Fjord Defence Group ASA

Quarterly Report • Aug 30, 2019

Songa Bulk ASA Financial Report H1 2019

CONTENTS

SONGA BULK
FIRST HALF YEAR 2019 FINANCIAL HIGHLIGHTS
FIRST HALF YEAR 2019 EVENTS
SUBSEQUENT EVENT
FIRST HALF YEAR 2019 RESULTS
FORWARD-LOOKING STATEMENTS
FINANCIAL INFORMATION
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
CONDENSED STATEMENT OF FINANCIAL POSITION
CONDENSED STATEMENT OF CHANGES IN EQUITY
CONDENSED STATEMENT OF CASH FLOWS
NOTES
RESPONSIBILITY STATEMENT

SONGA BULK

First Half Year 2019 Highlights, Events and Results

FIRST HALF YEAR 2019 FINANCIAL HIGHLIGHTS

• The Company reports a net loss of \$0.3 million in H1 2019 compared to net loss of \$1.6 million in H1 2018.

FIRST HALF YEAR 2019 EVENTS

• On 4 January 2019 the Company distributed a cash dividend of NOK 2.25 per share to the shareholders, equalling a total distribution of \$9.3 million.
• On 29 January a total of 23 820 shares of Star Bulk were distributed to the shareholders in connection with the dividend resolution on 6 July 2018, the share capital reduction resolved on 5 June 2018 and the extraordinary dividend resolved on 3 October 2018. These shares were distributed to shareholders that did not submit the representation and warranties letter within the initial deadline dates for distributions but have submitted such letter prior to 18 January 2019.
• On 16 April 2019 Songa Bulk ASA and Axxis Geo Solutions AS (AGS) entered into a joint merger plan, pursuant to which Songa Bulk will assume all assets, rights and obligations of AGS against issuance of shares in Songa Bulk to existing shareholders in AGS.

SUBSEQUENT EVENTS:

On 2 July 2019, the completion of the Merger between Songa Bulk ASA and Axxis Geo Solutions AS was registered with the Norwegian Register of Business Enterprises. As approved by Songa Bulk's annual general meeting on 16 May 2019, conditional on completion of the Merger, the following also took effect:

New company name: Axxis Geo Solutions ASA

The Company's shares will from and including 3 July 2019 be listed on Oslo Axess with the new company name and the new ticker "AGS". The Company's new website is http://www.axxisgeo.com/. The ISIN number is unchanged.

FIRST HALF YEAR 2019 RESULTS

in \$ thousands
Financial performance	H1 2019	H1 2018
Loss from continuing operations	-100	-100
Loss from discontinued operations	-211	-1 493
Net loss	-311	-1 593
Financial position	30 June 2019	31 December 2018
Total assets	627	11 187
Cash and cash equivalents	522	10 570
Total equity	488	799
Cash flow statement	H1 2019	H1 2018
Net cash flow from operating activities from discontinued operations	-346	9 462
Net cash flow from investing activities from discontinued operations	-	-30 781
Net cash flow from financing activities from discontinued operations	-9 702	-3 586
Net change in cash and cash equivalents from discontinued operations	-10 048	-24 904

Financial performance

Net loss in H1 2019 was \$0.3 million, compared to a loss of \$1.6 million in H1 2018. Except for a small amount for general and administrative expenses, being the cost of owning and operating an empty company, all items are considered being results from discontinued operation and classified accordingly.

Financial position

The Company's total assets amounted to \$0.6 million at 30 June 2019, down from \$11.2 million at 31 December 2018, mainly through distribution of dividends.

Cash flow

Cash and cash equivalents at the end of H1 2018 were \$0.5 million, down from \$10.6 million on year end 2018.

FORWARD-LOOKING STATEMENTS

Forward-looking statements presented in this report are based on various assumptions. The assumptions were reasonable when made but are subject to uncertainties and contingencies that are difficult or impossible to predict Songa Bulk ASA cannot give assurances that expectations regarding the outlook will be achieved or accomplished.

FINANCIAL INFORMATION

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

in \$ thousands	Note	H1 2019	H1 2018
		(Unaudited)	(Unaudited)
General and administrative expenses		100	100
Total operating expenses		100	100
Operating loss		-100	-100
Loss before taxes		-100	-100
Tax expense		-	-
Loss from continuing operations	4	-100	-100
Loss from discontinued operations		-211	-1 493
Net loss		-311	-1 593
Total comprehensive loss		-311	-1 593
Basic and diluted earnings from
discontinued operations – \$ per share		-0.009	-0.044
Total basic and diluted earnings – \$ per
share		-0.009	-0.044

CONDENSED STATEMENT OF FINANCIAL POSITION

in \$ thousands	Note	30 June 2019	31 December 2018
		(Unaudited)	(Unaudited)
Other receivables		15	70
Financial assets through profit or loss		90	548
Cash and cash equivalents		522	10 570
Total current assets		627	11 187
TOTAL ASSETS		627	11 187
Share capital		121	121
Accumulated profit		367	678
Total equity	3	488	799
Trade payables		-	100
Income taxes payable		-	211
Dividends payable		-	9 702
Other liabilities		139	375
Total current liabilities		139	10 388
Total liabilities		139	10 388
TOTAL EQUITY AND LIABILITIES		627	11 187

CONDENSED STATEMENT OF CHANGES IN EQUITY

in \$ thousands	Share capital	Share premium	Other paid-in capital	Retained earnings	Total equity
	(Unaudi	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
	ted)
Incorporation	3	-	-	-	3
Share issuance 4 November 2016	9 082	65 188	-	-	74 270
Share issuance costs	-	-1 432	-	-	-1 432
Warrants issued to employees	-	-	400	-	400
Net loss 2016	-	-	-	-2 036	-2 036
Equity 31 December 2016	9 085	63 756	400	-2 036	71 205
Share issuance 31 January 2017	600	4 400	-	-	5 000
Share issuance 17 February 2017	11 935	88 311	-	-	100 246
Share issuance costs	-	-2 848	-	-	-2 848
Warrants issued to employees	-	-	174	-	174
Net profit 2017	-	-	-	388	388
Equity 31 December 2017	21 620	153 619	574	-1 648	174 165
Dividend 22 March 2018	-	-3 586	-	-	-3 586
Dividend 6 July 2018		-150 033	-574	-393	-151 000
Share capital reduction 17 August 2018	-21 499	-	-	-	-21 499
Extraordinary dividend 3 October 2018	-	-	-	-10 446	-10 446
Extraordinary dividend 19 December 2018				-9 321	-9 321
Net profit 2018	-	-	-	22 486	22 486
Equity 31 December 2018	121	-	-	678	799
Net loss H1 2019	-	-	-	-311	-311
Equity 30 June 2019	121	-	-	367	488

CONDENSED STATEMENT OF CASH FLOWS

in \$ thousands	H1 2019	H1 2018
	(Unaudited)	(Unaudited)
Profit before taxes	-311	-1 593
Depreciation	-	4 654
Change in inventories	-	-1 986
Net change in trade receivables/payables	-100	2 183
Change in financial liabilities at fair value through profit or loss	-	-490
Net change in other current items	65	7 189
Net cash flow from operating activities from discontinued operations*	-346	9 462
Purchase of vessels	-	-28 355
Dry docking paid	-	-2 426
Net cash flow from investment activities from discontinued operations	-	-30 781
Paid dividends	-9 702	-3 586
Net cash flow from financing activities from discontinued operations	-9 702	-3 586
Net change in cash and cash equivalents	-10 048	-24 904
Cash and bank deposits at beginning of period	10 570	41 017
Cash and bank deposits at end of period	522	16 113

*included in the net cash flow from operating activities from discontinued operations is \$100 thousand in operating expenses from continuing operations.

NOTES

Note 1 Accounting policies

These interim financial statements are prepared in accordance with IAS 34 Interim Financial Reporting.

The condensed interim financial reporting should be read in conjunction with the annual financial statements for the year ended 31 December 2018, which have been prepared in accordance with IFRS, as adopted by the EU.

New or amendments to standards

The following new or amendments to standards and interpretations have been issued and become effective in years beginning on or after 1 January 2019, assuming European Union adoption: IFRS 16 – Leases.

IFRS 16 was issued in January 2016. It will result in almost all leases being recognized on the balance sheet by lessees, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. The only exceptions are short-term (less than 12 months) and low-value leases.

Songa Bulk ASA has made a preliminary assessment showing no material effects at implementation of the standard.

Note 2 Share capital and shareholders

As at 30 June 2019, the Company's share capital consists of 35 860 000 shares, each at a nominal value of NOK 0.02789. All issued shares are fully paid.

Note 3 Discontinued operation

Financial information relating to the discontinued operation:

	H1 2019	H1 2018
Operating income	-	29 942
Operating expenses	258	20 415
Operating profit (-loss)	-258	9 527
Net financial income (-expenses)	47	-11 019
Loss before taxes	-211	-1 493
Tax expense	-	-
Net loss of discontinued operation	-211	-1 493

Note 4 Financial instruments

Set out below is a comparison by category for carrying amounts and fair values of all of the Company's financial instruments that are carried in the financial statements. The estimated fair value amounts of the financial instruments have been determined using appropriate market information and valuation techniques.

	30 June 2019		31 December 2018
In USD	Carrying amount	Fair value	Carrying amount	Fair Value
Financial assets:
Other receivables*	15	15	68	68
Financial assets through profit or loss	90	90	548	548
Cash and cash equivalents	522	522	10 570	10 570
Financial liabilities:
Trade payables	-	-	100	100
Income taxes payable	-	-	211	211
Dividends payable	-	-	9 702	9 702
Other current liabilities	139	139	375	375

*The difference between the balance sheet item other receivables and other receivables in the table above is prepaid expenses which are not considered a financial instrument.

Fair value estimation

The different levels for fair value estimation have been defined as follows:

Level 1: Quoted prices 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 or indirectly

Level 3: Unobservable input for the asset or liability

Fair value equals carrying value for all financial instruments. Cash and cash equivalents and financial assets through profit or loss are valued at level 1.

Note 5 Related party transactions

The Company has purchased corporate services from Arne Blystad AS under the corporate service agreement as mentioned in the annual report for 2018.

RESPONSIBILITY STATEMENT

We confirm that, to the best of our knowledge, the condensed set of financial statements for the first half year 2019, which has been prepared in accordance with IAS 34 Interim Financial reporting gives a true and fair view of the Company's consolidated assets, liabilities, financial position and result of operations, and that the first half 2019 report includes a fair review of the information required under the Norwegian Securities Trading Act section 5-6 fourth paragraph.

Lysaker, August 29, 2019

Chairman Board member

Board member Board member

Board member Board member

Nina Skage Board member

Rolf Rønningen Jogeir Romestrand

Njål Sævik Vibeke G Fængsrud

Fredrik Platou Eirin M. Inderberg