Q2 2017 – Positioned for an uncertain market
4 Aug 2017
Polarcus Limited (“Polarcus” or the “Company”) (OSE: PLCS) announces the release of its second quarter 2017 financial statements.
HEADLINES Q2 2017:
Revenues of USD 36.1 million, down 23% from Q1 2017
Gross cost of sales of USD 41.6 million, down 10% from Q1 2017
EBITDA of negative USD 8.9 million, down from USD 8.9 million in Q1 2017
Total cash balance of USD 36.2 million in addition to USD 25 million undrawn working capital facility
Commencement of Polarcus Amani on a 5 1/2 year bare boat contract with Sovcomflot
Backlog of USD 200 million
Polarcus recorded vessel utilization of 75% in the quarter, up from 72% in Q1 2017, driven by the Polarcus Amani bare boat contract which started in April 2017. Revenues declined 23% from Q1 2017 to USD 36.1 million. The reduced revenues were mainly driven by the change in the business mix as the vessel allocation to highly pre-funded multi-client and proprietary contract activities decreased as a result of Polarcus Amani commencing the 5 1/2 year bare boat contract with Sovcomflot in April 2017. The charter provides the Company with secured income for a prolonged period, in what continues to be an uncertain market. As a result, bare boat charter revenue increased by 75% to USD 6.3 million. Vessel time for the remaining fleet also shifted from highly prefunded multi-client activity in Q1 2017 to proprietary contract activity in Q2 2017. Proprietary contract revenues were negatively impacted by lower achieved day rates compared to Q1 2017, resulting principally from weather delays early in the quarter. There was no vessel allocation to multi-client projects in the quarter, down from 14% multi-client utilization the previous quarter.
The change in business mix towards more bare boat contracts had a positive impact on operating cost. The Company recorded an all-time low gross cost of sales of USD 41.6 million in the quarter; a decrease of 10% compared to the previous quarter and down 25% compared to the same quarter the previous year. The global cost base continues to be the most competitive in the industry and is a result of the ongoing focus on cost management and operational efficiency.
Total cash at quarter end amounted to USD 36.2 million, comprising USD 29.5 million unrestricted cash and USD 6.7 million restricted cash. In addition, the Company has a USD 25 million undrawn working capital facility. The net interest bearing debt amounted to USD 257.8 million, up from USD 247.3 million at the end of the first quarter 2017 driven by a lower cash balance at quarter end.
“Q2 2017 saw the commencement of our second vessel on long-term bare boat charter with Sovcomflot, providing stable income for the next five and a half years, while further reducing operating costs. In addition to this, through supply chain initiatives along with continued focus on cost management and operational efficiency, we saw our operating cost level continue to reduce for a further consecutive quarter. Our direct vessel operating costs remained under $90,000 per day per vessel in Q2, which is down 40% from the 2014 peak.
“While our Q2 revenues were impacted by lower than expected fleet utilization and delays on turnkey projects, primarily related to environmental conditions, we expect to achieve a significantly stronger Q3 driven by fleet utilization of 90%. There are a number of imminent tender awards for projects commencing in Q4 for which Polarcus is well positioned. Our sales and marketing teams are working hard to secure additional booked capacity for Q4 2017 and in to 2018.
“We remain highly focused on delivering our business fundamentals of safe and efficient project execution, high quality seismic data, high fleet utilization and low operating costs.”
Chief Executive Officer
|Quarter ended||Six months ended||Year ended|
|(In millions of USD)||30-Jun-17||31-Mar-17||30-Jun-16||30-Jun-17||30-Jun-16||31-Dec-16|
|EBITDA (before non-recurring items)||(8.9)||10.4||23.0||1.5||41.1||51.4|
|EBIT (before non-recurring items)||(28.0)||(18.0)||(4.6)||(46.0)||(6.7)||(54.1)|
|Net profit / (loss) for the period||(33.7)||(38.0)||(11.2)||(71.7)||134.7||20.3|
|Basic earnings/(loss) per share (USD)||(0.03)||(0.05)||(0.02)||(0.09)||0.38||0.05|
|Net cash flows from operating activities||(1.4)||14.4||11.2||13.0||25.4||48.1|
|PP&E cash investment||2.2||1.7||2.6||3.9||13.4||16.4|
|Multi-client projects cash investment||1.4||11.1||12.9||12.5||24.3||44.6|
|Net interest bearing debt||257.8||247.3||260.3||257.8||260.3||270.7|
Non-recurring items include impairments, the cost of onerous contract provisions and restructuring costs.
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 over 400 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 2014 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 of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act).