Earnings Release • Nov 30, 2020
Earnings Release
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| AXXIS GEO SOLUTIONS ASA 3 | |
|---|---|
| HIGHLIGHTS Q3 2020 |
3 |
| SUBSEQUENT EVENTS |
3 |
| KEY FINANCIALS IFRS REPORTING |
3 |
| KEY FINANCIALS SEGMENT REPORTING |
3 |
| CEO STATEMENT | 4 |
| OUTLOOK | 4 |
| GOING CONCERN | 4 |
| OPERATIONAL HIGHLIGHTS | 5 |
| FINANCIAL REVIEW | 5 |
| FINANCIAL STATEMENTS 9 | |
| INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | 9 |
| INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION | 10 |
| INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | 11 |
| INTERIM CONSOLIDATED STATEMENT OF CASH FLOW |
12 |
| NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS | 13 |
| USD thousands | |||||
|---|---|---|---|---|---|
| Profit and loss | Q3 2020 | Q3 2019 YTD Sep 2020 | YTD Sep 2019 | Full Year 2019 | |
| Revenue | 35 043 | 970 | 92 776 | 66806 | 70744 |
| Cost of sales | (8986) | (1796) | (48522) | (49 135) | (58 634) |
| EBITDA (loss) | 23 499 | (2, 496) | 38 5 53 | 12 5 5 1 | 5 3 1 0 |
| EBIT (loss) | 2425 | (3927) | 14 3 9 5 | 8737 | (35862) |
| Net profit (loss) | 3 3 9 5 | (3634) | 5356 | 3776 | (46 477) |
| Basic earnings (loss) per weighted average shares (in USD) | 0.06 | (0,06) | 0.09 | 0.06 | (0,79) |
| Financial position | |||||
| Total assets | 64 448 | 101 288 | 93783 | ||
| Total liabilities | 63813 | 78889 | 98 506 | ||
| Total equity | 635 | 22 3 9 9 | (4723) | ||
| Equity ratio | 1,0% | 22,1% | 0.0% | ||
| Cash flow | |||||
| Net cash flow from operating activities | (16 922) | 33 277 | (12, 408) | 33 491 | 24 4 4 6 |
| USD thousands | Q3 2020 | Q3 2019 YTD Sep 2020 | YTD Sep 2019 | Full Year 2019 | |
|---|---|---|---|---|---|
| Revenue | 7 639 | 11 297 | 66 170 | 78 262 | 83 542 |
| EBITDA (loss) | (4 208) | 7 777 | 11 532 | 23 460 | 17 504 |
| Amortization and impairment MCL | (1 828) | (6 522) | (2 331) | (7 328) | (44 692) |
| EBIT (loss) | (7 262) | (123) | 5 003 | 12 463 | (33 066) |
| Net booked value MCL | 39 221 | 53 991 | 29 752 | ||
| Total equity | 643 | 28 629 | 4 525 | ||
| Equity ratio | 1,0 % | 32,2 % | 5,7 % |
"The challenges resulting from the COVID-19 pandemic continued in Q3 2020. Nevertheless, our crews successfully completed the projects in Egypt and Norway without incident and to our clients' full satisfaction. Furthermore, AGS has recently entered into a contract with an international energy company for OBN work in the North Sea scheduled to start in Q2-21, with an estimated duration of one month. We also took final delivery of the Utsira multi-client data and secured two licensing agreements in cooperation with our partner TGS.
However, due to the difficult market conditions, we have to date been unsuccessful in securing work for our crews in Q4-20 and Q1-21 as start dates for projects have been moved out in time. Smart-stack solutions have been implemented in order to reduce costs to a minimum.
Due to the lack of revenue, we are unable to address our current debt obligations. Consequently, we are in active dialogue with stakeholders to address the Company's debt situation and improve its balance sheet," says Ronny Bøhn, CEO of Axxis Geo Solutions.
The Company is currently marketing the Utsira OBN multi-client data and is in active discussions with a number of clients on late-sales licensing agreements. In addition, AGS remains actively engaged in bidding for new OBN projects globally and developing new multi-client surveys in the North Sea.
In the Q2 earnings release from AGS dated 18 August 2020, it was made clear that AGS was dependent on securing additional OBN projects this year, and if unsuccessful, AGS would have to explore other financial solutions to secure liquidity. Since the release of the Q2 earnings release, there has been continued delays in seismic survey activity start-ups and multi-client late sales have been pushed into future periods. AGS is therefore unable to address its current debt obligations. AGS is in advanced discussions with several of its larger creditors and other stakeholders with the objective of improving the company's financial position.
The Company has implemented a smart-stack strategy and consequently the cash burn-rate is low. Current available working capital is sufficient to maintain running operating expenses for an extended period. It is also anticipated that late sales will supplement cash flow.
There are several leads for contract work in 2021, and AGS has entered into a contract with an international energy company for OBN work in the North Sea. The project is planned to start in Q2-21, with an estimated duration of one month.
On that basis, AGS finds that is in the interest of all its stakeholders to continue as a going concern. AGS is in the process of addressing the Company's debt situation and improve its balance sheet through a debt restructuring. Upon successfully completing a debt restructuring, the Company should be well positioned to attract additional equity capital as required and/or participate in a further consolidation of the market.
A debt restructuring could either be done on a voluntary basis or via a financial restructuring under the Norwegian Reconstruction Act ("Reconstruction Act"). AGS is in advanced discussions with several of its larger creditors and other stakeholders with the objective of either finding a voluntary solution or agree on a pre-arranged restructuring plan and use the Restructuring Act to implement such plan with effect for all its creditors.
AGS has received confirmation from bondholders holding in excess of 2/3 of the Axxis Geo Solutions ASA 8.00% senior secured USD 35,000,000 bonds 2020/2022 (ISIN NO 001 0887383) (the "Bonds") that they will support a waiver and an amendment allowing for the interest that should have been paid 30 November 2020 to be settled with PIK bonds.
There is still uncertainty with respect to the going concern assumption, and the Company is dependent of a positive outcome of the discussions with its stakeholders and additional liquidity.
AGS has continued to benefit from the early and rigorous COVID-19 mitigations implemented throughout our operations. These efforts have allowed the Company to maintain a zero COVID-19 infection rate year to date across our field crews.
The strong operational performance from Q2 continued into the first part of this quarter. Four seismic dedicated vessels, two nodal and one source vessel, as well as a high-resolution streamer vessel, were operated through the period. 327 vessel days were recorded, of which 36% were operational, down from 79% operational levels the previous quarter. Of the remaining, 10% was spent transiting, 54% in smart-stack.
The OBN fleet successfully completed two programs in the North Sea prior to entering the smart-stack mode.
The Pacific Finder completed the high-resolution streamer program in Egypt in September and then transited to Singapore where she was returned to the owners.
At the end of the period all three remaining vessels were in smart-stack and ready for rapid redeployment to the next opportunity.
Exemplary HSE standards were maintained, accumulating 139,000 man hours in the period without any recordable incidents, continuing our excellent performance of zero recordable rate for the year.
Our continuous improvement process remains active, having completion an internal iOMS audit. Travel restrictions imposed by COVID-19 dictated that this was conducted virtually. This was yet another first and proved to be a success.
The operations continue to attract praise from our customers in relation to the overall performance achieved and the quality and field level implementation of our iOMS.
The financial review is prepared according to the IFRS accounting principles. Following the application of the IFRS 15 accounting standard for revenues, multi-client pre-funding revenues are not recognized under percentage of completion ("PoC") method. Instead, all such revenues are recognized at delivery of the final processed data, which is considerably later than the acquisition of the seismic data. The segment reporting (used for management purposes) in note 1 Revenue, note 2 Segment Reporting, note 3 Multi-client library and note 6 EBITDA, shows the deviation from IFRS.
Revenue for the third quarter of 2020 was USD 35.0 million compared to USD 1.0 million for the third quarter of 2019. USD 27.4 million of the revenue is related to pre-funding of multi-client Utsira as the processing of the survey has been completed and delivered to the clients. According to IFRS 15, the revenues from the prefunding achieved for the multi-client project Utsira shall then be recognized as revenue and the contract liabilities has been recorded as zero by end of September 2020.
In the third quarter, the Utsira multi-client survey had two late sales with AGS'share of USD 1.1 million. USD 6.6 million of revenue comes from contract work for Equinor in the North Sea during the quarter.
Cost of sales (COS) in the third quarter of 2020 was USD 9.0 million, net after capitalized multi-client costs and amortized mobilization costs for the North Sea project, compared to USD 1.8 million in the third quarter of 2019 where almost all of the quarter was related to Utsira and therefore the COS capitalized as multi-client library.
The largest portion of COS relates to the Middle East streamer work and the North Sea projects. For the third quarter of 2020, USD 0.9 million of COS was capitalized related to Middle East multi-client project. For the same period in 2019, USD 30.7 million was capitalized related to multi-client projects.
Net mobilization cost related to the North Sea project in Q3 2020 was USD 1.4 million compared to USD -0.1 million for the same period in 2019.
Personnel expenses and other operating expenses in the third quarter of 2020 amounted to USD 2.6 million, compared to USD 1.7 million in the third quarter of 2019. The increase is mainly attributed to severance costs and use of external advisors and consultants onshore.
Depreciation was USD 1.3 million during the third quarter of 2020 compared to depreciation of USD 1.4 million in the third quarter of 2019. There has been no investment in 2020.
According to IFRS, multi-client surveys are not amortized until the data is ready for sale. The multiclient 3D OBN Utsira was finally processed in Q3 2020. AGS started linear amortization over 4 years from Q3 2020. The amortization of Utsira straight line was USD 1.8 million for a full quarter.
No impairment charges have been made in the third quarter of 2020 for the vessel Neptune Naiad or the node handling systems and seismic equipment. An impairment of USD 18.0 million has been performed on the Utsira multi-client library in IFRS books, due to fair value evaluation per September 2020 based on assumptions for late sales. This impairment brings both the value in segment reporting and IFRS reporting to be the same. The multi-client library in Egypt of USD 11.8 million has been tested for impairment even if the data was not processed and ready for sale. The result indicated no need for an impairment as of 30 September 2020.
The EBITDA was USD 23.5 million in the third quarter of 2020 compared to EBITDA of USD -2.5
million in the third quarter of 2019. This increase in EBITDA is mainly due to multi-client pre-funding and late sales revenue being registered for the first time this quarter compared to the same period in 2019 where the quarter was mainly Utsira acquisition of multi-client library.
EBIT (operating profit) was USD 2.4 million in the third quarter of 2020 compared to EBIT of USD -3.9 million during the same period in 2019. The increase in EBIT relates to the same factor as the increase in EBITDA described above.
Net financial income was USD 1.0 million during the third quarter of 2020 compared to net financial expense of USD 0.8 million in the third quarter of 2019. The increase is mainly related to that fair value evaluation of the converted debt has been calculated and booked as financial gain with USD 3.8 million in the quarter and the gain will be booked as amortized cost on the debt going forward. The amortized cost from the fair value evaluation in Q3 2020 was USD 0.6 million. Further financial expenses during the quarter is interest for the debt of USD 1.3 million.
The corporate income tax in Norway is 22% in 2020. Income tax expense for the third quarter of 2020 amounted to USD 15 thousand compared to income tax revenue of USD 1.1 million for the same period in 2019. The tax expense in Q3 2020 represents withholding tax related to the Middle East contract offset by refund of withholding tax from India in the quarter.
In addition, AGS has prepaid local corporate tax 2020 of USD 1.3 million registered in the balance sheet, by receiving net payment for the Middle East contract.
The Company has no deferred tax assets booked as of September 2020.
AGS has a profit of USD 3.4 million for the third quarter of 2020 compared to loss of USD 3.6 million for the third quarter of 2019.
As of 30 September 2020, AGS had total assets of USD 64.4 million, compared to total assets of USD 101.3 million as of 30 September 2019.
Total non-current assets decreased from USD 93.7 million in Q3 2019 to USD 52.4 million in Q3 2020. This is attributed to the net decrease in multi-client library of USD 31.4 million and decrease of USD 5.4 million in fixed asset, decrease in goodwill and deferred tax assets with USD 4.5 million to zero value for both items as of September 2020.
Total current assets increased from USD 7.6 million in Q3 2019 to USD 12.1 million in Q3 2020. The increase is driven by trade receivables and cash with USD 7.5 million increase, offset by decrease in inventories of USD 1.5 million and decrease in other current assets of USD 1.5 million. Cash balance ending at USD 4.9 million as of 30 September 2020.
The Group's equity was USD 0.6 million at the end of Q3 2020 versus USD 22.4 million as of 30 September 2019. The equity ratio is 1.0% as of 30 September 2020 compared to 22.1% same period in 2019.
Total non-current liabilities increase from USD 0.1 million as of 30 September 2019 to USD 19.5 million as of 30 September 2020 due to the announced conversion of accounts payable to long-term unsecured debt and bond loan as part of the restructuring in Q3 2020. The bond loan includes a covenant of minimum of cash of USD 2.0 million. The covenant is fulfilled as of September 2020. Fair value of the converted debt, both unsecured loan and bond loan, have been calculated and booked as financial gain with USD 3.8 million in the quarter and the gain will be booked as amortized cost on the loans going forward. The amortized cost from the fair value evaluation in Q3 2020 was USD 0.6 million. The original secured debt towards Eksportkreditt Norge AS has been reclassified to short-term debt. However, the Company has received waiver from the two covenants for all the quarters in 2020. The financial covenants are liquid of no less than 120% of outstanding loan and equity rate of 35%.
The current portion of long-term debt amounted to USD 1.3 million in respect of the debt towards Eksportkreditt Norge AS, USD 0.1 million the office leases, USD 7.6 million unsecured debt and USD 3.7 million in respect of the bond loan as of September 2020.
Total current liabilities as of 30 September 2020 amounted to USD 44.3 million, compared to USD 78.8 million as of 30 September 2019. The decrease is mainly related to trade payables due to conversion to debt, which net decreased by USD 21.5million during the quarter. Other current liabilities decreased by USD 5.3 million in 2020. The account includes project related accruals, taxes and VAT and the promissory loan note in favor of TGS which was reduced to USD 6.4 million per September 2020. The decreases are offset by an increase in the current portion of long-term debt by USD 10.1 million, ending with balance of USD 12.8 million as per 30 September 2020.
Cash outflow from operating activities in the third quarter of 2020 was negative with USD 16.9 million, compared to positive of USD 33.3 million at the end of the same period in 2019.
Cash outflow from investing activities in the third quarter of 2020 amounted to negative USD 0.9 million, compared to negative of USD 32.5 million in the same period in 2019. There was no investment in node handling equipment in the third quarter compared to investments of USD 2.2 million in the same period of 2019. Investment in the multi-client library decreased from USD 30.7 million in Q3 2019 to USD 0.9 million in the third quarter of 2020.
Cash inflow from financing activities in third quarter of 2020 was positive USD 19.7 million, compared to negative USD 0.9 million in the same period in 2019. In the third quarter of 2020, the Company had net proceeds from interest bearing debt of USD 22.0 million.
| Axxis Geo Solutions Group | ||||||
|---|---|---|---|---|---|---|
| USD thousands | Note | Q3 2020 | Q3 2019 | YTD Sep 2020 | YTD Sep 2019 | Full Year 2019 |
| Revenue | 1/2 | 35 043 | 970 | 92 776 | 66 806 | 70 744 |
| Cost of sales | 2 | (8 986) | (1 796) | (48 522) | (49 135) | (58 634) |
| Personnel expenses | 2 | (1 337) | (548) | (2 727) | (2 177) | (2 616) |
| Other operating expenses | 2 | (1 222) | (1 122) | (2 974) | (2 943) | (4 184) |
| Amortization & impairment multi-client & goodwill |
(19 792) | - | (19 792) | - | (35 093) | |
| Depreciation & impairment | 3 | (1 281) | (1 431) | (4 366) | (3 814) | (6 080) |
| Operating profit (loss) (EBIT) | 2 425 | (3 927) | 14 395 | 8 737 | (35 862) | |
| Financial income | 3 847 | 2 4 |
3 847 | 2 4 |
4 3 |
|
| Financial expenses | (2 048) | (1 327) | (3 196) | (2 941) | (4 934) | |
| Currency exchange gain (loss) | (814) | 525 | 250 | (53) | (1 148) | |
| Profit (loss) before tax | 3 410 | (4 704) | 15 296 | 5 767 | (41 901) | |
| Income tax (expense) | (15) | 1 070 | (9 941) | (1 991) | (4 576) | |
| Profit (loss) for the period | 3 395 | (3 634) | 5 356 | 3 776 | (46 477) | |
| Currency translation adjustments | - | - | - | - | - | |
| Other comprehensive income (loss) for the period | - | - | - | - | - | |
| Total comprehensive income (loss) for the period | 3 395 | (3 634) | 5 356 | 3 776 | (46 477) |
| Axxis Geo Solutions Group | ||||
|---|---|---|---|---|
| USD thousands | Note | 30.09.2020 | 30.09.2019 | 31.12.2019 |
| Assets | ||||
| Non-current assets | ||||
| Goodwill | - | 1 951 | - | |
| Multi-client library | 3 | 39 221 | 70 596 | 47 213 |
| Deferred tax asset | - | 2 568 | - | |
| Property, plant and equipment | 13 132 | 18 486 | 17 668 | |
| Other non-current assets | - | 101 | - | |
| Total non-current assets | 52 352 | 93 702 | 64 880 | |
| Current assets | ||||
| Inventories | 166 | 1 648 | 762 | |
| Trade receivables * | 4 992 | 1 875 | 12 291 | |
| Other current assets | 4 | 2 081 | 3 599 | 14 415 |
| Bank deposits, cash in hand | 4 857 | 464 | 1 435 | |
| Total current assets | 12 095 | 7 586 | 28 903 | |
| Total assets | 64 448 | 101 288 | 93 783 | |
| USD thousands Equity and Liabilities |
Note | 30.09.2020 | 30.09.2019 | 31.12.2019 |
| Equity | ||||
| Share capital and other paid in capital | 5 | 39 294 | 27 041 | 50 171 |
| Other reserves | (38 659) | (4 641) | (54 894) | |
| Total equity | 635 | 22 399 | (4 723) | |
| Non current liabilities | ||||
| Interest bearing debt | 19 534 | 129 | 7 3 |
|
| Total non current liabilities | 19 534 | 129 | 7 3 |
|
| Current liabilities | ||||
| Interest bearing debt current | 12 782 | 2 674 | 2 480 | |
| Trade payables | 11 443 | 32 933 | 41 646 | |
| Contract liabilities | - | 17 836 | 22 729 | |
| Other current liabilities* | 4 | 20 054 | 25 318 | 31 578 |
| Total current liabilities | 44 279 | 78 760 | 98 433 | |
| Total liabilities | 63 813 | 78 889 | 98 506 | |
| Total equity and liabilities | 64 448 | 101 288 | 93 783 |
* 31.12.2019 - USD 9.8 million relates to VAT that has been paid 10 Feb 2020
| USD thousands | Share capital | Additional paid-in capital |
Accumulated earnings |
Other equity/ Share based programme |
Total equity |
|---|---|---|---|---|---|
| Balance as of 01.01.2020 | 11718 | 38 4 53 | (55291) | 397 | (4723) |
| Profit (loss) for the period | 5356 | 5356 | |||
| Other comprehensive income (loss) | |||||
| Cost for new shares issued | |||||
| Write down of par value | (10878) | 10878 | |||
| Share based payment | 2 | ||||
| Balance as of 30.09.2020 | 840 | 38 4 53 | (39058) | 399 | 635 |
| USD thousands | Share capital | Additional paid-in capital |
Accumulated earnings |
ounce cause, Share based programme |
Total equity |
|---|---|---|---|---|---|
| Balance as of 01.01.2019 | 8396 | 5944 | (8814) | 423 | 5948 |
| Share based payment 01.01.2019 | (423) | (423) | |||
| Profit (loss) for the period | 3776 | 3776 | |||
| Other comprehensive income (loss) | |||||
| New shares issued - cash settled | 2735 | 8628 | 11 3 6 3 | ||
| Cost for new shares issued | (337) | (337) | |||
| Effect of Songa Bulk ASA merger 2/7- | |||||
| 19 of share consolidation for AGS | |||||
| shareholders | (5263) | (14151) | (19414) | ||
| Effect of Songa Bulk ASA merger 2/7- | |||||
| 19 of share consolidation for AGS | |||||
| shareholders | 19414 | 19414 | |||
| Effect of Songa Bulk ASA merger 2/7- | |||||
| 19 for shares in Songa as | |||||
| contribution in kind | 117 | 1558 | 1676 | ||
| Share based payment | 398 | 398 | |||
| Balance as of 30.09.2019 | 5985 | 21 0 55 | (5039) | 398 | 22 399 |
| Axxis Geo Solutions Group | ||||||
|---|---|---|---|---|---|---|
| USD thousands | Note | Q3 2020 | Q3 2019 | YTD Sep 2020 | YTD Sep 2019 | Full Year 2019 |
| Cash flow from operating activities | ||||||
| Profit (loss) before tax | 3410 | (4704) | 15 2 96 | 5767 | (41 901) | |
| Taxes paid | (189) | (2005) | ||||
| Depreciation and amortization | з | 21074 | 1431 | 24 158 | 3814 | 41 172 |
| Agio - disagio without cash flow effects | 1 1 0 6 | 102 | (134) | (4) | 1873 | |
| Interest expense * | 1408 | 1741 | 2511 | 2911 | 3 200 | |
| Share based payment cost | (4) | (81) | 2 | 398 | (25) | |
| Change in trade receivables | (1574) | 25760 | 7 2 9 9 | 2066 | (8 350) | |
| Change in trade payables | (25626) | 7981 | (30 203) | 12 164 | 20877 | |
| Change in inventories | 222 | 1 2 4 8 | 596 | 300 | 1 1 8 6 | |
| Change in other current assets | 13871 | 9745 | 12 3 3 5 | 2759 | (8 058) | |
| Change in contract liabilities | (25 247) | (379) | (22 729) | (23) | 4871 | |
| Change in other current liabilities | (5374) | (9565) | (19534) | 3341 | 9601 | |
| Net cash from operating activities | (16922) | 33 277 | (12, 408) | 33 491 | 24 446 | |
| Investment in property, plant and equipment Investment in multi-client library Cash received/paid from merger |
з | (914) | (2.237) (30 687) 425 |
219 (11800) |
(6137) (43 350) 425 |
(6 919) (55 060) 425 |
| Net cash flow from investment activities | (914) | (32499) | (11581) | (49062) | (61554) | |
| Cash flow from financing activities | ||||||
| Net proceeds from interest bearing debt | 22 036 | 31 449 | ||||
| Repayment of interest bearing debt | (866) | (282) | (1383) | (845) | (1127) | |
| Payment of lease liabilities (recognized under IFRS 16) | (56) | (53) | (162) | (133) | (186) | |
| Net proceeds from new equity | (32) | 11026 | 34 156 | |||
| Interest paid lease liabilities | (2) | (5) | (8) | (14) | (18) | |
| Interest paid | (1397) | (522) | (2484) | (1 696) | (1979) | |
| Net cash flow from financial activities | 19714 | (894) | 27 411 | 8339 | 30847 | |
| Net change in cash and cash equivalents | 1878 | (116) | 3422 | (7232) | (6261) | |
| Cash and cash equivalents balance 01.06/01.01 | 2979 | 580 | 1435 | 7696 | 7696 | |
| Cash and cash equivalents balance 30.09/31.12 | 4857 | 464 | 4857 | 464 | 1435 |
* Interest expense in 2019 includes financial cost as a result of the merger with Songa Bulk of USD 1.2 million
| In USD thousands | Segment reporting | IFRS reporting | ||
|---|---|---|---|---|
| Q3 2020/2019 | Q3 2020 | Q3 2019 | Q3 2020 | Q3 2019 |
| Operating Revenue | ||||
| Contract revenue | 6579 | 970 | 6579 | 970 |
| Multi-client pre-funding revenue | $\overline{\phantom{a}}$ | 10327 | 27 404 | |
| Multi-client late sales | 1060 | $\overline{\phantom{a}}$ | 1060 | |
| Total revenue | 7640 | 11 297 | 35 043 | 970 |
| In USD thousands | Segment reporting | IFRS reporting | ||
|---|---|---|---|---|
| YTD Q3 2020/2019 | YTD Sep 2020 | YTD Sep 2019 | YTD Sep 2020 | YTD Sep 2019 |
| Operating Revenue | ||||
| Contract revenue | 64 3 12 | 66 806 | 64 312 | 66 806 |
| Multi-client pre-funding revenue | 798 | 11456 | 27 404 | |
| Multi-client late sales | 1060 | 1060 | ||
| Total revenue | 66 171 | 78 262 | 92 776 | 66806 |
| In USD thousands | Segment reporting | IFRS reporting | ||
| Full Year 2019 | Full year 2019 | Full year 2019 | ||
| Operating Revenue | ||||
| Contract revenue | 70744 | 70744 | ||
| Multi-client pre-funding revenue | 12 799 | |||
| Multi-client late sales | ||||
| Total revenue | 83 542 | 70744 |
AGS entered early in 2019 into an agreement with TGS to invest in certain multi-client projects. From this time, and with retroactive effect for 2018, AGS recognizes its relative share of the investment in multi-client data and its share of revenue, amortization, and costs.
| USD thousands | Segment reporting | Adjustments | IFRS reporting | |||||
|---|---|---|---|---|---|---|---|---|
| Q3 2020/2019 | Multi-client Contract |
|||||||
| Income statement | Q3 2020 | 03 2019 | Q3 2020 | Q3 2019 | Q3 2020 | Q3 2019 | Q3 2020 | Q3 2019 |
| Total revenue | 1060 | 10 327 | 6579 | 970 | 27 404 | (10327) | 35 043 | 970 |
| Total cost of sales | (812) | 1064 | (8419) | (2860) | 245 | $\overline{\phantom{a}}$ | (8986) | (1796) |
| Personnel expenses | ۰ | (365) | (1337) | (183) | ۰ | (1337) | (548) | |
| Other operating expenses | ٠ | (326) | (1280) | (997) | 58 | 201 | (1222) | (1122) |
| Total Operating Expenses | (812) | 373 | (11036) | (4040) | 303 | 201 | (11545) | (3466) |
| Operating profit (loss) before depreciation and amortization (EBITDA) |
248 | 10700 | (4457) | (3070) | 27707 | (10126) | 23 4 9 9 | (2496) |
| Depreciation & Amortization | (1828) | (7283) | (1226) | (471) | (18 020) | 6323 | (21074) | (1431) |
| Operating profit (loss) (EBIT) Segment | (1580) | 3417 | (5682) | (3541) | 9687 | (3804) | 2425 | (3927) |
| USD thousands | Segment reporting | Adjustments | IFRS reporting | ||||||
|---|---|---|---|---|---|---|---|---|---|
| YTD Q3 2020/2019 | Multi-client | Contract | |||||||
| Income statement | YTD Sep 2020 YTD Sep 2019 | YTD Sep 2020 YTD Sep 2019 YTD Sep 2020 YTD Sep 2019 YTD Sep 2020 YTD Sep 2019 | |||||||
| Total revenue | 1858 | 11 4 5 6 | 64 312 | 66 806 | 26 606 | (11456) | 92 776 | 66 806 | |
| Total cost of sales | (3410) | 1775 | (45357) | (50910) | 245 | $\blacksquare$ | (48 522) | (49 135) | |
| Personnel expenses | ٠ | (824) | (2727) | (1759) | ۰ | 405 | (2727) | (2177) | |
| Other operating expenses | ٠ | (865) | (3144) | (2367) | 170 | 289 | (2974) | (2943) | |
| Total Operating Expenses | (3410) | 86 | (51228) | (55035) | 415 | 694 | (54223) | (54256) | |
| Operating profit (loss) before depreciation and amortization (EBITDA) |
(1552) | 11542 | 13084 | 11771 | 27021 | (10762) | 38553 | 12551 | |
| Depreciation & Amortization | (2331) | (8486) | (4199) | (2365) | (17629) | 7037 | (24158) | (3814) | |
| Operating profit (loss) (EBIT) Segment | (3883) | 3056 | 8886 | 9406 | 9392 | (3725) | 14395 | 8737 |
| USD thousands | Segment reporting | Adjustments | IFRS reporting | ||
|---|---|---|---|---|---|
| Full Year 2019 | Multi-client Contract |
||||
| Income statement | Full Year 2019 | Full Year 2019 | Full Year 2019 | Full Year 2019 | |
| Total revenue | 12799 | 70 744 | (12799) | 70 744 | |
| Total cost of sales | 2 2 4 6 | (60 880) | (58634) ۰ |
||
| Personnel expenses | (1067) | (1954) | 405 | (2616) | |
| Other operating expenses | (1085) | (3 299) | 200 | (4184) | |
| Total Operating Expenses | 94 ٠ |
(66132) | 605 | (65433) | |
| Operating profit (loss) before depreciation and amortization (EBITDA) |
12893 ٠ |
4611 | (12194) | 5310 | |
| Depreciation & Amortization | (43 606) | (6965) | 9398 | (41172) | |
| Operating profit (loss) (EBIT) Segment | (30713) ٠ |
(2354) | (2796) | (35862) |
AGS entered early in 2019 into an agreement with TGS to invest in certain multi-client projects. From this time, and with retroactive effect for 2018, AGS recognizes its relative share of the investment in multi-client data and its share of revenue, amortization, and costs.
| Segment reporting | IFRS reporting | ||||||
|---|---|---|---|---|---|---|---|
| USD thousands | 30.09.2020 | 30.09.2019 | 31.12.2019 | 30.09.2020 | 30.09.2019 | 31.12.2019 | |
| Cost as of 01.01 | 82 306 | 27 246 | 27 246 | 82 306 | 27 246 | 27 246 | |
| Capitalized costs | 11 800 | 43 350 | 55 060 | 11 800 | 43 350 | 55 060 | |
| Cost as of 30.09/31.12 | 94 106 | 70 596 | 82 306 | 94 106 | 70 596 | 82 306 | |
| Accumulated amortization and impairment as of 01.01 |
(52 554) | (9 423) | (9 423) | (35 093) | - | - | |
| Amortization for the period | (2 331) | (7 182) | (8 038) | (1 828) | - | - | |
| Impairment for the period | - | - | (35 093) | (17 964) | - | (35 093) | |
| Accumulated amortization and impairment as of 30.09/31.12 |
(54 885) | (16 605) | (52 554) | (54 885) | - | (35 093) | |
| Carrying value at 01.01 | 29 752 | 17 823 | 17 823 | 47 213 | 27 246 | 27 246 | |
| Carrying value at 30.09/31.12 | 39 221 | 53 991 | 29 752 | 39 221 | 70 596 | 47 213 | |
| Net MC revenues | 798 | 10 420 | 12 799 | 27 404 | - | - | |
| Change in net book value | 32 % | 203 % | 67 % | -17 % | 159 % | 73 % |
All investments in 2020 is related to the multi-client project in the Middle East. This project has a cap on late sales revenue in partner share to AGS at USD 13.7 million, with carrying amount as of September 2020 at USD 11.8 million.
AGS entered early in 2019 into an agreement with TGS to invest in certain multi-client projects. From this time, and with retroactive effect for 2018. The agreement from 2019 is classified as joint operation where the parties have rights to the assets and liabilities of the investment. AGS recognizes its relative share of the investment in multi-client data and its share of revenue, amortization, and costs. Carrying amount as of September 2020 at USD 27.4 million for Utsira.
The ultimate Parent of the Group is Axxis Geo Solutions ASA.
The Group transactions and balances with other Group companies in 2019 and 2020 are mainly related to time charter for vessels and consultancy fees. See the figure below for balances with related parties:
| USD thousands | YTD Sep 2020 |
YTD Sep 2019 |
Full Year 2019 |
|---|---|---|---|
| Hired vessels: | |||
| Lease payment Havila Fortune - controlled by Havila Holding AS | (3 286) | (3 946) | (4 756) |
| Lease payment Havila Aurora - controlled by Havila Holding AS | (3 377) | (1 708) | (2 997) |
| Lease payment Geo Caspian - controlled by Havila Holding AS | (31) | (3 267) | (3 267) |
| Ship management and other operating services: | |||
| Remøy Shipping controlled by W2 Seismic AS | - | (197) | (259) |
| Evotec AS - controlled by Rome AS * | - | - | (985) |
| Consultancy and accounting services: | |||
| Impact Geo Solutions controlled by Bjarte Bruheim * | - | (324) | (444) |
| Rome AS controlled by Jogeir Romestrand * | - | (109) | (205) |
| Hasund AS - controlled by Bjørnulf AS | - | (125) | 180 |
| Energy Consulting AS controlled by Christian Huseby ** | (125) | - | - |
| Interest and guarantee payments: | |||
| Interest ONGC guarantee to Havila Holding AS | - | (83) | (83) |
| Interest on shareholder loan from Havila Holding AS | - | (39) | (39) |
| Interest on shareholder loan from TRH AS | - | (11) | (11) |
| Interest on shareholder loan from Songa Investments AS | - | (36) | (39) |
| Balances with related parties | |||
| USD thousands | 30.09.2020 | 30.09.2019 | 31.12.2019 |
| Account payables: | |||
| Impact Geo Solutions controlled by Bjarte Bruheim * | - | 35 | 123 |
| Rome AS * | - | 66 | 17 |
| Evotec AS - controlled by Rome AS * | - | 450 | 863 |
| Havila Ships AS controlled by Havila Holding AS | 749 | 3 257 | 6 019 |
* The previously shareholders of AGS ASA, Bjarte Bruheim and Rome AS with zero shares as of September 2020 have both delivered consultancy services previously to the Board in addition to being Chairman/Board members of AGS AS/AGS ASA respectively. All work performed by these related parties was regulated in separate consultancy agreements. Both agreements were cancelled 30.09.2019.
** As of 30th September 2020, Christian Huseby was elected as Chairman of the Board at the Annual General Meeting, in addition to delivering of consultancy services from April 2020.
| The Company's share capital per | Number of | Par Value per | NOK |
|---|---|---|---|
| 30.09 include the following: | shares | share | |
| Ordinary shares (one share = one vote) |
58 821 018 | 0,10 | 5 882 102 |
| Name | Number of shares | Ownership share |
|---|---|---|
| 1 HAVILA HOLDING AS | 15 549 434,00 | 26,4% |
| 2 RONJA CAPITAL AS | 2 065 257,00 | 3,5% |
| 3 GRØNLAND | 1516454,00 | 2,6% |
| 4 JOHS. HANSEN REDERI AS | 1 413 345,00 | 2,4% |
| 5 Danielsen | 1 173 166,00 | 2,0% |
| 6 Nordnet Bank AB | 1071156.00 | 1.8% |
| 7 GRØNSTAD | 894 598,00 | 1,5% |
| 8 J.P. Morgan Securities LLC | 703 618,00 | 1,2% |
| 9 DAGUSIKI HOLDING AS | 680 000,00 | 1,2% |
| 10 NÆRINGSLIVETS HOVEDORGANISASJON | 671 343,00 | 1,1% |
| 11 STOKKANKER AS | 600 949.00 | 1,0% |
| 12 SAHMAN | 541 581,00 | 0,9% |
| 13 MEROUR | 541 531,00 | 0,9% |
| 14 JAKOB HATTELAND HOLDING AS | 500 000,00 | 0,9% |
| 15 TECHMA MANAGEMENT AS | 500 000,00 | 0.9% |
| 16 ACTION AS | 454 850,00 | 0,8% |
| 17 ALCIDES SHIPPING AS | 450 712,00 | 0,8% |
| 18 LØVLAND | 435 000,00 | 0.7% |
| 19 SEAWALK AS | 420 000,00 | 0,7% |
| 20 Deutsche Bank Aktiengesellschaft | 400 028,00 | 0,7% |
| Total | 30 583 022 | 52,0% |
| Total other shareholders | 28 237 996 | 48,0% |
| Total number of shares | 58 821 018 | 100,0% |
Axxis Geo Solutions ASA (AGS or the Company) is a public company listed on Oslo Axess and traded under the ticker AGS. The address of its registered office is Strandveien 50, 1366 Lysaker, Norway. More information on www.axxisgeo.com
The interim consolidated financial statements of AGS have been prepared in accordance with International Financial Reporting Standards (IFRS) IAS 34 Interim Financial Reporting as approved by EU and additional requirements in the Norwegian Securities Trading Act. The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with AGS' annual report for 2019 which is available at www.axxisgeo.com. The same accounting policies and methods of computation are followed in the interim financial statements as in the annual financial statements for 2019, except for the adoption of new standards effective as of January 1, 2020.
The Group presents its consolidated financial reports in USD from January 1, 2020, which also will be the functional currency of the Parent. For presentation in consolidated accounts, the monetary assets and liabilities has been converted and translated into USD at the rate of exchange prevailing at the reporting date each quarter and historical value has been used for all other balance sheet items. The statement of profit or loss are converted and translated into USD at the average exchange rate for each quarter, except for depreciation and amortization at historical values. Exchange rate differences arising from the translation to presentation currency are recognized in Other Comprehensive Income.
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 2020, but do not have an impact on the Company's interim condensed consolidated financial statements.
The European Securities and Markets Authority ("ESMA") issued guidelines on Alternative Performance Measures ("APMs") that came into force on 3 July 2016. The Company has defined and explained the purpose of the APMs in the paragraphs below.
The alternative performance measures presented by AGS may be determined or calculated differently by other companies.
EBITDA means earnings before interest, taxes, amortization, depreciation, and impairments. AGS uses EBITDA because it is useful when evaluating operating profitability as it excludes amortization, depreciation and impairments related to investments that occurred in the past. Also, the measure is useful when comparing the Company's performance to other companies.
| Segment reporting | IFRS reporting | |||
|---|---|---|---|---|
| USD thousands | Q3 2020 | Q3 2019 | Q3 2020 | Q3 2019 |
| Profit (loss) for the period | (6 143) | (1 128) | 3 395 | (3 634) |
| Income tax (expense) | (15) | 1 070 | (15) | 1 070 |
| Net financial items | 1 134 | (2 075) | 985 | (777) |
| Depreciation & impairment PPE | (1 226) | (1 378) | (1 281) | (1 431) |
| Amortization & impairment of | ||||
| multi-client and goodwill | (1 828) | (6 522) | (19 792) | - |
| Operating profit (loss) before | ||||
| depreciation and amortization | ||||
| (EBITDA) | (4 208) | 7 777 | 23 499 | (2 496) |
| Segment reporting | IFRS reporting | |||
| USD thousands | YTD Sep 2020 | YTD Sep 2019 | YTD Sep 2020 | YTD Sep 2019 |
| Profit (loss) for the period | (3 883) | 6 429 | 5 356 | 3 776 |
| Income tax (expense) | (9 941) | (1 991) | (9 941) | (1 991) |
| Net financial items | 1 055 | (4 042) | 902 | (2 970) |
| Depreciation & impairment PPE | (4 199) | (3 669) | (4 366) | (3 814) |
| Amortization & impairment of | ||||
| multi-client and goodwill | (2 331) | (7 328) | (19 792) | - |
| Operating profit (loss) before | ||||
| depreciation and amortization | ||||
| (EBITDA) | 11 532 | 23 460 | 38 553 | 12 551 |
| Segment reporting | IFRS reporting | |||
| USD thousands | Full Year 2019 | Full Year 2019 | ||
| Profit (loss) for the period | (40 806) | (46 477) | ||
| Income tax (expense) | (3 468) | (4 576) | ||
| Net financial items | (4 271) | (6 039) | ||
| Depreciation & impairment PPE | (5 879) | (6 080) | ||
| Amortization & impairment of | ||||
| multi-client and goodwill | (44 692) | (35 093) | ||
| Operating profit (loss) before | ||||
| depreciation and amortization | ||||
| (EBITDA) | - | 17 504 | 5 310 |
For full overview of Segment vs IFRS see note 2 Segment Reporting.
The segment reporting is based on the accounting principles used in the internal reporting and deviates from IFRS. In the segment reporting, multi-client pre-funding revenues are recognized based on the percentage of completion method, compared to delivery of processed data according to IFRS. In the segment reporting, there is amortization for the multi-client library equal to percentage of recognized revenue according to budget, while the financial statements are based on a principle where amortization begins when the library is completed.
Earnings before interest and tax is an important measure for AGS as it provides an indication of the profitability of the operating activities. The EBIT margin presented is defined as EBIT (Operating Profit) divided by net revenues.
The multi-client prefunding percentage is calculated by dividing the multi-client prefunding revenues, as per segment reporting, by the operational investments in the multi-client library, excluding investments related to projects where payments to the vendors are contingent on sales (risk-sharing investments). The multi-client prefunding percentage is considered an important measure as it indicates how the Company's financial risk is reduced by multi-client investments.
Backlog is defined as the total value of future segment revenue on signed customer contracts, letter of awards or where all major contracts terms are agreed. AGS believes that the backlog figure is a useful measure in that it provides an indication of the amount of customer backlog and committed activity in the coming periods.
| Njål Sævik | ________ Vibeke Fængsrud Director |
|
|---|---|---|
| ________ | ||
| Director | ||
| Ronny Bøhn | ||
| Director | ____ __ Eirin Inderberg _____ |
CEO
Axxis Geo Solutions (AGS) is a pure-play ocean bottom node seismic company uniquely positioned to pursue both contract and multi-client seismic. AGS specializes on delivering tailored seismic solutions and flexible project management and execution to oil and gas companies world-wide. Its operations are based on a scalable asset-light setup through chartering of vessels and nodes to complete seismic surveys.
The information included herein contains certain forward-looking statements that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future. These statements are based on various assumptions made by the Company, which are beyond its control and are subject to certain additional risks and uncertainties. The Company is subject to a large number of risk factors including but not limited to the demand for seismic services, the demand for data from our multi-client data library, the attractiveness of our technology, unpredictable changes in governmental regulations affecting our markets and extreme weather conditions. For a further description of other relevant risk factors, we refer to our Annual Report for 2019. As a result of these and other risk factors, actual events and our actual results may differ materially from those indicated in or implied by such forward-looking statements. The reservation is also made that inaccuracies or mistakes may occur in the information given above about current status of the Company or its business. Any reliance on the information above is at the risk of the reader, and AGS disclaims any and all liability in this respect.
| Houston, | ||
|---|---|---|
| Oslo, Norway | United States | |
| Strandveien 50, | 14511 Old Katy Road, | |
| 1366 Lysaker | Suites 150, | |
| Houston, TX 77079 |
+47 480 95 555 +1 281 810 2550
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