132 921 | -127 060 | -112 991 | -121 725 | |
| Total retained earnings | -132 921 | -127 060 | -112 991 | -121 725 | |
| TOTAL EQUITY | 90 800 | 96 449 | 112 636 | 101 628 | |
| LIABILITIES | |||||
| Capitalized grants | 53 920 | 53 920 | 38 720 | 6 | 53 920 |
| Total non-current liabilities | 53 920 | 53 920 | 38 720 | 53 920 | |
| Accounts payables | 4 541 | 3 891 | 4 290 | 3,8 | 4 401 |
| Public duties payables | 1 221 | 756 | 89 | 3 104 | |
| Other short term liabilities | 542 | 1 451 | 681 | 3 255 | |
| Total current liabilities | 6 304 | 6 098 | 5 060 | 10 761 | |
| TOTAL LIABILITIES | 60 224 | 60 018 | 43 780 | 64 681 | |
| TOTAL EQUITY AND LIABILITIES | 151 024 | 156 466 | 156 416 | 166 309 |
| Quarters | Year to date | Year end | |||||
|---|---|---|---|---|---|---|---|
| Unaudited figures in NOK 1000 | Q2 2014 | Q1 2014 | Q2 2013 Note | 30.06.2014 | 30.06.2013 | 31.12.2013 | |
| Contribution from operations* | -5 043 | -4 648 | -5 262 | -9 691 | -10 785 | -20 597 | |
| Change in accounts receivables and accounts payables |
651 | -511 | -3 864 | 3,8 | 140 | -7 289 | 2 487 |
| Change in other receivables and payables | 474 | -3 854 | 4 393 | -3 380 | 7 282 | 1 079 | |
| Net cash flow from operating activities | -3 918 | -9 012 | -4 733 | -12 930 | -10 792 | -17 032 | |
| Capitalization of development cost | -5 337 | -7 876 | -7 187 | 2 | -13 213 | -12 418 | -31 523 |
| Sale of shares in subsidiaries | 0 | 0 | 173 | 3 | 0 | 173 | 5 442 |
| Net cash flow from investment activities | -5 337 | -7 876 | -7 014 | -13 213 | -12 245 | -26 081 | |
| Public grants | 1 159 | 2 274 | 7 274 | 1 | 3 432 | 13 797 | 20 343 |
| Contribution from industry partners | 0 | 0 | 10 020 | 6 | 0 | 14 720 | 29 920 |
| Interest received | 5 | 118 | 29 | 123 | 59 | 387 | |
| Interest paid | -35 | -72 | -35 | -107 | -61 | -3 | |
| Income from investments in associates | 176 | 0 | 0 | 10 | 176 | 0 | 0 |
| Net cash flow from financing activities | 1 305 | 2 319 | 17 287 | 3 625 | 28 515 | 50 647 | |
| Total net changes in cash flow - continuing operations |
-7 949 | -14 569 | 5 268 | -22 519 | 5 478 | 7 535 | |
| Total net changes in cash flow - discontinued operations |
0 | 0 | -3 239 | 10 | 0 | -4 208 | -199 |
| Net foreign translation differences | 0 | 0 | 795 | 0 | 9 | 0 | |
| Cash and cash equivalents beginning of period | 10 374 | 24 943 | 16 063 | 24 943 | 17 608 | 17 608 | |
| Cash and cash equivalents end of period | 2 425 | 10 374 | 18 887 | 2 425 | 18 887 | 24 943 | |
| Profit (loss) attributable to equity holders of the Company |
-5 860 | -5 335 | -5 489 | -11 196 | -11 575 | -19 471 | |
| Profit (loss) attributable to non-controlling interests |
0 | 0 | -143 | 0 | 54 | 54 | |
| Employee options | 211 | 156 | 331 | 5 | 368 | 659 | -1 616 |
| Depreciation | 71 | 90 | 131 | 161 | 267 | 451 | |
| Financial income | -34 | -118 | -127 | -152 | -252 | -735 | |
| Financial expenses | 35 | 72 | 35 | 107 | 61 | 339 | |
| Share of (profit) / loss of associates | 711 | 487 | 0 3,10 | 1 198 | 0 | 380 | |
| Income from investments in associates | -176 | 0 | 0 | 10 | -176 | 0 | 0 |
| *Contribution from operations before tax | -5 043 | -4 648 | -5 262 | -9 691 | -10 785 | -20 597 |
Unaudited figures in NOK 1000
| Option plan payment Equity as of 30.06.2014 |
5 | 2 317 | 218 070 | 368 3 333 |
-132 921 | 0 | 368 90 800 |
|---|---|---|---|---|---|---|---|
| Total comprehensive income | -11 196 | 0 | -11 196 | ||||
| Equity as of 31.12.2013 | 2 317 | 218 070 | 2 966 | -121 725 | 0 | 101 628 | |
| Note | Share capital |
Share premium |
Other paid in capital |
Retained earnings |
Non controlling interest |
Total equity |
Unaudited figures in NOK 1000
| Quarters | Year to date | Year end | ||||
|---|---|---|---|---|---|---|
| Total comprehensive income | Q2 2014 | Q1 2014 | Q2 2013 | 30.06.2014 | 30.06.2013 | 31.12.2013 |
| Profit (loss) for the year (period) | -5 860 | -5 335 | -9 982 | -11 196 | -15 081 | -23 815 |
| Other comprehensive income - items that will later be reclassified to profit and loss |
||||||
| Translation differences | 0 | 0 | 0 | 0 | 0 | 1 934 |
| Comprehensive income at end of period | -5 860 | -5 335 | -9 982 | -11 196 | -15 081 | -21 881 |
| Quarters | Year to date | Year end | ||||
| Total comprehensive income attributable to: | Q2 2014 | Q1 2014 | Q2 2013 | 30.06.2014 | 30.06.2013 | 31.12.2013 |
| Equity holders of the parent | -5 860 | -5 335 | -9 839 | -11 196 | -15 135 | -21 935 |
| Non-controlling interest | 0 | 0 | -143 | 0 | 54 | 54 |
| Total comprehensive income | -5 860 | -5 335 | -9 982 | -11 196 | -15 081 | -21 881 |
From 28 June 2013, BXPL owns 30% of the shares in SST. The investment in SST is initially recognised at fair value at the effective date of the sale from 100% to 30% of the shares. Subsequent measurement of the remaining 30% of the shares is recognized according to equity method.
The BXPL Group has a significant influence but not a control, accompanying a shareholding of 30% of the voting rights.
The options granted in Q3 2009 were replaced with a new option program on 17 February 2014. The Board of Directors of BXPL implemented a new Share Options Program for BXPL employees offering a total of 213,000 share options at a strike price of NOK 7.51, corresponding to 1.2% of all outstanding BXPL shares. The options granted will be vested in tranches and can be exercised at the earliest 12 months subsequent to the date of grant and thereafter at up to 2 occasions during each calendar year, between three and ten days after publications of the Company's Q1 and Q3 quarterly results. All options were "out of the money" as of 30 June 2014.
The share options agreements are equity-based incentive compensation. The employee share options are recognised as an expense in the Consolidated Income Statement under "Payroll and related costs" and in the Consolidated Statement of Financial Position under "Other paid in capital". The options (incl. Employers' national insurance contributions) are recognised over the vesting period starting from September 2009. The share option value is based on a third party evaluation of the options at the grant date where the Black-Scholes model is used for calculation. The replacement of options is treated as a cancellation and re-pricing under IFRS 2.
Former CEO Mr. David Blacklaw was granted 370,579 share options in BXPL at a strike price of NOK 19 per share in September 2011. Mr. Blacklaw resigned as the Company's President and CEO on 15 September 2013. A total of 370,597 share options forfeited on 15 September 2013.
BXPL entered into a consultancy agreement with Mr. Blacklaw on 16 September 2013. Mr. Blacklaw was granted 100,000 share options to acquire shares in BXPL at a strike price of NOK 7.50. The share options can be exercised at any time from the date of grant until 31 December 2014. The share options were "out of the money" as of 30 June 2014.
On 16 September 2013, Mr. Steinar Bakke took on the position as President and CEO. Upon commencement of the employment, Mr. Bakke was granted 370,000 share options in BXPL at a strike price of NOK 6.50 per share. 185,000 share options will vest on the date of the publication of the Company's Q4 2015 report. A further 185,000 share options will vest on the date of the publication of the Company's Q2 2017 report. The exercise of fully vested share options is at the sole discretion of the option holder. All share options were "out of the money" as of 30 June 2014.
Milestone 3 was delivered and approved by the Steering Committee on 29 October 2013. Based on the delivery of Milestone 3, the BXPL Group received the following contributions in December 2013:
| Statoil Petroleum ASA | NOK 3 million (excl.VAT) |
|---|---|
| ExxonMobil | NOK 3 million (excl.VAT) |
| Wintershall Norge AS | NOK 4.6 million (excl.VAT) |
| Chevron Energy Technology Company | NOK 4.6 million |
No contributions were received during Q2 2014.
A total of NOK 53.920 million of this contribution shall be repaid to the partners by paying 5% royalty of all technology related sales in the future. This royalty is limited to 150% of received contribution. A total of NOK 4.975 million of the entire contribution of NOK 58.895 million is capitalized as a reduction of the development costs of which NOK 2.488 million was capitalized in Q1 2012. The contributions are recognised as capitalized grants in the Consolidated Statement of Financial Position.
Unaudited figures in NOK 1000
The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year:
| Transactions with related party | 30.06.2014 | 30.06.2013 |
|---|---|---|
| Purchases of services* | 2 190 | 0 |
* In June 2013, BXPL entered into a concultancy agreement with two of its largest shareholders - Dalvin Rådgivning AS and Nilsholmen AS. During H1 2014, payments totalling NOK 866,084 were made to Dalvin Rådgivning AS in respect of performed consultancy services and NOK 12,030 related to travel expenses. Mr. Gunnar Dolven, who is a CFO of BXPL, is a director of Dalvin Rådgivning AS. During H1 2014, Nilsholmen AS, a company owned by Mr. Kjell Markman who is a Sr.VP Business Development & Strategy of BXPL, received payments of NOK 1.128 million in respect of performed consultancy services and NOK 183,639 related to travel expenses.
| Transactions with Severn Subsea Technologies Ltd. | 30.06.2014 | 30.06.2013 |
|---|---|---|
| Accounts payable** | 111 | 972 |
| Purchased services** | 1 558 | 5 579 |
a **BXPL purchased engineering- and production services from SST. All purchased services from SST in 2014 are related to the BXPL's development project.
| Shares held by members of the Board of Directors and members of the Management Group |
30.06.2014 | 30.06.2013 |
|---|---|---|
| SEB Private Bank S.A. Luxembourg (Chairman of the Board - Marcus Hansson) | 565 000 | 565 000 |
| Dalvin Rådgivning AS (CFO - Gunnar Dolven) | 301 872 | 301 872 |
| Nilsholmen Investering AS (Sr. VP Business Development & Strategy - Kjell Markman) | 209 222 | 209 222 |
| President & CEO - Steinar Bakke | 30 000 | 0 |
| Nilsholmen AS (Sr. VP Business Development & Strategy - Kjell Markman) | 20 200 | 20 200 |
| Chairman of the Board - Marcus Hansson | 11 668 | 11 668 |
| CFO - Gunnar Dolven | 8 000 | 8 000 |
| Board member - Tone Kvåle | 5 000 | 5 000 |
| Ordinary shares | 1 150 962 | 1 120 962 |
| % of total shares | 6.2 % | 6.0 % |
As at 30 June 2014, the BXPL Group does not hold any financial instruments carried at fair value in the Consolidated Statement of Financial Position.
Unaudited figures in NOK 1000
On 28 June 2013, BXPL entered into the Share Purchase Agreement (Agreement) with Severn Glocon Group PLC (Severn Glocon), whereby BXPL sold 84 shares pursuant to the Agreement representing 70% of the issued share capital of its subsidiary Severn Subsea Technologies Ltd. (SST) for the equivalent of NOK 7.189 million with a loss of NOK 1.120 million in the Group. Upon settling the Completion Accounts, BXPL realized a further loss of NOK 838,350 accounted for in December 2013.
Under the Agreement, Severn Glocon will acquire another 15% of the shares in SST in 2015 and the remaining 15% in 2016 on an earn-out model basis. The share purchase price for the two future transactions is linked to SST's financial performance during 2014 and 2015 respectively. Under the terms of the Agreement, BXPL will continue to place orders with SST worth minimum of £750k over the next 2 years (£500k in 2014 and £250k in 2015).
The 36 shares retained by BXPL represent 30% of the issued share capital of SST. The investment in SST is initially recognised at fair value at the effective date of the sale from 100% to 30% of the shares. Subsequent measurement of the remaining 30% of the shares is accounted for using the equity method.
The BXPL Group has a significant influence but not a control, accompanying a shareholding of 30% of the voting rights.
Under the equity method, the Consolidated Statement of Financial Position includes the initial fair value of the investment, plus the share of the profit or loss generated by SST in the period the profit or loss occurs. Due to the changes in fair value, the carrying amount of the investment is subsequently increased or decreased. BXPL's share of profit or loss of the associate is recognised in the Consolidated Income Statement under "Net financial income (loss)" and in the Consolidated Statement of Cash Flow as a single line ("Share of (profit) / loss of associates").
| Carrying amount of 30% interest retained as of 28 June 2013 | 3 081 |
|---|---|
| Share of net result in the associate for the period 29 June - 31 December 2013 | -380 |
| Share of net result in the associate for the period 1 January - 30 June 2014 | -1 198 |
| Closing balance for the period ended 30 June 2014 | 1 503 |
The partial divestment of shares have been treated as discontinued operations in accordance with IFRS 5 and comparable figures have been changed accordingly.
Visiting address: Forusskogen 1, 4033 Stavanger, Norway Postal address: P.O.Box 147, 4065 Stavanger, Norway
Switchboard: +47 52 97 45 00 / Fax: +47 52 97 45 01
www.bxpl.com
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