q1 2017-v03final - magseis.com€¦ · being completed ahead of schedule despite the shorter ......

Magseis ASAFirst quarter

Q12017

Dicks Vei 10B, N-1366 Lysaker NORWAY, Phone: +47 23 36 80 20

Generation 3 MASS nodes Photo: Runar Storeide

HIGHLIGHTS

• Strong operational performance results in best financial quarter to date

• Awarded extension to Red Sea survey for BGP and Saudi Aramco

• Raised USD 40 million of new equity to finance planned expansion

• Started preparations for the rigging of our second hich-capacity cable vessel

• Revenue of USD 21.1 million compared to USD 18.1 million in 2016

• EBITDA of USD 8.3 million compared to USD 1.6 million in 2016

• EBIT of USD 4.8 million compared to USD -2.5 million in 2016

• Net Income of USD 3.5 million compared to USD -3.9 million in 2016

2

Revenue

20

15

10

5

-USD

mill

ion

Q2 Q3 Q4 Q12016 2016 2016 2017

FIRST QUARTER 2017

EBITDA

8.00

6.00

4.00

2.00

-USD

mill

ion

Q2 Q3 Q4 Q12016 2016 2016 2017

Magseis ASA - For the period ended 31 March 2017

Q1 was another strong quarter for Magseis with USD 21.1 million in revenue, EBITDA of USD 8.3 million and a net profit before tax of USD 4.3 million. This demonstrates the efficiency of our operation in the Red Sea and robustness of our equipment as well as the very good cooperation with our partner BGP and Saudi Aramco. Based on this performance, we were awarded the S-78 Extension which is now well underway. The preparations for the Conoco- Phillips Ocean Bottom Seismic (OBS) 4D project on the Eldfisk Field in the southern North-Sea are progressing well and we are on plan with respect to building new equipment and recruiting staff for this mobile ”smart- operation.” The Eldfisk project represents a step change

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Idar Horstad - CEO Magseis

CEO STATEMENTSin OBS operations with a set up that reduces the cost of OBS data significantly for our customers. This lowers the adoption barrier and will result in an expansion of the customer base and a larger market.

During the first quarter we successfully raised USD 40 million in new equity in a process that was met with significant interest from investors. We are very pleased to see that most of our existing shareholders participated in the new funding and welcome our new shareholders. The new capital will, in combination with additional funding, allow us to expand our capacity by 10,000 new MASS nodes, rig a new high capacity cable handling vessel and continue to improve our technology to provide new innovative and cost efficient solutions to our clients.

The preparations for our new cable vessel are progressing well. We have placed orders for long lead items and started to recruit additional staff. More than 20 different ship owners were invited to participate in the tender process and final negotiations are ongoing. We expect to announce the new charter party before the summer. The new vessel will have a capacity to handle up to 1,000 km of cable, more than 10,000 nodes and have permanent ROV capability onboard. This vessel represents a game changer for the OBS market and a significant step towards our Vision: To re-shape the Ocean Bottom Seismic Market.

KEY FINANCIALSIn thousands of USD

Profit and loss Q1 2017 Q1 2016 2016Revenues 21 076 18 115 58 905Cost of sales 9 997 13 630 39 038EBITDA 8 329 1 559 8 506EBIT 4 762 -2 487 -11 114Net profit/loss 3 511 -3 942 -16 695Basic earnings per share 0.06 -0.13 -0.48

Financial positionTotal assets 128 067 75 852 86 665Total liabilities 36 933 26 026 37 620Total equity 91 134 49 826 49 045Equity ratio 71.2% 65.7% 56.6 % Cash flowNet cash flow from operating activities 10 074 1 533 -2 117

Idar Horstad, CEO Photo: Runar Storeide


OPERATIONAL COMMENTS

The Artemis Athene crew’s good performance has continued into 2017 with the second half of the survey being completed ahead of schedule despite the shorter operating window and more challenging weather condi-tions resulting from wintertime operations. The last part of the survey also comprised the most challenging areas with large seabed variations rapidly changing from very shallow to very deep water in-between numerous islands. Close cooperation with the BGP crew was maintained at all-times and operational challenges were dealt with in a professional and efficient manner.

The performance of our MASS technology in these conditions has been excellent and demonstrates the robustness of the system.

Athene ended the quarter preparing for a scheduled annual vessel classing and looking ahead to the upcoming S-78 Extension which offers very similar conditions as the current S-78 survey.

A lot of preparation work has gone into building a containerized handling system for our new, ROV-based crew. Our plan is to start the ConocoPhillips survey in the second half of June. The addition of a second crew, which can be rigged up or down in a matter of days, adds more flexibility to our operation and allows us to move into complex fields with multiple seabed obstructions and deploy large node spreads using a high-efficiency ROV-based solution. On the ConocoPhillips project we use vessels that our client already has on charter and it will be a very cost-efficient operation.

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QHSE COMMENTS

During Q1 Magseis started the formal process towards ISO 9001 accreditation with completion of the stage 1 and

stage 2 audits were successfully completed in April. The certificate was received early May.

Aftdeck at Artemis Athene Red Sea Photo: Crew


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BOARD OF DIRECTORS REPORT

Revenues Revenues for the first quarter were USD 21.1 million. All revenues were related to the Saudi Aramco survey. In comparison, the revenues for the first quarter of 2016 came in at USD 18.1 million, with multi-client revenue of USD 1.9 million.

Operational costs Cost of sales in the first quarter was USD 10.0 million compared to USD 13.6 million in the first quarter of 2016. The decrease of cost is primarily due to a reduction of fuel cost which is supplied by Saudi Aramco. In addition Cost of Sales during Q1 2016 included a separate source vessel. Cost of sales for this quarter includes additional costs of USD 1.0 million related to the final part of the late start compensation due under the ongoing contract. The late start compensation is amortised across the duration of the ongoing contract. Selling, general and administration expenses (SG&A) and other expenses in the first quarter amounted to USD 2.0 million, compared to USD 1.9 million in the first quarter of 2016.

Research and development Research and development (R&D) expenses amounted to USD 0.5 million for the first quarter, which is on a comparable level as the first quarter of 2016. Depreciation Depreciation was USD 3.2 million during the first quarter compared to depreciation of USD 3.0 million in the first quarter of 2016.

AmortisationFirst quarter amortisation of USD 0.1 million was related to other intangible assets only. This compares to USD 1.0 million for the same period in 2016 where the amortisation was related to both the multi-client library and other intangible assets.

ImpairmentFirst quarter impairment of USD 0.2 million was related to equipment damaged during the ongoing survey. This compares to a USD 0.05 million impairment for the same period in 2016.

EBITDA and EBIT The EBITDA was USD 8.3 million in the first quarter compared to USD 1.6 million the first quarter of 2016. This increase in EBITDA was driven by a full quarter of contract revenue r and very good vessel performance.

EBIT was USD 4.8 million in the first quarter compared to USD -2.5 million during the same period in 2016. The increase in EBIT relates to the same factors as the increase in EBITDA described above.

Balance Sheet and Cash FlowAs of 31 March 2017, the Group’s equity was USD 91.1 million compared to USD 49.8 million at 31 March 2016. The equity ratio was 71.2% as of end March 2017. Tangibles and intangible assets amounted to USD 54.1 million as of 31 March 2017, compared to USD 49.3 million at the same date in 2016. The investments comprise seismic equipment on board Artemis Athene as well as capitalisation of expenses related to research and development projects per March 2017.

As of 31 March 2017 and 2016, the net value of the multi-client library is zero due to amortisation of USD 0.9 million during the first quarter of 2016.

As of 31 March 2017, current assets amounted to USD 74.0 million compared to USD 26.5 million as of 31 March 2016. Cash and cash equivalents were USD 54.2 million compared to USD 15.2 million as of 31 March 2016 primarily due to the capital raising of USD 40 million conducted in March 2017.

Non-current liabilities increased to USD 14.8 million as of 31 March 2017, from USD 11.2 million at the same date in 2016. This is mainly related to debt financing from Export Credit Norway and Innovation Norway. In addition, funding of an accumulated amount of USD 6.8 million has been received from Shell Global Solutions related to the cooperation agreement for development of a deep-water solution for seismic operations. This funding is recognised as a finance arrangement in the financial statements. The current portion of long-term debt amounted to USD 2.9 million as of March 2017. Current liabilities as of 31 March 2017, amounted to USD 22.2 million compared to USD 14.8 million as of 31 March 2016. The increase is mainly due to increase in accruals

FINANCIAL REVIEW


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of USD 3.9 million resulting from the operations on the Saudi Aramco Red Sea project. Furthermore, it includes USD 2.1 million in pre-funding from BGP as a short-term loan to assist in the financing of required investments for the same project. In addition, an increase of USD 2.5 million in current tax liability related to operations in Malaysia and Saudi Arabia for corporate tax and withhold-ing tax. Cash flow from operating activities was USD 10.1 million in the first quarter of 2017 compared to USD 1.5 million in the same period of 2016. The full quarter of contract revenue resulting from the current survey is the primary cause of the strong operational cash flow. The net cash flow from investing activities amounted to

USD -9.5 million in the first quarter of 2017 compared to USD -2.3 million in the same period of 2016.

Cash flow from finance activities was USD 34.6 million for the first quarter of 2017 compared to USD 4.6 million in the same period of 2016. The proceeds are related to the share capital increase of net USD 38.5 million, the proceeds from the cooperation agreement with Shell Global Solutions of USD 0.4 million, offset by instalments and interest relating to the loans and finance lease totalling USD 4.3 million.

Employees As of 31 March 2017, Magseis had a total of 85 full-time employees (31 March 2016: 77) including the offshore seismic crew of 46 employees (31 March 2016: 41).

20 LARGEST SHAREHOLDERS 31 MARCH 2017 Shareholder HoldingsANFAR INVEST AS 6 030 190 10.0 %

WESTCON GROUP AS 5 328 103 8.8 %

GEO INNOVA AS 4 571 716 7.6 %

AS CLIPPER 4 012 689 6.6 %

JPMORGAN CHASE BANK, N.A., LONDON 2 401 152 4.0 %

BARRUS CAPITAL AS 2 292 351 3.8 %

KLP AKSJENORGE 2 264 615 3.7 %

JPMORGAN CHASE BANK, N.A., LONDON 1 865 186 3.1 %

REDBACK AS 1 833 333 3.0 %

VERDIPAPIRFONDET PARETO INVESTMENT 1 742 591 2.9 %

VPF NORDEA NORGE VERDI 1 728 453 2.9 %

KOMMUNAL LANDSPENSJONSKASSE 1 548 780 2.6 %

VPF NORDEA KAPITAL 1 323 265 2.2 %

ALTITUDE CAPITAL AS 1 200 000 2.0 %

CITIBANK, N.A. 1 178 723 1.9 %

INVESCO PERP EURAN SMLER COMPS FD 1 098 845 1.8 %

EUROCLEAR BANK S.A./N.V. 1 038 399 1.7 %

VPF NORDEA AVKASTNING 942 507 1.6 %

GNEIS AS 924 825 1.5 %

COSIMO AS 860 000 1.4 %

Total 20 largest shareholders 44 185 723 73.1 %

Other shareholders 16 282 291 26.9 %

Total outstanding shareholders 60 468 014 100.0 %


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Board of Directors of Magseis ASA, Lysaker, 30 May 2017

We confirm, to the best of our knowledge, that the condensed consolidated interim financial statements for the period 1 January to 31 March 2017 have been prepared in accordance with current applicable accounting standards and IAS 34 Interim Financial Reporting, and gives a true and fair view of the assets, liabilities, financial position and results of the Group. We also confirm, to the best of our knowledge that the condensed consolidated interim financial statements present a fairly view of the development and performance of the business during the period, and together with the 2016 Annual Report a description of the principal risks and uncertainties facing the Group.

STATEMENT OF FINANCIAL COMPLIENCE

Jan P. Grimnes, Chairman

Jan Gateman, Director and Senior Vice President

Idar Horstad Chief Executive Officer

Bettina R. Bachmann, Non-executive Director

Jan M. Drange, Non-executive Director

Outlook With the award of the S-78 Extension in the Red Sea the back log for Artemis Athene has been extended to well into the fourth quarter of 2017. Based on our unique MASS technology and efficient operations we hope to continue to operate in this region during 2018. Saudi Aramco has announced that they have very ambitious plans for the Red Sea and that this region is a key area for the 2030 transformation plan for the country.

The strong performance has continued into the second quarter, but due to planned yard stays for Artemis Athene and several of the BGP shooting vessels, acquisition did not commence on the S-78 Extension until the end of April. During the third quarter, we should be back to a full quarter of production, not only with Athene but also expanding the scope of our operations with the ConocoPhillips project.

Following the successful capital raising during Q1 2017, the entire Magseis organisation is working hard to deliver on our growth plans and we plan to operate close to

10,000 nodes in the North Sea next summer. Production of equipment and other preparations for our second, ROV-based, crew are progressing well and we are on track to start operations for ConocoPhillips early June 2017. In parallel we are conducting a vessel tender process for our second high-capacity, cable-based, crew. We expect this process to be conducted before the summer and are gearing up the production of equipment for an early Q2 2018 start-up for this crew. Based on the candidates being considered and the requirements that have been set for financing to be provided by the vessel owners we consider our growth plan to be well funded.

The OBS market continues to show its relative strength with a number of tenders ongoing and several larger tenders expected in the months to come. As we expand our capacity into 2018, our industry leading MASS technology and strong operating track record places Magseis in a unique position to capture a substantial share of the OBS market. On this basis, we will work to deliver on our vision to bring down acquisition costs, grow the total OBS market and capture a significant share of this new market


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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of USD NoteQ1 2017

(unaudited)Q1 2016

(unaudited)Full Year 2016

(audited)

REVENUE AND OTHER INCOME

Revenue 4 21 076 18 115 58 905

Total revenue and other income 21 076 18 115 58 905

OPERATING EXPENSES

Cost of sales 9 997 13 630 39 038

Research and development expenses 499 492 2 022

Selling, general and administrative costs 2 036 1 935 7 863

Other expenses 215 500 1 475

Depreciation 5 3 219 2 991 10 769

Amortisation 6, 7 116 1 010 1 409

Impairment 5 233 46 7 441

Total operating expenses 16 314 20 602 70 018

OPERATING PROFIT (LOSS) 4 762 -2 487 -11 114

FINANCIAL INCOME AND EXPENSES

Finance income 2 119 1 593

Finance costs -464 -604 -2 986

Net finance costs -462 -485 -1 393

NET PROFIT (LOSS) BEFORE TAX 4 299 -2 972 -12 507

Income tax expense 789 970 4 188

NET PROFIT (LOSS) 3 511 -3 942 -16 695

Basic earnings (loss) per share (in NOK) 0.06 -0.13 -0.48

OTHER COMPREHENSIVE INCOME

Currency exchange differences 0 0 0

Total comprehensive income (loss) for the period, attributable to Owners of the Company 3 511 -3 942 -16 695


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CONDENSED AND CONSOLIDATED BALANCE SHEET

In thousands of USD NoteYTD 2017

(unaudited)YTD 2016

(unaudited)YE 2016(audited)

ASSETS

Non-current assets

Equipment 5 48 569 45 552 42 991

Multi-client library 6 0 0 0

Other intangible assets 7 5 543 3 762 5 583

Total non-current assets 54 111 49 314 48 574

Current assets

Cash and cash equivalents 54 195 15 218 18 974

Trade receivables 12 602 8 027 10 681

Other current assets 7 159 3 293 8 436

Total current assets 73 956 26 538 38 092

TOTAL ASSETS 128 067 75 852 86 665

EQUITY AND LIABILITIES

Shareholders' equity

Share capital 8 435 254 303

Share premium 8 140 963 90 945 102 594

Other equity 3 089 2 737 3 012

Retained earnings -48 229 -38 987 -51 740

Currency translation reserve -5 124 -5 124 -5 124

Total equity attributable to equity holders of the Company 91 134 49 826 49 045

TOTAL EQUITY 91 134 49 826 49 045

LIABILITIES

Non-current liabilities

Obligation under finance lease 10 704 1 668 951

Other non-current financial liabilities 14 063 9 523 14 188

Total non-current liabilities 14 767 11 191 15 139

Current liabilities

Trade payables 6 429 7 490 5 870

Current tax payable 2 875 330 2 841

Current portion of obligations under finance lease and loan 10 5 021 868 7 881Other current liabilities 7 841 6 147 5 890

Total current liabilities 22 166 14 835 22 481

TOTAL LIABILITIES 36 933 26 026 37 620

TOTAL EQUITY AND LIABILITIES 128 067 75 852 86 665


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

In thousands of USD Share

capital

Share premium

reserve

Share based

payments reserve

Retained earnings

Currency trans-lation

reserve Total

Balance at 1 January 2016 254 90 945 2 630 -35 045 -5 124 53 660

Profit / (loss) for the period 0 0 0 -3 942 0 -3 942

Other comprehensive income 0 0 0 0 0 0

Total comprehensive income for the period 0 0 0 -3 942 0 -3 942

Share-based payments (options) 0 0 107 0 0 107

Balance at 31 March 2016 254 90 945 2 737 -38 987 -5 124 49 826

Balance at 1 January 2017 303 102 594 3 012 -51 740 -5 124 49 045

Profit / (loss) for the period 0 0 0 3 511 0 3 511

Other comprehensive income 0 0 0 0 0 0

Total comprehensive income for the period 0 0 0 3 511 0 3 511

Share issuance 133 39 650 0 0 0 39 783

Expenses related to share issuance 0 -1 282 0 0 0 -1 282

Share-based payments (options) 0 0 78 0 0 78

Balance at 31 March 2017 435 140 963 3 089 -48 229 -5 124 91 134

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

In thousands of USD NoteYTD 2017

(unaudited)YTD 2016

(unaudited) CASH FLOWS FROM OPERATING ACTIVITIES

Profit / (Loss) before tax 4 299 -2 972

Adjustment for:

Income tax paid 115 -37

Depreciation and amortisation 5, 6 3 335 4 000

Deferred lease discount amortisation -116 -116

Impairment 5 233 46

Share based payments expense 78 107

Interest expense 536 262

Interest income -2 -4

Working capital adjustments:

(Increase) / decrease in current assets -643 -1 691

Increase / (decrease) in trade and other payables and accruals 2 240 1 938

1 597 247

Net cash from operating activities 10 074 1 533

Cash flows from investing activities

Interest received 2 4

Acquisition of equipment and prepayments 5 -9 375 -1 967

Payments for capitalised development and intangibles 7 -76 -352

Multi-client investment 6 0 0

Net cash used in investing activities -9 449 -2 316

Cash flows from financing activities

Proceeds from loan 428 5 030

Payment of finance lease obligation and loan -3 797 -203

Proceeds from issue of share capital 39 783 0

Expenses related to issue of share capital -1 282 0

Interest paid -536 -262

Net cash from financing activities 34 596 4 565

Net change in cash and cash equivalents 35 221 3 783

Cash and cash equivalents at 1 January 18 974 11 435

Cash and cash equivalents at period end 54 195 15 218

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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. Reporting entity Magseis ASA is a public limited liability company listed on Oslo Axess and incorporated in Bærum, Norway. The address of the Company’s registered office is Dicks vei 10b, 1366 Lysaker. These condensed consolidated interim financial state-ments comprise Magseis ASA (referred to as the “Company”) and its subsidiaries (together referred to as “Magseis” or the “Group”). The Group is primarily involved in marine seismic operations and seismic related activities.

2.1 Basis of preparation(a) Statement of compliance The condensed consolidated interim financial statements have been prepared in accordance with International Ac-counting Standard IAS 34 “Interim Financial Reporting” as issued by the International Accounting Standards Board (IASB) and adopted by the European Union (EU).The condensed consolidated interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the annual financial statements as of 31 December 2016.

The condensed consolidated interim financial statements were authorised for issue by the Board of Directors on 30 May 2017.

(b) Basis of measurement The condensed consolidated interim financial statements have been prepared on the historical cost basis except for financial instruments at fair value, which are recorded through the profit and loss.

(c) Going concern The condensed consolidated interim financial statements have been prepared on the going concern basis.

(d) Functional and presentation currency The Group’s functional and presentation currency has been United States Dollars (USD). All financial information is presented in USD and has been rounded to the nearest thousand unless otherwise stated.

(e) 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 following APMs;

EBITDA EBITDA means Earnings before interest, taxes, amortisation, depreciation and impairments. Magseis has included EBIT-DA as a supplemental disclosure because management believes that the measure provides useful information regarding the Company’s ability to service debt and to fund capital expenditures and provides a helpful measure for comparing its operating performance with that of other companies.

EBIT (Operating Profit) Earnings before interest and tax is an important measure for Magseis 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.

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Backlog Backlog is defined as the total value of future revenue from signed customer contracts. Management 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. 2.2 Basis for consolidation The condensed consolidated interim financial statements comprise the financial statements of the Company and its subsidiaries as of 31 March 2017. Subsidiaries are entities controlled by the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Intra-group balances and transactions, and any unrealised income and ex-pense arising from intra-group transactions, are eliminated.

2.3 Significantaccountingjudgements,estimatesandassumptions The preparation of the Group’s financial statements requires management to make judgements, estimates and assump-tions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The account-ing judgements, estimates and assumptions used to prepare the condensed consolidated interim financial statements are the same as those used to prepare the 2016 annual financial statements.

2.4 Summaryofsignificantaccountingpolicies The accounting principles used to prepare the condensed consolidated interim financial statements are the same as those used to prepare the 2016 annual financial statements. There are no new standards effective in 2017 that have had a significant impact to the Group’s financial statements.

3. Operating segments The Group is operating in one segment being geophysical surveys with respect to products and services. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole.

4. Revenues In thousands of USD Q1 2017 Q1 2016Revenue and other income

Contract revenue 21 076 16 270Multi- client revenue 0 1 845Total revenue and other income 21 076 18 115


In thousands of USD Office machines

Seismic equipment

Seismic equip-ment under

finance leaseUnder

construction Total

Cost

Balance at 1 January 2016 391 55 141 4 063 5 618 65 212

Asset completed and ready for intended use 0 0 0 0

Additions 9 148 0 1 090 1 247

Disposals 0 0 0 0 0

Impairment 0 -46 0 0 -46

Balance at 31 March 2016 400 55 243 4 063 6 707 66 413


Asset completed and ready for intended use 0 4 528 0 -4 528 0

Additions 30 41 0 8 591 8 662

Disposals 0 0 0 -233 -233


Balance at 31.March 2017 449 72 548 4 063 11 942 89 002

Depreciation and impairment losses

Balance at 1 January 2016 252 15 844 1 769 0 17 866

Depreciation for the year 23 2 775 197 0 2 995

Disposals 0 0 0 0 0Impairment 0 0 0 0 0

Balance at 31 March 2016 275 18 619 1 966 0 20 861


Depreciation for the year 18 2 636 197 0 2 851

Disposals 0 0 0 0 0


Balance at 31 March 2017 353 35 866 2 752 1 463 40 434

Carrying amounts

at 1 January 2016 139 39 297 2 294 5 618 47 346

at 31 March 2016 124 36 624 2 097 6 707 45 552

at 1 January 2017 85 34 750 1 507 6 649 42 991

at 31March 2017 97 36 682 1 311 10 479 48 569

Depreciation of the year 18 2 636 197 0 2 851

Depreciation capitalised and deferred - net 0 368 368

Depreciation charged to expense at 31 March 2017 18 3 004 197 0 3 219

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5. Equipment


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6. Multi-client library In thousands of USD 2017 2016Cost

Balance at 1 January 16 4 383 4 383

Additions 0 0Disposals 0 0Balance at 31 March 4 383 4 383

Amortisation

Balance at 1 January 16 4 383 3 506

Amortisation for the year 0 877

Disposals 0 0

Impairment 0 0

Balance at 31 March 4 383 4 383

Carrying amounts

at 1 January 16 0 877

Balance at 31 March 0 0

Useful life of equipmentUseful life of seismic equipment and office machines are 3-7 years.

CapitalisationIn 2017 Magseis has capitalised cost relating to the development of the seismic equipment of USD 42 thousands (2016: USD 0.2 million).

ImpairmentMagseis has in 2017 recorded an impairment of USD 233 thousands (2016: USD 46 thousands).


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7. Other intangible assets In thousands of USD 2017 2016Cost

Balance at 1 January 7 160 4 588

Additions 76 352Disposals 0 0Adjustment currency conversion 0 0Balance at 31 March 7 236 4 940

Amortisation

Balance at 1 January 1 577 1 045

Amortisation for the year 116 133

Disposals 0 0

Adjustment currency conversion 0 0

Balance at 31 March 1 693 1 178

Carrying amounts

at 1 January 5 583 3 555

at 31 March 5 543 3 762

Development costsIn the first quarter of 2017 USD 0.1 million was capitalised, compared to USD 0.4 million in the first quarter of 2016.


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No dividends were paid during the period ended 31 March 2017 (2016: USD 0).

SHARE CAPITAL ISSUED

Number of shares

Share capital USD ‘000

Share premium reserve

USD ‘000Ordinary shares - Issued and fully paid

At 1 January 2016 29 818 014 254 90 945

At 31 March 2016 29 818 014 254 90 945

Ordinary shares - Issued and fully paid

At 1 January 2017 37 818 014 303 102 594

30 March 2017 Private placement of 22,650,000 shares at NOK 15,00 per shareCapital raising costs 22 650 000 132 39 651Capital raising costs 0 0 -1 282

At 31 March 2017 60 468 014 435 140 963

8. Share capital and reserves The shares of Magseis are listed on Oslo Axess.

9. Related partiesKey management personnel and director transactions A number of key management persons and board members, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities. A num-ber of these entities transacted with the Group in the reporting period. The terms and conditions of the transactions with management persons, board members and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis. The aggregate value of transactions and outstanding balances related to key management personal, board members and entities over which they have control or significant influence were as follows: RELATED PARTIES TRANSACTIONS AND OUTSTANDING BALANCES:In thousands of USD Transaction value Balance outstandingName Transactions Note 31 March 2017 31 March 2016 31 March 2017 31 March 2016

J B Gateman Consultant costs (I) 41 42 0 42Westcon Group Leases (II) 4 644 6 994 1 592 6 536

Westcon Group Other services (III) 0 4 0 7Total 4 685 7 040 1 592 6 585

(I) J B Gateman is engaged as an independent consultant as Senior Vice President.

(II) Relates to time charters (TC) for one vessel and a sale and leaseback arrangement. As part of the TC agreement for Artemis Athene, Westcon Group also delivers Marine Management services. As at 31 March 2017 the remaining time charter lease term is 1 years and 9 months and the sale and leaseback is 1 years and 8 months.

(III) In addition to the leases Westcon Group also delivered other services during 2016.


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10. LeasesOperating leases The TC agreements with Westcon Group (related party) is classified as an operating lease. The table below sets out the future minimum lease payments of the arrangement based on full day rates: FUTURE MINIMUM LEASE PAYMENTS OPERATING LEASESIn thousands of USD 31 March 2017 31 March 2016Less than one year 18 018 17 922

Between one and five years 13 680 30 526

More than five years 0 0

Total 31 698 48 448

Finance lease The sale and leaseback arrangement with Westcon Group (related party) is treated as a finance lease. Future minimum lease payments under the finance lease together with the present value of the net minimum lease payments are as follows: FUTURE MINIMUM LEASE PAYMENTS FINANCE LEASES

31 March 2017 31 March 2016

In thousands of USD

Future minimum lease payments

Present value of minimum lease payments

Future minimum lease payments

Present value of minimum lease payments

Less than one year 1 095 1 000 1 098 953

Between one and five years 732 668 1 824 1 583

More than five years 0 0 0 0

Total minimum lease payments 1 827 1 668 2 922 2 537

Less amounts representing finance charges 159 0 385 0

Present value of minimum lease payments 1 668 1 668 2 537 2 537

Refer to note 9 Related parties for further information about leases with related parties.

11. Capital commitments Future minimum commitments relating to equipment are as follows: In thousands of USD 31 March 2017 31 March 2016Contracted but not yet provided for and payable:

Within one year 7 984 8 988

One year later and no later than five years 0 0

Later than five years 0 0

Total 7 984 8 988

Dicks Vei 10B, N-1366 Lysaker NORWAY, Phone: +47 23 36 80 20


q1 2017-v03final - magseis.com€¦ · being completed ahead of schedule despite the shorter ......

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