2021
Annual
Report
2
Contents
1 Board of Directors report 3
1.1. Responsibility statement 15
2 Environment, Social and Governance reporting (ESG) 16
3 Corporate governance 19
4 Consolidated financial statement Carbon Transition Group 29
4.1. Consolidated statement of comprehensive income 29
4.2. Consolidated statement of financial position 30
4.3. Consolidated statement of financial position 31
4.4. Consolidated statement of change in equity 32
4.5. Consolidated statement of cash flow 33
4.6. Notes to the consolidated financial statement 34
5 Financial statement Carbon Transition ASA 74
5.1. Statement of comprehensive income 74
5.2. Statement of financial position 75
5.3. Statement of financial position 76
5.4. Statement of changes in equity 77
5.5. Statement of cash flow 78
5.6. Notes to the financial statements 79
6 Auditors report 102
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1 Board of Directors report
Operations and location
Carbon Group comprises Carbon Transition ASA (referred to as the “Company” or the
“Parent”) and its subsidiaries (together referred to as the “Group” or “Carbon”). Carbon
Transition ASA is a public limited company incorporated in Norway. The Company is
listed on EURONEXT EXPAND OSLO and traded under the ticker CARBN. The
Company’s registered main office is at Askekroken 11, 0277 Oslo, Norway.
The Group has during 2021 changed name to Carbon Transition ASA and
implemented a new operational strategy. Following the restructuring completed in
June 2021, the Group refocused the business model to become a listed investment
company with the goal to invest in companies and technologies which contribute to
significant reduction of carbon emissions. The Group may also invest more broadly in
the "energy transition" space. Carbon has a legacy seismic business operating under
the name Axxis Geo Solutions. Under Axxis Geo Solutions, the Company manages a
seismic multi-client data library with assets in Norway and Egypt. Axxis Geo Solutions
operated an ocean-bottom seismic contract business which the Company sold to
Magseis Fairfield through an earn-out structure on 3 March 2022 (see “Events after
the reporting period”).
Since the announcement of the new business focus in July 2021, the Group has made
three investments in the carbon emissions reduction and energy transition sectors.
The Group has invested a total of USD 9.9 million with a fair market value at the end
of the year of USD 18.3 million.
In October, the Group made a USD 4.7 million (NOK 40.0 million) investment in CO2
Capsol AS to help accelerate the company’s growth efforts. The investment in CO2
Capsol marked our first investment into the carbon capture segment, a growth sector
with a substantial high value addressable market. CO2 Capsol’s patented carbon
capture technology is an internationally leading technology solution based on Hot
Potassium Carbonate technology (“HPC technology”). The HPC technology offers the
uniqueness of not having to use amine in the carbon capture process which is
attractive for health reasons. In addition, CO2 Capsol’s patented system offers an
estimated 40% cost advantage relative to alternative processes.
In July 2021, Stockholm Exergi, Stockholm’s waste-to-energy company, announced its
decision to start the front-end-engineering-and-design («FEED») phase for a bio-
carbon capture facility at one of its heat and power plants. This bio-CCS facility is the
only project of its kind which has received a financial grant from the EU Innovation
Fund. CO2 Capsol’s end of pipe solution was selected as the carbon capture
technology for this facility. In addition, the company announced that it had signed
collaboration agreements with Petrofac Limited, WOIMA Finland and Hitachi Zosen
Inova. The company also announced the decision to produce a mobile carbon capture
unit, CapsolGo™. The first test campaign for this product is planned for Q3 2022.
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Power by Britishvolt Limited provided our entry into the electric vehicle battery
segment. In August 2021, the Group invested approximately USD 1.7 million (NOK
15.2 million) in the company. The Group acquired 100,000 shares at GBP 12.68 per
share and was granted 100,000 options with a strike price of GBP 12.68 per share. In
this Series B investment round, the Group joined forces with a solid investment group
including Glencore, Cathexis Venture II and NG Bailey. Britishvolt is a UK developer,
and future manufacturer, of lithium-ion cell chemistries and batteries for the rapidly
accelerating electric car market. In January 2022, the company announced a very
substantial in-principle grant from the UK government via the UK Automotive
Transformation Fund. In addition, the company announced a private debt funding
agreement of GBP 1.7 billion with Tritax and abrdn for the building of the
Northumberland Gigaplant shell and core and the associated supplier park.
Subsequently, the company has entered into a memorandum of understanding with
the British performance car manufacturer Lotus. Finally, Britishvolt has announced a
joint venture with Glencore to develop a world-leading ecosystem for battery recycling
in the UK.
In July 2021, the Group invested USD 3.4 million (NOK 30.0 million) in a convertible
loan in Arbaflame AS. The convertible loan was converted to common shares in
December 2021. Arbaflame has spent a decade and invested approximately NOK 550
million in developing a patented technology which enables the production of black
pellets from bio waste (“ArbaCore”). ArbaCore can fully replace coal in coal-fired
power plants worldwide. When replacing coal with ArbaCore, Co2 emissions are
reduced by approximately 90%. Coal-fired power plants can utilize ArbaCore in their
existing plants with only minimal adjustments to the plants and related infrastructure,
which also makes ArbaCore the superior economic choice. Through the same process
of making ArbaCore pellets from bio waste, Arbaflame’s technology is also able to
extract high value biochemicals with significant positive environmental impact and high
earnings potential.
Arbaflame has recently completed construction of it first production facility in
Kongsvinger, Norway (ArbaOne). The facility has an annual production capacity of
70,000 tons of ArbaCore pellets.
In November 2021, Arbaflame announced a letter of intent with the Ministry of Energy
of Romania for a verification test program scheduled for the first half of 2022. Subject
to a successful test program, the Ministry of Energy of Romania will grant Arbaflame a
10-year offtake agreement for 100,000 tonnes per year of ArbaCore pellets to be
produced by a new Arbaflame production facility to be built in Romania. The
agreement provides for further capacity expansion of two million tonnes per year
(representing 20 ArbaNEXT plants), sufficient to replace approximately 10% of
Romania’s coal consumption.
The three investments made to date all fit the company’s investment criteria of
significantly contributing to the reduction of carbon emissions. They offer unique and
proven technology for a scalable business model with high barriers to entry. Target
geographic markets are substantial, and the Group are entering the investments in the
pre-IPO rounds.
With respect the Axxis Geo Solutions business, the Company saw a strong
improvement in the seismic multi-client market towards the end of the year and
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expects attractive cash flow from this business over time. In the fourth quarter, the
Company reported multi-client lates sales of USD 5.5 million. Proceeds from the late
sales were used to repay the substantial majority of the Company’s financial debt.
Subsequent to year end, the Company reported an additional multi-client late sale
which will fully repay all the company’s financial indebtedness (see “Events after the
reporting period”).
In August 2021, Axxis Geo Solutions successfully completed an ROV-deployed ocean
bottom node survey in the North Sea. The survey was completed on time, on budget
and without incidents. The ocean-bottom seismic contract business has subsequently
been divested (see “Events after the reporting period”).
During the fourth quarter, the Company completed a downsizing to right size the
operations to match the new strategy. The CEO resigned in November 2021 and the
board agreed on a working transition. The CFO is also the interim CEO till a replacement
has been decided.
Comments related to the financial statements
The consolidated financial statements are prepared in accordance with International
Financial Reporting Standards («IFRS») as adopted by the European Union («EU»).
The notes are an integral part of the consolidated financial statements. The
consolidated financial statements have been prepared on a historical cost basis. The
financial statements of the subsidiaries have been prepared for the same reporting
year as the Company, using consistent accounting policies.
The consolidated financial statements are presented in thousands of USD.
Presentation and functional currency
The Group presents its consolidated financial reports in USD. For presentation in
consolidated accounts, the monetary assets and liabilities have been converted and
translated into USD at the rate of exchange prevailing at the reporting date each
quarter and historical value has been used for all other balance sheet items. The
statement of comprehensive income is converted and translated into USD at the
average exchange rate for each quarter, except for depreciation and amortization at
historical values. Exchange rate differences arising from the translation to presentation
currency are recognized in Other Comprehensive Income.
Changes in accounting principles
The Company has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective. Several amendments and interpretations
apply for the first time in 2021, but do not have an impact on the consolidated financial
statement.
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Investment in financial assets at fair value through profit or loss
Financial assets are classified at initial recognition, and subsequently measured at
amortized cost, fair value through other comprehensive income (OCI), or at fair value
through profit or loss, whereas the latter acquired principally for the purpose of
generating a profit from fluctuation in prices is the most crucial for the Group. The
classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing
them.
The Group indulges in investment in financial assets as part of its core business. The
Group’s non-current financial investments are characterized in addition to the Group’s
intention of sale, that this sale could typically be expected to occur within a two-year
time frame. The non-current financial investments are therefore treated at fair value
through profit or loss.
All such instruments are classified as non-current financial investments, unless the
Group exercises significant influence of the investment, in which case the investment
will be classified as associate.
Current investments are considered part of a held for trading portfolio if they are
acquired for the purpose of selling or repurchasing in the near term. These
investments are subsequently measured at fair value in the statement of financial
position with net changes in fair value recognized in the statement of profit and loss.
Investments subsequently measured at fair value over profit and loss in accordance
with the fair value hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs).
Net unrealized and realized gain/losses on the portfolio of investments is classified as
operating income, while net unrealized and realized losses is classified as operating
expenses.
In cases where an investment changes classification between associate and non-
current financial investment either way, the investment is derecognized and
recognized in its new classification based on its fair value as of time of
derecognition/recognition. The highest level achievable according to the IFRS fair-
value hierarchy will be applied.
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Consolidated statement of comprehensive income
Revenue
The 2021 Group’s revenues of USD 15.8 million is lower than the previous year’s
revenues of USD 92.8 million. The revenues for 2021 is mainly based on one
exclusive node seismic contract in the UK of USD 9.0 million and late sales of USD
5.5 million from the multi-client Utsira project in the North Sea. Revenues for the full
year of 2020 is mainly related to contract work in Egypt and the North Sea. In addition,
under IFRS, pre-funding of USD 27.4 million was reclassified as pre-funding revenues
following the delivery of the Utsira data processing in September 2020. The Utsira
multi-client survey had two late sales in 2020 with the Group’s share being USD 1.1
million.
Changes in fair value for investments
Change in fair value for investment in the last quarter of 2021 was a gain of USD 8.4
million compared to zero in 2020.
Operational cost
The 2021 Group’s cost of sales (COS) amounted to USD 10.4 million compared to
USD 52.3 million during the same period in 2020. The COS 2021 is mainly related to
the UK project of USD 8.3 million and USD 1.9 million to warm stack/idle project. The
largest portion of COS for the full year of 2020 is related to the projects in Egypt and
the North Sea. In addition, the multi-client project in Egypt has been capitalized with
USD 10.6 million.
The 2021 Group’s personnel expenses and other operating expenses amounted to
USD 6.6 million compared to USD 7.1 million during the same period of last year. USD
0.8 million is related to remuneration for downsizing in 2021. Various consultants fee
was USD 2.3 million for 2021 compared to USD 2.8 million for the full year 2020.
Depreciation of tangible assets
The 2021 Group’s depreciation and write downs of equipment were USD 7.0 million
compared to USD 5.9 million in 2020. There were no new investments in equipment in
2021 or 2020. During 2021, the vessel Neptune Naiad was sold with a net loss of USD
3.5 million.
Amortization of intangible assets
According to IFRS, the investment related to multi-client surveys are not amortized
until the data is ready for sale. The data processing of the multi-client 3D OBN Utsira
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survey was completed in September 2020, and the Group started linear amortization
over 4 years from Q3 2020. The straight-line amortization of Utsira was USD 7.3
million for 2021 and USD 3.6 million for 2020. In September 2020, the IFRS value of
the multi-client survey Utsira was impaired with USD 18.0 million.
Impairment
No impairment charges have been made in 2021 or 2020 for the vessel Neptune
Naiad, the node handling systems, or the seismic equipment. There has not been any
impairment of the multi-client survey in Egypt. As of September 2020, the IFRS value
of the multi-client survey Utsira was impaired with USD 18.0 million.
EBITDA and EBIT
EBITDA for the Group in 2021 was USD 7.2 million compared to USD 33.4 million for
2020.
EBITDA 2021 was negatively impacted by the Group only having one contract seismic
survey during the year. For 2020, the contract work had a positive effect on the
EBITDA. EBITDA for 2021 was also impacted by lower cost due to cost reduction
measures implemented at year-end 2020.
EBIT for the Group in 2021 was USD -7.1 million compared to USD 5.8 million in
2020. EBIT is impacted by the same factors as described above for EBITDA.
Financial items
Net financial income was USD 21.2 million in 2021 compared to net financial expense
of USD 1.9 million in 2020. The improvement is mainly related to the restructuring gain
of USD 24.7 million during 2021, offset by financial expense and currency exchange
loss of USD 3.4. The Company has completed a successful reconstruction during
2021. For 2020, the fair value estimate of the converted loans was booked as a
financial gain of USD 3.8 million. Further, financial expense and currency exchange
loss was USD 5.8 million.
Income tax (expense)
The corporate income tax in Norway is 22% in 2021. Income tax expense for 2021
amounted to USD 0.2 million compared to income tax expense of USD 7.1 million for
the same period in 2020. The tax expense for 2021 is related to UK, US and Egypt,
where the tax expense in 2020 represents mainly withholding tax and corporate tax in
Egypt.
The Company has no deferred tax assets booked as of 31 December 2021. Tax loss
carried forwards for 31 December 2021 is estimated at USD 60 million.
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Profit for the period
For 2021, the Group had a profit of USD 13.9 million compared to a loss of USD 3.1
million for the same period in 2020.
Consolidated statement of financial position
As of 31 December 2021, the Company had total assets of USD 54.8 million,
compared to total assets of USD 54.5 million as of 31 December 2020.
Total non-current assets of USD 48.0 million as of 31 December 2020 increased to
USD 50.5 million as of 31 December 2021. This is attributed to investments adding
USD 18.3 million offset by amortization of multi-client survey of USD 7.3 million and a
decrease of USD 8.4 million in fixed assets which includes the sale of the vessel
Neptune Naiad. Under its new strategy, the Company made three new investments
during the year, with a total value of USD 18.3 million as of December 2021.
Total current assets decreased from USD 6.5 million as of 31 December 2020 to USD
4.2 million as of 31 December 2021. The decrease is driven by other current asset
and inventories reduced by USD 0.4 million and a decrease in cash by USD 1.9
million. The Group’s cash balance ended at USD 4.0 million per 31 December 2021.
The Group’s equity was USD 46.7 million as of 31 December 2021 versus negative of
USD 7.9 million as of 31 December 2020. The increase in equity is due to the
completion of the reconstruction in June and issue of new shares valued at USD 5.1
million to existing creditors. In addition, a private placement and related repair offering
for a total of USD 19.6 million was completed in June and July in connection with the
reconstruction. In October, the Company completed an equity private placement of
USD 3.2 million. The equity ratio is 85.3% as of 31 December 2021 compared to
negative equity of USD 7.9 million (-14.4%) in the same period in 2020.
Total non-current liabilities decreased from USD 17.4 million as of December 2020 to
USD 0.9 million as of December 2021 due to the completion of the reconstruction
process. There is one loan to TGS which matures 23 March 2023. As subsequent
event due to a late sale of the multi-client survey Utsira in March 2022, the remaining
debt will be paid.
Due to the financial position and ongoing restructuring at year-end 2020, some of the
incurred loans had covenants. The bond loan included a minimum cash covenant of
USD 2.0 million and the covenant was fulfilled as of December 2020. The Company
had further received waivers from two covenants for all the quarters in 2020, including
year-end 2020. These two financial covenants are (i) liquid assets of not less than
120% of the outstanding loan and (ii) equity ratio of 35% or more. Since waivers have
not been obtained for the coming 12 months, the secured debt towards Eksportkreditt
Norge AS was reclassified to short-term debt as of December 2020.
Total current liabilities decreased from USD 44.9 million as of 31 December 2020 to
USD 7.2 million as of 31 December 2021. All loans related to the bond loan and
unsecured loan agreements were settled in the reconstruction. The Eksportkreditt loan
was settled as part of the sale of the vessel Neptune Naiad. As a result, interest
bearing debt current is zero as of 31 December 2021.
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Additionally, trade payables were reduced by USD 11.9 million to USD 0.3 million as
of 31 December 2021. Taxes payables has been accrued with USD 2.4 million for
corporate tax in Egypt, UK and US per December 2021 compared to zero for 2020.
None of these corporate taxes have been settled. Other current liabilities decreased
by USD 6.8 million in 2021. Other current liabilities include project related accruals for
withholding tax and crew tax in Egypt of USD 3.8 million. The Group expects the
withholding tax to be reduced, but since the taxes is not settled as of December 2021,
the Group has decided to keep same tax level in Egypt as for 2020.
Consolidated statement of cash flow
The Group’s cash flow from operating activities in 2021 was USD -9.6 million,
compared to USD 18.9 million at the same period in 2020. The reduction in operating
cash flow compared to 2020 was primarily the gain in fair value change of investments
and the gain from reconstruction with non-cash effect. For 2020, the positive effect
was mainly changes in working capital.
The Group’s cash outflow from investing activities in 2021 amounted to USD 9.9
million, compared to USD 10.4 million in the same period in 2020. The investments in
2021 is only related to the new strategy to invest in companies and technologies which
contribute to significant reduction of carbon emissions. The main investments in 2020
were in the multi-client survey in Egypt of USD 10.6 million.
The Group’s cash flow from financing activities in 2021 was positive USD 17.6 million,
compared to negative USD 4.0 million in the same period in 2020. Net proceeds from
new equity are USD 21.6 million offset by payment of instalments and interest paid of
USD 4.0 million in 2021. Payment of instalments and interest paid was USD 4.0
million in 2020.
Parent company
Carbon Transition ASA is the parent company of the Group.
In 2021, Carbon Transition ASA reported a profit after tax of USD 7.9 million,
compared to a loss of USD 5.4 million in 2020. The increase this year is significantly
impacted by the gain from the restructuring of USD 24.1 million.
At year-end 2021, Carbon Transition ASA had total assets of USD 45.4 million,
compared to USD 43.0 million at the end of 2020.
As of 31 December 2021, Carbon Transition ASA has a total positive equity of USD
44.1 million, compared to a negative equity of USD 4.5 million at the end of 2020. The
equity increased USD 19.0 million as a result of debt conversion related to
restructuring. The equity ratio ended at 97.0% as of December 2021 up from negative
ratio of 10.5% at the end of 2020.
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Going concern
The financial statements for 2021 are based on the assumption of going concern. The
board of directors and management believe that the Company has sufficient working
capital for continued operation.
Risk factors
The Group is exposed to risk factors including, but not limited to, the factors described
below. The Group’s risk factors are described in more detail in note 15.
Market risk
The Group is exposed to market specific and general economic cycles and macro-
economic fluctuations, since changes in the general economic situation affect the
demand for products and services provided by companies the Group invests in. The
performance of the Axxis Geo Solutions operations is also dependent on production
and development spending by oil and gas companies. Historically, in times of low oil
price, demand for seismic data has been significantly reduced. The Group is also
exposed to share price changes in listed investment or changes and fluctuations in
estimated equity value for non-listed investments. There is also a risk that the
companies that are invested in will need further capital in order to obtain profitability,
and that such capital will be subject to reduced pricing for various reasons compared
to the current level of pricing.
Credit risk
The Group is faced with credit risk in terms of deposits with banks as well as
receivables due from counterparts. The Group may also invest in financial credit
instruments and may in such instances be assuming credit risk. Delayed or loss of
payments from these parties may adversely impair the Group's liquidity. The
concentration of the Group’s customers in the oil and gas industry may impact the
Group's overall exposure to credit risk. The Group evaluates the credit quality of its
counterparts to minimize the risk of payment delinquency, but no assurance can be
given that the Group will be able to avoid this risk. During 2021, the Group did not
experience any material receivables losses.
Liquidity risk
Liquidity risk is the risk that the Group is not able to meet its payment obligations. The
Group is dependent on liquidity from its investments, access to long-term funding and
timely payments of receivables from customers. There can be no assurance that
available funding sources are accessible when needed nor can there be any
assurance that the Group will be able to raise new equity or access alternative
sources of funds should this be required. The Group continuously monitors its cash
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receipts and payment obligations to ensure sufficient liquidity to meet operational
needs.
Foreign exchange risk
The Group’ presents its consolidated financial report in USD, the functional currency
for the Company and all subsidiaries. Currency exchange rates fluctuate for several
reasons, including international balance of payments, economic and financial
conditions, government intervention, speculation, and other factors. The Group is
primarily exposed to USD, NOK and GBP, and fluctuations in foreign exchange rates
may therefore impact earnings. The Group has not established hedging arrangements
to mitigate the possible adverse effects of this exposure.
COVID-19 risk
The impacts of COVID-19 on businesses across the globe is substantial and presents
new challenges to normal business practices. The Group has been planning for and
monitoring developments since the initial spread of the virus in early 2020 and has
taken a series of steps to maintain the continuity of our business and to safeguard the
health of our employees and stakeholders. Nevertheless, then continuation of this
pandemic or the onset of a similar pandemic could have a significant negative impact
on operations.
Climate risk
The Group has focus on how the business, financials, new technology and investment
can contribute to reduce the impact on climate change. The new strategy has the goal
to invest in companies and technologies which contribute to significant reduction of
carbon emissions. The Group may also invest more broadly in the "energy transition"
space.
Other business risk
Risk related to cyber criminality is increasing globally. This threat is relevant for all
devices connected to the internet. In order to protect the Group’s assets and
intellectual property, additional precautions and procedures have been implemented.
The Group has taken steps to identify ongoing malicious activities and increase
employee awareness of cyber threats. Despite these efforts, no guarantee can be
made against potential future cyber-attacks and any such attack could materially
impact the Group’s business and financial position.
The Group business is subject to laws and regulations in various jurisdictions.
Changes in or violations of such laws or regulations may adversely affect the Group's
business and profitability. The Group invests in financial and managerial resources to
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maintain compliance with these laws and regulations, and failure to do so could result
in fines or penalties, enforcement actions, claims for personal injury or property
damages, or obligations to investigate and remediate damages.
The Group's multi-client business relies on a period of exclusivity in controlling the
distribution of the acquired data through licenses to customers. The exclusivity period
granted by local authorities can typically be 10 years. Any change in the duration of
such exclusivity may have a negative impact on the Company's revenues and may
cause impairment of remaining book values.
The current conflict in Ukraine may have significant impact on prices of natural
recourses as well as global capital markets. The recent oil price increase may have an
impact on multi-client late sales. The volatility in the capital markets may have an
impact on the Company’s share price and the valuation of the Group’s investments.
Research and development
The Group does no material research and development activity.
Allocation of Net Profit (loss)
The Board of Directors has proposed the profit for the Company of USD 7.7 million to be
attributed to other equity. The Company’s equity as of December 31, 2021, was USD
43.8 million.
Outlook
The focus on reducing carbon emissions and developing new energy technologies is
continuing to gain momentum internationally. Governmental policies are also forcing the
transition to new energy sources as well as the creation of alternatives to curb carbon
emissions. As a result, we are experiencing an increase in new green-technology
companies, and we are seeing a solid flow of investment opportunities which fit well with
the company’s investment strategy.
Having repaid all financial indebtedness following the Company’s most recently
announced multi-client late sale, we have substantially strengthened our balance sheet.
Going forward, we also expect material cash flow from the multi-client library which will
support our future investment efforts. We therefore believe we are positioned well to
play a meaningful role in the carbon transition shift.
We have recently experienced an uptick in the demand for seismic data in the Utsira
area. The demand increase was largely driven by the higher oil and gas prices as well
as operators increasing development and drilling activity in the Utsira area. Looking
forward, we expect this trend to continue, and we also expect to see revenues from
mergers and acquisition activity in the survey area
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Events after the reporting period
The Group announced the sale of its node on a rope equipment to Magseis Fairfield
ASA 3 March 2022. The transaction is structured based on an earnout model. The
Company will receive USD 0.5 million at closing and will additionally receive earnout
payments over a three-year period conditioned on the utilization of the equipment
acquired. The earnout payments are capped at a maximum of USD 12.0 million and
have a minimum payment clause of USD 1.5 million, subject to certain milestones. The
completion of the transaction was subject to customary closing conditions which have
been lifted 31 March 2022.
On 16 March 2022, the Group announced a new Utsira multi-client late sale of USD
1.4 million. With proceeds from this late sale, the Group will repay its outstanding USD
0.9 million loan balance and increase its cash balance by approximately USD 0.5
million. As a result, the Group will have no remaining financial indebtedness after this
sale.
Oslo, 7 April 2022
The Board of Directors and CEO of Carbon Transition ASA
Gisle Grønlie
Nina Skage
Torstein Sannes
Chairman
Director
Director
Nils Haugestad
Interim CEO
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1.1. Responsibility statement
Confirmation from the Board of Directors and general manager
The Board of Directors and the CEO of Carbon Transition ASA have today considered
and approved the annual report and financial statements for the 2021 calendar year
ended on December 31, 2021.
We confirm, to the best of our knowledge, that:
• The 2021 financial statements for the Group and Parent company have been
prepared in accordance with all applicable accounting standards.
• The information provided gives a true and fair view of the Group’s and Parent
company’s assets, liabilities, financial position and results.
• The Board of Directors report provides a true and fair overview of the
development, performance and financial position of Carbon Transition ASA
and the Group together with a description of the principal risks and
uncertainties that they face.
Oslo, 7 April 2022
The Board of Directors and CEO of Carbon Transition ASA
Gisle Grønlie
Nina Skage
Torstein Sannes
Chairman
Director
Director
Nils Haugestad
Interim CEO
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2 Environment, Social and
Governance reporting (ESG)
Carbon Transition is an investment company with a strategy to invest in companies
and technologies which contribute to significant reductions of carbon emissions. The
Company may also invest more broadly in the energy transition space. In addition, the
Company has a legacy seismic business operating under the name Axxis Geo
Solutions. Axxis Geo Solutions manages a seismic multi-client data library.
Axxis Geo Solutions is considered a passive investment of the Company. As a result,
the Group’s ESG focus is largely targeting Carbon Transition’s investment operations
Environment
The Group is committed to protecting people and the environment. As stewards of the
environment, it is the collective responsibility of the Group and our people to protect
the environments that we work in. The Group’s intent is to conduct our business in
harmony with the environment and to minimize any impact our business may have.
The Group sold its seismic node operations in March 2022 which significantly reduces
its carbon emission going forward.
Corruption
The Group is committed to preventing bribery, illegal influence, fraud and money
laundering. The Group achieve this through committing to operate all activities within
the spirit and letter of laws and regulations that govern our businesses and
employees. Employees must exercise the highest level of integrity, ethics and
objectivity in any actions and relationships which may affect the Group. Employees
must not misuse their authority or influence of their positions in these relationships.
The Group shall strive for a clear culture of openness around all matters regarding
customer care, relationship building, sponsorship, gifts, representation, travel, etc.
People
The Group is committed to ensuring a safe and respectful working environment for its
employees. The health and wellbeing of our people is the key to the Company’s
success. Equality applies to all practices and guidelines relating to the recruitment
process and hiring of all workers. We respect and protect the fundamental human and
workers’ rights in a manner consistent with laws and regulations.
The Group promotes a healthy workplace by prohibiting discrimination due to gender,
race, age, ethnicity, disability, sexual orientation, or religion and provides fair
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compensation for employees’ work. Respect for the individual is a cornerstone of the
Group’s operation.
The total number of permanent employees in the Group was nine at the end of 2021,
compared to eleven at the end of 2020, where three were temporarily laid off
(furloughed) since November 2020. The Group employed three women and six men in
2021 and three women and eight men in 2020. One employee is on parental leave in
2021. The Group has no temporary or part-time employees.
The Board of Directors consists of three members at the end of 2021, two men and
one woman. At the end of 2020, the board consisted of five members, two men and
three women.
There have not been any significant personnel injuries or accidents in the current or
prior year. In both 2021 and 2020, the average sick day percentage for the work force
was zero.
Corporate governance
The board and management have an annual review of the Group’s principles of
corporate governance. In this review, the Group clarifies the division of roles between
shareholders, the board and management. A review of these principles and how the
Group has aligned itself is described in a separate section in the annual report, in
accordance with the Accounting Act § 3-3 b regarding corporate governance.
The board of directors has adopted ethical guidelines for the Group. The purpose of
the guidelines is to create a healthy corporate culture and preserve the Group's
integrity by helping employees to set a high standard of good business practice.
Furthermore, the guidelines are intended as a tool for self-evaluation and for the
development of the Group's identity.
The shares and shareholders
As of 31 December 2021, Carbon Transition had 239 760 117 shares outstanding and
4 150 shareholders. The share price as of 31 December 2021 was NOK 1.324 (2020
NOK 0.594).
Indicators for the Group
The Group has implemented a series of performance indicators which we believe will
ensure our focus on environment, social and governance factors. These performance
indicators are in line with the guidelines put in place by the board of directors.
Management’s performance evaluation will in part be based on meeting targets for
these indicators.
The Group will start to report on these indicators from 2022.
18
Financial investments
The Group measures four indicators with respect to Carbon Transition financial
investments.
• The investment should generally contribute significantly to the reduction in
carbon emissions and/or the development of green technology.
• Investment companies should have reasonable environment, social and
governance guidelines in place.
• Appropriate corporate governance policies should have been implemented.
All investments in 2021 fulfil these indicators.
People
The Group views its employees as a core asset. The following indicators are applied
to evaluate the Group’s effectiveness in managing this resource.
• The Group targets a sickness absence of less than 2%.
• Group employees should complete an anti-corruption course not less than
once per year.
• All recruitment processes and hiring decisions need to be based on the
Group’s standards for equal treatment.
• The Group shall ensure a safe and respectful working environment for its
employees.
The indicators for people in 2021 are within the target set above.
19
3 Corporate governance
CORPORATE GOVERNANCE POLICY
Adopted by the Board of Directors on 7 April 2022
SCOPE AND APPLICABILITY OF THE POLICY
These Corporate Governance Policies (the "Policies") have been adopted by the
Board of Directors (the "Board") of Carbon Transition ASA (the "Company") to
express the corporate governance principles by which the Company conducts its
business. The Policies apply to the Company and its consolidated subsidiaries
(together the "Group") and will be evaluated by the Board and the Company's
executive management (the "Management") annually.
The Company is incorporated in Norway in accordance with the Norwegian Public
Limited Liability Companies Act of 13 June 1997 no. 45 (the "NPLCA") and is subject
to Norwegian law. Hence, the reporting requirements on corporate governance set
forth in Section 3-3b of the Norwegian Accounting Act of 17 June 1998 no. 56 (the
"Norwegian Accounting Act") and the Norwegian Code of Practice for Corporate
Governance issued by the Norwegian Corporate Governance Board on 14 October
2021, as amended from time to time (the "NUES Code"), apply to the Company. As
the Company's shares are listed on Euronext Expand Oslo, the Company is also
subject to the Norwegian Securities Trading Act of 29 June 2007 no. 75 (the "NSTA")
and the continuing obligations of stock exchange listed companies issued by the
EURONEXT EXPAND OSLO (the "Continuing Obligations"). These Policies are
secondary to provisions set out in law, in regulations made pursuant to law, and in the
Company's articles of association (the "Articles of Association").
These Policies shall apply until the Board decides otherwise.
MAIN OBJECTIVES FOR THE COMPANY'S CORPORATE GOVERNANCE
The Board shall ensure that the Company has good corporate governance to, inter
alia, support achievement of the Company's core objectives on behalf of its
shareholders and to create a strong, sustainable company. The Board believes that
good corporate governance involves openness and a trustful cooperation between the
shareholders, the Board and the Management, employees, customers, suppliers,
public authorities and society in general.
The Company endorses the NUES Code. The NUES Code is based on a "comply or
explain" principle, which involves that listed companies must comply with the NUES
Code or explain why an alternative approach has been chosen. The Company will
comply with the NUES Code, and any deviations will be listed below.
20
The Company deviates from the NUES in two areas. The Company has granted
options to the Board of Directors in 2021 and the Chairman of the Board has a
consulting agreement with the Company.
The Company's corporate governance policies are based on the following main
objectives:
a. Open, reliable, and relevant communication with the outside world
regarding the Company's business and matters related to corporate
governance
b. Equal treatment of the Company's shareholders
c. Independence between the Board, the Management and the shareholders
in order to avoid conflicts of interests
d. A clear division of work between the Board and the Management and the
shareholders
e. Good control and corporate governance mechanisms in order to achieve
predictability
and reducing the level of risks for shareholders and stakeholders.
In addition to these Policies, the Company has adopted the following internal manuals:
A Code of Conduct for Business, Ethics and Corporate Social Responsibility
Instructions to the Board, and Instructions to the Chief Executive Officer ("CEO").
The above-mentioned internal manuals form an integral part of the Company's
corporate governance policies. In addition, the Company has adopted a manual for
"Inside Information and Additional Disclosure Routines".
THE BUSINESS OF THE COMPANY
The operations of the Company shall be in compliance with the business objective as
set forth in § 3 of the Articles of Association, which reads as follows:
"The Company's business involves operation of industry, trade and business
related to energy, IT and commodities, and sectors of the business directly or
indirectly in connection with such, including investments in and acquisition of
businesses, securities, and financial instruments and other assets and
participation in other businesses directly or indirectly related thereto."
The Board shall define clear objectives, strategies, and risk profiles for the Company's
business activities such that the Company creates value for shareholders in a
sustainable manner. When carrying out this work, the Board shall take into account
financial, social and environmental considerations. The Company shall have Policies
for how it integrates the interests of the society at large into the value creation, please
refer to the Code of Conduct for Business, Ethics and Corporate Social Responsibility.
The Board shall at least on an annual basis evaluate targets, strategies and risk
profiles.
21
EQUITY AND DIVIDENDS
Equity
The Board shall ensure that the Company's capital structure is in line with its goals,
strategy and risk profiles, and in accordance with the applicable laws and regulations.
Dividends
The Board proposes any distribution of dividends to the general meeting. The general
meeting determines any distribution of dividends in accordance with Section 8-1 and
Section 8-2 of the NPLCA. The grounds for any proposal to authorize the Board to
approve the distribution of dividend shall be explained. The Board shall establish a
clear and predictable dividend policy, which shall be available at the Company's
website.
Board authorizations
Any proposed authorizations to the Board to increase the Company's share capital
shall be restricted to defined purposes and shall be dealt with as separate agenda
items at the general meeting. Board authorizations shall be limited in time to the date
of the next annual general meeting, and in any event to 30 June the same year. This
also applies to any authorization to the Board for the Company to purchase own
shares.
EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH CLOSE
ASSOCIATES
Equal treatment of shareholders
All shareholders shall be treated on an equal basis, unless there is a just cause for
treating them differently in accordance with applicable laws and regulations. In the
event of an increase in share capital of the Company through issuance of new shares,
a decision to waive the existing shareholders' pre-emptive rights to subscribe for
shares shall be justified. If the Board resolves to issue new shares and waive the pre-
emptive rights of existing shareholders pursuant to a Board authorization granted by
the general meeting, the justification shall be publicly disclosed in a stock exchange
announcement issued in connection with the shares issue. The reasons for any
deviation from equal treatment of all shareholders in capital transactions will be
included in the stock exchange announcement made in connection with the
transaction.
Any transactions carried out by the Company in the Company's own shares shall be
carried out through the EURONEXT EXPAND OSLO and in any case at prevailing
stock exchange prices. In the event that there is limited liquidity in the Company's
shares, the Company shall consider other ways to ensure equal treatment of
shareholders. Any transactions in own shares will be evaluated in relation to the rules
on the duty of disclosure, as well as in relation to the prohibition against illegal insider
22
trading and market manipulation, the requirement for equal treatment of all
shareholders, and the prohibition of unreasonable business methods.
Transactions with close associates
Any transactions, agreements or arrangements between the Company and
shareholders; a shareholder's parent company; members of the Management or close
associates of any such parties, may only be entered into as part of the ordinary course
of business and on arm's length market terms. All such transactions shall where
relevantly comply with the procedures set out in the NPLCA. The Board shall obtain
an independent third-party evaluation, unless the transaction, agreement or
arrangement in question is considered to be immaterial or covered by the provisions of
section 3-16 of the NPLCA.
SHARES AND NEGOTIABILITY
There shall be no limitation with respect to any party's ability to own, trade or vote for
the Company's shares. The Articles of Association contain no restrictions on
negotiability of the shares.
GENERAL MEETINGS
Exercise of rights
The Board shall ensure that the Company's shareholders can participate at general
meetings. This shall be facilitated by the following:
• the Board shall ensure that the Company's shareholders can participate in
the general meeting
• The proposed resolutions and any supporting documents shall be sufficiently
detailed, comprehensive, and specific allowing shareholders to understand
and form a view on all matters to be considered
• The deadline for shareholders to give notice of their attendance at the
general meeting shall be no later than two business days prior to the date of
the general meeting in accordance with the Articles of Association
• Shareholders who cannot attend the meeting in person will be given the
opportunity to vote. The Company will design the form for the appointment
of a proxy to make voting on each individual matter possible and should
nominate a person who can act as a proxy for shareholders
• The Board and the chair of the general meeting shall ensure that the
shareholders are able to vote separately on each individual matter, including
on each individual candidate nominated for election to the Board and other
corporate bodies (if applicable)
• The Chairman shall be present at general meetings, as well as the auditor
should be present at general meetings where matters of relevance for such
committees/persons are on the agenda, and
• The Board shall make arrangements to ensure that the chair of the general
meeting is independent.
23
Participation without being present
Shareholders who are unable to attend the general meeting shall according to the
Company's articles of association shall be given the opportunity to vote in writing
and/or vote electronically in a period before the general meeting in accordance with
the NPLCA Section 5-8. Furthermore, shareholders who are unable to attend the
general meeting in person shall be given the opportunity to vote by proxy. In this
respect, the Company shall:
• Provide information in the notice to the general meeting on the procedure for
attending by proxy
• Nominate a person who can act as a proxy for shareholders and
• Prepare a proxy form, which shall, insofar as possible, be set up so that it is
possible to vote on each individual item on the agenda and candidates that
are nominated for election.
NOMINATION COMMITTEE
The Articles of Association of the Company require it to have a Nomination
Committee.
The Nomination Committee shall consist of up to 3 members elected by a
Shareholders Meeting for a period of up to 2 years at the time, unless the
Shareholders Meeting decides a shorter period. The Nomination Committee shall
make recommendation and prepare proposals to the Shareholders Meeting for:
• Election of members of the Board of Directors and remuneration of the
Directors and any Board Committees
• Election of the Nomination Committee and remuneration of the Nomination
committee
The proposals shall be made available no later than 21 days prior to the Shareholders'
Meeting.
The Nomination Committee shall meet at least annually with the Board of Directors, the
executive management, and the CEO, and shall consult with selected shareholders to
ensure that the Nomination Committee have their support.
BOARD COMPOSITION AND INDEPENDENCY
The Board shall be composed in a way that it can (i) attend to the common interests of
all shareholders and meet the Company's need for expertise, capacity and diversity
and (ii) act independently of special interests. The majority of the shareholder-elected
Board members shall be independent of the Management and significant business
contacts. At least two of the members of the Board shall be independent of the
Company's major shareholder(s).
For the purposes of these Policies, a major shareholder shall mean a shareholder who
owns or controls more than 10% of the Company's shares or votes, and
independence shall entail that there are no circumstances or relations that may be
24
expected to be able to influence an independent assessment of the person in
question. The Board shall not include members of the Management.
The Chair of the Board is elected by the general meeting. The term of office for
members of the Board shall not be longer than two years at a time. Members of the
Board may be re-elected.
The Company's annual report shall provide information regarding the expertise of the
members of the Board, as well as information on their history of attendance at board
meetings. Further, the annual report shall identify the members of the Board that are
considered to be independent. Members of the Board are encouraged to own shares
in the Company.
THE WORK OF THE BOARD
General
The Board has implemented instructions for the Board and the Management, focusing
on determining a clear allocation of internal responsibilities and duties. The respective
objectives, responsibilities and functions of the Board and the CEO shall be in
compliance with rules and standards applicable to the Company and are described in
the Company's "Instructions for the Board" and "Instructions for the CEO".
The Board shall ensure that the members of the Board and the members of the
Management make the Board aware of any material interests that they may have in
matters to be considered by the Board.
The Board's consideration of matters of a material character in which the Chair of the
Board is, or has been, personally involved, shall be chaired by another member of the
Board to ensure a more independent consideration of the matter in question.
Board committees
The Board has an audit committee (the "Audit Committee"), which is a working
committee for the Board, preparing matters and acting in an advisory capacity. The
duties, tasks and composition of the Audit Committee shall be in compliance with the
NCPLA. In particular, the Audit Committee shall act as a preparatory body and support
the Board in the exercise of its responsibility relating to financial reporting, auditing,
internal controls, compliance with ethical Policy such as Environmental, Social and
Governance ("ESG") and overall risk management.
The members of the Audit Committee are elected by and amongst the members of the
Board for a term of up to two years. The entire Board shall not act as the Company's
Audit Committee. At least one member of the Audit Committee should be competent in
respect of finance and audit, and the majority of the members should be independent
of the Company. The mandate of the Audit Committee is subject to annual revision.
The Company has not appointed a remuneration committee. A remuneration
committee has not deemed to be of importance and the Board has, after
25
consideration, decided to maintain a simple and cost-effective governance structure.
The Board will determine the remuneration and compensation scheme of the
Company in accordance with applicable law.
The Board shall provide details in the annual report of the Audit Committee and any
other board committees, if appointed.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board shall ensure that the Company has sound internal control and systems for
risk management that are appropriate in relation to the extent and nature of the
Group's business activities.
The Board shall carry out an annual review of the Group's most important areas of
exposure to risk and its internal control measures. The review shall pay particular
attention to:
• Changes relative to previous years' reports in respect of the nature and
extent of material risks and the Company's ability to cope with changes in its
business and external changes
• The extent and quality of the Management's routine monitoring of risks and
the internal control system and, where relevant, the work of the internal audit
function
• The extent and frequency of the Management's reporting to the Board on the
results of such monitoring, and whether this reporting makes it possible for
the Board to carry out an overall evaluation of the internal control situation
in the Group and how risks are being managed
• Events of material shortcomings or weaknesses in internal control that come
to light during the course of the year which have, could have, or may have
had a significant effect on the Group's financial results or financial standing
and
• How well the Company's external reporting process functions.
Based on the instructions by the Board, the CEO shall implement internal control
measures and propose the same to the Board.
The CEO shall effectuate internal control measures on the basis of the instructions by
the Board and report the results to the Board annually in accordance with the Board's
annual plan. The report to the Board shall provide a balanced presentation of all
material risks and how such risks are handled through the internal control measures of
the Company.
The main areas of internal control related to financial reporting shall be described and
included in the corporate governance report to be prepared by the Board pursuant to
Section 3-3b of the Norwegian Accounting Act and the Continuing Obligations. This
account should include sufficient and properly structured information to make it
possible for shareholders to understand how the Company's internal control system is
organized. The account should address the main areas of internal control related to
26
financial reporting. This includes the control of environment, risk evaluation, control
activities, information and communication and follow-ups.
BOARD REMUNERATION
The remuneration to the members of the Board shall be determined by the annual
general meeting each year. The Board's remuneration shall reflect the Board's
responsibility, expertise, use of time and the complexity of the Company's business
activities. Remuneration shall not be dependent on or linked to the Company's
performance.
If any Board member has received remuneration above the standard Board member
fee, this shall be specified in the annual report.
EXECUTIVES REMUNERATION
The Company has prepared Policy for determining remuneration to the CEO and other
executive members in accordance with Section 6-16a of the NPLCA, which is
considered to be clear and easily understandable. The Policy shall, at all times,
support prevailing strategy, long-term interests, financial sustainability and values of
the Company.
The total remuneration to the CEO and other executive members consists of basic
salary (main element), benefits in kind, variable salary, pension, and insurance
schemes.
Performance-related remuneration to the executive members in the form of share
options, bonus programs or similar shall be linked to value creation for shareholders or
the Company's profit over time. Such arrangements, including warrants and share
option arrangements, shall incentivize performance and be based on quantifiable
factors that the executive member in question may influence. Such performance-
related remuneration will ordinarily be subject to an absolute limit.
The Board prepares Policy for the remuneration of executive members. Such Policy
shall include the main principles for the Company's remuneration policy and shall
contribute to aligning the interests of the shareholders and the executive members.
These Policies shall be communicated to the annual general meeting, and it shall be
clearly stated which aspects of the Policies that are advisory and which, if any, are
binding. The general meeting shall vote separately on each of these aspects of the
Policy.
INFORMATION AND COMMUNICATIONS
Financial reporting and communication
The Company's financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS). Reporting must fulfil statutory requirements and
provide sufficient information to allow the Company's stakeholders to form as accurate
27
a picture of the business as possible. The Company shall report in accordance with
the provisions of the NSTA, as well as the requirements pursuant to the Continuing
Obligations.
The Company shall at all times provide its shareholders, the Euronext Expand Oslo
and the financial market in general with timely and precise information. Such
information will be given in the form of annual reports, quarterly reports, press
releases, stock exchange announcements and investor presentations. The Company's
report on corporate social responsibility shall be integrated in the annual report. The
Board has established Policy for the Company's reporting of financial and other
information.
The Company shall each year publish a financial calendar with details of the dates of
important events such as the general meeting, publication of interim reports, open
presentations, and payment of the dividend.
The Board has adopted routines for, inter alia and the handling of inside information.,
Information to the Company's shareholders
In addition to the Board's dialogue with the Company's shareholders at general
meetings, the Board should make suitable arrangements for shareholders to
communicate with the Company at other times in order to facilitate an understanding
of which matters affecting the Company from time to time and which are of particular
concern to the Company's shareholders. Communications with the shareholders
should always be in compliance with the provisions of applicable laws and regulations
and in consideration of the principles of transparency and equal treatment of the
Company's shareholders.
Information to the Company's shareholders shall be published at the Company's
website at the same time as it is sent to the shareholders. The Board has established
Policy for the Company's contact with shareholders outside the general meeting.
TAKE-OVERS
Although it is recommended by the NUES Code, the Board has not established
separate Policy on how to respond in the event of a take-over bid, but will comply with
the following principles should such event occur:
In the event of a take-over bid, the Board shall ensure that
a. shareholders in the Company are treated equally
b. shareholders are given sufficient information and time to form a view of the offer
c. the Group's business activities are not disrupted unnecessarily
d. the bid is not hindered or obstructed by the Board unless there are reasons to
do and that
e. in case the bid is made for the Company's shares, no authorizations or
resolutions are exercised or made by the Board with the intention to obstruct the
take-over bid unless this is approved by the general meeting subsequent to the
announcement of the bid.
28
With respect to any agreements entered into by the Company and a bidder, the
following principles shall apply:
a. An agreement limiting the Company's ability to arrange other bids for the
Company's shares shall only be entered into if it is self-evident that such
agreement is in the Company and the shareholders' common interest. This shall
also apply to any agreement on financial compensation to the bidder if the bid
does not proceed. Any financial compensation should be limited to the cost the
bidder has incurred in making the bid.
b. An agreement that is material to the market's evaluation of the bid shall be
disclosed no later than at the same time as the announcement that the bid will
be made is published.
c. Any transaction that de facto is a disposal of the Company's activities shall be
decided by the general meeting.
If an offer is made for the Company's shares, the Board shall issue a statement
recommending its shareholders to accept or decline the offer. The Board's statement
shall make it clear whether the views expressed are unanimous, and if such is not the
case, explain the basis on which specific members of the Board have excluded
themselves from the statement. The Board shall ensure that an explained valuation
of the offer is prepared by an independent expert, which shall be disclosed no later
than at the time of the disclosure of the Board’s statement.
AUDITOR
The Board shall ensure that the auditor annually submits the main features of the plan
for the audit of the Company to the Audit Committee.
The auditor shall participate in Board meetings dealing with the annual accounts,
where it shall
a. report on any material changes in the Company's accounting principles and key
aspects of the audit
b. comment on any material estimated accounting figures and
c. report all material matters on which there has been disagreement between the
auditor and the Management (if any).
The Board shall establish Policy for the Management regarding the use of the auditor
for work not related to the statutory audit review.
The Board shall at least once a year review the Company's internal control procedures
with the auditor, including identified weaknesses by the auditor and proposals for
improvements.
29
4 Consolidated financial statement
Carbon Transition Group
4.1. Consolidated statement of comprehensive income
USD thousands
Note
2021
2020
Revenue
3/4
Other income
4
Changes in fair value for investments
Cost of sales
5
(10 381 )
(52 313 )
Personnel expenses
3/21
(3 469 )
(3 388 )
Other operating expenses
3
(3 165 )
(3 691 )
Amortization & impairment multi-client & goodwill
11
(7 312 )
(21 620 )
Depreciation & impairment
10
(7 029 )
(5 934 )
Operating profit (loss) (EBIT)
(7 136 )
Gain on debt reconstruction
2.3
Financial income
6
Financial expenses
6
(2 610 )
(5 315 )
Currency exchange gain (loss)
6
(836 )
(424 )
Profit (loss) before tax
Income tax (expense)
7
(152 )
(7 086 )
Profit (loss) for the period
(3 133 )
Currency translation adjustments
Other comprehensive income (loss) for the period
Total comprehensive income (loss) for the period
(3 133 )
Earnings (loss) per share
Basic earnings per average share
(0.53 )
Diluted earnings per average share
(0.53 )
30
4.2. Consolidated statement of financial position
USD thousands
Note
31.12.2021
31.12.2020
Assets
Non-current assets
Multi-client library
11
Property, plant and equipment
10
Investments
13
Total non-current assets
Current assets
Inventories
12
Other current assets
9
Bank deposits, cash in hand
8
Total current assets
Total assets
31
4.3. Consolidated statement of financial position
USD thousands
Note
31.12.2021
31.12.2020
Equity and Liabilities
Equity
Share capital and other paid in capital
19
Other reserves
(33 200 )
(47 145 )
Total equity
(7 852 )
Non current liabilities
Interest bearing debt
14
Total non current liabilities
Current liabilities
Interest bearing debt current
14
Trade payables
16
Taxes payables
7.18
Other current liabilities
18
Total current liabilities
Total liabilities
Total equity and liabilities
Oslo, 7 April 2022
The Board of Directors and CEO of Carbon Transition ASA
Gisle Grønlie
Nina Skage
Torstein Sannes
Chairman
Director
Director
Nils Haugestad
Interim CEO
32
4.4. Consolidated statement of change in equity
USD thousands
Share
capital
Additional
paid-in
capital
Accumulated
earnings
Other
equity/
Share
based
programme
Total equity
Balance as of 01.01.2021
(47 546 )
(7 852 )
Profit (loss) for the period
Other comprehensive income (loss)
New shares issued - cash settled
Cost for new shares issued
(2 163 )
(2 163 )
Capital increase - debt conversion
Share based payment
Balance as of 31.12.2021
(33 611 )
USD thousands
Share
capital
Additional
paid-in
capital
Accumulated
earnings
Other
equity/
Share
based
programme
Total equity
Balance as of 01.01.2020
(55 291 )
(4 723 )
Profit (loss) for the period
(3 133 )
(3 133 )
Other comprehensive income (loss)
Write down of par value
(10 878 )
Share based payment
Balance as of 31.12.2020
(47 546 )
(7 852 )
33
4.5. Consolidated statement of cash flow
USD thousands
Note
2021
2020
Cash flow from operating activities
Profit (loss) before tax
7
Taxes paid
(147 )
(2 116 )
Depreciation and amortization
Changes in fair value for investments
(8 404 )
Gain reconstruction
6
(24 667 )
Currency (gain)/loss without cash flow effects
(67 )
(81 )
Interest expense
6
Share based payment cost
22
Reconstruction payments
(5 077 )
Change in trade receivables
Change in trade payables
(2 631 )
(29 396 )
Change in inventories
12
Change in other current assets
Change in contract liabilities
(22 729 )
Change in accrued interest
(142 )
Other working capital changes
Net cash from operating activities
(9 645 )
Cash flow from investing activities
Investment in property, plant and equipment
10
(62 )
Disposal of property, plant and equipment
Investment in multi-client library
11
(10 576 )
Cash received/paid from investments
(9 864 )
Net cash flow from investment activities
(9 864 )
(10 434 )
Cash flow from financing activities
Net proceeds from interest bearing debt
-
-
Repayment of interest bearing debt
(2 295 )
(1 440 )
Payment of lease liabilities (recognized under IFRS 16)
17
(73 )
(220 )
Net proceeds from new equity
Interest paid lease liabilities
17
(1 )
(10 )
Interest paid
(1 587 )
(2 321 )
Net cash flow from financial activities
(3 991 )
Net change in cash and cash equivalents
(1 868 )
Cash and cash equivalents balance 01.01
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents balance 31.12
34
4.6. Notes to the consolidated financial statement
Note 1 General information about the Company and basis for presentation
General information
Carbon Transition Group comprise Carbon T ransition ASA (referred to as the
“Company” or the “Parent”) and its subsidiaries (together referred to as the “Group”).
Company is listed on EURONEXT EXPAND OSLO and traded under the ticker
CARBN.
The Company’s registered office is at As kekroken 11, 0277 Oslo , further the Group is
located with operational office in Houston. The Group has due to local requirement,
when operating OBN survey, offices also in Cairo.
Carbon Transition ASA has an international liability insurance for the Board of
Directors and management. The insurance coverage is up to MNOK 50 per year for
total revenue of MNOK 612 and applies to the Parent company including subsidiaries.
refocused the business model to become a listed investment co mpany with the goal to
space. Carbon has a legacy seismic business operating under the name Axxis Geo
Solutions, with a multi-client data library.
Basis of Preparation
The consolidated financial statements are prepared in accordance with International
Financial Reporting Standards («IFRS») as adopted by the European Union (“EU”),
their interpretations adopted by the International Accounting Standards Board (IASB)
and the additional requirements of the Norwegian Accounting Act as of 31 December
2021.
The notes are an integral part of the consolidated financial statements.
The consolidated financial statements have been prepared on a historical cost basis,
except for certain financial assets financial instruments that have been measured at
fair value. The financial statements of the subsidiaries have been prepared for the
same reporting year as the Company, using consistent accounting policies.
The consolidated financial statements are presented in thousands of USD.
The consolidated financial statements of the Group were authorized by the Board of
Directors on 7 April 2022. The consolidated financial statements will be presented for
approval at the Annual General Meeting on 25 May 2022. Until this date the Board of
Directors have the authority to amend the financial statements.
35
The Group has prepared the financial statements on the basis that it will continue to
operate as a going concern.
Note 2.0 Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements comprise the Company and its subsidiaries.
Subsidiaries are all entities over which the Company has control. Assets, liabilities,
income, and expenses of a subsidiary acquired or disposed of during the year are
included in the income statement from the date the Company gains control until the
date the Company ceases to control the subsidiary.
All intra-group assets and liabilities, equity, income, expenses, and cash flows relating
to transactions between members of the Group are eliminated in full on consolidation.
Presentation and functional currency
The Group presents its consolidated financial reports in USD. For presentation
in consolidated accounts, the monetary assets and liabilities has been converted
and translated into USD at the rate of exchange prevailing at the reporting date
each quarter and historical value has been used for all other balance sheet
items. The statement of profit or loss are converted and translated into USD at
the average exchange rate for each quarter, except for depreciation and
amortization at historical values. Exchange rate differences arising from the
translation to presentation currency are recognized in Other Comprehensive
Income.
Foreign Currency
Transactions in foreign currencies are translated using the exchange rates prevailing
at the dates of the transactions. Monetary assets and liabilities in non-functional
currencies are translated into functional currency spot rate of exchange ruling at the
date of the balance sheet. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation of monetary assets and
liabilities denominate in non-functional currencies are recognized in the income
statement.
Revenue recognition
Revenue from contracts with customers comes from two different business models.
36
Contract seismic surveys is projects where the Group performs seismic services in
accordance with customer specifications and the customer is the owner of all data
collected. The contracts can include both collection of data and processing. If both
services are included in a contract, the contract consist of two performance
obligations. The Group has so far only had one multi-client contract with processing.
Revenue is recognized to the extent that it is probable that the economic benefits will
flow to the Group 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 for services in the ordinary course of the Group’s activities. Revenue is
shown net of withholding and value-added taxes.
The Company applies the practical expedient for short-term advances received from
customers. That is, the promised amount of consideration is not adjusted for the
effects of a significant financing component if the period between satisfying the
performance obligation and the payment is one year or less. Where the Company has
satisfied its performance obligations and has a right to consideration, an accrued
revenue is recognized. The principles applied for each of the main types of contracts
with customers are described in more detail below.
Contract seismic surveys
The Group recognizes contract revenue (whether priced as lump sum, day rate or unit
price) based on the percentage of completion method (POC). Progress is measured in
a manner generally consistent with the physical progress on the project. The revenue
recognition is based on a split between acquisition work and data processing, only if
both services are included in the contract. For the acquisition work the progress is
based on the number of energy releases in the water. The progress of the data
processing is measured based on estimated time of completion. Any amount received
exceeding recognized revenue, is recorded on the balance sheet as a contract liability.
Conversely, recognized revenue exceeding payments received is recognized as a
contract asset, or a receivable if there is a right to payment that is not conditional of
additional performance.
The contracts may include mobilization fees. These payments are included in the
transaction price. No revenue is recognized before the data acquisition commences.
Any mobilization cost is capitalized as a cost to fulfil a contract and are amortized over
the data acquisition period. The costs primarily relate to relocation of vessels and
other preparation costs that can be directly allocated to the contract. The Group incur
these costs to be able to fulfil the contract, and they are capitalized to the extent that
they are expected to be recovered by the contract.
Multi-client revenue
Multi-client is granting of licenses to the Group’s multi-client library. In the contracts
the customer gets a non-exclusive right to use the data from a specific survey, where
the Group already has, or will collect and process data. The Group owns the data in
the library. Before the Group initiates a new multi-client survey, the Group has its own
37
target to always have one or more committed customer. Revenues from these
contracts are defined as prefunding revenues. The advantages for pre-funding
customers are generally the possibility to influence the project specifications, early
access to acquired data, and discounted prices Revenues from contracts that are
signed after the survey is complete are defined as Late sales.
Multi-client pre-funding
The Company recognizes pre-funding revenue as “right to use” licenses and the
revenue is recognized at the point in time when the “right to use” license is transferred
to the customer.
When the license is transferred to the customer depends on the specific contract but is
typically upon completion of processing of the survey and granting of access to the
finished data or delivery of the finished data.
Cost to obtain contracts
Incremental cost of obtaining contracts with customers are recognized as an asset to
the extent that the entity expects to recover those costs. The incremental cost of
obtaining a contract are those costs that would not have incurred if the contract had
not been obtained. The costs are amortized over the same period as revenue for the
related contract is recognized.
Multi-client late sales
Customers are granted a license from the Group which entitles them to access a
specific part of the multi-client data library. The license payment is fixed and is
required when the license is granted. The late sale revenue is recognized when a valid
licensing agreement is signed, and the multi-client library data made accessible to the
customer.
Investment in financial assets at fair value through profit or loss
Financial assets at fair value through profit and loss for the Group is equity
instruments and convertible loan.
Financial assets are classified at initial recognition, and subsequently measured at
amortized cost, fair value through other comprehensive income (OCI), or at fair value
through profit or loss, whereas the latter acquired principally for the purpose of
generating a profit from fluctuation in prices is the most crucial for the Group. The
classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing
them.
38
The Group indulges in investment in financial assets as part of its core business. The
Group’s non-current financial investments are characterized in addition to the Groups
intention of sale, that this sale could typically be expected to occur within a two year
time frame. The non-current financial investments are therefore treated at fair value
through profit or loss.
All such instruments are classified as non-current financial investments, unless the
Group exercises significant influence of the investment, in which case the investment
will be classified as associate.
Current investments are considered part of a held for trading portfolio if they are
acquired for the purpose of selling or repurchasing in the near term. These
investments are subsequently measured at fair value in the statement of financial
position with net changes in fair value recognized in the statement of profit and loss.
Investments subsequently measured at fair value over profit and loss in accordance
with the fair value hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs).
Net unrealized and realized gain/losses on the portfolio of investments is classified as
operating income, while net unrealized and realized losses is classified as operating
expenses.
In cases where an investment changes classification between associate and non-
current financial investment either way, the investment is derecognized and
recognized in its new classification based on its fair value as of time of
derecognition/recognition. The highest level achievable according to the IFRS fair-
value hierarchy will be applied.
Property, plant and equipment
Property, plant, and equipment are stated at historical cost less accumulated
depreciation and any accumulated impairment loss. Historical cost includes costs
directly attributable to the acquisition of the item. Costs are included in the asset’s
carrying amount or recognized as a separate asset, if appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group
and the cost of the item can be measured reliably. Costs of all repairs and
maintenance are expensed as incurred. Depreciation of property plant and equipment
is calculated using the straight-line method, over the estimated useful life.
39
The asset’s residual values, useful lives, and method of depreciation are reviewed at
each balance sheet date and adjusted if appropriate. If an asset’s carrying amount is
greater than its estimated recoverable amount, the asset is immediately impaired to
the recoverable amount.
Assets under construction are carried at cost, less accumulated impairment.
Depreciation commences when the asset is ready for its intended use.
An item of property, plant and equipment is derecognized upon disposal or when no
future economic benefits are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the income
statement when the asset is derecognized.
Leases
The Company assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases,
except for short-term leases and leases of low-value assets. The Company recognizes
the liabilities to make lease payments and right-of-use assets representing the right to
use the underlying assets.
Lease term
The lease term is determined on the commencement date of the lease, and
corresponds to the term of the lease contract, unless the Company is reasonably
certain that it will exercise contractual extensions or termination options.
Measurement of lease liabilities
At the commencement date of the lease, the Company recognizes a lease liability
measured at the present value of lease payments due under the contract, less any
lease incentives receivable, plus the costs of purchase or termination options if
reasonably certain to be exercised. Lease payments are discounted using the interest
rate implicit in the lease. If that rate cannot be determined, the Company’s incremental
borrowing rate is used, being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
40
Subsequently, the carrying amount of the lease liability is increased to reflect the
accumulation of interest on the liability balance and reduced as the lease payments
are charged to the liability. In addition, the carrying amount of the lease liability is
remeasured to reflect contractual modifications, changes to lease payments or
changes in the assessment of the lease term.
Measurement of right-of-use assets
Right-of-use assets are measured at cost, comprising the initial measurement of lease
liability, lease payments made at the commencement date, initial direct costs and
estimated restoration costs, less any lease incentives received. Subsequently, the
right-of-use asset is measured at cost, less accumulated depreciation, and impairment
losses, and adjusted for any remeasurement of lease liabilities. Right-of-use assets
are depreciated on a straight-line basis over the shorter of the lease term and the
estimated useful lives of the assets. The right-of-use assets are also subject to
impairment.
Short term leases and low value leases
The Company has elected to apply the recognition exemption to lease contracts with a
duration of less than 12 months, or that relate to assets with an underlying low value.
Lease payments associated with short-term leases and leases of low-value assets are
expensed on a straight-line basis.
Other short-term leases less than 12 months and payments of these leases are
charged to the income statement on a straight-line basis over the period of the lease.
Intangible assets
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 at the date
of acquisition. Following initial recognition, intangible assets are carried at cost less
any accumulated amortization and any accumulated impairment losses.
Intangible assets with defined useful lives are amortized over the useful economic life
and assessed for impairment whenever there is an indication that the intangible asset
may be impaired. The amortization period and method are reviewed at least every
financial year end.
Other assets are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is
recognized for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs of disposal and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from other assets or groups
of assets (cash-generating units). Non-financial assets other than goodwill that
41
suffered an impairment are reviewed for possible reversal of the impairment at the end
of each reporting period.
Multi-client library
Capitalization
The multi-client library consists of geophysical data to be licensed to customers on a
non-exclusive basis. Directly attributable costs associated with the production and
development of multi-client projects such as data acquisition and processing, and
direct project costs are capitalized. Cost directly attributable to data acquisition and
processing include vessel costs, payroll and related costs for crew, project
management, agent, other related project costs, hardware/software costs and
mobilization costs when relocating a vessel to the survey areas.
Amortization
The OBN multi-client library will be amortized from the date the processed data are
ready
to be transferred to customers, using straight line amortization. Each project will be
evaluated individually, for the Utsira 3D OBN multi-client library that was processed
and ready for sale in September 2020, the Company used 4 years lifetime for the
linear amortization.
Before the library is completed, the Group test for impairment annually. To ensure that
value in use above net book value, the Group will perform an additional impairment
test after pre-funding revenues are recognized.
Inventories
Inventories are valued at the lower of cost or net realizable value. Cost is determined
using the first-in, first-out (FIFO) method. Net realizable value is the estimated selling
price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale. The Group’s inventory consists primarily
of fuel.
Taxes
a) Current income tax
Current income tax assets and liabilities for the current and prior periods are
measured using the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted at the reporting date in the countries where the
Group operates and generates taxable income. Withholding taxes are included in the
tax expense to the extent that a tax credit is available in the income tax in the home
state.
42
Current income tax relating to items recognized directly in equity or other
comprehensive is recognized in equity or other comprehensive income and not in the
income statement.
Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
b) Deferred tax
Deferred tax is provided for using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements. Deferred tax is determined using tax rates (and
laws) that have been enacted or substantially enacted on the balance sheet date and
are expected to apply when the related deferred tax asset is realized, or the deferred
tax liability is settled.
Deferred tax assets are recognized to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be utilized.
Deferred tax is provided on temporary differences arising on investments in
subsidiaries, except where the timing of the reversal of the temporary difference is
controlled by the Group and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax relating to items recognized directly in equity is recognized in equity and
not in the income statement.
Employee benefits
Pension obligations
The Group operates a defined contribution plan. The net pension cost for the period is
presented as an employee expense.
Share based payment
The Group has an option plan for employees and one member of the Board. The fair
value of options granted under the plan is recognized as employee benefit expense
with a corresponding increase in equity. The total expense is recognized over the
vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the Group revises its estimates of the
number of options that are expected to vest, based on the non-market vesting and
service conditions. It recognizes the impact of the revision to original estimates, if any,
in profit and loss, with a corresponding adjustment to equity.
43
Provisions
Provisions are recognized when the Group has a present obligation as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of
the obligation.
Trade receivables
Trade receivables sale of goods and services are held to collect contractual cash
flows. They are initially recognized at the transaction price from sale of goods or
services and are subsequent measured with a provision for expected credit loss.
Impairment losses are measured at lifetime expected credit losses in accordance with
IFRS 9.
The Group’s impairment model for trade receivable, contract assets and other current
assets is a simplified approach based on lifetime expected credit losses (ECL).
Impairment is based on an estimate of the probability of default for the financial assets
reflecting an unbiased amount determined by evaluating a range of possible
outcomes; the time value of money and reasonable available information related to
past events, current conditions, and forecasts of future economic conditions.
The Group uses an impairment model with the following characteristics: The
receivables are organized based on the credit risk of the customers. The primary
portfolio is the receivables where invoicing is done to customers with a high credit
rating, typical large listed or state-owned oil companies. This portfolio has a low risk of
default and therefore no impairment loss is initially recognized based on the
expectation of all of the accounts being paid. Further, an individual assessment is
performed on specific customer receivables, typically if a customer is in known
financial distress or has declared bankruptcy.
On confirmation that the trade receivable will not be collectable, the gross carrying
value of the asset is written off against the associated provision.
Financial liabilities
Financial liabilities represent a contractual obligation to deliver cash in the future.
Financial liabilities, with the exception of derivatives, are initially recognized at fair
value net of transaction costs directly attributable to the transaction and are
subsequently measured at amortized cost. Financial liabilities are derecognized when
the obligation is discharged through payment or when the Group is legally released
from the primary responsibility for the liability.
Classification and measurement
Financial instruments at fair value through profit and loss
44
This category comprises financial assets and liabilities held for trading. Financial
instruments in this category are initially recorded at fair value, and transaction costs
are expensed in the consolidated statement of profit and loss. Realized and unrealized
gains and losses arising from changes in the fair value are included in the
consolidated statements of profit and loss in the period in which they arise.
Financial instruments at amortized cost
Financial assets and liabilities in this category are initially recognized at fair value, and
subsequently carried at amortized cost, using the effective interest method less any
allowance for impairment. This category includes accounts receivable, accounts
payable and loans and other borrowings.
Cash flow statement
The cash flow statement is presented using the indirect method.
Cash and cash equivalents
Cash and cash equivalents include cash at hand, deposits held at call with banks with
original maturities of three months or less.
Note 2.1 New Financial Reporting Standards
Certain new accounting standards, amendments to accounting standards and
interpretations have been published that are not mandatory for 31 December
2021 reporting periods and have not been early adopted by the group. These
standards, amendments or interpretations are not expected to have a material
impact on the entity in the current or future reporting periods and on
foreseeable future transaction.
The Group has interest bearing debt of USD 0.9 million that is linked to NIBOR. No
date has been set for the transition of NIBOR, and the IBOR reform will not change
the risk management strategy.
Note 2.2 Key accounting estimates and judgement
The Group makes estimate and assumptions concerning the future. The resulting
accounting estimates could deviate from the actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the
45
carrying amount of assets and liabilities within the next financial year are discussed
below.
Fair value measurement of financial assets
When the fair values of financial assets and financial liabilities recorded in the
statement of financial position cannot be measured based on quoted prices in active
markets, their fair value is measured using various valuation techniques. The inputs to
these models are taken from observable markets where possible, but where this is not
feasible, a degree of judgement is required in establishing fair values. Judgements
include considerations of inputs such as liquidity risk, credit risk and volatility.
Changes in assumptions relating to these factors could affect the reported fair value of
financial instruments.
Market price changes may occur that could negatively impact fair value of investments
after year end.
Impairment of intangible assets
The Group uses the discounted cash flow method to estimate the present value of the
multi-client library, project Utsira and project Egypt, based on expectations of future
multi-client late sales according to the cash flow prognosis used by management for
2021.
There are two uncertainties when it comes to timing of the late sales and also the size
of the lates sales. The management has weighted these uncertainly with probability in
their discounted cash flow calculations. The WACC used in the calculation is
comparable to peers.
The IFRS value of multi-client survey Utsira was not impaired in 2021. In 2020 the
Utsira multi-client survey was impaired with USD 18.0 million.
Covid-19 risk
The impacts of COVID-19 on businesses across the globe is substantial and presents
new challenges to our normal business practices. The Group has been planning for
and monitoring developments since the initial spread of the virus in early 2020 and
has taken a series of steps to maintain the continuity of our services for our customers
and to safeguard the health of our employees and stakeholders.
Climate risk
The Group’s new strategy has the goal to invest in companies and technologies
which contribute to significant reduction of carbon emissions. The Group may
also invest more broadly in the "energy transition" space.
46
2.3 Court protected reconstruction
The Company filed for court protected reconstruction on 16 February 2021. This filing
provided protection from bankruptcy and allowed for continued operation under court
protection. A reconstruction plan was subsequently put forth, whereafter 106 out of
110 creditors voted in favor of the plan by the deadline of 27 April 2021. In nominal
amounts, this represented in excess of 98% of claims eligible to vote. In addition, the
Group obtained acceptance for voluntary debt settlement from the major creditors in
the group companies in the US and Egypt.
On 30 April 2021, the District Court of Ringerike, Asker and Bærum confirmed the
reconstruction proposal, subject to an appeal period which expired 1 June 2021.
An Extraordinary General Meeting on 21 May approved, subject to the reconstruction
proposal and the forced debt settlement becoming legally binding, that the Company
pay approximately USD 6 million in cash and issue approximately 424 million shares
to its creditors (the "Conversion Shares").
The court ruling became legally binding 1 June 2021 and the Company paid and
settled all Conversion Shares in June 2021.
As a part of the reconstruction, creditors were paid cash dividends or debt was
converted to equity. The gain of USD 18.2 million is from the creditors with cash
dividends where the remaining amount was booked as gain on debt forgiveness The
other gain of USD 6.5 million is from creditors with debt converted to equity and
afterwards fair value adjustment to the share price the day the debt was converted at
NOK 0.373 per share, compared to share price of NOK 0.50 offered in the converting
settlement. Both these transactions resulted in a total net gain of USD 24.7 million in
the statement of comprehensive income.
Equity and Liabilities
Cash
Payments
Gain on Debt
Forgiveness
Equity
Conversion
Gain on
equity
conversion
Capital
Increase
Net effect
Equity
Share capital and other paid in capital - - 25 495
(6 476)
15 547 34 566
Other reserves - 18 172 - 6 476 - 24 648
Total equity - 18 172 25 495
-
15 547 59 214
Liabilities
Interest bearing debt current
(2 888) (13 029) (19 017) - - (34 934)
Trade payables
(908) (4 631) (5 446) - - (10 985)
Other current liabilities
(1 215) (532) (1 032) - - (2 779)
Total liabilities
(5 011) (18 192) (25 495) - - (48 698)
Gain from reconstruction in income
statement
18 191 6 476 24 667
47
Note 3 Segment reporting
The Group operates two segments, Axxis and Investments, based on the two different
revenue streams. The Group (Carbon) has a legacy seismic business operating under
the name Axxis, with both an ocean-bottom seismic contract business and a multi-
client data library. The investment segment is new from 2021. The purpose of the
investment segment is to invest in companies and technologies which contribute to
significant reductions of carbon emissions.
The segment reporting is based on the accounting principles used in the internal
reporting and deviates from IFRS. In the segment reporting, under a multi-client
survey, the multi-client pre-funding revenues are recognized based on the percentage
of completion method, compared to delivery of finalized processed data according to
IFRS. In the segment reporting, there is amortization for the multi-client library equal to
a percentage of recognized revenues according to budget before the data is finalized
processed, while the financial statements are based on a principle where amortization
begins when the library is completed. Revenue recognition for the contract business
and the investment segment is based on the same principles as the IFRS financial
statements.
Operating expenses are allocated to the segments based on the use of resources and
assets.
Share based payment cost and capitalized cost of obtaining contracts has not been
allocated to segments.
Vessel and equipment are only utilized in the Axxis segment, and all depreciation relates
to this segment.
USD thousands Adjustments IFRS reporting
Axxis Investment
Income statement 2021 2021 2021 2021
Total revenue 14 653 - - 14 653
Other income 1 163 - - 1 163
Changes in fair value for investments - 8 404 - 8 404
Cost of sales (10 381) - - (10 381)
Personnel expenses (3 469) - - (3 469)
Other operating expenses (3 239) - 74 (3 165)
Total Operating Expenses (17 088) - 74 (17 015)
Operating profit (loss) before
depreciation and amortization (EBITDA)
(1 273) 8 404 74 7 205
Depreciation, Amortization and Impairment (14 272) - (69) (14 341)
Operating profit (loss) (EBIT) Segment (15 544) 8 404 5 (7 136)
Segment reporting
48
The geographical split is based on where the seismic surveys have been performed.
Vessel and equipment are only utilized in the Axxis segment, and depreciation relates
to this segment. . The MCL of Utsira was written down with USD 18 million in IFRS
reporting during 2020, due to fair value evaluation per September 2020 based on
assumption for late sales.
The geographical split is based on where the seismic surveys have been performed.
USD thousands Adjustments IFRS reporting
Axxis Investment
Geographical markets 2021 2021 2021 2021
Norway 5 669 - - 5 669
Asia - - - -
UK 8 983 - - 8 983
Brazil - - - -
Total revenue 14 653 - - 14 653
Segment reporting
USD thousands Adjustments IFRS reporting
Axxis Investment
Major customers 2021 2021 2021 2021
Customer 1 8 983 8 983
Customer 2 2 124 - - 2 124
Customer 3 2 042 - - 2 042
Customer 4 1 369 - - 1 369
Total revenue 14 519 - - 14 519
Segment reporting
USD thousands Adjustments IFRS reporting
Axxis Investment
Income statement 2020 2020 2020 2020
Total revenue 66 184 - 26 606 92 790
Cost of sales (52 557) - 245 (52 313)
Personnel expenses (3 388) - - (3 388)
Other operating expenses (3 919) - 229 (3 691)
Total Operating Expenses (59 865) - 473 (59 392)
Operating profit (loss) before
depreciation and amortization (EBITDA)
6 319 - 27 079 33 399
Depreciation, Amortization and Impairment (9 870) - (17 685) (27 554)
Operating profit (loss) (EBIT) Segment (3 550) - 9 395 5 845
Segment reporting
Axxis Investment
Geographical markets 2020 2020 2020 2020
Norway 16 793 - 26 606 43 399
Asia - - - -
Middle East 46 884 - - 46 884
Brazil 2 508 - - 2 508
Total revenue 66 184 - 26 606 92 790
49
Note 4 Revenue and cost from contract with clients
In 2021 there is no difference between Segment reporting and IFRS reporting. Figures
below for 2021 are IFRS.
Assets related to cost to fulfill and cost to obtain contracts is presented as other current assets
in the balance.
USD thousands Adjustments IFRS reporting
Axxis Investment
Major customers 2020 2020 2020 2020
Customer 1 47 684 - - 47 684
Customer 2 15 633 - 26 606 42 239
Customer 3 2 768 - - 2 768
Customer 4 100 - - 100
Total revenue 66 184 - 26 606 92 790
Segment reporting
USD thousands Axxis Investment Total
Income statement 2021 2021 2021
Contracts for seismic acquisition 9 117 - 9 117
Multi-client projects pre-funding - - -
Multi-client projects late sales 5 535 - 5 535
Total revenue from contracts with
customers
14 653 - 14 653
At a point in time 5 535 - 5 535
Over time 9 117 - 9 117
Total revenues from contracts
with customers
14 653 - 14 653
Cost to fulfill contracts and cost to obtain contracts
USD thousands Axxis Investment Total
Income statement 2021 2021 2021
Contract assets
Assets recognized for cost to fulfill a
contract in the balance 1.1.21
- - -
Assets recognized for costs to fulfill a
contract (mobilization costs)
1 938 - 1 938
Amortization of assets recognized for
cost to fulfill a contract (mobilization
costs)
(1 938) - (1 938)
Total contract assets - - -
USD thousands Axxis Investment Total
Other income 2021 2021 2021
Covid-19 compensation 1 163 - 1 163
Total other income 1 163 - 1 163
50
Cost to fulfill contracts and cost to obtain contracts
Assets related to cost to fulfill and cost to obtain contracts is presented as other current assets
in the balance.
Performance obligations
Contract seismic and imaging
The contracts for seismic surveys have an expected duration of less than one year.
Because of this, the Group does not disclose information about transaction price
allocated to unsatisfied or partly unsatisfied performance obligations for these
contracts. Contracts for seismic surveys usually have a billing schedule with frequent
billings, so there will not be a material difference in timing of the payments and the
progress in the projects.
Multi-client Pre-funding
The Group had per end of September 2020 finalized the data processing of the multi-
client 3D OBN Utsira survey. The IFRS pre-funding revenue was allowed to be
booked as pre-funding revenue in September 2020 USD 22.7 million. This is a
collaboration project where the Group has a 50% share of future lates sales. The
Group's share of contracted pre-funding revenue was USD 27.4 million.
Adjustments IFRS reporting
USD thousands Axxis Investment
Income statement 2020 2020 2020 2020
Contracts for seismic acquisition 64 325 - - 64 325
Multi-client projects pre-funding 798 - 26 606 27 404
Multi-client projects late sales 1 060 - - 1 060
Total revenue from contracts with
customers
66 183 - 26 606 92 790
At a point in time - - 28 464 28 464
Over time 66 183 - (1 858) 64 325
Total revenues from contracts with
customers
66 183 - 26 606 92 790
Segment reporting
Adjustments IFRS reporting
USD thousands Axxis Investment
Income statement 2020 2020 2020 2020
Contract assets
Assets recognized for cost to fulfill a
contract in the balance 1.1.20
5 047 - - 5 047
Assets recognized for costs to fulfill a
contract (mobilization costs)
5 105 - - 5 105
Amortization of assets recognized for
cost to fulfill a contract (mobilization
costs)
(10 152) - - (10 152)
Total contract assets - - - -
Segment reporting
51
Note 5 Cost of sales
Note 6 Financial items
*Other financial income 2020 is related to fair value amortization of non-current loans.
Note 7 Tax
USD thousands
Cost of sales
2021 2020
Vessel cost (3 786) (22 965)
Crew & project management (2 165) (18 524)
Seismic, source and node equipment (3 618) (13 486)
Agent related expenses (1 632) (2 866)
Mobilization amortization (1 938) (10 152)
Mobilization cost capitalized 1 938 5 105
Multi-client capitalization - gross (see note 11) - 10 576
Reversal of cost previous period 821 -
Total cost of sales (10 381) (52 313)
Financial income
2021 2020
Interest income 2 0
Other financial income* - 3 847
Total financial income 2 3 848
Financial expenses
2021 2020
Interest expense (1 483) (2 161)
Interest expense suppliers (246) (1 834)
Other financial expenses (880) (1 320)
Total financial expenses (2 610) (5 315)
Currency exchange gain (loss)
2021 2020
Exchange gains 1 928 3 434
Exchange losses (2 765) (3 858)
Total exchange gain (loss) (836) (424)
USD thousands 2021 2020
Specification of tax expense (income) for the year
Current income tax (including witholding tax) 90 7 073
Change in deferred tax - -
Changes from previous years 62 13
Total tax expense (income) 152 7 086
52
Current income tax is accruals for a survey in UK, where the taxes have not been
settled. Changes from previous year is related to change in accrual for corporate
income tax in Egypt, where the taxes have not been settled.
Per December 2021 the management evaluated the deferred tax assets to be
uncertain when to be utilized. The same evaluation was performed per December
2020.
The loss carried forward is in Norway and there are no time limits for use of the
losses.
Note 8 Bank deposits, cash in hand
Restricted bank deposits relate to employee withholding tax. These deposits are
subject to regulatory restrictions and are therefore not available for general use by the
entities within the Group. The account can be used to settle employee withholding tax.
Reconciliation of actual against expected tax
expense (income) at the income tax rate of 22%
Profit (loss) before tax 14 087 3 953
22% tax 3 099 870
Tax effect from:
Withholding tax and Corporate tax abroad 152 5 569
Permanent differences 246 (147)
Change in fair value investment (1 909) -
Currency effect (424) (1 386)
Difference in tax rate in foreign activities (8) (33)
Use of witholding tax abroad - (70)
Not booked deferred tax asset (1 004) 2 283
Calculated tax expense (income) 152 7 086
Effective tax rate for the Company (1.08) (179.27)
USD thousands 31.12.2021 31.12.2020
Temporary differences
Non current assets (6 044) (1 682)
Trade receivables - -
Other accruals - -
Financial lease - (1)
Accumulated loss carried forward (57 223) (57 348)
Temporary differences at 31.12. (63 267) (59 030)
Deferred tax assets (liabilities) 13 919 12 987
USD thousands
31.12.2021 31.12.2020
Bank deposits 3 919 5 792
Restricted bank deposits 86 80
Total bank deposits 4 005 5 873
53
Note 9 Other current assets
Note 10 Property, plant and equipment
USD thousands
31.12.2021 31.12.2020
Prepayments 197 186
Accrued income - 312
Other current receivables 25 34
Total other current assets 222 531
USD thousands
2021
Cost at 01.01.21 8 171 17 372 29 364 489 26 425
Additions - - - - - -
Disposal (5 459) (5 171) (29) - (184) (10 843)
Impairment (2 711) (813) - - - (3 524)
Cost at 31.12.21 - 11 388 - 364 305 12 057
Accumulated depreciation 01.01.21 (4 717) (9 259) - (235) (420) (14 631)
Depreciation (351) (2 967) - (117) (69) (3 505)
Disposal 5 067 4 251 - - 184 9 502
Impairment - - - - - -
Accumulated depreciation at 30.12.21 (0) (7 976) - (353) (305) (8 633)
Carrying amount at 01.01.21 3 454 8 114 29 128 69 11 794
Carrying amount at 31.12.21 (0) 3 412 - 11 0 3 423
Economic lifetime
3-10 years
3-5 years 3-10 years 2-5 years
Total
tangible
assets
Vessel
Seismic and
node
equipment
Projects
in
progress
Computer
equipment
Lease
asset
USD thousands
2020
Cost at 01.01.20 8 171 17 624 29 370 489 26 682
Additions - 62 - - - 62
Disposal - (246) - - - (246)
Impairment - (67) - (6) - (73)
Cost at 31.12.20 8 171 17 372 29 364 489 26 425
Accumulated depreciation 01.01.20 (3 504) (5 196) - (118) (196) (9 015)
Depreciation (1 213) (4 099) - (122) (223) (5 657)
Disposal - 25 - - - 25
Impairment - 12 - 5 - 16
Accumulated depreciation at 31.12.20 (4 717) (9 259) - (235) (420) (14 631)
Carrying amount at 01.01.20 4 667 12 428 29 251 292 17 668
Carrying amount at 31.12.20 3 454 8 114 29 128 69 11 794
Economic lifetime
3-10 years
3-5 years 3-10 years 2-5 years
Total
tangible
assets
Vessel
Seismic and
node
equipment
Projects
in
progress
Computer
equipment
Lease
asset
54
According to IFRS the carrying amount of intangible assets and property, plant and
equipment are reviewed at each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the asset’s recoverable amount
is estimated.
Management regularly evaluates its fleet plan and capital expenditure level in light of
market conditions. In 2021 and 2020 management performed such evaluations. There
was no need for impairment at the end of 2021. In 2020 this evaluation resulted in
impairments related to certain seismic equipment in the subsidiary in US.
The Group has no asset held for sale at the end of 2021.
The Group sold the vessel Neptune Naiad in June. An impairment of USD 3.5 million
was made before the transaction. The settlement was performed with loan settlement
to Sanco Holding AS from the reconstruction and time charter payment on Sanco Star
used on the UK contract in 2021, so there was no cash effect on this sale.
The climate risk for stranded equipment is evaluated as low, since the Group has sold
the node seismic equipment 2 March 2022, see note 27 Events after reporting period.
Note 11 Intangible assets
The company has no fully amortized intangible assets that are still in use per 31
December 2021.
The Group's Norwegian multi-client library in its entirety is pledged as security for
interest-bearing debt. Refer to note 14 Interest-bearing debts
The Group's Egyptian multi-client library in the Suez has a cap of late sales and
deviate from the WACC used for Utsira.
USD thousands
31.12.2021 31.12.2020 31.12.2021 31.12.2020
Cost as of 01.01 92 881 82 306 92 881 82 306
Capitalized costs - 10 576 - 10 576
Cost as of 31.12 92 881 92 881 92 881 92 881
(56 713) (52 554) (56 713) (35 093)
Amortization for the period (7 312) (4 159) (7 312) (3 656)
Impairment for the period - - - (17 964)
(64 025) (56 713) (64 025) (56 713)
Carrying value at 01.01 36 168 29 752 36 168 47 213
Carrying value at 31.12 28 856 36 168 28 856 36 168
IFRS reporting Multi-
client
Segment reporting Multi-
client
Accumulated amortization and
impairment as of 01.01
Accumulated amortization
and impairment as of 31.12
55
The multi-client segment consists of multiple seismic data surveys that comprise the
segment. As of 31 December 2021, the Group owns two multiclient surveys, each
considered a separate CGU and impairment tested separately.
The multi-client survey of Utsira has so far been amortized linearly over 4 years from
the date the processed data are ready to be transferred to customers according to
IFRS.
The multi-client survey in Egypt is not finalized processing per December 2021.
The impairment test is based on value in use
According to IFRS the multi-client library should be tested for impairment if the
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognized for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s
fair value less costs of disposal and value in use. The Group perform quarterly testing
for impairment where the sales estimate is updated for each quarterly evaluation. The
industry is known for uncertainty of when the late sales will happen, rather than the
size of the late sales. For financial purposes the Group used sales estimates weighted
in addition to worst, low, mid and high probability where the next two years was
estimated in detail. The WACC used for calculated NPV (Net Present Value) of Utsira
is 9,15 % similar to comparable companies. Together, the weighted sales
expectations and the WACC comprise the key input factors to the Group's impairment
testing of multi-client library. WACC used for MCL Egypt is 12.44% due to higher
country risk.
A decrease in the company's sales expectations exceeding 4,0% would result in an
impairment in the multi-client library. Similarly, an increase in WACC to 11,65% would
result in an impairment in the multi-client library.
There has been no write-down of the multi-client library in 2021.The multi-client survey
of Utsira was written down with USD 18 million in IFRS reporting during 2020, due to
fair value evaluation per September 2020 based on assumptions for late sales.
Note 12 Inventories
The Group has no inventories at 31.12.2021 and has not expensed any impairment of
inventories during the periods of 2021 or 2020.
USD thousands
31.12.2021 31.12.2020
Purchased finished goods - 85
Provision for obsolescence - -
Net inventories - 85
56
Note 13 Investments
CO2 Capsol AS
The investment in CO2 Capsol is valued based on Level 1 inputs, quoted prices in
active markets. Year-end closing price was NOK 24.795 per share. The Group held
3,636,363 shares with a total value of USD 10.3 million (NOK 90.2 million).
The valuation of traded shares is based on quoted prices in active markets. Market
price changes subsequent to year end may have a significant impact on overall fair
value of investments
Sensitivity: A 5% and 10% increase in CO2 Capsol stock price is equal to an increase
of USD 511 thousand and USD 1 023 thousand in value, respectively. Likewise, a 5%
and 10% decrease in stock price in CO2 Capsol is equal to a decrease of USD 511
thousand and USD 1 023 thousand, respectively.
Power By BritishVolt Limited
The investment in Britishvolt is measured based on Level 3 inputs. The company is
not listed, and the management has based fair value on comparable companies,
analysis from financial advisors and information from the company. The Group values
the investment at USD 4.6 million (NOK 40.9 million).
Sensitivity: A 5% and 10% increase in Britishvolt stock price is equal to an increase of
USD 232 thousand and USD 464 thousand in value, respectively. Likewise, a 5% and
10% decrease in stock price in Britishvolt is equal to a decrease of USD 232 thousand
and USD 464 thousand, respectively.
USD thousands
Non-current assets 31.12.2021 31.12.2020
Listed securities
CO2 Capsol AS 10 228
-
Listed securities 10 228
-
Unlisted securities
Arbaflame AS 3 403
-
Power By BritishVolt Limited
- Common shares 3 175
-
- Options 1 462
-
4 637
Unlisted securities 8 040
-
Total non-current assets 18 268
-
57
Arbaflame AS
The investment in Arbaflame is measured based on level 3 inputs. The company is not
listed, and management has therefore evaluated all available information and news
from the company after the investment was made. Management considers that the
fulfilment or failure to fulfil a defined production milestone is the most important driver
for changes in value for this type of company. In the period after the investment, the
development of the company has been more or less as expected, and the estimated
effect of information shared by the company is perceived as neutral. The production at
the Kongsvinger facility is still in ramp-up mode and we are therefore keeping the
valuation at historical cost of USD 3.4 million (NOK 30.0 million).
Sensitivity: A 5% and 10% increase in Arbaflame stock price is equal to an increase of
USD 170 thousand and USD 340 thousand in value, respectively. Likewise, a 5% and
10% decrease in stock price in Arbaflame is equal to a decrease of USD 170
thousand and USD 340 thousand, respectively.
Note 14 Interest bearing debt
Details of the Group's exposure to risk arising from current and non-current
borrowings are set out in note 15, Financial risk management.
USD 896 725 Nibor + 10% Term Loan (TGS)
The TGS loan was reclassified to non-current liabilities as of 31December 2021. At 31
December 2020, the TGS loan was included in other current liabilities. The TGS loan
is secured by the Utsira the multi-client survey as well as the shares in the company
Axxis Multi Client AS.
NOK 29 750 000 Nibor+5,5% Term Loan (Eksportkreditt)
The term loan was settled in 2021 in connection with the sale of the vessel Neptune
Naiad. Initially the loan was to amortize through twelve quarterly instalments. The term
USD thousands Interest rate (%) Maturity 31.12.2021 31.12.2020
USD 895 725 Floating rate term loan Nibor + 10% 2023 896 -
USD 24 739 311 Bond Loan 8% 2022 - 17 417
Non-current borrowings 896 17 417
Lease Liabilities 5%
2021
- 73
NOK 29 750 000 Floating rate term loan
Nibor + 0.5%
2021
- 1 160
USD 24 739 311 Bond loan 8%
2022
- 6 033
USD 5 780 326 Fixed rate term loan
4%
2021
- 5 695
USD 1 490 633 4% Fixed rate term loan
4%
2021
- 1 244
USD 1 332 704 4% Fixed rate term loan
4%
2021
- 1 300
NOK 2 495 043 4% Fixed rate term loan
4%
2021
- 234
NOK 12 000 000 Interest Free Loan
0%
2021
- 822
Current borrowings - 16 562
58
loan had a first priority pledge in the owned vessel, operating assets and factoring
agreement.
The loan was in breach of financial covenants and was classified to current liabilities in
the financial statements as of 31December 2020. However, the Company received
waiver from the two covenants for all the quarters in 2020, including year end 2020.
The financial covenants were as follows:
1) Liquid assets of no less than 120% of outstanding loan
2) Equity ratio of 30% until Q4 19 and thereafter 35% till final maturity date
(September 2021)
USD 24 739 311 Bond loan
The USD 24 739 311 bond loan was settled in connection with the reconstruction in
2021. The loan was issued in relation to the restructuring completed in 2020, in which
USD 24 739 311 of short-term payables were converted to a 2-year bond loan. The
bond carried a fixed interest of 8% and was to be repaid either through cash calls or
the agreed repayment schedule. For the bond loan, the group pledged shares in
subsidiaries, inventories, operating assets, factoring agreement and second priority in
the owned vessel.
The bond required the Group to maintain a liquidity balance of USD 2 million, and
maintain a 0-dividend policy.. As of 31December 2020, the covenants for the bond
loan were fulfilled.
Fixed rate term loans
All fixed rate term loans were settled as a result of the reconstruction in 2021. In
relation to the restructuring completed in 2020, the Group issued a series of fixed rate
term loans through conversion of short-term payables to long term loan agreements.
The loans were unsecured and carried a fixed interest rate from 0% to 4% p.a.
USD thousands 31.12.2021 31.12.2020
Multi-client library* 18 280 36 168
Property, plant and equipment - 11 794
Inventories - 85
Total balance sheet value of assets placed as security 18 280 48 047
* TGS also has security in the shares of Axxis Multi Client AS
Balance sheet value of assets placed as security
59
Note 15 Financial risk management
The Group has during 2021 changed name to Carbon Transition ASA and
implemented a new strategy. Following the restructuring in June 2021, the Group
refocused the business model to become a listed investment company with the goal to
invest in companies and technologies which contribute to significant reduction of
carbon emissions. The Group may also invest more broadly in the "energy transition"
space. Carbon has a legacy seismic business operating under the name Axxis Geo
Solutions, with a multi-client data library.
The Group is exposed to market specific and general economic cycles and macro-
economic fluctuations, since changes in the general economic situation affect the
demand for products and services provided by companies the Group invests in. The
performance of the Axxis Geo Solutions operations is also dependent on production
and development spending by oil and gas companies. Historically, in times of low oil
price, demand for seismic data has been significantly reduced.
Capital Management
For the purpose of the Group’s capital management, capital includes issued capital,
share premium and all other equity reserves attributable to the equity holders of the
parent.
The Group manages its capital structure and makes adjustments in light of changes in
economic conditions and the requirements of the financial covenants. To maintain or
adjust the capital structure, the Group may return capital to shareholders, issue new
shares, or repay or issue new debt.
The Group’s capital management, among other things, aims to ensure that it fulfil the
interest-bearing loans terms and borrowings that define capital structure requirements.
Any breaches in meeting the financial terms would permit the bank or borrower to
immediately call loans and borrowings
Market risk - price risk
For information regarding market risk- price risk see note 13.
Financing risk
The Group used bank loan, bond loan and unsecured loans in addition to equity for
financing purposes in 2020. During 2021 the Company successfully completed a legal
reconstruction and almost all debt was settled. There was only debt to TGS in the
Group per year-end 2021. The purpose of these financial instruments is to ensure that
the Group has financial flexibility for investments that are necessary for the Group's
operations. In addition, the Group has items such as trade receivables, trade payables
etc. which is directly related to regular business operations. The Group does not use
financial instruments for hedging purposes. Risk management procedures have been
established by the Board and handled by the CFO.
60
The Group is exposes to financial risk linked to interest rate risk, liquidity risk, currency
risk and credit risk. The Group's management has a continuous assessment to identify
and evaluate financial risks and sets guidelines for how to handle them.
The Group does not have any financial derivatives in 2021 or 2020.
(i) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss
for the other party by failing to discharge an obligation. The Group is mainly exposed
to credit risk related to trade receivables and other current receivables.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based
on shared credit risk characteristics and the days past due. Current and expected
future customers are oil and gas companies with sound credit ratings. Also, for other
companies in the industry, historic credit losses have been negligible. Because
expected credit loss is considered to be a clearly immaterial amount, no provision has
been made.
Trade receivables are written off when there is no reasonable expectation of recovery.
Indicators that there is no reasonable expectation of recovery include, amongst others,
the failure of a debtor to engage in a repayment plan with the group, and a failure to
make contractual payments for a period of greater than 120 days past due without
special agreement in advance.
Impairment losses on trade receivables are presented as net impairment losses within
operating profit. Subsequent recoveries of amounts previously written off are credited
against the same line item.
(ii) Market risk - interest rate
The Group does not use financial instruments to hedge interest rate risk.
Trade and other receivables and trade and other payables are interest free and with a
term of less than one year, so there is no significant interest rate risk associated with
these financial assets and liabilities.
The Group's sensitivity to potential changes in interest rates with an increase in 50
basis points would increase interest expense for the period with approximately USD
38 thousand in 2021 (USD 9 thousands for 2020).
(iii) Liquidity risk
Liquidity risk is the risk that the Company is not able to meet its payment obligations.
Prudent liquidity risk management implies maintaining sufficient cash and marketable
securities and the availability of funding through an adequate amount of committed
61
credit facilities to meet obligations when due and to close out market positions. The
Group's strategy for managing liquidity risk is to have sufficient liquidity at all times in
order to meet its financial liabilities at maturity, both under normal and exceptional
circumstances, without risking unacceptable losses or at the expense of the Group`s
reputation. The Group may need access to long-term funding. There can be no
assurance that available funding sources are accessible when needed nor can there
be any assurance that the Group will be able to raise new equity on favorable terms
and in amounts necessary to conduct its on-going and future operations, should this
be required. Furthermore, there can be no assurance that the Group will be able to
obtain additional shareholder funding. Failure to access necessary liquidity could
require the Group to scale back its operations or could have other materially adverse
consequences for its business and its ability to meet its obligations.
The table below provides an overview of the maturity profile of all financial liabilities.
For bank loans the stated amount includes estimated interest payments. In cases
where the counterparty may claim earlier redemption, the amount is placed in the
earliest period the payment may be required from the counterparty.
* Borrowings is included interest
(iv) Market risk - foreign exchange rates
The Group operates internationally and is exposed to foreign exchange risk, primarily
the NOK, GBP and EGP. Foreign exchange risk arises from future commercial
transactions and recognized assets and liabilities denominated in a currency that is
not the functional currency of the relevant group entity. The Group is exposed to
currency risk as a large part of the group’s expenses are denominated in NOK. Profit
after tax for the Group is also affected by changes in exchange rates, as expenses
and payables are converted to USD.
The NOK denominated bank loans and payables are expected to be repaid with
receipts from US dollar denominated sales. The foreign currency exposure of these
loans has not been hedged.
The table below shows the Group's sensitivity to potential changes in exchange rates.
The calculation takes into account the currency translation of all consolidated foreign
subsidiaries. The calculation in the table shows the effect on consolidated profit / loss
on the average exchange rate.
2021
USD thousands
0-3
months
3-6
months
6-9
months
9-12
months
1-2 years
Total
Borrowings*
- - - - 896
896
Trade payables 333 - - - -
333
Other current liabilities 736 - - 6 101 -
6 837
Total 1 069 - - 6 101 896 8 066
Remaining Term
62
The Group`s operations in foreign countries expose it to risks related to foreign
currency movements. Currency exchange rates fluctuate due to several factors, and
these include; international balance of payments, economic and financial conditions,
government intervention, speculation and other factors. Changes in currency
exchange rates relative to the USD may affect the USD valued assets and liabilities of
the Group – primarily the company’s portion of debt that is denominated in NOK.
Changes in currency may also affect the Group’s local expenses when operating
abroad. The Group’s expenses are primarily in USD and NOK. As such, the Group’s
earnings are exposed to fluctuations in the foreign currency market.
Note 16 Categories of financial instruments
The Group's exposure to various risks associated with the financial instruments is
discussed in note 15 Financial risk management. The maximum exposure to credit
risk at the end of the reporting period is the carrying amount of each class of financial
assets mentioned above.
Change in
exchange
rate
Effect on
profit
before
Effect on
OCI
2021 + 10 % 1 486 -
- 10 % (1 816) -
2020 + 10 % 481 -
- 10 % (588) -
USD thousands
USD thousands
ASSETS
31.12.2021 31.12.2020
Financial assets at amortized cost
Cash and cash equivalents 4 005 5 873
Financial assets at fair value through profit and loss
Investments 18 268 -
Total financial assets 22 273 5 873
LIABILITIES
31.12.2021 31.12.2020
Financial liabilities at amortized cost
Interest-bearing non-current liabilities 896 17 417
Interest-bearing current liabilities - 16 562
Trade payables 333 12 251
Other current liabilities 6 837 16 075
Total financial liabilities 8 065 62 305
63
Fair value
Due to the short-term nature of cash and cash equivalents, trade receivables and
other current receivables, their carrying amount is considered to be the same as their
fair value.
Interest bearing loans are recognized initially at fair value less transaction costs.
Subsequent to initial recognition, interest bearing loans are measured at amortized
cost using the effective interest method. Gains and losses are recognized in the
consolidated statements of profit or loss when the liabilities are derecognized as well
as through the amortization process. The carrying value of borrowing is less amortized
cost. The carrying amount of trade and other payables is considered to be
approximately the same as their fair values, due to their short-term nature. Due to the l
court reconstruction in June 2021 all interest-bearing debt except one loan has been
settled during 2021.
The Group does not hold any financial derivatives.
Note 17 Leases and commitments
Leases
The Group uses the accounting standard IFRS 16 Leases. IFRS 16 Leases has from
a lessee viewpoint eliminated the classification of leases as either operating leases or
financial leases.
For the Group only office space comes under the classification of leases. Vessels and
other seismic equipment on short-term leases come under the classification of
commitments. As of 31 December 2021, the Group has no commitments in vessels,
seismic equipment or office space.
Lease assets are included in the balance sheet under the item property, plant and
equipment. The non-current part of the lease liability is included in the balance sheet
under the item interest bearing debt non-current, and the current part under interest
bearing debt current, refer to note 14.
Lease liabilities:
Right-of-use assets:
USD thousands
Offices Total
Carrying value
Balance right-of-use assets 01.01.2021 69 69
Additions - -
Depreciation (69) (69)
Balance right-of-use assets 31.12.2021 - -
64
* All lease agreement related to office space expired end of 31 May 2021.
The Group had a total cash outflow for leases of USD 0.08 million of which USD 0.001
million is related to interest in 2021. The Groups cost of low-value assets was
insignificant and the Group had no variable lease payments in 2021.
Lease liabilities:
* All lease agreement related to office space expires by end of 31 May 2021.
The Group had a total cash outflow for leases of USD 0.2 million of which USD 0.01
million is related to interest in 2020. The Groups cost of low-value assets was
insignificant and the Group had no variable lease payments in 2020.
Commitments:
The Group has commitments as of 31 December 2021 related to office rent, for the
Oslo office until September 2022 and for the Houston office until April 2022. The cost
USD thousands
Non
current*
Current Total
Carrying value
Balance lease liabilities 01.01.2021 - 73 73
Additions - - -
Lease payments (75) (75)
Accrued interest 1 1
Other adjustments - 1 1
Balance lease liabilities 31.12.2021 - 0 0
Right-of-use assets:
USD thousands
Offices Total
Carrying value
Balance right-of-use assets 01.01.2020 293 293
Additions - -
Depreciation (223) (223)
Impairment - -
Other adjustments - -
Balance right-of-use assets 31.12.2020 69 69
USD thousands
Non
current*
Current Total
Carrying value
Balance lease liabilities 01.01.2020 73 224 297
Additions - - -
Reclassification to current (73) 73 -
Lease payments (230) (230)
Accrued interest 10 10
Other adjustments - (3) (3)
Balance lease liabilities 31.12.2020 - 73 73
65
for short term leases of office rent for 2021 was USD 0.1 million and USD zero for
2020.
The Group has not entered into any contractual commitments for the rental of seismic
equipment (nodes) as of 31 December 2021 or as of 31 December 2020. The cost for
short term leases of seismic equipment was USD 2.4 million in 2021 and USD 11.8
million in 2020.
The Group has no commitments for short-term leases of vessels as of 31 December
2021 or as of 31 December 2020. The cost for short-term leases of vessels was USD
2.8 million in 2021 and USD 15.7 million in 2020.
Note 18 Other current liabilities
* These taxes payables are-mainly related to Egyptian taxes for withholding and crew
tax. The Group expects the withholding tax to be reduced, but since the taxes is not
settled as of December 2021, the Group has decided to keep same tax level in Egypt
as for 2020.
** This is related to the TGS promissory note which has been classified as noncurrent
liabilities per December 2021 due to the new agreement after reconstruction and new
maturity date 23 March 2023. The collaboration agreement with TGS, gives Carbon
Transition the right to 50% of the late sales related to the OBN multi-client project
Utsira. The balance will be settled through late sales from future customer payments
to TGS. Interest rate is 3 months Nibor +10%. In addition, TGS has pledged security
in the multi-client library, operating assets, inventories, and factoring agreement.
Note 19 Share capital and shareholder information
*A reverse split of the shares 10:1 was performed 9 August 2021 and is included in the table above.
The Company has one class of shares, all shares provide equal rights, including the
right to any dividends in line with 2020. Each of the shares carries one vote in line with
USD thousands
31.12.2021 31.12.2020
Holiday pay owed 146 152
Taxes payable * 2 874 5 731
Other accrued costs 1 722 3 365
VAT settlement (267) 245
Balance against multi-client project partner ** - 6 582
Total other current liabilities 4 475 16 075
The Company's share capital per
31.12.2021 include the following:
Number of shares
Share Capital
in NOK
Par Value
per share*
Ordinary shares (one share = one vote)
239 760 117 239 760 117 1,00
66
2020. Neither Carbon Transition ASA nor any of its subsidiaries directly or indirectly
owns shares or treasury shares in the Company.
Paid/proposed dividend
The board has decided not to propose any dividend for 2021 or 2020.
The major shareholders in Carbon Transition ASA 31 December 2021 were as
follows:
Shares
Number of shares 01.01.2021
58 821 018
Reverse split 10:1
5 882 102
New shares issued - cash settled 15.6.21
144 500 000
Capital increase - debt conversion to fair value 15.06.21 42 439 946
New shares issued - cash settled 19.07.21 20 000 000
New shares issued - cash settled 09.08.21 2
New shares issued - cash settled tranche 1 - 21.10.21 21 282 205
New shares issued - cash settled tranche 2 - 16.11.21 5 655 862
Number of shares 31.12.2021
239 760 117
Changes in number of shares
Shareholders
Total shares
Ownership
share
Voting share
INVESTERINGSFONDET VIKING AS 28 000 000 11.7% 11.7%
MIDDELBORG INVEST AS 14 538 461 6.1% 6.1%
TIGERSTADEN AS 13 760 459 5.7% 5.7%
ALDEN AS 11 265 384 4.7% 4.7%
SPAREBANK 1 MARKETS AS 11 180 000 4.7% 4.7%
F2 FUNDS AS 9 250 000 3.9% 3.9%
BECK ASSET MANAGEMENT AS 9 012 307 3.8% 3.8%
F1 FUNDS AS 8 427 223 3.5% 3.5%
URTIVEN AS 8 230 770 3.4% 3.4%
GINNY INVEST AS 6 250 230 2.6% 2.6%
DNB BANK ASA 6 225 280 2.6% 2.6%
PHILIP HOLDING AS 5 750 230 2.4% 2.4%
Q CAPITAL AS 5 619 230 2.3% 2.3%
REDBACK AS 5 000 000 2.1% 2.1%
TTC INVEST AS 4 000 000 1.7% 1.7%
Nordnet Bank AB 3 758 002 1.6% 1.6%
LIVERMORE INVEST AS 3 079 615 1.3% 1.3%
Skandinaviska Enskilda Banken AB 2 500 000 1.0% 1.0%
NORDNET LIVSFORSIKRING AS 2 089 077 0.9% 0.9%
CITADELL AS 2 000 000 0.8% 0.8%
Total 20 largest shareholders
159 936 268 66.7% 66.7%
Total other shareholders
79 823 849 33.3% 33.3%
Total number of shares
239 760 117 100.0% 100.0%
67
The major shareholders in Axxis Geo Solutions AS 31 December 2020 were as
follows:
Shares owned or controlled by members of the Board of Directors, Chief Executive
Officer and Other Executive Officers 31 December 2021 were as follows:
Share and options owned by management 31 December 2021 were as follows:
Shares owned or controlled by members of the Board of Directors, Chief Executive
Officer and Other Executive Officers 31 December 2020 were as follows:
Shareholders
Total shares
Ownership
share
Voting share
HAVILA HOLDING AS 15 549 434 26.4% 26.4%
ROGER IGELSTRØM 2 000 000 3.4% 3.4%
JOHS. HANSEN REDERI AS 1 413 345 2.4% 2.4%
Nordnet Bank AB 1 096 145 1.9% 1.9%
TOM DANIELSEN 1 073 166 1.8% 1.8%
FRANK ROBERT SUNDE 742 468 1.3% 1.3%
J.P. Morgan Securities LLC 703 618 1.2% 1.2%
NÆRINGSLIVETS HOVEDORGANISASJON 671 343 1.1% 1.1%
DAGUSIKI HOLDING AS 660 572 1.1% 1.1%
DEHGHAN ZAKLAKI 629 647 1.1% 1.1%
YVES MEROUR 541 531 0.9% 0.9%
JOHN OTTO DYBVIK 500 995 0.9% 0.9%
MORTEN HÅVAR OLSEN 500 000 0.9% 0.9%
ACTION AS 454 850 0.8% 0.8%
ALCIDES SHIPPING AS 450 712 0.8% 0.8%
RONNY BRATTAAS 421 763 0.7% 0.7%
Deutsche Bank Aktiengesellschaft 400 028 0.7% 0.7%
MADRA INVEST AS 373 734 0.6% 0.6%
365 477 0.6% 0.6%
THOMAS GRØNSTAD 350 000 0.6% 0.6%
Total 20 largest shareholders
28 898 828 49.1% 49.1%
Total other shareholders
29 922 190 50.9% 50.9%
Total number of shares
58 821 018 100.0% 100.0%
NORDNET LIVSFORSIKRING AS
Board of Directors Position
Total shares
Ownership
share
Voting share
Number of
options
Gisle Grønlie Chairman 134 000 0.0 % 0.0 % 800 000
Torstein Sannes Board member 285 000 0.0 % 0.0 % 800 000
Executive management Position
Number of
shares
Number of
options
Nils Haugestad CFO (CFO from 1 April 2020) CFO - -
Richard Dunlop EVP Operations 14 423 10 640
68
Share and options owned by management 31 December 2020 were as follows:
Note 20 Related parties
The ultimate Parent of the Group is Carbon Transition ASA.
There are no transactions with related parties in 2021 and no balances on 31
December 2021. The Group transactions and balances with other Group companies in
2020 was mainly related to time charter for vessels and consultancy fees. See the
figure below for balances with related parties:
* As of 30th June 2020, Christian Huseby was selected as Chairman of the Board at
the Annual General Meeting, in addition to delivering consultancy services from April
2020. The agreement related to consultancy services was cancelled by the end of
2020. Christian Huseby continued as Chairman of the Board of Directors until 30 June
2021.
Board of Directors
Total
shares
Ownership
share
Voting share
Number of
options
Havila Holding AS 1) 15 549 434 26.4 % 26.4 % -
1) Partly owned by Njål Sævik 42 000
Executive management Position
Number of
shares
Number of
options
Lee Parker (CEO till August 8, 2020) CEO
559 390 -
Ronny Bøhn (CEO from August 8 2020) CEO - -
Svein Knudsen (CFO till 1 April 2020) CCO 17 000 106 400
Nils Haugestad CFO (CFO from 1 April 2020) CFO - -
Richard Dunlop EVP Operations 144 228 106 400
Transactions with related parties
USD
2021 2020
Hired vessels:
Lease payment Havila Fortune - controlled by Havila Holding AS - (3 275)
Lease payment Havila Aurora - controlled by Havila Holding AS - (3 746)
Lease payment Geo Caspian - controlled by Havila Holding AS - (31)
Consultancy and accounting services:
Energy Consulting AS controlled by Christian Huseby * - (159)
Balances with related parties
USD
31.12.2021 31.12.2020
Account payables:
Havila Ships AS controlled by Havila Holding AS - 1 116
69
Note 21 Personnel expenses and board remunerations
The Group has a defined contribution pension plan. The contribution plan is a
retirement plan in which the Group pays fixed contributions to a separate legal entity.
The Group has no further payment obligations once these contributions have been
paid. Contributions are booked as cost on an ongoing basis. The Group meets the
requirements for occupational pension scheme under the Act on Obligatory
Occupational Pensions. The contribution pension scheme in Norway meets the legal
requirements.
A loan of USD 90 thousands was given the former CEO, Lee Parker in 2020. The loan
was part of a settlement agreement in 2021. No other loan or collateral has been
granted to the Chairman of the Board or other related parties.
For detailed information of executive officers and board of Directors compensation,
see the remuneration report.
See note 19 for shares held by the executive officers and Board of Directors.
Note 22 Share based payments programs’
The Group has a share-based payment scheme for employees and one members of
the Board.
The options granted gives the holder right to purchase a defined number of shares at
a predetermined price if the vesting conditions are met. The exercise price has been
set to fair value of the shares at grant date.
A reverse split of the shares 10:1 was performed 9 August 2021 and is included in the
tables for 2021.
USD thousands
2021 2020
Wages and salaries 2 462 2 321
Social Security costs 340 261
Pension costs 150 103
Other remuneration 539 701
Share based payment expense (refer to note 22) 11 3
Refund salary -33 -
Total personnel expense 3 469 3 388
Number of man-years at 31.12 2021 2020
Group companies in Norway 7 9
Group companies abroad 2 2
Key management personell compensation
USD thousands
2021 2020
Base salary 1 223 934
Pension 60 37
Other Benefits 34 64
Number of options held 10 640 21 280
70
Set out below are summaries of options granted under the scheme:
Share options outstanding at the end of the year have the following expiry date:
Average
exercise
price per
share option
(NOK)
Number of
options
Average
exercise
price per
share option
(NOK)
Number of
options
As at 01.01 10,1400 405 079 9,4500 749 479
Granted during the year 1,8000 1 600 000 - -
Adjusted during the year 106,5452 (231 012) - -
Terminated during the year
9,2401 (148 400) 8,6400 (344 400)
As at 31.12 3,4538 1 625 667 10,1400 405 079
Vested 31.12 106,5450 25 667 9,8700 398 079
Exercisable 31.12 25 667 398 079
2021 2020
11 3
2021
2020
Share based payment cost (revenue) recognised
in the period USD thousand
Grant date Expiry date
Exercise price
Share
options 31
December
2021
Share
options 31
December
2020
30.09.2021 30.09.2028 1,70 800 000 -
30.09.2021 30.09.2028 1,90 800 000 -
15.09.2017 15.09.2022 69,61 12 600 196 000
27.09.2018 27.09.2023 112,75 10 267 181 079
01.05.2019 01.05.2024 250,00 2 800 28 000
Total number of options 1 625 667 405 079
Strike Price
Number of
instruments
Weighted
Average
remaining
contractual
life
Weighted
Average
Strike Price
Vested
instruments
31.12.2021
Weighted
Average
Strike Price
1.70 800 000 5.50 1.70 - -
1.90 800 000 6.50 1.90 - -
69.61 12 600 1.70 69.61 12 600 69.61
112.75 10 267 2.49 112.75 10 267 112.75
250.00 2 800 3.09 250.00 2 800 250.00
1 625 667 25 667
Outstanding instruments
Vested instruments
Outstanding instruments overview
71
The exercise price for the grants was fair value at the grant date. The options can be
exercised by buying shares as settlement where one options give right to one share.
For the 2021 grant, 25% of the options will be vested 30.03.2022, 30.09.22,
30.03.2023 and 30.09.2023. The fair value at grant date was 0.22 NOK/option.
The fair value has been estimated using the Black-Scholes option pricing model.
When calculating fair value at grant date, the Group has assumed a volatility of
47.31% from comparable peers in the oil and gas services for both grants, 0 expected
dividends, and a risk-free interest rate of 1,011% for the 2021 grant.
Note 23 Auditors fee
The Group has at the annual general meeting 23 June 2021 changed from Ernst &
Young (EY) to PricewaterhouseCoopers (PwC) as the auditor for the Norwegian
entities.
Note 24 Subsidiaries and associated companies
The Group comprise of the same legal entities as of 31 December 2021 and 31
December 2020.
* The formal shareholdings in Axxis Geo Solutions PT is 49 %. The Group has control
of operating decisions and is exposed to 100 % of variability of the company’s results
through a shareholder agreement. Because of this, no non-controlling interest has
been recognized in the financial statements.
USD thousands
Expensed audit fee (excluding VAT)
2021 2020
Statutory audit 260 159
Tax advice (incl. technical assistance with tax return)
8 109
Other attestation services 30 27
Other assurance services - -
Total auditors fee 299 295
Jurisdiction
Voting
rights %
Neptune Seismic AS Norway 100%
Axxis Geo Solution Inc. USA 100%
PT Axxis Geo Solutions* Indonesia 100%
Axxis Multi Client AS Norway 100%
Axxis Production AS Norway 100%
Carbon Transition Investment AS Norway 100%
Axxis Geo Solutions Egypt LLC** Egypt 100%
Subsidiary of Carbon
Transition ASA:
72
** Axxis Production AS owns 99% and Axxis Geo Solutions ASA owns 1% of the
shares in the company.
Note 25 Earnings per shares
Basic earnings per share is calculated by dividing the net profit or loss attributable to
shareholders of the Parent by the weighted average number of ordinary shares
outstanding during the year. Diluted earnings per share include the weighted average
number for ordinary shares that would be issued on the conversion of all the diluted
potential ordinary shares into ordinary shares. The options described in note 18, are
not included in the number of dilutive shares for 2021 due to the options is out of
money and for 2020 due to a loss reported for the period.
Note 26 Cash flow information
* Mainly related to debt forgiveness related to the reconstruction process.
Basic earnings (loss) per weighted average number of share 2021 2020
13 935 (3 133)
Average number of outstanding shares 131 501 057 58 821 018
Basic earnings (loss) per weighted average share (USD) 0.11 (0.05)
Diluted earnings (loss) per share 2021 2020
13 935 (3 133)
Average number of outstanding shares 131 501 057 58 821 018
Diluted earnings (loss) per share (USD) 0.11 (0.05)
Profit (loss) attributable to the ordinary equity holders of the
company
Profit (loss) attributable to the ordinary equity holders of the
company
USD thousands
Interest bearing debt Lease liabilities Total
01.01.2021 33 906 73 33 979
Repayment of interest bearing debt
(2 295) - (2 295)
Payment of lease liabilities (73)
Other* (30 716) - (30 716)
Reclassification - - -
31.12.2021 896 - 896
Liabilities arising from financing activities
73
* Mainly related to trade payables converted to loans.
The non-current part of the interest-bearing debt is USD 17.4 million
Note 27 Events after reporting period
The Group announced the sale of its node on a rope equipment to Magseis Fairfield
ASA 3 March 2022.
The transaction is structured based on an earnout model. The Company will receive
USD 0.5 million at closing and will additionally receive earnout payments over a three-
year period conditioned on the utilization of the equipment acquired. The earnout
payments are capped at a maximum of USD 12.0 million and have a minimum
payment clause of USD 1.5 million, subject to certain milestones.
The completion of the transaction was subject to customary closing conditions which
have been lifted 31 March 2022.
On 16 March 2022 the Group announced a new Utsira multi-client late sale of USD
1.4 million. With proceeds from this late sale the Group will repay its outstanding USD
0.9 million loan balance and increase its cash balance by approximately USD 0.5
million. As a result, the Group will have no remaining financial indebtedness after this
sale.
USD thousands
Interest bearing debt Lease liabilities Total
01.01.2020 2 256 297 2 553
Repayment of interest bearing debt
(1 440) - (1 440)
Payment of lease liabilities (230)
Other* 33 090 7 33 097
Reclassification - -
31.12.2020 33 906 73 33 979
Liabilities arising from financing activities
74
5 Financial statement-
Carbon Transition ASA
5.1. Statement of comprehensive income
USD thousands Note 2021 2020
Total revenue 2,3 3 764 42 429
Other income 3 1 163 -
Cost of sales 4 (1 038) (39 957)
Personnel expenses 18 (2 991) (3 335)
Other operating expenses 20 (4 089) (3 920)
Total Operating Expenses (8 117) (47 213)
Operating profit (loss) before
depreciation and amortization
(EBITDA)
(3 190) (4 784)
Depreciation & Amortization 9 (6 907) (5 682)
Operating profit (loss) (EBIT) (10 097) (10 466)
Gain on debt restructuring 2.3 24 062 -
Financial income 5 12 9 485
Financial expenses 5 (4 464) (4 315)
Currency gain (loss) 5 (1 575) (260)
Profit (loss) before tax 7 937 (5 556)
Tax income (expense) 6 - 109
Profit (loss) for the period 7 937 (5 447)
75
5.2. Statement of financial position
USD thousands
31.12.2021 31.12.2020
Assets Note
Non-current assets
Property, plant and equipment 9 3 413 11 662
Investment in subsidiaries 21 9 456 2 251
Non current receivables group companies 17 5 -
Total non-current assets 12 875 13 913
Current assets
Stock of supplies 10 - 85
Receivables group companies 17 28 627 28 548
Other current assets 8 184 231
Cash and cash equivalents 7 3 732 194
Total current assets 32 543 29 059
Total assets 45 418 42 972
76
5.3. Statement of financial position
USD thousands
31.12.2021 31.12.2020
Equity and Liabilities Note
Equity
Share capital 16 28 739 840
Additional paid-in capital 51 171 38 453
Total paid-in capital 79 910 39 294
Accumulated earnings and other equity (35 852) (43 800)
Total Equity 44 058 (4 506)
Non current liabilities
Interest bearing debt 11.22 - 17 417
Total non current liabilities - 17 417
Current liabilities
Current liability of long-term debt 11.22 - 16 511
Trade payables 12 141 10 557
Liabilities to group companies 17 399 2 014
Other current liabilities 15 821 978
Total current liabilities 1 360 30 060
Total liabilities 1 360 47 478
Total equity and liabilities 45 418 42 972
Gisle Grønlie Nina Skage Torstein Sannes
Chairman Board member Board member
Nils Haugestad
Interim CEO
Oslo, 7 April 2022
77
5.4. Statement of changes in equity
USD thousands
Share capital
Additional
paid-in capital
Accumulated earnings
Total equity
Balance as of 01.01.2021 840 38 453 (43 800) (4 506)
Profit (loss) for the period 7 937 7 937
Other comprehensive income (loss) - -
New shares issued - cash settled 22 800 961 23 760
Cost for new shares issued (2 163) (2 163)
Capital increase - debt conversion 5 099 13 920 - 19 019
Share based payment 11 11
Balance as of 31.12.2021 28 739 51 171 (35 852) 44 058
USD thousands
Share capital
Additional
paid-in
capital
Accumulated
earnings
Total equity
Balance as of 01.01.2020 11 718 38 453 (49 234) 938
Profit (loss) for the period (5 447) (5 447)
Other comprehensive income (loss) - -
Write down of par value (10 878) 10 878 -
Share based payment 3 3
Balance as of 31.12.2020 840 38 453 (43 800) (4 506)
78
5.5. Statement of cash flow
USD thousands Note 2021 2020
Cash flow from operating activities
Profit before tax 6 7 937 (5 556)
Depreciation, amortization and write-down 9 9 787 5 682
Reconstruction gain 5 (24 062) -
Currency (gain)/loss without cash flow effects 63 (72)
Interest expense 5 718 3 042
Share based payment cost 19 11 3
Reconstruction payments (4 732) -
Change in trade receivables - 11 369
Change in trade payables (1 475) (30 823)
Change in inventory 10 85 232
Change in other current receivables (32) 135
Change in other non current receivables (5) -
Other working capital changes 5 025 18 004
Net cash from operating activities (6 679) 2 015
Cash flow from investing activities
Investment in property, plant and equipment 9 - (62)
Disposal of property, plant and equipment 9 - 204
Investment in subsidiaries 21 (9 345) (377)
Net cash flow from investment activities (9 345) (235)
Cash flow from financing activities
Repayment of interest bearing debt (1 295) (1 440)
Payment of lease liabilities (recognized under IFRS 16) 14 (23) (82)
Net proceeds from new equity 21 597 -
Interest paid lease liabilities 14 (0) (3)
Interest paid (718) (1 374)
Net cash flow from financial activities 19 562 (2 899)
Net change in cash and cash equivalents 3 537 (1 119)
Cash and cash equivalents balance 1.1 7 194 1 314
Cash and cash equivalents balance 31.12 7 3 732 194
79
5.6. Notes to the financial statements
Note 1 General information about the Company and basis for presentation
General information
Carbon Transition ASA is a public limited listed company incorporated in Norway. The
Company is listed on EURONEXT EXPAND OSLO and traded under the ticker
CARBN.
The Company’s registered office is at Askekroken 11, 0277 Oslo, Norway.
Carbon Transition ASA has an international liability insurance for the Board of
Directors and management. The insurance coverage is up to MNOK 50 per year for
total revenue of MNOK 612 and applies to the Parent company including subsidiaries
The Company’s financial statements are prepared in accordance with International
Financial Reporting Standards («IFRS») as adopted by the European Union (“EU”),
their interpretations adopted by the International Accounting Standards Board (IASB)
and the additional requirements of the Norwegian Accounting Act as of 31 December
2021.
The notes are an integral part of the Company’s financial statements.
The Company’s financial statements have been prepared on a historical cost basis,
except for certain financial assets financial instruments that have been measured at
fair value.
The Company’s financial statements are presented in thousands of USD.
Further, the Company applies the same accounting policies as described in note 1
and 2 in the notes to the consolidated financial statements where relevant, except that
unrealized foreign exchange gain (loss) on non-current intercompany loans is
recognized in the statements of profit and loss.
Shares in subsidiaries (see note 21) are presented at cost less impairment.
Impairment is recognized based upon the carrying value of the individual shares and
net intercompany receivables in the subsidiaries less the estimated recoverable
amount (based on discounted estimated future cash flows). If estimated recoverable
amounts increase, impairment charges are reversed accordingly. There is no fixed
plan for repayment of long-term intercompany receivables and payables.
Changes in accounting principles
The Company has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective. Several amendments and interpretations
apply for the first time in 2021, but do not have an impact on the Company’s financial
statements
80
Key accounting estimates and judgement
The Company makes estimate and assumptions concerning the future. The resulting
accounting estimates could deviate from the actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next financial year are discussed
below.
Revenue recognition
The Company uses the percentage of completion method in accounting for revenue
for contract seismic surveys. Progress is measured in a manner generally consistent
with the physical progress on the project. Use of the percentage of completion method
requires the Company to estimate the services performed to date as a proportion of
the total service to be performed. The proportion of services performed to total
services to be performed can differ from management’s estimate, influencing the
amount of revenue recognized in the period.
Note 2 Segment reporting
The Company only operated in one segment, which is based on the node seismic
contract revenue stream directly in the Parent or through its subsidiaries, and
therefore no split of operating expenses has been included in the note. In 2021 the
revenue stream is based on intercompany services to company having seismic
contract and from Covid compensation.
Revenue recognition for the node seismic contract segment in 2020 is based on the
same principles as the IFRS financial statements.
USD thousands
Income statement 2021 2020
Contracts for seismic acquisitions - 2 508
Other revenue* 3 764 39 921
Total revenue from contracts with customers 3 764 42 429
USD thousands
Geographical markets 2021 2020
Norway 3 528 39 921
USA 236 -
Brazil - 2 508
Total revenue 3 764 42 429
81
Note 3 Revenue and cost from contract with clients
The Company has no current contract liabilities per 31. December 2021 or 2020.
Performance obligations
Contract seismic and imaging
The contracts for seismic surveys have an expected duration of less than one year.
Because of this, the Company does not disclose information about transaction price
allocated to unsatisfied or partly unsatisfied performance obligations for these
contracts. Contracts for seismic surveys usually have a billing schedule with frequent
billings, so there will not be a material difference in timing of the payments and the
progress in the projects.
USD thousands
Major customers 2021 2020
Customer 1 2 832 36 760
Customer 2 1 163 3 161
Customer 3 692 2 508
Other (923) -
Total revenue 3 764 42 429
USD thousands
Income statement 2021 2020
Contracts for seismic acquisition - 2 508
Other revenue 3 764 39 921
Total revenue from contracts with customers 3 764 42 429
At a point in time - -
Over time 3 764 42 429
Total revenues from contracts with customers 3 764 42 429
Cost to fulfill contracts and cost to obtain contracts
USD thousands 2021 2020
Contract assets
Assets recognized for cost to fulfill a contract in the
balance 01.01
- 69
Assets recognized for costs to fulfill a contract
(mobilization costs)
- -
Amortization of assets recognized for cost to fulfill a
contract (mobilisation costs)
- (69)
Total contract assets - 0
Other income
USD thousands 2021 2020
Covid-19 compensation 1 163 -
Total other income
1 163 -
82
Note 4 Cost of sales
Note 5 Financial items
Note 6 Tax
USD thousands
Cost of sales 2021 2020
Vessel cost (220) (16 966)
Crew & project management (262) (8 674)
Seismic, source and node equipment (280) (13 289)
Agent related expenses (276) (960)
Mobilization amortization - (69)
Total operating expenses (1 038) (39 957)
USD thousands
Financial income 2021 2020
Interest income 1 0
Other financial income - 3 847
Group contribution (from subsidiary) 11 5 637
Total financial income 12 9 485
Financial expenses 2021 2020
Interest expense 486 1 227
Interest expense suppliers 231 1 815
Other financial expenses 866 1 273
Exchange losses - -
Write-down shares in subsidiaries 2 881 -
Total financial expenses 4 464 4 315
Exchange gains 842 3 249
Exchange losses (2 418) (3 509)
Total currency exchange gain (loss) (1 575) (260)
83
Deferred tax assets are not recognized per December 2021. The management
evaluated the deferred tax assets to be uncertain when to be utilized in the future. This
evaluation is performed yearly.
There is no time limit for use of loss carried forward in Norway.
Note 7 Bank deposits, cash in hand
Restricted bank deposits relate to employee withholding tax. These deposits are
subject to regulatory restrictions and are therefore not available for general use by the
Company. The account is used to settle employee withholding tax.
USD thousands 2021 2020
Specification of tax expense (income) for the year
Current income tax (including witholding tax) - -
Change in deferred tax - (109)
Total tax expense (income) - (109)
Reconciliation of actual against expected tax expense
(income) at the income tax rate of 22%
Profit (loss) before tax 7 937 (5 556)
22% tax 1 746 (1 222)
Tax effect from:
Withholding tax abroad - (109)
Permanent differences 696 (86)
Not booked deferred tax assets (1 633) 1 503
Currency effect (809) (195)
Calculated tax expense (income) - (109)
Effective tax rate for the Company - 1.0
USD thousands 31.12.2021 31.12.2020
Temporary differences
Non current assets (4 109) (1 683)
Accruals (41 580) (45 757)
Gain/loss account (1 934) -
Accumulated loss carried forward (8 783) (18 157)
Temporary differences at 31.12. (56 408) (65 597)
Deferred tax assets (liabilities) 12 410 14 431
USD thousands
31.12.2021 31.12.2020
Bank deposits 3 646 114
Restricted bank deposits 86 80
Total bank deposits
3 732 194
84
Note 8 Other current assets
Note 9 Property, plant and equipment
According to IFRS the carrying amount of intangible assets and property, plant and
equipment are reviewed at each balance sheet date to determine whether there is any
USD thousands
31.12.2021 31.12.2020
Prepayments 145 151
Accrued income - 80
VAT settlement 39 -
Total other current assets 184 231
USD thousands
2021
Cost at 01.01.21 8 171 17 372 29 196 184 25 952
Additions - - - - - -
Disposal (5 459) (5 171) (29) - (184) (10 843)
Impairment (2 711) (813) (3 524)
Cost at 31.12.21 - 11 388 - 196 - 11 584
Accumulated depreciation 01.01.21
(4 717) (9 259) - (153) (162) (14 290)
Depreciation (351) (2 967) - (42) (22) (3 383)
Disposal 5 067 4 251 - - 184 9 502
Accumulated depreciation at 31.12.21
(0) (7 976) - (195) - (8 170)
Carrying amount at 01.01.21 3 454 8 114 29 43 22 11 662
Carrying amount at 31.12.21 (0) 3 412 - 1 - 3 413
Economic lifetime in years 3-10 years 3-5 years 3-10 years 2-5 years
Total tangible
assets
Vessel
Seismic and
node equipment
Projects in
progress
Computer
equipment
Lease asset
USD thousands
2020
Cost at 01.01.20 8 171 17 557 29 196 184 26 136
Additions - 62 - - - 62
Disposal - (246) - - - (246)
Reclass - - - - - -
Currency translation adjustment - - - - - -
Cost at 31.12.20 8 171 17 372 29 196 184 25 952
Accumulated depreciation 01.01.20 (3 504) (5 189) - (88) (73) (8 854)
Depreciation (1 213) (4 095) - (65) (88) (5 461)
Disposal - 25 - - - 25
Currency translation adjustment - - -
Accumulated depreciation at 31.12.20
(4 717) (9 259) - (153) (162) (14 290)
Carrying amount at 01.01.20 4 667 12 368 29 108 110 17 283
Carrying amount at 31.12.20 3 454 8 114 29 43 22 11 662
Economic lifetime in years 3-10 years 3-5 years 3-10 years 2-5 years
Vessel
Seismic and
node equipment
Projects in
progress
Computer
equipment
Lease asset
Total tangible
assets
85
indication of impairment. If any such indication exists, the asset’s recoverable amount
is estimated.
Management regularly evaluates its fleet plan and capital expenditure level in light of
market conditions. In 2021 and 2020 management performed such evaluations which
did not result in any need for impairments at the year-end 2021 or 2020.
The Company has no asset held for sale at the end of 2021 or 2020.
The Company sold the vessel Neptune Naiad in June. An impairment of USD 3.5
million was made before the transaction. The settlement was performed with loan
settlement to Sanco Holding AS from the reconstruction and time charter payment on
Sanco Star used on the UK contract in 2021, so there was no cash effect on this sale.
The climate risk for stranded equipment is evaluated as low, since the Company has
sold the node seismic equipment 2 March 2022, see note 23 Events after reporting
period.
Note 10 Inventories
The inventories consist of fuel.
The amount of inventories recognized as an expense in cost of sales during 2021 was
USD 0.2 million and for 2020 the amount was USD 1.1 million.
Note 11 Interest bearing debt
USD thousands
31.12.2021 31.12.2020
Purchased finished goods - 85
Net inventories - 85
USD thousands Interest rate (%) Maturity 31.12.2021 31.12.2020
USD 24 739 311 Bond Loan 8% 2022 - 17 417
Non-current borrowings - 17 417
Lease Liabilities 5%
2021
- 22
NOK 29 750 000 Floating rate term loan
Nibor + 0.5%
2021
- 1 160
USD 24 739 311 Bond loan 8%
2022
- 6 033
USD 5 780 326 Fixed rate term loan
4%
2021
- 5 695
USD 1 490 633 4% Fixed rate term loan
4%
2021
- 1 244
USD 1 332 704 4% Fixed rate term loan
4%
2021
- 1 300
NOK 2 495 043 4% Fixed rate term loan
4%
2021
- 234
NOK 12 000 000 Interest Free Loan
0%
2021
- 822
Current borrowings - 16 511
Total borrowings - 33 929
86
Details of the Company's exposure to risk arising from current and non-current
borrowings are set out in note 12, Financial risk management.
NOK 29 750 000 Nibor+5,5% Term Loan (Eksportkreditt)
The term loan was settled in 2021 in connection with the sale of the vessel Neptune
Naiad. Initially the loan was to amortize through twelve quarterly instalments. The term
loan had a first priority pledge in the owned vessel, operating assets and factoring
agreement.
The loan was in breach of financial covenants and was classified to current liabilities in
the financial statements as of 31December 2020. However, the Company had
received waiver from the two covenants for all the quarters in 2020, including year-end
2020.
The financial covenants were as follows:
1) Liquid assets of no less than 120% of outstanding loan
2) Equity ratio of 30% until Q4 19 and thereafter 35% till final maturity date
(September 2021).
USD 24 739 311 Bond loan
The USD 24 739 311 bond loan was settled in connection with the legal court
reconstruction in 2021. The loan was issued in relation to a restructuring completed in
2020, in which USD 24 739 311 of short-term payables were converted to a 2-year
bond loan. The bond carried a fixed interest of 8% and was to be repaid either through
cash calls or the agreed repayment schedule. For the bond loan, the group pledged
shares in subsidiaries, inventories, operating assets, factoring agreement, and second
priority in the owned vessel.
The bond required the Group to maintain a liquidity balance of USD 2 million and
maintain a 0-dividend policy. As of 31December 2020, the covenants for the bond loan
were fulfilled.
Fixed rate term loans
All fixed rate term loans were settled as a result of a reconstruction in 2021. In relation
to the restructuring completed in 2020, the Company issued a series of fixed rate term
loans through conversion of short-term payables to long term loan agreements. The
loans were unsecured and carried a fixed interest rate from 0% to 4% p.a.
USD thousands 31.12.2021 31.12.2020
Vessel, equipment and maintenance - 11 662
Investment in subsidiaries - 2 251
Stock of supplies - 85
Total balance sheet value of assets placed as security - 13 998
Balance sheet value of assets placed as security
87
Note 12 Financial risk management
The Company’s has during the year changed name to Carbon Transition ASA and
implemented a new strategy. Following the restructuring in June 2021, the Company
through the subsidiary Carbon Transition Investment AS refocused the business
model to become a listed investment company with the goal to invest in companies
and technologies which contribute to significant reduction of carbon emissions. The
Company may also invest more broadly in the "energy transition" space. Carbon has a
legacy seismic business operating under the name Axxis Geo Solutions, with a multi-
client data library.
The Company is exposed to market specific and general economic cycles and macro-
economic fluctuations, since changes in the general economic situation affect the
demand for products and services provided by companies the Company invests in.
The performance of the Axxis Geo Solutions operations is also dependent on
production and development spending by oil and gas companies Historically, in times
of low oil price, demand in exploration spending, where the Company is active, has
been reduced in much greater extent than production related spending.
Capital Management
For the purpose of the Company’s capital management, capital includes issued
capital, share premium and all other equity reserves attributable to the equity holders
of the parent.
The Company manages its capital structure and makes adjustments in light of
changes in economic conditions. To maintain or adjust the capital structure, the
Company may return capital to shareholders, issue new shares, or repay or issue new
debt.
Financing risk
The Company used bank loan, bond loan and unsecured loans in addition to equity for
financing purposes in 2020. During 2021 the Company successfully completed a legal
reconstruction, and all debt was settled. There was no debt in the Company per year-
end 2021. The purpose of these financial instruments is to ensure that the Company
has financial flexibility for investments that are necessary for the Company's
operations. In addition, the Company has items such as trade receivables, trade
payables etc. which is directly related to regular business operations. The Company
does not use financial instruments for hedging purposes. Risk management
procedures have been established by the Board and handled by the CFO.
The Company is exposes to financial risk linked to interest rate risk, liquidity risk,
currency risk and credit risk. The Company's management has a continuous
assessment to identify and evaluate financial risks and sets guidelines for how to
handle them.
The Company does not have any financial derivatives in 2021 or 2020.
88
(i) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss
for the other party by failing to discharge an obligation. The Company is mainly
exposed to credit risk related to trade receivables and other current receivables.
The Company applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based
on shared credit risk characteristics and the days past due. Current and expected
future customers are oil and gas companies with sound credit ratings. Also, for other
companies in the industry, historic credit losses have been negligible. Because
expected credit loss is considered to be a clearly immaterial amount, no provision has
been made.
Trade receivables are written off when there is no reasonable expectation of recovery.
Indicators that there is no reasonable expectation of recovery include, amongst others,
the failure of a debtor to engage in a repayment plan with the Company, and a failure
to make contractual payments for a period of greater than 120 days past due without
special agreement in advance.
Impairment losses on trade receivables are presented as net impairment losses within
operating profit. Subsequent recoveries of amounts previously written off are credited
against the same line item.
All trade receivable was fully paid during 2021 and 2020, and therefore no provision
for losses.
(ii) Market risk - interest rate
The Company does not use financial instruments to hedge interest rate risk.
Trade and other receivables and trade and other payables are interest free and with a
term of less than one year, so there is no significant interest rate risk associated with
these financial assets and liabilities.
The Company's sensitivity to potential changes in interest rates for 2020 with an
increase in 50 basis points would increase interest expense for the period with
approximately USD 9 thousands and zero for 2021 since the Company did not have
any debt per December 2021.
(iii) Liquidity risk
Liquidity risk is the risk that the Company is not able to meet its payment obligations.
Prudent liquidity risk management implies maintaining sufficient cash and marketable
securities and the availability of funding through an adequate amount of committed
credit facilities to meet obligations when due and to close out market positions. The
89
Company's strategy for managing liquidity risk is to have sufficient liquidity at all times
in order to meet its financial liabilities at maturity, both under normal and exceptional
circumstances, without risking unacceptable losses or at the expense of the
Company`s reputation. The Company may need access to long-term funding. There
can be no assurance that available funding sources are accessible when needed nor
can there be any assurance that the Company will be able to raise new equity on
favorable terms and in amounts necessary to conduct its on-going and future
operations, should this be required. Furthermore, there can be no assurance that the
Company will be able to obtain additional shareholder funding. Failure to access
necessary liquidity could require the Company to scale back its business or could
have other materially adverse consequences for its business and its ability to meet its
obligations.
The table below provides an overview of the maturity profile of all financial liabilities.
For bank loans the stated amount includes estimated interest payments. In cases
where the counterparty may claim earlier redemption, the amount is placed in the
earliest period the payment may be required from the counterparty.
(iv) Market risk - foreign exchange rates
The Company operates internationally and is exposed to foreign exchange risk,
primarily the NOK. Foreign exchange risk arises from future commercial transactions
and recognized assets and liabilities denominated in a currency that is not the
functional currency of the relevant Company entity. The Company is exposed to
currency risk as some parts of the Company’s expenses are denominated in NOK.
Profit after tax for the Company is also affected by changes in exchange rates, as
expenses and payables are converted to USD.
The NOK denominated bank loans and payables are expected to be repaid with
receipts from US dollar denominated sales. The foreign currency exposure of these
loans has not been hedged.
The table below shows the Company's sensitivity to potential changes in exchange
rates. Then calculation in the table below shows the effect on profit / loss on the
average exchange rate.
2021
USD thousands
0-3
months
3-6
months
6-9
months
9-12 months 1-2 years
Total
Trade payables 141 - - - -
141
Other current liabilities 821 - - - -
821
Total 962 - - - - 962
Remaining Term
90
The Company`s operations in foreign countries expose it to risks related to foreign
currency movements. Currency exchange rates fluctuate due to several factors, and
these include international balance of payments, economic and financial conditions,
government intervention, speculation and other factors. Changes in currency
exchange rates relative to the USD may affect the USD valued assets and liabilities of
the Company. Changes in currency may also affect the Company’s local expenses
when operating abroad. The Company’s expenses are primarily in USD and NOK. As
such, the Company’s earnings are exposed to fluctuations in the foreign currency
market.
Note 13 Categories of financial instruments
Carbon Transition ASA exposure to various risks associated with the financial
instruments is discussed in note 12 Financial risk management. The maximum
exposure to credit risk at the end of the reporting period is the carrying amount of each
class of financial assets mentioned above.
Change in
exchange
rate USD/NOK
Effect on profit
before
tax
Effect on
OCI
2021 + 10 % 722 -
- 10 % -882 -
2020 + 10 % 481 -
- 10 % (588) -
USD thousands
USD thousands
Financial assets at amortized cost
31.12.2021 31.12.2020
ASSETS
Cash and cash equivalents 3 732 194
Total financial assets 3 732 194
Financial liabilities at amortized cost
31.12.2021 31.12.2020
LIABILITIES
Interest-bearing non-current liabilities - 17 417
Interest-bearing current liabilities - 16 511
Trade payables 141 10 557
Other current liabilities 821 978
Total financial liabilities 962 45 464
91
Note 14 Leases and commitments
Leases
The Company uses the accounting standard IFRS 16 Leases. IFRS 16 Leases has
from a lessee viewpoint eliminated the classification of leases as either operating
leases or financial leases.
For the Company only office space comes under the classification of leases. Vessels
and other seismic equipment on short term leases come under the classification of
commitments. As of 31 December 2021, the Company has no commitments in
vessels, seismic equipment or office space.
Lease assets are included in the balance sheet under the item property, plant and
equipment. The non-current part of the lease liability is included in the balance sheet
under the item interest bearing debt non-current, and the current part under interest
bearing debt current, refer to note 11.
* The lease agreement related to office space expired as of 28 February 2021.
The Company had a total cash outflow for leases of USD 0.02 million in 2021. The
Company had no low-value assets or variable lease payments in 2021.
Right-of-use assets:
USD thousands
Offices Total
Carrying value
Balance right-of-use assets 01.01.2021 24 24
Additions - -
Depreciation (24) (24)
Balance right-of-use assets 31.12.2021 - -
Lease liabilities:
USD thousands
Non-
current*
Current
Total
Carrying value
Balance lease liabilities 01.01.2021 - 24 24
Lease payments - (24) (24)
Accrued interest - 0 0
Balance lease liabilities 31.12.2021 - 0 0
Right-of-use assets:
USD thousands
Offices Total
Carrying value
Balance right-of-use assets 01.01.2020 110 110
Depreciation (86) (86)
Balance right-of-use assets 31.12.2020 24 24
92
* The lease agreement related to office space expires as of 28 February 2021.
The Company had a total cash outflow for leases of USD 0.09 million of which USD
0.003 million is related to interest in 2020. The Company had no low-value assets or
variable lease payments in 2020.
Commitments:
The Company has commitments as of December 2021 related to office rent until
September 2022. The cost for short term leases of office rent for 2021 was USD 0.1
million and USD zero for 2020. The Company has not entered into any contractual
commitments for the rental of seismic equipment (nodes) as of 31 December 2021 or
as of 31 December 2020. The cost for short-term leases of seismic equipment was
USD 0.2 million in 2021 and USD 11.8 million in 2020.
The Company has no commitments for short-term leases of vessels as of 31
December 2021 or as of 31 December 2020. There was no cost for short term leases
of vessels in 2021. The cost for short term leases of vessels was USD 14.5 million in
2020.
Note 15 Other current liabilities
Lease liabilities:
USD thousands
Non-
current*
Current
Total
Carrying value
Balance lease liabilities 01.01.2020 22 86 109
Additions -
Reclassification to current (22) 22 -
Lease payments - (86) (86)
Accrued interest - 3 3
Other adjustments - (2) (2)
Balance lease liabilities 31.12.2020 - 24 24
USD thousands
31.12.2021 31.12.2020
Holiday pay owed 167 174
Other accrued costs 654 1 327
VAT settlement - (523)
Total other current liabilities 821 978
93
Note 16 Share capital and shareholder information
*A reverse split of the shares 10:1 was performed 9 August 2021 and is included in the table above.
The Company has one class of shares, all shares provide equal rights, including the
right to any dividends in line with 2020. Each of the shares carries one vote in line with
2020. Neither Carbon Transition ASA nor any of its subsidiaries directly or indirectly
owns shares or treasury shares in the Company.
Paid/proposed dividend
The board has decided not to propose any dividend for 2021 or 2020.
The Company's share capital per
31.12.2021 include the following:
Number of
shares
Share Capital
in NOK
Par Value
per share*
Ordinary shares (one share = one vote)
239 760 117 239 760 117 1.00
Shares
Number of shares 01.01.2021
58 821 018
Reverse split 10:1
5 882 102
New shares issued - cash settled 15.6.21
144 500 000
Capital increase - debt conversion to fair value 15.06.21 42 439 946
New shares issued - cash settled 19.07.21 20 000 000
New shares issued - cash settled 09.08.21 2
New shares issued - cash settled tranche 1 - 21.10.21 21 282 205
New shares issued - cash settled tranche 2 - 16.11.21 5 655 862
Number of shares 31.12.2021
239 760 117
Changes in number of shares
94
The major shareholders in Carbon Transition ASA 31 December 2021 were as
follows:
Shareholders
Total shares
Ownership
share
Voting share
INVESTERINGSFONDET VIKING AS 28 000 000 11.7% 11.7%
MIDDELBORG INVEST AS 14 538 461 6.1% 6.1%
TIGERSTADEN AS 13 760 459 5.7% 5.7%
ALDEN AS 11 265 384 4.7% 4.7%
SPAREBANK 1 MARKETS AS 11 180 000 4.7% 4.7%
F2 FUNDS AS 9 250 000 3.9% 3.9%
BECK ASSET MANAGEMENT AS 9 012 307 3.8% 3.8%
F1 FUNDS AS 8 427 223 3.5% 3.5%
URTIVEN AS 8 230 770 3.4% 3.4%
GINNY INVEST AS 6 250 230 2.6% 2.6%
DNB BANK ASA 6 225 280 2.6% 2.6%
PHILIP HOLDING AS 5 750 230 2.4% 2.4%
Q CAPITAL AS 5 619 230 2.3% 2.3%
REDBACK AS 5 000 000 2.1% 2.1%
TTC INVEST AS 4 000 000 1.7% 1.7%
Nordnet Bank AB 3 758 002 1.6% 1.6%
LIVERMORE INVEST AS 3 079 615 1.3% 1.3%
Skandinaviska Enskilda Banken AB 2 500 000 1.0% 1.0%
NORDNET LIVSFORSIKRING AS 2 089 077 0.9% 0.9%
CITADELL AS 2 000 000 0.8% 0.8%
Total 20 largest shareholders
159 936 268 66.7% 66.7%
Total other shareholders
79 823 849 33.3% 33.3%
Total number of shares
239 760 117 100.0% 100.0%
95
The major shareholders in Axxis Geo Solutions AS 31 December 2020 were as
follows:
Shares owned or controlled by members of the Board of Directors, Chief Executive
Officer and Other Executive Officers 31 December 2021 were as follows:
Share and options owned by management 31 December 2021 were as follows:
Shares owned or controlled by members of the Board of Directors, Chief Executive
Officer and Other Executive Officers 31 December 2020 were as follows:
Shareholders
Total shares
Ownership
share
Voting share
HAVILA HOLDING AS 15 549 434 26.4% 26.4%
ROGER IGELSTRØM 2 000 000 3.4% 3.4%
JOHS. HANSEN REDERI AS 1 413 345 2.4% 2.4%
Nordnet Bank AB 1 096 145 1.9% 1.9%
TOM DANIELSEN 1 073 166 1.8% 1.8%
FRANK ROBERT SUNDE 742 468 1.3% 1.3%
J.P. Morgan Securities LLC 703 618 1.2% 1.2%
NÆRINGSLIVETS
HOVEDORGANISASJON
671 343 1.1% 1.1%
DAGUSIKI HOLDING AS 660 572 1.1% 1.1%
DEHGHAN ZAKLAKI 629 647 1.1% 1.1%
YVES MEROUR 541 531 0.9% 0.9%
JOHN OTTO DYBVIK 500 995 0.9% 0.9%
MORTEN HÅVAR OLSEN 500 000 0.9% 0.9%
ACTION AS 454 850 0.8% 0.8%
ALCIDES SHIPPING AS 450 712 0.8% 0.8%
RONNY BRATTAAS 421 763 0.7% 0.7%
Deutsche Bank Aktiengesellschaft 400 028 0.7% 0.7%
MADRA INVEST AS 373 734 0.6% 0.6%
NORDNET LIVSFORSIKRING AS 365 477 0.6% 0.6%
THOMAS GRØNSTAD 350 000 0.6% 0.6%
Total 20 largest shareholders
28 898 828 49.1% 49.1%
Total other shareholders
29 922 190 50.9% 50.9%
Total number of shares
58 821 018 100.0% 100.0%
Board of Directors Position
Total shares
Ownership
share
Voting share
Number of
options
Gisle Grønlie Chairman 134 000 0.0 % 0.0 % 800 000
Torstein Sannes Board member 285 000 0.0 % 0.0 % 800 000
Executive management Position
Number of
shares
Number of
options
Nils Haugestad CFO (CFO from 1 April 2020) CFO - -
Richard Dunlop EVP Operations 14 423 10 640
Board of Directors Position
Total shares
Ownership
share
Voting share
Number of
options
Havila Holding AS 1) 15 549 434 26.4 % 26.4 % -
1) Partly owned by Njål Sævik Board member 42 000
96
Share and options owned by management 31 December 2020 were as follows:
Note 17 Related parties / Intercompany
* The intercompany receivables to Axxis Multi Client AS had per December 2019 been accrued for write
down of USD 41.7 million. The amount relates to acquiring of the multi-client project Utsira which
completed October 2019. The write-down has not been reversed per December 2021.
For more information on related parties see note 20 for the Group.
Executive management Position
Number of
shares
Number of
options
Lee Parker (CEO till August 8, 2020) CEO
559 390 -
Ronny Bøhn (CEO from August 8 2020) CEO - -
Svein Knudsen (CFO till 1 April 2020) CCO 17 000 106 400
Nils Haugestad CFO (CFO from 1 April 2020) CFO - -
Richard Dunlop EVP Operations 144 228 106 400
USD thousands
Non current receivables group companies 31.12.2021 31.12.2020
Carbon Transtion Investment AS 5 -
Total non current receivables group companies 5 -
USD thousands
Current receivables group companies 31.12.2021 31.12.2020
Axxis Multi Client AS * 14 314 12 367
Axxis Geo Solutions Inc. - 742
Axxis Production AS 12 358 15 132
Axxis Geo Solutions Egypt LLC 1 411 -
PT Axxis Geo Solutions 305 305
Carbon Transition Investment AS 235 -
Neptune Seismic AS 5 2
Total receivables group companies 28 627 28 548
USD thousands
Current liabilities group companies 31.12.2021 31.12.2020
Axxis Geo Solutions Inc. 141 1 379
Axxis Production AS - 377
PT Axxis Geo Solutions 257 257
Total liabilites group companies 399 2 014
USD thousands
Revenue from group companies
2021 2020
Axxis Geo Solutions Inc. 236 -
Axxis Multi Client AS 692 3 161
Axxis Production AS 2 832 36 762
Total revenue group companies 3 760 39 923
97
For more information on related parties see note 20 for the Group.
Note 18 Personnel expenses and board remunerations
The Company has a defined contribution pension plan. The contribution plan is a
retirement plan in which the Company pays fixed contributions to a separate legal
entity. The Company has no further payment obligations once these contributions
have been paid. Contributions are booked as cost on an ongoing basis. The Company
meets the requirements for occupational pension scheme under the Act on Obligatory
Occupational Pensions. The contribution pension scheme in Norway meets the legal
requirements.
A loan of USD 90 thousands was given the former CEO, Lee Parker in 2020. The loan
was part of a settlement agreement in 2021. No other loan or collateral has been
granted to the Chairman of the Board or other related parties.
USD thousands
Cost from group companies
2021 2020
Axxis Geo Solutions Inc. 1 360 11 983
PT Axxis Geo Solutions - 257
Total cost group companies 1 360 12 240
USD thousands
Revenue from investment in subsidiaries
2021 2020
Group contribution correction Axxis Production AS (224) 5 637
Group contribution from Carbon Transtition AS 235 -
Total revenue from investement in subsidiares 11 5 637
USD thousands
2021 2020
Wages and salaries 2 100 1 588
Social Security costs 318 26
Pension costs 150 203
Other remuneration 445 1 516
Share based payment expense (refer to note 22) 11 3
Refund salary (33) -
Total personnel expense 2 991 3 335
Number of man-years at 31.12 2021 2020
Companies in Norway 7 9
Key management personell compensation
USD thousands
2021 2020
Base salary 1 031 504
Pension 60 37
Other Benefits 7 3
Number of options held - 10 640
98
For detailed information of executive officers and board of Directors compensation,
see the remuneration report.
See note 16 for shares held by the Company`s Board of Directors.
Note 19 Share based payments programs
The Company has a share-based payment scheme for employees and one members
of the Board.
The options granted gives the holder right to purchase a defined number of shares at
a predetermined price if the vesting conditions are met. The exercise price has been
set to fair value of the shares at grant date.
A reverse split of the shares 10:1 was performed 9 August 2021 and is included in the
tables for 2021.
Set out below are summaries of options granted under the scheme:
Average
exercise
price per
share option
(NOK)
Number of
options
Average
exercise
price per
share option
(NOK)
Number of
options
As at 01.01 10,1400 405 079 9,4500 749 479
Granted during the year 1,8000 1 600 000 - -
Adjusted during the year 106,5452 (231 012) - -
Terminated during the year
9,2401 (148 400) 8,6400 (344 400)
As at 31.12 3,4538 1 625 667 10,1400 405 079
Vested 31.12 106,5450 25 667 9,8700 398 079
Exercisable 31.12 25 667 398 079
2021
2020
2021 2020
11 3
Share based payment cost (revenue) recognised in
the period USD thousand
Share options outstanding at the end of the year have the following expiry date
and exercise prices:
Grant date Expiry date
Exercise
price
Share
options 31
December
2021
Share
options 31
December
2020
30.09.2021 30.09.2028 1.70 800 000 -
30.09.2021 30.09.2028 1.90 800 000 -
15.09.2017 15.09.2022 69.61 12 600 196 000
27.09.2018 27.09.2023 112.75 10 267 181 079
01.05.2019 01.05.2024 250.00 2 800 28 000
Total number of options 1 625 667 405 079
99
The exercise price for the grants was fair value at the grant date. The options can be
exercised by buying shares as settlement where one options give right to one share.
For the 2021 grant, 25% of the options will be vested 30.03.2022, 30.09.22,
30.03.2023 and 30.09.2023. The fair value at grant date was 0.22 NOK/option.
The fair value has been estimated using the Black-Scholes option pricing model.
When calculating fair value at grant date, the Group has assumed a volatility of
47.31% from comparable peers in the oil and gas services for both grants, 0 expected
dividends, and a risk-free interest rate of 1,011% for the 2021 grant.
Note 20 Auditors fee
The Company has at the annual general meeting 23 June 2021 changed from Ernst & Young
(EY) to PricewaterhouseCoopers (PwC) as the auditor.
Strike Price
Number of
instrument
s
Weighted
Average
remaining
contractual
life
Weighted
Average
Strike Price
Vested
instruments
31.12.2021
Weighted
Average
Strike Price
1.70 800 000 5.50 1.70 - -
1.90 800 000 6.50 1.90 - -
69.61 12 600 1.70 69.61 12 600 69.61
112.75 10 267 2.49 112.75 10 267 112.75
250.00 2 800 3.09 250.00 2 800 250.00
1 625 667 25 667
Outstanding instruments
Vested instruments
Outstanding instruments overview
USD thousands
Expensed audit fee (excluding VAT) 2021 2020
Statutory audit 174 134
Tax advice (incl. technical assistance with tax return) 7 109
Other attestation services 19 27
Total auditors fee 200 270
100
Note 21 Subsidiaries and associated companies
Carbon Transition ASA (CT ASA) comprise of the following legal entities as of 31
December 2021.
* The formal shareholding in Axxis Geo Solutions PT is 49 %. The Group has control
of operating decisions and is exposed to 100 % of variability of the company’s' results
through a shareholder agreement. Because of this, no non-controlling interest has
been recognized in the financial statements.
** Axxis Geo Solutions Egypt LLC is owned by Axxis Production AS 99% and Carbon
Transition ASA by 1% of the shares.
The Company holds 100 percent of all shares (except Axxis Geo Solution PT and
Axxis Geo Solution Egypt LLC as mentioned above) and all voting rights for its
subsidiaries.
Note 22 Cash flow information
* Mainly related to debt forgiveness related to the reconstruction process.
USD thousands
Jurisdiction Total Equity
Net
Income/
(loss)
Carrying
value
Neptune Seismic AS Norway (9) (5) -
Axxis Geo Solution Inc. USA 17 (20) 100
Axxis Geo Solutions PT* Indonesia 427 (7) -
Axxis Multi Client AS Norway (38 543) (3 448) -
Axxis Production AS Norway (8 512) (8 112) 6
Carbon Transition Investment AS Norway 18 471 9 122 9 351
Axxis Geo Solutions Egypt LLC** Egypt 3 951 (865) 1
Total (24 198) (3 334) 9 456
Subsidiary of Carbon Transition
ASA:
USD thousands
Interest bearing
debt
Lease liabilities Total
01.01.2021 33 905 24 33 929
Repayment of interest bearing debt
(1 295) - (1 295)
Payment of lease liabilities (24)
Other* (32 610) (32 610)
31.12.2021 - - -
Liabilities arising from financing activities
101
* Mainly related to trade payables converted to loans.
The non-current part of the interest-bearing debt is USD 17.4 million
Note 23 Events after reporting period
The Group announced the sale of its node on a rope equipment to Magseis Fairfield
ASA 3 March 2022.
The transaction is structured based on an earnout model. The Company will receive
USD 0.5 million at closing and will additionally receive earnout payments over a three-
year period conditioned on the utilization of the equipment acquired. The earnout
payments are capped at a maximum of USD 12.0 million and have a minimum
payment clause of USD 1.5 million, subject to certain milestones.
The completion of the transaction was subject to customary closing conditions which
have been lifted 31 March 2022.
On 16 March 2022 the Group announced a new Utsira multi-client late sale of USD
1.4 million. With proceeds from this late sale the Group will repay its outstanding USD
0.9 million loan balance and increase its cash balance by approximately USD 0.5
million. As a result, the Group will have no remaining financial indebtedness after this
sale.
.
USD thousands
Interest bearing
debt
Lease liabilities Total
01.01.2020 2 257 108 2 365
Repayment of interest bearing debt
(1 440) - (1 440)
Payment of lease liabilities (86)
Other* 33 088 1 33 089
Reclassification -
31.12.2020 33 905 24 33 929
Liabilities arising from financing activities
PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
To the General Meeting of Carbon Transition ASA
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Carbon Transition ASA, which comprise:
• The financial statements of the parent company Carbon Transition ASA (the Company), which
comprise the statement of financial position at 31 December 2021, statement of
comprehensive income, statement of changes in equity and statement of cash flow for the year
then ended, and notes to the financial statements, including a summary of significant
accounting policies, and
• The consolidated financial statements of Carbon Transition ASA and its subsidiaries (the
Group), which comprise the statement of financial position as at 31 December 2021,
statement of comprehensive income, statement of change in equity and statement of cash flow
for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion:
• the financial statements comply with applicable statutory requirements,
• the financial statements give a true and fair view of the financial position of the Company as at
31 December 2021, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU, and
• the financial statements give a true and fair view of the financial position of the Group as at 31
December 2021, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company and the
Group as required by laws and regulations and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 1 year from the election by the general meeting of the
shareholders on 23.06.2021 for the accounting year 2021.
Independent Auditor's Report - Carbon Transition ASA
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Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. During 2021, Carbon Transition ASA completed a
restructuring of the Group and refocused the business model. The refocusing resulted in investments
where we focused on the valuation. The Group’s legacy seismic business carries the same
characteristics and risks as last year and have consequently also been in our focus in 2021.
Key Audit Matter
How our audit addressed the Key Audit Matter
Valuation of multi-client library
This has been an area of focus as the
multi-client library accounts for
approximately 50% of the Group’s total
assets per 31 December 2021.
Management used judgment in
determining whether the carrying amount
of the multi-client library exceeded the
recoverable amount. The judgement was
important in relation to assumptions such
as expected discounted future cash flows.
There is an inherent uncertainty in
forecasting future sales of the multi-client
library which is impacted by factors such
as: the overall exploration and production
spending within the oil and gas industry,
interest in specific regions, whether
licenses to perform exploration in the
various regions exist or will be awarded in
the future and other factors. Even small
changes in assumptions, or the discount
rate may impact the value of the multi-
client library.
We refer to note 11, where management
explains how the multi-client libraries are
valued under IAS 36 and IAS 38.
We obtained and gained an understanding of
management’s impairment assessment related to the
multi-client library.
We evaluated management’s assessment of impairment
indicators and management’s estimates related to sales
forecasts. Our audit procedures included inquiries and
evaluations of management and senior sales
personnel’s assumptions regarding the current market,
licensing rounds and exploration activities. This
included inspection of supporting documentation,
assessing the basis for key assumptions, and testing of
the key assumptions. We found no significant
deviations.
Furthermore, we evaluated and found that the
valuation methodology was reasonable. We assessed
the discount rate by comparing key components used
with external market data, as well as comparing the
overall level with discount rates used by other
companies within the industry. We considered that the
discount rates were within an appropriate range.
We also tested mathematical accuracy of the value in
use calculations by recalculating the value in use model.
We found the assessment to be mathematically
accurate.
We evaluated the disclosures in note 11 and found them
to appropriately describe the assessment of carrying
value of the multi-client libraries.
Valuation of investments
This has been an area of focus as the
investments account for approximately
We evaluated management’s valuation processes. Our
audit procedures included inquiries, inspection of
Independent Auditor's Report - Carbon Transition ASA
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30% of the Group’s total assets per
31 December 2021.
Some of the investments are unlisted and
valued with use of unobservable inputs
and classified as level 3 in the fair value
hierarchy. A certain degree of judgment is
applied in determining the assumptions
that market participants would use when
pricing observable market data is not
available.
We refer to note 13, where management
explains their valuation techniques and
assumptions used in the model to
determine fair value per 31 December
2021.
supporting documentation, assessing the basis for key
assumptions and testing of the key assumptions. We
found that management’s processes and their
assessment to be reasonable.
We evaluated management’s assumptions through
comparing the data they used to observable inputs in
external markets where such data was available, and to
other internal data where we deemed those as reliable
audit evidence.
We evaluated the disclosures in note 13. We found that
the disclosure appropriately describes the valuation of
the investments.
Other Information
The Board of Directors and the Managing Director (management) are responsible for the information
in the Board of Directors’ report and the other information accompanying the financial statements.
The other information comprises information in the annual report, but does not include the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the information in the Board of Directors’ report nor the other information accompanying the financial
statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is to
consider if there is material inconsistency between the Board of Directors’ report and the other
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other information
accompanying the financial statements otherwise appears to be materially misstated. We are required
to report if there is a material misstatement in the Board of Directors’ report or the other information
accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
• is consistent with the financial statements and
• contains the information required by applicable legal requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Governance and Corporate Social Responsibility.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as adopted by the EU, and for such
internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
Independent Auditor's Report - Carbon Transition ASA
(4)
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's or the Group's internal control.
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• conclude on the appropriateness of management’s use of the going concern basis of
accounting, and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company and the
Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in
the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company and the Group to cease to
continue as a going concern.
• evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves a true and fair view.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
Independent Auditor's Report - Carbon Transition ASA
(5)
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance with Regulation on European Single Electronic Format
(ESEF)
Opinion
We have performed an assurance engagement to obtain reasonable assurance that the financial
statements with file name Carbon TransitionASA-2021-12-31-en have been prepared in accordance
with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the
accompanying Regulation on European Single Electronic Format (ESEF).
In our opinion, the financial statements have been prepared, in all material respects, in accordance
with the requirements of ESEF.
Management’s Responsibilities
Management is responsible for preparing, tagging and publishing the financial statements in the single
electronic reporting format required in ESEF. This responsibility comprises an adequate process and
the internal control procedures which management determines is necessary for the preparation,
tagging and publication of the financial statements.
Auditor’s Responsibilities
For a description of the auditor’s responsibilities when performing an assurance engagement of the
ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger
Oslo, 7 April 2022
PricewaterhouseCoopers AS
Martin Alexandersen
State Authorised Public Accountant
103
Askekroken 11 www.carbn.no
0277 Oslo Copyright © 2021
Investing in a
sustainable future.