Annual Report • Apr 27, 2016
Annual Report
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| Note | 2015 | 2014 | |
|---|---|---|---|
| REVENUES | |||
| Other income | $\mathbf 0$ | 0 | |
| Total revenues | O | 0 | |
| OPERATING EXPENSES | |||
| External services for development project | 8 | 8725892 | 16 520 280 |
| Payroll and related expenses | 6 | 9 9 21 0 81 | 17 342 776 |
| Depreciation | 7 | 200 371 | 300 883 |
| Other operating expenses | 8 083 181 | 11 356 929 | |
| Capitalized development costs | 8 | $-14$ 123 964 | $-24106993$ |
| Total operating expenses | 12 806 562 | 21 413 875 | |
| Operating profit (loss) | $-12806562$ | $-21413875$ | |
| Financial income | 3 | 38 831 | 677 694 |
| Other financial income | 3 | 15 518 | 375 080 |
| Financial expenses | $\overline{\mathbf{3}}$ | 504 656 | 303 604 |
| Loss on sale of associate and shares | 3,17 | 0 | 156 802 |
| Impairment of remaining shares | 3,17 | 0 | 156 802 |
| Share of profit / (loss) of associates | 3,17 | 0 | 2 387 020 |
| Net financial income (loss) | $-450308$ | $-1951455$ | |
| Profit (loss) before taxes | $-13256869$ | $-23365330$ | |
| Tax on ordinary result | 4 | $\mathbf 0$ | 0 |
| Net profit (loss) | $-13256869$ | $-23365330$ | |
| Profit (loss) attributable to equity holders of the company | 5 | $-13256869$ | -23 365 330 |
| Earnings per share | 5 | $-0,72$ | $-1,26$ |
| Earnings per share diluted | 5 | $-0,70$ | $-1,23$ |
| Total comprehensive income | 2015 | 2014 |
|---|---|---|
| Profit (loss) for the year | $-13256869$ | $-23365330$ |
| Other comprehensive income - items that will later be reclassified to profit or loss |
||
| Translation differences | 0 | 0 |
| Total comprehensive income for the year, net of tax | $-13256869$ | $-23365330$ |
| Total comprehensive income attributable to: | 2015 | 2014 |
| Equity holders of the company | $-13256869$ | $-23365330$ |
| Non-controlling interest | 0 | 0 |
| Total comprehensive income | $-13256869$ | $-23365330$ |
All figures in NOK
| ASSETS | Note | 2015 | 2014 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Capitalized development costs | 2,8 | 147 767 798 | 140 217 614 |
| Patent rights | 8 | 386 668 | 386 668 |
| Total intangible assets | 148 154 466 | 140 604 282 | |
| Property, plant & equipment | $\overline{7}$ | 100 933 | 301 304 |
| Total tangible assets | 100 933 | 301 304 | |
| Investment in shares | 17 | 0 | $\mathbf 0$ |
| Total investment in shares | $\mathbf 0$ | $\mathbf 0$ | |
| TOTAL NON-CURRENT ASSETS | 148 255 399 | 140 905 594 | |
| CURRENT ASSETS | |||
| Other receivables | 2,9,14 | 3 629 859 | 5 390 522 |
| Total receivables | 3 629 859 | 5 390 522 | |
| Cash and cash equivalents | 10 | 585 953 | 4 350 500 |
| TOTAL CURRENT ASSETS | 4 215 812 | 9 741 022 |
All figures in NOK
| EQUITY AND LIABILITIES | Note | 2015 | 2014 |
|---|---|---|---|
| EQUITY | |||
| Share capital | 11 | 2 3 1 7 1 6 1 | 2 3 1 7 1 6 1 |
| Share premium | 11 | 218 069 985 | 218 069 985 |
| Other paid in capital | 6 | 4 167 490 | 3 659 643 |
| Total paid in equity | 224 554 636 | 224 046 789 | |
| Retained earnings | -158 347 399 | -145 090 529 | |
| Total equity attributable to equity holders of parent | -158 347 399 | -145 090 529 | |
| TOTAL EQUITY | 66 207 237 | 78 956 260 | |
| LIABILITIES | |||
| Capitalized grants | 13 | 75 000 000 | 66 520 000 |
| Total long term liabilities | 75 000 000 | 66 520 000 | |
| Accounts payable | 12,14 | 3 077 545 | 2 394 292 |
| Public duties payables | 474 324 | 1 650 303 | |
| Debt financial institutions | 15 | 6711379 | $\mathbf 0$ |
| Other short term liabilities | 16 | 1 000 727 | 1 125 761 |
| Total short term liabilities | 11 263 975 | 5 170 356 | |
| TOTAL LIABILITIES | 86 263 975 | 71 690 356 | |
| TOTAL EQUITY AND LIABILITIES | 152 471 211 | 150 646 616 |
Stavanger, 27th April 2016
lidels
Marcus Hansson
(Chairman of the Board)
Birte Noer Borrevik
(Board member)
Betinda P. Ingebrigtsen
(Board member)
David Ottesen (Board member)
Øystein Larsen
CEO
| Note | Share capital |
Share premium |
Other paid in capital |
Foreign currency translation |
Retained earnings |
Total equity |
|---|---|---|---|---|---|---|
| Equity as of 1 January 2014 | 2 317 161 | 218 069 985 | 2 965 787 | 172 373 | $-121897575$ | 101 627 732 |
| Profit (loss) for the year | $-23365330$ | $-23365330$ | ||||
| Foreign currency translation | 0 | |||||
| Total comprehensive income | $\mathbf{0}$ | $-23365330$ | $-23365330$ | |||
| Changes in non- 17 controlling interest |
ß | $-172373$ | 172 373 | 0 | ||
| Option plan payment 6 |
693 856 | 693 856 | ||||
| Equity as of 31 December 2014 | 2 3 1 7 1 6 1 | 218 069 985 | 3 659 643 | 0 | $-145090529$ | 78 956 260 |
| Profit (loss) for the year | -13 256 869 | $-13256869$ | ||||
| Total comprehensive income | -13 256 869 | $-13256869$ | ||||
| Option plan payment 6 |
507 847 | 507 847 | ||||
| Equity as of 31 December 2015 | 2 3 1 7 1 6 1 | 218 069 985 | 4 167 490 | 0 | -158 347 399 | 66 207 237 |
All figures in NOK
| Note | 2015 | 2014 | |
|---|---|---|---|
| Cash flow from operational activities | |||
| Contributions from operations* | $-12098343$ | $-20419137$ | |
| Change in accounts receivable and accounts payables | 683 066 | $-2006954$ | |
| Change in other receivables and payables | $-936206$ | $-1$ 286 695 | |
| Net cash flow from operating activities | A | $-12351484$ | -23 712 786 |
| Cash flow from investment activities | |||
| Capitalization of development costs | 8 | -14 123 964 | $-24$ 106 993 |
| Net cash flow from investment activities | B | $-14$ 123 964 | $-24$ 106 993 |
| Cash flow from financing activities | |||
| Government grants | $\overline{2}$ | 8 060 043 | 13 907 721 |
| Contributions from industry partners | 13 | 8 389 786 | 12 600 000 |
| Proceeds from borrowings financial institutions | 15 | 6711379 | 0 |
| Interest received | 3 | 38 831 | 648 037 |
| Other financial income | 3 | 15 518 | 375 080 |
| Interest paid | $\overline{\mathbf{3}}$ | $-504656$ | $-303604$ |
| Net cash flow from financing activities | Ċ | 22 710 901 | 27 227 234 |
| Total net changes in cash flow | $A+B+C$ | $-3764547$ | $-20$ 592 545 |
| Cash and cash equivalents at beginning of period | 10 | 4 350 500 | 24 943 338 |
| Cash and cash equivalents at end of period | 10 | 585 953 | 4 3 5 0 5 0 0 |
| Net result attributable to equity holders of the company | $-13256869$ | -23 365 330 | |
| Employee options | 6 | 507847 | 693 856 |
| Depreciation | $\overline{7}$ | 200 371 | 300 883 |
| Financial income | 3 | $-54349$ | $-1052774$ |
| Financial expenses | 3 | 504 656 | 303 604 |
| Share of (profit) / loss of associate | 3,17 | 0 | 2 387 020 |
| Impairment of remaining shares | $\overline{\mathbf{3}}$ | 0 | 156 802 |
| Loss on sale of associate and shares | 3,17 | 0 | 156 802 |
| *Total contributions from operations | $-12098343$ | -20 419 137 | |
Badger Explorer ASA (BXPL) 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 Professor Olav Hanssens vei 15, 4021 Stavanger, Norway.
The financial statement of BXPL has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
The financial statement has been prepared on an historical cost basis.
BXPL's investment in its associate is accounted for using the equity method.
Under the equity method, the investment in the associate is initially recognised at fair value. The carrying amount of the investment is adjusted to recognise changes in the Company's share of net assets of the associate since the acquisition date.
The income statement reflects BXPL's share of the results of operations of the associate. When there has been a change recognised directly in the equity of the associate, the Company recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Company and the associate are eliminated to the extent of the interest in the associate.
After application of the equity method, the Company determines whether it is necessary to recognise an impairment loss on its investment in its associate. At each reporting date, BXPL determines whether there is objective evidence that the investment in the associate is impaired. If there is such evidence, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, then recognises the loss as share of loss of an associate in the income statement.
Upon loss of significant influence over the associate, BXPL measures and recognises any retained investment as its fair value. Any differences between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognised in profit or loss.
The Company presents its financial statements in Norwegian kroner (NOK). This is also BXPL's functional currency.
Translation differences are taken to profit or loss. Transaction in foreign currencies are initially recorded in the functional currency rate quoted at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency exchange rate at the balance sheet date. Non monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in foreign currency are translated using the exchange rates at the balance sheet date.
Income statement in foreign associate is translated into NOK using the average exchange rate for the period (month). Assets and liabilities in foreign associate 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.
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.
Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, receivables, available-for-sale financial assets, as appropriate. The Company determines the classification of its financial assets at initial recognition. Financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Company's financial assets include cash and cash equivalents, trade and other receivables.
The subsequent measurement of financial assets depends on their classification as described below:
Financial assets at fair value through profit or loss includes financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognised in finance income or finance cost in the income statement
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR (Effective Interest Rate) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in financial income in the income statement. The losses arising from impairment are recognised in the income statement in cost of sales or other operating expenses for receivables. This category includes accounts receivable and other receivables carried at amortised cost or at normal amount less provision for bad debt were this can be regarded as a reasonable proxy for fair value.
Financial liabilities within the scope IAS 39 are classified as financial liabilities at fair value through profit or loss, borrowings, as appropriate. The Company determines the classification of its financial liabilities at initial recognition.
BXPL's financial liabilities include trade and other payables, bank overdraft, borrowings (capitalized grants).
The measurement of financial liabilities depends on their classification as described below:
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separate embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the income statement.
Financial liabilities designated upon initial recognition at fair value through profit and loss so designated at the initial date of recognition, and only if criteria of IAS 39 are satisfied. The Company has not designated any financial liability as at fair value through profit or loss.
After initial recognition, borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the income statement.
The fair value of bank overdraft held by the Company is classified within current liabilities in the statement of financial position and it amounts to NOK 6.711 million at 31 December 2015.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if:
Cash includes cash in hand and at bank. Cash equivalents are short-term liquid investments that can be converted into cash within three months and to a known amount, and subject to an insignificant risk of change in value.
Fixed assets are carried at cost less accumulated depreciations and impairment losses. When fixed assets are sold or disposed of, the gross carrying amount and accumulated depreciation are derecognised, and any gain or loss on the sale or disposal is recognised in the income statement.
The gross carrying amount of fixed assets is the purchased price, including duties/taxes and direct acquisition costs relating to making the asset ready for use. Subsequent costs, such as repair and maintenance costs, are recognised in profit or loss as incurred. When increased future economic benefits as a result of repair/maintenance work can be proven, such costs will be recognised in the balance sheet as additional to fixed assets.
Depreciation is calculated using the straight-line method over the following periods: Plant and machinery: 6 - 10 years Fixtures, fittings and vehicles: 3 - 5 years
The depreciation period, the depreciation method and the residual value of fixed assets are evaluated annually.
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as of the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is expensed as incurred.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of the future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as change in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss.
Intangible assets are capitalized 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.
Intangible assets with indefinite useful lives are tested for impairment annually at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.
Cost relating to patents and licenses are capitalized as incurred. Depreciation is recognised in the balance sheet and depreciated using the straight-line method over the expected useful life, commencing when the technology is ready for its intended use. The expected useful life of patents and licenses varies from 5 to 20 years.
Expenses relating to research and development are recognised in the income statement when they are accrued. Expenses relating to development are capitalized if the following criteria are met in full:
When all the above criteria are met, the costs relating to development are capitalized. All costs related to the Badger Explorer development project is capitalized continuously every month. Project manager performs a continuous assessment to identify whether the cost relates to the development project or to normal operations. Internal hours used in the development project are capitalized at cost (no mark-up).
Costs that have been charged as expenses in previous accounting periods are not capitalized.
Recognised development costs are depreciated on a straight-line basis over the estimated useful life for the asset, usually not exceeding 10 years. Depreciation starts when the asset is ready for use. No depreciation has been performed for the development projects yet. The fair value of the development costs will be calculated when there is an indication of change in value.
A provision is recognised in the accounts only when the Company is a subject to a liability that is a consequence of an event that has already happened and where it is likely that in order to reduce the liability the Company will have to apply financially measurable resources, and the liability can be reasonably estimated. Provisions are evaluated at the end of each month and adjusted to reflect the available information about the provision. Where the information available is insufficient, a best estimate is used.
Revenue is recognised to the extent when it is probable that the economic benefit will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable net of value added tax and discounts. The following specific recognition criteria must also be met before revenue is recognised:
Interest income is recognised in the income statement based on the effective interest method as they are earned.
Government grants are recognised where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Where the grant are related to a development project which is capitalized, the belonging grants are deducting the carrying amount of the asset.
Government grants received to date are related to (ref. note 8): - development projects and deducted in the carrying amount of the related project
When the contributions from partners are subject to specific requirements, the contributions are recognised in the balance sheet as long term liabilities. When the contributions from partners are not subject to specific requirements, the contributions are recognised in the balance sheet as a deduction of the carrying amount of the related project. ref. note 13.
Where the Company receives non-monetary grants, the assets and the grants are recorded at nominal amounts and released to profit and loss over the expected useful life of the relevant assets by equal annual instalments.
The tax expense consists of the tax payable and changes to deferred tax. Deferred tax/tax assets are calculated on all taxable temporary differences on assets and liabilities.
Deferred income tax liabilities are recognised for all taxable temporary differences.
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Management judgment 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 together with future tax planning strategies.
The tax payable and deferred tax are recognised directly as other comprehensive income in equity to the extent that they relate to factors that are recognised directly as other comprehensive income in equity.
Contingent liabilities are defined as
(i) possible obligations resulting from past events whose existence depends on future events.
(ii) obligations that are not recognised because it is not probable that they will lead to an outflow of resources.
(iii) obligations that cannot be measured with sufficient reliability.
Contingent liabilities are not recognised in the annual financial statements. Significant contingent liabilities are stated, with the exception of contingent liabilities where the probability of the liability occurring is remote.
A contingent asset is not recognised in the annual financial statements, but is disclosed if there is a certain level of probability that a benefit will accrue to the Company.
New information received after the balance sheet date relating to events and transactions incurred before the balance sheet date is reflected in the balance sheet/income statement. Events after the balance sheet date that do not affect the Company's position at the balance sheet date but affect the Company's position in the future are stated if significant.
Estimates and their underlying assumptions that affect the application of accounting principles and reported amounts of assets and liabilities, income and expenses are based on historic experience and other factors considered reasonable under the circumstances. The estimates constitute the basis for the assessment of the net book value of assets and liabilities when these values cannot be derived from other sources. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognized in the financial statements, is given in the following note:
The preparation of the Company's financial statements requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment of the carrying amount of the asset or liability affected in the future.
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment of the carrying amounts of assets and liabilities within the next financial year are discussed below.
Development costs are capitalized in accordance with the accounting policy. Initial capitalization of costs is based on management's judgement that technological and economical feasibility is confirmed. Project manager performs a continuous assessment to identify whether the cost relates to the development project or to normal operations. Internal hours used in the development project are capitalized at cost (no mark-up). Capitalized carrying amount for the development project amounts to NOK 147.768 million as of 31 December 2015, see note 8.
The capitalized development of NOK 147.768 million is the main asset of BXPL, equivalent to 99.7% of total assets. Future sales of the Badger units has a minimum net price of USD 12 million, thus present capitalized value represents roughly 11 sold units. Via the development agreement the partners have a first right to buy Badger services at agreed terms. This right to buy the first operations secures BXPL prime customers and likely delivery of many units. The year-end valuation of the capitalized technology must be seen in this perspective. Based on the above assement of future sales the entity has assessed that there is no need to book an impairment of the capitalized cost in 2015.
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including the expected life of the option, volatility and dividend yield and making assumptions about them. The assumptions and models used are disclosed further below and in note 6.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognised as the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
Where the terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. All cancellations of equity-settled transaction awards are treated equally.
The Company assesses whether there are any indicators of impairment for all assets at each reporting date.
An assessment of impairment losses on assets is made when there is an indication of a fall in value. If an asset's carrying amount is higher than the asset's recoverable amount, an impairment loss will be recognised in the income statement. The recoverable amount is the higher of the fair value less costs to sell and the discounted cash flow from continued use. The fair value less costs to sell is the amount that can be obtained from a sale to an independent third party minus the sales costs. The recoverable amount is determined separately for all assets but, if this is impossible, it is determined together with the entity to which the assets belong.
Impairment losses recognised in the income statements of previous periods are reversed when there is information that the need for the impairment loss no longer exists or is not as great as it was. However, no reversal takes place if the reversal leads to the carrying amount exceeding what the carrying amount would have been if normal depreciation periods had been used.
The cash flow statement is prepared in accordance with the indirect method and based upon IAS 7.
Costs directly related to equity transactions are recognised directly on the equity after deduction of tax.
The Company has implemented all changes in standards and interpretations for 2015. The implementation of these changes have not resulted in any changes to the group beyond the information given in the notes.
Standards and interpretations that are issued up to the date of issuance of the financial statements, but not yet effective, are disclosed below. The Company's intention is to adopt the relevant new and amended standards and interpretations when they become effective, subject to EU approval before the financial statements are issued.
Standards issued but not yet effective or implemented up to the date of issuance of the Company's financial statements This listing of standards and interpretations are those that the Company reasonably expect to have an impact on disclosures, financial position or performance when applied in future periods.
The amendments to IAS 1, issued as part of IASBs Disclosure Initiative, further encourage companies to apply professional judgment in determining what information to disclose and how to structure it in their financial statements.
IFRS 9 will eventually replace IAS 39 Financial Instruments: Recognition and Measurement. In order to expedite the replacement of IAS 39, the IASB divided the project into phases: classification and measurement, hedge accounting and impairment. New principles for impairment were published in July 2014 and the standard is now completed. The parts of IAS 39 that have not been amended as part of this project have been transferred into IFRS 9.
The amendment is implemented prospectively and clariefies the definition of performance conditions and service conditions, including the following:
• A performance condition must contain a service condition
• A performance target must be met while the counterparty is rendering service
• A performance target may relate to the operations or activities of an entity, or to those of another entity in the same group
• A performance condition may be a market or non-market condition
. If the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not satisfied
The amendment is implemented prospectively and clarifies that the portfolio exception in IFRS 13 can not only be applied to financial assets and financial liabilities, but also to other contracts which fall under the scope of IAS 39.
The core principle of IFRS 15 is that revenue is recognised to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company is not yet in a commersial position and the effects of the new standards has not yet been assessed.
IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer ('lessee') and the supplier ('lessor'). The effective date for IASB is from January 1, 2019 but not yet determined by EU. The Company does not expect the new leasing standard to have material effect on the financial statement at the date of the implementation.
The amendment is implemented retrospectively and clarifies that the revaluation method may be used by reference to observable data, either by adjusting the gross carrying amount to the market value or by determining the market value at the carrying amount and adjusting the gross carrying amount proportionaly so that the carrying amount is equal to the market value. The accumulated depreciation / amortisation is the difference between the gross and carrying amount of the assets.
The amendment is implemented retrospectively and clarifies that an entity providing management personnel services ("a management entity") and key management personnel to management is a related party and has to apply the disclosure requirements for related parties.
The Company does not anticipate that the implementation of the standards and interpretations detailed above will have any material impact on the accounts when they are implemented other than in terms of the information that will have to be provided in the notes.
(All figures in NOK)
Badger Explorer ASA (BXPL) has been awarded grants from the Research Council of Norway (RCN). For the financial year 2015, RCN has through its PETROMAKS-program awarded a grant of NOK 957,165 (2014: NOK 4.066 million) supporting a development of the Badger autonomous drilling tool. Through the PETROMAKS2-program, RCN granted NOK 4.181 million (2014: NOK 2.287 million) funding for the development of HPHT ultrasonic system.
The R&D projects have been approved for Skattefunn. For the financial year 2015, the Company has recognized NOK 2.922 million compared with NOK 1.554 million in 2014.
Innovation Norway has awarded a grant of NOK 6 million supporting BXPL's ongoing Demonstrator Program for the financial year 2014.
The R&D projects are funded with a percentage of the total project costs. The government grants and all project development costs of BXPL, related to the Demonstrator Program, are capitalized in accordance with the IFRS regulations, except of NOK 2.699 million for 2015 and NOK 3.793 million for 2014. These additional project costs are related to the restriction on capitalisation of own personnel cost in the IFRS standard.
| Note 3 Net financial income (loss) | |
|---|---|
| (All figures in NOK) |
| 2015 | 2014 |
|---|---|
| 5 3 0 9 | 96 526 |
| 15 518 | 384 922 |
| 33 521 | 571 326 |
| 54 349 | 1052774 |
| $-181188$ | $-99469$ |
| 0 | $-156802$ |
| 0 | $-2,387,020$ |
| $-323468$ | $-204136$ |
| 0 | $-156802$ |
| $-504656$ | $-3004229$ |
Note 4 Tax
(All figures in NOK)
| income tax expense | 2015 | 2014 |
|---|---|---|
| Payable tax | 0 | |
| Other | 0 | |
| Tax from previous years | 0 | |
| Changes in deferred tax | ||
| Total tax expense | 0 |
| Total basis for tax | ||
|---|---|---|
| Changes in temporary differences | 12 757 276 | 19 957 312 |
| Permanent differences | 499 593 | 3 408 018 |
| Earnings before tax | $-13256869$ | $-23365330$ |
| Calculation of basis for tax |
| Total | $-157888809 - 145131533$ | |
|---|---|---|
| Loss carried forward | $-157257028$ | $-144456674$ |
| Fixed assets | $-631781$ | $-674859$ |
| Summary of temporary differences: |
Deferred tax asset
-39 472 202 -39 185 514 Statement of financial position
| Deferred tax asset | 2015 | 2014 |
|---|---|---|
| Loss carried forward | $-39314257$ | $-39003302$ |
| Fixed assets | $-157945$ | $-182212$ |
| Total deferred tax asset | $-39$ 472 202 | $-39$ 185 514 |
| Valuation allowance | 39 472 202 | 39 185 514 |
| Total deferred tax asset recognised in the statement of financial position | Đ. |
The Company has not recognized a deferred tax asset in the statement of financial position as the Company is in a development phase and is currently generating losses.
| Loss carried forward as of 31 December 2015 | 2015 | 2014 |
|---|---|---|
| Unlimited carrying forward | 157 257 028 | 144 456 674 |
| Effective tax rate | 2015 | 2014 |
| Profit / (loss) before tax | $-13256869$ | $-23365330$ |
| 27% tax of earnings before tax | $-3579355$ | $-6308639$ |
| Permanent differences | 134 890 | 920 165 |
| Changes in deferred tax asset not recognised in the statement of financial position | 286 688 | 5 388 474 |
| Effect due to changes in tax rate from 27% to 25% on the deferred tax asset* | 3 157 776 | 0 |
| Calculated tax cost | 0 | 0 |
| Effective tax rate | 0% | 0% |
*With effect from the 2016 financial year, the corporate taxable profits (ordinary income) are taxed at a flat rate of 25%. Deferred tax assets and liabilities at 31 December 2015 have been calculated using the new tax rate.
(All figures in NOK)
Earnings per share is calculated as net profit (loss) for the year attributable to equity holders of the Company divided by the weighted average number of shares outstanding over the year.
Diluted earnings per share is calculated as net profit (loss) for the year attributable to equity holders of the Company divided by the weighted average number of shares outstanding over the year plus the weighted average number of dilutive potential shares.
Options, awarded to employees at the end of 2006 and 2007, were waived and not included in the calculation of diluted earnings per share. The effect of options awarded to employees in September 2009, June 2010, October 2011, September 2013 and February 2014 is included in the calculation of diluted earnings per share for 2014 and 2015.
| 2015 | 2014 | |
|---|---|---|
| Profit (loss) attributable to equity holders of the Company | $-13256869$ | $-23365330$ |
| Weighted average outstanding ordinary shares | 18 537 288 | 18 537 288 |
| Effect of dilution - share options | 469 000 | 523 000 |
| Weighted average outstanding diluted shares | 19 006 288 | 19 060 288 |
| Earnings (loss) per share | 2015 | 2014 |
| Ordinary | $-0,72$ | $-1,26$ |
| Diluted | $-0,70$ | $-1,23$ |
(All figures in NOK)
| 2015 | 2014 |
|---|---|
| 7 015 003 | 12 733 637 |
| 1 145 796 | 2 021 301 |
| 301 163 | 468 548 |
| 507 847 | 667 757 |
| 545 000 | 815 000 |
| 406 271 | 636 533 |
| 9921081 | 17 342 776 |
| Number of employees | 2015 | 2014 |
|---|---|---|
| The average number of full time equivalent employees* |
*Effective from 30 June 2015, three employees were laid off from their positions as a result of cost cutting efforts.
The Company has a defined contribution pension scheme that complies with the Norwegian mandatory occupational pension legislation (called "OTP"). The annual contributions to this scheme are at the rates of 4% for salaries between one and twelve times Public pension base rate (G) and 3% for salaries between 6 G and 12 G. The compensation scheme is financed from operations and will be paid upon members achieving a retirement age of 67. As of 1 May 2015, the amount of the Public pension base rate was NOK 90,068 per year.
| 2015 | 2014 | |
|---|---|---|
| Contributions expensed during the year | 301 163 | 468 548 |
Total remuneration to executive management during the year ended 31 December is as follows:
| 2015 | 2014 | |||||
|---|---|---|---|---|---|---|
| Salary | Other Benefits | Pension cost | Salary | Other Benefits | Pension cost | |
| Chief Executive Officer (CEO)* | 1 305 362 | 14 535 | 54 792 | 1735856 | 14 535 | 54 792 |
| Chief Technology Officer (CTO) | 099842 | 28 3 26 | 54792 | 066 859 | 26 799 | 54 792 |
| General Manager** | 0 | 0 | 0. | 2 3 2 8 1 1 6 | 28 036 | 49 268 |
*Effective from 1 May 2015, CEO's monthly salary was reduced by 50% from NOK 150,000 to NOK 75,000 as a result of cost cutting efforts. **Compensation for the financial year 2014 includes accrued vacation pay and other payments paid out in respect of employee's death at work.
At the end of the financial year 2015, executive management of BXPL consists of CEO, CFO, CTO and Sr. Vice President Business Dev. & Strategy. Remuneration for CFO and Sr. Vice President Business Dev. & Strategy is included in the note 12 "Transactions with related parties".
| No. of shares | % share | Options | |
|---|---|---|---|
| Chief Executive Officer (CEO) | 155 000 | 0.8% | 370 000 |
| Chief Financial Officer (CFO) | 434 872 | 2.3% | |
| Chief Technology Officer (CTO) | o | 0 % | 24 000 |
| Sr. Vice President Business Dev. & Strategy | 229 422 | 1.2% | |
| Total | 819 294 | 4.4% | 394 000 |
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. 185,000 share options will vest on the day of the publication of the Company's Q4 2015 report. A further 185,000 share options will vest on the day of the publication of the Company's Q2 2017 report. The exercise of fully vested share options is at the sole of discretion of the option holder. All share options were "out of the money" on 31 December 2015.
The Annual General Meeting held on 5 May 2015 resolved changes to the composition of the Board of Directors and remuneration of the Board members. The allocation of remuneration to the members of the Board and Nomination Committee is as follows:
| 2015 | 2014 | |
|---|---|---|
| Marcus Hansson - Chairman of the Board, Audit Committee* | 120 000 | 300 000 |
| Birte N. Borrevik - Board member* | 60 000 | $\Omega$ |
| Hilde Christiansen - Board member | 0 | 120 000 |
| Belinda T. Ingebrigtsen - Board member | 0 | 0 |
| Tone Kvåle - Board member, Audit Committee** | 200 000 | 200 000 |
| Rolf E. Ahlgvist - Nomination Committee | 25 000 | 25 000 |
| Bjørge Gretland - Board member (**) | 60 000 | 0 |
| Bigrge Gretland - Nomination Committee | 0 | 10 000 |
| David Ottesen - Board member* | 60 000 | 150 000 |
| Richard Urbanski - Nomination Committee | 10 000 | 0 |
| Knut Am - Nomination Committee | 10 000 | 10 000 |
| Total remuneration | 545 000 | 815 000 |
*Effective from 28 July 2015, the members of the Board was initially paid out 40% of the total remuneration as a result of the Company's tight cash position in 2015. The remaining 60% of the total Board remuneration will be paid in 2016. The Board members have decided to split their board remuneration at their own initiative.
** On 31 March 2015, Mrs. Tone Kvåle resigned as member of the Company's Board of Directors.
*** On 30 December 2015, Mr. Bjørge Gretland resigned as member of the Company's Board of Directors.
On 1 January 2015, there were 523,000 share options outstanding under Employee share option program. These share options include 370,000 options granted to CEO Steinar Bakke and 153,000 share options to other BXPL's employees. Effective from 30 June 2015, three employees were laid off from their positions as a result of cost cutting efforts and their 54,000 share options forfeited. A total of 469,000 share options held by BXPL employees were outstanding on 31 December 2015. Fully vested and exercisable share options can be exercised between three to ten days after the publication of the Company's Q1 and Q3 reports.
| 2015 | 2014 | |||
|---|---|---|---|---|
| Summary of outstanding options: | Share options | Weighted average exercise price |
Share options | Weighted average exercise price |
| Outstanding options 01.01. | 523 000 | 6,80 | 520 667 | 7,27 |
| Granted options | 0 | 0,00 | 213 000 | 7,51 |
| Exercised options | 0 | 0,00 | 0 | 0,00 |
| Cancelled options | $\mathbf{0}$ | 0,00 | $-43167$ | 12,90 |
| Forfeited | $-54000$ | 7,51 | $-67500$ | 7,79 |
| Expired options | 0 | 0,00 | $-100000$ | 7,50 |
| Outstanding options 31.12. | 469 000 | 6,71 | 523 000 | 6,79 |
| Vested options | 33 000 | 7,51 | 0,00 | 0,00 |
| Weighted Average Fair Value of options granted during the period | 0 | 0,00 | 213 000 | 3,45 |
| Charged against the income statement: | 507 847 | 693 856 | ||
| Charged against the income statement - Employers' national insurance contribution: |
0 | $-26.099$ |
Fair value of the options granted is measured using the Black-Scholes model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility, weighted average expected life of the instruments, expected dividends, and the risk-free interest rate. At the end of each reporting period, the Company revises its estimates of the number of options that are expected to vest. It recognizes the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. Changes to the estimates may significantly influence the expense recognized during a period.
The Board of Directors holds an authorisation to issue shares in the Company resolved by the Annual General Meeting on 5 May 2015. This authorisation is valid until the next General Meeting to be held in 2016 with an ultimate expiry date on 30 June 2016. The authorisation is provided for increasing the Company's share capital with up to NOK 115,858 by way of issuance of up to 926,864 shares in connection with the Company's share incentive scheme.
The main principle of the Company's remuneration policy for BXPL's management is to offer competitive terms in an overall perspective taking into account salary, payments in kind, bonuses, pension plans and other benefits, to retain key staff.
Management salaries and benefits for 2015 was based on the principles noted below.
The fixed salary for each member of the management shall be competitive and based on the individual's experience, responsibilities as well as the results achieved during the previous year. Salaries as well as other benefits shall be reviewed annually, and adjusted as appropriate. The salary for the CEO and executive management has been reduced during 2015.
In addition to their base salary, the Company's management may be granted additional remuneration in the form of a bonus. If a bonus scheme is implemented in 2015, the assessment criteria will be based on both Company's performance and the individual's performance. The targets to be reached by the CEO are to be determined by the Company's Board of Directors. The CEO will set relevant targets for the other members of the management team, based on principles defined by BXPL's Board of Directors. No provision for bonus has been recognized for 2015.
The Company's management will receive payment in kind such as cell phone expenses and payment of IT and telecommunication expenses.
In February 2014, a new share option program for all BXPL employees was implemented. The current management has been allocated 24,000 share options. Each option entitles the option holder to purchase one share at a strike price of NOK 7.51. If, on the exercise day, the market price of the BXPL shares exceeds NOK 50, the exercise price shall be increased by an amount equivalent to 8% of the market price less NOK 50. 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 10 days after publications of the Company's Q1 and Q3 results in 2016 and 2017. CEO Steinar Bakke has been granted 370,000 share options at a strike price of NOK 6.50. 185,000 shares options will vest on the date of the publication of BXPL's Q4 2015 report. A further 185,000 shares options will vest on the date of the publication of BXPL's Q2 2017 report. The exercise of fully vested shares options is at the sole discretion of the option holder.
All members of the management are included in the Company's occupational pension scheme drawn up by BXPL for all its employees. The pension scheme is a defined contribution scheme and contributions range from 4% to 7% of the employee's salary - maximized to a percentage of 12G (NOK 1,080,816). The retirement age for all employees, including management, is 67 years.
The main principle of the Company's remuneration policy for BXPL's management is to offer competitive terms in an overall perspective taking into account salary, payments in kind, bonuses, pension plans and other benefits, to retain key staff.
Management salaries and benefits for 2016 will be based on the principles noted below.
The fixed salary for each member of the management shall be competitive and based on the individual's experience, responsibilities as well as the results achieved during the previous year. Salaries as well as other benefits shall be reviewed annually, and adjusted as appropriate.
In addition to their base salary, the Company's management may be granted additional remuneration in the form of a bonus. If a bonus scheme is implemented in 2016, the assessment criteria will be based on both the Company's performance and the individual's performance. The targets to be reached by the CEO are to be determined by the Company's Board of Directors. The CEO will set relevant targets for the other members of the management team, based on principles defined by BXPL's Board of Directors.
The Company's management will receive payment in kind such as cell phone expenses and payment of IT and telecommunication expenses.
In February 2014, a new share option program for all BXPL employees was implemented. Each option entitles the option holder to purchase one share at a strike price of NOK 7.51. If, on the exercise day, the market price of the BXPL shares exceeds NOK 50, the exercise price shall be increased by an amount equivalent to 8% of the market price less NOK 50. 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 10 days after publications of the Company's Q1 and Q3 results in 2016 and 2017. Former CEO Steinar Bakke has been granted 370,000 share options at a strike price of NOK 6.50. 185,000 shares options will vest on the date of the publication of BXPL's Q4 2015 report. A further 185,000 shares options will vest on the date of the publication of BXPL's Q2 2017 report. The exercise of fully vested shares options is at the sole discretion of the option holder.
On 15 January 2016, the new CEO Øystein Larsen has been granted 370,000 share options at a strike price of NOK 1.50. 185,000 shares options will vest on the date of the publication of BXPL's Q4 2017 report. A further 185,000 shares options will vest on the date of the publication of BXPL's Q4 2018 report. Upon exercise of the options, the option holder shall pay to the Company a price of NOK 1.50 per option share. If on the exercise day the market price of BXPL's shares is exceeding NOK 25, the exercise price shall be increased by an amount equivalent to 8% of the market price deducting NOK 25. The exercise of fully vested shares options is at the sole discretion of the option holder.
All members of the management are included in the Company's occupational pension scheme drawn up by BXPL for all its employees. The pension scheme is a defined contribution scheme and contributions range from 4% to 7% of the employee's salary - maximized to a percentage of 12G (NOK 1,080,816). The retirement age for all employees, including management, is 67 years.
(All figures in NOK)
The following table shows remuneration related to professional services rendered by the Company's principal auditor, Ernst & Young AS, for fiscal year 2015 and 2014. The amounts shown are exclusive of value added tax.
| 2015 | 2014 | |
|---|---|---|
| Audit services* | 165 000 | 130 000 |
| Assurance services** | 42 691 | 42 185 |
| Other assistance*** | 100 538 | 129 867 |
| Total | 308 229 | 302 052 |
* Audit services relate primarily to services provided by Ernst & Young AS for auditing BXPL's financial statements and its internal controls.
** Assurance services include primarily review of the Company's quarterly financial statements and the annual report.
*** Other assistance relates primarily to other attestation services required under regulatory requirements, advisory services, preparation of tax returns, Going concern assumption review.
(All figures in NOK)
| Property, plant & | Property, plant | |||
|---|---|---|---|---|
| equipment | Total 2015 | & equipment | Total 2014 | |
| Cost price 01.01. | 5793447 | 5793447 | 5764330 | 5764330 |
| Additions | 0 | 0 | 29117,82 | 29117,82 |
| Disposals | 0 | ٥ | 0 | $\Omega$ |
| Cost price 31.12. | 5793447 | 5 793 447 | 5793447 | 5 793 447 |
| Accumulated depreciations 31.12. | $-5692515$ | $-5692515$ | $-5492143$ | $-5492143$ |
| Accumulated depreciation of disposed asset | ٥ | 0 | ٥ | 0 |
| Currency translation difference | 0 | 0 | 0 | 0 |
| Booked value 31.12. | 100 933 | 100 933 | 301 304 | 301 304 |
| Depreciation | $-200371$ | $-200$ 371 | $-300883$ | $-501254$ |
| Depreciation rate %: | 10% - 33% | $10\% - 33\%$ | ||
| Economic life (years): | $3 - 10$ | $3 - 10$ | ||
| Depreciation method: | straight line | straight line |
The depreciation period and method are assessed each year to ensure that the method and period used harmonize with the financial realities of the non-current asset. The same applies to the scrap value.
BXPL has entered into operating leases for offices and other equipment. The costs are as follows:
| Operating leasing costs | 2015 | 2014 |
|---|---|---|
| Rent costs on buildings | 2 019 520 | 1 979 948 |
| Other | 32 551 | 33 271 |
| Total operating leasing costs | 2052071 | 2013219 |
The future minimum rents related to non-cancellable leases fall due as follows for BXPL:
| Within 1 year | 2-5 years | After 5 years | |
|---|---|---|---|
| Operational leasing costs | 16 000 | ||
| Rent costs on buildings | 556 337 | ||
| Total | 572 337 |
The lease agreement for the main office (headquarters) has been entered into for a period of 5 years. This agreement expires on 31 March 2016 and includes an option to extend the agreement for 3+3 years at market conditions.
(All figures in NOK)
BXPL has recognised the following intangible assets in the statement of financial position (including internal built up assets such as development costs).
| Development | ||||
|---|---|---|---|---|
| 2015 | Patents* | costs | Total | |
| Cost price 01.01. | 400 000 | 140 217 614 | 140 617 614 | |
| Additions** | 0 | 14 123 964 | 14 123 964 | |
| Government grants | ٥ | $-6$ 573 781 | $-6573781$ | |
| Cost price 31.12. | 400 000 | 147 767 798 | 148 167 798 | |
| Accumulated depreciations 31.12. | 13 3 3 2 | 0 | 13 332 | |
| Book value 31.12. | 386 668 | 147 767 798 | 148 154 466 |
** The addition in 2015 consists of external services of NOK 8.162 million, purchase of manufactured parts, components and materials of NOK 0.452 million, internal personnel costs of NOK 5.398 million and travel expenses of NOK 0.112 million for the Badger Explorer development projects.
| Development | ||||
|---|---|---|---|---|
| 2014 | Patents* | costs | Total | |
| Cost price 01.01. | 400 000 | 130 785 242 | 131 185 242 | |
| Additions** | ٥ | 24 106 993 | 24 106 993 | |
| Government grants | 0 | $-14674620$ | $-14674620$ | |
| Cost price 31.12. | 400 000 | 140 217 614 | 140 617 614 | |
| Accumulated depreciations 31.12. | 13 3 3 2 | ٥ | 13 3 3 2 | |
| Book value 31.12. | 386 668 | 140 217 614 | 140 604 282 |
** The addition in 2014 consists of external services of NOK 9.577 million, purchase of manufactured parts, components and materials of NOK 6.336 million, internal personnel costs of NOK 7.587 million and travel expenses of NOK 0.445 million for the Badger Explorer development projects.
There has not been made any depreciation on intangible asset in 2014 and 2015.
All development costs in 2014 and 2015 are related to the development of the Badger Explorer technology in BXPL. The development work contains inherent technology risk and risk related to the funding contributions from the partners. An amount of management focus will continue to be applied to prudent financial management, improved cost-effectiveness and simplification of non-technical activities.
* The patent applies to the Badger Explorer technology and has a validity of 20 years from date it was granted. The Development costs apply to the development of the Badger Explorer technology in Badger Explorer ASA and the Plasma Channel Drilling technology in Badger Plasma Technology AS. Depreciation will commence when the technology is ready for its intended use.
| Note 9 Total receivables | |
|---|---|
| (All figures in NOK) |
| 2015 | 2014 | |
|---|---|---|
| Skattefunn & Research Council of Norway receivables | 3 108 774 | 4 595 016 |
| Prepaid expenses | 187 192 | 296 127 |
| Refundable VAT | 333 893 | 499 379 |
| Total receivables | 3 629 859 | 5 390 522 |
For age distribution of accounts receivables see note 14.
Note 10 Cash and cash equivalents
| (All figures in NOK) | ||
|---|---|---|
| 2015 | 2014 | |
| Cash at bank | 585 953 | 4 3 5 0 5 0 0 |
| Total cash at bank | 585 953 | 585 953 |
| Restricted bank deposits for employee withholding taxes | 259 771 | 1 091 589 |
(All figures in NOK)
Share capital as at 31 December 2015 is NOK 2.317 million, being 18,537,288 ordinary shares at a nominal value of NOK 0.125 each. All share carry equal voting rights.
| Number of ordinary shares | 2015 | 2014 |
|---|---|---|
| 01.01.2015 | 18 537 288 | 18 537 288 |
| Capital increase | ||
| 31.12.2015 | 18 537 288 | 18 537 288 |
BXPL had 793 shareholders on 31 December 2015. Norwegian entities and individuals held 64.4% of the outstanding shares and the 20 largest shareholders held 60.5% of the outstanding shares. As of 31 December 2015, the 20 largest shareholders were as follows:
| No. of shares | % share | |
|---|---|---|
| DEUTSCHE BANK AG | 2829997 | 15,3% |
| TTC INVEST AS | 1 306 862 | 7,0 % |
| INVESCO PERP EUR SMALL COM | 1 2 2 5 3 8 9 | 6,6% |
| EUROCLEAR BANK S.A. | 923 924 | 5,0% |
| HOLBERG NORGE | 808 135 | 4,4% |
| SKANDINAVISKA ENSKILDA BANKEN S.A. | 615 000 | 3,3% |
| ARGENTUM | 523 145 | 2,8% |
| DALVIN RÅDGIVNING AS | 426 872 | 2,3% |
| MACAMA AS | 355 514 | 1,9% |
| ANØY INVEST DA | 278 800 | 1,5% |
| KNUT ÅM | 242 600 | 1,3% |
| GJENSIDIGE FORSIKRING | 226 472 | 1,2% |
| KJELL ERIK DREVDAL | 222 600 | 1,2% |
| NILSHOLMEN INVESTERING AS | 209 222 | 1,1% |
| MP PENSJON PK | 208 700 | 1,1% |
| ESPELID KARLSTEIN JOHAN | 170 000 | 0,9% |
| SIGMUND STOKKA | 168 693 | 0,9% |
| BARRA ØYSTEIN | 155 748 | 0,8% |
| BAKKE STEINAR | 155 000 | 0,8% |
| ØVREBOTTEN SVEIN | 155 000 | 0,8% |
| 20 largest shareholders | 11 207 673 | 60,5 % |
| 773 other shareholders | 7 329 615 | 39,5% |
| Total of 793 shareholders | 18 537 288 | 100% |
The following members of the Board of Directors and member of executive management hold shares as of 31 December 2015:
| 2015 | 2014 | |
|---|---|---|
| Skandinaviska Enskilda Banken S.A. Luxembourg (Chairman - Marcus Hansson) | 565 000 | 565 000 |
| Dalvin Rådgivning AS (CFO - Gunnar Dolven)* | 426 872 | 301 872 |
| Nilsholmen Investering AS (Sr. VP Bus. Dev. & Strategy - Kiell Markman) | 209 222 | 209 222 |
| President & CEO - Steinar Bakke* | 155 000 | 30 000 |
| Nilsholmen AS (Sr. VP Bus. Dev. & Strategy - Kiell Markman) | 20 200 | 20 200 |
| Chairman - Marcus Hansson | 11 668 | 11 668 |
| CFO - Gunnar Dolven | 8 0 0 0 | 8 0 0 0 |
| Board member - Tone Kvåle | 5 000 | 5 0 0 0 |
| Ordinary shares | 1 400 962 | 1 150 962 |
| % of total shares | 7,6 % | 6.2% |
*On 20 August 2015, BXPL's CEO Steinar Bakke purchased 125,000 shares in BXPL at a price of NOK 1.35 per share. CEO of Dalvin Rådgivning AS, Mr. Gunnar Dolven purchased 125,000 in BXPL at a price of NOK 1.35 per share.
The Board of Directors holds two authorisations to issue shares in the Company resolved by the Annual General Meeting on 5 May 2015. These authorisations are valid until the next Annual General Meeting to be held in 2016 with an ultimate expiry date on 30 June 2016. The first authorization is provided for increasing the Company's share capital with up to NOK 115,858 by way of issuance of up to 926,864 shares in connection with the issuance of shares to employees, directors and others connected with the Company as part of the Company's share incentive scheme and the share issue against payment in other cash payment (contribution). The second authorization is provided for increasing the Company's share capital with up to NOK 231,716 by way of issuance of up to 1,853,728 shares in conjunction with the issuance of shares to existing shareholders and new investors for a cash deposit or cash contributions and mergers.
(All figures in NOK)
The following table provides the total amount of transactions that have been entered into with related parties controlled by the members of executive management of BXPL for the relevant financial year. The purchases from related parties are made at terms equivalent to those that prevail in arm's lenght transactions.
| Transactions with related parties ------- |
2015 ______ |
|
|---|---|---|
| Purchased services the company's state of the |
2 515 589 | 106 |
In June 2013, BXPL entered into a consultancy agreement with two of its largest shareholders, Dalvin Rådgivning AS and Nilsholmen AS. During 2015, payments totalling NOK 1.124 million were made to Dalvin Rådgivning AS in respect of performed consultancy services and NOK 13,188 related to travel expenses. Mr. Gunnar Dolven, who is CFO of BXPL, is a director of Dalvin Radgivning AS. In 2015, Nilsholmen AS, a company owned by Mr. Kjell Markman, received payments of NOK 1.319 million in respect of performed consultancy services and NOK 59,574 related to travel expenses. Mr. Markman is Sr. VP Business Development & Strategy of BXPL.
For transactions with Severn Subsea Technologies Ltd. and Mr. Nigel Halliday please refer to note 17.
Note 13 Conditional commitments (All figures in NOK)
BXPL has received contributions from the industry partners amounting to NOK 75.000 million whereas NOK 66.520 million were received prior to 2015. These contributions shall be repaid to the partners by paying 5% royalty of all technology related sales in the future. This royalty is limited to a total of 150% of received contributions.
(All figures in NOK)
BXPL is exposed to foreign currency exchange risk, interest rate risk, credit risk and liquidity risk.
The Company's management oversees the management of these risks and assures that BXPL's financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies. It is the Company's policy that no trading in derivates for speculative purposes shall be undertaken. The Board of Directors reviews and agrees on policies for managing each of these risks which are summarised below.
The Company's cash reserves of NOK 585,953 are deposited in the Norwegian bank Sparebanken Vest. All the Company's financial instruments are in a Norwegian Kroner (NOK) functional currency. When commercial operations in larger scale commence, a foreign currency exchange risk policy will be introduced.
The Company's financial income and financial cost in the income statement are both influenced by changes in interest rates. BXPL's interest rate risk is mainly related to funding in USD. The Company has NOK 450,308 in net financial loss as of 31 December 2015. The Company's debt to financial institutions carries fixed interest rate of 4.95%. In addition, there is a yearly commission of 1.0% on the credit line. As of 31 December 2015, NOK 6.711 million has been drawn on the overdraft facility.
BXPL trades only with recognised, creditworthy third parties. It is the Company's policy that all customers that wish to trade on credit terms are subject to credit verification procedures. All cash in the Company is deposited in the Norwegian bank Sparebanken Vest. Credit risk is managed through a framework that sets out policies and procedures covering the measurement and management of credit risk.
BXPL monitors its liquidity on a regular basis, and produces rolling liquidity forecast on a monthly basis in order to indentify liquidity requirements in future periods. The target for BXPL's management of liquidity risk is to maintain a liquidity corresponding to its net liquidity requirements for 12 months.
The cash position of BXPL at year end 2015 was NOK 585,953, compared to NOK 4.351 million in 2014. At year-end 2015, the Company has withdrawn NOK 6.711 million of the total overdraft facility of NOK 7.500 million. The main cash inflow during 2016 is Skattefunn 2015 tax deduction (NOK 2.547 million), the remaining RCN's grants (NOK 6.171 million) and the Badger Development Program partner funding from Statoil for the Milestone 1 (NOK 5.000 million). The Company believes it will have sufficient funds to continue its ongoing operations during 2016 and meet its obligations, if Statoil and CNPC DR join the Development Program. As of 27 April 2016, the signatures from Statoil and CNPC DR for the Development Program are still pending. In January 2016, CNPC DR signed MoU indicating their intent to support the Development Program. In April 2016, Statoil confirmed their intent to support the Development Program. The level of technical progress is dependent upon the level of funding from the partners. Contingencies for 2016 include overdraft facility with the Company's bank and accelerated release of government grants and partner funding.
Cash level will be carefully managed during 2016. The Badger Development Program will contribute to operational funding in 2016. In Q1 2016, Statoil approved the first and second key deliverables of Milestone 1 of the Badger Development Program, which released NOK 5.000 million. Technical progress on the HPHT ultrasonic project will release funding from awarded grants. As of 22 April 2016, the Company has withdrawn NOK 4.604 million of the total overdraft facility of NOK 7.500 million. BXPL is in breach of the financial covenants in the current credit facility, ref. note 15.
The table below shows a maturity analysis for BXPL's total short term liabilities:
| 2015 | within 3 months within 6 months | within 9-12 months |
|
|---|---|---|---|
| Accounts payable | 3 077 545 | 0 | |
| Public duties payables | 474 324 | 0 | |
| Debt financial institutions (due as a result of breach of covenants ref. note 15) | 6711379 | 0 | |
| Other short term liabilities | 371 820 | 628 907 | $\Omega$ |
| within 9-17 |
| 2014 | within 3 months within 6 months | . months |
|
|---|---|---|---|
| Accounts payable | 2 394 292 | ||
| Public duties payables | 1 650 303 | ||
| Other short term liabilities | 131 383 | 994 378 |
BXPL's main objective for the management of its capital structure is to maximise value creation for shareholders, while at the same time maintaining a sound financial position and a good credit rating.
BXPL manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may issue new shares. No changes were made in the objectives policies or processes during the financial vear.
BXPL monitors its capital structure using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, debt financial institutions, trade and other payables, less cash and short-term deposits.
| Note 14 Financial risk management objectives and policies (continues) | ||
|---|---|---|
| 2015 | 2014 | |
| Debt financial institutions | 6711379 | $\mathbf{0}$ |
| Trade and other payables | 4 5 5 2 5 9 6 | 5 170 356 |
| Bank deposits | $-585953$ | -4 350 500 |
| Net debt | 10 678 022 | 819856 |
| Equity | 66 207 237 | 78 956 260 |
| Total capital | 66 207 237 | 78 956 260 |
| Capital and net debt | 76 885 259 | 79 776 116 |
| Gearing ratio | 13,9% | 1,0% |
| Equity ratio | 43.4% | 52,4% |
Set out below is a comparison by category of carrying amounts and fair values of all of the Company's financial instruments:
| 2015 | 2014 | |||
|---|---|---|---|---|
| Carrying amount | Fair value | Carrying amount | Fair value | |
| Financial assets | ||||
| Cash and cash equivalents | 585 953 | 585 953 | 4 350 500 | 4 3 5 0 5 0 0 |
| Current receivables | 3 629 859 | 3 629 859 | 5 390 522 | 5 390 522 |
| Financial liabilities | ||||
| Debt financial institutions | 6711379 | 6711379 | ٥ | 0 |
| Trade and other payables | 4 552 596 | 4 5 5 2 5 9 6 | 5 170 356 | 5 170 356 |
As at 31 December 2015, the ageing analysis of receivables is as follows:
| Neither past | |||||||
|---|---|---|---|---|---|---|---|
| due nor | Past due but not impaired | ||||||
| Total | impaired | <30 days | 30-60 days | 60-90 days | 90-120 days | $>120$ days | |
| 2015 | 3 629 859 | 3 6 29 8 59 | 0 | ٥ | 0 | ||
| 2014 | 5 390 522 | 5 390 522 | 0 | 0 | ٥ | 0 | |
Note 15 Debt financial institutions
(All figures in NOK)
| Short term liabilities ---- |
2015 | 2014 |
|---|---|---|
| Debt financial institutions | 6711379 |
BXPL entered into a revolving credit facility with its Norwegian bank Sparebanken Vest on 22 August 2012 that provides for borrowings of up to NOK 7.500 million with a fixed interest rate of 4.95%. In addition, there is a yearly commission of 1.0% on the credit line. As of 31 December 2015, NOK 6.711 million has been drawn on the overdraft facility. Financial covenants: equity - not be less that NOK 75 million and should exceed more than 50% of the book equity ratio. The book equity less intangible assets must be positive. Accounts receivable must exceed 75% of the withdrawn credit facility. Financial review - quarterly financial statement submission to the bank. The overdraft facility of NOK 7.500 million with Sparebanken Vest is in breach with the agreed covenants as of 31 December 2015 and also as of 31 March 2016.
| Other short term liabilities | 2015 | 2014 |
|---|---|---|
| Unpaid vacation pay | 628 907 | 994 378 |
| Other accrued costs | 181 297 | 131 383 |
| Other short term liabilities* | 190 522 | 0 |
| Total other short term liabilities | 1 000 727 | 1 125 761 |
* Other short term liabilities include outstanding balance payable to CNPD DR for having two Chinese engineers working at Badger Explorer ASA's HQ from May to September in 2015.
On 28 June 2013, BXPL divested its 70% interest of Severn Subsea Technologies Ltd. (SST) to Severn Glocon for a net amount of NOK 7.189 million with a loss of NOK 1.120 million in the Group. Upon settling the completion accounts, BXPL realised a further loss of NOK 838,350 accounted for in December 2013.
On 15 December 2014, Severn Glocon acquired another 15% of the shares for consideration of £1 giving a loss of NOK 156,802. Loss arising from the partial disposal of investment in the associated company was recognised in the income statement. BXPL's fair value assessment of the investment in the shares was set to zero at year end 2014 and impairment of NOK 156,802 has been booked. BXPL holds 15% of shares in SST as of 31 December 2015.
| Closing balance for the period ended 31 December 2015 | |
|---|---|
| Impairment of the remaining 15% of shares in SST booked in 2014 | $-156802$ |
| Sale of 15% of shares on 15 December 2014 | $-156802$ |
| 30% share of net result in the associate for the period 1 January - 15 December 2014 | $-2,387,020$ |
| Carrying amount of 30% interest retained on 31 December 2013 | 2 700 624 |
| Transactions with Severn Subsea Technologies Ltd. | 2015 | 2014 |
|---|---|---|
| Accounts payable * | 16 092 | |
| Purchased services* | 7 109 | 1871500 |
* The Company purchased engineering- and production services from SST. Mr. Nigel Halladay (previous MD of Calidus Engineering Ltd.) owns 75,500 shares in BXPL. All purchased services from SST in 2014 and 2015 are related to the development project in BXPL.
(All figures in NOK)
The cost decrease throughout 2015 was driven by the current market challenges and uncertainty with respect to future oil prices. BXPL has significantly reduced its cost structure to align with anticipated lower activity level. Effective from 1 January 2016 until further notice, the executive management of BXPL has implemented a temporary salary reduction by 15% for all employees as a result of budgetary constrains.
On 20 January 2016, Mr. Øystein Larsen was appointed new CEO of BXPL. Mr. Larsen has previously held the position as CTO of BXPL and has been working for the Company since 2009. Mr. Steinar Bakke, former CEO of BXPL, will assume the position as Senior Advisor focusing on sponsoring partners and industrial partnerships.
On 11 January 2016, Mr. Bakke has purchased 45,473 shares in BXPL at a price of NOK 0.95 per share. The total holding of Mr. Bakke's shares, after this transaction, is 200,437 shares.
No other events have taken place after the reporting period that would have affected the financial statements or any assessments carried nut.
(All figures in NOK)
The annual financial statements have been prepared on the basis of the going concern assumption. The Board of Directors confirms the going concern assumption to be present but the Board assess the current liquidity situation as very tight. Additional funding is required within a short period of time to carry on the future development of the Badger tool. As of April 27, 2016, signatures from CNPC DR for the Badger Development Program are pending, and as a result the funding from both sponsors, Statoil and CNPC DR, is uncertain. In addition, the Company is in breach of the financial covenants in the current credit facility, ref. note 15. The Board assessed the uncertainties for pending signatures of sponsors in the Badger Development Program and corresponding liquidity risk, causing significant doubt about the Company's ability to continue as a going concern. Reference is also made to note 14 "Liquidity risk" and note 15 "Debt financial institutions" for additional information.
| 2015 | 2014 | |
|---|---|---|
| Selected items from income statement (1000 NOK) | ||
| Total revenues | 0 | 0 |
| Government grants | 6 5 7 4 | 14 675 |
| Capitalized development costs | $-14124$ | $-24107$ |
| Total operating expenses | 12 807 | 21 4 14 |
| EBIT | $-12807$ | $-21414$ |
| Net profit (loss) for the year | $-13257$ | $-23365$ |
| Profit (loss) attributable to equity holders of the company | $-13257$ | $-23365$ |
| Earnings per share (NOK) | $-0,72$ | $-1,26$ |
| Selected items from statement of financial position (1000 NOK) | ||
| Capitalized development costs | 147 768 | 140 218 |
| Total non-current assets | 148 255 | 140 906 |
| Total current assets | 4 2 1 6 | 9741 |
| Total assets | 152 471 | 150 647 |
| Total equity | 66 207 | 78 956 |
| Equity ratio | 43,4% | 52,4% |
| Total liabilities | 86 264 | 71 690 |
| Selected items from statement of cash flow (1000 NOK) | ||
| Net cash flow from operating activities | $-12351$ | $-23713$ |
| Net cash flow from investment activities | $-14124$ | $-24107$ |
| Net cash flow from financing activities | 22 711 | 27 227 |
| Total net changes in cash flow | $-3765$ | $-20593$ |
| Cash and cash equivalents at end of period | 586 | 4 3 5 1 |
| Average number of employees | 8 | 12 |
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