Annual Report • Apr 16, 2021
Annual Report
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| BOARD OF DIRECTORS REPORT | |
|---|---|
| CORPORATE RESPONSIBILITY | |
| RESPONSIBILITY STATEMENT | |
| CORPORATE GOVERNANCE | |
| CONSOLIDATED FINANCIAL STATEMENT | |
| - AXXIS GEO SOLUTIONS GROUP | |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | |
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |
| CONSOLIDATED STATEMENT OF CASH FLOW | |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | |
| FINANCIAL STATEMENTS - | |
| AXXIS GEO SOLUTIONS ASA | |
| STATEMENT OF COMPREHENSIVE INCOME | |
| STATEMENT OF FINANCIAL POSITION | |
| STATEMENT OF FINANCIAL POSITION | |
| STATEMENT OF CHANGES IN EQUITY | |
| STATEMENT OF CASH FLOW | |
| NOTES TO THE FINANCIAL STATEMENTS | |
| AUDITORS REPORT |
Axxis Geo Solutions Group comprises Axxis Geo Solutions ASA (referred to as the "Company" or the "Parent") and its subsidiaries (together referred to as the "Group" or "AGS"). Axxis Geo Solutions ASA is a public limited company incorporated in Norway. The Company is listed on EURONEXT EXPAND OSLO and traded under the ticker Axxis.
The Company's registered main office is at Strandveien 50, 1366 Lysaker, Norway. Further, the Group also has operational offices in Houston, USA and Cairo, Egypt.
The Group is engaged in the international geophysical industry and focuses its activities in the Ocean Bottom Node ("OBN") segment of the marine seismic market.
The Group's business strategy is to secure proprietary OBN contracts and develop multi-client OBN programs through an asset light model where vessels, personnel and equipment are leased in on a cost-efficient basis. The asset light model, along with the Company's operational efficiency, gives a competitive advantage when bidding for contracts.
The Group specializes in delivering tailored seismic solutions, flexible project management and execution to oil and gas companies world-wide.
The consolidated financial statements are prepared in accordance with International Financial Reporting Standards («IFRS») as adopted by the European Union («EU»). Following the application of the IFRS 15 accounting standard for revenues, multi-client pre-funding revenues are not recognized under the 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 2.3 Alternative Performance Measures ("APM") 2.3 EBITDA, note 3 Segment, note 4 Revenue, and note 11B Multi-client library, shows the deviation from IFRS.
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.
From 1 January 2020 the parent company changed its functional currency from NOK to USD. This change is accounted for prospectively with effect from 1 January 2020. Further the group also changed the presentation currency from NOK to USD from 1 January 2020. The change in presentation currency has been accounted for retrospectively, similar to a change in accounting policy. The Group has restated prior periods for this voluntary presentational change in line with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, from 1 January 2019. This point in time represents the earliest date from which it was practicable to perform a restatement, given the lack of sufficiently reliable data for earlier periods. As a consequence, foreign currency translation gains or losses prior to 2019 has been disregarded, with the FCT effects first calculated from 1 January 2019 onwards. In addition, the Group has included a statement of financial position at the beginning of the comparative period, i.e. as of 1 January 2019, in line with IAS 1, Presentation of Financial Statements.
The Group presents its consolidated financial reports in USD. For presentation in consolidated accounts, the monetary assets and liabilities have been converted and translated into USD at the rate
of exchange prevailing at the reporting date each quarter. Historical value has been used for all other balance sheet items. The statement of profit or loss is converted and translated into USD at the average exchange rate for each quarter, except for depreciation and amortization which are based on historical values. Exchange rate differences arising from the translation to presentation currency are recognized in Other Comprehensive Income.
The 2020 Group's revenues of USD 92.8 million is higher than the previous year's revenues of USD 70.7 million. Revenues for the full year of 2020 is mainly related to contract work in Egypt and the North Sea. In addition under IFRS, the pre-funding of USD 27.4 million being booked as contract liability in 2019 in the balance sheet, was reclassified as pre-funding revenues following the delivery of the Utsira data processing in September 2020. The Utsira multi-client library had two late sales with AGS' share being USD 1.1 million. The revenues in 2019 was related to contract work in India, Dubai and Brazil.
The 2020 Group's cost of sales (COS) amounted to USD 52.3 million compared to USD 58.6 million during the same period in 2019. The largest portion of COS for the full year of 2020 is related to the projects in the Egypt and the North Sea. In addition, the multi-client project in Egypt has been capitalized with USD 10.6 million. COS for 2019 included USD 7.4 million related to idle time in Malta and the remaining amount related to the contracts in Dubai and Brazil. In addition, USD 55.1 million was capitalized related to the multi-client Utsira project.
The 2020 Group's personnel expenses and other operating expenses amounted to USD 7.1 million compared to USD 6.8 million during the same period of last year. Legal and consultants fee was USD 2.8 million for the full year 2020, compared to USD 2.2. million in 2019.
The 2020 Group's depreciation and write downs of equipment were USD 5.9 million compared to USD 6.1 million in 2019. The write down in 2020 was USD 0.3 million. There were no new investments in equipment in 2020.
According to IFRS, the investment related to multi-client surveys are not amortized until the data is ready for sale. The data processing of the multi-client 3D OBN Utsira survey was completed in September 2020, and the Group started linear amortization over 4 years from Q3 2020. The straight line amortization of Utsira was USD 3.6 million for 2020. As of September 2020, the IFRS value of the multi-client survey Utsira was impaired with USD 18.0 million, the value is equal to the segment value.
No impairment charges have been made in 2020 for the vessel Neptune Naiad, the node handling systems or the seismic equipment. There has not been any impairment of the multi-client survey in Egypt. As of September 2020, the IFRS value of the multi-client survey Utsira was impaired with USD 18.0 million. In 2019, the multi-client survey Utsira was impaired with USD 35.1 million, based on net present value of the library and expectations of future sales both for IFRS and segment value. There were no impairment charges for the vessel Neptune Naiad, nor the node handling systems owned by the Group or the seismic equipment in 2019.
EBITDA for the Group in 2020 was USD 33.4 million compared to USD 5.3 million for 2019. The contract work had a positive effect on the EBITDA for 2020. Another impact on EBITDA was lower activity and
lower cost due to cost reduction measures implemented. In 2019, mobilization and idle time between jobs had a negative effect on EBITDA.
EBIT for the Group in 2020 was USD 5.8 million compared to USD -35.9 million in 2019. EBIT is impacted by the same factors as described above for EBITDA. In addition, EBIT for 2019 was negatively impacted by the impairment of the multi-client library.
Net financial expense was USD 1.9 million in 2020 compared to net financial expense of USD 6.0 million in 2019. The improvement is mainly related to the fair value estimate of the converted loans which has been calculated and booked as a financial gain of USD 3.8 million. Additionally, the improvement is related to a lower currency loss last year compared to 2020. Financial expenses during 2020 includes interest cost of USD 2.1 million for additional debt in 2020, and USD 0.4 million in penalty interest of unsecured debt.
The corporate income tax in Norway is 22% in 2020. Income tax expense for 2020 amounted to USD 7.1 million compared to income tax expense of USD 4.6 million for the same period in 2019. The tax expense in 2020 represents mainly withholding tax and corporate tax in Egypt. No deferred tax asset has been recorded related to tax losses carried forward at December 31, 2020.
For 2020 the Group had a loss of USD 3.1 million compared to a loss of USD 46.5 million for the same period in 2019.
As of December 31, 2020, AGS had total assets of USD 54.5 million, compared to total assets of USD 93.8 million as of December 31, 2019.
Total non-current assets decreased from USD 64.9 million in 2019 to USD 48.0 million in 2020. This is attributed to a net decrease in the multi-client library of USD 11.0 million and decrease of USD 5.9 million in fixed assets.
Total current assets decreased from USD 28.9 million in 2019 to USD 6.5 million in 2020. The decrease is driven by trade receivables and other current asset with USD 26.2 million, offset by increase in cash of USD 4.4 million. Cash balance was USD 5.9 million as of December 31, 2020.
The Group's equity was negative of USD 7.9 million at December 31, 2020 versus negative of USD 4.7 million as of December 31, 2019. The negative equity ratio is -14.4% as of December 31, 2020 compared to -5.0% for the same period in 2019. The Board has secured additional equity in the range of USD 17 -20 million which will be available to the Company to the extent a successful reconstruction is completed (see further information under "Events after the reporting period").
Total non-current liabilities increased from USD 0.1 million as of December 31, 2019 to USD 17.4 million as of December 31, 2020 related to the issuance of the Company's current bond loan. The bond loan includes a minimum cash covenant of USD 2.0 million. The covenant is fulfilled as of December 2020. The Company received a waiver of scheduled interest payment related to the bond loan per 30 November 2020, whereby the scheduled cash interest payment was added to the principal of the bond loan. Fair value of the converted loans, both unsecured loan and bond loan, has been calculated and booked as financial gain which will be booked as amortized cost on the loans going forward. The amortized cost from the fair value evaluation in 2020 was USD 1.2 million. The Company has received waivers from the two covenants for all the quarters in 2020, including year end 2020.
These two financial covenants are (i) liquid assets of not less than 120% of the outstanding loan and (ii) equity ratio of 35% or more. Since waivers have not been obtained for coming 12 months, the secured debt towards Eksportkreditt Norge AS has been reclassified to short-term debt.
The current portion of long-term debt amounted to USD 16.6 million as of December 2020; USD 1.2 million in respect of debt towards Eksportkreditt Norge AS, USD 0.1 million in respect of office leases, USD 9.3 million in respect of unsecured debt and USD 6.0 million in respect of the bond loan.
Total current liabilities as of December 31, 2020 amounted to USD 44.9 million, compared to USD 98.4 million as of December 31, 2019. A decrease of USD 29.4 million of the current liabilities is due to trade payables having been converted to loan. In addition, contract liability related to pre-funding revenue for Utsira was allowed booked as revenue in 2020, leading to a decrease of current liabilities with USD 22.7 million. Other current liabilities decreased by USD 15.5 million in 2020. This item includes project related accruals, taxes and VAT and the promissory loan note in favor of TGS of USD 6.6 million per December 2020. The decreases are offset by an increase in the current portion of long-term debt by USD 14.1 million, ending with a balance of USD 16.6 million per December 31, 2020.
The Group's cash flow from operating activities in 2020 was USD 18.9 million, compared to USD 24.4 million at the same period in 2019. The reduction in operating cash flow compared to 2019 was primarily a result of idle time after the Egypt and North Sea projects. The latter ended in July, whereas Neptune Naiad was warm-stacked per December 2020. In addition as offset, trade payables have been converted to loans with USD 34.3 million in 2020.
The Group's cash outflow from investing activities in 2020 amounted to USD 10.4 million, compared to USD 61.6 million in the same period in 2019. The main investments in 2020 were in the multi-client survey in Egypt of USD 10.6 million, compared to the Group's investment in 2019 of the multi-client survey Utsira of USD 55.1 million, and in node handling equipment of USD 6.9 million. To the extent the proposed reconstruction (see note 26 Events after the reporting period) is completed, the Group will have reasonable liquidity to finance future investments.
The Group's cash flow from financing activities in 2020 was negative USD 4.0 million, compared to positive USD 30.8 million in the same period in 2019. Payment of instalments and interest paid of USD 4.0 million in 2020. In 2019, net proceeds from new equity were USD 34.2 million offset by payment of instalments and interest paid of USD 3.3 million.
Axxis Geo Solutions ASA is the parent company of the Group.
In 2020, Axxis Geo Solutions ASA reported a loss after tax of USD 5.4 million, compared to a loss of USD 40.5 million in 2019. The reduction of loss this year is significantly impacted by impairment of shares in subsidiaries and accruals for impairment of intercompany receivables of USD 42.9 million in 2019.
At year end 2020, Axxis Geo Solutions ASA had total assets of USD 43.0 million, compared to USD 61.1 million at the end of 2019.
As of December 31, 2020, Axxis Geo Solutions ASA has a total negative equity of USD 4.5 million, compared to a positive equity of USD 0.9 million at the end of 2019. The equity ratio was -10.5%, compared to 1.5% at the end of 2019. The Board has secured additional equity in the range of USD 17
-20 million which will be available to the Company to the extent a successful reconstruction is completed (see further information under "Events after the reporting period").
The financial statements for 2020 are based on the assumption of going concern.
The Company has filed for court protected reconstruction on 16 February 2021. This filing provides protection from bankruptcy and allows for continued operation under court protection. The Company has put forth a reconstruction proposal to the creditors (see note 26 Events after the reporting period) and a restructuring as outlined by the proposal will provide the Company sufficient working capital for continued operation. However, the Company will still be dependent on securing new seismic survey contracts as well as multi-client late sales.
The Company has implemented a smart-stack strategy and thereby significantly reduced its cash burnrate.
The Company currently reports a negative common equity and total current liabilities exceed total current assets per 31 December 2020.
In light of the current reconstruction efforts, there is significant uncertainty with respect to the going concern assumption. Should the reconstruction proposal not be approved, the going concern assumption will most likely not be applicable and balance sheet items would be significantly impaired.
The Group prepares and maintains a rolling P&L and cash forecast, in addition to key balance sheet items (trade payables, long-term debt, and cash). The forecast is based on the assumed restructuring of the Company's balance sheet as a part of the proposed reconstruction (see note 26 Events after the reporting period. Management's operational outlook is derived from existing pipeline of opportunities as well as estimated multi-client late sales. The forecast is adjusted for the current trough in the oil and gas markets. In the Group's current forecast, cash and cash equivalents are expected to remain positive for the 12-month period following the 2020 financial statements.
The Group's cash flow forecast is based on existing firm commitments and the Group's expectations for future opportunities and the Group's corporate restructuring efforts, specifically:
The financial forecast has been prepared based on the current challenging market conditions. There are, however, risks related to the assumptions in the forecast:
The annual accounts are prepared on the assumption of a going concern. However, the Company's and the Group's financial situation is unsustainable as equity is negative and liquidity is under pressure and hence there is material uncertainty related to the going concern assumption. The Group has filed for a court-protected reconstruction and put forth a restructuring plan to its creditors. If successful in
this restructuring, the Group will strengthen its working capital and improve its liquidity. The outcome of these discussions is uncertain and the going concern assumption is subject to material uncertainty.
Management has used its best judgements in the evaluation of the going concern assumption. Although there are significant uncertainties and risk listed above related to events or conditions that might impact the future cash flows, management is of the opinion that the going concern assumption is appropriate and the accounts are prepared under the going concern assumption. If the Company is unsuccessful with the above activities, the financial statements do not reflect impairment charges or provisions that might be required if the Company or the Group was liquidated or the assets were sold in a distressed situation.
The Group is exposed to risk factors including, but not limited to, the factors described below.
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 from clients. The Group's business performance depends on production and development spending by oil and gas companies. Historically, in times of low oil price, demand in exploration spending has been reduced to a much greater extent than production related spending, where the Group is active. The Group is also affected by the current Covid pandemic and to the extent the pandemic continues, this may have a negative impact on future demand for seismic services.
Delayed or loss of payments from the Group's customers/clients may adversely impair the Group's liquidity. The concentration of the Group's customers, presently few, in the oil and gas industry may impact the Group's overall exposure to credit risk as customers may be similarly affected by prolonged changes in economic- and industry conditions. The Group evaluates the credit quality of its potential clients during contract negotiations in order to minimize the risk of payment delinquency, but no assurance can be given that the Group will be able to avoid this risk. During 2020, the Group did not experience any material receivables losses.
Liquidity risk is the risk that the Group is not able to meet its payment obligations. The Company is dependent on both access to long-term funding and timely payments of receivables 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 other financial solutions on favorable terms and in amounts necessary to conduct its on-going and future operations, should this be required. 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 as has been the case for 2020. The Group took action to convert some of its accounts payable debt to long-term debt with a bond loan of USD 24.7 million and an unsecured loan of USD 9.6 million. In February 2021 the Company filed for court protected reconstruction and sufficient liquidity for 2021 is dependent on successful outcome of such reconstruction and new equity to be raised. The Board has secured additional equity in the range of USD 17 -20 million which will be available to the Company to the extent a successful reconstruction is completed (see further information under "Events after the reporting period").
The Group' presents its consolidated financial report in USD. The functional currency for the Parent Company and all of the subsidiaries is USD. The Group's significant operations in foreign countries exposes it to risks related to foreign currency movements. Currency exchange rates fluctuate due to
several factors, including international balance of payments, economic and financial conditions, government intervention, speculation and other factors. Changes in currency may affect the Group's local expenses when operating abroad. The Group's revenues are primarily in USD, while expenses are primarily in USD and NOK. As such, the Group's earnings are exposed to fluctuations in the foreign currency market. The Group has not established hedging arrangements to mitigate the possible adverse effects of this exposure.
The Group is exposed to fluctuations in the price of certain key commodities such as oil, fuel and transportation costs. The Group has not established hedging arrangements to mitigate the possible adverse effects of this exposure.
The impacts of COVID-19 on businesses across the globe is substantial and presents new challenges to normal business practices. The Group has been planning for and monitoring developments since the initial spread of the virus in early 2020 and has taken a series of steps to maintain the continuity of our services for our customers and to safeguard the health of our employees and stakeholders.
During the year, the Company received a cancellation of a small contract in the North Sea which was expected to be conducted in the second quarter of 2020. The contract revenues related to this survey was estimated at USD 1 million. The Company received a cancellation fee of 25% of the estimated revenue amount.
To the extent the pandemic continues, this may have a negative impact on future demand for seismic services.
The offshore seismic industry has from time to time experienced excess capacity and supply. The Group operates on a smaller scale than some of its competitors. Consequently, the Group may not be as financially or operationally robust to manage cyclical down-turns as its larger competitors. Further, the Group has an asset-light business model and is dependent on suppliers to ensure access to necessary equipment for its seismic operations. Such access may be difficult to obtain. In addition, the Company could be required to perform material depreciations on its balance sheet, primarily related to the value of its seismic library, which in turn would have a negative effect on the Company's profit and loss. This risk is primarily related to possible deviations in multi-client late sales relative to current estimates.
The seismic and oil service industry sees frequent changes and developments in technology. Such changes and developments can often be driven by competitors of the Company with substantial greater resources than those of the Company. The Group's technology, such as its OBN acquisition method, and any further technology under development, may not prove to be viable or efficient, and efforts to respond to technological innovations may require significant financial investments and resources. Failure by the Group to respond to changes in technology and innovations may render the Group's operations non-competitive and may have a material, negative effect on the Company's results of operation, financial condition and future prospects.
The Group is currently dependent on a limited number of suppliers which provide critical elements to the Group's operations, such as processing capacity, nodes and node handling equipment. This is expected to continue to be the case going forward. The Group currently relies on chartering vessels suited for seismic acquisition, which may in a situation of shortage of vessels involve a disadvantage towards its competitors. There can be no guarantee that there will be available vessels for charter or processing capacity for the Company's requirements in the future. Further, being highly dependent on
a limited number of suppliers, supply for nodes and node-handling equipment may impede or restrict the Group in obtaining improved terms for the supplies. If any of the foregoing occurs, it may have a material, negative effect on the Company's revenues, financial position and prospects.
The business of the Group currently only has a limited number of potential customers, and a few existing customers which provide a large part of the total revenues. This creates a risk of losing substantial revenue if one or a small number of customers are unable to perform their obligations under, or terminates, their contracts with the Group. Further, being highly dependent on a limited number of clients may impede or restrict the Group's in obtaining improved terms for its services.
The seismic acquisition operations of the Group may be exposed to extreme weather, hazardous conditions and activity in the work area. The Company's own insurance may not be adequate to cover potential losses. The Group may also have to share the production time in the survey area with another party, or stop for a period of time if own or third-party operations cause disturbance to the project or impacting safety or quality in the production. If any of the foregoing occurs, the Group will lose production time which in turn will have a negative effect on Company's revenues, financial position and prospects.
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 and the Company's assets and IP, precautions and procedures has been taken. The most common attack vector is 'phishing emails'. The Group has taken steps to improve protection of email, improve capabilities to identify ongoing malicious activities and increase employee awareness of cyber threats. Despite these efforts and precautions, no guarantee can be made against cyber attacks on the Group that can materially impact the Group's operation and financial position.
The Group business is subject to laws and regulations in various jurisdictions, and the requirements of, changes in or violations of such laws or regulations may adversely affect the Group's 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 acquisition of geophysical data is, in most jurisdictions, dependent on regulatory approval such as licenses, permits or similar which must be obtained before geophysical data may be acquired. For its multi-client projects in particular, there may be a risk that such regulatory approvals are not obtained or will only be obtained on conditions not acceptable to the Group. Should this occur with short or no advance notice, there may not be alternative employment available for the Group. This may have a negative impact on the Company's revenue and profits from operations.
The Group's multi-client business relies on a certain 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 but may be shortened during that period for reasons outside the Group's control. Any such change in business assumptions to the Group's investment in multi-client data may have a negative impact on the Company's revenues, profits and may cause impairment of remaining book values.
The total number of permanent employees in the Group were eleven at the end of 2020, compared to eight at the end of 2019, where three are temporarily laid off (furlough) since November 2020. The employee list consisted of three women and eight men in 2020 and three women and five men in
The Board of Directors consists of five members, two men and three women in both 2020 and 2019.
There have not been any serious injuries or accidents in the current or prior year. In both 2020 and 2019, the average sick day percentage for the work force was zero.
The Group's policies prohibit unlawful discrimination against employees, on account of ethnic or national origin, age, gender, sexual orientation or religion. Respect for the individual is the cornerstone of this policy and the Group also aims to treat its employees with dignity and respect.
The Company is a global leading pure-play ocean-bottom node seismic company committed to the protecting our personnel's health and wellbeing, minimizing our environmental impact, and operating in line with high ethical business practices.
The Group integrates our people, our business and the environment in which we operate into one coherent operation providing our stakeholders and shareholders sustainable and socially responsible operations and services. Our corporate responsibilities provide us the opportunity to enter new areas and operate within communities around the world, leaving behind a positive footprint.
The Group has developed policies, standards, guidelines and education materials to prepare our employees to be custodians of ethics, human rights, social matters and anti-corruption in all of our areas of operations.
The Group aims to form part of the social fabric in the areas and countries in which we operate. Our Social Responsibility Policy reflects the culture that we have grown in our company and the level of expectation of all persons representing us.
The health and wellbeing of our people is the key to our success as a company. Our diverse, multinational work force reflects our goal to be an equal opportunity employer. Equality applies to all practices and guidelines relating to the recruitment and hiring of all workers. We respect and protect the fundamental human and workers' rights in a manner consistent with the United Nations Universal Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises.
The first months of 2020 gave us a renewed sense of corporate social responsibility – in keeping our employees safe, helping our customers, and sustaining our business through the pandemic. From the onset of the pandemic outbreak of Covid 19 in early March 2020, the Group initiated a committee dedicated to navigating our way through the health risks that it presented our people. Covid 19 mitigation plans were established and implemented in all of our operations and we were successful in completing them with zero infections or illnesses.
We adhere to the local laws and regulations within the countries we operate, and respect the cultures and rights of the communities with which we interact. The Group promotes a healthy workplace by prohibiting unlawful discrimination due to gender, race, age, ethnicity, disability, sexual orientation or religion and provide fair compensation for employees' work and rewarding and recognizing their contributions. We train our diverse staff in Cultural Competence and maintain a culture of zero tolerance of any form of harassment throughout the organization.
The Group recorded 937,392 man hours in 2020 with zero industry defined recordable injuries. Our 2021 Goals and Objectives reflect improvement initiatives generated from our 2020 learnings and will be executed to maintain our record of a TRIR of zero in the coming year.
Subcontractors and their personnel are important to our operations and team. Our Subcontractor Management Standard guides our employees to review our subcontractors policies and management systems to ensure these are aligned with the Group's principles, and that they conform with our management systems, and how to address inconsistencies or non conformities where these arise.
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 operations may have. Our Policies underscore our commitment to the environment and outline our responsibilities throughout all operations. The Group's goal of zero environmental recordable incidents throughout our operations was achieved in 2020.
Our mission is to minimize our footprint wherever we work through the implementation of five key strategies at work locations:
The Group is committed to operate all activities within the spirit and letter of all laws and regulations that govern our businesses and 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. Moreover, employees have a duty to act in the best interest of the Group at all times and are empowered to intervene in any situation they feel is not appropriate through our Stop Work Policy, or to report indiscretions through our confidential anonymous reporting process.
All of the Group operations are conducted under the framework of our Integrated Operations Management System (iOMS). Our system employs a strong project management principle and covers the risk management and controls, guidelines and processes required to competently undertake our tasks. The scope of the iOMS addresses a broad range of tasks impacts or threats; that impact the wellbeing of the environment in which we work, the communities with which we interact, the employees and subcontractors as well as the business results the Group aims to achieve. By bringing together the management of key aspects of running a successful business, the iOMS achieves company-wide consistency, across all assets and activities, at every location and throughout the entire workforce.
The Group does no material research and development activity.
The Board of Directors has proposed the net loss for the Company of USD 5.4 million to be attributed to accumulated earning and other equity. The Company's negative equity as of December 31, 2020 was USD 4.5 million.
The market is showing signs of improvement and we expect to see increased activity starting in the second half of 2021. The Company has been awarded one contract in the North Sea, starting in Q3 2021, and there are several active tenders under review for 2021. Following the completion of the data processing of the Utsira OBN multi-client survey, our sales team embarked on a (digital) road show to showcase the dataset to a substantial number of potential buyers. Based on the preliminary feedback, we see several late sale opportunities for 2021.
The Company has after the reporting period received default notice from Nordic Trustee on behalf of the bondholders and from Eksportkreditt for unpaid installment and interest in January 2021. The Company is in active dialogue with the respective creditors and expect to find a solution which is aligned with the outcome of the court-protected reconstruction
The Company announced 16 February 2021 that the Company had not been able to reach agreement with all creditors in order to implement a voluntary solution to refinance the Company. Consequently, the Company filed for court protected reconstruction.
On 17 February 2021, the District Court of Asker and Bærum authorized opening of reconstruction negotiations for the Company. On 7 April 2021, the Company presented the final proposal for reconstruction by forced debt settlement. The proposal from the company involves a forced debt settlement of the Company's unsecured debt. Secured debt, up to the value of the pledged assets, is not part of the forced debt settlement. The deadline for creditor replies is 27 April 2021.
Under the court-authorized reconstruction negotiations, the Company continues normal business operations under the oversight of the Debt Restructuring Committee. Unsecured liabilities incurred prior to the opening of reconstruction negotiations are "frozen". All liabilities that are incurred thereafter shall be covered in their entirety.
Under the reconstruction proposal, Company creditors are offered the following:
It is not opened reconstruction negotiations in the subsidiaries of the Company. The Company has arranged for separate voluntary debt settlements in the subsidiaries. The Company aims to achieve a
solution whereby the bondholders also waive claims and collateral in the subsidiaries, thus avoiding insolvency proceedings in these companies.
The reconstruction will be financed through an equity issue for cash of USD 17-20million, where a group of investors on certain conditions have committed to provide the Company with USD 17 million, at a subscription price of 0.1 NOK/share. After the reconstruction is complete, the Company will have an attractive financial position and satisfactory liquidity. This forms a sound basis for continued operations.
Ongoing agreements which the Company is party to and that are not terminated during the reconstruction negotiations continue.
It is the opinion of the Company that the creditors will receive a higher recovery in the reconstruction proposal compared to alternative bankruptcy proceedings. Through bankruptcy proceedings, the Company estimates that creditors with ordinary (general and unsecured) claims would be able to achieve a dividend in the range 0–2%.
The Board of Directors and CEO of Axxis Geo Solutions ASA
[Sign.] _________________________ _________________________ _________________________ Christian Huseby Njål Sævik Vibeke Fængsrud
Chairman Director Director _________________________ _________________________ _________________________
Nina Skage Eirin Inderberg Ronny Bøhn Director Director CEO
The Board of Directors and the CEO of Axxis Geo Solutions ASA have today considered and approved the annual report and financial statements for the 2020 calendar year ended on December 31, 2020.
We confirm, to the best of our knowledge, that:
The Board of Directors and CEO of Axxis Geo Solutions ASA
[Sign.] _________________________ _________________________ _________________________ Christian Huseby Njål Sævik Vibeke Fængsrud
Chairman Director Director _________________________ _________________________ _________________________
Nina Skage Eirin Inderberg Ronny Bøhn Director Director CEO
Adopted by the Board of Directors on 16 April 2021
These Corporate Governance Policies (the "Policies") have been adopted by the Board of Directors (the "Board") of Axxis Geo Solutions 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 17 October 2018, as amended from time to time (the "NUES Code"), apply to the Company. As the Company's shares are listed on Oslo Axess, 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.
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 included in a statement of policy on corporate governance in the annual report.
The Company's corporate governance policies are based on the following main objectives:
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. In addition, the Company has adopted a manual for "Inside Information and Additional Disclosure Routines".
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: "The Company's business involves owning and/or operating vessels providing services to the oil and gas industry, including investment in other entities and businesses related thereto."
The Company shall define clear goals, strategies and risk profiles for the Company's business activities. 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 Business, Ethics and Corporate Social Responsibility The Board shall at least on an annual basis evaluate targets, strategies and risk profiles.
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.
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 at the Company's website.
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.
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.
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.
In the event of any not immaterial transactions between the Company and shareholders; a shareholder's parent company; members of the Board; members of the Management or close associates of any such parties, the Board shall obtain an independent third party evaluation of the transaction, unless the transaction in questions shall be approved by the Company's general meeting in accordance with the NCPLA. Independent third-party evaluations shall also be obtained in the event of transactions between companies in the Group where any of the companies involved have minority shareholders.
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.
The Board shall ensure that the Company's shareholders can participate at general meetings. This shall be facilitated by the following:
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:
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.
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.
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 assessments 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.
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.
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") and overall risk management.
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 deemed to be of importance and the Board has, after consideration, 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.
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 internal control shall encompass the Company's Policy etc. for how it integrates considerations related to stakeholders into its creation of value.
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:
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 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.
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, and no options shall be issued to the members of the Board.
Board members, or companies to whom they are associated, should not undertake separate assignments for the Group in addition to the Board appointment. If they nevertheless do so, the whole Board shall be informed. Fees for such additional assignments shall be approved by the Board. If remuneration has been paid above the standard Board member fee, this shall be specified in the annual report.
The Chairman has been paid NOK 1.4 million in 2020 as consultant fee.
The Company has prepared Policy for determining remuneration to the CEO and other members of the Management in accordance with Section 6-16a of the NPLCA. The Policy shall, at all times, support prevailing strategy and values of the Company.
The total remuneration to the CEO and other members of the Management consists of basic salary (main element), benefits in kind, variable salary, pension and insurance schemes.
Performance-related remuneration to the members of the Management in the form of warrants, 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 member of the Management in question may influence.
The Board prepares Policy for the remuneration of members of the Management. 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 Management. 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.
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, the 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.
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, the handling of inside information, please see Section 2 and the reference therein to the manual for "Inside Information and Additional Disclosure Routines".
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. Communications 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. The Board has established Policy for the Company's contact with shareholders outside the general meeting.
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
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.
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.
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 Board shall establish Policy for the Management regarding the use of the auditor for work not related to the statutory audit review.
The Board 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.
| USD thousands | Note | Full year 2020 | Full Year 2019 |
|---|---|---|---|
| Revenue | 3,4 | 92790 | 70744 |
| Cost of sales | 5 | (52313) | (58634) |
| Personnel expenses | 3,20 | (3388) | (2616) |
| Other operating expenses | 3 | (3691) | (4184) |
| Amortization & impairment multi-client & goodwill |
11 b | (21620) | (35093) |
| Depreciation & impairment | 11a | (5934) | (6080) |
| Operating profit (loss) (EBIT) | 5845 | (35862) | |
| Financial income | 6 | 3848 | 43 |
| Financial expenses | 6 | (5315) | (4934) |
| Currency exchange gain (loss) | 6 | (424) | (1148) |
| Profit (loss) before tax | 3953 | (41901) | |
| Income tax (expense) | 7 | (7086) | (4576) |
| Profit (loss) for the period | (3133) | (46477) | |
| Currency translation adjustments | |||
| Other comprehensive income (loss) for the period | |||
| Total comprehensive income (loss) for the period | (3133) | (46477) | |
| Earnings (loss) per share | |||
| Basic earnings per share | (0,05) | (0, 79) | |
| Diluted earnings per share | (0,05) | (0, 79) |
| USD thousands | As of 31.12.2020 |
As of 31.12.2019 |
As of 01.01.2019 |
|
|---|---|---|---|---|
| Assets | Note | Restated* | Restated* | |
| Non-current assets | ||||
| Goodwill | 1951 | |||
| Multi-client library | 11 b | 36 168 | 47 213 | 27 130 |
| Deferred tax asset | 7 | 4585 | ||
| Property, plant and equipment | 11a | 11794 | 17668 | 16 604 |
| Total non-current assets | 47963 | 64 880 | 50 270 | |
| Current assets | ||||
| Inventories | 12 | 85 | 762 | 1948 |
| Trade receivables ** | 9,14 | 12 2 9 1 | 3941 | |
| Other current assets | 10 | 531 | 14 4 15 | 6358 |
| Bank deposits, cash in hand | 8 | 5873 | 1435 | 7696 |
| Total current assets | 6490 | 28 903 | 19 942 | |
| Total assets | 54 4 52 | 93 783 | 70 212 |
* Restated due to changes of presentation currency from NOK to USD
** 31.12.2019 - MUSD 9.8 relates to VAT that has been paid 10 Feb 2020
| USD thousands | As of 31.12.2020 |
As of 31.12.2019 |
As of 01.01.2019 |
|
|---|---|---|---|---|
| Equity and Liabilities | Note | Restated* | Restated* | |
| Equity | ||||
| Share capital and other paid in capital | 39 29 3 | 50 17 1 | 14762 | |
| Other reserves | (47145) | (54 894) | (8814) | |
| Total equity | (7852) | (4723) | 5948 | |
| Non current liabilities | ||||
| Interest bearing debt | 13,25 | 17417 | 73 | 142 |
| Total non current liabilities | 17417 | 73 | 142 | |
| Current liabilities | ||||
| Interest bearing debt current | 13 | 16 562 | 2480 | 3518 |
| Trade payables | 15 | 12 2 5 1 | 41 646 | 20769 |
| Contract liabilities | 4 | 22729 | 17858 | |
| Other current liabilities | 17 | 16075 | 31578 | 21977 |
| Total current liabilities | 44 887 | 98 433 | 64 123 | |
| Total liabilities | 62 30 5 | 98 506 | 64 265 | |
| Total equity and liabilities | 54 452 | 93783 | 70 212 |
* Restated due to changes of presentation currency from NOK to USD
** 31.12.2019 - MUSD 9.8 relates to VAT that has been paid 10 Feb 2020
The Board of Directors and CEO of Axxis Geo Solutions ASA
[Sign.] _________________________ _________________________ _________________________ Christian Huseby Njål Sævik Vibeke Fængsrud
Chairman Director Director _________________________ _________________________ _________________________
Nina Skage Eirin Inderberg Ronny Bøhn Director Director CEO
| USD thousands | Share capital | Additional paid-in capital |
Accumulated earnings |
Other equity/ Share based programme |
Total equity |
|---|---|---|---|---|---|
| Balance as of 01.01.2020 | 11 718 | 38 4 53 | (55291) | 397 | (4723) |
| Profit (loss) for the period | (3133) | (3133) | |||
| Other comprehensive income (loss) | |||||
| Cost for new shares issued | |||||
| Write down of par value | (10878) | 10878 | |||
| Share based payment | |||||
| Balance as of 31.12.2020 | 840 | 38453 | (47546) | 400 | (7852) |
| USD thousands | Share capital | Additional paid-in capital |
Accumulated earnings |
Other equity/ 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 | (46477) | (46477) | |||
| Other comprehensive income (loss) | |||||
| New shares issued - cash settled | 8468 | 27564 | 36 033 | ||
| Cost for new shares issued | (1876) | (1876) | |||
| 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 | 397 | 397 | |||
| Balance as of 31.12.2019 | 11 718 | 38 4 53 | (55291) | 397 | (4723) |
| USD thousands | Note | Full Year 2020 | Full Year 2019 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit (loss) before tax | 7 | 3953 | (41901) |
| Taxes paid | 7 | (2116) | |
| Depreciation and amortization | 11a, 11b, 16 | 27 554 | 41 172 |
| Currency (gain)/loss without cash flow effects | (81) | 1873 | |
| Interest expense | 6 | 3995 | 3 2 0 0 |
| Share based payment cost | 21 | з | (25) |
| Change in trade receivables | 9 | 12 2 9 1 | (8350) |
| Change in trade payables | 15 | (29396) | 20877 |
| Change in inventories | 12 | 676 | 1 1 8 6 |
| Change in other current assets | 10 | 13884 | (8058) |
| Change in contract liabilities | 4 | (22729) | 4871 |
| Other working capital changes | 13,17 | 10827 | 9601 |
| Net cash from operating activities | 18863 | 24 4 4 6 | |
| Cash flow from investing activities Investment in property, plant and equipment |
11a | (62) | (6919) |
| Disposal of property, plant and equipment | 11a | 204 | |
| Investment in multi-client library | 11 b | (10576) | (55060) |
| Cash received/paid from merger | 2.0 | 425 | |
| Net cash flow from investment activities | (10434) | (61554) | |
| Cash flow from financing activities | |||
| Repayment of interest bearing debt | 13 | (1440) | (1127) |
| Payment of lease liabilities (recognized under IFRS 16) | 16 | (220) | (186) |
| Net proceeds from new equity | 18 | 34 156 | |
| Interest paid lease liabilities | 16 | (10) | (18) |
| Interest paid | (2321) | (1979) | |
| Net cash flow from financial activities | (3991) | 30847 | |
| Net change in cash and cash equivalents | 4438 | (6261) | |
| Cash and cash equivalents balance 1.1 | 8 | 1435 | 7696 |
| Cash and cash equivalents balance 31.12 | 8 | 5873 | 1435 |
Axxis Geo Solutions Group comprise Axxis Geo Solutions ASA (referred to as the "Company" or the "Parent") and its subsidiaries (together referred to as the "Group"). Axxis Geo Solutions ASA is a public limited listed company incorporated in Norway. The Company is listed on EURONEXT EXPAND OSLO and traded under the ticker Axxis.
The Company's registered office is at Strandveien 50, 1366 Lysaker, further the Group is located with operational office in Houston. The Group has due to local requirement, when operating OBN survey, offices also in Cairo.
The Group is engaged in the international geophysical industry and focuses its activities in the Ocean Bottom Node ("OBN") segment of the marine seismic market.
The Group's business strategy is to secure OBN contacts and develop multi-client OBN programs and hire in vessels, personnel and equipment to secured contracts and multi-client projects. The asset light model does yield a cost efficiency and should, along with operational efficiency when on contracts and projects, lead to cost benefits which will give a comparative advantage in securing new contracts and profitable projects.
The Group specializes on delivering tailored seismic solutions, flexible project management and execution to oil and gas companies world-wide. Its operations are based on a scalable asset-light setup to complete seismic surveys.
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 2020.
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 16 April 2021. The consolidated financial statements will be presented for approval at the Annual General Meeting on 23 June 2021. Until this date the Board of Directors have the authority to amend the financial statements.
The financial statements for 2020 are based on the assumption of going concern.
The Company has filed for court protected reconstruction on 16 February 2021. This filing provides protection from bankruptcy and allows for continued operation under court protection.
The Company has put forth a reconstruction proposal to creditors (see note 26 Events after the reporting period) and a restructuring as outlined by the proposal will provide the Company sufficient working capital for continued operation. However, the Company will still be dependent on securing new seismic survey contracts as well as multi-client late sales.
The Company has implemented a smart-stack strategy and thereby significantly reduced its cash burnrate.
The Company currently reports a negative common equity and total current liabilities exceed total current assets per 31 December 2020.
In light of the current reconstruction efforts, there is significant uncertainty with respect to the going concern assumption. Should the reconstruction proposal not be approved, the going concern assumption will most likely not be applicable and balance sheet items would be significantly impaired. Under such circumstances, valuation of balance sheet items will be based on liquidation values which are substantially lower than the current carrying values.
See item 2.2 for a full going concern evaluation.
The consolidated financial statements comprise the Parent company Axxis Geo Solutions ASA 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 on consolidation.
From 1 January 2020 the parent company changed its functional currency from NOK to USD. This change is accounted for prospectively with effect from 1 January 2020. Further the group also changed the presentation currency from NOK to USD from 1 January 2020. The change in presentation currency has been accounted for retrospectively, similar to a change in accounting policy. The Group has restated prior periods for this voluntary presentational change in line with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, from 1 January 2019. This point in time represents the earliest date from which it was practicable to perform a restatement, given the lack of sufficiently reliable data for earlier periods. As a consequence, foreign currency translation gains or losses prior to 2019 has been disregarded, with the FCT effects first calculated from 1 January 2019 onwards. In addition, the Group has included a statement of financial position at the beginning of the comparative period, i.e. as of 1 January 2019, in line with IAS 1, Presentation of Financial Statements.
The Group presents its consolidated financial reports in USD. 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.
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 denominate in non-functional currencies are recognized in the income statement.
Revenue from contracts with customers comes from two different business models.
Contract seismic surveys is projects where the Group performs seismic services in accordance with customer specifications and the customer is the owner of all data collected. The contracts can include both collection of data and processing. If both services are included in a contract, the contract consist of two performance obligations. The Group has so far only had one multi-client contract with prosessing.
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received for services in the ordinary course of the Group's activities. Revenue is shown net of withholding and value-added taxes.
The Company applies the practical expedient for short-term advances received from customers. That is, the promised amount of consideration is not adjusted for the effects of a significant financing component if the period between satisfying the performance obligation and the payment is one year or less. Where the Company has satisfied its performance obligations and has a right to consideration, an accrued revenue is recognized. The principles applied for each of the main types of contracts with customers are described in more detail below.
The Group recognizes contract revenue (whether priced as lump sum, day rate or unit price) based on the percentage of completion method (POC). Progress is measured in a manner generally consistent with the physical progress on the project. The revenue recognition is based on a split between acquisition work and data processing, only if both services are included in the contract. For the acquisition work the progress is based on the number of energy releases in the water. The progress of the data processing is measured based on estimated time of completion. Any amount received exceeding recognized revenue, is recorded on the balance sheet as a contract liability. Conversely, recognized revenue exceeding payments received is recognized as a contract asset, or a receivable if there is a right to payment that is not conditional of additional performance.
The contracts may include mobilization fees. These payments are included in the transaction price. No revenue is recognized before the data acquisition commences.
Any mobilization cost is capitalized as a cost to fulfil a contract and are amortized over the data acquisition period. The costs primarily relate to relocation of vessels and other preparation costs that can be directly allocated to the contract. The Group incur these costs to be able to fulfil the contract, and they are capitalized to the extent that they are expected to be recovered by the contract.
Multi-client is 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, where the Group already has, or will collect and process data. The Group owns the data in the library. Before the Group initiates a new multi-client survey, the Group has it's own target to always have one or more committed customer. Revenues from these contracts are defined as prefunding revenues. The advantages for pre-funding customers are generally the possibility to influence the project specifications, early access to acquired data, and discounted prices Revenues from contracts that are signed after the survey is complete are defined as Late sales.
The Company recognizes pre-funding revenue as "right to use" licenses and the revenue is recognized at the point in time when the "right to use" license is transferred to the customer.
When the license is transferred to the customer depends on the specific contract but is typically upon completion of processing of the survey and granting of access to the finished data or delivery of the finished data.
Incremental cost of obtaining contracts with customers are recognized as an asset to the extent that the entity expects to recover those costs. The incremental cost of obtaining a contract are those costs that would not have incurred if the contract had not been obtained. The costs are amortized over the same period as revenue for the related contract is recognized.
Customers are granted a license from the Group which entitles them to access a specific part of the multi-client data library. 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.
Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment loss. Historical cost includes costs directly attributable to the acquisition of the item. Costs are included in the asset's carrying amount or recognized as a separate asset, if appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Costs of all repairs and maintenance are expensed as incurred. Depreciation of property plant and equipment is calculated using the straight-line method, over the estimated useful life.
The asset's residual values, useful lives, and method of depreciation are reviewed at each balance sheet date and adjusted if appropriate. If an asset's carrying amount is greater than its estimated recoverable amount, the asset is immediately impaired to the recoverable amount.
Assets under construction are carried at cost, less accumulated impairment. Depreciation commences when the asset is ready for its intended use.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company applies a single recognition and measurement approach for all leases, except for shortterm leases and leases of low-value assets. The Company recognizes the liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The lease term is determined on the commencement date of the lease, and corresponds to the term of the lease contract, unless the Company is reasonably certain that it will exercize contractual extensions or termination options.
At the commencement date of the lease, the Company recognizes a lease liability measured at the present value of lease payments due under the contract, less any lease incentives receivable, plus the costs of purchase or termination options if reasonably certain to be exercized. Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Company's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Subsequently, the carrying amount of the lease liability is increased to reflect the accumulation of interest on the liability balance, and reduced as the lease payments are charged to the liability. In addition, the carrying amount of the lease liability is remeasured to reflect contractual modifications, changes to lease payments or changes in the assessment of the lease term.
Right-of-use assets are measured at cost, comprising the initial measurement of lease liability, lease payments made at the commencement date, initial direct costs and estimated restoration costs, less any lease incentives received. Subsequently, the right-of-use asset is measured at cost, less accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. The right-of-use assets are also subject to impairment.
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 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.
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 OBN multi-client library will be amortized from the date the processed data are ready to be transferred to customers, using straight line amortization.. Each project will be evaluated
individually, for the Utsira 3D OBN multi-client library that was processed and ready for sale in September 2020, the Company used 4 years life time for the linear amortization.
Before the library is completed, the Group test for impairment annually. To ensure that value in use above net book value, the Group will perform an additional impairment test after pre-funding revenues are recognized.
Inventories are valued at the lower of cost or net realizable value. Cost is determined using the firstin, first-out (FIFO) method. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The Group's inventory consists primarily of fuel.
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 recognised directly in equity or other comprehensive is recognised 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.
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 recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
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 recognised directly in equity is recognised in equity and not in the income statement.
The Group operates a defined contribution plan. The net pension cost for the period is presented as an employee expense.
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 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 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 sale of goods and services are held to collect contractual cash flows. They are initially recognised 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.
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, typical 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 of 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.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Receivables other than account receivables from sale of goods and services are also held in a business model to collect the contractual cash flows. The receivables are subsequently measured at amortized cost with a provision for expected credit loss. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
Interest bearing loans are recognized initially at fair value less transaction costs. 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 and loss when the liabilities are derecognized as well as through the amortization process.
Financial liabilities represent a contractual obligation to deliver cash in the future. Financial liabilities, with the exception of 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.
This category comprises financial assets and liabilities held for trading. Financial instruments in this category are initially recorded at fair value, and transaction costs are expensed in the consolidated statement of profit and loss. Realized and unrealized gains and losses arising from changes in the fair value are included in the consolidated statements of profit and loss in the period in which they arise.
Financial assets and liabilities in this category are initially recognized at 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.
The cash flow statement is presented using the indirect method.
Cash and cash equivalents include cash at hand, deposits held at call with banks with original maturities of three months or less.
The merger between Songa Bulk ASA and Axxis Geo Solutions AS (AGS AS) in 2019 with a reverse share split, forming Axxis Geo Solutions ASA (AGS ASA), was not considered a business combination under IFRS, but a reverse take over/acquisition of a non-trading shell company. The Merger was carried out pursuant to chapter 13 of the Norwegian Public Limited Liability Companies Act, whereby Songa Bulk ASA has assumed the assets, rights and obligations of AGS AS as a whole, against issuance of consideration shares to the former shareholders in AGS AS.
The merger has been accounted as a reverse acquisition whereby AGS AS is the accounting acquirer, i.e. the continuing entity. As the transaction is not a business combination, but a share-based transaction, it is accounted for in accordance with IFRS 2. In the consolidated financial statement of AGS ASA (former Songa Bulk ASA), the transaction is accounted for as a continuation of the financial statements of AGS AS. Assets and liabilities of Songa Bulk ASA are recognised at fair value in accordance with IFRS 2.
The opening balance from Songa Bulk ASA comprised cash and an investment in shares measured at fair value of MNOK 5.2, as well as a short-term liability (Trade payable) of MNOK 1.2. The rest was other contribution equity restricted, see table below.
| Opening balance from Songa Bulk ASA | ||||
|---|---|---|---|---|
| thousands NOK | ||||
| Assets | ||||
| Bank | 4448 | |||
| Shares in Star Bulk AS | 761 | |||
| 5 2 0 8 | ||||
| Equity and liabilities | ||||
| Trade payable | 1 1 8 4 | |||
| Other contributed equity (restricted) | 4025 | |||
| 5 2 0 8 |
When the transactions was finally booked, the cash received in NOK currency was slightly higher MNOK 4.8, giving net cash from the merger of MNOK 3.6, reflected in the cash flow for 2019.
The following standards and interpretations have been issued but are not mandatory for annual reporting periods ending on 31 December 2020.
The Group does not expect any material implementation effects for any of the new or amended standards or interpretations.
At the date of authorization of these financial statements, the Group has not applied the following new and revised IFRS Standards that have been issued but are not yet effective:
Amendments to IAS 16 Property, Plant and Equipment—Proceeds before Intended Use
Amendments to IAS 37 Onerous Contracts Cost of Fulfilling a Contract
• Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture
The Group makes estimate 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.
The Group uses the discounted cash flow method to estimate the present value of the multi-client library, project Utsira and project Egypt, based on expectations of future multi-client late sales according the cash flow prognosis used by management for 2021.
There are two uncertainty when it comes to 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 comparabele to peers.
In 2020, the IFRS value of multi-client survey Utsira was impaired with USD 18.0 million. In 2019 the Utsira multi-client survey was impaired with USD 35.1 million.
The Group 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 Group 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.
The Group entered into an agreement with TGS, where the parties have agreed that the library will be a jointly owned asset and each party will be entitled to 50% of the revenues generated by the library.
Management has evaluated the substance of the agreement and concluded that the contract is not within the scope of IFRS 15. This is because it is considered to be a collaboration agreement as TGS is not considered to be a customer. Management has established an accounting policy where the rules for joint operations in IFRS 11 Joint arrangements are used by analogy. The Group recognize its cost net of TGS investment as intangible asset and will recognize its 50% share of revenues generated by the library.
The Group prepares and maintains a rolling P&L and cash forecast, in addition to key balance sheet items (trade payables, long-term debt, and cash). The forecast is based on the assumed restructuring of the Company's balance sheet as a part of the proposed reconstruction (see note 26 Events after the reporting period. Management's operational outlook is derived from existing pipeline of opportunities as well as estimated multi-client late sales. The forecast is adjusted for the current trough in the oil and gas markets. In the Group's current forecast, cash and cash equivalents are expected to remain positive for the 12-month period following the 2020 financial statements.
The Group's cash flow forecast is based on existing firm commitments and the Group's expectations for future opportunities and the Group's corporate restructuring efforts, specifically:
The financial forecast has been prepared based on the current challenging market conditions. There are, however, risks related to the assumptions in the forecast:
The annual accounts are prepared on the assumption of a going concern. However, the Company's and the Group's financial situation is unsustainable as equity is negative and liquidity is under pressure and hence there is material uncertainty related to the going concern assumption. The Group has filed for a court-protected reconstruction and put forth a restructuring plan to its creditors. If successful in this restructuring, the Group will strengthen its working capital and improve its liquidity. The outcome of these discussions is uncertain and the going concern assumption is subject to material uncertainty.
Management has used its best judgements in the evaluation of the going concern assumption. Although there are significant uncertainties and risk listed above related to events or conditions that might impact the future cash flows, management is of the opinion that the going concern assumption is appropriate and the accounts are prepared under the going concern assumption. If the Company is unsuccessful with the above activities, the financial statements do not reflect impairment charges or provisions that might be required if the Company or the Group was liquidated or the assets were sold in a distressed situation.
Management has evaluated the merger between Songa Bulk ASA and Axxis Geo Solutions AS (AGS AS) with a reverse share split, forming Axxis Geo Solutions ASA (AGS ASA), not to be considered a business combination under IFRS, but a reverse takeover/acquisition of a non-trading shell company. There were no employees, no processes or no asset except cash that was transferred in the merge.
The impacts of COVID-19 on businesses across the globe is substantial and presents new challenges to our normal business practices. The Group has been planning for and monitoring developments since the initial spread of the virus in early 2020 and has taken a series of steps to maintain the continuity of our services for our customers and to safeguard the health of our employees and stakeholders.
During the year, the Company received a cancellation of a small contract in the North Sea which was expected to be conducted in the second quarter of 2020. The contract revenues related to this survey was estimated at USD 1 million. The Company received a cancellation fee of 25% of the estimated revenue amount.
The Group operates two segments, Multi-client and Contract, based on the two different revenue streams for the Group.
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 a perentage of recognised revenues according to budget, while the financial statements are based on a principle where amortization begins when the library is fully processed and ready for sale.
Revenue recognition for the Contract segment is based on the same principles as the IFRS financial statements.
Operating expenses are allocated to the segments based on the use of resources and assets. Share based payment cost and capitalized cost of obtaining contracts has not been allocated to segments.
| USD thousands | Segment reporting | Adjustments | IFRS reporting | |
|---|---|---|---|---|
| Multi-client | Contract | |||
| Income statement | Full Year 2020 Full Year 2020 | Full Year 2020 | Full Year 2020 | |
| Total revenue | 1858 | 64 32 6 | 26 606 | 92790 |
| Cost of sales | (4045) | (48513) | 245 | (52313) |
| Personnel expenses | ۰ | (3388) | (3388) | |
| Other operating expenses | ۰ | (3 919) | 229 | (3 691) |
| Total Operating Expenses | (4045) | (55820) | 473 | (59392) |
| Operating profit (loss) before depreciation and amortization (EBITDA) |
(2187) | 8506 | 27 079 | 33 399 |
| Depreciation, Amortization and Impairment |
(4159) | (5711) | (17685) | (27554) |
| Operating profit (loss) (EBIT) Segment | (6346) | 2796 | 9 3 9 5 | 5845 |
Vessel and equipment are utilized by both segments, and depreciation is allocated based on use. Investments in multi-client library (MCL) in the period of USD 10.6 million only relates to the multiclient segment. The MCL of Utsira was written down with USD 18 million in IFRS reporting during 2020, due to fair value evaluation per September 2020 based on assumption for late sales.
| USD thousands | Segment reporting | IFRS reporting | ||
|---|---|---|---|---|
| Multi-client | Contract | |||
| Geographical markets | Full Year 2020 Full Year 2020 Full Year 2020 Full Year 2020 | |||
| Norway | 1858 | 14935 | 26 606 | 43 3 9 9 |
| Asia | ۰ | |||
| Middle East | ۰ | 46884 | 46884 | |
| Brazil | $\sim$ | 2 5 0 8 | 2 5 0 8 | |
| Total revenue | 1858 | 64 32 6 | 26 606 | 92790 |
The geographical split is based on where the seismic surveys have been perfomed.
| USD thousands | Segment reporting | IFRS reporting | ||
|---|---|---|---|---|
| Multi-client | Contract | |||
| Major customers | Full Year 2020 Full Year 2020 Full Year 2020 Full Year 2020 | |||
| Customer 1 | 800 | 46884 | 47 684 | |
| Customer 2 | 698 | 14935 | 15 633 | |
| Customer 3 | 260 | 2 508 | 2768 | |
| Customer 4 | 100 | ۰ | 100 | |
| Total revenue | 1858 | 64 32 6 | 66 184 |
| USD thousands | Segment reporting | Adjustments | IFRS reporting | |
|---|---|---|---|---|
| Multi-client | Contract | |||
| Income statement | Full Year 2019 Full Year 2019 | Full Year 2019 | Full Year 2019 | |
| Total revenue | 12799 | 70744 | (12799) | 70744 |
| Total cost of sales | 2 2 4 6 | (60 880) | (58634) | |
| Personnel expenses | (1067) | (1954) | 405 | (2616) |
| Other operating expenses | (1085) | (3 299) | 200 | (4184) |
| Total Operating Expenses | 94 | (66132) | 605 | (65433) |
| Operating profit (loss) before depreciation and amortization (EBITDA) |
12893 | 4611 | (12194) | 5 3 1 0 |
| Depreciation, Amortization and Impairment |
(43 606) | (6965) | 9398 | (41172) |
| Operating profit (loss) (EBIT) Segment | (30713) | (2354) | (2796) | (35862) |
Vessel and equipment are utilized by both segments, and depreciation is allocated based on use. Investments in multi-client library (MCL) in the period of USD 10.6 million only relates to the multiclient segment. The MCL of Utsira was written down with USD 18 million in IFRS reporting during 2020, due to fair value evaluation per September 2020 based on assumption for late sales.
| USD thousands | Segment reporting | Adjustments | IFRS reporting | |
|---|---|---|---|---|
| Multi-client | Contract | |||
| Geographical markets | Full Year 2019 Full Year 2019 Full Year 2019 Full Year 2019 | |||
| Norway | 12799 | (12799) | ||
| Asia | ۰ | 64 153 | 64 153 | |
| Middle East | $\overline{\phantom{a}}$ | 2 1 1 5 | 2 1 1 5 | |
| Brazil | 4476 | 4476 | ||
| Total revenue | 12799 | 70744 | (12799) | 70744 |
| USD thousands | Segment reporting | Adjustments | IFRS reporting | |
|---|---|---|---|---|
| Multi-client | Contract | |||
| Major customers | Full Year 2019 Full Year 2019 Full Year 2019 Full Year 2019 | |||
| Customer 1 | ۰ | 70744 | 70744 | |
| Customer 2 | 9567 | (9567) | ||
| Customer 3 | 3 2 3 2 | (3232) | ||
| Customer 4 | $\overline{\phantom{a}}$ | ۰ | ۰ | |
| Total revenue | 12799 | 70744 | (12799) | 70744 |
| Segment reporting | Adjustments | IFRS reporting | |||
|---|---|---|---|---|---|
| USD thousands | Multi-client | Contract | |||
| Income statement | Full Year 2020 | Full Year 2020 | Full Year 2020 | Full Year 2020 | |
| Contracts for seismic acquisition | 64 3 2 5 | 64 3 2 5 | |||
| Multi-client projects pre-funding | 798 | 26 606 | 27 404 | ||
| Multi-client projects late sales | 1060 | 1060 | |||
| Total revenue from contracts with customers |
1858 | 64 325 | 26 606 | 92790 | |
| At a point in time | 28 4 64 | 28 4 6 4 | |||
| Over time | 1858 | 64 3 2 5 | (1858) | 64 3 2 5 | |
| Total revenues from contracts with customers |
1858 | 64 325 | 26 606 | 92790 |
| Segment reporting | Adjustments | |||
|---|---|---|---|---|
| USD thousands | Multi-client | Contract | ||
| Income statement | Full Year 2020 | Full Year 2020 | Full Year 2020 Full Year 2020 | |
| Contract assets | ||||
| Assets recognized for cost to fulfill a contract in the balance 1.1.20 |
5047 | 5047 | ||
| Assets recognized for costs to fulfill a contract (mobilization costs) |
5 1 0 5 | 5 1 0 5 | ||
| Amortization of assets recognized for cost to fulfill a contract (mobilization |
||||
| costs) | (10152) | (10152) | ||
| Total contract assets | 0 |
| Advanced payments received | ||
|---|---|---|
| Recognized revenue related to | ||
| advanced payments received | ||
| Total current contract liabilities |
| Adjustments | IFRS reporting | ||
|---|---|---|---|
| Multi-client | Contract | ||
| Full Year 2019 | Full Year 2019 | Full Year 2019 | Full Year 2019 |
| ۰ | 70744 | 70744 | |
| 12799 | (12799) | ||
| Total revenue from contracts with 12799 |
70744 | (12799) | 70744 |
| 12799 | 70744 | (12799) | 70744 |
| 12799 | 70744 | (12799) | 70744 |
| Segment reporting |
| Segment reporting | Adjustments | IFRS reporting | ||
|---|---|---|---|---|
| USD thousands | Multi-client | Contract | ||
| Income statement | Full Year 2019 | Full Year 2019 | Full Year 2019 | Full Year 2019 |
| Contract assets | ||||
| Assets recognized for cost to fulfill a contract in the balance 1.1.20 |
3390 | 3 3 9 0 | ||
| Assets recognized for costs to fulfill a contract (mobilization costs) |
5971 | 5971 | ||
| Amortization of assets recognized for cost to fulfill a contract (mobilization |
||||
| costs) | (4314) | (4314) | ||
| Total contract assets | 5047 | 5047 |
| Contract liabilities | |
|---|---|
| ----------------------------- | -- |
| Advanced payments received Recognized revenue related to |
100 | 22.629 | 22729 | |
|---|---|---|---|---|
| advanced payments received | 12799 | $\overline{\phantom{a}}$ | (12799) | $\overline{\phantom{a}}$ |
| Total current contract liabilities | 12899 | 9830 | 22 7 29 |
The contracts for seismic surveys have an expected duration of less than one year. Because of this, the Group does not disclose information about transaction price allocated to unsatisfied or partly unsatisfied performance obligations for these contracts. Contracts for seimic surveys ususally have a billing shcedule with frequent billings, so there will not be a material difference in timing of the payments and the progress in the projects.
The Group had per end of September 2020 finalized the data processing of the multi-client 3D OBN Utsira survey. The IFRS pre-funding revenue being booked as contract liability in 2019 the balance sheet of USD 22.7 million was allowed booked as pre-funding revenue in September 2020. This is a collaboration project where the Group has a 50% share. The Group's share of contracted pre-funding revenue is USD 27.4 million.
Per end of 2019 the Group had completed 100% of the data collection phase of the OBN multi-client survey Utsira in the North Sea.
For pre-funding contracts a significant portion of the payments is received during the data collection phase, which is before the customer receives the final processed data.
| Cost of sales | Full Year 2020 | Full Year 2019 |
|---|---|---|
| Vessel cost | (22965) | (53101) |
| Crew & project management | (18524) | (24037) |
| Seismic, source and node equipment | (13486) | (27100) |
| Agent related expenses | (2866) | (12094) |
| Mobilization amortization | (10152) | (4314) |
| Mobilization cost capitalized | 5 1 0 5 | 5971 |
| Multi-client capitalization - gross (see note 11b)* | 10576 | 56 041 |
| Total operating expenses | (52313) | (58634) |
| USD thousands | ||
|---|---|---|
| Financial income | Full Year 2020 | Full Year 2019 |
| Interest income | 0 | 9 |
| Other financial income | 3847 | 34 |
| Total financial income | 3848 | 43 |
| Financial expenses | Full Year 2020 | Full Year 2019 |
| Interest expense | (2161) | (1099) |
| Interest expense suppliers | (1834) | (898) |
| Other financial expenses | (1320) | (2937) |
| Total financial expenses | (5315) | (4934) |
| Currency exchange gain (loss) | Full Year 2020 | Full Year 2019 |
| Exchange gains | 3 4 3 4 | 5064 |
| Exchange losses | (3858) | (6212) |
| Total exchange gain (loss) | (424) | (1148) |
| USD thousands | Full Year 2020 | Full Year 2019 |
|---|---|---|
| Specification of tax expense (income) for the year | ||
| Current income tax (including witholding tax) | 7073 | - |
| Change in deferred tax | 4576 | |
| Changes from previous years | 13 | ۰ |
| Total tax expense (income) | 7086 | 4576 |
| Reconciliation of actual against expected tax expense (income) at the income tax rate of 22% |
||
| Profit (loss) before tax | 3953 | (41901) |
| 22% tax | 870 | (9218) |
| Tax effect from: | ||
| Non taxable income | 0 | |
| Withholding tax abroad | 5 5 6 9 | |
| Permanent differences | (147) | 423 |
| Currency effect | (1386) | (166) |
| Difference in tax rate in foreign activities | (33) | 152 |
| Use of withholding tax paid abroad | (70) | |
| Not booked deferred tax asset | 2 2 8 3 | 13385 |
| Calculated tax expense (income) | 7086 | 4576 |
| Effective tax rate for the Company | (179, 26) | 10,92 |
| USD thousands | 31.12.2020 | 31.12.2019 |
| Temporary differences | ||
| Non current assets | (1682) | 1598 |
| Trade receivables | ||
| Other accruals | (148) | |
| Financial lease | (1) | 87 |
| Accumulated loss carried forward | (57348) | (62379) |
| Temporary differences at 31.12. | (59030) | (60842) |
| Deferred tax assets (liabilities) | 12 987 | 13 3 8 5 |
Deferred tax assets is not recongized per December 2020. The management evaluated the deferred tax assets to be uncertain when to be utilized in the future. This evaluation is performed yearly.
| USD thousands | 31.12.2020 | 31.12.2019 |
|---|---|---|
| Bank deposits | 5792 | 1367 |
| Restricted bank deposits | 80 | 68 |
| Total bank deposits | 5873 | 1435 |
Restricted bank deposits relates to employee withholding tax. These deposits are subject to regulatory restrictions and are therefore not avaliable for genereal use by the entities within the Group. The account can be used to settle employee withholdig tax.
At 31 December there were two supplier who had outlays in the bank. These are after year-end 2020 resolved and released back to the Company.
| Trade receivables | 31.12.2020 | 31.12.2019 |
|---|---|---|
| Trade receivables | 12 291 | |
| Provisions for bad debts | ||
| Net trade receivables | 12 291 |
Related parties transactions is disclosed in note 19.
| USD thousands | 31.12.2020 | 31.12.2019 |
|---|---|---|
| Not overdue as of 31.12 | 9 5 8 2 | |
| Past due 0-30 days | 1464 | |
| Past due 31-180 days | 1033 | |
| Past due more than 180 days | 211 | |
| Total | 12 291 |
Trade receivables are amounts due from customers for goods sold or services rendered in the ordinary course of business. Trade receivables are classified as current assets as they are generally due for payment within 30 to 60 days. Trade receivables are recognized initially at the amount of unconditional consideration, unless significant financing components exist. In such instances, trade receivables are recognized at fair value. Refer to note 14 (i) for information about credit risk and expected credit loss.
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, typical 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 of 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. Per year-end 2019 the Group had two main clients, being major oil companies and one of them large listed company. All outstanding trade receivables has been paid during 2020.
In addition, the Group has accrued revenue for ongoing projects, which has not been invoiced the customers per year-end, see also note 10.
Accrued revenue as of December 2020 was USD 0.3 million, compared to USD 7.9 as of December 2019.
The accrued revenue per end 2020 is related to the Utsira multi-client project and recharge for fuel for redelivered vessels. Per 2019 the accrued revenue was related to the ongoing Middle East and Brazil projects, The accrued revenue is following the same impairment model as ordinary trade receivables. As of December 2020 and 2019, there were no indicators for the need of impairment for trade receivables.
| USD thousands | 31.12.2020 | 31.12.2019 |
|---|---|---|
| Prepayments | 186 | 1420 |
| Mobilization | 5049 | |
| Accrued income | 312 | 7913 |
| Cost to obtain contracts | ||
| Other current receivables | 34 | 33 |
| Total other current assets | 531 | 14415 |
| Economic lifetime in years | 3-10 | 3-5 | 3-10 | 2-5 | |
|---|---|---|---|---|---|
According to IFRS the carrying amount of intangible assets and property, plant and equipment are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.
Economic lifetime in years 3-10 3-5 3-10 2-5
Management regularly evaluates its fleet plan and capital expenditure level in light of market conditions. In 2020 and 2019 management performed such evaluations. In 2020 this evaluation resulted in impairments related to certain seismic equipment in the subsidiary in US for the year 2020. There was no need for impairment at the end of 2019.
The Group has no asset held for sale.
| Segment reporting | IFRS reporting | ||||
|---|---|---|---|---|---|
| USD thousands | Multi-client | Goodwill | Multi-client | Goodwill | |
| Carrying value at 1.1.2020 | 29752 | 47 213 | |||
| Capitalized cost for the period | 10576 | 10576 | |||
| Amortization for the period | (4159) | (3656) | |||
| Impairment for the period | (17964) | ||||
| Carrying value at 31.12.2020 | 36 168 | 36 168 | |||
| Carrying value at 1.1.2019 | 17823 | 1832 | 27 24 6 | 1832 | |
| Capitalized cost for the period | 55 060 | ۰ | 55 060 | ||
| Amortization for the period | (8038) | ||||
| Impairment for the period | (35093) | (1832) | (35093) | (1832) | |
| Carrying value at 31.12.2019 | 29752 | 47 213 |
The Group has no fully amortized intangible assets that are still in use per 31.12.2020. The Group's multi-client library is pledged as security for interest-bearing debt, refer to note 13 Interest-bearing debt.
The Multi-client segment consists of multiple seismic data surveys that comprise the segment. As of 31.12.2020, the Group owns two multiclient surveys, each considered a separate CGU and impairment tested serparately.
The MCL will be amortizised linearly over 4 years from the date the processed data are ready to be transferred to customers according to IFRS.
The asset is rated to level 3 using the Fair Value Hierarchy.
According to IFRS the MCL should be testet 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 perform 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) is 12,44 % 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.
A decrease in the company's sales expectations exceeding 5,5% would result in an impairment in the multi-client library. Similarily, an increase in WACC to 15,4% would result in an impairment in the multiclient library.
The MCL of Utsira was written down with 18 million in IFRS reporting during 2020, due to fair value evaluation per September 2020 based on assumptions for late sales.
In 2017 the Group acquired 100% of the shares in Axxis Geo Solutions Inc. The historical value of the goodwill arose from the knowledge and competence of the personnel in the Axxis Geo Solutions Inc. This knowledge and competence have since then been incorporated into the Group as a whole and was no longer attributable to a single subsidiary or CGU of the Group. The basis for the goodwill had changed and gave the Group indicatiors to perform new write down analysis. Based on the evaluation the goodwill was written down to zero as of December 2019.
| USD thousands | 31.12.2020 | 31.12.2019 |
|---|---|---|
| Purchased finished goods | 85 | 762 |
| Provision for obsolescence | ||
| Net inventories | 85 | 762 |
The inventories consist of fuel for the vessel Neptune Naiad per 31 December 2020. The Group has not expensed any impairment of inventories during the periods 2020 or 2019.
| USD thousands | Interest rate (%) | Maturity | 31.12.2020 | 31.12.2019 |
|---|---|---|---|---|
| Lease Liabilities | 5% | 2021 | 73 | |
| NOK 29 750 000 Nibor+5,5% Term Loan | Nibor $+5.5%$ | 2021 | ||
| USD 24 739 311 Bond Loan | 8% | 2022 | 17417 | |
| Non-current borrowings | 17417 | 73 | ||
| Lease Liabilities | 5% | 2021 | 73 | 224 |
| NOK 29 750 000 Floating rate term loan | Nibor $+0.5%$ | 2021 | 1 1 6 0 | 2 2 5 6 |
| USD 24 739 311 Bond loan | 8% | 2022 | 6033 | |
| USD 5 780 326 Fixed rate term loan | 4% | 2021 | 5 6 9 5 | |
| USD 1 490 633 4% Fixed rate term loan | 4% | 2021 | 1 2 4 4 | |
| USD 1 332 704 4% Fixed rate term loan | 4% | 2021 | 1300 | |
| NOK 2 495 043 4% Fixed rate term loan | 4% | 2021 | 234 | |
| NOK 12 000 000 Interest Free Loan | 0% | 2021 | 822 | |
| Current borrowings | 16 5 6 2 | 2480 | ||
| Total borrowings | 33 980 | 2553 |
Details of the Group's exposure to risk arising from current and non-current borrowings are set out in note 14, Financial risk management.
The term loan is repaid through twelve consecutive quarterly instalments. The term loan has a first priority pledge in the owned vessel, operating assets and factoring agreement.
The loan is in breach of financial covenants, and have been classified to current liabilities in the financial statements since 31.12.2019. However, the Company has received waiver from the two covenants for all the quarters in 2020, including year end 2020.
The financial covenants are as following:
The USD 24 739 311 bond loan was issued in relation to the restructuring completed in 2020, in which USD 24 739 311 of short term payables were converted to a 2-year bond loan. The bond carries a fixed interest of 8% and is repaid either through cash calls or the agreed repayment schedule. For the bond loan, the group has pledged shares in subsidiaries, inventories, operating assets, factoring agreement, and second priority in the owned vessel.
The bond requires the Group to maintain a liquidity balance of USD 2 million, and maintain a 0 dividend policy, through financial covenants. As of 31.12.2020, the covenants for the bond loan are fulfilled.
In relation to the restructuring completed in 2020, The Group has issued a series of fixed rate term loans through conversion of short term payables to long term loan agreements. The loans are unsecured and carry a fixed interest rate from 0% to 4% p.a.
| Balance sheet value of assets placed as secuirty | ||||
|---|---|---|---|---|
| -------------------------------------------------- | -- | -- | -- | -- |
| USD thousands | 31.12.2020 | 31.12.2019 |
|---|---|---|
| Multi-client library | 36 168 | 47 213 |
| Property, plant and equipment | 11 794 | 17 6 68 |
| Inventories | 85 | 762 |
| Trade receivables | $\overline{\phantom{a}}$ | 12 2 9 1 |
| Total balance sheet value of assets placed as security | 48 047 | 77934 |
| USD thousands | 2020 | 2019 | |||
|---|---|---|---|---|---|
| Carrying amount | Fair value | Carrying amount | Fair value | ||
| Interest bearing debt | 33 980 | 36 531 | 2553 | 2 5 5 3 |
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 from our clients. The Group's business performance depends upon production and development spending by oil and gas companies. Historically, in times of low oil price, demand in exploration spending, where the Group is active, has been reduced in much greater extent than production related spending.
For the purpose of 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 makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares, or repay or issue new debt. The Group monitors capital using a equity ratio, which is the book value of equity over the book value of assets in the Group's segment reporting. The Group's policy and target is to keep the equity ratio over 35%.
In order to achieve this overall objective, the Group's capital management, among other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. Refer to Note 13 for information regarding financial covenants related to the Group's interest bearing debt.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2020 and 2019.
The Group use bank loan, bond loan and unsecured loans in addition to equity for financing purposes. The purpose of these financial instruments is to ensure that the Group has financial flexibility for investments that are necessary for the Group's operations. In addition, the Group has items such as
trade receivables, trade payables etc. which is directly related to the business's daily 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 exposes 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 2020 or 2019.
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 has been neglectible. Because expected credit loss is considered to be a clearly immaterial amount, no provision has been made.
| USD thousands | Current | More than 30 days past due |
More than 60 days past due |
More than 120 days past due |
Total |
|---|---|---|---|---|---|
| Expected loss rate | 0% | 0% | 0% | 0% | |
| Carrying amount trade receivables | $\sim$ | ۰ | $\overline{\phantom{a}}$ | $\sim$ | |
| Loss allowance | $\overline{\phantom{a}}$ | $\sim$ | $\,$ | $\overline{\phantom{a}}$ |
| USD thousands | Current | More than 30 days past due |
More than 60 days past due |
More than 120 days past due |
Total |
|---|---|---|---|---|---|
| Expected loss rate | 0% | 0% | 0% | 0% | |
| Carrying amount trade receivables | 9582 | 1464 | 1034 | 211 | 12 2 9 1 |
| Loss allowance | COL |
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.
The Group`s main interest rate risk arises from loan from Eksportkreditt/GIEK, which expose the group to cash flow interest rate risk. 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's sensitivity to potential changes in interest rates with an increase in 50 basis points would increase interest expense for the period with appoximately USD 9 thousands for 2020 (USD 15 thousands for 2019).
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 have sufficient liquidity at all times 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 ongoing 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 liabilites. 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 the payment may be required from the counterparty. The majority of trade payables are past their respective due dates.
| Remaining Term | ||||||
|---|---|---|---|---|---|---|
| USD thousands | 0-3 months | 3-6 months | 6-9 months | 9-12 months | $1-2$ years | Total |
| Borrowings | 5323 | 2905 | 3852 | 2999 | 22 5 8 6 | 37 665 |
| Lease liabilities | 60 | 15 | ۰ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 74 |
| Trade payables | 12 2 5 1 | - | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 12 2 5 1 |
| Other current liabilities | 9561 | 6514 | $\sim$ | $\overline{\phantom{a}}$ | 16 075 | |
| Total | 27 194 | 9434 | 3852 | 2999 | 22 5 8 6 | 66 065 |
| Remaining Term | ||||||||
|---|---|---|---|---|---|---|---|---|
| USD thousands | 0-3 months | 3-6 months | 6-9 months | 9-12 months | 1-2 years | Total | ||
| Borrowings | 2 2 5 6 | $\overline{\phantom{a}}$ | $\sim$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 2 2 5 6 | ||
| Lease liabilities | 4423 | 59 | 59 | 59 | 73 | 4673 | ||
| Trade payables | 41 646 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\sim$ | 41 646 | ||
| Other current liabilities | 25 339 | 79 | $\sim$ | 6 1 5 9 | 31578 | |||
| Total | 73 665 | 138 | 59 | 6 2 1 8 | 73 | 80 153 |
The Group operates internationally and is exposed to foreign exchange risk, primarily the NOK and EGP. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilites 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 groups 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 bank loans and 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 takes into account 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.
| USD thousands | Change in exchange rate |
Effect on profit before |
Effect on OCI |
|---|---|---|---|
| 2020 | $+10%$ | 481 | ۰ |
| $-10%$ | $-588$ | ۰ | |
| 2019 | $+10%$ | 1595 | c. |
| $-10%$ | $-1949$ | ۰ |
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 – prinmarily the companys portion of debt that is denominated in NOK. Changes in currency may 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.
| USD thousands | ||
|---|---|---|
| Financial assets at amortized cost | 31.12.2020 | 31.12.2019 |
| ASSETS | ||
| Other non-current assets | ||
| Trade receivables | 12 2 9 1 | |
| Cash and cash equivalents | 5873 | 1435 |
| Total financial assets | 5873 | 13725 |
| Financial liabilities at amortized cost | 31.12.2020 | 31.12.2019 |
|---|---|---|
| LIABILITIES | ||
| Interest-bearing non-current liabilities | 17417 | 73 |
| Interest-bearing current liabilities | 16 5 6 2 | 2480 |
| Trade payables | 12 2 5 1 | 41 646 |
| Other current liabilities | 16075 | 31 578 |
| Total financial liabilities | 62 30 5 | 75704 |
The Group's exposure to various risks associated with the 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.
Due to the short-term nature of cash and cash equivalentes, 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. 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 are considered to be approximately the same as their fair values, due to their short-term nature.
The Group does not hold any financial derivatives.
The Group uses the accounting standard IFRS 16 Leases. IFRS 16 Leases has from a lessee viewpoint eliminated the classification of leases as either operating leases or financial leases.
The standard was effective for accounting periods beginning on or after 1 January 2019 and was adopted by the Group from the same date.
For the Group only office space comes under the classification of leases. Vessels and other seismic equipment on short term leases comes under the classification of commitments. As of 31 Dec 2020 the Group has no commitments in vessels or seismic equipment.
Lease assets are included in the balance sheet under the item property, plant and equipment. The non current part of the lease liability is included in the balance sheet under the item interest bearing debt non current, and the current part under interest bearing debt current, refer to note 13.
| Right-of-use assets: USD thousands |
Offices | Total |
|---|---|---|
| Carrying value | ||
| Balance right-of-use assets 1.1.2020 | 293 | 293 |
| Additions | ||
| Depreciation | (223) | (223) |
| Impairment | ||
| Other adjustments | ||
| Balance right-of-use assets 31.12.2020 | 69 | 69 |
| USD thousands | Non current * |
Current | Total |
|---|---|---|---|
| Carrying value | |||
| Balance lease liabilities 1.1.2020 | 73 | 224 | 297 |
| Additions | |||
| Reclassification to current | (73) | 73 | |
| Lease payments | (230) | (230) | |
| Accrued interest | 10 | 10 | |
| Other adjustments | (3) | (3) | |
| Balance lease liabilities 31.12.2020 | 73 | 73 | |
* All lease agreement related to office space expires by end of 31 May 2021.
The Group had a total cash outflow for leases of USD 0.2 million of which USD 0.01 million is related to interest in 2020. The Groups cost of low-value assets was insignificant and the Group had no variable lease payments in 2020.
| Right-of-use assets: | ||
|---|---|---|
| USD thousands | Offices | Total |
| Carrying value | ||
| Balance at 1.1.2019 | ||
| Leases capitalized due to implementation | ||
| of IFRS 16 | 236 | 236 |
| Balance right-of-use assets 1.1.2019 | 236 | 236 |
| Additions | 254 | 254 |
| Depreciation | (197) | (197) |
| Impairment | ||
| Other adjustments | ||
| Balance right-of-use assets 31.12.2019 | 293 | 293 |
| USD thousands | Non current* |
Current | Total |
|---|---|---|---|
| Carrying value | |||
| Balance at 1.1.2019 Leases capitalized due to implementation |
|||
| of IFRS 16 | 142 | 94 | 236 |
| Balance lease liabilities 1.1.2019 | 142 | 94 | 236 |
| Additions | 254 | 254 | |
| Reclassification to current | (323) | 323 | |
| Lease payments | (204) | (204) | |
| Accrued interest | 18 | 18 | |
| Other adjustments | (6) | (6) | |
| Balance lease liabilities 31.12.2019 | 73 | 224 | 297 |
* The non current part of the lease liability of USD 73 thousand is due in 2021.
The Group had a total cash outflows for leases of USD 0.2 million of which USD 0.02 million is related to interest in 2019. The Groups cost of low-value assets was insignificant and the Group had no variable lease payments in 2019.
The Group has not entered into any contractual commitments for the rental of seismic equipment (nodes) as of 31 December 2020. Contractual commitments were USD 1.2 million as of 31 December 2019. The cost for short term leases of seismic equipment was USD 11.8 million in 2020 and USD 10.3 million in 2019.
The Group has no commitments for short-term leases of vessels as of 31 December 2020. The commitments for short-term leases of vessels amounted to USD 3.2 million as of 31 December 2019, and all were due within one year. Lease commitments of vessels were USD 3.2 million as of 31 December 2019. The cost for short term leases of vessels was USD 15.7 million in 2020 and USD 13.6 million in 2019.
| USD thousands | 31.12.2020 | 31.12.2019 | |
|---|---|---|---|
| Holiday pay owed | 152 | 79 | |
| Taxes payable | 5731 | ||
| Other accrued costs | 3 3 6 5 | 9 2 3 6 | |
| VAT settlement | 245 | 9474 | |
| Deferred mobilization revenue | ۰ | 6 1 5 9 | |
| Balance against multi-client project partner | 6582 | 6629 | |
| Total other current liabilities | 16075 | 31 578 |
Balance against multi-client (MC) project partner is related to the collaboration agreement with TGS, which gives TGS the right to 50% of the pre-funding received as well as late sales related to the ongoing OBN MC project Utsira. The balance will be settled through distribution of future customer payments to TGS. Since its inception, the maturity date of the between the Group and TGS has been extended until 2021, and and interest rate of Nibor +10% is applied to the outstanding balance.
In addition, the group has pledged security in the multi-client library, operating assets, inventories, and factoring agreement.
| The Company's share capital per 31.12.2020 include the following: |
Number of shares |
Share Capital in NOK |
Par Value per share* |
|
|---|---|---|---|---|
| Ordinary shares (one share = one vote) | 58 821 018 | 5 882 102 | 0,10 | |
* The par value has been written off from NOK 1.39431124614644 to NOK 0,10 per share in 2020.
The Company has one class of shares, all shares provide equal rights, including the right to any dividends in line with 2019. Each of the shares carries one vote in line with 2019. Neither AGS nor any of its subsidiaries directly or indirectly owns shares or treasury shares in the Company.
| Changes in number of shares | Shares |
|---|---|
| Number of shares 1.1.2019 | 500 958 750 |
| New shares issued - cash settled | 234 496 171 |
| Merge with Songa | 294 181 968 |
| Merge with Songa split | 20 592 738 |
| Share from Songa | 717 199 |
| New shares as Axxis Geo Solutions ASA 2.7.2019 | 21 309 937 |
| New shares issued - cash settled | 37 511 082 |
| Number of shares 31.12.2019 | 58 821 018 |
| Change in 2020 | |
| Number of shares 31.12.2020 | 58 821 018 |
The board has decided not to propose any dividend for 2020 or 2019 .
| The major shareholders in Axxis Geo Solutions ASA 31 December 2020 were as follows: |
|---|
| ------------------------------------------------------------------------------------- |
| Ownership | |||
|---|---|---|---|
| Shareholders | Total shares | share | Voting share |
| HAVILA HOLDING AS | 15 549 434 | 26,4% | 26,4% |
| ROGER IGELSTRØM | 2 000 000 | 3,4% | 3,4% |
| JOHS, HANSEN REDERIAS | 1413345 | 2,4% | 2,4% |
| Nordnet Bank AB | 1096145 | 1,9% | 1,9% |
| TOM DANIELSEN | 1073 166 | 1.8% | 1,8% |
| FRANK ROBERT SUNDE | 742 468 | 1,3% | 1,3% |
| J.P. Morgan Securities LLC | 703 618 | 1,2% | 1,2% |
| NÆRINGSLIVETS HOVEDORGANISASJON | 671 343 | 1,1% | 1,1% |
| DAGUSIKI HOLDING AS | 660 572 | 1,1% | 1,1% |
| DEHGHAN ZAKLAKI | 629 647 | 1,1% | 1,1% |
| YVES MEROUR | 541 531 | 0.9% | 0,9% |
| JOHN OTTO DYBVIK | 500 995 | 0,9% | 0,9% |
| MORTEN HÅVAR OLSEN | 500 000 | 0.9% | 0,9% |
| ACTION AS | 454 850 | 0.8% | 0,8% |
| ALCIDES SHIPPING AS | 450712 | 0,8% | 0,8% |
| RONNY BRATTAAS | 421 763 | 0,7% | 0,7% |
| Deutsche Bank Aktiengesellschaft | 400 028 | 0.7% | 0.7% |
| MADRA INVEST AS | 373734 | 0,6% | 0,6% |
| NORDNET LIVSFORSIKRING AS | 365 477 | 0,6% | 0,6% |
| THOMAS GRØNSTAD | 350 000 | 0.6% | 0,6% |
| Total 20 largest shareholders | 28 898 828 | 49,1% | 49,1% |
| Total other shareholders | 29 922 190 | 50,9% | 50,9% |
| Total number of shares | 58 821 018 | 100,0% | 100,0% |
| Shares owned or controlled by members of the Board of Directors, Chief Executive Officer and Other Executive Officers 31 December 2020 were as follows: Board of Directors |
Position | Number of shares |
Ownership share | Voting share |
Number of options |
|---|---|---|---|---|---|
| Havila Holding AS 1) | 15 549 434 | 26,4 % | 26,4 % | - | |
| 1) Partly owned by Njål Sævik | Board member | 42 000 | |||
| Share and options owned by management 31 December 2020 were as follows: | |||||
The major shareholders in Axxis Geo Solutions ASA 31 December 2019 were as follows:
| Number of | Voting | Number of | |
|---|---|---|---|
| share | options | ||
| Executive management | Position | Number of shares |
Number of options |
|---|---|---|---|
| Lee Parker (CEO till August 8 2020) | CEO | 559 390 | |
| Ronny Bøhn (CEO from August 8 2020) | CEO | $\sim$ | |
| Svein Knudsen (CFO till 1 April 2020) | CCO | 17000 | 106 400 |
| Nils Haugestad CFO (CFO from 1 April 2020) | CFO | ||
| Richard Dunlop | EVP Operations | 144 228 | 106 400 |
| Shares owned or controlled by members of the Board of Directors, Chief Executive Officer and Other Executive Officers 31 December 2019 were as follows: |
|||||
|---|---|---|---|---|---|
| Board of Directors | |||||
| Position | Number of shares |
Ownership share | Voting share |
Number of options |
|
| Havila Holding AS 1) | 15 549 434 | 26,4 % | 26,4 % | - | |
| 1) Partly owned by Njål Sævik | Board member | 42 000 | |||
| Share and options owned by management 31 December 2019 were as follows: | |||||
| Number of | Number of | ||
|---|---|---|---|
| Executive management | Position | shares | options |
| Lee Parker | CEO | 559 390 | 176 400 |
| Richard Dunlop | EVP Operations | 144 228 | 106 400 |
| Svein Knudsen | CFO | 17000 | 106 400 |
The ultimate Parent of the Group is Axxis Geo Solutions ASA. The Group transactions and balances with other Group companies in 2020 and 2019 mainly related to time charter for vessels and consultancy fees. See the figure below for balances with related parties.
| USD thousands | Full Year 2020 |
Full Year 2019 |
|---|---|---|
| Hired vessels: | ||
| Lease payment Havila Fortune - controlled by Havila Holding AS | (3275) | (4756) |
| Lease payment Havila Aurora - controlled by Havila Holding AS | (3746) | (2997) |
| Lease payment Geo Caspian - controlled by Havila Holding AS | (31) | (3267) |
| Ship management and other operating services: | ||
| Remøy Shipping controlled by W2 Seismic AS | (259) | |
| Evotec AS - controlled by Rome AS * | (985) | |
| Consultancy and accounting services: Impact Geo Solutions controlled by Bjarte Bruheim * |
(444) | |
| Rome AS controlled by Jogeir Romestrand * | (205) | |
| Hasund AS - controlled by Bjørnulf AS | 180 | |
| Energy Consulting AS controlled by Christian Huseby ** | (159) | |
| Interest and guarantee payments: | ||
| Interest ONGC guarantee to Havila Holding AS | (83) | |
| Interest on shareholder loan from Havila Holding AS | (39) | |
| Interest on shareholder loan from TRH AS | (11) | |
| Interest on shareholder loan from Songa Investments AS | (39) |
| USD thousands | 31.12.2020 | 31.12.2019 |
|---|---|---|
| Account payables: | ||
| Impact Geo Solutions controlled by Bjarte Bruheim * | $\overline{\phantom{a}}$ | 123 |
| Rome AS * | ۰ | |
| Evotec AS - controlled by Rome AS * | 863 | |
| Havila Ships AS controlled by Havila Holding AS | 1 1 1 6 | 6019 |
* The previously shareholders of AGS ASA, Bjarte Bruheim and Rome AS with zero shares as of December 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 June 2020, Christian Huseby was selected as Chairman of the Board at the Annual General Meeting, in addition to delivering consultancy services from April 2020 to December 2020.
| USD thousands | Full Year 2020 |
Full Year 2019 |
|---|---|---|
| Wages and salaries | 2 3 2 1 | 1683 |
| Social Security costs | 261 | 182 |
| Pension costs | 103 | 53 |
| Other remuneration | 701 | 708 |
| Share based payment expense (refer to note 22) | З | $-11$ |
| Total personnel expense | 3388 | 2616 |
| Number of man-years at 31.12 | 2020 | 2019 |
| Group companies in Norway | 9 | 6 |
| Group companies abroad | 4 |
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.
A loan of USD 90 thousands was given the the CEO, Lee Parker in 2020. The loan will a part of the settlement with the former CEO.No loan or collateral has been granted to the CEO, the Chairman of the Board or other related parties.
In 2020, the Group paid compensation to its executive officers as follows:
| Name | Fixed salary | Bonus | benefits benefits | Other Pension | Share based payment cost |
Total cost |
Number of options held |
|---|---|---|---|---|---|---|---|
| Lee Parker (CEO till August 8 2020) | 210 | $\overline{\phantom{a}}$ | 37 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 247 | $\overline{\phantom{a}}$ |
| Ronny Bøhn (CEO from August 8 2020) | 100 | $\sim$ | ۰ | 108 | |||
| Svein Knudsen CCO (CFO till 1 April 2020) | 213 | ۰ | 17 | 233 | 106 400 | ||
| Nils Haugestad (CFO from 1 April 2020) | 191 | 13 | 205 | ||||
| Richard Dunlop (EVP Operations) | 220 | $\overline{\phantom{a}}$ | 24 | $\overline{\phantom{a}}$ | 246 | 106 400 |
| Share based |
Number of | ||||||
|---|---|---|---|---|---|---|---|
| Name | Fixed salary | Bonus | Other benefits |
Pension benefits |
payment cost |
Total cost | options held |
| Svein Knudsen (CFO) | 273 | $\overline{\phantom{a}}$ | 18 | 41 | 332 | 106 400 | |
| Lee Parker (CEO) | 360 | $\overline{\phantom{a}}$ | 35 | ٠ | 68 | 463 | 176 400 |
| Rick Dunlop (EVP Operations) | 240 | ٠ | 23 | $\overline{\phantom{a}}$ | 41 | 304 | 106 400 |
In 2020, for the period from AGM 2019 to AGM 2020, the Group paid following compensations to Board of Directors:
| Name | Position | Director since | Term expire |
Fee | Share based payment cost |
Number of options held |
|---|---|---|---|---|---|---|
| Christian Huseby | Chairman | 30.6.2020 | 2022 | ۰ | $\overline{\phantom{a}}$ | |
| Njål Sævik | Board Member | 6.11.2017 | 2021 | 29 | 2 | 42 000 |
| Nina Skage | Board Member | 2.7.2019 | 2021 | 35 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ |
| Eirin Inderberg | Board Member | 2.7.2019 | 2021 | 29 | $\overline{\phantom{a}}$ | ۰ |
| Vibeke Fængsrud | Board Member | 2.7.2019 | 2021 | 34 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ |
| Director to | ||||||
| Rolf Rønningen | Chairman | 30.6.2020 | N/A | 43 | $\overline{\phantom{a}}$ | |
| Tore Tønseth | Board Member | 12.2.2020 | N/A | $\overline{\phantom{a}}$ | ||
In 2019, for the period from AGM 2018 to AGM 2019, the Group paid following compensations to Board of Directors:
| Position | Director since | Term expire |
Fee | энаге based cost |
Number of options held |
|---|---|---|---|---|---|
| Chairman | 2.7.2019 | 2020 | ۰ | ۰ | ۰ |
| Board Member | 6.11.2017 | 2020 | 25 | 19 | 42 000 |
| Board Member | 2.7.2019 | 2020 | ۰ | ||
| 2.7.2019 | 2020 | ۰ | ۰ | ||
| 2.7.2019 | 2020 | ۰ | |||
| Director to | |||||
| 1.11.2019 | N/A | 51 | 50 | ۰ | |
| 1.11.2019 | N/A | 36 | 16 | ||
| 1.11.2019 18.12.2019 |
N/A | 4 | ٠ | ||
| 1.12.2019 12.2.2020 |
N/A | ٠ | |||
| Chairman | 2.7.2019 | N/A | 50 | 68 | |
| 2.7.2019 | N/A | 25 | 16 | ۰ | |
| 2.7.2019 | N/A | 25 | 19 | ||
| Board Member Board Member Board Member Board Member Board Member Board Member Board Member Board Member |
payment |
See note 18 for shares held by the Group`s Board of Directors.
The Group has a share based payment scheme for employees and some members 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:
| 2020 | 2019 | ||||
|---|---|---|---|---|---|
| Average exercise price per share option (NOK) |
Number of options |
Average exercise price per share option (NOK) |
Number of options |
||
| As at $1.1*$ | 9.4500 | 749 479 | 8,8761 | 981879 | |
| Granted during the year | 25,0000 | 28 000 | |||
| Expired during the year | 8,9556 | (260 400) | |||
| Terminated during the year | 8,6400 | (344400) | - | ||
| As at 31.12 | 10,1400 | 405 079 | 9,4508 | 749 479 | |
| Vested 31.12 | 9,8700 | 398 079 | 8,9002 | 656 609 | |
| Exercisable 31.12 | 398 079 | 656 609 |
* after the merge with Songa - new number of option
| Full Year 2020 | Full Year 2019 | |
|---|---|---|
| Share based payment cost (revenue) recognised in the period USD thousand |
3 | $-11$ |
| Granted instruments Instrument |
2020 Option |
2019 Option |
| Quantity 31.12 (instruments) | 28 000 | |
| Quantity 31.12 (shares) | 28 000 | |
| Contractual life* | 5,75 | |
| Strike price* | 25,00 | |
| Share price* | 22,45 | |
| Expected lifetime* | 2,25 | |
| Volatility* | 57,65% | |
| Interest rate* | 1,329% | |
| Dividend* | 0,00 | |
| FV per instrument* | 6,87 | |
| Vesting conditions |
*Weighted average parameters at grant of instrument
| Grant date | Expiry date | Exercise price | Share options 31 December 2020 |
Share options 31 December 2019 |
|---|---|---|---|---|
| 15.9.2017 | 15.9.2022 | 6,96 | 196 000 | 406 000 |
| 27.9.2018 | 27.9.2023 | 11.28 | 181079 | 315479 |
| 1.5.2019 | 1.5.2024 | 25,00 | 28 000 | 28 000,00 |
| Total number of options | 405 079 | 749 479 |
| Outstanding instruments overview | |||||
|---|---|---|---|---|---|
| Strike Price | Number of instruments |
Weighted Average remaining contractual life |
Weighted Average Strike Price |
Vested instruments 31.12.2020 |
Weighted Average Strike Price |
| Outstanding instruments | Vested instruments | ||||
| 6,96 | 196 000 | 2,70 | 6,96 | 196 000 | 6,96 |
| 11,28 | 181079 | 3,49 | 11,28 | 181079 | 11,28 |
| 25,00 | 28 000 | 4,09 | 25,00 | 21 000 | 25,00 |
| 405 079 | 398 079 |
The exercise price for both 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 2019 grant, 50% of the options vested on grant date, while the remaining option will vest in May 2024. The fair value at grant date was 6.87 NOK/option.
The fair value has been estimated using the the Black-Scholes option pricing model. When calcluating fair value at grant date, the group has assumed a volatility of 49% from comparable peers in the oil and gas services for both grants, 0 expected dividends, and a risk free interest rate of 1.98% for the 2019 grant.
| USD thousands | ||
|---|---|---|
| ---------------------- | -- | -- |
| Expensed audit fee (excluding VAT) | Full Year 2020 | Full Year 2019 |
|---|---|---|
| Statutory audit | 159 | 122 |
| Tax advice (incl. technical assistance with tax return) | 109 | 55 |
| Other attestation services | 27 | 24 |
| Other assurance services | ۰ | |
| Total auditors fee | 295 | 202 |
| Equity | Voting | |||
|---|---|---|---|---|
| Subsidiary of AGS ASA: | Jurisdiction | interest % | rights % | |
| Neptune Seismic AS | Norway | 100 % | 100 % | |
| Axxis Geo Solution Inc. | USA | 100 % | 100 % | |
| PT Axxis Geo Solutions* | Indonesia | 49 % | 100 % | |
| Axxis Multi Client AS | Norway | 100 % | 100 % | |
| Axxis Production AS Axxis Multi Client International AS |
Norway Norway |
100 % 100 % |
100 % 100 % |
|
| Axxis Geo Solutions Egypt LLC** | Egypt | 100 % | 100 % |
* The formal shareholdings in Axxis Geo Solutions PT is 49 %. The Group has control of operating decisions and is exposed to 100 % of variability of the companys' results through a shareholder agreement. Because of this, no non-controlling interest has been recognised in the financial statements.
** Axxis Production AS owns 99% and Axxis Geo Solutions ASA owns 1% of the shares in the company.
Basic earnings per share is calcuated 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 earnigs 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 warrants and options described in note 18, are not included in the number of dilutive shares, since the Group report a loss in both periods presented.
| Basic earnings (loss) per ordinary number of share | 2020 | 2019 |
|---|---|---|
| Profit (loss) attributable to the ordinary equity holders of the | ||
| company | (3133) | (46 477) |
| Number of outstanding shares | 58 821 018 | 58 821 018 |
| Basic earnings (loss) per ordinary share (USD) | (0,05) | (0, 79) |
| Basic earnings (loss) per weighted average number of share | 2020 | 2019 |
| Profit (loss) attributable to the ordinary equity holders of the | ||
| company | (3133) | (46477) |
| Average number of outstanding shares | 58 821 018 | 34 111 774 |
| Basic earnings (loss) per weighted average share (USD) | (0,05) | (1, 36) |
| Diluted earnings (loss) per share | 2020 | 2019 |
| Profit (loss) attributable to the ordinary equity holders of the | ||
| company | (3133) | (46477) |
| Average number of outstanding shares | 58 821 018 | 34 111 774 |
| Diluted earnings (loss) per share (USD) | (0,05) | (1, 36) |
Due to loss in both years, the number of diluted shares 140 907 is not taken into calculations above for 2019.
| Liabilities arising from financing activities | |||||||
|---|---|---|---|---|---|---|---|
| USD thousands | Current interest bearing debt |
liabilities | Non-current Current lease interest bearing |
Non-current debt lease liabilities |
Total | ||
| 1.1.2020 | 2 2 5 6 | 224 | ۰ | 73 | 2553 | ||
| Cash flows | (1440) | (230) | (1670) | ||||
| Other* | 33 090 | ۰ | 33 097 | ||||
| Reclassification | (17417) | 73 | 17417 | (73) | |||
| 31.12.2020 | 16 489 | 73 | 17417 | 33 979 |
* Mainly related to trade payables converted to loans.
| Liabilities arising from financing activities | ||||||
|---|---|---|---|---|---|---|
| USD thousands | Current interest bearing debt |
liabilities | Non-current Current lease interest bearing |
Non-current debt lease liabilities |
Total | |
| 1.1.2019 | 3424 | 94 | 142 | 3660 | ||
| Cash flows | (1127) | (204) | (1331) | |||
| New leases | 254 | 254 | ||||
| Other | (41) | 12 | (29) | |||
| Reclassification | ۰ | 323 | (323) | |||
| 31.12.2019 | 2 2 5 6 | 224 | - | 73 | 2554 |
The Group implemented IFRS 16 effective as of 1 January 2019.
The Company has after the reporting period received default notice from Nordic Trustee on behalf of the bondholders and from Eksportkreditt for unpaid installment and interest in January 2021. The Company is in active dialogue with the respective creditors and expect to find a solution which is aligned with the outcome of the court-protected reconstruction
The Company announced 16 February 2021 that the Company had not been able to reach agreement with all creditors in order to implement a voluntary solution to refinance the Company. Consequently, the Company filed for court protected reconstruction.
On 17 February 2021, the District Court of Asker and Bærum authorized opening of reconstruction negotiations for the Company. On 7 April 2021, the Company presented the final proposal for reconstruction by forced debt settlement. The proposal from the company involves a forced debt settlement of the Company's unsecured debt. Secured debt, up to the value of the pledged assets, is not part of the forced debt settlement. The deadline for creditor replies is 27 April 2021.
Under the court-authorized reconstruction negotiations, the Company continues normal business operations under the oversight of the Debt Restructuring Committee. Unsecured liabilities incurred prior
to the opening of reconstruction negotiations are "frozen". All liabilities that are incurred thereafter shall be covered in their entirety.
Under the reconstruction proposal, Company creditors are offered the following:
It is not opened reconstruction negotiations in the subsidiaries of the Company. The Company has arranged for separate voluntary debt settlements in the subsidiaries. The Company aims to achieve a solution whereby the bondholders also waive claims and collateral in the subsidiaries, thus avoiding insolvency proceedings in these companies.
The reconstruction will be financed through an equity issue for cash of USD 17-20million, where a group of investors on certain conditions have committed to provide the Company with USD 17 million, at a subscription price of 0.1 NOK/share. After the reconstruction is complete, the Company will have an attractive financial position and satisfactory liquidity. This forms a sound basis for continued operations.
Ongoing agreements which the Company is party to and that are not terminated during the reconstruction negotiations continue.
It is the opinion of the Company that the creditors will receive a higher recovery in the reconstruction proposal compared to alternative bankruptcy proceedings. Through bankruptcy proceedings, the Company estimates that creditors with ordinary (general and unsecured) claims would be able to achieve a dividend in the range 0–2%.
| USD thousands | Note | Full year 2020 | Full year 2019 |
|---|---|---|---|
| Total revenue | 2,3 | 42429 | 135 265 |
| Cost of sales | 4 | (39957) | (111542) |
| Personnel expenses | 19,2 | (3335) | (2529) |
| Other operating expenses | (3920) | (44607) | |
| Total Operating Expenses | (47213) | (158678) | |
| Operating profit (loss) before depreciation and amortization (EBITDA) |
(4784) | (23413) | |
| Depreciation & Amortization | 10 | (5682) | (5931) |
| Operating profit (loss) (EBIT) | (10466) | (29344) | |
| Financial income | 5 | 9485 | 43 |
| Financial expenses | 5 | (4315) | (5903) |
| Currency gain (loss) | 5 | (260) | (852) |
| Profit (loss) before tax | (5556) | (36055) | |
| Tax income (expense) | 6 | 109 | (4482) |
| Profit (loss) for the period | (5447) | (40537) |
| USD thousands | As of 31.12.2020 |
As of 31.12.2019 |
As of 01.01.2019 |
|
|---|---|---|---|---|
| Assets | Note | Restated* | Restated* | |
| Non-current assets | ||||
| Deferred tax asset | 4576 | |||
| Property, plant and equipment | 10 | 11 662 | 17 283 | 16 535 |
| Investment in subsidiaries | 22 | 2 2 5 1 | 1873 | 4 2 2 9 |
| Other non current assets | 510 | |||
| Total non-current assets | 13913 | 19 15 6 | 25850 | |
| Current assets | ||||
| Stock of supplies | 11 | 85 | 317 | 1948 |
| Trade receivables | 8,13 | $\Omega$ | 11369 | 3941 |
| Receivables group companies | 18 | 28 548 | 26 332 | |
| Other current assets | 9 | 231 | 2 5 8 2 | 5835 |
| Cash and cash equivalents | 7 | 194 | 1314 | 7569 |
| Total current assets | 29 059 | 41914 | 19 2 9 3 | |
| Total assets | 42 972 | 61 070 | 45 143 |
| USD thousands | As of 31.12.2020 |
As of 31.12.2019 |
As of 01.01.2019 |
|
|---|---|---|---|---|
| Equity and Liabilities | Note | Restated* | Restated* | |
| Equity | ||||
| Share capital | 17 | 840 | 11718 | 8396 |
| Additional paid-in capital | 17 | 38 453 | 38 4 53 | 5944 |
| Total paid-in capital | 39 294 | 50 171 | 14 3 3 9 | |
| Accumulated earnings and other equity | (43800) | (49 234) | (8671) | |
| Total Equity | (4506) | 938 | 5 6 6 8 | |
| Non current liabilities | ||||
| Interest bearing debt | 12,15,23 | 17417 | 22 | 98 |
| Total non current liabilities | 17417 | 22 | 98 | |
| Current liabilities | ||||
| Current liability of long-term debt | 12,15,23 | 16511 | 2 3 4 2 | 3510 |
| Trade payables | 13 | 10557 | 41 380 | 20 677 |
| Liabilities to group companies | 18 | 2014 | 736 | 9320 |
| Other current liabilities | 16 | 978 | 15 651 | 5869 |
| Total current liabilities | 30 060 | 60 110 | 39 376 | |
| Total liabilities | 47478 | 60 132 | 39 474 | |
| Total equity and liabilities | 42972 | 61 070 | 45 143 |
* Restated due to changes of presentation currency from NOK to USD
The Board of Directors and CEO of Axxis Geo Solutions ASA
[Sign.] _________________________ _________________________ _________________________ Christian Huseby Njål Sævik Vibeke Fængsrud
Chairman Director Director _________________________ _________________________ _________________________
Director Director CEO
Nina Skage Eirin Inderberg Ronny Bøhn
| USD thousands | Share capital | Additional paid-in capital |
Accumulated earnings | Total equity |
|---|---|---|---|---|
| Balance as of 1.1.2020 | 11718 | 38453 | (49234) | 938 |
| Profit (loss) for the period | (5447) | (5447) | ||
| Other comprehensive income (loss) | ||||
| Write down of par value | (10878) | 10878 | ||
| Share based payment | ||||
| Balance as of 31.12.2020 | 840 | 38 4 53 | (43800) | (4506) |
| USD thousands | Share capital | Additional paid-in capital |
Accumulated earnings | Total equity |
|---|---|---|---|---|
| Balance as of 1.1.2019 | 8 3 9 6 | 5944 | (8671) | 5668 |
| Share based payment 1.1.2019 | (423) | (423) | ||
| Profit (loss) for the period | (40537) | (40537) | ||
| Other comprehensive income (loss) | ||||
| New shares issued - cash settled | 8468 | 27564 | 36 033 | |
| Cost for new shares issued | (1876) | (1876) | ||
| 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 | 397 | 397 | ||
| Balance as of 31.12.2019 | 11718 | 38 4 53 | (49234) | 938 |
| Cash flow from operating activities Profit before tax 6 Depreciation and amortization 10,15 Currency (gain)/loss without cash flow effects 5 Interest expense Share based payment cost 20 Change in trade receivables 8 Change in trade payables 13 Change in inventory 11 Change in other current receivables 9 Change in other non current receivables Other working capital changes 12,16 Net cash from operating activities Cash flow from investing activities Investment in property, plant and equipment 10 Disposal of property, plant and equipment 10 Write-down subsidiaries Investment in subsidiaries 22 Cash received/ paid from merger 2.0 Net cash flow from investment activities Cash flow from financing activities |
(5556) 5682 (72) 3 0 4 2 3 11 3 6 9 (30823) 232 135 18 004 |
(36055) 5931 (1317) 3 1 8 8 (11) (7428) 20703 1630 (23079) 510 |
|---|---|---|
| 1 1 9 8 | ||
| 2015 | (34729) | |
| (62) | (5618) | |
| 204 | ||
| 2702 | ||
| (377) | (11) | |
| 425 | ||
| (235) | (2502) | |
| Repayment of interest bearing debt 12 |
(1440) | (1127) |
| Payment of lease liabilities (recognized under IFRS 16) 15 |
(82) | (69) |
| Net proceeds from new equity 17 |
34 156 | |
| Interest paid lease liabilities 15 |
(3) | (6) |
| Interest paid | (1374) | (1979) |
| Net cash flow from financial activities | (2899) | 30 975 |
| Net change in cash and cash equivalents | (1119) | (6256) |
| Cash and cash equivalents balance 1.1 7 |
1314 | 7569 |
| Cash and cash equivalents balance 31.12 7 |
194 | 1314 |
Axxis Geo Solutions ASA is a public limited listed company incorporated in Norway. The Company is listed on EURONEXT EXPAND OSLO and traded under the ticker Axxis.
The Company's registered office is at Strandveien 50, 1366 Lysaker, Norway.
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 2020.
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 22) 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.
From 1 January 2020 the parent company changed its functional currency from NOK to USD. This change is accounted for prospectively with effect from 1 January 2020. The change in presentation currency has been accounted for retrospectively, similar to a change in accounting policy. The Company has restated prior periods for this voluntary presentational change in line with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, from 1 January 2019. This point in time represents the earliest date from which it was practicable to perform a restatement, given the lack of sufficiently reliable data for earlier periods. As a consequence, foreign currency translation gains or losses prior to 2019 has been disregarded, with the FCT effects first calculated from 1 January 2019 onwards. In addition, the Company has included a statement of financial position at the beginning of the comparative period, i.e. as of 1 January 2019, in line with IAS 1, Presentation of Financial Statements.
The Company makes estimate 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.
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.
The Company prepares and maintains a rolling P&L and cash forecast, in addition to key balance sheet items (trade payables, long-term debt, and cash). The forecast is based on the assumed restructuring of the Company's balance sheet as a part of the proposed reconstruction (see note 26 Events after the reporting period. Management's operational outlook is derived from existing pipeline of opportunities. The forecast is adjusted for the current trough in the oil and gas markets. In the Company's current forecast, cash and cash equivalents are expected to remain positive for the 12-month period following the 2020 financial statements.
The Company's cash flow forecast is based on existing firm commitments and the Company's expectations for future opportunities and the Company's corporate restructuring efforts, specifically:
The financial forecast has been prepared based on the current challenging market conditions. There are, however, risks related to the assumptions in the forecast:
The annual accounts are prepared on the assumption of a going concern. However, the Company's and the Company's financial situation is unsustainable as equity is negative and liquidity is under pressure and hence there is material uncertainty related to the going concern assumption. The Company has filed for a court-protected reconstruction and put forth a restructuring plan to its creditors. If successful in this restructuring, the Company will strengthen its working capital and improve its liquidity. The outcome of these discussions is uncertain and the going concern assumption is subject to material uncertainty.
Management has used its best judgements in the evaluation of the going concern assumption. Although there are significant uncertainties and risk listed above related to events or conditions that might impact the future cash flows, management is of the opinion that the going concern assumption is appropriate and the accounts are prepared under the going concern assumption. If the Company is unsuccessful with the above activities, the financial statements do not reflect impairment charges or provisions that might be required if the Company was liquidated or the assets were sold in a distressed situation.
The impacts of COVID-19 on businesses across the globe is substantial and presents new challenges to our normal business practices. The Group has been planning for and monitoring developments since the initial spread of the virus in early 2020 and has taken a series of steps to maintain the continuity of our services for our customers and to safeguard the health of our employees and stakeholders.
During the year, the Company received a cancellation of a small contract in the North Sea which was expected to be conducted in the second quarter of 2020. The contract revenues related to this survey was estimated at USD 1 million. The Company received a cancellation fee of 25% of the estimated revenue amount.
Management has evaluated the merger between Songa Bulk ASA and Axxis Geo Solutions AS (AGS AS) with a reverse share split, forming Axxis Geo Solutions ASA (AGS ASA), not to be considered a business combination under IFRS, but a reverse takeover/acquisition of a non-trading shell company. There were no employees, no processes or no asset except cash that was transferred in the merge.
The Company operates only one segment, which is based on the Contract revenue stream, and therefore no split of operating expenses has been included in the note. Revenue recognition for the Contract segment is based on the same principles as the IFRS financial statements.
| USD thousands Income statement |
Full Year 2020 Full Year 2019 | |
|---|---|---|
| Contracts for seismic acquisitions | 2 5 0 8 | 70417 |
| Other revenue | 39 9 21 | 64 847 |
| Multi-client projects | ||
| Total revenue from contracts with customers | 42429 | 135 265 |
| USD thousands |
|---|
| ---------------------- |
| Geographical markets | Full Year 2020 Full Year 2019 | |
|---|---|---|
| Norway | 39 9 21 | 53 717 |
| Asia | 63 3 3 7 | |
| Middle East | $\overline{\phantom{a}}$ | 13798 |
| Brazil | 2508 | 4413 |
| Total revenue | 42 429 | 135 265 |
| Major customers | Full Year 2020 Full Year 2019 | ||
|---|---|---|---|
| Customer 1 | 36 760 | 62 962 | |
| Customer 2 | 3 1 6 1 | 53717 | |
| Customer 3 | 2 508 | 11713 | |
| Other | $\overline{\phantom{a}}$ | 6873 | |
| Total revenue | 42429 | 135 265 |
| USD thousands | ||
|---|---|---|
| Income statement | Full Year 2020 | Full Year 2019 |
| Contracts for seimic acquisition | 2 5 0 8 | 70417 |
| Other revenue | 39 9 21 | 64 847 |
| Multi-client projects | ||
| Total revenue from contracts with customers | 42 4 2 9 | 135 265 |
| At a point in time | $\overline{\phantom{a}}$ | |
| Over time | 42 4 2 9 | 135 265 |
| Total revenues from contracts with customers | 42429 | 135 265 |
| Full Year 2020 | Full Year 2019 |
|---|---|
| 69 | 3 3 9 0 |
| $\overline{\phantom{a}}$ | 993 |
| (69) | (4314) |
| $\Omega$ | 69 |
The Company has no current contract liabilities per 31.12.2020.
The contracts for seismic surveys have an expected duration of less than one year. Because of this, the Group does not disclose information about transaction price allocated to unsatisfied or partly unsatisfied performance obligations for these contracts. Contracts for seimic surveys ususally have a billing shcedule with frequent billings, so there will not be a material difference in timing of the payments and the progress in the projects.
| Cost of sales | Full Year 2020 Full Year 2019 | |
|---|---|---|
| Vessel cost | (16966) | (52417) |
| Crew & project management | (8674) | (19159) |
| Seismic, source and node equipment | (13289) | (27059) |
| Agent related expenses | (960) | (9584) |
| Mobilization amortization | (69) | (4314) |
| Mobilization cost capitalized | 993 | |
| Total operating expenses | (39957) | (111542) |
| USD thousands Financial income |
Full Year 2020 | Full Year 2019 |
|---|---|---|
| Interest income | ||
| Other financial income | 3847 | 34 |
| Group contribution (from subsidiary) | 5637 | |
| Total financial income | 9485 | 43 |
| Financial expenses | Full Year 2020 | Full Year 2019 | |
|---|---|---|---|
| Interest expense | 1 2 2 7 | 1087 | |
| Interest expense suppliers | 1815 | 898 | |
| Other financial expenses | 1 2 7 3 | 1 2 1 5 | |
| Write-down shares in subsidiaries | 2702 | ||
| Total financial expenses | 4315 | 5903 | |
| Currency exchange gain (loss) | Full Year 2020 | Full Year 2019 | |
| Exchange gains | 3 2 4 9 | 2 2 5 5 | |
| Exchange losses | (3509) | (3107) | |
| Total currency exchange gain (loss) | 12501 | (952) |
| USD thousands | Full Year 2020 | Full Year 2019 | |
|---|---|---|---|
| Specification of tax expense (income) for the year | |||
| Current income tax (including witholding tax) | |||
| Change in deferred tax | (109) | 4482 | |
| Total tax expense (income) | (109) | 4482 |
| Profit (loss) before tax | (11194) | (36055) |
|---|---|---|
| 22% tax | (2, 463) | (7932) |
| Tax effect from: | ||
| Non taxable income | ||
| Withholding tax abroad | (109) | |
| Receive Group contribution | 1 2 4 0 | |
| Permanent differences | (86) | (423) |
| Not booked deferred tax assets | 1503 | 12873 |
| Currency effect | (195) | (36) |
| Calculated tax expense (income) | (109) | 4482 |
| Effective tax rate for the Company | 1,0 | 12,4 |
| USD thousands | 31.12.2020 | 31.12.2019 |
| Temporary differences | ||
| Non current assets | (1683) | 908 |
| Accurals | (45757) | (44485) |
| Accumulated loss carried forward | (18157) | (15187) |
| Temporary differences at 31.12. | (65597) | (58764) |
| Deferred tax assets (liabilities) | 14 4 3 1 | 12928 |
Deferred tax assets is not recongized per December 2020. The management evaluated the deferred tax assets to be uncertain when to be utilized in the future. This evaluation is performed yearly.
| USD thousands | 31.12.2020 | 31.12.2019 | ||
|---|---|---|---|---|
| Bank deposits | 114 | 1 2 4 6 | ||
| Restricted bank deposits | 80 | 68 | ||
| Total bank deposits | 194 | 1 3 1 4 |
Restricted bank deposits relates to employee withholding tax. These deposits are subject to regulatory restrictions and are therefore not avaliable for genereal use by the Company. The account is used to settle employee withholdig tax.
At 31 December there were two supplier who had outlays in the bank. These are after year-end 2020 resolved and released back to the Company.
| USD thousands | |
|---|---|
| Trade receivables | 31.12.2020 31.12.2019 |
| Trade receivables | 11369 |
| Provisions for bad debts | |
| Net trade receivables | 11369 |
Related parties transactions is disclosed in note 18.
| USD thousands | 31.12.2020 | 31.12.2019 8857 |
|
|---|---|---|---|
| Not overdue as of 31.12 | |||
| Past due 0-30 days | 1 2 4 2 | ||
| Past due 31-180 days | 1055 | ||
| Past due more than 180 days | 215 | ||
| Total | 11 369 |
Trade receivables are amounts due from customers for goods sold or services rendered in the ordinary course of business. Trade receivables are classified as current assets as they are generally due for payment within 30 to 60 days. Trade receivables are recognized initially at the amount of unconditional consideration, unless significant financing components exist. In such instances, trade receivables are recognized at fair value. Refer to note 13 (i) for information about credit risk and expected credit loss.
The Company use the same metod as the Group. 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, typical 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 of 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. Per year-end 2019 the Company had two main clients, being major oil companies and one of them large listed company. All outstanding trade receivables per end 2019 were paid during 2020 apart from one reimbursable item of USD 0.9 million related to the India project. There was no outstanding trade receivables per end 2020.
In addition, the Company has accrued revenue for ongoing projects, which has not been invoiced the customers per year-end, see also note 9.
Accrued revenue as of December 2020 was USD 0.1 million, compared to USD 1.8 million as of December 2019.
The accrued revenue per end 2020 is related to recharge of fuel for redelivered hired vessels. The accrued revenue per end 2019 was related to the ongoing Brazil project. The accrued revenue is following the same impairment model as ordinary trade receivables.
As of December 2020 and 2019, there were no indicators for the need of impairment.
| USD thousands | 31.12.2020 | 31.12.2019 | |
|---|---|---|---|
| Prepayments | 151 | 692 | |
| Mobilization | 71 | ||
| Accrued income | 80 | 1817 | |
| Other current receivables | |||
| Total other current assets | 231 | 2.582 |
| Economic lifetime in years | 3-10 | 3-5 | 3-10 | 2-5 |
|---|---|---|---|---|
| USD thousands | Vessel | Seismic and node equipment |
Projects in progress |
Computer | equipment Lease asset | Total tangible assets |
|---|---|---|---|---|---|---|
| 2019 | ||||||
| Cost at 1.1.2019 | 7332 | 11 672 | 1060 | 157 | ۰ | 20 221 |
| Additions | 839 | 4 2 4 9 | 1552 | 39 | 184 | 6862 |
| Disposal | $\overline{\phantom{a}}$ | (947) | ۰ | (947) | ||
| Reclass ** | ۰ | 2 5 8 3 | (2583) | - | ÷ | |
| Cost at 31.12.2019 | 8 1 7 1 | 17557 | 29 | 196 | 184 | 26 136 |
| Accumulated depreciation 1.1.2019 | (2157) | (1690) | $\overline{\phantom{a}}$ | (24) | ۰ | (3870) |
| Depreciation | (1347) | (3771) | ۰ | (64) | (73) | (5255) |
| Disposal | 271 | ۰ | ٠ | 271 | ||
| Accumulated depreciation at 31.12.2019 | (3504) | (5189) | ۰ | (88) | (73) | (8854) |
| Carrying amount at 1.1.2019 | 5 1 7 6 | 9982 | 1060 | 134 | ۰ | 16 3 5 1 |
| Carrying amount at 31.12.2019 | 4667 | 12 3 6 8 | 29 | 108 | 110 | 17 283 |
** The reclass is related to assets moved from projects in progress to correct asset group when capitalized.
Economic lifetime in years 3-10 3-5 3-10 2-5
According to IFRS the carrying amount of intangible assets and property, plant and equipment are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.
Management regularly evaluates its fleet plan and capital expenditure level in light of market conditions. In 2020 and 2019 management performed such evaluations which did not resulted in impairments related to fixed assets at the year end 2020 or 2019.
The Company has no asset held for sale.
| USD thousands | 31.12.2020 | 31.12.2019 |
|---|---|---|
| Purchased finished goods | 85 | 317 |
| Provision for obsolescence | $\sim$ | |
| Net inventories | 85 | 317 |
The inventories consist of fuel.
The amount of inventories recognized as an expense in cost of sales during 2020 was USD 1.1 million and for 2019 the amount was USD 14.9 million.
| USD thousands | Interest rate (%) | Maturity | 31.12.2020 | 31.12.2019 |
|---|---|---|---|---|
| Lease Liabilities | 5% | 2021 | 22 | |
| NOK 29 750 000 Nibor+5,5% Term Loan | Nibor + 5.5% | 2021 | ||
| USD 24 739 311 Bond Loan | 8% | 2022 | 17417 | |
| Non-current borrowings | 17417 | 22 | ||
| Lease Liabilities | 5% | 2021 | 22 | 86 |
| NOK 29 750 000 Floating rate term loan | $Nibor + 0.5%$ | 2021 | 1 1 6 0 | 2 2 5 6 |
| USD 24 739 311 Bond Joan | 8% | 2022 | 6 0 3 3 | |
| USD 5 780 326 Fixed rate term Joan | 4% | 2021 | 5 6 9 5 | |
| USD 1 490 633 4% Fixed rate term loan | 4% | 2021 | 1 2 4 4 | |
| USD 1 332 704 4% Fixed rate term loan | 4% | 2021 | 1 300 | |
| NOK 2 495 043 4% Fixed rate term Joan | 4% | 2021 | 234 | |
| NOK 12 000 000 Interest Free Loan | 0% | 2021 | 822 | |
| Current borrowings | 16511 | 2 3 4 2 | ||
| Total borrowings | 33 929 | 2 3 6 4 |
Details of the Company's exposure to risk arising from current and non-current borrowings are set out in note 13, Financial risk management.
The term loan is repaid through twelve consecutive quarterly instalments. The term loan has a first priority pledge in the owned vessel, operating assets and factoring agreement.
The loan is in breach of financial covenants, and have been classified to current liabilities in the financial statements since 31.12.2019. However, the Company has received waiver from the two covenants for all the quarters in 2020, including year end 2020.
The financial covenants are as following:
1) Liquid assets of no less than 120% of outstanding loan
2) Equity ratio of 30% until Q4 19 and thereafter 35% till final maturity date (September 2021)
The USD 24 739 311 bond loan was issued in relation to the restructuring completed in 2020, in which USD 24 739 311 of short term payables were converted to a 2-year bond loan. The bond carries a fixed interest of 8% and is repaid either through cash calls or the agreed repayment schedule. For the bond loan, the group has pledged shares in subsidiaries, inventories, operating assets, factoring agreement, and second priority in the owned vessel.
The bond requires the Group to maintain a liquidity balance of USD 2 million, and maintain a 0 dividend policy, through financial covenants. As of 31.12.2020, the covenants for the bond loan are fulfilled.
In relation to the restructuring completed in 2020, the Group has issued a series of fixed rate term loans through conversion of short term payables to long term loan agreements. The loans are unsecured and carry a fixed interest rate from 0% to 4% p.a.
| USD thousands | 2020 | 2019 | |||
|---|---|---|---|---|---|
| Carrying amount | Fair value | Carrying amount | Fair value | ||
| Interest bearing debt | 33929 | 36 480 | 2 3 6 4 | 2 3 6 4 |
The Company is exposed to market specific and general economic cycles and macro-economic fluctuations, since changes in the general economic situation affect the demand from our clients. The Company's business performance depends upon production and development spending by oil and gas companies. Historically, in times of low oil price, demand in exploration spending, where the Company is active, has been reduced in much greater extent than production related spending.
For the purpose of the Company's capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders of the parent.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may return capital to shareholders, issue new shares, or repay or issue new debt. The Company monitors capital using a equity ratio, which is the book value of equity over the book value of assetsin the Company's segment reporting. The Company's policy and target is to keep the equity ratio over 35%.
In order to achieve this overall objective, the Company's capital management, among other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. Refer to Note 12 for information regarding financial covenants related to the Company's interest bearing debt.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2020 and 2019.
The Company use bank loan, bond loan and unsecured loans in addition to equity for financing purposes. The purpose of these financial instruments is to ensure that the Company has financial flexibility for investments that are necessary for the Company's operations. In addition, the Company has items such as trade receivables, trade payables etc. which is directly related to the business's daily operations. The Company does not use financial instruments for hedging purposes. Risk management procedures have been established by the Board and handled by the CFO.
The Company is exposes to financial risk linked to interest rate risk, liquidity risk, currency risk and credit risk. The Company's management has a continuous assessment to identify and evaluate financial risks, and sets guidelines for how to handle them.
The Company does not have any financial derivatives in 2020 or 2019.
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 Company is mainly exposed to credit risk related to trade receivables and other current receivables.
The Company 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 Companyed 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 has been neglectible. Because expected credit loss is considered to be a clearly immaterial amount, no provision has been made.
2020
| USD thousands | More than 30 days past |
More than 60 days past |
More than 120 days |
||
|---|---|---|---|---|---|
| Current | due | due | past due | Total | |
| Expected loss rate | 0% | 0% | 0% | 0% | |
| Carrying amount trade receivables | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | ||
| Loss allowance | $\sim$ | $\overline{\phantom{a}}$ | $\sim$ | $\overline{\phantom{a}}$ |
| USD thousands | More than 30 days past |
More than 60 days past |
More than 120 days |
||
|---|---|---|---|---|---|
| Current | due | due | past due | Total | |
| Expected loss rate | 0% | O% | 0% | 0% | |
| Carrying amount trade receivables | 8857 | 1 2 4 2 | 1055 | 215 | 11369 |
| Loss allowance | $\sim$ | $\sim$ | $\overline{\phantom{a}}$ |
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 Company, 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.
The Company`s main interest rate risk arises from loan from Eksportkreditt/GIEK, which expose the Company to cash flow interest rate risk. The Company 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 Company's sensitivity to potential changes in interest rates with an increase in 50 basis points would increase interest expense for the period with appoximately USD 9 thousands for 2020 (USD 15 thousands for 2019).
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 have sufficient liquidity at all times 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 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 liabilites. 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 the payment may be required from the counterparty. The majority of trade payables are past their respective due dates.
| Remaining Term | ||||||
|---|---|---|---|---|---|---|
| USD thousands | 0-3 months | 3-6 months | 6-9 months | 9-12 months | 1-2 years | Total |
| Borrowings | 5 3 2 3 | 2905 | 3852 | 2999 | 22 5 8 6 | 37 665 |
| Lease liabilities | 23 | $\overline{\phantom{a}}$ | ٠ | $\overline{\phantom{a}}$ | 23 | |
| Trade payables | 10557 | $\overline{\phantom{0}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\,$ | 10557 |
| Other current liabilities | 2 1 6 1 | $\sim$ | ۷ | $\overline{\phantom{a}}$ | 2 1 6 1 | |
| Total | 18 0 64 | 2905 | 3852 | 2999 | 22 5 8 6 | 50 40 6 |
| Remaining Term | ||||||
|---|---|---|---|---|---|---|
| USD thousands | 0-3 months | 3-6 months | 6-9 months | 9-12 months | 1-2 years | Total |
| Borrowings | 2 2 5 6 | $\overline{\phantom{a}}$ | ۰ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 2 2 5 6 |
| Lease liabilities | 4 3 8 8 | 23 | 23 | 23 | 23 | 4478 |
| Trade payables | 41 380 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\sim$ | 41 380 | |
| Other current liabilities | 15 5 72 | 79 | ۰ | ٠ | 15 651 | |
| Total | 63 595 | 102 | 23 | 23 | 23 | 63765 |
The Company operates internationally and is exposed to foreign exchange risk, primarily the NOK. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilites denominated in a currency that is not the functional currency of the relevant Company entity. The Company is exposed to currency risk as some part of the Companys 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 bank loans and 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. The calculation takes into account 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.
| USD thousands | Change in exchange rate |
Effect on profit before |
Effect on OCI |
|---|---|---|---|
| 2020 | $+10%$ | 481 | ۰ |
| $-10%$ | $-588$ | - | |
| 2019 | $+10%$ | 1595 | ۰ |
| $-10%$ | $-1949$ | $\overline{\phantom{a}}$ |
The Company`s significant 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 – prinmarily the companys portion of debt that is denominated in NOK. Changes in currency may also affect the Company's local expenses when operating abroad. The Company's expenses are primarily in USD and NOK. As such, the Company's earnings are exposed to fluctuations in the foreign currency market.
| Financial assets at amortized cost | 31.12.2020 | 31.12.2019 |
|---|---|---|
| ASSETS | ||
| Other non-current assets | ||
| Trade receivables | 11 369 | |
| Cash and cash equivalents | 194 | 1314 |
| Total financial assets | 194 | 12 683 |
| Financial liabilities at amortized cost LIABILITIES |
31.12.2020 | 31.12.2019 |
| Interest-bearing non-current liabilities | 17417 | 22 |
| Interest-bearing current liabilities | 16511 | 2 3 4 2 |
| Trade payables | 10557 | 41 3 8 0 |
| Other current liabilities | 978 | 15 651 |
Axxis Geo Solutions ASA exposure to various risks associated with the financial instruments is discussed in note 13 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.
Due to the short-term nature of cash and cash equivalentes, 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. Subsequent to initial recognition, interest bearing loans are measured at amortized cost using the effective interest method. Gains and losses are recognized in the 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 are considered to be approximately the same as their fair values, due to their short-term nature.
The Company does not hold any financial derivatives.
The Company uses the accounting standard IFRS 16 Leases. IFRS 16 Leases has from a lessee viewpoint eliminated the classification of leases as either operating leases or financial leases.
The standard was effective for accounting periods beginning on or after 1 January 2019 and was adopted by the Company from the same date.
For the Company only office space comes under the classification of leases. Vessels and other seismic equipment on short term leases comes under the classification of commitments. As of 31 December 2020 the Company has no commitments in vessels or seismic equipment.
Lease assets are included in the balance sheet under the item property, plant and equipment. The non current part of the lease liability is included in the balance sheet under the item interest bearing debt non current, and the current part under interest bearing debt current, refer to note 12.
| USD thousands | Offices | Total |
|---|---|---|
| Carrying value | ||
| Balance right-of-use assets 1.1.2020 | 110 | 110 |
| Additions | ||
| Depreciation | (86) | (86) |
| Impairment | ||
| Other adjustments | ||
| Balance right-of-use assets 31.12.2020 | 24 | 24 |
| USD thousands | Non- current* |
Current | Total |
|---|---|---|---|
| Carrying value | |||
| Balance lease liabilities 1.1.2020 | 22 | 86 | 109 |
| Additions | |||
| Reclassification to current | (22) | 22 | |
| Lease payments | (86) | (86) | |
| Accrued interest | З | 3 | |
| Other adjustments | (2) | (2) | |
| Balance lease liabilities 31.12.2020 | (0) | 24 | 24 |
* The lease agreement related to office space expires as of 28 February 2021.
The Company had a total cash outflow for leases of USD 0.09 million of which USD 0.003 million is related to interest in 2020. The Companys had no low-value assets or variable lease payments in 2020.
| Right-of-use assets: | ||
|---|---|---|
| USD thousands | Offices | Total |
| Carrying value | ||
| Balance at 1.1.2019 | ||
| Leases capitalized due to implementation of | ||
| IFRS 16 | ||
| Balance right-of-use assets 1.1.2019 | ||
| Additions | 184 | 184 |
| Depreciation | (73) | (73) |
| Impairment | ||
| Balance right-of-use assets 31.12.2019 | 110 | 110 |
| USD thousands | Non- current* |
Current | Total |
|---|---|---|---|
| Carrying value Leases capitalized due to implementation of IFRS 16 |
|||
| Balance lease liabilities 1.1.2019 | |||
| Additions | 98 | 86 | 184 |
| Reclassification to current | (76) | 76 | |
| Lease payments | (75) | (75) | |
| Accrued interest | 6 | 6 | |
| Other adjustments | (7) | (7) | |
| Balance lease liabilities 31.12.2019 | 22 | 86 | 109 |
* The non current part of the lease liability of USD 22 thousand is due in 2021.
The Company had a total cash outflow for leases of USD 0.08 million ofwhich USD 0.006 million is related to interest in 2020. The Companys had no low-value assets or variable lease payments in 2019.
The Company has not entered into any contractual commitments for the rental of seismic equipment (nodes) as of 31 December 2020. Contractual commitments were USD 1.2 million as of 31 December 2019. The cost for short term leases of seismic equipment was USD 11.8 million in 2020 and USD 10.4 million in 2019.
The Company has no commitments for short-term leases of vessels as of 31 December 2020. Lease commitments of vessels were USD 3.2 million as of 31 December 2019. The cost for short term leases of vessels was USD 14.5 million in 2020 and USD 13.6 million in 2019.
| USD thousands | 31.12.2020 | 31.12.2019 |
|---|---|---|
| Holiday pay owed | 174 | 79 |
| Other accrued costs | 1327 | 6906 |
| VAT settlement | (523) | 8665 |
| Total other current liabilities | 978 | 15 651 |
| The Company's share capital per 31.12.2020 include | Number of | Share Capital in | Par Value per |
|---|---|---|---|
| the following: | shares | NOK | share* |
| Ordinary shares (one share = one vote) | 58 821 018 | 5 882 102 | 0.10 |
* The par value has been written off from NOK 1.39431124614644 to NOK 0,10 per share in 2020.
The Company has one class of shares, all shares provide equal rights, including the right to any dividends in line with 2019. Each of the shares carries one vote in line with 2019. Neither AGS nor any of its subsidiaries directly or indirectly owns shares or treasury shares in the Company.
| Changes in number of shares | Shares |
|---|---|
| Number of shares 1.1.2019 | 500 958 750 |
| New shares issued - cash settled | 234 496 171 |
| Merge with Songa | 294 181 968 |
| Merge with Songa split | 20 592 738 |
| Share from Songa | 717 199 |
| New shares as Axxis Geo Solutions ASA 2.7.2019 | 21 309 937 |
| New shares issued - cash settled | 37 511 082 |
| Number of shares 31.12.2019 | 58 821 018 |
| Change in 2020 | |
| Number of shares 31.12.2020 | 58821018 |
The Board has decided not to propose any dividend for 2020 or 2019.
The major shareholders in Axxis Geo Solutions ASA 31 December 2020 were as follows:
| Ownership | |||
|---|---|---|---|
| Shareholders | Total shares | share | Voting share |
| HAVILA HOLDING AS | 15 549 434 | 26,4% | 26,4% |
| ROGER IGELSTRØM | 2 000 000 | 3.4% | 3,4% |
| JOHS. HANSEN REDERI AS | 1413345 | 2.4% | 2,4% |
| Nordnet Bank AB | 1096 145 | 1,9% | 1,9% |
| TOM DANIELSEN | 1073 166 | 1,8% | 1,8% |
| FRANK ROBERT SUNDE | 742 468 | 1.3% | 1,3% |
| J.P. Morgan Securities LLC | 703 618 | 1,2% | 1,2% |
| NÆRINGSLIVETS HOVEDORGANISASJON | 671343 | 1,1% | 1,1% |
| DAGUSIKI HOLDING AS | 660 572 | 1.1% | 1,1% |
| DEHGHAN ZAKLAKI | 629 647 | 1,1% | 1,1% |
| YVES MEROUR | 541 531 | 0,9% | 0,9% |
| JOHN OTTO DYBVIK | 500 995 | 0.9% | 0,9% |
| MORTEN HÅVAR OLSEN | 500 000 | 0.9% | 0,9% |
| ACTION AS | 454 850 | 0,8% | 0,8% |
| ALCIDES SHIPPING AS | 450712 | 0,8% | 0,8% |
| RONNY BRATTAAS | 421763 | 0,7% | 0,7% |
| Deutsche Bank Aktiengesellschaft | 400 028 | 0.7% | 0,7% |
| MADRA INVEST AS | 373734 | 0.6% | 0.6% |
| NORDNET LIVSFORSIKRING AS | 365 477 | 0,6% | 0,6% |
| THOMAS GRØNSTAD | 350 000 | 0.6% | 0,6% |
| Total 20 largest shareholders | 28 898 828 | 49,1% | 49,1% |
| Total other shareholders | 29 922 190 | 50,9% | 50,9% |
| Total number of shares | 58 821 018 | 100,0% | 100,0% |
The major shareholders in Axxis Geo Solutions ASA 31 December 2019 were as follows:
| Number of | Voting share |
Number of options |
|
|---|---|---|---|
| Executive management | Position | Number of shares |
Number of options |
|---|---|---|---|
| Lee Parker (CEO till August 8 2020) | CEO | 559 390 | ۰ |
| Ronny Bøhn (CEO from August 8 2020) | CEO | $\sim$ | $\sim$ |
| Svein Knudsen (CFO till 1 April 2020) | CCO | 17000 | 106 400 |
| Nils Haugestad CFO (CFO from 1 April 2020) | CFO | ||
| Richard Dunlop | EVP Operations | 144 228 | 106 400 |
| Shares owned or controlled by members of the Board of Directors, Chief Executive Officer and Other | |||||
|---|---|---|---|---|---|
| Executive Officers 31 December 2019 were as follows: Board of Directors |
Position | Number of shares |
Ownership share | Voting share |
Number of options |
| Havila Holding AS 1) | 15 549 434 | 26,4 % | 26,4 % | - | |
| 1) Partly owned by Njål Sævik | Board member | 42 000 | |||
| Share and options owned by management 31 December 2019 were as follows: | |||||
| Executive management | Position | Number of shares |
Number of options |
|---|---|---|---|
| Lee Parker | CEO | 559 390 | 176 400 |
| Richard Dunlop | EVP Operations | 144 228 | 106 400 |
| Svein Knudsen | CFO | 17000 | 106 400 |
| USD thousands | ||
|---|---|---|
| Current receivables group companies | 31.12.2020 | 31.12.2019 |
| Axxis Multi Client AS * | 12 3 6 7 | 13324 |
| Axxis Geo Solutions Inc. | 742 | 172 |
| Axxis Production AS | 15 132 | 12786 |
| Axxis Geo Solutions Egypt LLC | 50 | |
| PT Axxis Geo Solutions | 305 | |
| Axxis Multi Client International AS | ||
| Neptune Seismic AS | 2 | |
| Total receivables group companies | 28 5 48 | 26 3 32 |
* The intercompany receivables to Axxis Multi Client AS has per December 2019 been accrued for write down of USD 41.7 million. The amount relates to acquiring of the multi-client project Utsira which completed October 2019. The write-down has not been reversed per December 2020.
| USD thousands | ||
|---|---|---|
| Current liabilities group companies | 31.12.2020 31.12.2019 | |
| Axxis Geo Solutions Inc. | 1379 | 736 |
| Axxis Production AS | 377 | |
| PT Axxis Geo Solutions | 257 | |
| Total liabilites group companies | 2014 | 736 |
For more information on related parties see note 19 for the Group.
| Revenue from group companies | Full year 2020 Full year 2019 | |
|---|---|---|
| Axxis Multi Client AS | 3 1 6 1 | 53 511 |
| Axxis Production AS | 36 762 | 11 668 |
| Total revenue group companies | 39 923 | 65 179 |
| Cost from group companies | Full year 2020 Full year 2019 | |
|---|---|---|
| Axxis Geo Solutions Inc. | 11 983 | 13 16 7 |
| PT Axxis Geo Solutions | 257 | 965 |
| Total cost group companies | 12 240 | 14 132 |
For more information on related parties see note 19 for the Group.
| Revenue from investment in subsidiaries | Full year 2020 Full year 2019 | |
|---|---|---|
| Group contribution from Axxis Production AS | 5637 | |
| Total revenue from investement in subsidiares | 5.637 |
| USD thousands | Full Year 2020 |
Full Year 2019 |
|---|---|---|
| Wages and salaries | 1588 | 966 |
| Social Security costs | 26 | 145 |
| Pension costs | 203 | 51 |
| Other remuneration | 1513 | 1377 |
| Share based payment expense (refer to note 21) | $-11$ | |
| Total personnel expense | 3 3 3 3 | 2529 |
| Number of man-years at 31.12 | 2020 | 2019 |
| Group companies in Norway | 9 | 6 |
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.
A loan of USD 90 thousands was given the the previous CEO, Lee Parker in 2020. The loan will a part of the settlement with the former CEO. No other loan or collateral has been granted to the Chairman of the Board or other related parties.
In 2020, the Company paid compensation to its executive offices as follows:
| Share based | |||||||
|---|---|---|---|---|---|---|---|
| Name | Fixed salary | Bonus | Other benefits |
Pension benefits |
payment cost |
Total cost | Number of options held |
| Ronny Bøhn (CEO from August 8 2020) | 100 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 108 | |||
| Svein Knudsen CCO (CFO till 1 April 2020) | 213 | $\overline{\phantom{a}}$ | 233 | 106 400 | |||
| Nils Haugestad (CFO from 1 April 2020) | 191 | $\overline{\phantom{a}}$ | 13 | $\overline{\phantom{a}}$ | 205 | $\overline{\phantom{a}}$ |
| Share based | |||||||
|---|---|---|---|---|---|---|---|
| Name | Fixed salary | Bonus | Other benefits |
Pension benefits |
payment cost |
Total cost | Number of options held |
| Svein Knudsen (CFO) | 273 | $\overline{\phantom{0}}$ | 18 | 41 | 332 | 106 400 |
* Svein Knudsen was employed 1.5.2018, and before that he was a consultant. Consultancy fees are not included in amounts above.
In 2020, for the period from AGM 2019 to AGM 2020, the Group paid following compensations to Board of Directors:
| Vame | Position | Director since Term expire | Share based Fee payment cost |
Number of options held |
||
|---|---|---|---|---|---|---|
| Christian Huseby | Chairman | 30.6.2020 | 2022 | ٠ | ||
| Vjål Sævik | Board Member | 6.11.2017 | 2021 | 29 | 42 000 | |
| Vina Skage | Board Member | 2.7.2019 | 2021 | 35 | $\overline{\phantom{a}}$ | |
| irin Inderberg | Board Member | 2.7.2019 | 2021 | 29 | $\overline{\phantom{a}}$ | $\tilde{\phantom{a}}$ |
| libeke Fængsrud | Board Member | 2.7.2019 | 2021 | 34 | $\overline{\phantom{a}}$ | |
| Director to | ||||||
| Rolf Rønningen | Chairman | 30.6.2020 | N/A | 43 | ||
| Tore Tønseth | Board Member | 12.2.2020 | N/A | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | |
In 2019, for the period from AGM 2018 to AGM 2019, the Group paid following compensations to Board of Directors:
| Name | Position | Director since Term expire | Share based Fee payment cost |
Number of options held |
||
|---|---|---|---|---|---|---|
| Rolf Rønningen | Chairman | 2.7.2019 | 2020 | ۰ | ||
| Njål Sævik | Board Member | 6.11.2017 | 2020 | 25 | 19 | 42 000 |
| Nina Skage | Board Member | 2.7.2019 | 2020 | ۰ | ۰ | $\overline{\phantom{a}}$ |
| Eirin Inderberg | Board Member | 2.7.2019 | 2020 | ۰ | ۰ | |
| Vibeke Fængsrud | Board Member | 2.7.2019 | 2020 | ٠ | ٠ | |
| Director to | ||||||
| Jogeir Romestrand | Board Member | 1.11.2019 | N/A | 51 | 50 | |
| Fredrik Platou | Board Member | 1.11.2019 | N/A | 36 | 16 | |
| Andreas Pay | Board Member | 1.11.2019 18.12.2019 |
N/A | 4 | ٠ | |
| Tore Tønseth | Board Member | 1.12.2019 12.2.2020 |
N/A | ٠ | ||
| Bjarte Henry Bruheim | Chairman | 2.7.2019 | N/A | 50 | 68 | |
| Ole Andre Heggheim | Board Member | 2.7.2019 | N/A | 25 | 16 | |
| Tore Rødal | Board Member | 2.7.2019 | N/A | 25 | 19 |
The main rule is that board members are elected for 2 years at a time, until the Annual General Meeting the year in question 2 years after the election.
See note 17 for shares held by the Group`s Board of Directors.
The Company has a share based payment scheme for employees and some members 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:
| 2020 | 2019 | |||
|---|---|---|---|---|
| Average exercise price per share option (NOK) |
Number of options |
Average exercise price per share option (NOK) |
Number of options |
|
| As at 1.1* | 9,4500 | 749 479 | 8,8761 | 981 879 |
| Granted during the year | 25,0000 | 28 000 | ||
| Expired during the year | 8,9556 | (260 400) | ||
| Terminated during the year | 8,6400 | (344 400) | ||
| As at 31.12 | 10,1400 | 405 079 | 9,4508 | 749 479 |
| Vested 31.12 | 9,8700 | 398 079 | 8,9002 | 656 609 |
| Exercisable 31.12 | 398 079 | 656 609 |
* after the merge with Songa - new number of option
| Full Year 2020 | Full Year 2019 | |
|---|---|---|
| Share based payment cost (revenue) recognised in the period USD thousand |
3 | $-11$ |
| Granted instruments Instrument |
2020 Option |
2019 Option |
| Quantity 31.12 (instruments) | 28 000 | |
| Quantity 31.12 (shares) | 28 000 | |
| Contractual life* | 5,75 | |
| Strike price* | ۰ | 25,00 |
| Share price* | 22,45 | |
| Expected lifetime* | 2,25 | |
| Volatility* | 57,65% | |
| Interest rate* | 1,329% | |
| Dividend* | 0,00 | |
| FV per instrument* | 6,87 | |
| Vesting conditions |
*Weighted average parameters at grant of instrument
| Grant date | Expiry date | Exercise price | Share options 31 December 2020 |
Share options 31 December 2019 |
|---|---|---|---|---|
| 15.9.2017 | 15.9.2022 | 6.96 | 196 000 | 406 000 |
| 27.9.2018 | 27.9.2023 | 11.28 | 181079 | 315 479 |
| 1.5.2019 | 1.5.2024 | 25,00 | 28 000 | 28 000,00 |
| Total number of options | 405 079 | 749 479 |
| Outstanding instruments overview | |||||
|---|---|---|---|---|---|
| Strike Price | Number of instruments |
Weighted Average remaining contractual life |
Weighted Average Strike Price |
Vested instruments 31.12.2020 |
Weighted Average Strike Price |
| Outstanding instruments | Vested instruments | ||||
| 6,96 | 196 000 | 2.70 | 6,96 | 196 000 | 6,96 |
| 11,28 | 181079 | 3,49 | 11,28 | 181079 | 11,28 |
| 25,00 | 28 000 | 4,09 | 25,00 | 21 000 | 25,00 |
| 405 079 | 398 079 |
The exercise price for both 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 2019 grant, 50% of the options vested on grant date, while the remaining option will vest in May 2024. The fair value at grant date was 6.87 NOK/option.
The fair value has been estimated using the the Black-Scholes option pricing model. When calcluating fair value at grant date, the group has assumed a volatility of 49% from comparable peers in the oil and gas services for both grants, 0 expected dividends, and a risk free interest rate of 1.98% for the 2019 grant.
| Expensed audit fee (excluding VAT) | Full Year 2019 | Full Year 2019 |
|---|---|---|
| Statutory audit | 134 | 93 |
| Tax advice (incl. technical assistance with tax return) | 109 | 55 |
| Other attestation services | 27 | 24 |
| Total auditors fee | 270 | 173 |
Axxis Geo solutions ASA (AGS ASA) comprise of the following legal entities as at 31 December 2020
* The formal shareholdings in Axxis Geo Solutions PT is 49 %. The Group has control of operating decisions and is exposed to 100 % of variability of the companys' results through a shareholder agreement. Because of this, no non-controlling interest has been recognised in the financial statements.
** Axxis Production AS owns 99% and Axxis Geo Solutions ASA owns 1% of the shares in the company.
The Company holds 100 percent of all shares (except AGS PT and AGS Egypt LLC as mentioned above) and all voting rights for its subsidiaries.
| Liabilities arising from financing activities | |||||
|---|---|---|---|---|---|
| USD thousands | Current interest bearing debt |
liabilities | Non-current Current lease interest bearing |
Non-current debt lease liabilities |
Total |
| 1.1.2020 | 2 2 5 7 | 86 | $\overline{\phantom{a}}$ | 22 | 2 3 6 5 |
| Cash flows | (1440) | (86) | ٠ | $-1525$ | |
| Other* | 33 088 | - | ۰ | 33 089 | |
| Reclassification | (17417) | 22 | 17417 | (22) | ٠ |
| 31.12.2020 | 16488 | 24 | 17417 | ۰ | 33 9 29 |
* Mainly related to trade payables converted to loans.
| Liabilities arising from financing activities | |||||
|---|---|---|---|---|---|
| Current | Non-current | ||||
| USD thousands | interest bearing debt |
liabilities | Current lease interest bearing | Non-current debt lease liabilities |
Total |
| 1.1.2019 | 3424 | 86 | 98 | 3608 | |
| Cash flows | (1127) | (75) | $\overline{\phantom{a}}$ | (1202) | |
| Other | (41) | Œ. | 42 | ||
| Reclassification | ۰ | 76 | (76) | ||
| 31.12.2019 | 2 2 5 7 | 86 | 22 | 2 3 6 5 |
The Company implemented IFRS 16 effective as of 1 January 2019.
The Company has after the reporting period received default notice from Nordic Trustee on behalf of the bondholders and from Eksportkreditt for unpaid installment and interest in January 2021. The Company is in active dialogue with the respective creditors and expect to find a solution which is aligned with the outcome of the court-protected reconstruction
The Company announced 16 February 2021 that the Company had not been able to reach agreement with all creditors in order to implement a voluntary solution to refinance the Company. Consequently, the Company filed for court protected reconstruction.
On 17 February 2021, the District Court of Asker and Bærum authorized opening of reconstruction negotiations for the Company. On 7 April 2021, the Company presented the final proposal for reconstruction by forced debt settlement. The proposal from the company involves a forced debt settlement of the Company's unsecured debt. Secured debt, up to the value of the pledged assets, is not part of the forced debt settlement. The deadline for creditor replies is 27 April 2021.
Under the court-authorized reconstruction negotiations, the Company continues normal business operations under the oversight of the Debt Restructuring Committee. Unsecured liabilities incurred prior to the opening of reconstruction negotiations are "frozen". All liabilities that are incurred thereafter shall be covered in their entirety.
Under the reconstruction proposal, Company creditors are offered the following:
It is not opened reconstruction negotiations in the subsidiaries of the Company. The Company has arranged for separate voluntary debt settlements in the subsidiaries. The Company aims to achieve a solution whereby the bondholders also waive claims and collateral in the subsidiaries, thus avoiding insolvency proceedings in these companies.
The reconstruction will be financed through an equity issue for cash of USD 17-20million, where a group of investors on certain conditions have committed to provide the Company with USD 17 million, at a subscription price of 0.1 NOK/share. After the reconstruction is complete, the Company will have an attractive financial position and satisfactory liquidity. This forms a sound basis for continued operations.
Ongoing agreements which the Company is party to and that are not terminated during the reconstruction negotiations continue.
It is the opinion of the Company that the creditors will receive a higher recovery in the reconstruction proposal compared to alternative bankruptcy proceedings. Through bankruptcy proceedings, the Company estimates that creditors with ordinary (general and unsecured) claims would be able to achieve a dividend in the range 0–2%.
| APPENDIX – ALTERNATIVE PERFORMANCE MEASURES (APMS) |
||||
|---|---|---|---|---|
| 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 the Group may be determined or calculated differently by other companies. |
||||
| EBITDA | ||||
| EBITDA means Earnings before interest, taxes, amortization, depreciation and impairments. The Group 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 | |||
| Full Year | ||||
| USD thousands | Full Year 2020 | Full Year 2019 | 2020 | Full Year 2019 |
| Profit (loss) for the period | (12 373) | (40 806) | (3 133) | (46 477) |
| Income tax (expense) | (7 086) | (3 468) | (7 086) | (4 576) |
| Net fina ncial items |
(1 737) | (4 271) | (1 891) | (6 039) |
| (5 711) | (5 879) | (5 934) | (6 080) | |
| Depreciation & impairment PPE | (44 692) | (21 620) | (35 093) | |
| Amortization & impairment of | ||||
| multi-client and goodwill Operating profit (loss) before |
(4 159) |
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 recognised 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 the Group 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. The Group 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.
Statsautoriserte revisorer Ernst & Young AS
Dronning Eufemias gate 6A, NO-0191 Oslo Postboks 1156 Sentrum, NO-0107 Oslo
Foretaksregisteret: NO 976 389 387 MVA Tlf: +47 24 00 24 00
www.ey.no Medlemmer av Den norske revisorforening
To the Annual Shareholders' Meeting of Axxis Geo Solutions ASA
We have audited the financial statements of Axxis Geo Solutions ASA, which comprise the financial statements for the parent company and the Group. The financial statements for the parent company and the Group comprise the statements of financial position as at 31 December 2020, statements of comprehensive income, the statements of cash flows and changes in equity for the year then ended and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the financial statements have been prepared in accordance with laws and regulations and present fairly, in all material respects, the financial position of the Company and the Group as at 31 December 2020 and their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU.
We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including 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 in accordance with the ethical requirements that are relevant to our audit of the financial statements in Norway, and we have fulfilled our ethical responsibilities as required by law and regulations. We have also complied with our other ethical obligations 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.
We draw attention to Note 1.1 – "Going concern" and Note 2.2 – "Going concern" of the consolidated financial statements, which indicates that the Company's ability to continue as a going concern is dependent upon a successful outcome of the reconstruction plan including securing sufficient liquidity. This indicates that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. The financial statements do not reflect impairment charges or provisions that might be required if the Company is liquidated or the assets sold in a distressed situation. Our opinion is not modified in respect of this matter.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for 2020. In addition to the matter(s) described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the financial statements.
Multi-client library accounts for USD 36.2 million (66 %) of the Group's total assets per 31 December 2020. The Company performed an impairment evaluation and determine the value in use to assess impairment. The Company estimated the value in use based on present value of estimated future sales forecasts. The Company based the forecasts on budgets and assumptions about future market demand and spending on exploration and production by oil companies, including licensing activities. The forecasts require considerable insight and judgment from management about future market conditions. The impairment evaluation of the multi-client data library is a key audit matter based on the continued uncertain market conditions and the significant judgement involved. In 2020 impairment losses of USD 18.0 million were recorded in the consolidated financial statements.
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's assumptions regarding the current market, licensing rounds and exploration activities. Furthermore, we evaluated the valuation methodology and the discount rate applied in the value in use model. We also tested the mathematical accuracy of the value in use calculations and performed sensitivity analysis of key assumptions. We also assessed the Company's disclosures regarding those assumptions and the impairment losses of multi-client data library recorded.
We refer note 11b in the consolidated financial statements.
Other information consists of the information included in the Company's annual report other than the financial statements and our auditor's report thereon. The Board of Directors and Chief Executive Officer (management) are responsible for the other information. Our opinion on the financial statements does not cover the other information, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information, and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Management is responsible for the preparation and fair presentation of the financial statements 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.
In preparing the financial statements, management is responsible for assessing the Company'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 Company or to cease operations, or has no realistic alternative but to do so.
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 the 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 law, regulations and generally accepted auditing principles in Norway, including ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also
We communicate with those charged with governance 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 those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and 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 those charged with governance, 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.
Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors' report and in the statements on corporate governance and corporate social responsibility concerning the financial statements, the going concern assumption and proposal for the allocation of the result is consistent with the financial statements and complies with the law and regulations.
Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, it is our opinion that management has fulfilled its duty to ensure that the Company's accounting information is properly recorded and documented as required by law and bookkeeping standards and practices accepted in Norway.
Oslo, 16 April 2021 ERNST & YOUNG AS
The auditor's report is signed electronically
Finn Ole Edstrøm State Authorised Public Accountant (Norway)
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 2018. 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. Strandveien 50, 14511 Old Katy Road, 1366 Lysaker Suites 150, +47 480 95 555 +1 281 810 2550
Oslo, Norway Houston, United States Houston, TX 77079
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