Polarcus first quarter 2018 – Improved capital structure and increased market activity
11 May 2018
Polarcus Limited (“Polarcus” or the “Company”) (OSE: PLCS) announces the release of its first quarter 2018 financial statements.
The first quarter 2018 is the first financial reporting period that the Company has adopted IFRS 15 Revenues from contracts with customers, a new and mandatory accounting principle on revenue recognition. IFRS 15 has a significant impact on the timing of the recognition of revenue and associated amortization arising from the Company’s multi-client projects during the prefunding stage. The Company has applied the modified retrospective approach for transition to IFRS 15, meaning the comparative period numbers are not restated. To enable better comparison with prior period results, the Company will, in places, refer to adjusted numbers that exclude the impact of IFRS 15. Such numbers are based on the same accounting principles that were in effect in 2017, before the implementation of IFRS 15.
HEADLINES Q1 2018:
Adjusted¹ revenues of USD 40.1 million, up 8% from Q4 2017 (IFRS revenues of USD 30.6 million)
Adjusted¹ EBITDA before non-recurring costs of USD 12.1 million, up from USD 2.2 million in Q4 2017
Gross cost of sales of USD 37.7 million, up 2% from Q4 2017
Cash from operations of USD 5.6 million, down from USD 18.5 million in Q4 2017
Completion of NOK 300 million Private Placement and financial restructuring providing debt service runway to 2022
Available liquidity of USD 86.0 million (including undrawn WCF of USD 40 million), up from USD 50.8 million at end Q4 2017
Backlog of USD 150 million
Post-quarter end, completion of NOK 40 million Repair Offer
¹ = adjusted for IFRS 15 effects
“The first quarter 2018 results reflect a cold winter coming to an end. Revenues were low but increased sequentially driven by increased utilization and a higher prefunding level. Utilization improved significantly as Polarcus Asima came back into production in February driven by increased demand for marine seismic services. Revenues were negatively impacted by operational delays on turnkey projects in North and South America.
“Despite the improved fleet utilization, our gross cost of sales continued to be tightly managed and remained relatively flat and on track for delivering our full year guiding of USD 150 million. Similarly, G&A expenses for the quarter adjusted for non-recurring restructuring costs came in at USD 3.1m, also on target for delivering our guiding of USD 13 million. This demonstrates that the re-shape undertaken in Q4 2017 across our onshore and offshore organisations has been successfully implemented with the benefits crystallizing during Q1 2018. Capex spend for Q1 2018 came in at USD 1.1 million also providing comfort for delivering our full year guiding of USD 10 million, excluding the purchase of the N-Class vessels.
“Cash flow from operations was lower sequentially due to reduced working capital movements, partially offset by higher earnings. The Company’s available liquidity at the quarter end was USD 86.0 million, including the USD 40 million undrawn working capital facility.
“During the first part of 2018 we successfully completed our financial restructuring, including raising NOK 340 million of new equity. Together with an increased working capital facility and amended debt terms, the new equity provides the Company with a robust financial foundation to continue our focus on operational excellence, cost efficiency and backlog for the fleet, in addition to providing a solid platform to participate in market consolidation.”
“Despite our somewhat cautious view on the near-term market, we are positive on the mid- to long-term. The number of square kilometers tendered in Q1 2018 almost doubled compared to Q4 2017. The increase is driven by a higher number of larger tenders across Africa and Asia Pacific. For the 12-month period ending Q1 2018, tender activity increased by approximately 50% compared to the same period last year. Oil price is significantly higher in 2018 compared to recent years and utilization of the active global 3D seismic fleet has increased substantially since Q4 2017. The positive developments in tender activity, oil price and global fleet utilization are all indications of an improving marine seismic market.
“The Company’s backlog at 31 March 2018, including the two bareboat charters and awards made after the quarter end, is estimated at USD 150 million.”
Chief Executive Officer, Polarcus.
Duncan Eley, CEO
+971 50 553 2198
Hans-Peter Burlid, CFO
+971 50 559 8175
Polarcus (OSE: PLCS) is an innovative marine geophysical company with a pioneering environmental agenda, delivering high-end towed streamer data acquisition and imaging services from Pole to Pole. Polarcus operates a fleet of high performance 3D seismic vessels incorporating leading-edge maritime technologies for improved safety and efficiency. Polarcus offers contract seismic surveys and multi-client projects with advanced onboard processing solutions and employs approximately 350 professionals worldwide. The Company’s principal office is in Dubai, United Arab Emirates. For more information, visit www.polarcus.com
The information included herein may contain forward-looking statements. Forward-looking statements include all statements that are not historical facts, including but not limited to statements expressing or implying the Company’s intent, belief or current expectations with respect to, among other things, forecasts, estimates, and predictions. Such forward-looking statements necessarily involve risks and uncertainties and are dependent on assumptions, information, data or methods that may be incorrect or imprecise. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations proves to be inaccurate or is unrealized. Some factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, developments in the oil and gas industry, the demand for seismic services, the demand for data from the Company’s multi-client library, currency risks, political risks, regulatory risks, and unexpected operational setbacks. For a further description of other relevant risk factors we refer to our 2017 Annual Report. The reservation is also made that inaccuracies or mistakes may occur in the information given above concerning the current status of the Company or its business. Any reliance on the information given above is at the risk of the reader, and Polarcus disclaims any and all liability in this respect.
This information is subject to the disclosure requirements pursuant to section 5 -12 of the Norwegian Securities Trading Act.