31.05.2005
Global Geo Services ASA
Results
1st Quarter 2005
by
Morten Andersen (Chairman)
Trond Christoffersen (CEO)
Agenda
•Strategy
•Finanicial highlights and results
•IFRS
•Status
•Vessels
•Nescos
•MC plans
Strategy
Continued focus on balance sheet improvement:
Reduction of debt and converting short term to long
term debt
Building financial flexibility and strength for gradual
expansion of activities:
Funding future Multi Client investments. Together with
partners when appropriate.
Developing corporate structure:
Reviewing opportunities
Strategy
2003-2004:
Has been used to turn GGS around from bankrupcy
candidate to a company resuming activities positioned for
growth
2005-2006:
Will be used to make GGS a top contender in profitability
among the seismic companies at the Oslo Stock Exchange
Strategy
2005-2006:
Will be used to make GGS a top contender in profitability among the seismic
companies at the Oslo Stock Exchange
Globalizing GGS:
Presence near markets and areas of operation.
(Offices in London, Dubai and Singapore)
Activities also outside Persian Gulf.
(East Timor, East Africa, Syria)
Strategy
2005-2006:
Will be used to make GGS a top contender in profitability among the seismic
companies at the Oslo Stock Exchange
Partnerships:
Rather 50 % of 20 projects than 100 % of 10 projects.
(Speeding up globalizing process)
(Spreading risk)
(Creating more even revenue stream)
Strategy
2005-2006:
Will be used to make GGS a top contender in profitability among the seismic
companies at the Oslo Stock Exchange
Filling the gaps:
PC-2000 revenue stream characterized by large sales
contracts at unpredictable and relatively long intervals.
Adding smaller and shorter life-cycle projects will fill
the gaps and gradually create a more even cash flow
with PC-2000 contributing to peaks.
Strategy
2005-2006:
Will be used to make GGS a top contender in profitability among the seismic
companies at the Oslo Stock Exchange
Securing capacity to grow:
Seismic market booming. Harder to get vessel capacity
at right time and place.
Seismic company without vessels is like a farmer
without his tractor.
Goal to secure long time capacity (2-3 vessels) with exit
possibilities, e.g. chartering Odin Explorer for 6 months
with up to 3 extensions of 6 months each.
•Financial highlights Q1 2005
•Revenue for Q1-2005 is NOK 0. (down from NOK 4.5
million for Q1-2004).
•EBITDA is NOK - 5.3 million for Q1-2005 (down from
NOK - 0.9 million in Q1-2004).
•Operating Profit for Q1 is NOK -17.7 million (up from
NOK - 38.9 million for Q1-2005).
•Amortisation and depreciation was NOK 12.4 million in
Q1-2005 (down from NOK 38.0 million for Q1-2004).
•Loss before tax and net loss for Q1 is NOK 22.0 million
(up from a loss of NOK 44.3 million in Q1-2004).
•Financial highlights
RESULTS
Global Geo Services Group
Income Statement
(In thousands of NOK)
Revenue
Quarter ended
March 31
2005
2004
Year ended
December 31
2004
-
4.476
93.699
Amortisation and depreciation
Write down patents
Other operating expenses
Total operating expenses
Operating profit/-loss
(12.412)
(5.304)
(17.716)
(17.716)
(38.044)
(5.360)
(43.404)
(38.928)
(150.202)
(53.394)
(203.596)
(109.897)
Interest expense, net
Foreign exchange gain/-loss
Other financial items
Profit/-loss before tax
Tax expense
Net profit/-loss
(2.540)
(1.748)
(22.004)
(22.004)
(2.132)
(3.200)
(44.260)
(44.260)
(14.872)
5.359
(6)
(119.417)
(0,51)
(1,34)
(2,82)
Earning / loss(-) per share
(119.417)
Diluted earning / loss(-) per share
Basic shares outstanding average
Diluted shares outstanding average
42.802.517
43.243.179
33.046.730
33.487.392
42.311.080
42.751.742
Global Geo Services Group
Balance Sheet
(In thousands of NOK)
Assets
Fixed assets
Intangible fixed assets
Multi-client library, net
Total intangible fixed assets
Tangible fixed assets
Machinery and equipment
Financial fixed assets
Other long term receivables
Total fixed assets
Current Assets
Inventory
Receivables
Accounts receivable
Other receivables
Total receivables
Cash and cash equivalents
Total current assets
Total assets
Quarter ended
March 31
2005
2004
Year ended
December 31
2004
227.490
227.490
337.072
337.072
222.454
222.454
2.017
476
2.273
9.214
238.722
13.087
350.635
9.195
233.921
750
4.402
750
3.043
2.834
5.877
13.949
74
14.023
30.786
8.916
39.703
13.808
20.435
1.940
20.366
22.392
62.844
259.156
371.000
296.765
Global Geo Services Group
Balance Sheet
(In thousands of NOK)
Quarter ended
March 31
2005
2004
Year ended
December 31
2004
Shareholders' Equity and Liabilities
Shareholders' equity
Paid-in capital
Share capital
Share premium reserve
Not registered capital increase
Total paid-in capital
4.280
160.495
164.776
3.305
175.766
179.071
4.231
175.281
3.641
183.153
Retained earnings
Total equity
(41.178)
123.597
(36.398)
142.672
(37.551)
145.602
3.500
9.069
12.569
4.200
77.145
81.345
3.500
9.208
12.708
93.924
29.064
122.988
88.756
58.226
146.982
109.312
29.144
138.456
259.156
371.000
296.765
Liabilities
Long term liabilities
Deferred revenue
Long term liabilities
Total long term liabilities
Current liabilities
Short term debt
Payable tax
Accounts payable, accrued expenses and other short term liabilities
Total current liabilities
Total shareholders' equity and liabilities
Global Geo Services Group
Equity Reconsilliation
Equity for the Group
All figures in thousands of NOK
Opening balance 01.01
Equity issue
Conversion of debt
Not registered debt
conversion
Profit / loss(-) for the year
Acquisition of minority adj.
Closing balance
Quarter ended
March 31.
2005
2004
145.602
186.932
(22.004)
123.597
(44.260)
142.672
Year ended
December 31
2004
186.932
25.105
50.042
3.641
(119.417)
(700)
145.602
Global Geo Services Group
Consolidated Cash Flows Statement
Quarter ended
March 31
2005
Cash flows from operating activities:
Profit/-loss before tax
Depreciation and amortisation
Working capital changes
Net cash flow from operating activities
Cash flows from investing activities:
Investment in multi client library
Investment in fixed assets
Net cash flow from investing activities
Cash flows from financing activities:
Net increase/ decrease in debt
Share issue
Net cash from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of periode
Cash and cash equivalents at end of periode
2004
Year ended
December 31
2004
-22.004
12.412
18.200
8.609
-44.260
38.044
7.541
1.325
-119.417
150.202
-31.894
-1.109
-17.089
-104
-17.193
0
0
0
0
-2.218
-2.218
0
0
1.324
614
1.940
0
25.105
25.105
21.778
614
22.392
0
0
-8.584
22.392
13.808
Global Geo Services Group
Segment information
Primary Basis
(In thousands of NOK)
Quarter ended
March 31.
2005
2004
Year ended
December
2004
Revenue
Seismic activities
Well solutions
Total
0
0
0
4.068
408
4.476
84.244
9.456
93.699
Operating profit
Seismic activities
Well solutions
Total
-15.255
-2.461
-17.716
-38.521
-407
-38.928
-109.540
-357
-109.897
Secondary Basis
The revenue from the seismic activities in Q1-04 originates from Middel East activities
and the revenue from well solutions originates from activities in Norway in Q1-04.
Investment Q1-2005
Total Multi-Client library investment is NOK 14.8
million
of this NOK 13.7 million is investment into Ferdowsi
P3D
Amortisation Q1-2005
Multiclient-seismic library will be amortised together
with the sale of data, with an amortisation percentage
reflecting the total expenditure of the actual survey
relative to the estimated total sales. This does not
constitute a change compared with the pre-IFRS
amortisation policy.
IFRS will not alter the main principles of revenue
recognition and capitalisation of survey expenditures.
Amortisation Q1-2005
Strategic surveys with long term revenue structure will
be amortised over 7 years in accordance with the straight
line method. A long term revenue structure is normally
accomplished by exclusive agreements. The PC 2000
survey meets these requirements and is amortised
according to this method with effect from 1 Q 2005. This
amortisation method is considered to comply with the
IAS 38 amortisation requirement and will reflect the
nature of the revenue structure for this kind of surveys.
Amortisation Q1-2005
Surveys with limited revenue structure, typically small
surveys and surveys without exclusivity, will be
amortised in accordance with the minimum amortisation
policy. Maximum net book value of the individual survey
one year after completion will be 60 % of cost. After this
point, the minimum amortization represents 20 % of
cost. The minimum amortisation policy is in accordance
with the pre-IFRS accounting policy.
Summary of IFRS implementation effects
Stock options
In the first time adoption of IFRS 2, Global Geo Services Group has used the option
to not implement the standard for options vested before 1.1.2005.
Information about the option program is disclosed in a note to the Q1 financial
report.
Reclassification of long-term debt
The Company was at year end 2004 not in compliance with a minimum repayment
schedule in its long-term loan agreement with BGP, and the debt was as such payable
on demand as of this date. The minimum repayment due at year end 2004 was paid
by the Company 5. January 2005. Although BGP subsequently has agreed to a
renewed repayment schedule, the debt is to be reclassified to current liabilities as of
the balance sheet dates of non-compliance, according to IAS 1.
Summary of IFRS implementation effects
Other consequences
Global Geo Services Group will in the future also adopt IFRS as reporting standard
for the company and the subsidiary accounts.
Segment reporting
Global Geo Services Group has business areas as the primary basis for its segment
reporting and geographical segment as its secondary basis.
Reconciliation BS 311203 and 311204
Balance
(all amount in thousand of NOK)
Fixed assets
Immaterial assets
Multi-client library
Total immaterial assets
NGAAP
31.12.2004
Effect of
transition
IFRS
31.12.2004
NGAAP
31.12.2003
IFRS
01.01.2004
222.454
222.454
-
222.454
222.454
375.025
375.025
375.025
375.025
Property, plant and equipment
Property, plant and equipment
Total property, plant and equipment
2.273
2.273
-
2.273
2.273
567
567
567
567
Financial fixed assets
Other receivables
Total financial fixed assets
9.195
9.195
-
9.195
9.195
11.882
11.882
11.882
11.882
233.921
-
233.921
387.474
387.474
750
30.786
8.916
22.392
62.844
-
750
30.786
8.916
22.392
62.844
4.402
18.771
864
614
24.651
4.402
18.771
864
614
24.651
296.765
-
296.765
412.125
412.125
Total fixed assets
Current assets
Inventory
Accounts receivables
Other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Reconciliation BS 311203 and 311204
Balance
(all amount in thousand of NOK)
LIABILITIES AND EQUITY
Paid-in equity
Share capital
Premium fund
Not registered capital increase
Total paid-in equity
Earned equity
Other equity
Total equity
NGAAP
31.12.2004
Effect of
transition
IFRS
31.12.2004
NGAAP
31.12.2003
IFRS
01.01.2004
-
4.231
175.281
3.641
183.153
3.281
218.170
1.011
222.462
3.281
218.170
1.011
222.462
(37.551)
145.602
-
(37.551)
145.602
(35.529)
186.932
(35.529)
186.932
Long-term liabilities
Deffered revenue
Other long-term liabilities
Total long-term liabilities
3.500
73.998
77.498
(64.790)
(64.790)
3.500
9.208
12.708
5.950
78.277
84.227
5.950
78.277
84.227
Short-term liabilities
Short-term debt
Other short-term liabilities
Total short-term liabilities
47.422
26.244
73.666
61.890
2.900
64.790
109.312
29.144
138.456
82.089
58.878
140.967
82.089
58.878
140.967
296.765
-
296.765
412.125
412.125
TOTAL LIABILITIES AND EQUITY
4.231
175.281
3.641
183.153
Reconciliation of profit for 2004
Profit and Loss Accounts
(all amount in thousand of NOK)
Revenue
NGAAP
2004
Amortisation and depreciation
Other operating expenses
Total operating expenses
Operating profit/-loss
(150.202)
(53.394)
(203.596)
(109.897)
93.699
0
0
(150.202)
(53.394)
(203.596)
(109.897)
Interest expense, net
Foreign exchange gain/-loss
Other financial items, net
Profit/-loss before tax
Tax expense
Net profit/-loss
(14.872)
5.359
(6)
(119.417)
(119.417)
(14.872)
5.359
(6)
(119.417)
(119.417)
(2,82)
-
(2,82)
-
Earning / loss(-) per share
Diluted earning / loss(-) per share
Basic shares outstanding average
Diluted shares outstanding average
93.699
IFRS
2004
42.311.080
42.751.742
42.311.080
42.751.742
Shareholders Equity GGS Group
Paid in
(all amount in thousand of NOK)
Shareholders equity at 31.12.03, NGAAP
Effect of transition to IFRS
Shareholders equity at 01.01.04, IFRS
Equity issue
Conversion of debt
Not registered debt conversion
Profit / loss(-) for the year
Acquisition of minority adjustment
Shareholders equity at 31.12.04, IFRS
equity
Not registered
debt conversion
Share premium
reserve
Other
equity
Total
186.932
186.932
25.105
50.040
3.641
(119.417)
(700)
145.602
3.281
1.011
218.170
(35.529)
3.281
362
588
1.011
218.170
24.743
50.463
(35.529)
(117.395)
(700)
175.281
(2.021)
4.231
(1.011)
3.641
3.641
(37.551)
•Status Vessels
Odin Explorer is coming on charter
June/July 2005
Geomariner has
completed 3.200 km
Multi Client Pseudo
3D on Ferdowsi
prospect and 3.000
km Salar project in
Persian Gulf. In
transit for project
offshore East
Africa, thereafter
MC offshore Syria
•Status NESCOS
•Successful test completed at Rogaland Research ParkRF.
•Tendering for well installations of NESCOS (Target
areas GOM, North Sea, West Africa)
•Oil company sponsored development of Shifting tool for
MRS
•Field proving of Rotation Valve technology can be
speeded up by MRS installations enabled by new shifting
tool
•Status Multi Client plans
What we said:
•GGS is likely in the near future to enter into agreement
regarding participation in Multi Client survey in another
Middle East country
•Iran campaign to be supplemented
•Project plans being developed for new surveys outside
Middle East after the East Timor survey
•Status Multi Client plans
What we have done:
•GGS is likely in the near future to enter into agreement regarding participation
in Multi Client survey in another Middle East country.
Made agreement about Syria project with InseisTerra
•Iran campaign to be supplemented
Completed Ferdowsi and Salar surveys
•Project plans being developed for new surveys outside Middle East after the
East Timor survey
Secured Odin Explorer from summer 05
•Status Multi Client plans
Three licensing rounds coming up:
•East Timor, first licensing round 2005
•Iran Persian Gulf, third licensing round 2005
•Syria, first offshore licensing round 2006
In all cases GGS with partners offers the only available
seismic data to evaluate the acreage offered