2022
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 21
4 Transparency Act 32
5 Consolidated financial statement Carbon Transition Group 35
5.1. Consolidated statement of comprehensive income 35
5.2. Consolidated statement of financial position 36
5.3. Consolidated statement of financial position 37
5.4. Consolidated statement of change in equity 38
5.5. Consolidated statement of cash flow 39
5.6. Notes to the consolidated financial statement 40
6 Financial statement Carbon Transition ASA 76
6.1. Statement of comprehensive income 76
6.2. Statement of financial position 77
6.3. Statement of financial position 78
6.4. Statement of changes in equity 79
6.5. Statement of cash flow 80
6.6. Notes to the financial statements 81
7 Auditors report 95
3
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 investment 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.
Carbon Transition ASA has 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 Group’s business model is an investment company. Carbon comprises an OBN
multi-client company and an investment arm. The Group may invest broadly in listed
companies as well as companies expected to be listed in the near term.
Carbon has a legacy seismic business operating under the name Axxis Geo Solutions.
Under Axxis Geo Solutions, the Company manages a seismic OBN multi-client data
library with assets in Norway and Egypt.
The ocean-bottom seismic contract node on a rope business was divested in March
2022 through an earnout agreement with Magseis Fairfield. Under the agreement,
Carbon Transition received USD 0.5 million at closing and will receive earnout
payments of up to a maximum of USD 12.0 million over the next three years, based on
the use of the equipment. There is a minimum payment in year three of USD 1.5
million, subject to certain milestones.
During 2022, the Company reported multi-client late sales of USD 5.7 million and USD
5.5 million in 2021.
The seismic multi-client data business model is frequently the preferred way to access
seismic data for petroleum exploration and production (E&P) companies. The seismic
data is licensed by E&P companies to assist in the discovery and development of
petroleum resources. The Group’s return on investment from its multi-client library
is seen through the life span of the data; from its early stage with revenues coming
from the pre-funding by E&P companies during the execution of the program, through
subsequent late sales after the seismic images are processed and available.
The Group’s multi-client data is targeting near-field exploration, where production
infrastructure is in place and where E&P companies need high-quality seismic data to
unlock existing and new resources. In these production fields, oil and gas can be
developed with lower cost, environmental impact and emissions.
4
In 2022, our multi-client business line, Axxis Multi Client, announced several
milestones, such as the announcement of the Axxis/CGG reprocessing project and a
significant late sale to existing client with a set of future milestone payments. Carbon
expects these agreements to provide significant cashflow for the company going
forward. The Axxis/CGG project will provide a steady quarterly revenue stream, and
the milestone payments will follow the slightly lumpy nature of multi-client late sales
revenues.
With a sustained high oil price (in the range $75-85 per barrel of oil equivalent), it is
expected that both Norway and Egypt will continue to be considered highly attractive
for new exploration expenditures by the E&P companies.
The Group expects the investment growth in exploration and development in our core
areas to be durable and reinforced by the long-term demand outlook and supportive
commodity prices.
The Group invested USD 2.0 million (NOK 20.0 million) in Dolphin Drilling AS in
September 2022. The Group acquired 1,714,568 shares at a price of USD 1.17 per
share.
The shares of Dolphin Drilling were listed on NOTC in Oslo and were moved to
Euronext Growth in October 2022. The closing share price at the end of December
2022 was NOK 12.898, which values the Group’s investment at USD 2.2 million (NOK
22.1 million).
The Group participated with USD 4.7 million (NOK 40.0 million) in CO2 Capsol AS’
equity private placement in October 2021. The Group acquired 3,636,363 shares at a
price of NOK 11.00 per share.
The shares of CO2 Capsol were listed on Euronext Growth in Oslo in December 2021.
The closing share price at the end of December 2022 was NOK 11.50, which values
the Group’s investment at USD 4.2 million (NOK 41.8 million).
In August 2021, the Group invested approximately USD 1.7 million (NOK 15.2 million)
to acquire 100,000 shares in the Series B equity private placement in the UK-based
company, Power by Britishvolt Limited. In addition, Carbon Transition secured an
option to acquire an additional 100,000 shares at the same price per share This option
is valid until, and must be exercised in conjunction with, an initial public offering of the
company. The Group’s entry price into Britishvolt as well as the exercise price on the
Group’s Britishvolt options was GBP 12.68 per share.
The Group is currently valuing Britishvolt at GBP 0.0 per share which is based on the
fact that the Company is under administration.
The estimated fair value of the Group’s investment in Power by Britishvolt Limited is
USD zero (NOK zero) at the end of December 2022.
The Group participated in Arbaflame AS’ convertible bond offering in July 2021, with a
total investment of USD 3.4 million (NOK 30.0 million). In December 2021, the
convertible bonds were converted to 3,920,294 common shares in the company.
5
Arbaflame had an equity private placement in November 2022 at NOK 0.83 per share
and the Group use this value. Based on this valuation, the estimated fair value of the
Group’s investment in Arbaflame was USD 0.3 million (NOK 3.3 million) at the end of
December 2022.
Total initial invested capital was USD 11.9 million. The fair value of the total
investments was USD 6.8 million (NOK 67.2 million) at the end of December 2022.
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. The Functional currency
for the Group is USD.
Foreign Currency
Transactions in foreign currencies are translated to USD 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 denominated in non-functional currencies are recognized in the income
statement.
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 2022, but do not have an impact on the consolidated financial
statement.
Consolidated statement of comprehensive income
Revenue
6
The 2022 Group’s revenues of USD 7.3 million are lower than the previous year’s
revenues of USD 15.8 million. The 2022 revenues are late sales from multi-client
Utsira project in the North Sea and Gulf of Suez project. The revenues for 2021 are
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.
Changes in fair value for investments
Change in fair value for investment in 2022 was a loss of USD 13.4 million compared
to a gain of USD 8.4 million in 2021. During 2022, the investment in Britishvolt has
been written down to zero with USD 4.6 million, investment in Arbaflame has been
written down with USD 3.1 million and listed companies have had negative market
change of USD 5.7 million (CO2 Capsol AS and Dolphin Drilling AS).
Other gains and losses
Other gains in 2022 were USD 0.7 million compared to zero in 2021. The net gain is
from the sales of the seismic node business to Magseis Fairfield in March 2022.
Operational cost
The 2022 Group’s cost of sales (COS) amounted to USD 0.4 million compared to USD
10.4 million during the same period in 2021. The COS in 2022 reflects zero operation
and downscaling and sale of the seismic node business, remaining is data processing
and storage of remaining equipment. The COS in 2021 is mainly related to the UK
project of USD 8.3 million and USD 1.9 million to warm stack/idle project.
Selling, general and administrative expenses
The 2022 Group’s personnel expenses and other operating expenses amounted to
USD 2.4 million compared to USD 6.6 million during the same period of last year. The
reduction in 2022 is a result of downscaling of the seismic node business and
downscaling of personnel. Various consultants fee was USD 2.3 million and
remuneration for downsizing was 0.8 million in 2021.
Depreciation of tangible assets
The 2022 Group’s depreciation and write downs of equipment were USD 0.6 million
compared to USD 7.0 million in 2021. During 2022, the node seismic business was
sold. There were no new investments in equipment in 2022 or 2021. During 2021, the
vessel Neptune Naiad was sold with a net loss of USD 3.5 million.
Amortization of intangible assets
7
The straight-line amortization of the Utsira multi-client survey was changed from 4 to
10 years from 1 January 2022, which gave 8.5 years remaining amortization.
The Group’s multi-client data in Gulf of Suez was finalized with processing in Q3 2022
and started amortization. The straight-line amortization of the Gulf of Suez multi-client
survey is 4 years.
The straight-line amortization of multi-client was USD 3.9 million for 2022 compared to
USD 7.3 million for 2021.
Impairment and write-up (reverse of impairment)
No impairment charges have been made in 2022 of the Utsira multi-client survey or
the Gulf of Suez multi-client survey in Egypt.
During the first quarter of 2022, the Group reversed a portion of the 2019 and 2020
impairment and increased the Utsira survey carrying value with USD 5.6 million based
on expectation for future late sales.
Further, in the fourth quarter of 2022, the Group made a write-up of USD 7 million
which is reversal of previous impairment, a portion of the 2019 and 2020 impairment.
The increased value of the Utsira survey is based on expectation for future late sales
for the new reprocessing project of Utsira. Amortization of the reprocessing of Utsira
will start amortization over 7.5 years from January 2023 with USD 233 thousand per
quarter.
Financial items
Net financial expense was USD 98 thousand in 2022 compared to net financial
income of USD 21.2 million in 2021. During 2022, financial expenses and currency
exchange loss was offset by financial income. The Company completed a successful
reconstruction during 2021. The financial income was mainly due to restructuring gain
of USD 24.7 million during 2021, offset by financial expense and currency exchange
loss of USD 3.4.
Income tax (expense)
The corporate income tax in Norway is 22% in 2022. Income tax revenue of USD 1.7
million compared to income tax expense of USD 0.2 million for 2021. The tax revenue
in 2022 of USD 1.4 million is related to currency exchange rate of EGP in taxes in Egypt
calculated into USD and refund from operations in India with USD 0.3 million. The tax
expense for 2021 was related to UK, US and Egypt.
The Company has no deferred tax assets booked as of 31 December 2022. Tax loss
carried forwards for 31 December 2022 is estimated at USD 43 million.
8
Profit for the period
For 2022, the Group had a profit of USD 1.4 million compared to a profit of USD 13.9
million for the same period in 2021.
Consolidated statement of financial position
As of 31 December 2022, the Company had total assets of USD 52.8 million,
compared to total assets of USD 54.8 million as of 31 December 2021.
Total non-current assets of USD 47.3 million as of 31 December 2022 compared to
USD 50.5 million as of 31 December 2021. This is attributed to multi-client library net
adding USD 8.6 million and financial assets adding USD 3.0 million offset by net
decrease in investment during 2022 of USD 11.4 million and a decrease of USD 3.4
million in fixed assets which includes the sale of the node business. There was no new
investment or disposal in 2022.
Total current assets increased from USD 4.2 million as of 31 December 2021 to USD
5.4 million as of 31 December 2022. The increase is driven by an increase in other
current assets receivable of USD 3.0 million related to Utsira late sales, offset by
reduction in cash by USD 1.8 million. The Company’s cash balance ended at USD 2.2
million on 31 December 2022.
The Group’s equity was USD 47.7 million at the end of December 2022, representing
a net increase of USD 0.9 million compared to 31 December 2021. The Group
purchased its own shares of USD 0.5 million. In 2021, the Company completed the
reconstruction in June and issued new shares valued at USD 5.1 million. Further the
same year, a private placement and related repair offering in June and July of USD
19.6 million and in October an equity private placement of USD 3.2 million. The equity
ratio is 90.3% as of 31 December 2022 compared to 85.3% as of 31 December 2021.
Total non-current liabilities reduced from USD 0.9 million as of 31 December 2021 to
zero as of 31 December 2022, following the full repayment of the company’s TGS loan
during the first quarter of 2022.
Total current liabilities reduced from USD 7.2 million as of 31 December 2021 to USD
5.1 million as of 31 December 2022. Taxes payables is related to corporate tax in
Egypt of USD 2.3 million which has not been settled. Additionally, other current
liabilities decreased by USD 1.7 million in 2022. Other current liabilities include project
related accruals for taxes in Egypt of USD 2.1 million. The Group’s accrual for the
Egyptian tax including corporate tax is uncertain and is not settled as of December
2022.
Consolidated statement of cash flow
The Group’s cash flow from operating activities in 2022 was positive of USD 1.1
million compared to negative USD 9.6 million in the same period in 2021, mainly due
to the Groups legal reconstruction process.
9
The Group’s cash flow from investment activities in 2022 was negative USD 2.0
million. USD 2.0 million due to the investment in Dolphin Drilling and USD 0.5 million
for investment in own shares during the quarter offset by USD 0.5 million received
from sale of the node business, compared to negative of USD 9.9 million in the same
period for 2021 due to investments.
The Group’s cash flow from financing activities in 2022 was negative USD 1.0 million
compared to positive USD 17.6 million in the same period in 2021. Repayment of the
TGS loan during the first nine months of 2022 was USD 0.9 million. Cash outflow from
financing activities for the same period of 2021 is mainly from new equity due to the
Groups legal reconstruction process of USD 21.6 million offset by repayment of debt
by USD 2.4 million and interest paid of USD 1.6 million.
10
Parent company
Carbon Transition ASA is the parent company of the Group.
In 2022, Carbon Transition ASA reported a profit after tax of USD 3.8 million
compared to a profit after tax of USD 7.9 million in 2021. The decrease this year is
significantly impacted by the reversal of intercompany receivables net of USD 11.7
million. Further write-down of shares in subsidiaries in 2022 with 5.1 million. Last year
the profit was mainly due to gain from the restructuring of USD 24.1 million.
At year-end 2022, Carbon Transition ASA had total assets of USD 48.9 million
compared to USD 45.4 million at the end of 2021. The increase is mainly due to
increase in investment in shares net of USD 20.9 million and increase in financial
asset adding USD 3.0 million due to the earn-out model, offset by reduction in
intercompany receivables of USD 14.1 million and reduction of fixed assets by USD
3.4 million due to sale of the node equipment business. The bank ended with USD 0.9
million, down from USD 3.7 million last year.
As of 31 December 2022, Carbon Transition ASA has a total positive equity of USD
42.6 million, compared to a positive equity of USD 44.1 million at the end of 2021. The
equity ratio ended at 87.2% as of December 2022 from 97.0% at the end of 2021.Total
current liabilities has increased from USD 1.4 million as of December 2021 to USD 6.3
million as of December 2022 mainly due to year-end group contribution to and from
the subsidiary Carbon Transition Investment AS net of USD 4.8 million.
11
Going concern
In accordance with the Accounting Act § 3-3a, we confirm that the financial
statements have been prepared under 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 is dependent on production and development
spending by oil and gas companies. Historically, in times of low oil prices, 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 assume 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 2022, 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 receivable 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 receipts and payment
obligations to ensure sufficient liquidity to meet operational needs.
12
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.
Climate risk
The Group is exposed to climate-related risks primarily associated with its legacy
business. This business may face reduced customer demand as a result of a growing
focus on more environmentally attractive alternatives. Given the strong demand for oil
and gas, the Group does not evaluate this risk as high in the coming year.
This business may also be exposed to increasingly stringent environmental regulations.
In light of the growing focus on energy security, the Group does not evaluate this to be a
high risk in the coming year.
The Group is not invested in exploration and production companies. However, its
investments in the oil and gas sector are contributing to the production of carbon
emissions and the related effects on the environment. This could potentially be a risk for
the Group’s reputation in the investment community. The Group considers this to be a
low risk in the coming year.
The Group also invests in companies which may be negatively impacted by increasingly
stringent environmental regulations. The Group evaluates this risk prior to making any
investment decision. However, increasing environmental regulations may have a
significant adverse effect on the investment portfolio.
The Group may invest in companies which will need additional financing. To the extent
such financing were not to be available, these investments may be significantly
impacted.
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
13
business and profitability. The Group invests in financial and managerial resources to
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 38.8 million to
be attributed to other equity. The Company’s equity as of December 31, 2022, was USD
82.4 million.
Outlook
We expect oil and gas prices to remain relatively high in the foreseeable future.
Improved profitability in the energy sector is expected to result in increased capital
investment by the oil majors and the larger independents. Additionally, historical
underinvestment in exploration and development is driving the need for investment.
For 2023, capital investment by the oil majors is significantly increased. We expect the
Group’s multi-client library to benefit from this market dynamic.
Market volatility is expected to remain high, and this poses a risk for the investment
portfolio. In light of the market uncertainty, we believe it is prudent to take a cautious
approach to making additional investments. However, we will continue to evaluate new
investment opportunities in line with our broader strategic focus.
Events after the reporting period
On 17 January 2023, the Group announced a new Utsira multi-client late sale of USD
0.5 million (net to the Carbon Transition).
14
Oslo, 30 March 2023
The Board of Directors and CEO of Carbon Transition ASA
Nina Skage
Ketil Skorstad
Torstein Sanness
Chair
Director
Director
Nils Haugestad
Interim CEO
15
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 2022 calendar year
ended on December 31, 2022.
We confirm, to the best of our knowledge, that:
• The 2022 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, 30 March 2023
The Board of Directors and CEO of Carbon Transition ASA
Nina Skage
Ketil Skorstad
Torstein Sanness
Chair
Director
Director
Nils Haugestad
Interim CEO
16
2 Environment, Social and
Governance reporting (ESG)
The Group’s business model is an investment company. Carbon comprises an OBN
multi-client company and an investment arm. The Group may invest broadly in listed
companies as well as companies expected to be listed in the near term.
Carbon has a legacy seismic business operating under the name Axxis Geo Solutions.
Under Axxis Geo Solutions, the Company manages a seismic OBN multi-client data
library with assets in Norway and Egypt.
Axxis Geo Solutions is considered a passive investment of the Company. There have
not been any operations in 2022 since the Group sold its seismic node on a rope
business to Magseis Fairfield ASA in March 2022. As a result, the Group’s ESG focus is
largely targeting Carbon Transition’s investment business.
The Group is exposed to climate-related risks primarily associated with its legacy
business as well as investments. These businesses may face reduced customer
demand as a result of a growing focus on more environmentally attractive alternatives.
Given the strong demand for oil and gas, the Group does not evaluate this risk as high
in the coming year.
These businesses may also be exposed to increasingly stringent environmental
regulations. In light of the growing focus on energy security, the Group does not
evaluate this to be a high risk in the coming year.
The Group is not invested in exploration and production companies. However, its
investments in the oil and gas sector are contributing to the production of carbon
emissions and the related effects on the environment. This could potentially be a risk for
the Group’s reputation in the investment community. The Group considers this to be a
low risk in the coming year.
17
Stakeholders
Materiality assessment overview
Environmental
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 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 indicators will be presented under each belonging chapter below, first indicators
are for environmental.
Employees Investors Customers Suppliers Community
Key topics
* Engagement,
commitments
* Climate,
environmental
impact
*Training
* ESG risks,
opportunities
* Corporate
governance
* Main business
drivers
* Climate
environmental
protection
*Human rights
and decent
working
conditions
* Climate
environmental
protection
*Human rights
and decent
working
conditions
*Climate
envorironmental
impact
* Anti-corruption
* Human rights
and labor
regulations
* Management
communication
* Anti-corruption
course
* Corporate
policies for health
and safety, ethics
and social
responsibility
* Annual report,
quarterly reports
* Company
presentations
* Press releases
* Investor
meetings
* Customer
meetings
* Regular
dialogues
* Compliance
with transparency
act of supply
chain
* Company
presentations
Strategic topics Strategic ambition Material topics
What the topic covers
Why the topic is
material
Topic boundary
Enviromental
Decarbonization and
green growth
Partly invest in
companies which
contribute to reduction of
carbon emissions
Decarbonization and
green investments
Reduce, reuse and
recycle to minimize
rescource use
Pollution, stronger
envirommental focus,
requirements and
regulations
CT Group, customers,
suppliers and partners
Social
Health and safety,
equality and diversity
Engaging and safe
workplace with no harm
to the employees
Human rights and
employment condition,
equality and diversity
Investing in human
capital. Respect and
protcection of human
rights. Respect and
protection of equal
opportunities.
To meet current and
future demand for
empoloyees. To
acctract the best talent.
Respect and protection
of working conditions,
equal treatment
and non-discrimination
practices.
CT group, customers,
suppliers and partners
Governance
Compliance and supply
chain
Be a responsible,
trusted and compliant
value chain partner.
Compliance, supply
chain management,
responsible owenership
Anti-corruption, supplier
monitorinig, sustainable
investments and active
ESG ownership
Eliminate corruption in
the value chain and
support fair trade. ESG
evaluation of suppliers
and investment portfolio
CT group, customers,
suppliers and partners
18
The Group measures three indicators with respect to Carbon Transition financial
investments.
• To the extent the investment relates to the energy transition sector, 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.
Target 2022
Result
2022
Target 2023
To the extent the investment relates to the
energy transition sector, the investment should
generally contribute significantly to the
reduction in carbon emissions and/or the
development of green technology.
N/A
Maintain 2022 target
Investment companies should have reasonable
environment, social and governance guidelines
in place.
100%
Maintain 2022 target
Appropriate corporate governance policies
should have been implemented.
100%
Maintain 2022 target
Result for 2022
The Group had one new investment in 2022, Dolphin Drilling AS, where the
investment fulfilled the last two targets. The first target is not applicable as the
investment does not relate to the energy transition sector.
Social
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
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 four at the end of 2022,
compared to nine at the end of 2021. The Group employed two women and two men
in 2022 and three women and six men in 2021. One employee was on parental leave
both in 2022 and in 2021. The Group has no one part-time employee at 50% from
August 2022.
19
The Board of Directors consists of three members at the end of 2022, one woman and
two men. At the end of 2021, the board consisted also of one woman and two men
and.
There have not been any significant personnel injuries or accidents in the current or
prior year. In 2021 the average sick day percentage for the work force was 0.6
percent. The average sick day percentage for the work force was zero in 2021.
The following indicators are applied to evaluate the Group’s effectiveness in managing
its people.
• The Group targets absence due to illness of less than 2%.
• All recruitment processes and hiring decisions need to be based on the
Group’s standards for equal treatment.
Target 2022
Result
2022
Target 2023
The Group targets absence due to illness of
less than 2%.
Maintain 2022 target
All recruitment processes and hiring decisions
need to be based on the Group’s standards for
equal treatment.
N/A
Maintain 2022 target
Result for 2022
The Group fulfilled the target for illness in 2022, with 0.6 %.
The second target is not applicable since there has not been any new hiring in 2022.
Governance
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 Company 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.
Corruption
The Group is committed to prevent bribery, illegal influence, fraud and money
laundering. The Group achieves this through committing to operating all activities
within the spirit and letter of laws and regulations that govern our businesses and
20
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
The following indicators are applied to evaluate the Group’s effectiveness in managing
its corporate governance and corruption.
• All employees should complete an anti-corruption course not less than once
per year.
• All employees should confirm reading the corporate policies: Health and
safety, Ethics and Social responsibility.
Target 2022
Result
2022
Target 2023
All employees should complete an anti-
corruption course not less than once per year.
100%
Maintain 2022 target
All employees should confirm reading the
corporate policies: Health and safety, Ethics
and Social responsibility.
100%
Maintain 2022 target
Result for 2022
All employees completed both targets in 2022.
21
3 Corporate governance
CORPORATE GOVERNANCE POLICY
Adopted by the Board of Directors on 30 March 2023
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.
22
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 reduce 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.
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:
"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."
The Board will at the Annual General Meeting 25 May 2023 propose new business
objective set forth in § 3 of the Articles of Association, which will reads as follows:
"Carbon Transition is an investment company. The Company comprises an
OBN multi-client company and an investment arm. The company may invest
broadly in listed companies as well as companies expected to be listed in the
near term.”
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 Ethics, Health and Safety and Corporate Social
Responsibility. The Board shall at least on an annual basis evaluate targets, strategies
and risk profiles.
23
Deviation from the code of Practice: None
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 on the Company's
website. The Board will consider share repurchase if more attractive for our
shareholders. Annual General Meeting in May 2022 approved repurchase of own
shares.
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.
Deviation from the code of Practice: None
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.
24
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
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.
Deviation from the code of Practice: None
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.
Deviation from the code of Practice: None
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
25
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 Chair of the Board 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.
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.
Deviation from the code of Practice: None
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.
26
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.
Deviation from the code of Practice: None
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
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.
Deviation from the code of Practice: None
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.
27
In 2022, there were 14 board meetings where the following was participating;
Gisle Grønlie 6 of 7 meetings
Nina Skage 13 of 14 meetings
Torstein Sanness 12 of 14 meetings
Ketil Skorstad 4 of 7 meetings (personal deputy was attending 1 of the missing
meeting)
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"). .
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 been deemed to be of importance by the Board. The Board has
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.
Deviation from the code of Practice: None
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
28
• 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
control 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 or in the annual 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 financial reporting. This includes the control of environment,
risk evaluation, control activities, information and communication and follow-ups.
Deviation from the code of Practice: None
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.
Deviation from the code of Practice: The Company has granted options to the Board of
Directors in 2021.
29
EXECUTIVES REMUNERATION
The Company has prepared a 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.
Deviation from the code of Practice: None
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
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, 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.
30
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. Communication 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.
Deviation from the code of Practice: None
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.
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.
31
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.
Deviation from the code of Practice: None
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 Audit committee 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.
Deviation from the code of Practice: None
32
4 Transparency Act
This statement represents Carbon Transition due diligence pursuant to section 5 in the
Norwegian Act related to enterprises’ transparency and work on fundamental human
rights and decent working conditions (Transparency Act). The transparency Act
entered into force on 1 July 2022.
The reporting period covered in this report is from 1 January 2022 to 31 December
2022.
There is a general desire for more transparency regarding the production of goods
and the provision of services, especially relating to how businesses respect
fundamental human rights and decent working conditions. It is hoped that the Act will
lead to improvements in these areas and that the information available will allow
consumers to make more informed choices.
Operations and locations
Carbon Transition ASA is a public limited investment company. The Company’s
registered main office is at Askekroken 11, 0277 Oslo, Norway. Carbon comprises an
OBN multi-client company and an investment arm. The Company may invest broadly in
listed companies as well as companies expected to be listed in the near term.
Carbon has a legacy seismic business operating under the name Axxis Geo Solutions.
Under Axxis Geo Solutions, the Company manages a seismic OBN multi-client data
library with assets in Norway and Egypt.
The Company makes investment decision based on Board of Directors (BoD)
resolutions according to the Group’s corporate governance.
The Group’s investment strategy is reviewed together with the BoD and is executed by
the management team.
Responsibility
The BoD is responsible for the Company’s implementation of applicable laws and
regulations, including the Transparency Act.
All employees in Carbon Transition ASA have a responsibility to protect human rights
and decent working conditions.
If Carbon causes, contributes to or is linked to adverse impacts on human rights, the
Company will take necessary steps to cease, prevent and/or mitigate the adverse
impacts.
Vendors of Carbon
There are two categories of vendors;
33
1) Vendors with a material value chain and subcontractors
2) Vendors without a material value chain and primarily delivering their own
services or goods, not relying in a significant way on subcontractors
In 2022 Carbon categories their vendors as follows:
a) vendors from Axxis multi-client business
b) vendors from the investment business
c) vendors from being a listed company and general office services
A. Vendors from Axxis muti-client business
Carbon did not have new multi-client project or any processing in 2022. The Utsira
survey was finalized in 2020. The Gulf of Suez survey in Egypt was finalized in Q3
2022, but the reprocessing was performed by the Company’s business partner,
Schlumberger. Schlumberger is following their own transparency requirements and
Carbon did therefore not do any further due diligence on this vendor.
The multi-client data is stored electronically and the vendor providing this service does
not significantly rely on third parties for data storage.
B. Vendors from the investment business
The investment in 2022 was in a listed company at Euronext Oslo.
C. Vendors from being a listed company and general office services
The vendors for the Group are only business partners, as they are not generally
dependent on sub-contractors in delivering their services. The Group works with a
number of business partners which generally provide consulting services, IT solutions,
office services, insurance, pension, capital markets and other services.
After the review of the Group’s three categories of vendors the Group classified all their
vendors as business partners.
These business partners are evaluated as low risk in accordance with the evaluation
criteria outlined in the table below. In 2022, the Group had 53 vendors which were
evaluated according to the following criteria;
Provision of
services
Services from
vendors in
Norway
Services from
vendorsers in
EU/EA
Services from
vendorss in
US
Services from
vendors in
Egypt
Production of
goods from
Norway
Production of
goods from EU
Production of
goods from
US
Production of
goods from
Egypt
Delivered in
Norway,
EU/EA or low-
cost country
Delivered in
EU/EA, US or
low-cost
country
Delivered in
US, EU/EA or
low-cost
country
Delivered in
Egypt or low-
cost country
Production of
goods
34
To determine potential adverse impacts on human rights and decent working
conditions a combination of the following factors was evaluated; vendors locations and
country of origin, industry of the vendor, the spend values, knowledge of the vendor
and web search.
All vendors were then evaluated according to low, medium or high risk for both human
rights violation and breach of working conditions.
Result for 2022 evaluation
After review of the 53 vendors, 4 of the vendors in Egypt ended on medium risk
due to locations and country of origin. Following further investigation of these vendors
through web searches and knowledge of worldwide consulting services, the Group
assessed the risk as acceptable for all four vendors in Egypt.
Consequence if negative risk by any of the vendors
If there had been any negative risk on any vendor after the assessment, the Group
would have tried to change to a “green vendor”, if possible.
If it would have been difficult to change and use another vendor, the Group would
have contacted the vendor for more information about the vendor’s actions to avoid
human rights violation and avoid breach of working conditions in their company.
Based on this review, a conclusion would have been made.
Going forward
The Group intends to continue its vendor evaluation policies in line with the structure
highlighted above. The Group performs periodic evaluations to make sure its vendors
have an acceptable status. All new vendors will be separately evaluated.
The Company recognizes that risk of adverse impact on human rights cannot
categorically be ignored based on the above risk-reducing factors alone, and therefore
considers regular risk assessment and continuous monitoring to be important to
prevent, detect and respond to potential adverse impacts on human rights.
35
5 Consolidated financial statement
Carbon Transition Group
5.1. Consolidated statement of comprehensive income
USD thousands
Note
2022
2021
Revenue
3,4
7 258
15 816
Changes in fair value of investments (loss)
3,12
(13 447)
8 404
Other gains (losses)
3,4
666
-
Cost of sales
5
(399)
(10 381)
Selling, general and administrative expenses
3,20
(2 417)
(6 633)
Amortization multi-client
11
(3 983)
(7 312)
Write-up multi-client (reversal of impairment)
11
12 618
-
Depreciation & impairment
10
(559)
(7 029)
Operating profit (loss) (EBIT)
(264)
(7 136)
Gain on debt restructuring
2.3
-
24 667
Financial income
6
51
2
Financial expenses
6
(81)
(2 610)
Currency exchange gain (loss)
6
(69)
(836)
Profit (loss) before tax
(362)
14 087
Income tax (expense)
7
1 758
(152)
Profit (loss) for the period
1 396
13 935
Currency translation adjustments
-
-
Other comprehensive income (loss) for the
period
-
-
Total comprehensive income (loss) for the
period
1 396
13 935
Earnings (loss) per share
Basic earnings per ordinary share
0.01
0.11
Diluted earnings per ordinary share
0.01
0.11
36
5.2. Consolidated statement of financial position
USD thousands
Assets
Note
31.12.2022
31.12.2021
Non-current assets
Multi-client library
11
37 491
28 856
Property, plant and equipment
10
-
3 423
Investments
12
6 821
18 268
Financial assets
15
3 029
-
Total non-current assets
47 342
50 548
Current assets
Other current assets
9
3 238
222
Bank deposits, cash in hand
8
2 197
4 005
Total current assets
5 435
4 227
Total assets
52 777
54 775
37
5.3. Consolidated statement of financial position
Oslo, 30 March 2023
The Board of Directors and CEO of Carbon Transition ASA
Gisle Grønlie
Nina Skage
Torstein Sanness
Chairman
Director
Director
Nils Haugestad
Interim CEO
USD thousands
Equity and Liabilities
Note
31.12.2022
31.12.2021
Equity
Share capital and other paid in capital
18
79 909
79 909
Own shares
18
(489)
-
Other reserves
(31 769)
(33 200)
Total equity
47 652
46 709
Non current liabilities
Interest bearing debt
13
-
896
Total non current liabilities
-
896
Current liabilities
Trade payables
15
88
333
Taxes payables
2 282
2 362
Other current liabilities
17
2 755
4 475
Total current liabilities
5 125
7 170
Total liabilities
5 125
8 065
Total equity and liabilities
52 777
54 775
38
5.4. Consolidated statement of change in equity
USD thousands
Share
capital
Additional
paid-in
capital
Own
shares
Accumulated
earnings
Other
equity/
Share
based
programme
Total
equity
Balance as of
01.01.2022
28 739
51 170
-
(33 611)
411
46 709
Profit (loss) for the
period
1 396
1 396
Other comprehensive
income (loss)
-
-
Purchase own shares
(489)
24
(464)
Share based payment
11
11
Balance as of
31.12.2022
28 739
51 170
(489)
(32 191)
422
47 652
USD thousands
Share
capital
Additional
paid-in
capital
Own
shares
Accumulated
earnings
Other
equity/
Share
based
programme
Total
equity
Balance as of
01.01.2021
840
38 453
-
(47 546)
400
(7 852)
Profit (loss) for the
period
13 935
13 935
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
51 170
-
(33 611)
411
46 709
39
5.5. Consolidated statement of cash flow
USD thousands
Note
2022
2021
Cash flow from operating activities
Profit (loss) before tax
(362)
14 087
Taxes refund (paid)
264
(147)
Depreciation, amortization and net
impairment
10,11
(8 076)
14 341
Changes in fair value for investments
3
13 447
(8 404)
Changes in other gains and losses
3
(666)
-
Gain reconstruction
-
(24 667)
Currency (gain)/loss without cash flow
effects
0
(67)
Interest expense
6
69
1 730
Share based payment cost
21
11
11
Reconstruction payments
-
(5 077)
Other working capital changes
(3 576)
(1 451)
Net cash from operating activities
1 112
(9 645)
Cash flow from investing activities
Disposal of property, plant and equipment
4
500
-
Cash received/paid from investments
(2 000)
(9 864)
Net cash flow from investment activities
(1 500)
(9 864)
Cash flow from financing activities
Repayment of interest-bearing debt
13
(896)
(2 295)
Payment of lease liabilities (recognized
under IFRS 16)
13
-
(73)
Net proceeds from new equity
-
21 597
Investment in own shares
18
(464)
-
Interest paid lease liabilities
-
(1)
Interest paid
(59)
(1 587)
Net cash flow from financial activities
(1 419)
17 641
Net change in cash and cash equivalents
(1 807)
(1 868)
Cash and cash equivalents balance 01.01
8
4 005
5 873
Cash and cash equivalents balance 31.12
8
2 197
4 005
40
5.6. Notes to the consolidated financial statement
Note 1 General information about the Company and basis for presentation
General information
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 investment 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.
.
Carbon Transition is an investment company. Carbon comprises an OBN multi-client
company and an investment arm. The Group may invest broadly in listed companies as
well as companies expected to be listed in the near term. Carbon has a legacy seismic
business operating under the name Axxis Geo Solutions. Under Axxis Geo Solutions,
the Company manages a seismic OBN multi-client data library with assets in Norway
and Egypt.
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 30 March 2023. The consolidated financial statements will be presented
for approval at the Annual General Meeting on 24 May 2023. Until this date the Board
of Directors has the authority to amend the financial statements.
In accordance with the Accounting Act § 3-3a, we confirm that the financial
statements have been prepared under the assumption of going concern. The
board of directors and management believe that the Company has sufficient
working capital for continued operation.
41
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 consolidation.
Presentation and functional currency
The Group presents its consolidated financial reports in USD. The Functional
currency is USD for the Group and its subsidiaries.
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 denominated in non-functional currencies are recognized in the income
statement.
Revenue recognition
Within the seismic segment the company previously operated two business models. In
2022 all revenue relates to multi-client late sales. In 2021 the company earned
revenue from both multi-client late sales and contract seismic surveys. For accounting
policy information for contract seismic surveys, see the annual report for 2021.
Multi-client revenue (late sales)
Multi-client is the 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. The company owns multi-client libraries together with other parties, and are
entitled to a defined portion of future revenues,
42
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 are 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.
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 on 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.
43
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.
The Group sold all of their seismic node equipment in March 2022.
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
suffered an impairment are reviewed for possible reversal of the impairment at the end
of each reporting period.
44
Multi-client library
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.
The multi-client library are amortized from the date the processed data are ready to be
transferred to customers, using straight line amortization. Each project is evaluated
individually for lifetime and the estimates are revised at least annually.
Before the library is completed, the Group test for impairment at least annually. To
ensure that value in use above net book value, the Group will perform an additional
impairment test after each significant sale is recognized, as each customer will only
acquire the full data-set once.
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.
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.
45
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 Company operates a defined contribution plan. The net pension cost for the
period is presented as an employee expense in the line selling, general and
administrative cost (SG&A).
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 an 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.
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.
46
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, typically 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 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, except for 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.
Financial instruments at amortized cost
Financial assets and liabilities in this category are initially recognized as 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.
47
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 2022
reporting periods and have not been adopted early 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 transactions.
Note 2.2 Key accounting estimates and judgement
The Group makes estimates 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.
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 the 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 incl the reprocessing and project Egypt, based on
expectations of future multi-client late sales according to the cash flow prognosis used
by management for 2022.
There are two uncertainties when it comes to the 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 2022 or 2021.
However, in March 2022 the Group’s Norwegian multi-client library in the North-Sea,
Utsira was written up (reversal of a portion of the 2019 and 2020 impairment), which
increased the value with USD 5.6 million based on expectation for future late sales.
Further in December 2022, due to a new reprocessing agreement of the Utsira survey
48
was written up (reversal of a portion of the 2019 and 2020 impairment) with USD 7.0
million based on expectation for future late.
Note 2.3 Court protected reconstruction in 2021
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 on 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
49
Note 3 Segment reporting
The Group operates two segments, Axxis and Investments, based on the two different
revenue streams. The Group has a legacy seismic business operating under the name
Axxis Geo Solutions, with a multi-client data library. The investment segment was new
from 2021. The Group has a strategy to invest in listed companies as well as
companies expected to be listed in the near term. Investments must meet the criteria
for risk and return set by the board of directors.
The segment reporting is based on the same accounting principles as the financial
statements.
Operating expenses are allocated to the segments based on the use of resources and
assets. Unallocated items include revenue and expenses related to salaries for office
personnel and other office expenses.
Share based payment cost and capitalized cost of obtaining contracts has not been
allocated to segments.
The ocean-bottom seismic contract node on a rope business was divested in March
2022 through an earnout agreement with Magseis Fairfield.
USD thousands
Segment reporting
Unallocated
Total
Axxis
Investment
Income statement
2022
2022
2022
2022
Total revenue
7 258
-
-
7 258
Changes in fair value of investments
-
(13 447)
-
(13 447)
Other gains (losses)
666
-
-
666
Cost of sales
(399)
-
-
(399)
Selling, general and administrative
expenses
(413)
(6)
(1 998)
(2 417)
Amortization multi-client
(3 983)
-
-
(3 983)
Write-up multi-client (reversal of
impairment)
12 618
-
-
12 618
Depreciation & impairment
(548)
-
(11)
(559)
Operating profit (loss) (EBIT) Segment
15 198
(13 453)
(2 009)
(264)
50
The geographical split is based on where the multi-client late sales occur.
Vessel and equipment are only utilized in the Axxis segment, and the major part of
depreciation relates to this segment.
USD thousands
Segment reporting
Unallocated
Total
Axxis
Investment
Geographical markets
2022
2022
2022
2022
Norway
6 328
-
-
6 328
Egypt
1 596
-
-
1 596
Total revenue
7 924
-
-
7 924
USD thousands
Segment reporting
Unallocated
Total
Axxis
Investment
Major customers
2022
2022
2022
2022
Customer 1
2 522
-
-
2 522
Customer 2
1 764
-
-
1 764
Customer 3
1 596
-
-
1 596
Customer 4
1 368
-
-
1 368
Total revenue
7 250
-
-
7 250
USD thousands
Segment reporting
Unallocated
Total
Axxis
Investment
Income statement
2021
2021
2021
2021
Total revenue
15 816
-
-
15 816
Changes in fair value of investments
-
8 404
-
8 404
Cost of sales
(10 381)
-
-
(10 381)
Selling, general and administrative
expenses
(909)
(4)
(5 720)
(6 633)
Amortization multi-client
(7 312)
-
-
(7 312)
Depreciation & impairment
(6 965)
-
(64)
(7 029)
Operating profit (loss) (EBIT) Segment
(9 751)
8 400
(5 785)
(7 136)
USD thousands
Segment reporting
Unallocated
Total
Axxis
Investment
Geographical markets
2021
2021
2021
2021
Norway
5 669
-
-
5 669
UK
8 983
-
-
8 983
Total revenue
14 653
-
-
14 653
51
The geographical split is based on where the seismic surveys have been performed
and the late sales occur.
Note 4 Revenue and cost from contract with clients
The ocean-bottom seismic contract node on a rope business was divested in March
2022 through an earnout agreement with Magseis Fairfield. The net gain is from the
sales of the seismic node business to Magseis Fairfield. Under the agreement, Carbon
Transition received USD 0.5 million at closing and will receive earnout payments of up
to a maximum of USD 12.0 million over the next three years, based on the use of the
equipment. There is a minimum payment in year three of USD 1.5 million, subject to
certain milestones.
As basis for the gain calculation, the Group has estimated total revenues, and the
resulting payments to Carbon, for the three year period. The Group has used a
probability weighted cash flow and discounted with a WACC of 9.15%.Two scenarios
have been calculated as high and as low scenario. The NPV per 31.12.2022 is just
above the low case of USD 3.0 million. This NPV has been offset by the sales net
book value of the nodes sold at the time of divestment with a loss of USD 2.3 million,
which resulted in a gain of USD 0.7 million.
USD thousands
Segment reporting
Unallocated
Total
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
USD thousands
Axxis
Investment
Total
Income statement
2022
2022
2022
Other income
8
-
8
Multi-client projects late sales
7 250
-
7 250
Total revenue from contracts
with customers
7 258
-
7 258
At a point in time
7 258
-
7 258
Total revenues from contracts
with customers
7 258
-
7 258
USD thousands
Axxis
Investment
Total
Other gains (losses)
2022
2022
2022
Sale of node assets - earnout
model
666
-
666
Total gain (losses)
666
-
666
52
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.
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
USD thousands
Axxis
Investment
Total
Other income
2021
2021
2021
Covid-19 compensation
1 163
-
1 163
Total other income
1 163
-
1 163
USD thousands
Axxis
Investment
Total
Income statement
2021
2021
2021
Contract assets
Assets recognized for cost to fulfill a
contract in the balance 01.01.21
-
-
-
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
-
-
-
53
Note 5 Cost of sales
Note 6 Financial items
USD thousands
Cost of sales
2022
2021
Vessel cost
(1)
(3 786)
Crew & project management
(216)
(2 165)
Seismic, source and node equipment
(56)
(3 618)
Agent related expenses
(127)
(1 632)
Mobilization amortization
-
(1 938)
Mobilization cost capitalized
-
1 938
Reversal of cost previous period
-
821
Total cost of sales
(399)
(10 381)
USD thousands
Gain on debt restructuring
2022
2021
Gain on debt restructuring
-
24 062
Total gain on restructuring
-
24 062
Financial income
2022
2021
Interest income
7
2
Other financial income
45
-
Total financial income
51
2
Financial expenses
2022
2021
Interest expense
(69)
(1 483)
Interest expense suppliers
-
(246)
Other financial expenses
(12)
(880)
Total financial expenses
(81)
(2 610)
Currency exchange gain (loss)
2022
2021
Exchange gains
1 404
1 928
Exchange losses
(1 472)
(2 765)
Total exchange gain (loss)
(69)
(836)
54
Note 7 Tax
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 2022 the management evaluated the deferred tax assets to be
uncertain when to be utilized. The same evaluation was performed per December
2021.
USD thousands
2022
2021
Specification of tax expense (income) for the year
Current income tax (including withholding tax)
-
90
Change in deferred tax
-
-
Changes from previous years
(1 758)
62
Total tax expense (income)
(1 758)
152
Reconciliation of actual against expected tax
expense (income) at the income tax rate of 22%
Profit (loss) before tax
(362)
14 087
22% tax
(80)
3 099
Tax effect from:
Non taxable income - restructuring
-
152
Withholding tax and corporate tax abroad
83
246
Permanent differences
(1 519)
(1
909)
Currency effect
(708)
(424)
Difference in tax rate in foreign activities
5
(8)
Changes from previous years
(1 758)
Not booked deferred tax asset
2 219
(1
004)
Calculated tax expense (income)
(1 758)
152
Effective tax rate for the Company
485,37
(1,08)
USD thousands
31.12.2022
31.12.2021
Temporary differences
Non current assets
(6 387)
(6 044)
Trade receivables
-
-
Other accruals
-
-
Financial lease
-
-
Accumulated loss carried forward
(42 780)
(57 223)
Temporary differences at 31.12.
(49 167)
(63 267)
Deferred tax assets (liabilities)
10 817
13 919
55
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.
Note 9 Other current assets
USD thousands
31.12.2022
31.12.2021
Bank deposits
2 156
3 919
Restricted bank deposits
42
86
Total bank deposits
2 197
4 005
USD thousands
31.12.2022
31.12.2021
Prepayments
82
197
Accrued income
3 153
-
Other current receivables
3
25
Total other current assets
3 238
222
56
Note 10 Property, plant and equipment
Vessel
Seismic and
node
equipment
Projects
in
progress
Computer
equipment
Lease
asset
Total
tangible
assets
USD thousands
2022
Cost at 01.01.22
-
11 388
-
364
305
12 057
Additions
-
-
-
-
-
-
Disposal
-
(10 000)
-
-
-
(10 000)
Cost at 31.12.22
-
1 388
-
364
305
2 057
Accumulated depreciation 01.01.22
(0)
(7 976)
-
(353)
(305)
(8 633)
Depreciation
-
(548)
-
(11)
-
(560)
Disposal
(0)
7 136
-
-
-
7 136
Accumulated depreciation at
31.12.22
(0)
(1 388)
-
(364)
(305)
(2 057)
Carrying amount at 01.01.22
(0)
3 412
-
11
0
3 423
Carrying amount at 31.12.22
(0)
0
-
(0)
0
(0)
Economic lifetime
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
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
31.12.21
(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
57
The climate risk for stranded equipment is evaluated as low, since the Group has sold
the node seismic equipment in March 2022. The book value of assets is zero at the
end of 2022.
Note 11 Intangible assets
In March 2022 the Group's Norwegian multi-client library Utsira in the North Sea was
written up (reversal of a portion of the 2019 and 2020 impairment), which increased
the value with USD 5.6 million based on expectation for future late sales.
In December 2022, a reprocessing agreement for the Utsira project was signed with
reprocessing from CGG and with pre-funding from two major oil companies. Due to
this new reprocessing agreement the Utsira was written up (reversal of a portion of the
2019 and 2020 impairment) with USD 7.0 million based on expectation for future late
sales. Fair value less cost of disposal is used to determine this amount. Fair value less
costs to sell is the arm's length sale price between knowledgeable willing parties less
costs of disposal. The value in use of an asset is the expected future cash flows that
the asset in its current condition will produce, discounted to present value using an
appropriate discount rate. The Group used the same discounted rate as the WACC in
the fair value calculation of 10.10%.
The company has no fully amortized intangible assets that are still in use per 31
December 2022.
TGS had a pledge as collateral in the multi-client project Utsira in 2021 until March
2022 when the interest-bearing debt to TGS was repaid.
The Group's Egyptian multi-client library in the Suez has a cap of late sales and
deviate from the WACC used for Utsira.
The multi-client segment consists of multiple seismic data surveys that comprise the
segment. As of 31 December 2022, the Group owns two multiclient surveys, each
considered a separate CGU and impairment tested separately.
USD thousands
31.12.2022
31.12.2021
Cost as of 01.01
92 881
92 881
Capitalized costs
-
-
Cost as of 31.12
92 881
92 881
Accumulated amortization and
impairment as of 01.01
(64 025)
(56 713)
Amortization for the period
(3 983)
(7 312)
Write-up (reversal of
impairment)
12 618
-
Accumulated amortization and
impairment as of 31.12
(55 390)
(64 025)
Carrying value at 01.01
28 856
36 168
Carrying value at 31.12
37 491
28 856
58
The multi-client survey of Utsira has so far been amortized from the date the
processed data was ready to be transferred to customers in Q3 2020 with a lifetime of
4 years. From January 2022 the lifetime was changed from 4 to 10 years, with the
remaining year of 8.5 from January 2022.
The multi-client survey in Egypt finalized processing per September 2022, and
amortization started in Q3 2022 with a lifetime of 4 years.
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 performs 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 10,10 % 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 1,5% would result in an
impairment in the multi-client library. Similarly, an increase in WACC to 10,7% would
result in an impairment in the multi-client library.
The Group does not consider climate risk to have a significant impact on the estimates
for the multi-client values per December 2022.
59
Note 12 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 11.50 (NOK 24.795 in 2021) per
share. The Group held 3,636,363 shares with a total value of USD 41.8 million (USD
10.3 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 the overall
fair value of investments.
Sensitivity: A 5% and 10% increase in CO2 Capsol stock price is equal to an increase
of USD 212 thousand and USD 511 thousand in value, respectively. Likewise, a 5%
and 10% decrease in stock price in CO2 Capsol is equal to a decrease of USD 212
thousand and USD 511 thousand, respectively.
Dolphin Drilling AS
The investment in Dolphin Drilling AS is valued based on Level 1 inputs, quoted prices
in active markets. Year-end closing price was NOK 12.868 per share. The Group held
1.714.568 shares with a total value of USD 2.2 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 the overall
fair value of investments.
Sensitivity: A 5% and 10% increase in Dolphin Drilling stock price is equal to an
increase of USD 112 thousand and USD 225 thousand in value, respectively.
USD thousands
Non-current assets
31.12.2022
31.12.2021
Listed securities
CO2 Capsol AS
4 246
10 228
Dolphin Drilling AS
2 245
-
Listed securities
6 491
10 228
Unlisted securities
Arbaflame AS
330
3 403
Power By BritishVolt Limited
- Common shares
-
3 175
- Options
-
1 462
-
4 637
Unlisted securities
330
8 040
Total non-current assets
6 821
18 268
60
Likewise, a 5% and 10% decrease in stock price in Dolpin Drilling is equal to a
decrease of USD USD 112 thousand and USD 225 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 analysis from financial
advisors and information from the company. The Group is currently valuing Britishvolt
at GBP 0.0 per share, which is based on the fact that the Company is under
administration.
The estimated fair value of the Group’s investment in Power by Britishvolt Limited is
USD zero (NOK zero) at the end of December 2022
No sensitivity is prepared for Britishvolt since the value is written down to zero as of
December 2022.
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. Arbaflame had an equity private
placement in November 2022 at NOK 0.83 per share and the Group use this value.
Based on this valuation, the estimated fair value of the Group’s investment in
Arbaflame was USD 0.3 million (NOK 3.3 million) at the end of December 2022.
Sensitivity: A 5% and 10% increase in Arbaflame stock price is equal to an increase of
USD 17 thousand and USD 33 thousand in value, respectively. Likewise, a 5% and
10% decrease in stock price in Arbaflame is equal to a decrease of USD 17 thousand
and USD 33 thousand, respectively.
The Group does not consider climate risk to have a significant impact on the estimates
for the fair value of investments per December 2022.
Note 13 Interest bearing debt and cash flow information
USD 896 725 Nibor + 10% Term Loan (TGS)
The TGS loan was fully repaid during the first quarter of 2022 and the security at the
same time was resolved. The TGS loan was classified as non-current liabilities as of
31 December 2021. The TGS loan was secured by the Utsira multi-client survey as
well as the shares in the company Axxis Multi Client AS.
61
* Mainly related to debt forgiveness related to the reconstruction process.
Note 14 Financial risk management
The Group changed name to Carbon Transition ASA during 2021 following the
restructuring in June 2021. The Group has a legacy seismic business operating under
the name Axxis Geo Solutions, with a multi-client data library. The investment
segment was new from 2021. The Group has a strategy to invest in listed companies
as well as companies expected to be listed in the near term. Investments must meet
the criteria for risk and return set by the board of directors.
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 business operating under the name Axxis Geo Solutions is also
dependent on production and development spending by oil and gas companies.
Historically, in times of low oil prices, demand for seismic data has been significantly
reduced.
Capital Management
Liabilities arising from financing activities
USD thousands
Interest bearing
debt
Lease
liabilities
Total
01.01.2022
896
-
896
Repayment of interest-bearing debt
(896)
-
(896)
Payment of lease liabilities
-
-
Other
-
-
-
Reclassification
-
-
-
31.12.2022
-
-
-
Liabilities arising from financing activities
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
62
For 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 adjusts considering changes in economic
conditions. To maintain or adjust the capital structure, the Group may return capital to
shareholders, issue new shares, repay or issue new debt.
The Group’s capital management, among other things, aims to ensure that it fulfils if
any borrowings that define capital structure requirements. Any breaches in meeting
the financial terms if any would permit the borrower to immediately call borrowings.
Market risk - price risk
For information regarding market risk- price risk see note 12.
Financing risk
The Group fully repaid the TGS loan during 2022 and ended in December 2022 with
zero external debt. During 2021 the Company successfully completed a legal court
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 was to ensure
that the Group has financial flexibility for investments that were necessary for the
Group's operations. In addition, the Group has items such as trade receivables, trade
payables etc. which is directly related 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.
The Group is exposed 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 2022 or 2021.
(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 the
expected credit loss has been negligible. Because the expected credit loss is a clearly
immaterial amount, no provision has been made.
63
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.
All trade receivable was fully paid during 2022 and 2021, and therefore no provision
for losses.
(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 has no debt as per December 2022. The Group's sensitivity to potential
changes in interest rates with an increase in 50 basis points would increase interest
expense for 2021 with USD 38 thousands.
(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
Group's strategy for managing liquidity risk is to always have sufficient liquidity 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 and the payment may be required from the counterparty.
64
(iv) Market risk - foreign exchange rates
The Group operates internationally and is exposed to foreign exchange risk, primarily
from the NOK 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 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 considers 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.
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 tax exposure in USD and NOK. Changes in currency may
2022
Remaining Term
USD thousands
0-3
months
3-6
months
6-9
months
9-12
months
1-2 years
Total
Trade payables
88
-
-
-
-
88
Other current
liabilities
634
-
-
4 403
-
5 037
Total
723
-
-
4 403
-
5 125
USD thousands
Change in
exchange
rate
USD/NOK
Effect on profit
before tax
Effect on
OCI
2022
+ 10 %
(21)
-
- 10 %
25
-
2021
+ 10 %
1 486
-
- 10 %
(1 816)
-
65
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 15 Categories of financial instruments
The Group's exposure to various risks associated with financial instruments is
discussed in note 14 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.
Fair value
Due to the short-term nature of bank deposits, cash in hand, 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. The
TGS loan was settled during the first quarter of 2022. 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 court reconstruction in June 2021 all
interest-bearing debt except the TGS loan was settled during 2021.
USD thousands
ASSETS
31.12.2022
31.12.2021
Financial assets at amortized cost
Bank deposits, cash in hand
2 197
4 005
Financial assets at fair value through profit and
loss
Investments
6 821
18 268
Financial assets
3 029
-
Total financial assets
12 048
22 273
LIABILITIES
31.12.2022
31.12.2021
Financial liabilities at amortized cost
Interest-bearing non-current liabilities
-
896
Trade payables
88
333
Other current liabilities
5 037
6 837
Total financial liabilities
5 125
8 065
66
Financial assets are from the ocean-bottom seismic contract node on a rope business
that was divested in March 2022 through an earnout agreement with Magseis
Fairfield. Under the agreement, Carbon Transition received USD 0.5 million at closing
and will receive earnout payments of up to a maximum of USD 12.0 million over the
next three years, based on the use of the equipment. There is a minimum payment in
year three of USD 1.5 million, subject to certain milestones. This is level 3-inputs for
the asset or liability that are not based on observable market data (that is,
unobservable inputs). An entity shall include in the transaction price some or all of an
amount of variable consideration estimated only to the extent that it is highly probable
that a significant reversal in the amount of cumulative revenue recognized will not
occur when the uncertainty associated with the variable consideration is subsequently
resolved. The Group used best estimates and discounted to net present value. As
basis for the gain calculation, the Group has estimated total revenues, and the
resulting payments to Carbon, for the three year period. The group has used a
probability weighted cash flow and discounted with a WACC of 9.15%.. Two scenarios
have been calculated as high and as low scenario. The NPV per 31.12.2022 of USD
3.0 million is just above the low case.
The Group does not hold any financial derivatives.
Note 16 Leases and commitments
Leases
For the Group only office rental comes under the classification of leases. As of 31
December 2022, and 2021, the Group has no lease liabilities. The reason is that the
commitment related to office rent expires in September 2023.
Commitments:
As of December 2022, the Group had commitments related to office rent for the Oslo
office until September 2023. As of December 2021, the Group had commitments
related to office rent for the Oslo Office until September 2022 and for the Houston
office until April 2022. The cost for short term leases of office rent for 2022 was USD
0.1 million and USD 0.1 million for 2021.
The cost for short term leases of seismic equipment was zero in 2022 and USD 2.4
million in 2021.
The cost for short-term leases of vessels was zero in 2022 and USD 2.8 million in
2021.
67
Note 17 Other current liabilities
* These taxes payables are related to Egyptian taxes for withholding and crew related
tax originally in EGP. The Group expects the Egyptian tax to be reduced, but since the
taxes is not settled as of December 2022, the Group has decided to keep same tax
level in EGP as for 2021. However, due to currency exchange development in Egypt
EGP vs USD, the amount in USD is reduced.
Note 18 Share capital and shareholder information
The Company has one class of shares, all shares provide equal rights, including the
right to any dividends in line with 2021. Each of the shares carries one vote in line with
2021.
Carbon Transition ASA has in September 2022 purchased own share with 5 263 157
shares at USD 0.5 million. The subsidiaries directly or indirectly do not own shares or
treasury shares in the Company.
Paid/proposed dividend
The board has decided not to propose any dividend for 2022 or 2021.
USD thousands
31.12.2022
31.12.2021
Holiday pay owed
68
146
Egyptian tax *
2 121
3 923
Other accrued costs
127
672
VAT settlement
440
(267)
Total other current liabilities
2 755
4 475
The Company's
share capital per
31.12.2022 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
Changes in number of shares
Shares
Number of shares 01.01.2022
239 760 117
Own shares 31.12.2022
5 263 157
Number of shares 31.12.2022
234 496 960
68
The major shareholders in Carbon Transition ASA 31 December 2022 were as
follows:
Shareholders
Total shares
Ownership
share
Voting share
INVESTERINGSFONDET VIKING AS
28 000 000
11,7%
11,7%
TIGERSTADEN AS
16 250 000
6,8%
6,8%
F2 FUNDS AS
11 848 719
4,9%
4,9%
ALDEN AS
11 265 384
4,7%
4,7%
F1 FUNDS AS
10 642 170
4,4%
4,4%
DNB BANK ASA
9 300 000
3,9%
3,9%
BECK ASSET MANAGEMENT AS
9 012 307
3,8%
3,8%
GINNY INVEST AS
7 250 230
3,0%
3,0%
BALLISTA AS
6 323 231
2,6%
2,6%
URTIVEN AS
6 300 000
2,6%
2,6%
Q CAPITAL AS
5 869 230
2,4%
2,4%
PHILIP HOLDING AS
5 750 230
2,4%
2,4%
CARBON TRANSITION ASA
5 263 157
2,2%
2,2%
REDBACK AS
5 000 000
2,1%
2,1%
TTC INVEST AS
4 000 000
1,7%
1,7%
Nordnet Bank AB
3 472 800
1,4%
1,4%
SIX SIS AG
3 451 756
1,4%
1,4%
LIVERMORE INVEST AS
3 092 249
1,3%
1,3%
KING KONG INVEST AS
3 000 000
1,3%
1,3%
NORDNET LIVSFORSIKRING AS
2 975 849
1,2%
1,2%
Total 20 largest shareholders
158 067 312
65,9%
65,9%
Total other shareholders
81 692 805
34,1%
34,1%
Total number of shares
239 760 117
100,0%
100,0%
69
The major shareholders in Carbon Transition ASA 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 2022 were as follows:
Share and options owned by management 31 December 2022 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%
Board of Directors
Position
Total shares
Ownership
share
Voting share
Number
of
options
Torstein Sanness
Board member
285 000
0,0 %
0,0 %
800 000
Executive
management
Position
Number of
shares
Number of
options
Nils Haugestad
Interim CEO and CFO
(Interim CEO from
9.12.2021)
Interim CEO
and CFO
-
-
70
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:
Note 19 Related parties
The ultimate Parent of the Group is Carbon Transition ASA.
The Group transactions and balances with other Group companies in 2022 were
related to consultancy fees from companies representing some of the largest
shareholders. There were no transactions with related parties in 2021.
Transactions with related parties
USD thousands
2022
2021
Consultancy services:
Citadell AS controlled by Fredrik Sneve
68
-
Middelborg AS controlled by Lars Eriksen
70
-
Balances with related parties
USD thousands
31.12.2022
31.12.2021
Account payables / Other current liabilities:
Citadell AS
5
30
Middelborg AS
5
26
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 Sanness
Board member
285 000
0,0 %
0,0 %
800 000
Executive
management
Position
Number of
shares
Number of
options
Nils Haugestad
Interim CEO and CFO
(Interim CEO from
9.12.2021)
Interim CEO
and CFO
-
-
Richard Dunlop
EVP
Operations
14 423
10 640
71
As of 1st July 2021, an agreement related to consultancy services was entered with
Citadell AS and Middelborg AS representing some of the largest shareholders of the
Parent company, in addition to participate in the nomination committee from 23 June
2021. The payment related the consultancy services started in 2022. The agreement
to deliver consultancy services with these companies was cancelled by end of January
2023.
Note 20 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.
The Group has not granted any loan or collateral to the Chair of the Board or other
related parties.
For detailed information about executive officers and board of Directors compensation,
see the remuneration report 2022.
USD thousands
2022
2021
Wages and salaries
842
2 462
Social Security costs
176
340
Pension costs
89
150
Other remuneration
34
539
Share based payment expense (refer to note 21)
11
11
Refund salary
(20)
(33)
Total personnel expense
1 132
3 469
Number of man-years at 31.12
2022
2021
Group companies in Norway
3,5
7
Group companies abroad
0
2
Key management personnel compensation
USD thousands
2022
2021
Base salary
337
1 223
Pension
19
60
Other Benefits
12
34
Number of options held
-
10 640
72
See note 18 for shares held by the executive officers and Board of Directors.
Note 21 Share based payments programs
The Group has a share-based payment scheme for employees and one member 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.
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:
2022
2021
Average
exercise
price per
share
option
(NOK)
Number of
options
Average
exercise
price per
share
option
(NOK)
Number of
options
As at
01.01
3,4538
1 625 667
10,1400
405 079
Granted during the year
-
-
1,8000
1 600 000
Adjusted during the year
-
-
106,5452
(231 012)
Terminated during the
year
4,2227
(822 867)
9,2401
(148 400)
As at
31.12
2,6657
802 800
3,4538
1 625 667
Vested 31.12
3,4260
402 800
106,5450
25 667
Exercisable 31.12
402 800
25 667
2022
2021
Share based payment cost (revenue) recognized in
the period USD thousand
10
11
73
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 22 Auditors fee
USD thousands
Expensed audit fee (excluding VAT)
2022
2021
Statutory audit
128
260
Tax advice (incl. technical assistance with tax
return)
63
8
Other attestation services
28
30
Total auditors fee
219
299
Grant date
Expiry date
Exercise
price
Share
options 31
December
2022
Share
options 31
December
2021
30.09.2021
30.09.2028
1,70
400 000
800 000
30.09.2021
30.09.2028
1,90
400 000
800 000
15.09.2017
15.09.2022
69,61
-
12 600
27.09.2018
27.09.2023
112,75
-
10 267
01.05.2019
01.05.2024
250,00
2 800
2 800
Total number of options
802 800
1 625 667
Outstanding instruments overview
Strike
Price
Number of
instruments
Weighted
Average
remaining
contractual
life
Weighted
Average
Strike Price
Vested
instruments
31.12.2021
Weighted
Average
Strike
Price
Outstanding instruments
Vested instruments
1,70
400 000
4,50
1,70
400 000
1,70
1,90
400 000
5,50
1,90
-
-
250,00
2 800
2,09
250,00
2 800
250,00
802 800
402 800
74
The auditor of the Group and the Norwegian entities is PricewaterhouseCoopers
(PwC).
Ernst & Young Egypt (EY) is the auditor for the subsidiary Axxis Geo Solutions Egypt
LLC.
Note 23 Subsidiaries and associated companies
The Group comprise of the same legal entities as of 31 December 2022.
* Axxis Production AS owns 99% and Axxis Geo Solutions ASA owns 1% of the
shares in the company.
Subsidiary of Carbon
Transition ASA:
Jurisdiction
Voting
rights %
Neptune Seismic AS
Norway
100%
Axxis Geo Solution Inc.
USA
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%
75
Note 24 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 21, are
not included in the number of dilutive shares for 2022 or 2021 due to the options is out
of money.
Note 25 Climate risk
The Group does face risks related to both transition risk (market-related,
technological, and changes in regulatory requirements), and in physical risk (extreme
weather) as a result of climate change. The risks are assessed to be a medium to long
term risk. For consolidated accounts for fiscal year 2022, climate related
considerations did not materially affect the Group’s estimates and assumptions.
Note 26 Events after reporting period
On 17 January 2023, the Group announced a new Utsira multi-client late sale of USD
0.5 million (net to the Carbon Transition).
Basic earnings (loss) per weighted average number of shares
2022
2021
Profit (loss) attributable to the ordinary equity holders of the
company
1 396
13 935
Average number of outstanding shares
234 496 960
131 501 057
Basic earnings (loss) per weighted average share
(USD)
0,01
0,11
Diluted earnings (loss) per share
2022
2021
Profit (loss) attributable to the ordinary equity holders of the
company
1 396
13 935
Average number of outstanding shares
234 496 960
131 501 057
Diluted earnings (loss) per share (USD)
0,01
0,11
76
6 Financial statement
Carbon Transition ASA
6.1. Statement of comprehensive income
USD thousands
Note
2022
2021
Revenue
2
153
3 764
Other income
2
-
1 163
Other gains (losses)
2
666
-
Cost of sales
3
208
(1 038)
Personnel expenses
4
(957)
(2 991)
Other operating expenses
(1 486)
(4 089)
Depreciation
5
(549)
(6 907)
Reversal of impairment intercompany
expenses
11 682
-
Operating profit (loss) (EBIT)
9 716
(10 097)
Gain on debt restructuring
7
-
24 062
Financial income
7
9
12
Financial expenses
7
(5 109)
(4 464)
Currency exchange gain (loss)
7
(849)
(1 575)
Profit (loss) before tax
3 767
7 937
Income tax (expense)
8
-
-
Profit (loss) for the period
3 767
7 937
Currency translation adjustments
-
-
Other comprehensive income
(loss) for the period
-
-
Total comprehensive income (loss)
for the period
3 767
7 937
77
6.2. Statement of financial position
USD thousands
Assets
Note
31.12.2022
31.12.2021
Non-current assets
Deferred tax asset
8
-
-
Vessel, equipment and maintenance
5
-
3 413
Investment in subsidiaries
9
30 322
9 456
Non current receivables group companies
6
-
5
Financial assets
10
3 029
-
Total non-current assets
33 351
12 875
Current assets
Receivables from group companies
6
14 507
28 627
Other current assets
11
108
184
Bank deposits, cash in hand
10,12
912
3 732
Total current assets
15 526
32 543
Total assets
48 877
45 418
78
6.3. Statement of financial position
Oslo, 30 March 2023
The Board of Directors and CEO of Carbon Transition ASA
Gisle Grønlie
Nina Skage
Torstein Sanness
Chairman
Director
Director
Nils Haugestad
Interim CEO
USD thousands
Equity and Liabilities
Note
31.12.2022
31.12.2021
Equity
Share capital
13
28 739
28 739
Additional paid-in capital
51 171
51 171
Own shares
(489)
-
Total paid-in capital
79 422
79 910
Accumulated earnings and other equity
(36 812)
(35 852)
Total Equity
42 609
44 057
Current liabilities
Trade payables
77
141
Liabilities to group companies
6
6 001
399
Other current liabilities
14
190
821
Total current liabilities
6 269
1 361
Total equity and liabilities
48 877
45 418
79
6.4. Statement of changes in equity
USD thousands
Share
capital
Additional
paid-in
capital
Own
shares
Accumulated
earnings
Total
equity
Balance as of 01.01.2022
28 739
51 171
-
(35 852)
44 057
Profit (loss) for the period
3 767
3 767
Other comprehensive income
(loss)
-
-
Purchase own shares
(489)
24
(464)
Group contribution to and from
subsidiary
(4 762)
(4 762)
Share based payment
11
11
Balance as of 31.12.2022
28 739
51 171
(489)
(36 812)
42 609
USD thousands
Share
capital
Additional
paid-in
capital
Own
shares
Accumulated
earnings
Total
equity
Balance as of 01.01.2021
840
38 453
-
(43 800)
(4 507)
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)
44 057
80
6.5. Statement of cash flow
* The investment was transferred in 2021 to Carbon Transition Investment AS
USD thousands
Note
2022
2021
Cash flow from operating activities
Profit before tax
3 767
7 937
Taxes refund (paid)
-
-
Depreciation
5
549
9 787
Reversal of impairment intercompany expenses
6
(11 682)
-
Write-down subsidiaries
7
5 106
-
Changes in other gains and losses
2
(666)
-
Gain reconstruction
2,3
-
(24 062)
Currency (gain)/loss without cash flow effects
0
63
Interest expense
7
0
718
Share based payment cost
17
11
11
Other working capital changes
59
(1 133)
Net cash from operating activities
(2 855)
(6 679)
Cash flow from investing activities
Disposal of property, plant and equipment
2,10
500
-
Investment in financial instruments *
-
(9 345)
Net cash flow from investment activities
500
(9 345)
Cash flow from financing activities
Repayment of interest-bearing debt
19
-
(1 295)
Payment of lease liabilities (recognized under IFRS
16)
19
-
(23)
Net proceeds from new equity
-
21 597
Investment in own shares
(464)
-
Interest paid lease liabilities
-
(0)
Interest paid
7
(0)
(718)
Net cash flow from financial activities
(464)
19 562
Net change in cash and cash equivalents
(2 820)
3 537
Cash and cash equivalents balance 01.01
12
3 732
194
Cash and cash equivalents balance 31.12
12
912
3 732
81
6.6. 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 is an investment company. Carbon comprises an OBN multi-client
company and an investment arm. Carbon may invest broadly in listed companies as
well as companies expected to be listed in the near term. Carbon has a legacy seismic
business operating under the name Axxis Geo Solutions. Under Axxis Geo Solutions,
the Company manages a seismic OBN multi-client data library with assets in Norway
and Egypt.
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 9) 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
82
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 2022, but do not have an impact on the Company’s financial
statements.
Key accounting estimates and judgement
The Company makes estimates 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 2021
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 Revenue and cost from contract with clients
Revenue of USD 0.2 million in 2022 partly relates to intercompany invoices to Axxis
Geo Solutions Inc for compensation for the node business, and partly from the close-
down of the subsidiary PT Axxis Geo Solutions in Indonesia (reversal of accruals).
Other gains (losses) include the ocean-bottom seismic contract node on a rope
business, which was divested in March 2022 through an earnout agreement with
Magseis Fairfield. The net gain of USD 0,7 million is from the sales of the seismic
node business to Magseis Fairfield. Under the agreement, Carbon Transition received
USD 0.5 million at closing and will receive earnout payments of up to a maximum of
USD 12.0 million over the next three years, based on the use of the equipment. There
is a minimum payment in year three of USD 1.5 million, subject to certain milestones.
Revenue of USD 3.8 million in 2021 mainly relates intercompany revenues for
reimbursement of cost according to transfer pricing agreement.
Other revenue of USD 1.2 million in 2021 is related to Covid-19 compensation.
83
Note 3 Cost of sales
Note 4 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.
The Company has not granted any loan or collateral to the Chair of the Board or other
related parties.
Key management personnel compensation
USD thousands
Cost of sales
2022
2021
Vessel cost
-
(220)
Crew & project management
22
(262)
Seismic, source and node equipment
(9)
(280)
Agent related expenses
(117)
(276)
Withholding tax refund
312
-
Total operating expenses
208
(1 038)
USD thousands
2022
2021
Wages and salaries
695
2 100
Social Security costs
165
318
Pension costs
89
150
Other remuneration
17
445
Share based payment expense (refer to note 21
Group)
11
11
Refund salary
(20)
(33)
Total personnel expense
957
2 991
Number of man-years at 31.12
2022
2021
Companies in Norway
3,5
7
USD thousands
2022
2021
Base salary
249
1 031
Pension
19
60
Other Benefits
2
7
Number of options held
-
-
84
For detailed information of executive officers and board of Directors compensation,
see the remuneration report 2022.
See note 18 for the Group for shares held by the executive officers and Board of
Directors.
Note 5 Property, plant and equipment
USD thousands
Vessel
Seismic
and node
equipment
Projects
in
progress
Computer
equipment
Lease
asset
Total
tangible
assets
2022
Cost at 01.01.22
-
11 388
-
196
-
11 584
Additions
-
-
-
-
-
-
Disposal
-
(10 000)
-
-
-
(10 000)
Cost at 31.12.22
-
1 388
-
196
-
1 584
Accumulated depreciation 01.01.22
-
(7 976)
-
(195)
-
(8 170)
Depreciation
-
(548)
-
(1)
-
(549)
Disposal
-
7 136
-
-
-
7 136
Accumulated depreciation at
31.12.22
-
(1 388)
-
(196)
-
(1 584)
Carrying amount at 01.01.22
-
3 412
-
1
-
3 413
Carrying amount at 31.12.22
-
(0)
-
-
-
(0)
Economic lifetime
3-10
years
3-5 years
3-10 years
2-5
years
85
The climate risk for stranded equipment is evaluated as low since the Company has
sold the node seismic equipment in March 2022. The book value of assets is zero at
the end of 2022.
Note 6 Related parties intercompany
USD thousands
Vessel
Seismic
and node
equipment
Projects
in
progress
Computer
equipment
Lease
asset
Total
tangible
assets
2021
Cost at 01.01.21
8 171
17 372
29
196
184
25 952
Additions
-
-
-
-
-
-
Disposal
(8 171)
(5 984)
(29)
-
(184)
(14 368)
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
3-10
years
3-5 years
3-10 years
2-5
years
USD thousands
Non-current receivables group companies
31.12.2022
31.12.2021
Carbon Transtion Investment AS
-
5
Total non-current receivables group
companies
-
5
86
For more information on related parties see note 19 for the Group.
* Prior years impairment of intercompany receivables to Axxis Multi Client AS have
during 2022 been net reversed by USD 11.7 million and presented as a gain in
the statement of comprehensive income.
USD thousands
Current receivables group companies
31.12.2022
31.12.2021
Axxis Multi Client AS *
-
14 314
Axxis Production AS
11 878
12 358
Axxis Geo Solutions Egypt LLC
395
1 411
PT Axxis Geo Solutions
-
305
Carbon Transition Investment AS
2 223
235
Neptune Seismic AS
11
5
Total receivables group companies
14 507
28 627
USD thousands
Current liabilities group companies
31.12.2022
31.12.2021
Carbon Transition Investment AS
4 762
-
Axxis Multi Client AS
1 214
-
Axxis Geo Solutions Inc.
25
141
PT Axxis Geo Solutions
-
257
Total liabilites group companies
6 001
399
USD thousands
Revenue from group companies
2022
2021
Axxis Geo Solutions Inc.
96
236
Axxis Multi Client AS
-
692
Axxis Production AS
-
2 832
PT Axxis Geo Solutions
52
-
Total revenue group companies
148
3 760
87
For more information on related parties related to other than group companies see
note 19 for the Group.
Note 7 Financial items
USD thousands
Gain on debt restructuring
2022
2021
Gain on debt restructuring
-
24 062
Total gain on restructuring
-
24 062
Financial income
2022
2021
Interest income
4
1
Other financial income
5
-
Group contribution (from subsidiary)
-
11
Total financial income
9
12
Financial expenses
2022
2021
Interest expense
(0)
(486)
Interest expense suppliers
-
(231)
Other financial expenses
(3)
(866)
Write-down shares in subsidiaries
(5 106)
(2 881)
Total financial expenses
(5 109)
(4 464)
Currency exchange gain (loss)
2022
2021
Exchange gains
406
842
Exchange losses
(1 255)
(2 418)
Total currency exchange gain (loss)
(849)
(1 575)
USD thousands
Cost from group companies
2022
2021
Axxis Geo Solutions Inc.
445
1 360
Total cost group companies
445
1 360
USD thousands
Revenue from investment in subsidiaries
2022
2021
Group contribution correction Axxis Production
AS
-
(224)
Group contribution from Carbon Transition AS
-
235
Total revenue from investment in
subsidiaries
-
11
88
Note 8 Tax
Deferred tax assets are not recognized per December 2022. 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.
USD thousands
2022
2021
Specification of tax expense (income) for the year
Current income tax (including withholding tax)
-
-
Change in deferred tax
-
-
Total tax expense (income)
-
-
Reconciliation of actual against expected tax expense
(income) at the income tax rate of 22%
Profit (loss) before tax
3 767
7 937
22% tax
829
1 746
Tax effect from:
Withholding tax abroad
-
-
Permanent differences
6 696
696
Not booked deferred tax assets
(7 820)
(1 633)
Currency effect
285
(809)
Receive Group contribution
10
Calculated tax expense (income)
(0)
-
Effective tax rate for the Company
(0.0)
-
USD thousands
31.12.2022
31.12.2021
Temporary differences
Non current assets
(5 002)
(4 109)
Accruals
(1 385)
(41 580)
Gain/loss account
(2)
(1 934)
Accumulated loss carried forward
(8 551)
(8 783)
Temporary differences at 31.12.
(14 940)
(56 408)
Deferred tax assets (liabilities)
3 287
12 410
89
Note 9 Subsidiaries and associated companies
Carbon Transition ASA (CT ASA) comprise of the following legal entities as at 31
December 2022
* 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 Egypt LLC
as mentioned above) and all voting rights for its subsidiaries.
The main change from 2021 is conversion of intercompany receivables to shares in
subsidiaries in Axxis Multi Client AS, as of year-end the shares has partly been written
down. Further write-down was partly performed in Carbon Transition Investment AS,
fully write-down of the shares in Axxis Production AS and Axxis Geo Solution Inc was
performed. In addition, the subsidiary Axxis Geo Solutions PT was finally closed
during 2022.Carbon Transition ASA (CT ASA) comprise of the following legal entities
as of 31 December 2021
USD thousands
Subsidiary of Carbon Transition
ASA:
Jurisdiction
Total
Equity
Net
Income/
(loss)
Carrying
value
Neptune Seismic AS
Norway
(13)
(4)
-
Axxis Geo Solution Inc.
USA
25
(118)
-
Axxis Multi Client AS
Norway
32 827
15 399
25 971
Axxis Production AS
Norway
(9 550)
367
-
Carbon Transition Investment AS
Norway
9 361
(13 437)
4 351
Axxis Geo Solutions Egypt LLC*
Egypt
3 713
500
1
Total
36 364
2 707
30 322
USD thousands
Subsidiary of Carbon Transition
ASA:
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
90
* The formal shareholdings in Axxis Geo Solutions PT are 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 10 Categories of financial instruments
Carbon Transition ASA 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.
Transaction price
Financial assets is from the ocean-bottom seismic contract node on a rope business
was divested in March 2022 through an earnout agreement with Magseis Fairfield.
Under the agreement, Carbon Transition received USD 0.5 million at closing and will
receive earnout payments of up to a maximum of USD 12.0 million over the next three
years, based on the use of the equipment. There is a minimum payment in year three
of USD 1.5 million, subject to certain milestones. An entity shall include in the
transaction price some or all of an amount of variable consideration estimated only to
the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognized will not occur when the uncertainty associated with the
USD thousands
Financial assets at amortized cost
31.12.2022
31.12.2021
ASSETS
Financial assets
3 029
-
Cash and cash equivalents
912
3 732
Total financial assets
3 941
3 732
Financial liabilities at amortized cost
31.12.2022
31.12.2021
LIABILITIES
Trade payables
77
141
Other current liabilities
190
821
Total financial liabilities
267
962
91
variable consideration is subsequently resolved. the Group used best estimates and
discounted to net present value.
Note 11 Other current assets
Note 12 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.
Note 13 Share capital and shareholder information
Please see note 18 in the Group for more information.
Note 14 Other current liabilities
USD thousands
31.12.2022
31.12.2021
Prepayments
56
145
VAT settlement
51
39
Total other current assets
108
184
USD thousands
31.12.2022
31.12.2021
Bank deposits
870
3 646
Restricted bank deposits
42
86
Total bank deposits
912
3 732
USD thousands
31.12.2022
31.12.2021
Holiday pay owed
77
167
Other accrued costs
113
654
Total other current liabilities
190
821
92
Note 15 Financial risk management
Capital Management – see note 14 in the Group for more information
Financing risk – see note 14 in the Group for more information
(i) Credit risk– see note 14 in the Group for more information
(ii) Market risk - interest rate– see note 14 in the Group for more information
(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
Company's strategy for managing liquidity risk is to always have sufficient liquidity 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 and the payment may be required from the counterparty.
2022
Remaining Term
USD thousands
0-3
months
3-6
months
6-9
months
9-12
months
1-2 years
Total
Trade payables
77
-
-
-
-
77
Other current liabilities
190
-
-
-
-
190
Total
267
-
-
-
-
267
93
(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 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 the calculation in the table below shows the effect on profit / loss on the
average exchange rate.
Note 16 Auditors fee
The auditor of the Company is PricewaterhouseCoopers (PwC).
Note 17 Share based payments programs
Please see note 21 in the Group for more information.
USD thousands
Change in
exchange
rate
USD/NOK
Effect on
profit
before tax
Effect on
OCI
2022
+ 10 %
(193)
-
- 10 %
236
-
2021
+ 10 %
722
-
- 10 %
(882)
-
USD thousands
Expensed audit fee (excluding VAT)
2022
2021
Statutory audit
74
174
Tax advice (incl. technical assistance with tax
return)
4
7
Other attestation services
28
19
Total auditors fee
105
200
94
Note 18 Commitments
As of December 2022, the Group had commitments related to office rent for the Oslo
office until September 2023. As of December 2021, the Company had commitments
related to office rent for the Oslo office until September 2022. The cost for short term
leases of office rent for 2022 was USD 0.1 million and USD 0.1 million for 2021. The
cost for short-term leases of seismic equipment was zero in 2022 and USD 0.2 million
in 2021.
Note 19 Interest bearing debt and cash flow information
There was no interest-bearing debt as of 31 December 2022 or as of 31 December
2021. All loans were settled because of the legal court reconstruction in 2021.
* Mainly related to debt forgiveness related to the reconstruction process.
Note 20 Events after reporting period
See note 26 in the Group for more information.
Liabilities arising from financing
activities
USD thousands
Interest
bearing debt
Lease
liabilities
Total
01.01.2022
-
-
-
Liabilities arising from financing activities
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
-
-
-
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 as at 31 December 2022, the 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 consolidated statement of financial position as at 31 December
2022, the consolidated statement of comprehensive income, the consolidated statement of
change in equity and the consolidated 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 2022, 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 consolidated financial statements give a true and fair view of the financial position of the
Group as at 31 December 2022, 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 relevant laws and regulations in Norway and the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 2 years from the election by the general meeting of the
shareholders on 23 June 2021 for the accounting year 2021.
7 Auditors report
2 / 5
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.
The Group’s business activities are largely unchanged compared to last year. We have not identified
regulatory changes, transactions or other event that qualified as new Key Audit Matters for our audit of
the 2022 financial statements. Furthermore, Valuation of multi-client library and Valuation of
investments have the same characteristics and risks as in the prior year, and therefore continues to be
an area of focus this year.
Key Audit Matters
How our audit addressed the Key Audit Matter
Valuation of multi-client library
Valyation of multi-client library has been an
area of focus as it accounts for approximately
70% of the Group’ total assets per 31
December 2022.
Management applied judgment in determining
whether the carrying amount of the multi-client
library exceeded the recoverable amount.
Specifically, judgement was applied when
determining assumptions such as expected
discounted future cash flows. Furthermore,
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, including
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 method applied 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 fair
value less cost of disposal calculations by
recalculating the fair value less cost of disposal
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.
3 / 5
Valuation of investments
Valuation of investments has been an area of
focus as the investments account for
approximately 13% of the Group’s total assets
per 31 December 2022.
Some of the investments are unlisted and
valuated with use of unobservable inputs and
classified as level 3 in the fair value hierarchy.
A certain degree of judgement is applied in
determining the assumptions that market
participants would use when observable
market pricing data is not available.
We refer to note 12, where management
explains their valuation techniques and
assumptions used in the model to determine
fair value per 31 December 2022.
We evaluated management’s valuation
processes. Our audit procedures included
inquiries, inspection of supporting documentation,
assessing the basis for key assumptions, and
testing 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 12 and
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 appear 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 statutory 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.
4 / 5
In preparing the financial statements, management is responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the 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 and 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's 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.
5 / 5
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on Compliance with Requirement on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Carbon Transition ASA, we have performed an
assurance engagement to obtain reasonable assurance about whether the financial statements
included in the annual report, with the file name Carbon TransitionASA-2022-12-31-en, have been
prepared, in all material respects, in compliance with the requirements of the Commission Delegated
Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and
regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes
requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of
the consolidated financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all
material respects, in compliance with the ESEF regulation.
Management’s Responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
regulation. This responsibility comprises an adequate process and such internal control as
management determines is necessary.
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, 30 March 2023
PricewaterhouseCoopers AS
Martin Alexandersen
State Authorised Public Accountant
(This document is signed electronically)
Signers:
Name
This document package contains:
- Closing
page (this page)
- The original document(s)
- The electronic signatures. These are not visible in the
document, but are electronically integrated.
This le is sealed with a digital signature.
The seal is a guarantee for the authenticity
of the document.
Method
Date
2023-03-30 07:41
BANKID
Alexandersen, Martin H
Auditor's report
96
Askekroken 11 www.carbn.no
0277 Oslo Copyright © 2021
Norway Carbon Transition
Investing in a
sustainable future.
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