Earnings Release • Nov 6, 2019
Earnings Release
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Axxis Geo Solutions
Q3 2019 Earnings release
| NOK thousand | |||||
|---|---|---|---|---|---|
| Profit and loss | Q3 2019 | Q3 2018 | YTD Sep 2019 | YTD Sep 2018 | Full year 2018 |
| Revenue | 8 814 | 160 | 576 359 | 17 583 | 53 378 |
| Cost of sales | (16 019) | (7) | (423 809) | (1 997) | (47 395) |
| EBITDA | (22 168) | (3 569) | 107 423 | (6 749) | (40 177) |
| EBIT | (34 261) | (10 619) | 75 198 | (19 732) | (63 703) |
| Profit (loss) for the period | (42 717) | (8 663) | 29 129 | (14 536) | (64 992) |
| Basic earnings (loss) per weighted average shares (in USD) | (2,02) | (0,02) | 1,36 | (0,03) | (0,13) |
| Financial position | |||||
| Total assets | 873 308 | 480 989 | 586 402 | ||
| Total liabilities | 706 455 | 403 500 | 556 800 | ||
| Total equity | 166 853 | 77 488 | 29 602 | ||
| Equity ratio | 19,1 % | 16,1 % | 5,0 % | ||
| Cash flow | |||||
| Net cash flow from operating activities | 286 678 | 360 366 | 365 092 | ||
| Key Financials Segment reporting | |||||
| NOK thousand | Q3 2019 | Q3 2018 | YTD Sep 2019 | YTD Sep 2018 | Full year 2018 |
| Revenue | 100 132 | 87 216 | 677 361 | 150 302 | 178 872 |
| EBITDA | 68 660 | 84 768 | 203 703 | 127 250 | 85 693 |
| Amortization MCL | (57 530) | (54 946) | (63 631) | (82 869) | (79 061) |
| EBIT | (897) | 22 772 | 107 843 | 31 398 | (18 486) |
| Net booked value MCL | 458 844 | 185 777 | 137 926 |
"AGS operations continue to grow and mature through the third quarter of this year. We achieved multiple production records during the Utsira multi-client survey offshore Norway, we entered a new OBN market in Brazil and signed an LOI for a large OBN survey in the Middle East. With our safe and efficient track record, our asset light model, core competence and proprietary technology, we believe AGS is well positioned to grow and pursue OBN market opportunities", says Lee Parker CEO of Axxis Geo Solutions
The access to the listing on Oslo Axess on 3 July 2019 represent an important milestone in the short history of AGS. The listing also paved the way for the subsequent private placement after the close of this quarter, which will strengthen our balance sheet and fund further growth and capital expenditures needed to meet increased OBN activity." Mr. Parker continues.
After completing a successful season in the North Sea, AGS is getting ready to start the previously announced contract with a new client in the Middle East. AGS expects a steady cashflow from this contract. AGS forward looking estimate consists of 28 vessel months and several new projects are being developed.
AGS has previously entered into a joint venture with TGS in the North Sea to develop new multi-client projects and expect projects under this agreement to materialize in 2020 and the years to come.
The E&P companies' spending on seismic data increase as cashflow improves, and with a stable or increasing oil price, AGS expects good market conditions going forward. OBN is taking a larger share of the seismic budgets and the Company also observe a trend where OBN is increasingly being used in exploration. This market change opens new and large opportunities for AGS, and E&P companies are now requesting price quotes for proprietary work, pre-funding new multi-client campaigns and licensing data from the multi-client library.
A total of six seismic dedicated vessels, two nodal and four source vessels, plus support vessels were operated across two projects. A total of 497 vessel days were recorded during the period across the fleet, of which 75% was operationally utilized with the remaining 25% spent transiting between projects. The fleet operated includes those core assets AGS maintains through a mix of one owned vessel and mid to long term charter commitments. This is supplemented by short term charters to meet demand. Looking forward we expect two source vessels, two receiver vessels and support vessels to be deployed on the 28 vessel months commitment in the Middle East as earlier announced.
AGS had activity on two projects through the quarter. One was commenced, and the other substantially completed during the period. Returning from a successful campaign in India in H1 2019, the fleet was resupplied in Stavanger and immediately deployed on the Utsira 3D program in the North Sea.
The Utsira 3D OBN survey is the largest OBN survey completed to date in the Norwegian North Sea, and among one of the largest in the world in respect to the volumes of data acquired. The Utsira South area was substantially completed in the quarter, including an infill area resulting from Simultanious Marine Operations (SIMOPS) related exclusions from the 2018 Utsira North program. The crew showed excellent performance in both productivity and safety. The project delivered a solid technical performance, with technical down time on the nodal operations of 1.2%, a reduction from 3% recorded prior to the commencement of the quarter. Minimal downtime was recorded through the program due toSIMOPS and fishing, a direct result of the well managed and planned coordination with stakeholders. Industry leading deployment and retrieval speeds are being maintained across the fleet with a high level of seafloor positioning accuracy being attained. Record productivity was achieved in both source and receiver operations. Peak levels of 62,123 shots per day were recorded, 158 km's of nodes moved in a calendar day, proving that moving up to 24 km2 of high-density receiver spread per day can be achieved.
In the quarter, AGS entered the growing Brazilian market. AGS's owned Neptune Naiad successfully mobilized ahead of schedule to Brazil and commenced a 90+ day campaign on a Deep Water OBN project. This project will run through Q4 2019 providing 100% utilization for the vessel in Q4.
AGS undertook to upgrade the source control electronics on the Neptune Naiad to a GunLink 2500 digital source controller. This upgrade provides the technical capability to deliver high end source solutions to our client base and making Neptune Naiad one of the more advanced shallow water capable seismic source vessels available today.
AGS has also placed an order for its first Marine Vibrator, due for delivery in Q4 2019. The unit will be deployed in certain areas in order to provide enhanced low frequency source offering capacity to clients.
The AGS "Four Knots" campaign continued through the period, with software and engineering upgrades readied for installation across the nodal fleet. These upgrades are expected to provide further significant efficiencies to the company's operations and afford safe deployment and recovery speeds of up to four knots along a single receiver line.
Interest in the AGS operations continues to grow, underscored by several iOMS (Integrated Operations Management System) audits being performed by major IOC's through the quarter. These audits present a great opportunity for AGS to grow and mature the robust iOMS toward an industry leading system.
An online HSE training program is now complete and added to the company's growing digital HSE toolbox, with 15 Computer Based Training (CBT) modules now rolled out company wide. The crews continued to perform to high HSE standards. During the quarter 413,000 manhours were recorded, including 263,000 subcontractor hours without a Lost Time Incident. A strong focus on proactive measures was evident across the operations, with 1031 proactive events recorded in the quarter.
The financial review is prepared according to the IFRS accounting principles. Following the application of the IFRS 15 accounting standard for revenues, multi-client pre-funding revenues are not recognized under percentage of completion ("PoC") method. Instead, all such revenues are recognized at delivery of the final processed data, which is typically later than the acquisition of the seismic data. The segment reporting (used for management purposes) in note 1 Revenue, note 2 Segment, note 3 Multi-client library and note 6 EBITDA, shows the difference from IFRS.
Revenues for the third quarter of 2019 were NOK 8.8 million compared to NOK 0.2 million for the third quarter of 2018. The revenue in 2019 of NOK 8.8 million is related to contract work in India and Brazil, compared to revenue related to reimbursement of cost in 2018.
Revenues for the first nine months of 2019 were NOK 576.4 million compared to NOK 17.6 million in 2018. Of the total of 2019 revenue NOK 555 million is related to contract work in India, compared to the BGP project in Indonesia for 2018.
In accordance with IFRS 15 no revenues from the prefunding achieved for the multi-client project Utsira has been recorded in this quarter or during the first nine months of 2019 or during 2018. As end of September the Company has recognized a contract liability of NOK 162.1 milllion which reflects the revenue of the work performed on the project to date.
Cost of sales (COS) in the third quarter of 2019 was NOK 16.0 million, net of capitalized multiclient costs, compared to NOK 7 thousand in the third quarter of 2018 (only multi-client projects). The largest portion of COS relates to the Indian work finished in Q2 yet some costs recognized in this quarter. The remaining COS is related to the Brazil campaign starting in Q3 2019. The third quarter of 2018 only had multi-client project where the COS was capitalized.
For the first nine months of 2019, COS amounted to NOK 423.8 million, net of capitalized multi-client costs, compared to NOK 2.0 million during the same period in 2018, where NOK 418.9 million is related to contract work in India for 2019, while the main COS in 2018 was related to multi-client and therefore capitalized.
Personnel expenses and other operating expenses in the third quarter of 2019 amounted to NOK 15.0 million, compared to NOK 3.7 million in the third quarter of 2018. NOK 6.6 million of the costs in the quarter were attributable to transaction costs and other costs in connection with the Songa Bulk ASA merger and listing.
For the first nine months of 2019, personnel expenses and other operating expenses amounted to NOK 45.1 million compared to NOK 22.3 million during the same period of last year. In addition merger and listing costs of NOK 13.7 million for 2019 is attributed to consultants and increased number of staff required to pursue the Company's growth plans.
Depreciation was NOK 12.1 million during the third quarter of 2019 compared to depreciation of NOK 7.1 million in the third quarter of 2018. The increase is due to more node handling systems in operation.
For the first nine months of 2019 depreciation was NOK 32.2 million compared to NOK 13.0 million in 2018, where the increase is due to more node handling systems in operation as mentioned above.
According to IFRS, multi-client surveys are not amortized in the acquisition phase. The multiclient 3D OBN project will be finalized during Q4 and processed in Q1 2020.
No impairment charges have been made for goodwill, the vessel Naiad, the node handling system or the multi-client library.
The EBITDA was NOK -22.2 million in the third quarter of 2019 compared to NOK -3.6 million in the third quarter of 2018. This decrease in EBITDA is due to cost of sales from the India contract work ending in June and higher personnel expenses and other operating expenses related to the growth and the merger with Songa Bulk ASA.
EBIT (operating profit) was NOK -34.3 million in the third quarter of 2019 compared to NOK - 10.6 million during the same period in 2018. The decrease in EBIT relates to the same factors as the decrease in EBITDA described above.
EBITDA for the first nine months of 2019 was NOK 107.4 million compared to NOK -6.7 million for the same period of 2018. EBIT for the first nine months of 2019 was NOK 75.2 million in 2019 compared to NOK -19.7 million during 2018. The contract work had a positive effect on the EBITDA and EBIT for the first nine months of 2019. For the first nine months in 2018 personell expenses and other operating expenses had a negative impact on EBITDA and EBIT.
Net financial expense were NOK 21.5 million during the third quarter of 2019 compared to net financial items of NOK 0.5 million in the third quarter of 2018. The increase is financial expenses of NOK 10.2 million is related to fair value calculation of the merger with Songa Bulk ASA and a net result of currency exchange loss of NOK 10.1 million.
For the first nine months of 2019 net financial expense was NOK 37.6 million compared to net financial income of NOK 1.1 million in 2018, where the increase in expense is due to merger with Songa Bulk ASA as mentioned above, a net result of currency exchange loss of NOK 12.7 million, guarantee cost of NOK 4.9 million for a performance bond and interest cost of NOK 6.7 million.
AGS has computed tax expense based on the corporate income tax in Norway (22% in 2019). Income tax for the third quarter of 2019 amounted to NOK 13.0 million compared to NOK 2.4 million for the same period in 2018.
For the first nine months in 2019 income tax expense amounted to NOK 8.5 million compared to income tax of NOK 4.1 million for the same period in 2018.
There is no taxes payables in AGS, all changes is due to adjustment in deferred tax asset.
AGS had a loss of NOK 42.7 million for the third quarter of 2019 compared to loss of NOK 8.7 million for the third quarter of 2018.
For the first nine months of 2019 had a profit of NOK 29.1 million compared to a loss of NOK 14.5 million for the same period in 2018.
As of 30 September 2019, AGS had total assets of NOK 873.3 million, compared to total assets of NOK 481.0 as of 30 September 2018.
Total non-current assets increased from NOK 441.0 million to NOK 808.5 million , which can largely be attributed to the NOK 332.9 million increase in multi-client library and a NOK 34.8 million increase in the node handling system.
Total current assets increased from NOK 40.0 million to NOK 64.9 million, driven by a NOK 11.2 million increase in trade receivables from contract work finished in Q2 2019, NOK 28.6 million increase in other current assets (mobilization, accrued revenue and prepaid cost) and a decrease in cash of NOK 17.4 million.
The Group's equity was NOK 166.9 million at the end of the quarter, compared to NOK 77.5 million as of 30 September 2018. During the first nine months of 2019, the Company has raised NOK 94.2 million net of transaction costs. The equity ratio was 19.1% of 30 September 2019.
Total non-current liabilities increased to NOK 13.6 million as of 30 September 2019, from zero as of 30 September 2018, consisting of the long-term portion of a NOK 22.3 million secured debt towards Eksportkreditt Norge AS and NOK 3.1 million financial lease for properties. A waiver from Eksportkreditt Norge AS has been received on the two financial covenants for the third quarter 2019.The current portion of long-term debt amounted to NOK 11.9 million as of September 2019.
Total current liabilities as of 30 September 2019 amounted to NOK 692.9 million, compared to NOK 403.5 million as of 30 September 2018. The large increase is related to trade payables, which increased by NOK 167.9 million. Contract liabilities (IFRS adjustment for multi-client pre-funding revenue) fell by NOK 80.4 to NOK 162.1 million. Other current liabilities increased by NOK 190.0 due to project related accruals of NOK 85 million, mobilization revenue of NOK 6.9 million and the issuance of a promissory loan note in favour of TGS of NOK 121.8 million. The current portion of long-term debt amounted to NOK 11.9 million.
Net cash inflows from operating activities in Q3 2019 were NOK 297.5 million in 2019, compared to NOK 92.8 million at the end of the same period in 2018. Cash inflows were primarily a result of positive change in trade receivables and trade payables.
Cash outflow from investing activities in Q3 2019 amounted to NOK 293.6 million, compared to NOK 225.6 in the same period in 2018. The main investments were those in the multi-client library of NOK 276.2 million (NOK 198.2 million in Q3 2018) and in node handling equipment of NOK 21.0 million (NOK 27.5 million in Q3 2018). The company assumed NOK 3.6 million cash from the Songa merger.
Cash outflow from financing activities in Q3 2019 was NOK 4.6 million, compared to NOK 0.3 million in the same period in 2018. Instalments and interest relating to the loan and finance leases totaled NOK 4.3 million (NOK 0.3 million in Q3 2018).
| Note | Q3 2019 | Q3 2018 | YTD Sep 2019 | YTD Sep 2018 | Full Year 2018 |
|---|---|---|---|---|---|
| 1/2 | 8,814 | 160 | 576,359 | 17,583 | 53,378 |
| 2 | (16,019) | (7) | (423,809) | (1,997) | (47,395) |
| 2 | (4,755) | (3, 167) | (18,908) | (9,403) | (14,955) |
| $\overline{2}$ | (10, 209) | (555) | (26, 219) | (12, 932) | (31, 204) |
| з | (12,093) | (7,050) | (32, 225) | (12,983) | (23, 526) |
| (34, 261) | (10,619) | 75,198 | (19, 732) | (63,703) | |
| 0.0% | 0.0% | 13.0% | 0.0% | 0.0% | |
| 7,606 | 999 | 13,206 | 2.836 | 6,747 | |
| (29,088) | (1, 487) | (50,801) | (1,740) | (19, 892) | |
| (55, 743) | (11, 107) | 37,603 | (18, 635) | (76, 849) | |
| 13,026 | 2,444 | (8, 474) | 4,100 | 11,857 | |
| (42, 717) | (8,663) | 29,129 | (14, 536) | (64,992) | |
| (379) | 19 | (218) | (47) | 331 | |
| Other comprehensive income (loss) for the period | (379) | 19 | (218) | (47) | 331 |
| Total comprehensive income (loss) for the period | (43,095) | (8,644) | 28,910 | (14, 583) | (64, 661) |
| (2.02) | (0.02) | 1.36 | (0.03) | (0.13) | |
| (1.99) | (0.02) | 1.33 | (0.03) | (0.13) | |
| Axxis Geo Solutions Group | ||||
|---|---|---|---|---|
| NOK thousand | Note | 30.09.2019 | 30.09.2018 | 31.12.2018 |
| Assets | ||||
| Non-current assets | ||||
| Goodwill | 15,917 | 15,917 | 15,917 | |
| Multi-client library | 3 | 601,536 | 268,646 | 216,987 |
| Deferred tax asset | 31,563 | 32,190 | 40,037 | |
| Property, plant and equipment | 158,568 | 123,783 | 139,133 | |
| Other non-current assets | 870 | 419 | 419 | |
| Total non-current assets | 808,454 | 440,954 | 412,491 | |
| Current assets | ||||
| Inventories | 14,977 | 12,587 | 16,923 | |
| Trade receivables | 17,040 | 5,848 | 34,239 | |
| Other current assets | 4 | 28,627 | 55,883 | |
| Bank deposits, cash in hand | 4,211 | 21,600 | 66,866 | |
| Total current assets | 64,855 | 40,035 | 173,910 | |
| Total assets | 873,308 | 480,989 | 586,402 | |
| NOK thousand | Note | 30.09.2019 | 30.09.2018 | 31.12.2018 |
| Equity and Liabilities | ||||
| Equity | ||||
| Share capital and other paid in capital | 5 | 211,353 | 50,096 | 99,538 |
| Other reserves | (44,500) | 27,392 | (69,936) | |
| Total equity | 166,853 | 77,488 | 29,602 | |
| Non current liabilities | ||||
| Interest bearing debt | 13,566 | |||
| Total non current liabilities | 13,566 | |||
| Current liabilities | ||||
| Interest bearing debt current | 11,901 | 29,856 | ||
| Trade payables | 299,129 | 131,213 | 180,808 | |
| Contract liabilities | 162,080 | 242,473 | 155,353 | |
| Other current liabilities | 4 | 219,779 | 29,814 | 190,783 |
| Total current liabilities | 692,889 | 403,500 | 556,800 | |
| Total liabilities | 706,455 | 403,500 | 556,800 | |
| Total equity and liabilities | 873,308 | 480,989 | 586,402 |
| NOK thousand | Share capital | Additional paid-in capital |
Accumulated earnings |
Other equity/ Share based programme |
Total equity |
|---|---|---|---|---|---|
| Balance as of 01.01.2019 | 50 096 | 49 442 | (73 410) | 3473 | 29 602 |
| Profit (loss) for the period | 29 1 29 | 29 1 29 | |||
| Other comprehensive income (loss) | (218) | (218) | |||
| New shares issued - cash settled | 23 450 | 73 695 | 97 144 | ||
| Cost for new shares issued | (2894) | (2894) | |||
| Effect of Songa Bulk ASA merger 2/7-19 for AGS shareholders |
(44833) | (120537) | (165 370) | ||
| Effect of Songa Bulk ASA merger 2/7-19 of share consolidation for AGS shareholders |
165 370 | 165 370 | |||
| Effect of Songa Bulk ASA merger 2/7-19 for shares in Songa as contribution in kind |
1000 | 13 2 7 2 | 14 27 2 | ||
| Share based payment | (181) | (181) | |||
| Balance as of 30.09.2019 | 29713 | 178 348 | (44 499) | 3 2 9 2 | 166853 |
| NOK thousand | Share capital | Additional paid-in capital |
Accumulated earnings |
Other equity/ Share based programme |
Total equity |
|---|---|---|---|---|---|
| Balance as of 01.01.2018 | 50 096 | 49 442 | (8748) | 90 791 | |
| Profit (loss) for the period | (14536) | (14536) | |||
| Other comprehensive income (loss) | (47) | (47) | |||
| Share based payment | 1 2 8 1 | 1 2 8 1 | |||
| Balance as of 30.09.2018 | 50 096 | 49 442 | (23331) | 1 2 8 1 | 77488 |
The merger was booked as a transaction in such a way that AGS AS' assets and liabilities are calculated at fair value on the day the merger 2 July 2019 was consummated in accordance with the acquisition method. In the accounts, the merger will be booked as a reversed take-over, i.e. in the consolidated financial statement of Songa Bulk ASA, AGS will be booked as the assignee company (continuity) and Songa Bulk ASA will be booked as the assigning company (fair value).
The merger plan was carried out with accounting effect from the day the merger is consummated, i.e. 2 July 2019.
| Axxis Geo Solutions Group | ||||||
|---|---|---|---|---|---|---|
| NOK thousand | Note | Q3 2019 | Q3 2018 | YTD Sep 2019 | YTD Sep 2018 Full year 2018 | |
| Cash flow from operating activities | ||||||
| Profit (loss) before tax | (55, 743) | (11, 107) | 37,603 | (18, 635) | (76, 849) | |
| Taxes paid | (423) | |||||
| Depreciation and amortization | 3 | 12,093 | 7,050 | 32,225 | 12,983 | 23,526 |
| Agio - disagio without cash flow effects | (457) | (358) | 628 | |||
| Interest expense * | 11,687 | 294 | 16,942 | 294 | 6,818 | |
| Share based payment cost | (661) | 1,281 | (181) | 1,281 | 3,473 | |
| Change in trade receivables | 218,361 | 1,979 | 17,199 | 2,887 | (29,392) | |
| Change in trade payables | 85,940 | 80,267 | 118,321 | 111,713 | 161,307 | |
| Change in inventories | 9,690 | (12, 515) | 1,946 | (12, 515) | (16, 851) | |
| Change in other current assets | 51,490 | 27,256 | (368) | (50,893) | ||
| Change in contract liabilities | 6,919 | (1, 293) | 6,727 | 242,473 | 155,353 | |
| Change in other current liabilities | (41, 862) | 26,804 | 28,996 | 20,253 | 188,395 | |
| Net cash from operating activities | 297,458 | 92,761 | 286,678 | 360,366 | 365,092 | |
| Cash flow from investing activities Investment in property, plant and equipment Investment in multi-client library Cash received/paid from non-current receivables |
з | (20, 990) (276, 215) |
(27, 491) (198, 153) |
(47,402) (384, 549) |
(72, 505) (268, 646) |
(98,089) (216, 987) (368) |
| Cash received/paid from merger | 3,620 | 3,620 | ||||
| Net cash flow from investment activities | (293, 586) | (225, 643) | (428, 331) | (341, 150) | (315, 444) | |
| Cash flow from financing activities Proceeds from interest bearing debt Repayment of interest bearing debt |
(2, 479) | (7, 438) | 29,750 (8,500) |
|||
| Payment of lease liabilities (recognized under IFRS 16) | (485) | (1,215) | ||||
| Net proceeds from new equity | (294) | 94,250 | ||||
| Interest paid | (1, 343) | (294) | (6,598) | (294) | (6, 712) | |
| Net cash flow from financial activities | (4,602) | (294) | 78,999 | (294) | 14,538 | |
| Net change in cash and cash equivalents | (729) | (133, 177) | (62, 654) | 18,921 | 64,186 | |
| Cash and cash equivalents balance 01.07/01.01 | 4,940 | 154,777 | 66,866 | 2,679 | 2,679 | |
| Cash and cash equivalents balance 30.09/31.12 | 4,211 | 21,600 | 4,211 | 21,600 | 66,866 | |
| 1.0040111101 | D. B. LAROLEO O. |
" Interest expense in 2019 includes financial cost as a result of the merger with Songa Bulk of NOK 10.2 million.
| NOK thousand | Segment reporting | IFRS reporting | ||
|---|---|---|---|---|
| Q3 2019 | Q3 2019 | Q3 2018 | Q3 2019 | Q3 2018 |
| Operating Revenue | ||||
| Contract revenue | 8814 | 160 | 8814 | 160 |
| Multi-client pre-funding revenue | 91 318 | 87056 | ||
| Multi-client late sales | ||||
| Total revenue | 100 132 | 87 216 | 8814 | 160 |
| NOK thousand | Segment reporting | IFRS reporting | ||
| YTD Sep 2019 | YTD Sep 2019 | YTD Sep 2018 YTD Sep 2019 | YTD Sep 2018 | |
| Operating Revenue | ||||
| Contract revenue | 576 359 | 17 583 | 576 359 | 17583 |
| Multi-client pre-funding revenue | 101 002 | 132 718 | ||
| Multi-client late sales | ||||
| Total revenue | 677 361 | 150 302 | 576359 | 17583 |
| NOK thousand | Segment reporting | IFRS reporting | ||
| Full year 2018 | Full year 2018 | Full year 2018 | ||
| Operating Revenue | ||||
| Contract revenue | 53 378 | 53 378 | ||
| Multi-client pre-funding revenue | 125 494 | |||
| Multi-client late sales | ||||
| Total revenue | 178872 | 53 378 | ||
| NOK thousand | ||||||||
|---|---|---|---|---|---|---|---|---|
| 03 2019 | Multi-client | Contract | Adjustments | IFRS reporting | ||||
| Income statement | Q3 2019 | Q3 2018 | Q3 2019 | Q3 2018 | Q3 2019 | Q3 2018 | Q3 2019 | Q3 2018 |
| Total revenue | 91 318 | 87056 | 8814 | 160 | (91318) | (87056) | 8814 | 160 |
| Total cost of sales | 550 | (16570) | (7) | (16 019) | (7) | |||
| Personnel expenses | (4515) | (1886) | (240) | (1281) | (4755) | (3167) | ||
| Other operating expenses | (4486) | (555) | (6211) | 489 | (10209) | (555) | ||
| Total Operating Expenses | (8451) | (2441) | (23021) | (7) | 489 | (1281) | (30982) | (3728) |
| Operating profit (loss) before depreciation | ||||||||
| and amortization (EBITDA) | 82867 | 84 616 | (14207) | 153 | (90 829) | (88337) | (22168) | (3569) |
| Depreciation & Amortization | (65547) | (61996) | (4010) | 57464 | 54946 | (12093) | (7 050) | |
| Operating profit (loss) (EBIT) Segment | 17320 | 22 6 19 | (18217) | 153 | (33 365) | (33 391) | (34261) | (10619) |
| NOK thousand | ||||||||
| YTD Sep 2019 | Multi-client | Contract | Adjustments | IFRS reporting | ||||
| Income statement | YTD Sep 2019 | YTD Sep 2018 | YTD Sep 2019 | YTD Sep 2018 YTD Sep 2019 | YTD Sep 2018 YTD Sep 2019 YTD Sep 2018 | |||
| Total revenue | 101 002 | 132 718 | 576 359 | 17583 | (101002) | (132718) | 576 359 | 17583 |
| Total cost of sales | 18 109 | 9934 | (441918) | (11931) | (423 809) | (1997) | ||
| Personnel expenses | (7347) | (8123) | (15035) | 3473 | (1281) | (18908) | (9403) | |
| Other operating expenses | (7181) | (11397) | (20287) | (1535) | 1249 | (26219) | (12932) | |
| Total Operating Expenses | 3581 | (9585) | (477 240) | (13466) | 4723 | (1281) | (468936) | (24332) |
| Operating profit (loss) before depreciation | ||||||||
| and amortization (EBITDA) | 104583 | 123 133 | 99 1 20 | 4 1 1 7 | (96 279) | (133999) | 107423 | (6749) |
| Depreciation & Amortization | (74894) | (91057) | (20 965) | (4795) | 63 634 | 82869 | (32225) | (12983) |
| Operating profit (loss) (EBIT) Segment | 29689 | 32076 | 78 154 | (678) | (32645) | (51130) | 75 198 | (19732) |
| NOK thousand | ||||||||
| Full year 2018 | Multi-client | Contract | Adjustments | IFRS reporting | ||||
| Income statement | Full year 2018 | Full year 2018 | Full year 2018 | Full year 2018 | ||||
| Total revenue | 125 494 | 53 378 | (125 494) | 53 378 | ||||
| Total cost of sales | 48 190 | (98683) | 3098 | (47395) | ||||
| Personnel expenses | (8213) | (3269) | (3473) | (14955) | ||||
| Other operating expenses | (22319) | (8885) | (31204) | |||||
| Total Operating Expenses | 17659 | (110838) | (376) | (93555) | ||||
| Operating profit (loss) before depreciation and amortization (EBITDA) |
143 153 | (57460) | (125 870) | (40177) | ||||
| Depreciation & Amortization | (94835) | (9344) | 80653 | (23526) | ||||
| Operating profit (loss) (EBIT) | 48318 | (66804) | (45 217) | (63703) | ||||
| NOK thousand | Q3 2019 segment |
Q3 2019 IFRS |
YTD Sep 2019 segment |
YTD Sep 2019 IFRS |
Full year 2018 segment |
Full year 2018 IFRS |
|---|---|---|---|---|---|---|
| Cost as of 01.07/01.01 | 325 321 | 325 321 | 216 987 | 216 987 | ||
| Capitalized costs | 276 215 | 276 215 | 384 549 | 384 549 | 216 987 | 216987 |
| Cost as of 30.09/31.12 | 601 536 | 601 536 | 601 536 | 601 536 | 216 987 | 216 987 |
| Accumulated amortization and impairment as of 01.07/01.01 |
(85162) | (79061) | ||||
| Amortization for the period | (57530) | (63 631) | (79061) | |||
| Impairment for the period Accumulated amortization and |
||||||
| impairment as of 30.09/31.12 | (142692) | ۰ | (142692) | (79061) | ||
| Carrying value at 01.07/01.01 | 240 159 | 325 321 | 137 926 | 216 987 | ||
| Carrying value at 30.09/31.12 | 458 844 | 601 536 | 458 844 | 601 536 | 137926 | 216 987 |
| Net MC revenues | 91 318 | 101 002 | 125 494 | |||
| Amort, in % of net MC revenues | 63% | 63% | 63% | 63% | 63% | 63% |
| Change in net book value | 91% | 85% | 233% | 177% | 100% | 100% |
AGS entered in 2018 into an agreement with TGS to invest in certain multi-client projects. The agreement from 2018 is classified as joint operation where the parties have rights to the assets and liabilities of the investment. AGS recognizes its relative share of the investment in multi-client data and its share of revenue, amortization and costs.
The ultimate Parent of the Group is Axxis Geo Solutions ASA.
The Group transactions and balances with other Group companies in 2018 and 2019 mainly related to time charter for vessels and consultancy fees. See the figure below for balances with related parties:
| NOK thousand | YTD Sep 2019 | YTD Sep 2018 | Full year 2018 |
|---|---|---|---|
| Hired vessels: | |||
| Lease payment Havila Fortune - controlled by Havila Holding AS | (34 819) | (10 462) | (21 503) |
| Lease payment Havila Aurora - controlled by Havila Holding AS | (15 241) | - | - |
| Lease payment Geo Caspian - controlled by Havila Holding AS | (35 377) | (27 222) | (48 421) |
| Ship management and other operating services: | |||
| Remøy Shipping controlled by W2 Seismic AS | (1 710) | (716) | (954) |
| Evotec AS - controlled by Rome AS | (1 764) | (26 250) | (30 017) |
| Consultancy and accounting services: | |||
| Impact Geo Solutions controlled by Bjarte Bruheim * | (2 817) | (2 641) | (5 965) |
| Rome AS controlled by Jogeir Romestrand * | (945) | (2 823) | (3 447) |
| Hasund AS - controlled by Bjørnulf AS | (661) | (512) | (1 009) |
| Interest and guarantee payments: | |||
| Interest ONGC guarantee to Havila Holding AS | (665) | - | (2 553) |
| Interest on shareholder loan from Havila Holding AS | (340) | (340) | (340) |
| Interest on shareholder loan from TRH AS | (97) | - | - |
| Interest on shareholder loan from Songa Investments AS | (338) | - | - |
| Account payables: | |||
| Impact Geo Solutions controlled by Bjarte Bruheim | 308 | 17 | 1 230 |
| Rome AS | (2) | 436 | 455 |
| Evotec AS - controlled by Rome AS | 1 764 | 7 005 | 4 771 |
| Havila Ships AS controlled by Havila Holding AS | 12 351 | 6 410 | 6 878 |
The Company did not have any significant outstanding balances with related parties as of September 30, 2019 and 2018. All transactions with related parties are priced on arm's length basis.
* The two shareholders of AGS ASA, Bjarte Bruheim with 11.1% of the shares and Rome AS with 11.5% of the shares have both delivered consultancy services to the Board in addition to being Chairman/ Board members of AGS AS/AGS ASA respectively. All work performed by these related parties is regulated in separate consultancy agreements. Both agreements were cancelled by 30.09.2019.
| The Company's share capital per | Number of | ||
|---|---|---|---|
| 30.09 include the following: | shares | Par value per share | NOK |
| Ordinary shares (one share = | |||
| one vote) | 21 309 937 | 1,39431124614644 | 29 712 685 |
| Name | Number of shares | Ownership share |
|---|---|---|
| 1 SONGA INVESTMENTS AS | 3 399 283 | 15,95 % |
| 2 HAVILA HOLDING AS | 3 156 041 | 14,81 % |
| 3 ROME AS | 2 449 257 | 11,49 % |
| 4 BRUHEIM | 2 371 657 | 11,13 % |
| 5 W2 SEISMIC AS | 1 765 561 | 8,29 % |
| 6 TRH AS | 866 839 | 4,07 % |
| 7 J.P. Morgan Securities LLC | 703 618 | 3,30 % |
| 8 JOHS. HANSEN REDERI AS | 663 012 | 3,11 % |
| 9 RONJA CAPITAL AS | 644 000 | 3,02 % |
| 10 REMCO AS | 540 854 | 2,54 % |
| 11 ALCIDES SHIPPING AS | 450 712 | 2,12 % |
| 12 AJEA INVEST AS | 444 000 | 2,08 % |
| 13 STETTE INVEST AS | 400 000 | 1,88 % |
| 14 KJØLÅS STANSEKNIVER AS | 400 000 | 1,88 % |
| 15 ABG SUNDAL COLLIER ASA | 288 455 | 1,35 % |
| 16 BJØRNULF A/S | 260 862 | 1,22 % |
| 17 KREFTING AS | 180 885 | 0,85 % |
| 18 URBANIUM GRUPPEN AS | 180 285 | 0,85 % |
| 19 GRANT INVEST AS | 120 190 | 0,56 % |
| 20 CANOMARO SHIPPING AS | 104 627 | 0,49 % |
| Total | 19 390 138 | 90,99 % |
| Total other shareholders | 1 919 799 | 9,01 % |
| Total number of shares | 21 309 937 | 100,00 % |
The European Securities and Markets Authority ("ESMA") issued guidelines on Alternative Performance Measures ("APMs") that came into force on July 3, 2016. The Company has defined and explained the purpose of the APMs in the paragraphs below.
The alternative performance measures presented by AGS may be determined or calculated differently by other companies.
EBITDA means Earnings before interest, taxes, amortization, depreciation and impairments. AGS uses EBITDA because it is useful when evaluating operating profitability as it excludes amortization, depreciation and impairments related to investments that occurred in the past. Also, the measure is useful when comparing the Company's performance to other companies.
| Q3 2019 | YTD Sep | |||
|---|---|---|---|---|
| NOK thousand | segment | Q3 2019 IFRS | segment | YTD Sep IFRS |
| Profit (loss) for the period | (17 151) | (42 717) | 53 262 | 29 129 |
| Income tax (expense) | 5 593 | 13 026 | (16 697) | (8 474) |
| Net financial items | (21 847) | (21 482) | (37 885) | (37 595) |
| Depreciation, amortization & impairment | (12 027) | (12 093) | (32 228) | (32 225) |
| Amortization and impairment of multi-client | (57 530) | - | (63 631) | - |
| Operating profit (loss) before depreciation and | ||||
| amortization (EBITDA) | 68 660 | (22 168) | 203 703 | 107 423 |
Earnings before interest and tax is an important measure for AGS as it provides an indication of the profitability of the operating activities. The EBIT margin presented is defined as EBIT (Operating Profit) divided by net revenues.
The multi-client prefunding percentage is calculated by dividing the multi-client prefunding revenues, as per segment reporting, by the operational investments in the multi-client library, excluding investments related to projects where payments to the vendors are contingent on sales (risk-sharing investments). The multi-client prefunding percentage is considered an important measure as it indicates how the Company's financial risk is reduced by multi-client investments.
Backlog is defined as the total value of future segment revenue on signed customer contracts, letter of awards or where all major contracts terms are agreed. AGS believes that the Backlog figure is a useful measure in that it provides an indication of the amount of customer backlog and committed activity in the coming periods.
Axxis Geo Solutions ASA (AGS or the Company) is a public company listed on Oslo Axess and traded under the ticker AGS. The address of its registered office is Strandveien 50, 1366 Lysaker, Norway.
More information on www.axxisgeo.com
The interim consolidated financial statements of AGS have been prepared in accordance with International Financial Reporting Standards (IFRS) IAS 34 Interim Financial Reporting as approved by EU and additional requirements in the Norwegian Securities Trading Act. The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with AGS' annual report for 2018 which is available at www.axxisgeo.com. The same accounting policies and methods of computation are followed in the interim financial statements as in the annual financial statements for 2018 except for the implementation of IFRS 16 Leases with effect from 1 January 2019. Please see below.
IFRS 16 Leases is effective from the financial year starting at 1 January 2019. The new standard is replacing IAS 17 Leases. AGS Group has chosen the modified retrospective approach for the implementation of IFRS 16 Leases where comparative figures are not restated. The reclassifications and adjustments on implementation are recognized in the opening balance of 2019. The Group will apply transition reliefs where the lease asset will be equal to the lease liability at the transition date. The Group has used the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17.
As of 1 January 2019, AGS Group recognized lease liabilities for properties. The liabilities were measured at the present value of the remaining lease payments. The remaining lease payments were discounted using the incremental borrowing rate as of 1 January 2019. The incremental borrowing rate applied was 5 %. As of 1 January 2019, a lease liability of NOK 3.6 million was recognized. A corresponding right-of-use asset was recognized measured at a value of NOK 3.6 million. An additional lease liability and lease asset for properties of NOK 0.6 million was recognized as of 1 May 2019.
| Rolf Rønningen | Andreas Pay | Vibeke Fængsrud |
|---|---|---|
| Chairman | Director | Director |
| ____ | _____ | ________ |
| Njål Sævik Director |
Nina Skage Director |
Eirin Inderberg Director |
Lee Parker Chief Executive Officer
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.
| Oslo, Norway | Jakarta, Indonesia |
Houston, United States |
|---|---|---|
| Strandveien 50. | Beltway Office Park | 14511 Old Katy Road, |
| 1366 Lysaker | Tower B. | Suites 150. |
| Floor 5, Suit 562, | Houston, TX 77079 | |
| JI TB Simatupang No 41. | ||
| Kel Pasar Minggu, | ||
| Kec. Ragunan, | ||
| South Jakarta. | ||
| +47 480 95 555 | +1 281 810 2550 |
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