REACH SUBSEA ASA

Financial review
The consolidated accounts and associated notes are reported in compliance with IFRS, as approved by the EU. Annual accounts for
the parent company are reported in compliance with Norwegian Generally Accepted Accounting Principles.
Results
Revenues for 2012 total NOK 3.6 mill., and stems from consultancy services under existing frame agreements.
Operating cost for 2012 total NOK 9.1 mill. The Group’s result for 2012 was a loss of NOK 5.5 mill before tax. Increase in operating
cost from same period previous year is mainly due to costs related to a private placement completed in December 2012. Salary
increases are due to an increase in the number of employees.
Balance Sheet
The Group’s liquidity position is satisfactory. Total current assets per year end were NOK 46.4 mill. of which NOK 45.6 mill were cash
and cash equivalents. The Group’s book equity was NOK 44.2 mill., representing 87 % of the total assets. The Group had, per year
end, no long term debt or debt to financial institutions.
Cash Flow
Net cash flow from operating activities for 2012 was NOK - 1.6 mill. This is due to accrued cost in relation with the reversed take-over.
The private placement in December 2012 gave a positive liquidity effect of NOK 42.2 mill.
Financial Risk
The Group is exposed to financial market risk by the nature of its business. This is the risk that changes in currency exchange rates,
interest rates and freight prices will impact on the value of the Group’s assets, obligations and future cash flows. To reduce and manage
these risks, management regularly reviews and reassesses the Group’s main market risk. Whenever a major risk factor is identified,
action to reduce the specific threat is considered.
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with
respect to the NOK, USD and EURO. Foreign exchange risk arises from future commercial transactions and recognised assets or
liabilities.
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency
that is not an entity’s functional currency. The Group aims at achieving a natural hedge between cash inflows and cash outflows and
manages remaining foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, by forward
contracts and similar instruments as appropriate
The Group’s risk management policy is to hedge anticipated transactions in each major currency.
Price risk
The Group is exposed to commodity price risk at two main levels:
The demand for ROV units is sensitive to oil price developments, fluctuations in production levels, exploration results and general
activity within the oil and gas industry. The cost of construction of future units is sensitive to changes in market prices of the input
factors.
Credit Risk
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to
customers. The Group has no significant concentration of credit risk towards single financial institutions and has policies that limit
the amount of credit exposure to any single financial institution. Credit exposures to customers are mainly concentrated around the
engineering contracts.
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