The market for research in oil and gas remains weak, with some improvement in areas related to more efficient processes and lower costs. For our part, this mainly concerns our research in digitisation and automation. However, our ability to obtain adequate financial support from the industry for projects is negatively affected by a market that has declined. The Ullrigg Drilling and Well Centre (UBBS) activities in the field of development and testing of new equipment has nevertheless risen sharply since the spring of 2016, with good prospects also for 2017. We do not foresee any further decline in this activity in the short and medium term.
In terms of impact on IRIS Forskningsinvest AS, a persistently weak market situation in oil and gas can result in that is becomes challenging to raise funding for the commercialisation of research results. On the other hand, the market for bioeconomics and aquaculture, which IRIS also focuses on, is on the rise. It is most likely that the market for social science research will remain unchanged, though there is a possibility of a slight decline.
The utilisation rate of research infrastructures poses a risk for IRIS in terms of cost. Here, close customer contact and long-term financing will contribute to reduced risk. The use of national infrastructure is necessary in order to obtain investment grants and will contribute to reduced cost risk at these facilities. The financial risk with the building up of new research infrastructure in the field of bioeconomics at Risavika Gassenter has been reduced via governmental participation in the initiative. The extent of exposure IRIS risks is initially limited to NOK 5 million.
Credit risk connected with the customers’ ability to fulfil their financial obligations has been low historically, and at the end of 2016 it is still assessed as moderate, even though many of the company's customers are also affected by the downturn in the oil industry in the region. IRIS is exposed to interest rate risk to a moderate extent. Rental costs for buildings will, to some extent, be dependent on interest rate developments, but the rental rate is expected to be unaffected in the short and medium term.
For several years, efforts have been made to strengthen the working capital of the parent company and the Group.
The working capital of the parent company IRIS is considered to be on a sound level, from the perspective of the company’s activities. The sale of shares in 2016 means that the working capital of the Group is solid and enables strategic investments, including investments in laboratories and facilities.