PROSPECTUS. Spectrum ASA

Transcription

1 PROSPECTUS Spectrum ASA Offering of minimum 2,000 and maximum 2,500,000 new Shares issued in the Subsequent Share Issue resolved on 26 June 2009 with Offer Price NOK 5 per Share Application Period for Subsequent Share Issue: From 3 July 2009 to 1600 hours (Norwegian time) on 17 July 2009 and Listing of 10,000,000 new Shares issued in the Private Placement and up to 2,500,000 new Shares issued in the Subsequent Share Issue, both resolved on 26 June 2009 Manager: 30 June 2009

2 IMPORTANT NOTICE Please see section 13 Definitions for definitions, which apply also to the front page and this section Important Notice. This Prospectus has been prepared in order to provide a presentation of Spectrum ASA ( Spectrum or the Company ) and its business in connection with the Subsequent Share Issue Offering and the Listing on Oslo Axess of the New Shares issued by way of the Share Issues as set out herein. This Prospectus has been prepared to comply with the Norwegian Securities Trading Act and related legislation and regulations including the EC Commission Regulation EC/809/2004. The Prospectus has been prepared solely in the English language. Oslo Børs has reviewed and approved this Prospectus in accordance with the Norwegian Securities Trading Act Section 7-7. The Company has furnished the information in this Prospectus. Neither the Manager nor Haavind makes any representation or warranty, expressed or implied, as to the accuracy or completeness of such information, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation by the Manager or Haavind. All inquiries relating to this Prospectus must be directed to the Company or the Manager. No other person is authorised to give any information about or to make any representations on behalf of the Company in connection with the Subsequent Share Issue Offering and the Listing. If any such information is given or made, it must not be relied upon as having been authorised by the Company or by the Manager. The information contained herein is subject to change, completion and amendment without notice. In accordance with section 7-15 of the Norwegian Securities Trading Act, every significant new factor, material mistake, or inaccuracy relating to the information included in the Prospectus, which is capable of affecting the assessment of the Shares between the time when the Prospectus is approved and the time of the end of the Subscription Period, will be included in a supplement to the Prospectus. Publication of this Prospectus shall not create any implication that there has been no change in the Company s affairs or that the information herein is correct as of any date subsequent to the date of the Prospectus. In the ordinary course of their respective businesses, the Manager and certain of its affiliates have engaged, and may continue to engage, in investment and commercial banking transactions with the Company. The contents of this Prospectus are not to be construed as legal, business or tax advice. Each reader of this Prospectus should consult with its own legal, business or tax advisor as to legal, business or tax advice. If you are in any doubt about the contents of this Prospectus you should consult your stockbroker, bank manager, lawyer, accountant or other professional adviser before making any investment decision. This Prospectus is subject to Norwegian law. Any dispute arising in respect of or in connection with this Prospectus, the Subsequent Share Issue Offering or the Listing is subject to the exclusive jurisdiction of the Norwegian courts with Oslo District Court as legal venue. No action has been or will be taken in any jurisdiction other than Norway by the Manager or the Company that would permit a public offering of the Subsequent Share Issue Shares, or the possession or distribution of any documents relating thereto, in any jurisdiction where specific action for that purpose is required. Accordingly, this Prospectus may not be used for the purpose of, and does not constitute, an offer to sell or issue, or a solicitation of an offer to buy or subscribe for, any securities in any jurisdictions in any circumstances in which such offer or solicitation is not lawful or authorised. The Company and the Manager require persons in possession of this Prospectus to inform themselves about and to observe any such restrictions. Explicitly, the Subsequent Share Issue Shares are not being offered and may not be offered or sold, directly or indirectly, in Canada or Japan or to or for the account of any resident of Canada or Japan. 1

3 The Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act ), and may not be offered or sold in the United States. The Shares are being offered outside the United States in accordance with Regulation S under the Securities Act ( Regulation S ). Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Shares or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Each prospective investor and applicant must comply with all applicable laws and regulations in force in any jurisdiction in which it purchases, applies for, offers or sells the Subsequent Share Issue Shares or possesses or distributes this Prospectus and must obtain any consent, approval or permission required by it for acquiring Subsequent Share Issue Shares. Each subscriber of Subsequent Share Issue Shares will be deemed to have acknowledged, by its application for Subsequent Share Issue Shares, which the Company and the Manager and their respective affiliates and other persons will rely on the accuracy of the acknowledgements, representations and agreements set forth herein. 2

4 LIST OF CONTENTS IMPORTANT NOTICE SUMMARY RISK FACTORS STATEMENTS CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS PRESENTATION OF THE COMPANY THE COMPANY S BUSINESS AND INDUSTRY ORGANIZATION, BOARD AND MANAGEMENT FINANCIAL INFORMATION TERMS OF THE PRIVATE PLACEMENT AND THE SUBSEQUENT SHARE ISSUE SHARES AND SHARE CAPITAL SHAREHOLDER MATTERS AND NORWEGIAN SECURITIES LAW NORWEGIAN TAXATION OF SHAREHOLDERS DEFINITIONS

5 Appendices Appendix 1. Articles of Association of Spectrum ASA 2. Application Form The Company s annual report for 2008 (audited) and quarterly report for the first quarter of 2009 (unaudited) are incorporated by reference, and can be found on the Company s website or on using the Company s ticker code SPU. The following documents will for the lifetime of the Prospectus be available for review at the Company s offices, Sjølyst Plass 2, 0278 Oslo, Norway, and be available at the Company s internet pages 1. Articles of Association 2. Memorandum of incorporation 3. Annual report 2008 (audited) 4. Quarterly report for the first quarter of 2009 (unaudited) 5. IPO Prospectus dated 12 June 2008 The Prospectus has also been made publicly available at the below address. The Manager s office: ABG Sundal Collier Norge ASA Munkedamsveien 45E N-0250 Oslo, Norway 4

6 1. SUMMARY This summary provides selected information about the Company, the Subsequent Share Issue Offering and the Listing. The summary should be read as an introduction to the Prospectus. The summary does not provide investors and potential investors with a complete summary of all information contained in this Prospectus. Investors should carefully review the entire Prospectus with its appendices and any other information deemed appropriate prior to making an investment decision. Any decision to invest in the securities should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in this Prospectus is brought before a court, the plaintiff might under the applicable legislation have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches to those persons who have tabled the summary including any translation thereof, and applied for its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus. 1.1 Description of the Company General Spectrum ASA is a Norwegian public limited liability company (in Norwegian: Allmennaksjeselskap) with organisation number Spectrum s registered place of business is Oslo, Norway. Spectrum s registered business address is at: Spectrum ASA Sjølyst Plass Oslo Norway Telephone: Facsimile: Business Description Spectrum s business is comprised of the acquisition, processing, marketing and sale of seismic data. Spectrum s operational headquarters are at Woking, England with subsidiaries in Houston (USA), Egypt and Beijing (China). The Company also has operations in Singapore, Trinidad and India. The Company s multi-client library consists of more than 250,000 line kilometres of 2D data and 700 square kilometres of 3D data. Spectrum employs around 170 persons worldwide including affiliates. The Company s customers for data processing, multi client data and seismic acquisition are mainly larger and medium-sized oil and gas companies worldwide. The major drivers of demand for geophysical services are the increased global demand for oil and gas combined with the depletion of world oil and gas reserves. 5

7 1.1.3 History and development Spectrum is the holding company in the Spectrum group. It was incorporated on 25 March 2008 in connection with the sale of the Seismic Business (as defined below) from GTB to Spectrum. On 16 April 2008, the board of directors of GTB and Spectrum agreed to transfer the major part of GTB s seismic business (the Seismic Business ) to Spectrum pursuant to an arm s length transaction against a cash consideration of NOK 275 million (the Separation ) and as more particularly described below in section Major Shareholders and Related Party Transactions. The transaction agreement was entered into on 2 May As of the date of this Prospectus, GTB owns 53,685 shares in the Company. Spectrum was listed on Oslo Axess on 1 July 2008 and is still listed on Oslo Axess. The Seismic Business is comprised by the acquisition, processing, marketing and sale of seismic data through the company Spectrum UK Limited ( Spectrum UK ) and its subsidiaries and related companies, in addition to the ownership of certain libraries of multi-client seismic data, and the chartering and operation of one vessel for acquisition of seismic data, the GGS Atlantic. GGS-Spectrum Limited was established in 1986, and was acquired by GTB on 28 December The company is located in the UK. GeoBridge Pte. Ltd was established by GTB and BGP in December GeoBridge Pte. Ltd. targets the seismic market in the Asia Pacific region with multi client geophysical surveys as its priority area. BGP owns 50% of the shares in GeoBridge Pte. Ltd Board of Directors, Management and Employees Board The Company s Board consists of the following persons: Name of director Director Current term Business address: since expires Glen Ole Rødland, Sjølyst Plass 2, 0278 Oslo Chairman Anne Mürer Lysaker Torg 8, 1366 Lysaker Tone Bjørnov Veslekroken 8B, 0379 Oslo Viggo Leisner Haakon VIIs gt. 1, 0162 Oslo Sjur B. Talstad AGR Petroleum Services, Karenslyst allé 4, P. O. Box 444 Skøyen, 0213 Oslo Management The Company s management consists of the following persons: Name: Position Business address: David Rowlands CEO Sjølyst Plass 2, 0278 Oslo Rhys Edwards CFO Sjølyst Plass 2, 0278 Oslo Employees As of the date of the Prospectus, the Company including affiliates has approximately 170 employees. 6

8 1.1.5 Patents and trademarks The Company does not hold patents and/or trademarks that are considered to be of significant importance to its business Research and development In the opinion of the Company, its business is not materially dependent on any research and development Auditor The Company's auditor is Ernst & Young AS Advisors The Company's advisors in connection with the Subsequent Share Issue Offering and the Listing have been ABG Sundal Collier as Manager and Haavind as legal advisor. PWC has performed a limited financial due diligence and Wiersholm has performed a limited legal due diligence on the Company in connection with the Offering of the Subsequent Share Issue Shares Major shareholders and Related Party Transactions Shareholders The 20 largest shareholders in the Company as registered in the VPS as of the date of this Prospectus: Name Shares % of shares SPENCER ENERGY AS NOR 1,600, FERNCLIFF DAI 1 AS NOR 1,567, SKAGEN VEKST NOR 680, GROSS MANAGEMENT AS NOR 535, SOLAN CAPITAL AS NOR 498, MUSTANG AS NOR 398, STOREBRAND NOR LIVSFORSIKRING AS 229, CURARE INVEST AS NOR 174, DAI INVEST AS NOR 160, ADRIAN FINANS AS NOR 150, KOV INVEST HOLDING AS NOR 140, CAMACA AS NOR 129, FLISA EIENDOMSINVEST AS NOR 122, MP PENSJON NOR 108, MIDDELBOE AS NOR 107, PAN SIRIUS AS NOR 60, GLOBAL GEO SERVICES NOR 53, STOKO AS NOR 50, STOREBRAND NORGE I NOR 47, STOREBRAND NORGE H NOR 44, largest shareholders 6,853, % Other shareholders 1,252, % The total number of outstanding shares in Spectrum following the registration of the Private Placement Shares in the Register of Business Enterprises on 30 June 2009 is 18,106,452. The Private Placement Shares will be registered in the VPS on or about 2 July

9 Related party transactions Spectrum has entered into the following agreements with related parties: - On 2 May 2008 Spectrum entered in a sale and purchase agreement with GTB according to which Spectrum acquired the Seismic Business from GTB for a consideration to GTB of NOK 275 million (the Separation ), settled through a cash payment of NOK 125 million and a loan from GTB of NOK 150 million (the Loan, and the loan agreement of the Loan is referred to as the Loan Agreement ) - On 2 May 2008 the Company entered in a Services Agreement with GTB. In 2008, Spectrum made sales to GTB under this agreement of USD 326,000 for additional data processing services. The Services Agreement has been terminated and is no longer in force. See further description in section Transactions with related parties. - In 2008, the Company made a number of smaller transactions with related joint venture parties, see further description in section Transactions with related parties. - On 5 June 2009 Spectrum entered into the Loan Redemption Agreement with GTB regarding the redemption of the Loan and termination of the Loan Agreement as described in section 5.3 The Loan Redemption. - On 5 June 2009 Spectrum entered into an Indemnification agreement with GTB where GTB indemnifies Spectrum for all obligations which Spectrum is subject to under the arbitration award in the arbitration proceedings between Kjell Finstad on the one hand and GTB and Spectrum on the other. See section 5.16 Legal and arbitration proceedings. 1.2 Key Financial Information Key financial data For complete financial statements, accounting policies, management discussion & analysis and other financial information see section 8 Financial Information Significant changes and trends after 31 March 2009 There have been no significant changes to report in the period from 31 March 2009 to the date of this Prospectus except for the Loan Redemption as described in section 5.3 The Loan Redemption Capitalization and indebtedness Spectrum ASA s capitalisation as of 31 March 2009 (unadited) consisted of USD 23.3 million in equity and USD 6.6 million in cash. The table below shows a statement of capitalisation and indebtedness as of 31 March Capitalization as at 31 March 2009 USDt Total Current Debt A 6,476 Total Non-Current Debt B 30,053 Shareholders Equity C 23,338 Paid in capital 23,338 Total capitalization (A+B+C) 59,867 8

10 Indebtedness as of 31 March 2008 Liquidity A 6,565 Current trade and other receivables B 15,786 Current financial debt C (6,476) Net current financial indebtedness (A+B+C) D 15,875 Non current financial indebtedness E (23,002) Net financial indebtedness (A+B+C+E) (7,127) Investments The expected investment level going forward will be in the range of USD 4 million in a normal year, exclusive of larger multi client projects. These investments will be financed through the cash flow from operations. The majority of these investments will relate to Spectrum s multi-client activities in the US, Australia and Spain. Below is a table setting out the investments in 2008 and in the first quarter of 2009: USDt Acquisition of subsidiaries, cash acquired 28 March - 31 December 2008 (audited) First quarter 2009 (unaudited) 1,181 - Investment in seismic assets (48,162) (509) Investments in joint ventures (1,695) - Total investments (48,676) (509) 1.3 Share Capital The Company s current share capital, after completion of the Private Placement, is NOK 18,106,452 divided on 18,106,452 Shares, each with a par value of NOK The Private Placement, the Subsequent Share Issue Offering and the Listing Purpose of the Private Placement and Use of Proceeds The purpose of the Private Placement was to provide the Company with funds sufficient to pay to GTB the full settlement amount equal to NOK 50 million under the Loan Redemption Agreement, for the full redemption of the Loan, with a nominal value of NOK 150 million. The redemption of the Loan and the agreed price was based on a consideration of the current market value of the Loan, taking into account the deteriorating condition of the credit and equity markets, since the spin-off of Spectrum from GTB. The Private Placement is further described in section 9.2 The Private Placement and listing of Private Placement Shares. 9

11 1.4.2 Purpose of the Subsequent Share Issue Offering and Use of Proceeds The purpose of the Subsequent Share Issue Offering is to allow the shareholders in the Company as of 8 June 2009 that were not offered to participate in the Private Placement, to subscribe for new Shares at the same Offer Price as in the Private Placement in order to be able to maintain their relative shareholding in the Company. The proceeds will be used for general corporate financing. The Subsequent Share Issue Offering is further described in section 9.3 Terms of the Subsequent Share Issue Overview: Private Placement, Private Placement Listing, Subsequent Share Issue Offering and Subsequent Share Issue Listing Private Placement (already allocated and paid) Number of Private Placement Shares 10,000,000 Offer Price NOK 5 per Share Total gross proceeds NOK 50,000,000 Payment date 29 June 2009 Settlement date 2 July 2009 Private Placement Listing Listing of Private Placement Shares Listing and first day of trading at Oslo Axess of 10,000,000 Private Placement Shares to take place on or about 2 July 2009 Subsequent Share Issue Offering and Subsequent Share Issue Listing Number of Subsequent Share Issue Shares: Offer Price: Application Period for Subsequent Share Issue: Minimum order in the Subsequent Share Issue Offering: Allocation of Subsequent Share Issue Shares: Minimum 2,000 Shares and maximum 2,500,000 Shares NOK 5 per Share 3 July 2009 to 16:00 hours (Norwegian time) on 17 July The Company may extend the Application Period, but not beyond 31 July Share Allocation will be made in the following priority and order: i. First, the Eligible Shareholders will be allotted Subsequent Share Issue Shares up to pro rata to their shareholding per 8 June 2009, meaning that each Eligible Shareholder shall be entitled to subscribe for and be allotted up to 1.52 Subsequent Share Issue Shares for each Share in the Company held by such Eligible Shareholder. ii. Second, but only to the extent there are Shares left after the above allocation to the Eligible Shareholders, the Company s management may be allotted up to 200,000 Shares. iii. Third, but only to the extent there are Shares left after the 10

12 above allocations, then other shareholders, Eligible Shareholders and management for any subscriptions made over the thresholds referred to above, together with external investors, may be allotted any remaining Shares. Tradability of preferred allocation rights The preferred allocation rights in the Subsequent Share Issue will be non-transferable and non-tradable and will only serve as an instrument for the said allocation process. If the preferred allocation rights are not used, they will lapse at the expiry of the subscription period without compensation to the shareholder. Allocation date: On or about 17 July Allocation letters will be sent on 20 July 2009 Payment date: On or about 22 July 2009 Settlement: On or about 28 July 2009 Conditions related to the Subsequent Share Issue Offering At least 2,000 Subsequent Share Issue Shares being subscribed for and paid-up in accordance with the terms of the Subsequent Share Issue Offering. There are no other conditions for the Subsequent Share Issue Offering. Listing and first day of trading on Oslo Axess: Number of Shares after the Subsequent Share Issue Offering: Gross proceeds of the Subsequent Share Issue Offering: On or about 28 July 2009 Minimum 18,106,452 Shares and maximum 20,606,452 Shares Minimum NOK 10,000 (if the minimum subscription condition is fulfilled) and maximum NOK 12.5 million The Subsequent Share Issue is further described in section 9.3 Terms of the Subsequent Share Issue Dilution Private Placement Subsequent Share Issue Total, Shares Issues Number of New Shares 10,000,000 2,000 2,500,000 10,002,000 12,500,000 Percentage of immediate dilution % 0.01% % % % Costs Costs attributable to the Private Placement and the Subsequent Share Issue will be borne by the Company. The total costs are expected to amount to approximately NOK million depending on the level of subscription in the Subsequent Share Issue. 11

13 1.5 Summary of Risk Factors Please revert to section 2 "Risk Factors" below for a description of certain relevant risk factors summarised in the following: Risk factors related to the Company and the industry in which it operates: Market Risk Economic, political and legal risk Risks related to the sale of seismic data Operational risk and harm to personnel and property Technological risks Trade secrets and intellectual property risks Risks related to the Vessel Contractual risks Risks related to jointly controlled entities Risk related to the competitive situation Risks related to uninsured losses Risk related to environmental, health and safety issues Dependence on key personnel Financial Risks: Liquidity risks Financing risks Financial reporting and internal control risks Currency risks Risk for interest rate increases Risk factors relating to the Shares, the Listing and the Subsequent Share Issue Offering: Volatility of share price Risk that Shareholders may be diluted if they are unable to participate in future offerings The ability to bring an action against the Company may be limited under Norwegian law Holders of the Company s Shares that are registered in a nominee account may not be able to exercise voting rights as readily as shareholders whose shares are registered in their own names with the VPS The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions Additional risks not presently known to the Company or risks the Company currently deems immaterial may also impair the Company's business operations and adversely affect the price of the Company's Shares. 1.6 Additional information For the life of this Prospectus the following documents are available for inspection at the Company s offices: The Articles of Association of Spectrum ASA Memorandum of Incorporation of Spectrum ASA 12

14 The Prospectus has been made publicly available at the below addresses. The Company's office: Spectrum ASA Sjølyst Plass Oslo Norway The Manager s office: ABG Sundal Collier Norge ASA Munkedamsveien 45 E N-0250 Oslo, Norway 13

15 2. RISK FACTORS Before investing in the Company, investors should carefully consider all of the information contained in this Prospectus, and in particular the following risk factors, which may affect some or all of the Company's activities, the industry in which it operates and the securities being offered. The risk factors described below are not the only ones that will be faced by the Company. Other risks and uncertainties, including those not currently considered material by the Company s management, may impair the Company s business. The risk factors discussed below may adversely affect the business, financial condition, operating results or cash flow of the Company. The order in which risk factors appear is not intended as an indication of the relative weight or importance thereof. Such information is presented as of the date hereof and is subject to change, completion or amendment without notice. An investment in the Shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all of the investment. 2.1 Risk factors related to the Company and the industry in which it operates Market risks Demand for offshore geophysical services depends on the level of capital spending by oil and gas companies, particularly exploration and development expenditures. Capital expenditures, and in particular exploration and development expenditures, by oil and gas companies can be negatively affected by a number of factors including, but not limited to, decreases in oil and gas prices, fluctuations in production levels and disappointing exploration results. On the supply side, there is uncertainty when it comes to the level of construction of new seismic vessels, the upgrading and maintenance of existing production units, and the conversion of other vessel types to seismic vessels. Demand for offshore exploration, development and production has historically been volatile and closely linked to the prices of oil and gas. Low oil prices typically lead to a reduction in capital expenditures as the oil and gas companies scale down their investment budgets. Sustained periods of substantially reduced capital expenditures by oil and gas companies may reduce the demand for the Company's products and services. Furthermore, recoveries in oil and gas prices do not immediately increase exploration, development and production spending, so improving demand for the Company s services will generally lag oil and gas price increases. Economic, political and legal risks The Company s seismic activities take place in several foreign countries and regions and changes in political regimes could constitute a material risk factor for the Company s operations. All seismic companies operating in international waters are also subject to risks of war or other armed conflicts, terrorist activities and political, civil or labour disturbances and embargos. Furthermore, the Company s operations in foreign countries and regions may cause both legal and practical difficulties in case of a dispute or conflict. The Company operates in regions where the ability to protect contractual and other legal rights may be more limited than compared to regions with more well-established markets. Changes in the economic, regulatory and political situation in the regions of which the Company s operations are dependent on could have material adverse effect on exploration, production and development activity and could, directly or indirectly, materially adversely affect the Company s business, results of operations and financial conditions. Risks related to the sale of seismic data The Company has invested significant amounts in acquisition and processing of seismic data. The Company s future sales of seismic data are uncertain and depend on a variety of factors, many of which are beyond the Company s control. The Company cannot guarantee that it will be able to meet expectations neither with 14

16 respect to how much seismic data it will be able to sell nor at which price the seismic data will be sold in the future. If the Company is not able to recover from sales of its seismic data the costs of acquiring and processing the data, or if the Company is affected by any material adverse change in the general prospects for oil and gas exploration, development and production activities in areas where the Company acquires multiclient data, the value of such seismic data would be impaired, and which again could materially adversely affect the Company s future business, results of operations and financial conditions. Operational risks and harm to personnel and property There will always be operational risks involved in performing offshore seismic surveys. This includes among others unexpected failure or damage to vessels and technical equipment, work accidents, or adverse weather conditions. These risks can cause personal injury, prevent surveys to be performed as scheduled and other business interruptions, property and equipment damage, pollution and environmental damage. The Company may be subject to claims as a result of these hazards. The Company seeks to prevent loss or damages from such incidents by insurances, contractual regulations and emergency routines. However, there will always be some exposure to technical and operational risks, with unforeseen problems leading to unexpectedly high operating costs, substantial losses, additional investments, etc., which may have a material negative effect on the Company s operating results and financial position. If e.g. a vessel is rendered a total loss, the charter party will be void and the Company will under such circumstances experience a shortfall of income that would otherwise come from operating this vessel. Additionally, the occurrence of any of these risks could damage the Company s reputation. Technological risks Segments of the seismic and oil service industry are characterised by rapid changes in technology. The development of new technology may render it necessary to develop and protect new technology through registration of patents. There can be no assurance that the Company will be able to successfully patent, develop, and commercialize new technology. Furthermore, there can be no assurance that the Company will be able to respond to new technological developments and challenges or identify and respond to new market opportunities. The Company s technology projects and efforts to respond to technological innovations may require significant financial investments and resources. There can be no assurance that the Company will have the necessary financial and human resources to respond to new technological changes and innovations and emerging competition. Trade Secrets and Intellectual Property Risks Trade secrets and intellectual property are recognized by the Company as important assets and potential reasons for disputes and legal battles. The Company relies on a combination of development, non-disclosure and other contractual provisions and restrictions on disclosure to protect the Company s intellectual property rights and trade secrets. However, there can be no assurance that the Company s efforts to implement protective measures and to register (where appropriate) and defend its intellectual property rights will be sufficient. Risks related to the Vessel The Company has chartered the seismic vessel GGS Atlantic (the Vessel ) pursuant to a bareboat charter with Atlantic Seismic AS and with the charter period expiring on 4 September No assurance can be given with respect to securing future contracts for the Vessel, nor can any assurance be given that any future contracts will be at such commercial terms required in order for the operation of the Vessel to be a profitable business for the Company. Furthermore, the fact that the Company s fleet consists of only one vessel, makes the Company highly vulnerable in case of technical failure, breakdown etc. The Vessel may have unforeseen 15

17 technical problems or deficiencies, new environmental requirements may be enforced, or new and better technical solutions or vessels may be introduced which again could make it difficult or even impossible for the Vessel to obtain new contract awards in certain markets. If the Company fails to secure future contracts for the engagement of the Vessel, the Company may incur significant financial losses. Contractual risks The Company s income depends on contracts with customers regarding collection and sale / licensing of seismic data. Each contract normally involves a substantial value or consideration to the Company. Any breach or alleged breach or other contractual disputes related to the Company s contracts might result in material losses or other negative effects on the Company. Contracts may governed by foreign laws which may create both legal and practical difficulties in case of a dispute or conflict. The Company also operates in regions where the ability to protect contractual and other legal rights may be limited compared to regions with more well-established markets. Risks related to jointly controlled entities The Company has made, directly and indirectly, investments in several joint venture projects and companies. Since the Company does not fully control these joint venture projects and companies, the Company is dependent on its joint venture partners in order to make the decisions in relation to the relevant joint venture operations that it believes is in the best interest of the Company. Should the Company in the future not be able to cooperate with its joint venture partners in making decisions regarding these joint venture projects and operations, or should the Company not be able to prevent actions relating to jointly controlled entities that it believes is not in its best interests, this could materially adversely affect the Company s business, results of operations and financial conditions. Risks related to the competitive situation The seismic industry is highly competitive. The Company competes with other companies with an equal or larger resource base. There can be no assurance that the Company will be able to respond to existing and new sources of competition. Overcapacity, increased competition and price pressure in the seismic market may materially adversely affect the Company s business, results of operations and financial conditions. Risks related to uninsured losses The Company s business is subject to a number of risks and hazards, including adverse environmental conditions, accidents, unusual or unexpected geological conditions, changes in the regulatory environment and natural phenomena such as inclement weather conditions. There can be no assurance that the Company s insurances will cover all the potential risks associated with its operations. Unanticipated occurrences, insured or uninsured, could have a material adverse effect on the Company s operating results and financial condition. Risks related to environmental, health and safety issues The Company s operations are subject to numerous national and supra-national, environmental, health and safety laws, regulations, treaties and conventions (together, Regulations ), including, inter alia, those controlling the discharge of materials into the environment, requiring removal and clean-up of environmental contamination, establishing certification, licensing, health and safety, taxes, labour and training standards, operation of the vessels or otherwise relating to the protection of human health and the environment. The amendment or modification of existing Regulations or the adoption of new Regulations curtailing or further regulating the Company s business could have a material adverse effect on the group s operating results and financial condition. The Company cannot predict the extent to which future earnings or capital expenditures may be affected by compliance with such new Regulations. 16

18 In addition, the Company may be subject to significant fines, penalties or liability if it does not comply with any such existing or future Regulations. Dependence on key personnel The Company s depends, to a significant extent, upon management personnel and other key employees. The Company is dependent upon attracting and retaining key employees and management personnel. The Seismic Business faces competition for skilled personnel, and it is always a risk that management personnel or other key employees may decide to leave the Company. Competition for qualified personnel is intense and the Company may be unable to identify and recruit such personnel if and when needed on short notice. The loss of the services of management personnel or other key employees could have a material adverse affect on the financial condition of the Company. 2.2 Financial risks Liquidity risks The Company is dependent upon having access to long term funding. There can be no assurance that the Company may not experience net cash flow shortfalls exceeding the Company s available funding sources. Furthermore, there can be no assurance that the Company will be able to raise new equity, or arrange new borrowing facilities, on favourable terms and in amounts necessary to conduct its ongoing and future operations, should this be required. Financing risks The Company is currently financed by way of the Loan from GTB at a face value of NOK 150 million. Based on agreement between the Company and GTB dated 5 June 2009, the Loan including incurred interest will be redeemed in full by payment from the Company to GTB of NOK 50 million. Such redemption of the Loan will be financed in full by the Private Placement as described in this Prospectus. Financial reporting and internal control risks The Company has experienced difficulties in relation to its financial reporting for Q and for the full year 2008, and has not filed such reports to Oslo Axess within the prescribed deadlines. Although measures have been and will be taken to significantly improve financial reporting and internal control reporting routines, if such improvements should turn out not to be sufficient to prevent deficiencies to reoccur in the future, this could affect the Company negatively. A failure to maintain effective internal control over financial reporting could cause investors and rating agencies to lose confidence in the Company s reported financial information and the trading prices of the Company s Shares could be materially adversely affected. Currency risks The Company s business has USD as its functional currency. Operating revenues and the majority of its expenses are denominated in USD. Fluctuating foreign exchange rates can have an effect on the results of operations when costs are incurred in currencies other than USD, such as NOK. Risk for interest rate increases Interests on the Company s borrowings from time to time are subject to fluctuations in the applicable interest rates. Increase in such interest rates will increase the Company s interest payments and may have a negative effect on the Company s liquidity and financial position. 17

19 2.3 Risk Factors relating to the Shares and the Subsequent Share Issue Offering Volatility of share price The Offer Price may not correspond to the price at which the Shares are subsequently traded. The market price of the Shares subsequent to the Subsequent Share Issue Offering could fluctuate widely in response to a number of factors, including the following: actual or anticipated variations in operating results; changes in financial estimates or recommendations by stock market analysts regarding the Company or its competitors; announcements by the Company or its competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; sales or purchases of substantial blocks of stock; additions or departures of key personnel; future equity or debt offerings by the Company and its announcements of these offerings; and general market and economic conditions. Moreover, in recent years, the stock market in general has experienced large price fluctuations. These broad market fluctuations may adversely affect the Company's stock price, regardless of its operating results. Risk that Shareholders may be diluted if they are unable to participate in future offerings Because certain non-norwegian investors may be unable to participate in future offerings, their percentage shareholding may be diluted. Unless otherwise resolved by the general meeting or the Board by proxy, shareholders in Norwegian public companies, such as the Company, have preferred rights proportionate to the aggregate amount of the shares they hold with respect to new shares being issued by the Company. For reasons relating to foreign securities laws or other factors, foreign investors may not be able to participate in a new issuance of shares or other securities and may face dilution as a result. The ability to bring an action against the Company may be limited under Norwegian law The Company is a public limited liability company incorporated under the laws of Norway. The rights of holders of Shares are governed by Norwegian law and by the articles of association. These rights might differ from the rights of shareholders in other jurisdictions. In particular, Norwegian law imposes strict limitations on investors right to raise a claim against the Company on the basis of the information given to the investors by the Company or its advisers connected to a share issue being wrongful or misleading, either in the form of reversing the capital contribution, or in the form of damages or indemnities. Under Norwegian law, the interests of the Company s creditors are prioritised before the interests of the shareholders. In addition, it may be difficult to prevail in a claim against the Company under, or to enforce liabilities predicated upon, securities laws in other jurisdictions. Holders of the Company s Shares that are registered in a nominee account may not be able to exercise voting rights as readily as shareholders whose shares are registered in their own names with the VPS Beneficial owners of the Company s Shares that are registered in a nominee account may not be able to vote such shares unless their ownership is re-registered in their names with the VPS prior to the Company s general meetings. The Company cannot guarantee that beneficial owners of the Company s Shares will receive the notice for a general meeting in time to instruct their nominees to either effect a re-registration of their shares or otherwise vote their shares in the manner desired by such beneficial owners. The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions The Company has not registered the Shares under the Securities Act or the securities laws of other jurisdictions other than Norway and the Company does not expect to do so in the future. The Shares may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the Securities Act) nor may they be offered or sold in any other jurisdiction in which the registration of the shares is required but 18

20 has not taken place, unless an exemption from the applicable registration requirement is available or the offer or sale of the shares occurs in connection with a transaction that is not subject to these provisions. In addition, there can be no assurances that shareholders residing or domiciled in the United States will be able to participate in future capital increases or subscription rights. 19

21 3. STATEMENTS 3.1 Board of Directors The Board of Directors of Spectrum ASA is responsible for this Prospectus and its contents. The members of the Board of Directors of Spectrum ASA confirm that to the best of their knowledge, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect its import. Oslo, 30 June 2009 The Board of Directors of Spectrum ASA Glen Ole Rødland (Chairman) Viggo Leisner Anne Mürer Tone Bjørnov Sjur B. Talstad 3.2. Third-party information The information in this Prospectus that has been sourced from third parties has been accurately reproduced and, as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. 20

22 4. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Prospectus contains forward-looking statements. The forward-looking statements are contained principally in sections 1 Summary, 2 Risk Factors, 5 Presentation of the Company, 6 The Company s Business and Industry, and 8 Financial Information. These statements involve known and unknown risks, uncertainties and other factors which may cause the Company s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as may, will, could, should, expect, plan, intend, anticipate, believe, estimate, predict, potential or continue, the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, prospective investors should specifically consider various factors, including the risks outlined in section 2 Risk Factors above. These factors may cause our actual results to differ materially from any forward-looking statement. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement. Except as required by law, the Company undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this Prospectus to conform these statements to actual results or to changes in our expectations or publicly release the result of any revisions to these forward-looking statements which the Company may make to reflect events or circumstances after the date of this Prospectus or to reflect the occurrence of unanticipated events. Investors are advised, however, to consult any further public disclosures made by the Company, such as filings made with Oslo Børs or press releases. 21

23 5. PRESENTATION OF THE COMPANY 5.1 General Spectrum ASA is a Norwegian public limited liability company (in Norwegian: Allmennaksjeselskap) incorporated under and governed by the Norwegian Public Limited Companies Act (In Norwegian: Allmennaksjeloven) with organisation number The Company operates under Norwegian law. Spectrum s business is comprised of the acquisition, processing, marketing and sale of seismic data. Spectrum s operational headquarters are at Woking, England with subsidiaries in Houston (USA), Egypt and Beijing (China). The Company s seismic operations focus on Europe, the Middle East, south-east Asia, the Mediterranean, West-Africa and the Gulf of Mexico. The Company s multi-client library consists of more than 250,000 line kilometres of 2D data and 700 square kilometres of 3D data. Spectrum including affiliates employs around 170 persons worldwide. Spectrum s registered place of business is Oslo, Norway. Spectrum s registered business address is at: Spectrum ASA Sjølyst Plass Oslo Norway Telephone: Facsimile: Internet: Historical background and development The Company was incorporated on 25 March 2008 as a wholly owned subsidiary of GTB. Since the Company s operations are continuations of certain parts of GTB s Seismic Business, a brief background and history of GTB and its Seismic Business will be set out below. GTB was incorporated in 1999 as Mid East Geophysical Alliance (MEGA) in order to collect multi client 2D and 3D seismic data offshore Iran in the Persian Gulf and the Oman Sea. The name was changed to Global Geo Services ASA in connection with the conversion from a private limited liability company to a public limited liability company in GTB was listed on Oslo Børs SMB list later the same year. In 2009 the name was changed to Global Tender Barges ASA from Global Geo Services ASA. Up to late 2003, the majority of GTB s seismic activities were related to the acquisition and sale of the PC 2000 survey. In September 2004, GTB in partnership with BGP International Equipment signed a contract with the Government of the República Democrática de Timor Leste (East Timor) to carry out 6,000 line kilometres of multi-client seismic data. Based on this contract, data was collected and processed in 2005 and marketed for the first East Timor licensing round announced in the summer of During 2004 and 2005, GTB carried out multi-client surveys in the Joint Petroleum Development Area (JPDA) between East Timor and Australia, Indonesia and off the west coast of Florida. The Florida survey 22

24 was approved by the Florida state authorities for a multi-client seismic programme planned off the west coast of Florida more than 150 kilometres from the coastline. The programme called US Open - West Florida Escarpment, was planned for more than 10,000 line kilometres. In December 2005, GTB and BGP agreed to establish `GEO BRIDGE - a BGP GTB company` as a jointly owned limited company registered in Singapore. GEO BRIDGE Pte. Ltd. targets the seismic market in the Asia Pacific region with multi client geophysical surveys as its priority area. In December 2005, GTB acquired Spectrum Energy and Information Technology limited (Spectrum UK), a seismic niche player providing non-exclusive surveys, seismic data processing and electronic data management services. Spectrum UK has its headquarters in Woking, England, with operational centres in Houston, Beijing and Cairo. Spectrum UK is a party to joint ventures in Buenos Aires, Islamabad and New Delhi. The Spectrum Group has centralised computer hardware facilities based in Houston. Spectrum UK was established in In May 2007, a private share placement of NOK 200 million provided GTB with two new strategic shareholders, Spencer Energy and AS Ferncliff. In February 2008, GTB completed the acquisition of three tender barge rigs for a consideration of USD 215 million. On 16 April 2008, the board of directors of GTB resolved the Separation regarding transfer of the majority of the seismic assets of GTB to Spectrum. The purchase price for the seismic assets acquired was NOK 275 million. In order to fund this, the Company collected NOK 150 million from the capital market through a share issue. Of the NOK 150 million collected, Spectrum paid NOK 125 million to GTB as consideration for the asset purchase, and the remaining NOK 25 million was used for the purpose of paying costs and as working capital. The remaining NOK 150 million of the consideration plus accrued interest, is still held as a receivable by GTB against Spectrum in accordance with the Loan agreement, but is to be redeemed by Spectrum as further described in section 5.3 below. Spectrum was listed on Oslo Axess on 1 July In Q4 2008, the Company completed the acquisition and processing of 28,000 km of seismic and gravity data in the Gulf of Mexico together with TGS Nopec Geophysical Company ASA. On 5 June 2009 the Company entered into the Loan Redemption Agreement with GTB, see section 5.3 The Loan Redemption below, and on 9 June 2009 the Company announced the result of the Private Placement, see section 9.1 The Private Placement and the Listing of the Private Placement Shares. 5.3 The Loan Redemption Up to the date of this Prospectus, no part of the principal amount of the Loan has been repaid. Spectrum made an offer to GTB on 29 May 2009 to redeem the Loan in full (the Loan Redemption ). The parties entered into an agreement with regard to the Loan Redemption on 5 June 2009 (the Loan Redemption Agreement ). 23

25 The redemption of the Loan and the agreed price was based on a consideration of the current market value of the Loan, taking into account the deteriorating condition of the credit and equity markets, since the spin-off of Spectrum from GTB. The cash consideration to GTB for the Loan Redemption, in total NOK 50 million, shall be paid no later than 31 July Following such payment, all obligations of Spectrum under the Loan Agreement will lapse, and the Loan Agreement will terminate as of the date of such payment. The Loan Redemption Agreement was conditional upon the aggregate subscription amount in the Private Placement being at least NOK 50 million, and approval by the general meeting of Spectrum of (i) the Loan Redemption pursuant to the Norwegian Public Limited Companies Act section 3-8, and (ii) the Private Placement. All these conditions have been met before the date of this Prospectus. Tax consequences of the Loan Redemption for the Company The Loan Redemption will imply that GTB releases Spectrum's debt with NOK 100 million plus accrued but unpaid interest. It is the Company s view that the debt release is given due to Spectrum s inability to repay the Loan in full. The debt release is therefore unlikely to be considered taxable income for Spectrum. However, Spectrum s ability to deduct tax losses accrued in 2009 and loss carry forward from 2008, will be limited due to the debt release. Only losses exceeding the released amount will be deductible and/or carried forward against future taxable earnings. 5.4 Legal structure of the Spectrum Group The legal structure of the Spectrum group is set out below. Spectrum ASA 50% 100% Geobridge Ltd Spectrum UK 100% 50% Spectrum USA Joint Venture (Pakistan, India, Trinidad, Singapore) Spectrum Egypt 100% 45% Spectrum China Libya 1) Source: Spectrum 5.5 Description of the main companies in the Spectrum group Spectrum ASA: Spectrum ASA is the holding company in the Spectrum group. It was incorporated on 25 March 2008 in connection with the Separation. In addition to the shares in GeoBridge Pte. Ltd. and Spectrum UK, Spectrum ASA owns a multi-client seismic library relating to surveys in a number of areas, including East Timor, West Florida, Indonesia and Australia, as further described in section 5.9 Spectrum s multi-client seismic libraries below. 24

26 GeoBridge Pte Ltd: On 5 December 2005, GTB established, together with BGP, GeoBridge Pte. Ltd., which is a 50/50 owned company incorporated, registered and located in Singapore. The company is targeting the seismic market in the Asia Pacific region with multi-client geophysical surveys as its priority area. BGP is a major land and shallow water geophysical contractor. Spectrum UK Limited: Spectrum UK was established in 1986, and was acquired by GTB on 28 December The company is incorporated, registered and located in the UK. Spectrum UK provides non-exclusive surveys, seismic data processing and electronic data management services. Spectrum UK is the 100 % owner of the shares of Spectrum US Inc, a company incorporated under the laws of Texas ( Spectrum US ) and 50 % of the shares in Spectrum-Geopex Egypt Limited ( Spectrum-Geopex Egypt ). As of the date hereof, Spectrum including affiliates has a total of approximately 170 employees. 5.6 Strategy and mission Spectrum provides seismic data processing, multi-client seismic data and offshore acquisition to the global oil industry. The Company mission is to focus on innovative data processing techniques for the benefit of proprietary clients and also the Spectrum multi-client business unit. Spectrum s aim is to achieve the combination of high quality data processing and strategic multi client projects. 5.7 Business model The Spectrum business model can be divided into two categories. The first is to acquire and process seismic data on a proprietary, cash-paying basis for oil companies on a global basis. The second category (multi client) is whereby Spectrum acquires and processes seismic data at its own expense. The resultant data is nonexclusive and licences to this data are marketed and sold to as many oil companies as possible. 5.8 Processing of Seismic Data Overview Spectrum is engaged in the time and depth processing of offshore and onshore seismic data from centres in Houston, London and Cairo, supported by several smaller remote offices. A new on board processing service (processing of seismic data on-board the seismic vessel) was added to the portfolio in Q4 2007, and this completed a full range of seismic processing services that Spectrum offers. Spectrum also provides electronic document management services and systems to clients in both the oil sector and other vertical markets. Spectrum sells and installs the contemporary ViewPortal document management software and also provides the associated support services of document scanning, indexing and electronic warehousing. Spectrum core business is land and marine seismic data processing in both depth and time. Along with conventional seismic data processing, Spectrum also provides specialised services such as AVO and Inversion. In Spectrum s opinion, one of its strengths is the level of experience amongst its data processing geophysicists. Technology Spectrum uses a combination of proprietary software (SPA) and specialist third party programs enabling complex processing and the ability to offer individual solutions. The technology utilised by Spectrum includes several noise removal techniques, Kirchhoff time migration and specialist technologies such as AVO. 25

27 Spectrum makes use of third party software to enhance its processing results, mainly in the fields of statics modelling and depth migration. The Company aims for its software components to be compatible and enable seamless transition between software packages. Spectrum has entered into agreements with various research bodies and individual academics. Spectrum is part of the Delft Consortium, an international initiative led by the Delft University of Technology (TU Delft) at Delft, The Netherlands. Members and contributors to the Delft consortium include several major oil companies and exploration service suppliers. Spectrum has also entered into a partnership with Tariq Ali Alhalifah, a professor at King Abdulaziz City for Science and Technology University in Saudi Arabia who is a prominent figure in Middle Eastern geophysical research. Spectrum supports Tariq s work and contributes in developing his ideas for commercial use. Mr. Alhalifah has twice been awarded the EAGE gold medal for technical excellence. Examples of Spectrum Technologies: Depth migration MULLOCK Specialist Imaging Tool Impulse Response from SPA PSTM Algorithm Tau-P Migration Before(L) & After(R) Source: Spectrum Organisation Spectrum s data processing division is run from two centres which between them control the other international operations. Most administrative work for the Company is undertaken in the UK office. Also based in the UK are teams of data processing geophysicists, sales specialists, a marketing team and the company s HR department. The US office houses the Company s main hardware infrastructure which can be 26

28 accessed by all other centres via high speed internet links. The Houston based geophysicists process data mainly for US-based companies. Egypt: Located in Cairo, Spectrum-Geopex was established in 1997 and has grown steadily and consistently over the last 10 years. Spectrum-Geopex now employs 38 local staff including 26 geoscientists. The Cairo office has traditionally focused on the local Egyptian marketplace but has recently expanded into other markets such as Syria, Pakistan and the Arabian Gulf. China: Established in 2005 this joint venture was incorporated as a 100% subsidiary of Spectrum US in 2007, the Beijing office was set-up to provide key access to this emerging marketplace and also as a means of providing additional on-line processing resource for the US processing centre. The Beijing office currently employs 8 staff in total. The Beijing staff mainly support US processing projects but they also aim to attract work from local companies. Trinidad: In 2005 Spectrum signed an agreement with local company Geoserve Trinidad Ltd to provide a full range of seismic data processing services from their centre in Port of Spain, Trinidad. The new entity is called GeoserveSpectrum. Local content is provided by Geoserve and seismic processing software and procedures by Spectrum. India: Samit Spectrum PVT, based in New Delhi, India, was established in This centre provides 2D seismic processing to oil companies operating in India. Samit Spectrum has more recently provided support to Spectrum s various on-board data processing teams operating offshore India. Spectrum group worldwide geophysical experience (per 2008) Source: Spectrum 27

29 Examples of Technologies: VELTUNE: Veltune is Spectrum s proprietary automatic continuous velocity analysis package, producing velocity information for each sample of each mid-point bin. Manual Velocity Analysis 1km x 1km velocity field High Resolution Residual Velocity Analysis 12.5m x 40m velocity field from VELTUNE Source: Spectrum MULLOCK: MULLOCK is Spectrum s product for targeted multiple attenuation. It aims to be useful in instances where there is little to no velocity separation between the multiple and primary trends in which case traditional methods such as Radon are ineffective. It may also function well in situations where the aliasing of multiples occurs. The process can be parameterized to be spatially variant so that when the dip of the primaries and multiples coincide, it can be effectively turned off. PSTM without MULLOCK Multiple Attenuation Source: Spectrum PSTM with MULLOCK Multiple Attenuation 28

30 Straight Ray Datuming: Straight Ray Datuming is a statics modelling tool developed for commercial use by Tariq Ali Alhalifah, a professor at King Abdulaziz City for Science and Technology University in Saudi Arabia. It was directly sponsored, supported and developed for commercial use by Spectrum. The main advantages of this technique compared to conventional statics correction include the removal of a vertical ray path requirement. It allows time distortion corrections conducive to actual wave propagation and contains a lateral extension to consider the finite size of the Fresnel zone at the reflector. The technique has been applied to both 3D and 2D acquisition. 5.9 Spectrum s multi-client seismic libraries Spectrums portfolio of multi-client data and reports includes projects from most of the major oil producing regions of the world. The library consists of more than 250,000 line kilometres of 2D data and 700 square kilometres of 3D data. Spectrum s multi-client library consists of more than 40 multi client 2D surveys. The library includes newly acquired data complimented by strategically selected reprocessing projects. Spectrum s Multi Client team designs and sells surveys from regional offices in Houston, London and Singapore. New multi-client data is traditionally acquired in frontier sedimentary basins which are considered to be prospective for hydrocarbon accumulations. In most cases the data is owned by the country in which the data is acquired, and Spectrum will then enter into a long term agreement with the relevant governing body (normally the Ministry of Oil) to acquire and sell licences of the data on behalf of the Ministry, to international oil companies. In addition to its own multi-client library, Spectrum also has interests in certain other companies multi-client data. Spectrum will process multi client data on behalf of such companies at no cost. In return, Spectrum will charge a percentage share of any revenues generated. In 2007/2008 new multi-client projects have included projects from the US Gulf of Mexico, offshore India, the Far East (3 projects) and offshore Norway. Older surveys are screened and evaluated to determine their sales potential. The surveys can be located in frontier, sedimentary basins or recycled acreage in traditional hydrocarbon provinces. Depending on the risk profile of a project whether newly acquired or reprocessing, Spectrum may elect to undertake the project with a strategic business partner. Recent partners include Fugro, TGS Nopec, Seitel and EGI. Through such processes Spectrum aims to reduce financial risk and to increase market exposure with both partners promoting the data. As an example, Fugro are 50% partners in certain East Mediterranean surveys. TGS are partners in the Gulf of Mexico Phase 51 project. BGP or Australian Seismic Brokers are partners in the Far East Surveys. 29

31 See the table below for a detailed list of the Spectrum data library subdivided in geographical areas. Spectrum Multi-Client Datasets June 2009 UKCS & IRELAND Northern UK NUK-98 Reprocessed 2003 Porcupine Basin PORC-97 Reprocessed 2001 South Irish Rockall ISROCK-96 Reprocessed 1999 Total Km 4, km 4, km 4,347.63km 4,347.63km 2,930.34km 2, km North Irish Rockall INROCK-96 Reprocessed , km 1,142.60km Rockall Trough NWUK95 3,677.65km West Shetland SPEC94-WSH Quads 205/206 Liverpool/Colwyn Bay COL-92 1, km 1, km Forth Approaches FA-91 (Nopec JV/Partner) Quad 9 SG-88 Reprocessed ,823.65km km km NORWAY & ICELAND North Voering Basin & Nordland Reprocessing Project 2007 Total Km 10,456.87km Iceland, Dreki Area & Jan Mayen Reprocessing Project ,240km GREENLAND & POLAND West Greenland 1991 Polish Reports (Lubin & Carpathian Regions) Total Km 8, km 600km 30

32 WEST AFRICA Angola AN-75 Reprocessed 1991 Total Km 2,815.15km Mauritania S72/S73 Scanned & Reprocessed ,611.60km Nigeria Block Specific 2D & 3D OML & OPL Blks Reprocessed/scanned/vectorised 15,220km 2D; 700sqkm 3D SOUTH WEST ATLANTIC Total Km South Atlantic Regional Falklands FALK-0x ,426.05km Reprocessed ,881.55km South Atlantic Infill Falklands FALK Reprocessed , km 3, km South Atlantic Zone of Co-Operation Falklands SWAT ,109.50km Reprocessed 1998 Reprocessed km 3,109.50km INDIA & PAKISTAN West Coast India WC-2K2 Acquired 2002 by DGH Reprocessed 2007/2008 Total Km 12,083.23km Pakistan I 1999 Scanned/vectorised Profiles 7,205.25km 31

33 MEDITERRANEAN Algeria District 10 (on & offshore package) Reprocessed ,044km Total Km 1,348km (Offshore); 696km (Onshore) East Mediterranean Regional Acquired 1975 Part Reprocessed 1994 All Reprocessed ,233.70km 7, km Also sold as separate EGPC Dataset East Mediterranean 2000 EMED-00 Regional ,303.70km 2007 PSDM East Mediterranean Leb-02 Lebanon ,303.70km 2,000km East Mediterranean GL-93 Offshore Lebanon Reprocessed km West Mediterranean SP-BAL01 Ebro Delta offshore Spain ,612.85km West Mediterranean mid 70 s Rhone Delta South of Balearics Reprocessed/scanned ,323.26km MIDDLE EAST Libya SIRTE 06 Note: Special MLA for any sales Total Km 6,500km 32

34 FAR EAST & AUSTRALASIA JPDA Reprocessed 2005 (Reprocessed from 1990 sfield Tapes) East Timor West Bonaparte Australia Central Bonaparte (Repro 2008) Australia East Java Sea Well Tie Total Km 6,349km 9,429km 5,635km 5,371km Indonisia JPDA 05 (Acquired 2005) 3,959km East Timor East Timor 6,747.9km East Timor Exmouth 2006 (Acquired 2006) 1,807km Australia Exmouth Repro 2006 Repro ,792km 4,453km Australia Exmouth 2008 Repro 5,119km (GPCT Canarvon Tie); PSTM & PSDM Australia Browse Basin 2008 Reprocessing 3913km Australia North West Shelf 2009 (NWS 09) 15,808km Ongoing NEW Survey NORTH AMERICA West Florida Phase I (Big Wave Eastern Gulf of Mexico) West Florida Phase II Total Km 10,000km 14,000km Ongoing NEW Survey SOUTH AMERICA Brazil ESP/CMP 2000 Campos, Espirito Santo Basins Total Km 11,684km 33

35 2D multi client library by region Source: Spectrum 34

36 The following is a brief description of selected surveys within Spectrum s multi client library. These are provided as an example subset of the library. West Florida Phase I & III Source: Spectrum The survey consists of two projects collected in the Eastern Gulf of Mexico west of the coast of Florida. The surveys have been collected with deep water specifications using three different vessels with 8-10 km streamer length. The West Florida Phase 1 survey was mainly collected in The survey consists of 10,000 km of data and is available both with pre stack time and pre stack depth migrated products. The project has revealed a highly prospective geology across the platform area, the Florida escarpment and into the deep water including multiple play types. The West Florida Phase 3 was mainly collected in 2006 and has been renamed Phase 51 after a Joint Venture agreement with TGS to combine both parties initiatives into one big survey consisting of 28,000 km and owned 50/50 between the parties. The GGS Atlantic collected 19,000 km while TGS vessel collected 9,000 km. The data has been processed through PSTM and PSDM by Spectrum while TGS is responsible for the marketing. In July 2009, Spectrum will commence the acquisition of Big Wave Phase 2 in the eastern Gulf of Mexico. Phase 2 comprises 12,000 km of high quality, long offset 2D seismic data. The GGS Atlantic will acquire Big Wave Phase 2 from July to December The project cost is more than 75% pre-funded. 35

37 East Mediterranean Surveys Source: Spectrum Spectrum s East Mediterranean surveys consist of 22,150 km of 2D seismic data, of which 7,850 km were acquired in 1975 and reprocessed in 1999 (East Med I), 14,300 km were acquired in two separate surveys in 2000 (East Med II) and 2002 (LEB02). The surveys cover a wide area of the Eastern Mediterranean sea including the outer Nile Delta and regional basins offshore Turkey, Syria, Cyprus, Lebanon and (Israel). The largest of the surveys is East Med II (Emed-2000). The East Med II survey was reprocessed with Pre-Stack Depth Migration (PSDM) in The reprocessing generated improvement in structural resolution facilitating a better identification of various potential plays from Triassic to Tertiary levels. The Spectrum surveys have identified thirteen potential exploration plays in the region and tie into 11 wells offshore Israel, an area where several oil discoveries have been made. 36

38 Far East Surveys Spectrum has been engaged in the reprocessing of three surveys in the Far East. The surveys are situated offshore Northern Australia in each of the Exmouth plateau, Bonaparte basin and Browse basin areas. The reprocessing totals more than 15,000 kilometres of 2D data. Exmouth Survey Browse Basin Survey Bonaparte Survey Source: Spectrum 37

39 Offshore West India - NELP VII (reprocessed 2007) Source: Spectrum In September 2007, Spectrum commenced a reprocessing contract with India s Directorate General of Hydrocarbons (DGH) to reprocess for third party licensing up to kilometres of seismic data offshore the west coast of India, in connection with India s NELP-VII licensing round. The NELP-VII licensing round was India s largest-ever exploration licensing round. The survey area, illustrated by the black lines shown relative to the NELP VII blocks, extends from the Laxmi depression and ridge in the north to the Kerala Konkan and Laccadive basins in the south. The Laxmi depression and ridge lie to the west of the petroliferous Bombay High in a deep water area. The area lies next to some of India s most significant oil fields and is, in the Company s opinion, prospective. In Q2 2009, Spectrum signed a second agreement with DGH. The second agreement is for the reprocessing of 9,000km of data offshore the Andaman Islands which are to the east of India. 38

40 Andaman Islands Survey The Indian Government is planning to announce the NELP VIII licensing round in the second week of August, Nordland VI and VII (Offshore Northern Norway) Source: Spectrum The Nordland VI and VII reprocessing initiative constitutes km of 2D seismic data covering the moratorium blocks Nordland VI and Nordland VII off the Lofoten islands of northern Norway. The original data, obtained from the NPD, was acquired between 1986 and These areas are among the remaining frontier exploration targets in the Norwegian Sea. 39

41 Presently, exploration drilling is not permitted in the Nordland VI and VII areas. However, the Company believes that there is a chance that the areas will be opened for licensing later in 2009 or 2010 when the Norwegian government is expected to discuss an integrated management plan concerning the marine environment of the Barents Sea and the sea areas off the Lofoten Island. East Timor survey In September 2003, the Government of the República Democrática de Timor Leste (RDTL), East Timor, awarded a multi-client seismic contract to a partnership of GTB and the Chinese Geophysical contractor BGP. The seismic, gravity and bathymetric data collected was mandatory data for the first licensing round in East Timor, which closed in March The survey is located between the southern coast of East Timor and the JPDA (Joint Petroleum Development Area). The JPDA contains two petroleum discoveries (the Bayu-Undan and the Greater Sunrise fields). The seismic survey is approximately 6,000 kilometres and was completed in the fourth quarter of Spectrum has processed and interpreted the data, arranged training and cooperation measures in East Timor and supported the RDTL Government in its first international licensing round. Source: Spectrum 40

42 5.10 GGS Atlantic As a part of the Separation, Spectrum become bareboat charterers of the Vessel by GTB, Spectrum and Atlantic Seismic AS (the Vessel s owner) entering into a transfer and assignment agreement pursuant to which all of GTB s rights and obligations under the Bareboat Charter were transferred to Spectrum. As part of the transfer, GTB issued a guarantee to Atlantic Seismic AS for Spectrum s performance under the Bareboat Charter. Should GTB default under any provision of the guarantee or any other material adverse change should occur in relation to GTB s financial condition, this will trigger an option to terminate the Bareboat Charter for Atlantic Seismic AS. Spectrum may however rectify such termination option by providing Atlantic Seismic AS with sufficient security in replacement of the guarantee issued by GTB. The Bareboat Charter period expires on 4 September The redelivery provision in the Bareboat Charter requires the Vessel to have her present class free of recommendations and qualifications of any kind on redelivery. This is likely to result in an additional cost on Spectrums hand on redelivery in 2012, as the requirement usually covers only overdue recommendations. Default of any provision of the Bareboat Charter will entitle Atlantic Seismic to terminate. In connection with the Separation, Spectrum also assumed GTB s rights and obligations under three management agreements related to the operation and manning of the vessel (with Continental (M.E.) Limited, Canada, V. Ships Management Limited, Isle of Man, and Dmigeo Inc, Texas, USA respectively). In the second half of May 2009, the GGS Atlantic commenced the transit from India to the eastern Gulf of Mexico to commence acquisition of Big Wave Phase 2, a pre-funded Spectrum multi-client project. The data acquisition is expected to commence in July 2009 and continue until December The table below sets out key facts about the Vessel: GGS Atlantic Flag Marshall Islands Classification society American Bureau of Shipping Built 1981, Galliano, Louisiana, USA Major upgrade and refurbishment 2007, Freeport, Texas, USA Length 52 m Beam 12.5 m Draft 4.3 m Gross tonnage 1,151 t Net tonnage 345 t Main engines 2 x Caterpillar 399 Bow thruster Detroit Engine GM12V71AT Compressor engines 2 x Caterpillar 399 Endurance 45 days Cruising speed 10 knots Compressors 2 x Cherco Joy wbf 74 xhd Compressor capacity 2 x 1,600 2,000 psi Air guns 39 Bolt 1900-LLX in 3 strings Air gun source volume 4,530 cu. inch 118 bar-m Air gun controller system SeaMap GunLink 2000 Streamer Sercel SEAL up to 12 km Streamer depth controller DigiCourse-5011 Recording system Sercel SEAL 5.1 Navigation EIVA 41

43 5.11 Customers Spectrum sells seismic data to larger and medium-sized oil and gas companies worldwide Property, plants and equipment Spectrum leases its offices and other premises. The lease agreements are on commercial terms and satisfactory to the needs of the Spectrum group. The only exception is Egypt where the 50% subsidiary Spectrum-Geopex Ltd owns its own building. In general, all equipment needed to conduct seismic surveys and data processing and data administration are owned by the companies in the Spectrum group Environmental issues The Company is not aware of any specific environmental issues that are likely to have a negative effect on the utilisation of its assets Dependence on research and development, patents and licences Currently, the Company does not own any patents for the technology used in relation to the Company s seismic surveys and the processing of seismic data. However, the development of new technology may render it necessary with protection of intellectual property rights through registration of patents. The Company does not hold any licences, except for regular licences to use ordinary software and computers. As of the date of this Prospectus, the Company s business is not dependent on any industrial, commercial or financial contracts or research and development, or on particular patents or licences. The expected investment level going forward will be in the range of USD 4 million in a normal year, exclusive of larger multi client projects Trend information The Company has, except for the Loan Redemption as described in section 5.3 The Loan Redemption, not experienced any changes or trends that are significant to the Spectrum Group between 31 December 2008 and the date of this Prospectus, and which are likely to have a material effect on the Company s prospects for the current financial year Legal and arbitration proceedings As of the date of this Prospectus and for the preceding 12 months, except for the arbitration proceedings and award described below, the Company is not and has not been involved in any governmental, legal or arbitration proceedings, including any such proceedings which are pending or threatened of which the Company is aware of, which may have or have had significant effects on the Company s financial position or profitability, other than as described below. The individual Kjell G. Finstad initiated arbitration proceedings against GTB and Spectrum jointly on 2 September Kjell G. Finstad demanded payment from each of GTB and Spectrum pursuant to a consultancy agreement entered into between GTB and Finstad on 1 February The arbitration board found that Spectrum became a party to the consultancy agreement as a result of the Separation described in section 5.2 of this Prospectus. On 25 March 2009, the arbitration board passed its decision (the Arbitration Award ). In the Arbitration Award, Spectrum and GTB were found jointly liable to: (i) pay the arbitration 42

44 proceeding costs of Finstad, (ii) pay Finstad commission of NOK 1,393,635 plus late payment interest, and (iii) to pay Finstad commission under the consultancy agreement going forward. GTB has in a letter to Spectrum dated 5 June 2009 confirmed to Spectrum that the responsibility for the agreement with Finstad remains with GTB regardless of the conclusion of the Arbitration Award (the Indemnification Letter ). Through the Indemnification Letter, GTB has accepted to be liable for all future payments to Finstad under the consultancy agreement and the Arbitration Award, and that Spectrum is free of such liability. In the Indemnification Letter, GTB confirms that GTB i. has paid the commission of NOK 1,393,636 due to Mr Finstad on behalf of Spectrum pursuant to the Arbitration Award, ii. will pay any late interest penalty in law pursuant to the Arbitration Award, iii. will make all payments required to be made by Spectrum under the terms of the Arbitration Award on the date such payments are due including all arbitration court costs plus interest penalty in law, iv. will pay all of Spectrum s legal costs (including any applicable sales taxes and/or VAT) expended in respect of all advice given in connection with the Arbitration Award, and v. will in dialog with Spectrum enter into settlement negotiations with Finstad, and that GGS will be liable for making payment of any agreed amounts to Finstad, GGS will however only enter into such agreement with Finstad subject to written consent from Spectrum. To the extent no settlement is reached with Finstad, GGS will be liable for making any future payments to Finstad under the agreement that was subject to the Arbitration Award and will hold Spectrum harmless of their costs related thereto. 43

45 6. THE COMPANY S BUSINESS AND INDUSTRY If not otherwise indicated in the text, the source of the information in this section is the Company. Information which has been sourced from a third party has been accurately reproduced. As far as the Company is aware and able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. 6.1 Introduction to the seismic industry Oil companies are facing a situation where their reserves are being depleted faster than the rate of new discoveries. Analyst perception of oil companies changed in the late 1990s. They had historically been measured on reserves, but the focus shifted to cash flow. As a consequence of this, the oil companies focused more on stimulation and increased production from existing fields rather than discovering new reserves. The realization that they were depleting their existing reserves was a major contributing factor to the merger-mania in the early 2000s. However, the acquisition of existing assets did not increase the world s oil reserves either. Depleting reserves and high oil prices drove E&P spending budgets to record levels. Following the financial turmoil experienced over the last 6 months, and the reduction in the oil price, the E&P spending outlook is now more uncertain than before. Though, it remains a fact that with reserve replacements ratios amongst the major oil companies further investments in exploration is needed to keep up with the production. Seismic data is conventionally collected by discharging a wave of acoustic energy just below the water s surface from energy sources towed behind a survey vessel. At rock layer boundaries, parts of the wave are reflected back to the streamers. Hydrophones detect and convert these reflections into digital data, which in turn are recorded onboard the survey vessel. There are several seismic techniques that are being used to analyze potential sub-sea reservoirs. These can roughly be categorized as 2-, 3- and 4-dimentional analyses, as well as the developing electro magnetic surveying. 2-dimentional seismic survey is the more cost efficient method, conducted by having a survey vessel towing a single streamer. The seismic survey will generate data which generally represent a vertical cross-section along the line tracked by the streamer, and is the preferred method for initial analysis of larger areas. An alternative to this is to use more streamers to produce several parallel 2D cross-section data. This will later be processed to produce a 3D image of the subsurface, often used when initial 2D analyses indicate findings. Normally, one will use several streamers attached to one survey vessel, but where longer offset and wide azimuth analyses is required, several source vessels may be used. This process requires more sophisticated navigation equipment to ensure a precise determination of the positions of streamers and energy sources; hence it is a more costly approach. A fourth dimension, evolvement over time, is used to efficiently determine the changes occurring in the reservoir as a result of hydrocarbon production or injection of water or gas into the reservoir by comparing the repeated datasets. Time-lapse or 4D seismic involves comparing the results of 3D seismic surveys repeated at considerable time intervals (e.g. before a field starts producing versus various post-production stages). Separate to the aforementioned seismic techniques, there exist also two prevailing business models in the seismic industry, contract and multi-client. In the contract model the project is initiated by the client and the data is acquired exclusively under contract for that specific client, typically over acreage licensed to that client. In the multi-client model the seismic companies plan, acquire and process the data at their own risk, and offer the processed data for license to clients on a non-exclusive basis. Under this model the clients benefit from access to high quality data at a fraction of the cost of acquiring the same data on a proprietary 44

46 contract basis but forfeit any exclusivity to the data. Such data is typically acquired over open acreage in anticipation of licensing by the relevant authority and is used by clients for risk evaluation and prospect identification prior to them making a bid for acreage. For the seismic companies the benefit comes from the potential for multiple sales that in total can exceed the revenue that would have been otherwise derived from an exclusive (contract) survey. The risk aspects of the two models differ as contracted work is commenced against pre-defined revenue whilst the income from multi-client projects is speculative and contingent on external factors such as the attractiveness to clients of the associated acreage being offered for lease. However, it is common practice in the seismic industry that client pre-funding is sought by the seismic companies for their multi-client projects according to the companies risk appetite, in order to mitigate these risks, sometimes up to or exceeding the full pre-funding of the survey equivalent to that of the contract model. 6.2 Drivers of demand for marine geophysical services In addition to the technological developments that affect the cost, quality and reliability of marine seismic data, demand for marine geophysical services is strongly influenced by two other factors: Future demand for oil and gas Oil companies exploration and production spending As economic growth has occurred in most parts of the World, including several emerging markets, the demand for energy has grown significantly during the past 5 years. In parallel many of the large oil and gas fields in the world discovered in the 1970s and 1980s have or are reaching peak production, and in some cases are now in decline. The combination of these factors resulted in a peak oil price in the beginning of Oil price development (WTI) USD/bbl /11/1999 6/11/2000 6/11/2001 6/11/2002 6/11/2003 6/11/2004 6/11/2005 6/11/2006 6/11/2007 6/11/2008 6/11/2009 Source: Datastream 45

47 Following the sharp price decline that occurred during the second half of 2008, the global oil market remained relatively stable during the first quarter of So far in the second quarter of 2009, the oil price has increased to levels above USD 60 per barrel. Growth in World oil demand vs GDP growth GDP growth 8% 7% 6% 5% 4% 3% 2% 1% 0% -4% -2% 0% 2% 4% 6% 8% Oil demand growth Source: Datastream, Economist Intelligence Unit ( US Department of Energy ( 46

48 The challenge for the oil and gas industry today is to keep up with the demand by adding additional reserves to their maturing portfolios. With reserves replacement ratios (the amount of new reserves that are added versus the production from existing) still falling well below 100% the incentives to do exploration has increased over the previous years and investments in E&P and seismic has increased significantly. Development of E&P spending, Seismic Spending and Reserve replacement ratio Index 500 RRR 250% % % % % e E&P spending (LHS) Seismic spending (LHS) Reserve replacement ratio (RHS) 0% Source: Citigroup, EIA, SEB, ABG Sundal Collier Research

49 6.3 Market trends 2D is the preferred survey method for initial searches. 2D vessels may be used as source boats for seabed operations and long offset surveys, dependent on source configuration and compressor capacity (being a cheaper alternative to source boats than 3D vessels), demand for such vessels has increased over the last 3-4 years. There has been an expansion of the world-wide fleet over the past years, but increasing conversion costs combined with the financial crisis has put an end to this. There are a number of older vessels in the market that could be retired as a result of a possible downturn in the market. A final example of vessel intensive seismic is how surveys performed in areas with dense infrastructure also require a source vessel, as platforms will obstruct the path of the seismic vessel. Market trends Conventional 3D Continuous long offset 3D Wide azimuth 3D Platform Undershoot Source 3D vsl Source Source vsl 3D vsl Source vsl Reflects in the ground Recording Reflects in the ground 3D vsl Source vsl Source vsl Reflects in the ground Oil platform Recording 3D vsl Recording Source: ABG Sundal Collier Equity Research Positioning of Spectrum The main seismic players; CGG Veritas, Western Geco and PGS compete in all major markets and have a somewhat greater capacity and technological competence. The other competitors have a more dispersed presence. Spectrum is a relatively small player in the global seismic market, with a market share of approximately 3% in the no of 2D vessels (Source: ABG Sundal Collier Research). With its long track record, Spectrum has established what it believes to be strong relationships with several medium to small size oil companies such as Repsol, OMV, Hess, Devon, Statoil, Woodside, RWE, Edison, Perenco and Stratic. Spectrum considers itself to be an internationally established provider of 2D and 3D seismic data processing services with processing centres in UK, US, Libya and Cairo. Asia and USA are the main geographical regions comprising 66% and 28% respectively of the operating revenues for the period 28 March - 31 December Spectrum is currently increasing technical capability with the addition of data processing software from Claritas and the Delft consortium. In parallel with the introduction of the new software, 48

50 Spectrum has recently embarked upon a rebranding programme with the aim of securing technically more complex and higher value data processing projects. Spectrum is a well known provider of 2D Multi Client data with a particular strength in the Middle East, the Far East (with GeoBridge Pte. Ltd.), Eastern Mediterranean, the South Atlantic and more recently the US Gulf of Mexico. 49

51 7. ORGANIZATION, BOARD AND MANAGEMENT 7.1 Overview Spectrum is a public limited liability company, incorporated under and governed by the laws of Norway pursuant to the Norwegian Public Limited Companies Act. The Company was incorporated on 25 March 2008 and registered in the Norwegian Register of Business Enterprises on 28 March The organisation number is Registered Address The registered business and postal addresses of Spectrum are: Registered business address Spectrum ASA Sjølyst Plass Oslo Norway Telephone: Facsimile: Postal address Spectrum ASA Sjølyst Plass Oslo Norway Telephone: Facsimile: Organizational Structure CEO CFO Business Functions Support Functions Multi-Client Acquisiti on DP Tech. Support Sales + Marketing HR Finance Admin. US Com. Ops Tech. Manager On Board DP Woking US 3rd Party S/W S/W dev Egypt China S/W Com 50

52 7.4 Corporate Governance The Company is dedicated to observing high standards of corporate governance, based on the principles set forth in the Norwegian Code of Practice for Corporate Governance, as published on 4 December 2007 (the Code of Practice ). The Company will annually produce a report as to corporate governance, which will be included in its annual report. Except as set out below, the Company is currently in compliance with the recommendations set out in the Code of Practice. The role of deputy chairman will be filled on an ad-hoc basis should the elected chairman be unable to fulfil the role due to either absence or any conflict of interest. Currently there are no sub-committees of the Board of Directors with the Board of Directors undertaking the responsibilities of the audit and remuneration committees. The Company s Annual General Meeting 2008 appointed an Election Committee for the Company for the period , consisting of two persons, Kjetil Erikstad as chairman and Ivar B. Ramberg as member. The Election Committee s mandate is to identify and propose candidates to be elected as directors of the Board and their remuneration, also including remuneration to the members of the Election Committee. The Election Committee was expanded with a third member in the AGM at 26 June 2009, such member being Jon Christian Syvertsen, who was elected for the period The Company made the annual financial statement for 2008 public on Monday 8 June According to the Norwegian Securities Trading Act section 5-5 and Oslo Børs Continuing Obligations section 4.4, the annual report shall be made public at the latest four months after the end of the financial year. 7.5 Board of Directors Members of the Board The administration of the Company pertains to the Board of Directors, which include ensuring the proper and satisfactory organization of the Company's business and affairs. The Board shall supervise the administration of the Company, including the Chief Executive Officer. At the AGM on 26 June 2009, the following board of directors of Spectrum was elected: Name of director Director Current term Business address: since expires Glen Ole Rødland, May 2008 June 2011 Sjølyst Plass 2, 0278 Oslo Chairman (2009) Anne Mürer May 2008 May 2010 Lysaker Torg 8, 1366 Lysaker Tone Bjørnov May 2008 May 2010 Veslekroken 8B, 0379 Oslo Viggo Leisner June 2009 June 2011 Haakon VIIs gt 1, 0161 Oslo Sjur B. Talstad June 2009 June 2011 AGR Petroleum Services AS, Karenslyst allé 4, P. O. Box 444 Skøyen, 0213 Oslo 51

53 Glen Ole Rødland (1964), Chairman Mr. Rødland is a director and co-investor of Direct Active Investments in Ferncliff TIH AS. Mr. Rødland has a PhD in Finance from the Norwegian school of economics and business administration (NHH) and UCLA. He has worked as a management consultant in PWC and research assistant at NHH. Mr. Rødland has also worked as a market and investment analyst at JEBSENS, a shipping company based in Bergen. Mr. Rødland has worked 15 years with portfolio management and investment banking for Vital (two years) and First Securities (formerly Elcon Securities) (13 years). Mr. Rødland s experience is mainly within Energy, Basic Materials and Shipping, where he has significant transaction experience. Mr. Rødland is a member of the board of directors of several companies, including Strata Marine & Offshore AS and Skaie Capital Invest AS. He has previously been a member of the board of directors of First Securities ASA, Norske Finansanalytikeres Forening, Standard Drilling ASA and Noble Denton. Mr. Rødland joined Ferncliff TIH AS in early 2006 as a partner. Mr. Rødland is a Norwegian citizen and resides in Oslo, Norway. Mr. Rødland has his business address at Sjølyst Plass 2, 0278 Oslo. Anne Mürer (1959), Board member Mrs. Mürer is Regional Managing Director for Noble Denton Norway coming from the position as Chief Executive Officer of Strata Marine & Offshore AS until January Mrs. Mürer has previously held several senior manager positions in Aker Solutions, including Project Manager / Director, Marine Operation Manager and President of Aker Marine Contractors AS. She serves as a board member of Aker Offshore Partner AS, Aker Universitetssykehus HF and Liaaen Teknologi AS (Chairman). Mrs. Mürer was also previously a member of the board of directors of Aker Verdal AS and AF Gruppen ASA. Mrs. Mürer is a marine engineer from NTNU. Mrs. Mürer is a Norwegian citizen, and resides in Bærum, Norway. Mrs. Mürer has her business address at Kongensgt 23, 0153 Oslo, Norway. Viggo Leisner (1966), Board member Mr. Leisner holds MBA degrees from Aalborg and Cloud State Universities. He was a manager of Statoil s LPG department from 1996 through 1998, and a derivatives broker until He is now employed by Arne Blystad AS. Leisner has served as a board member of Fesil Sales AS, Tomsk refinery and World Water Ways AS, in addition to being alternate director in Fesil AS. Mr. Leisner is a Norwegian citizen and resides in Oslo, Norway. Mr. Leisner has his business address at Haakon VIIs gate 1, 0162 Oslo, Norway. Sjur B. Talstad (1962), Board member Mr. Talstad holds a degree in Petroleum Engineering from NTNU, as well as a degree in Industrial Economy also from NTNU. He has held various SVP and VP positions in Statoil since From 2004 through 2007 he was SVP Subsurface Technologies in Statoil and from 2007 through 2008 he was VP of Sleipner Operations in StatoilHydro. Thereafter, from 2008 until this date he has been CEO of AGR Petroleum Services AS, in addition to being board member of AGR Group from 2008 until May Mr. Talstad is a Norwegian citizen and resides in Hafrsfjord, Norway. He has his business address at Karenslyst allé 4, P. O. Box 444 Skøyen, 0213 Oslo. Tone Bjørnov (1961), Board member Mrs. Bjørnov holds a degree in Business Administration from the Norwegian School of Management, as well as degrees in French and IT from the University of Oslo. She has a long career within DnB NOR, where she held several management positions. She is currently partner and member of the board of the financial and foreign exchange consultancy ValutaCorp AS. Mrs Bjørnov holds several board directorships in Norwegian listed companies, among others Kongsberg Automotive ASA and Marine Farms ASA. Mrs. Bjørnov lives in Oslo, Norway. Mrs. Bjørnov has her business address at Veslekroken 8B, 0379 Oslo. 52

54 7.5.2 Remuneration of the Board The remuneration of the members of the Board of Directors is determined annually by the annual general meeting of the Company. The Company was incorporated on 25 March 2008, meaning that 2008 was the first year for payment of remuneration to the board members. At the AGM on 26 June 2009, the remuneration for the period of for the Chairman was fixed at NOK 175,000 and for each board member at NOK 125,000. Further, the AGM fixed the remuneration for each of the periods and for the members of the Election Committee at NOK 20,000 for the Chairman and NOK 15,000 for each member. The Election Committee has two members in addition to the Chairman. None of the members of the Board are parties to any additional service contracts with the Company entitling them to consideration or remuneration in addition to the remuneration determined by the annual general meeting. Further, the Company has no outstanding loans or guarantees to any member of the Board Independence from Management and Large Shareholders The Board of Directors is sufficiently independent of any sectional interests in accordance with the independence requirements of the Code of Practice, and as further described below. The Board is in compliance with the requirement that at least two of the shareholders elected members should be independent of the Company s main shareholders, as at least two out of five board members can be regarded as independent in this respect. Furthermore, the Board is in compliance with the requirement that more than half of the members of the Company s Board should be independent of the Company s management. Finally, the Board is in compliance with the requirement that more than half of the members of the Board should be independent of the Company s main business partners Directors Shareholding and Options As of the date of this Prospectus, the following members of the Board of Directors hold shares in the Company (either personally or through holding companies): Name: Position Number of shares: Glen Ole Rødland Chairman of the Board 2,185,000* Viggo Leisner Board member 14,500 Anne Mürer Board member 5,500 * The shares are owned by Gross Management AS, wherein Glen Ole Rødland owns 50% of the shares, and includes 1,650,000 shares allocated to Gross Management AS in the Private Placement. None of the members of the Board holds any share options in the Company as of the date of this Prospectus. 53

55 7.6 Management and Employees Executive Management The key management team of Spectrum comprises the following: Name: Position Business address: David Rowlands CEO Sjølyst Plass 2, 0278 Oslo Rhys Edwards CFO Sjølyst Plass 2, 0278 Oslo David Rowlands (1955), Chief Executive Officer Mr. Rowlands graduated from Reading University (UK) in 1977 with an Honours Degree in Geology. David has been employed in the seismic service industry for 30 years with extensive international contacts and experience. Mr Rowlands joined Spectrum UK from Schlumberger in 1989 as Data Processing Manager and was appointed as Commercial Director of Spectrum UK in As Commercial Director, the main responsibility was international business development. This involved identifying, negotiating and concluding contracts for both seismic data processing and multi client surveys. Appointed as CEO of Spectrum in 2008, Mr Rowlands also manages the Spectrum UK office and is a Director of Spectrum-Geopex (Egypt) Ltd and Napsco-Spectrum (Libya) Ltd. Mr. Rowlands lives in London, United Kingdom. Rhys Edwards (1965), Chief Financial Officer Mr. Edwards joined Spectrum in November 2008, having previously been CFO of Oilspace and prior to that holding a number of senior finance roles across a variety of industries. He graduated from University of West of England with an Honours Degree in Accounting & Finance and is a member of the Chartered Institute of Management Accountants. He has over 15 years of experience of running finance and administration teams, change management and acquisition and integrations projects. He lives outside of London, United Kingdom Compensation to CEO and CFO The CEO of the Company received compensation of USD 111,000 and other compensations amounting to USD 7,000 for the 6 months of employment in The CFO of the Company received compensation of USD 24,000 for the 2 months of employment in Management s Shareholdings and Options As of the date of this Prospectus, the following members of the management hold shares in the Company (either personally or through holding companies): Name: Position Number of shares: David Rowlands CEO 360,000 None of the members of the management hold any share options in the Company as of the date of this Prospectus Loans or Guarantees to the Management The Company has no outstanding loans or guarantees to any member of the management. 54

56 7.7 Directorships held by Board members and management Over the five years preceding the date of this document, the members of the Board and the executive management hold or have held the following directorships, key management positions (apart from their directorships and key management positions of the Company) and/or partnerships: Name Current directorships/partnerships Directorships/partnerships previous 5 years Board of Directors Glen Ole Rødland Tone Bjørnov Chairman: Akland Eiendom AS, Akland Property AS, Corona Maritime AS, Gerox AS, Standard Investering AS, Strata Key Invest AS, Board member: Ferncliff Asset Management Holding AS, Dasut AS, Ferndrill Management AS, Gross Management AS, Skeie Capital Investment AS, Standard Holding AS, Strata Marine & Offshore AS, Tycoon Trading 2 AS. CEO: None Chairman: None Board member: Kongsberg Automotive Holding ASA, Marine Farms ASA, Aqua Bio Technology ASA, ValutaCorp AS, FishPool ASA, Bank 1 Oslo AS, Global Tender Barges ASA, BB Finans ASA, Kilda Biolink AS. Chairman: None Board member: Amek Holding AS, Brevik Engineering AS, Liaaen Teknologi AS, Noble Denton Group, First Securities ASA, Norske Finansanalytikeres Forening, Standard Drilling ASA, GTB Invest. CEO: None Chairman: None Board member: BaneTele AS, Capitalis ASA. CEO: None CEO: None Anne Mürer Chairman: Anne Mürer AS Board member: Brevik Engineering AS, Noble Denton Norge AS Noble Denton Sandefjord AS. Chairman: Liaaen Teknologi AS, Enerquip AS, Standard Engineering AS, Brevik Engineering AS, Amek AS and Eiken Mekaniske Verksted AS Board member: Aker Offshore Partner AS, Aker Universitetssykehus HF, Aker Verdal AS, AF Gruppen ASA Viggo Leisner CEO:, Noble Denton Norge AS Chairman: Duo Jag AS Board member: Fesil Sales Holding AS, Fesil Sales AS CEO: None CEO: Strata Marine & Offshore AS Chairman: None. Board member: Tomsk refinery, World Water Ways CEO: None 55

57 Sjur B. Talstad Chairman: N/A Board member: N/A CEO: AGR Petroleum Services AS Chairman: N/A Board member: N/A CEO: AGR Petroleum Services AS. Management positions: VP Sleipner Operations StatoilHydro ASA, SVP Subsurface Technologies StatoilHydro ASA, SVP StatoilHydro ASA (Subsurface Technology) Management: David Rowlands Chairman: None Board member: GTB Spectrum Ltd, Spectrum-Geopex Ltd., Napsco Spectrum- Geopex Ltd., Dai Invest AS CEO: Spectrum ASA Chairman: None Board member: None CEO: None Rhys Edwards Chairman: Cherry Tree Events Ltd, ETD Services Ltd, All That s Chic Ltd, Lullingstone Ltd Board member: None CEO: None Chairman: None Board member: None CEO: None 7.8 Severance pay etc. No members of the Board or management have contracts with the Company or its subsidiaries that provide for severance benefits. 7.9 Incentive Programs The Company has not as of the date of this Prospectus implemented any incentive programmes for board members or key management, but there are a number of sales based commission schemes for the sales staff and geophysicists Conflicts of Interest etc. To the Company s knowledge, there are currently no potential conflicts of interest between any duties to the Company of the members of the Board or the Company s management, and their private interests or other duties, except as described below. There are no family relationships between any of the Company s Board members or management. 56

58 None of the members of the Board or management have been subject to any bankruptcy, receivership or liquidation proceedings for the last five years. None of the members of the Board or management have been convicted of any fraudulent offence or been subject to any official public incrimination or sanctions by statutory or regulatory authorities (including designated professional bodies) in acting as founder, director or senior manager of any company for the last five years, nor has any such members been disqualified by a court from acting as a member of management or supervisory bodies of any issuer or from acting in the management or conduct of the affairs of any issuer for the last five years. None of the directors or senior management are appointed or employed subject to shareholders agreements or agreements with the Company s customers and/or suppliers or other contracting parties Employees As of the date of the Prospectus, the Company including affiliates has approximately 170 employees. The table below illustrates the development in number of employees over the last three years (excluding affiliates), as per the end of each calendar year for 2006 to 2008 split by its main locations Cairo (Spectrum-Geopex Egypt Ltd) Beijing (GTB-Spectrum (BJ) International Oil Technology Inc) Woking (Spectrum UK) Houston (GTB-Spectrum Inc) Pensions and Other Obligations Spectrum has defined contribution plans. The defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Spectrum pays contributions to publicly or privately administered pension plans. The contributions are recognised as employee benefit expenses when they are due. 57

59 8. FINANCIAL INFORMATION 8.1 Accounting policies GENERAL INFORMATION CONCERNING THE COMPANY AND BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS Spectrum ASA (Spectrum) is a public limited liability company incorporated and domiciled in Norway. The address of its registered office is Sjølyst Plass 2, 0278 Oslo. The principal activities of Spectrum are the acquisition and processing of seismic data for customers operation in the global oil and gas market. The consolidated financial statements of the Spectrum Group for the period ended 31 December 2008 were approved by the Board of Directors on 5 June Significant transactions Spectrum was incorporated on 25 March 2008 with a share capital of 1,000,000 shares, each with a nominal value of NOK 1. On 27 June 2008 Spectrum placed its offering of 8,052,767 shares with a subscription price of NOK with new shareholders. On 30 June 2008 the Company acquired the seismic business operations of Global Geo Services ASA (GTB) for a consideration of NOK 275 million. On 1 July 2008 Spectrum listed its shares on Oslo Axess. Basis of preparation The consolidated financial statements of Spectrum and all its subsidiaries (the Spectrum Group) have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The consolidated financial statements have been prepared on a historical cost basis except for financial instruments. The application of the Spectrum Group s accounting policies requires management to make judgments, estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management bases their estimates and assumptions on previous experience and other factors that are believed to be relevant to the circumstances. These estimates and assumptions are the basis for assessing the carrying value of assets and liabilities that are not evident from other sources. The key areas where estimation has been applied and where there is a significant risk of material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. The valuation and the amortisation of the seismic library is especially affected by management estimates and judgements. In addition, goodwill, recognition of deferred tax and purchase price allocations through acquisition are also affected by management estimates and judgements. Change in market conditions, including competition and political circumstances, affect expected future earnings from the seismic library. This influences the assessment of the library s amortization rate and its carrying amount. Goodwill has been generated by acquisition, and it is linked to the assessment of future earnings. There are uncertainties with regard to assumptions made in connection with impairment assessment 58

60 ACCOUNTING POLICIES Basis of consolidation The consolidated financial statements comprise the financial statements of Spectrum and its subsidiaries at 31 December The financial statements of the subsidiaries have been prepared for the same reporting period as Spectrum using consistent accounting policies. All intra-group balances, balance sheet transactions and profit and loss transactions are eliminated in full. Subsidiaries Subsidiaries are entities in which the Spectrum group has a controlling interest. This normally occurs when the group holds, directly or indirectly, more than 50 % of the voting rights and is capable of exercising financial and operational control over the entity. Acquired subsidiaries are consolidated from the date on which control is transferred to the Spectrum group. Sold subsidiaries are consolidated to the date on which control is transferred from the Spectrum group. Joint venture An associated company is an entity over which the Spectrum group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the ability to participate in the financial operational decisions of an entity without having control or joint control over those decisions. This normally occurs when the group holds, directly or indirectly between 20 % and 50 % of the voting rights. Joint venture companies are accounted for by the equity method. The consolidated financial statements include the group s share of profit or loss from the date on which significant influence is attained and until such influence ceases. Presentation and classification The presentation currency of the functional consolidated financial statements is USD, which is the currency for the majority of the Spectrum group. Income statement Expenses in the income statement have been classified by their nature. Balance sheet Current assets and current liabilities are items due in less than one year from balance sheet date, or within normal operating cycle if this is longer or are assets held primarily for the purpose of being traded. All other assets and liabilities are classified as non-current. Cash Flow Statement The cash flow statement has been prepared using the indirect method. Foreign currency translation Foreign currency transactions Transactions in currencies other than USD are translated using the exchange rate in effect on the date of transaction. Monetary assets and liabilities in foreign currency are translated into USD using the exchange rate in effect on the balance sheet date. Exchange differences arising from translations are recorded in the income statement. Non-monetary assets and liabilities measured at historical cost in foreign currency are translated using the exchange rate in effect on the date of transaction. Nonmonetary assets and liabilities denominated in foreign currency, and recognised at fair value, are translated into USD using the prevailing exchange rate on the date of the determination of the fair value. 59

61 Subsidiaries with a functional currency other than USD The financial statements for all subsidiaries using a functional currency other than USD are translated into USD as follows: 1. Assets and liabilities are translated at the closing rate at balance sheet date. 2. Income and expenses are translated at average exchange rates. 3. All resulting exchange differences are recognised as a separate component of equity. Revenue recognition Revenue is recognised by the Spectrum group when the economic benefits from a transaction are supported by evidence of a sales arrangement which demonstrate that revenues can be reliably measured, services have been provided and collection is reasonably expected. Where these revenue recognition parameters have not been met, the Spectrum group defers such revenues until such times as the unearned components of these transactions are clearly in place. Revenue is allocated among the separate units of accounting based and is measured at the fair value of the consideration received, net of discounts and sales taxes or other duties. The following describes specific principles; Work in Progress Revenue for unfinished projects (work in progress) at the balance sheet date is recognised on a percentage completion complete basis. Determination of the degree of completion is based on the amount of accrued expenses relative to the estimated total cost of the survey, modified to the specific customer agreement. Multi-client surveys Pre-commitment arrangements: When the Spectrum group obtains pre-funding from customers before a seismic project is completed, the customer is normally entitled to a discounted price and/or is granted the opportunity to provide input into the project parameters. The Spectrum group then recognises the precommitment revenue as the services are performed on a percentage progress basis. As progress is made through the project plan, this physical progress is recognised as revenue based on a percentage basis of the pre-commitment funds received, provided that all other revenue recognition criteria are satisfied. Late sales: Where the Spectrum group has finished data sets ready for sale, revenue is recognised at the time of the transaction when the customer executes a valid license agreement and has the right to access the licensed portion of the multi-client library. The customer s license payment is fixed and determinable and typically is required at the time that the license is granted. Acquisition Revenue from acquisition projects is recognised on a percentage of completion basis in the same way as revenue from work in progress, modified according to the specific customer agreement. Other services Revenue from other services is recognised as the services are performed, provided all other recognition criteria are satisfied. Intangible non-current assets Goodwill Acquisitions of interests in subsidiaries, associates and joint ventures are accounted for using the purchase method. The purchase price is allocated to the acquired assets and liabilities according to their fair value. Any excess purchase price is recorded as goodwill. Goodwill is recognised in the balance sheet at initial cost, less accumulated impairment losses. 60

62 Software Software is carried at cost less accumulated depreciation amortization and impairment losses. Amortisation is charged on a straight-line basis over the useful life of the asset in the income statement. Estimated remaining lives range between five and twenty years, based on the managements split between the core technology and ancillary applications. Data Processing Where the Spectrum group performs seismic services for specific customers the seismic data is owned by that customer and revenues are recognised as the services are performed and become chargeable to the customer on a proportionate performance basis over the term of each contract. Progress is measured in a manner generally consistent with the physical progress of the project, and revenue is recognised based on the ratio of the project s progress to date, provided that all other revenue recognition criteria are satisfied. Multi-client library The multi-client library comprises completed surveys and surveys in progress that can be licensed to multiple customers. All direct costs related to data collection, processing and completion of seismic surveys are capitalised. The multi-client library is capitalised at cost less accumulated amortisation and impairment losses. Amortisation is the proportion of the total cost of a survey calculated according to the proportion of cumulative revenues for the survey to the estimated total revenue for the survey. The costs of a survey are completely amortised when the estimated revenue has been reached. Estimated revenues are reviewed quarterly and these may change to reflect market conditions. The amortisation expense of the multi-client library fluctuates according to the level of revenue and revisions to estimated remaining revenues. The Spectrum group has a minimum amortisation policy whereby the carrying amount one year after completion of a survey is no more than 60 % of cost. This maximum level is reduced by 20 % points for each of the three subsequent years. Tangible non-current assets Tangible non-current assets are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is charged on a straight line basis over the useful live of the asset and recognised in the income statement. Calculated depreciation takes into account estimated current residual value. Expenses regarding major replacements and renewals are capitalised, while all other replacements, renewals, maintenance and repairs are recognised in the income statement. Estimated useful lives are as follows: Machinery and Survey Equipment: 3-5 years Fixtures fittings and office equipment: 3-5 years Impairment of tangible and intangible non-current assets Tangible and intangible non-current assets are assessed for indications of impairment at each reporting period and when there are events and changes in circumstances which indicate that the carrying amount of the asset may not be recoverable. When impairment is considered, the assets are grouped at the lowest level for which there are separate identifiable cash generating units. Impairment is calculated as the difference between an asset s carrying amount and the recoverable amount. The recoverable amount is the higher of an asset s net selling price and the value in use for the Spectrum group. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. When an asset s value is assessed as lower than its carrying amount, the carrying amount is written down to the recoverable amount. The impairment loss is recognised in the income statement. 61

63 Previously recognised impairment losses are reversed if there have been positive changes in the estimates used to determine the recoverable amount. Impairment of goodwill is not reversed. Trade and other receivables Trade and other receivables are recognised at fair value less any provision for losses. Trade receivables are regularly reviewed for losses considering their maturity, the customer s financial position and other relevant information. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and short-term deposits. Cash and cash equivalents are recognized at fair value. Bank overdrafts are recognised as short-term debt. Provisions Provisions are recognised when the Spectrum group has a present obligation (legal or constructive) as a result of a past event, it is probable that the obligation will have to be settled and a reliable estimate of the obligation can be made. Loans and borrowings Loans are recognised at the amount received, net of transaction costs after initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the amortization process. Borrowing costs Borrowing costs consist of interest and other costs that are incurred in connection with the borrowing of funds. All borrowing costs are expensed in the period in which they occur. Trade and other payables Trade and other payables are recognised at cost. Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. Assets acquired under finance leases which transfer all the risks and benefits incidental to ownership of the leased item are presented in the financial statements as non-current assets at cost value less any provision for depreciation. The liability for future rentals is recorded in the balance sheets as a liability. The lease payments are divided into an interest element and reductions in the capital payment. Operational lease payments are recognised as an expense in the income statement on a straight line basis over the lease term. Pensions The Spectrum group has defined contribution plans. The defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The group pays contributions to government and privately administered pension plans. The contributions are recognised as employee benefit expenses when they are due. 62

64 Segment reporting The group has three primary business segments: seismic data processing, Multi-Client surveys and the acquisition of seismic data. Secondary segmental analysis is made on a geographical basis. Income from transactions between segments is eliminated through consolidation. Income tax Tax expense comprises both current tax and changes in net deferred tax. Current tax includes expected current tax on the year s taxable income using tax rates existing at balance sheet date and any corrections to previous years current tax. Deferred tax assets and liabilities arise as a result of temporary differences existing between the values attributed to items in the financial statements and their tax-related values. These are measured at the tax rates that are expected to apply at the time the assets are realised or the liability is settled. The calculation of deferred tax assets and liabilities also takes into account tax losses carried forward at balance sheet date. Deferred income tax assets and liabilities are offset to the extent that current income tax assets and liabilities can be offset. Deferred tax assets are recognised in the balance sheet when it is probable that there will be sufficient future taxable profit to utilise the tax asset. In countries where withholding taxes are operational they are charged to profit and loss as the expense is incurred. Equity Exchange differences Exchange differences arise from the translation of financial statements of foreign subsidiaries with functional currencies other than USD. Equity transactions Costs directly related to increases in share capital are regarded as a reduction in paid-in capital and are charged to equity. Any associated tax effect is also taken to the equity. Contingencies Neither contingent assets nor liabilities are recognised in the financial statements. They are disclosed unless the impact on the resources of the company is not material. Subsequent events Event occurring after balance sheet date that provide additional information concerning the group s position at that date are reflected in the financial statements. Other subsequent events are disclosed as a note, if significant. Provisions Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the obligation. Where it is expected that some or all of a provision will be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is recognized in the income statement net of any reimbursement. New standards and interpretations The following new standards, amendments to standard or interpretations are mandatory for the first time for financial year beginning 1 January 2008 but are not currently relevant for the Spectrum Group. IFRIC 11, IFRS 2 Group and treasury share transactions IFRIC 12, Service concession agreements 63

65 IFRIC 14, IAS 19 the limit on a defined benefit asset, minimum funding requirements and their interaction. The following new standards, amendments to standard or interpretations have been issued but are not effective for the financial year beginning 1 January 2008 and have not been early adopted: IFRS 8, Operating segments, effective for annual periods beginning on or after 1 January IAS 23 (amendment), Borrowing costs, effective for annual periods beginning on or after 1 January IFRS 2 (amendment), Share-based payment, effective for annual periods beginning on or after 1 January This is currently not relevant to the Spectrum Group, as the Spectrum Group does not have any share-based payments yet. IFRS 3 (amendment), Business combinations and consequential amendments to IAS 27, Consolidated and separate financial statements, IAS 28, Investments in associates and IAS 31, Interest in joint ventures, effective prospectively to business combinations with the acquisition date on or after the beginning of the first annual reporting period beginning on or after 1 July IAS 32 (amendment), Financial instruments: presentation, and consequential amendments to IAS 1, Presentation of financial statements, effective for annual periods beginning on or after 1 January This is not relevant to the Spectrum Group, as the Spectrum Group does not have any puttable instruments. IFRIC 13, Customer loyalty programmes, effective for annual periods beginning on or after 1 July This is not relevant to the Spectrum Group, as the Spectrum Group does not have such schemes in place and expects no impact on Spectrum Group. IFRIC 15, Agreements for the Construction of Real Estate, effective for annual periods beginning on or after 1 January This is not relevant to the Spectrum Group. IFRIC 16, Hedges of a Net Investment in a Foreign Operation, effective for annual periods beginning on or after 1 October This is not relevant to the Spectrum Group. Amendment to IAS 39 and IFRS 7 Reclassification of Financial Assets, effective for annual periods beginning on or after 1 July

66 8.2 Consolidated income statement USDt 28 March - 31 December 2008 (audited) First quarter 2009 (unaudited) Total operating revenues 27,630 13,589 Total operating expenses (39,933) (13,002) Operating (loss) / profit (12,303) 587 Interest expense (net) (1,209) (437) Foreign exchange (net) 8,268 (1,056) Share of (loss) / profit of joint venture (147) 2 Net financial items 6,912 (1,491) Loss before tax (5,391) (904) Tax 693 (18) Net loss (4,698) (922) Earnings per share Basic loss for the year attributable to ordinary equity holder of the parent (0.58) Diluted loss for the year attributable to ordinary equity holder of the parent (0.58) Segment information is given for business segments. The services of the Spectrum group are offered globally from all group locations to customers world-wide. The Company has recognised the multi-client revenues on a gross basis, with the partner share recognised as cost of sales. 65

67 USDt 28 March - 31 December 2008 (audited) First quarter 2009 (unaudited) External Internal External Internal Revenues Seismic data processing 5,730 1,677 3, Multi-client surveys 10, ,514 0 Marine acquisition 11, ,124 0 Total revenues 27,630 1,677 13, EBITDA Seismic data processing (1,040) 0 (467) 0 Multi-client surveys 6, ,488 0 Marine acquisition (2,235) 0 1,289 0 Total EBITDA 2, ,310 0 Depreciation and amortisation Seismic data processing 3, Multi-client surveys 10, ,233 0 Marine acquisition 1, Total Depreciation and amortisation 15, ,723 0 EBIT Seismic data processing (4,136) 0 (709) 0 Multi-client surveys (4,789) Marine acquisition (3,378) 0 1,041 0 Total EBIT (12,303) Inter segment sales are data processing for multi-client surveys. Operating expenses relating to general operations, including general administration costs and head office costs within the various companies in the corporation, are assigned to business segments in proportion to the respective revenues in each operating location. Charges between segments are made at market rates. 66

68 8.3 Consolidated balance sheet USDt ASSETS 31-Dec-08 (audited) 31-Mar-09 (unaudited) Intangible assets Goodwill 10,926 8,356 Software 4,657 5,004 Multi-client library, net 12,803 15,773 Total intangible assets 28,386 29,133 Tangible assets Machinery and equipment 2,084 2,898 Fixtures, fittings & office Equipment 3,240 2,084 Total tangible assets 5,324 4,982 Financial assets Investment in joint ventures 1,695 1,683 Total financial assets 1,695 1,683 Current assets Inventory 1,554 1,718 Accounts receivable 13,567 15,028 Other receivables Cash and cash equivalents 4,613 6,565 Total current assets 20,025 24,069 Total assets 55,430 59,867 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity Share capital 1,595 1,596 Share premium reserve 21,638 27,944 Other equity reserves (1,171) (6,202) Total equity 22,062 23,338 Long term liabilities Deferred tax liability 2,770 3,176 Long term debt 22,143 23,002 Other liabilities 991 3,875 Total long term liabilities 25,904 30,053 Current liabilities Short term debt Payable tax 29 (914) Other liabilities 6,799 6,744 Total current liabilities 7,464 6,476 Total shareholders' equity and liabilities 55,430 59,867 67

69 8.4 Changes in equity USDt Issued capital Share premium Retained earnings Other capital reserves Total equity Equity as of 28 March Equity issue 1,595 27, ,539 Equity transaction cost - (1,608) - - (1,608) Loss for the period - (4,698) - - (4,698) Foreign currency translation - - (1,171) (1,171) Balance as of 31 December ,595 21,638 - (1,171) 22,062 Balance as of 31 December ,595 21,638 - (1,171) 22,062 Loss for the period (922) - (922) Other comprehensive income (6) - 1,177 1,171 Balance as of 31 March ,595 20, ,311 The annual report for 2008 was approved after the completion of the 1Q/2009 figures. Following the AGM the loss for the period ending 31 December 2008 was charged against equity rather than retained earnings as previously reported in the Q1/2009 earnings release, The table above includes the changes in the equity with a corresponding change in equity of USD 1.0 million, from USD 23.3 million to USD 22.3 million 68

70 8.5 Consolidated cash flow statement USDt 28 March - 31 December 2008 (audited) First quarter 2009 (unaudited) Cash flow from operating activities Profit before tax (5,391) (922) Depreciation and amortisation 7,029 1,723 Impairment of intangible assets 8,001 - Provision against receivables Interest expense, net 1, Gain on sale of non-current assets (1) - Share of loss of associated undertakings Working capital changes (9,022) (380) Net cash flow from operating activities 2, Cash flow from investing activities Acquisition of subsidiaries, cash acquired 1,181 - Investments in seismic assets (48,162) (509) Proceeds from sale of intangible assets 24 - Investment in joint ventures (1,695) - Net cash flow from investing activities (48,652) (509) Cash flow from financing activities Issued capital 29,539 - Equity transaction costs (1,608) - Long term acquisition financing 21,648 - Loan interest paid (1,210) (437) Other long term liabilities acquired Deferred tax liability 2,770 - Net cash from financing activities 51,634 (437) Net change in cash and cash equivalents 5,174 (88) Net foreign exchange difference (561) 2,040 Cash and cash equivalents at start of the period - 4,613 Cash and cash equivalents at end of the period 4,613 6,565 The majority of the investments in 2008 relates to the acquisition of the majority of GTB s seismic assets for NOK 275 million. 8.6 Operational and financial review Operational and financial review for 2008 Group revenues for 2008 ended at USD 27.6 million with operating expenses of USD 39.9 million resulting in a group EBITDA of USD 2.7 million. There was a write down of 8.0 million, which is included in total operating expenses. The net financial items in the period was USD 6.9 million, comprising foreign exchange gains of USD 8.3 million (including a gain of USD 8.1 million attributable to the re-translation of the loan from GTB), producing a net loss before tax of USD 5.4 million 69

71 Total non-current assets totalled USD 35.4 million divided into intangible assets of USD 28.4 million, tangible assets of USD 5.3 million and financial assets of USD 1.7 million. There have been no material additions to intangible assets in the quarter while work in progress has been reduced by USD 1.1 million as data processing projects have been converted into revenue during the quarter. Total tangible assets of USD 5.3 million include additions relating to the capitalization of the GGS Atlantic source upgrade and CLARITAS software roll-out, together with the computer hardware on board the seismic vessels and within our processing centers. Total current assets were USD 20.0 million predominately made up of a cash balance of USD 4.6 million and accounts receivable of USD 13.6 million. The high level of accounts receivable reflects the late timing of sales in December together with delays in collecting cash from a contract in India. Long term debt of USD 22.1 million includes a loan from GTB of USD 21.4 million (NOK 150 million) to part fund the acquisition of the seismic assets purchased at 30th June The loan attracts interest payable quarterly in arrears at a rate of NIBOR 3-months +300 bps and is repayable in December As further described in section 5.3 The Loan Redemption, the Company on 5 June 2009 entered into an agreement with GTB to redeem the loan. In addition a deferred tax liability of USD 2.8 million has been recognised in relation to fair value of assets acquired. The short term liabilities are USD 7.5 million representing an increase of USD 1.7 million in accruals and accounts payables Operational and financial review for 1Q/2009 Group revenues (external) for the first quarter of 2009 were USD 13.6 million which were slightly ahead of the figures for both Q3 and Q The sales mix from multi-client in the quarter has led to higher than expected operational costs as both partner share and amortisation costs have increased in line with contractual obligations. Group EBITDA of USD 2.3 million was achieved before charging USD 1.7 million for amortisation and depreciation. Spectrum has not taken any additional impairment charges against either goodwill or the value of the libraries during Q Spectrum was named as joint defendant in a court case by a former majority owner and board member of GTB which resulted in findings against the company. No costs have been charged to profit and loss as all liabilities under the judgment are covered by GTB. See sections 5.16 Legal and arbitration proceedings and Transactions with Related Parties The total assets of the Company is USD 59.9 million split between intangible assets of USD 29.1 million, tangible assets of USD 5.0 million, financial assets of USD 1.7 million and current assets of USD 24.1 million which are funded by equity of USD 23.3 million, long term liabilities of USD 30.1 million and current liabilities of USD 6.5 million There have been no material additions to intangible assets in the quarter. The ongoing rollout of Claritas during Q1 and small computer enhancements resulted in additional capital expenditure of USD 154,000. Cash balances and equivalents rose by USD 1.95 million to USD 6.56 million as strong cash flows from late December 2008 sales and measures designed to conserve cash which were implemented in Q1. Accounts receivable remain high and Spectrum is aggressively collecting the monies due. A small provision has previously been taken against non-payment and all accounts are closely monitored in case of potential default. The Company considers it has sufficient liquidity to meet its ongoing operational obligations. 70

72 Long term debt of USD 23.0 million is predominately made up of a loan from GTB of USD 22.9 million (NOK 150 million) to part fund the acquisition of the seismic assets purchased at 30th June The loan attracts interest payable quarterly in arrears at a rate of NIBOR 3-months +300 bps and is repayable in December 2011, the terms of the loan express that no dividends can be paid. As further described in section 5.3, the Company on 5 June 2009 entered into an agreement with GTB to redeem the loan. Other long term liabilities of USD 3.9 million include accruals for the GGS Atlantic dry docking scheduled under her planned maintenance program. The short term liabilities are USD 6.5 million representing an increase of USD 1.0 million in accruals and accounts payables predominately to partners for revenue splits, this increase reflects the high costs associated with the sales mix in the quarter Investments USDt 28 March - 31 December 2008 (audited) First quarter 2009 (unaudited) Acquisition of subsidiaries, cash acquired 1,181 - Investment in seismic assets (48,162) (509) Investments in joint ventures (1,695) - Total investments (48,676) (509) The expected investment level going forward will be in the range of USD 4 million in a normal year, exclusive of larger multi client projects. These investments will be financed through the cash flow from operations. The majority of these investments will relate to Spectrum s multi-client activities in the US, Australia and India. Spectrum has entered into agreements with four major oil companies regarding a multi-client survey in the Gulf of Mexico. The GGS Atlantic has mobilised from India to shoot the survey that has attracted more than 75% of pre-funding and is anticipated to be completed in December The remaining capital expenditure will be financed through operating cash flow. There are currently no other firm investment commitments. 71

73 8.7 Capitalisation and Indebtedness Spectrum ASA capitalisation and indebtedness Spectrum ASA s capitalisation as of 31 March 2009 (unadited) consisted of USD 23.3 million in equity and USD 6.6 million in cash. The table below shows a statement of capitalisation and indebtedness as of 31 March Capitalization as at 31 March 2009 USDt Total Current Debt A 6,476 - Secured - finance leases Unguaranteed/unsecured 5,830 Total Non-Current Debt B 30,053 - Secured - finance leases Secured loans 22,670 - Unguaranteed/unsecured 7,051 Shareholders Equity C 23,338 Paid in capital 23,338 Total capitalization (A+B+C) 59,867 Indebtedness as of 31 March 2008 Liquidity A 6,565 -Cash and cash equivalents 6,565 Current trade and other receivables B 15,786 -Trade accounts receivables 15,028 -Other accounts receivables 758 Current financial debt C (6,476) -Current portion of non current debts / finance leases (646) -Interest bearing debt - -Current trade and other payables (5,830) Net current financial indebtedness (A+B+C) D 15,875 Non current financial indebtedness E (23,002) -Non current loans (22,670) -Interest bearing debt / finance leases (332) Net financial indebtedness (A+B+C+E) (7,127) As described in section 9.1 Background and purpose of the Private Placement and the Subsequent Share Issue, the Company carried out the Private Placement with gross proceeds of NOK 50 million which will be used to redeem the Loan to GTB. Following the redemption, Spectrum will have no interest bearing debt. 72

74 8.8 Borrowings for the Company Following the redemption of the Loan to GTB, Spectrum has no long-term debt. The short-term debt consists of short-term financial leasing commitments in the subsidiaries Spectrum Ltd. and Spectrum Inc. The total lease facility is USD 2.5 million of which USD 1.25 million was available as of 31 May As of the date of the Prospectus, the Company has no borrowing requirements. 8.9 Commitments Restrictions on the use of capital There are no restrictions on the use of capital for Spectrum Working capital statement Spectrum has sufficient capital for Spectrum s present requirements Financial market exposure General Financial assets of Spectrum group comprise of trade receivables and cash. The receivables have a carrying value of USD 15.8 million. The assets held for resale have been fully written down. The financial liabilities comprise of payables of USD 6.5 million. Capital management The primary focus of the Spectrum group s management of capital is to safeguard the group s ability to pay its creditors when they fall due, to invest in the improvement and expansion of operations and to minimise the cost of and risk to capital. Financial instruments The carrying amount of accounts receivable, other receivables, cash and cash equivalents, and current liabilities approximate to their fair values because of the short maturities of these instruments. Currency risk Revenues and expenses are denominated mostly in USD. Revenues in other currencies are mostly sufficient to match expenses in those currencies. The sensitivity on profit before tax to a +/-10% change in the NOK exchange rate is USD +/- ~2.7 million. Interest rate risk Following the Loan Redemption, Spectrum has no long-term interest bearing debt Liquidity risk The Board of directors considers the liquidity risk to be low. At balance sheet date, Spectrum had current assets of USD 24.1 million and current liabilities of USD 6.5 million. The group held a cash balance of USD 6.6 million at balance sheet date of which USD 13,000 was restricted cash. 73

75 Analysis of current and non-current liabilities by payable date as of 31 March 2009 (unadited): USDt Due <3 months Due 3 to 12 months Due 1 to 5 years Interest bearing loans and borrowings ,670 Finance leases Other liabilities 282-1,278 Trade and other payables 1,933 3,615 5,773 Total 2,376 4,100 30,053 Spectrum has an outstanding balance of USD 1.25 million under its short term leasing arrangement. Spectrum UK has a GBP 350,000 bank overdraft facility that is not used. Credit risk The customers of the Spectrum group are large companies that are well known to the group. Management strategies are considered to be sufficient to ensure that the credit risk is low. The remaining exposure to credit risk at the end of the period is minimal after provision for bad debts. Market risk The demand for the services of the Spectrum group is related to fluctuations on oil and gas commodity prices The Company's Auditor Spectrum s statutory auditor is Ernst & Young AS, and their business address is Christian Fredriks plass 6, NO-0154 Oslo. Ernst & Young AS is a member of Den Norske Revisorforening (The Norwegian Institute of Public Accountants). The financial information for the period 28 March - 31 December 2008 has been audited and the auditor s report for 2008 has been issued without qualifications Dividend policy The Company was incorporated on 25 March 2008 and has not paid any dividends to this date. In general, any future dividend will be subject to determination by Spectrum s Board of Directors based on its results of operations and financial condition, its future business prospects, any applicable legal or contractual restrictions and any other factors that the Board of Directors considers relevant. Any proposal by the Board of Directors must be approved by Spectrum s shareholders Trend information Spectrum has, except for the Loan Redemption as described in section 5.3 above, not experienced any changes or trends that are significant to the Company s trading and financial position between 31 March 2009 and the date of this Prospectus. 74

76 9. TERMS OF THE PRIVATE PLACEMENT AND THE SUBSEQUENT SHARE ISSUE 9.1 Background and purpose of the Private Placement and the Subsequent Share Issue On 5 June 2009 Spectrum announced its intention to carry out the Private Placement on 8 June 2009, and the Subsequent Share Issue. On 8 June 2009 after close of trading on Oslo Axess, Spectrum completed a book-building process for the issuance of 10,000,000 New Shares at a subscription price of NOK 5 per Share in the Private Placement directed towards major shareholders and other professional investors. The Private Placement was at that time conditional upon approval by the Company s general meeting with 2/3 majority. The Company announced the result of the book-building at 9 June 2009, and on 12 June 2009 the Company called for the annual general meeting to be held on 26 June 2009 (the AGM ) to approve the Private Placement. On 26 June 2009, the AGM resolved to issue the Shares in the Private Placement and to complete a subsequent share issue under which the Company s shareholders as of 8 June 2009 who were not offered to participate in the Private Placement would be granted preferred allocation rights up to pro rata to their shareholding prior to the Private Placement (the Subsequent Share Issue, and shareholders with preferred allocation rights in the Subsequent Share Issue defined as Eligible Shareholders ). The further details of the Private Placement is provided in section 9.2, while the Subsequent Share Issue is described in further details in section 9.3. Spectrum intends to use the total gross proceeds from the Private Placement, equal to NOK 50 million, as payment to GTB for settlement in full of the Loan, having a nominal value of NOK 150 million. The net proceeds from the Private Placement and the Subsequent Share Issue will be between NOK 47 million and NOK 59 million depending on the level of subscription in the Subsequent Share Issue. The proceeds from the Subsequent Share Issue, up to NOK 12.5 million, will be used by Spectrum to cover the costs incurred by the Company in connection with the Share Issues, as further described below in section 9.8 Costs, and for general corporate purposes. 9.2 The Private Placement and listing of Private Placement Shares The Company and the Manager invited major shareholders of the Company s and other professional investors to participate in a book-building process after 6:30 pm (Norwegian time) on 8 June The book-building was closed at 20:30 pm (CET) on 8 June The subscription price in the Private Placement was NOK 5 per Share. The price was determined by the Company in collaboration with the Manager and announced on 5 June The subscription price represents a premium of 32.3% to the closing price of the Company s share on Oslo Axess on Friday 5 June 2009 when the Loan Redemption and the Private Placement were announced, such closing price being NOK The Private Placement Shares were allotted by the Board of Directors in consultation with the Manager subsequent to the closing of the book building process. Such allocation took place in accordance with customary allocation principles for offerings of this type, and subject to the resolution of the Private Placement by the AGM. The Board of Directors proposals for the Private Placement and the Subsequent Share Issue and the result of the book-building were announced to the market by the Company before start of trading on 9 June

77 At the AGM, the Company resolved the Private Placement, by increasing the Company s share capital by NOK 10,000,000 through the issuance of 10,000,000 Private Placement Shares, each with a par value of NOK 1.00, at a subscription price of NOK 5 in cash per Private Placement Share, while at the same time setting aside the preferred rights of the existing shareholders. The AGM also resolved to amend section 4 in the Articles of Association in accordance with the resolution regarding the Private Placement. The Board of Directors considered it necessary to set aside the shareholders preferred rights in order to secure a successful Private Placement, hereunder to ensure that the Company obtains capital sufficient in order to settle the Loan Redemption Agreement. The subscribers in the Private Placement paid the share contribution for the Private Placement Shares on 29 June 2009, and the share capital was registered in the Norwegian Register of Business Enterprises on 30 June The Private Placement Shares will on or about 2 July 2009 be distributed to the subscribers in the Private Placement and be listed and traded on Oslo Axess as from the same date. Prior to the Private Placement the Company s share capital was NOK 8,106,452 divided into 8,106,452 Shares each with a par value of NOK Upon registration of the share capital increase related to the Private Placement the Company's share capital is NOK 18,106,452 divided into 18,106,452 Shares, each with a par value of NOK The percentage of immediate dilution resulting from the Private Placement is %. The Private Placement Shares carry full shareholder rights from the date of registration in the Norwegian Register of Business Enterprises. The Private Placement Shares will not be distributed to the shareholders, listed and tradable at Oslo Axess before this Prospectus has been approved by Oslo Børs, and published. Thus, when the Prospectus is published, the Private Placement Shares will be distributed, listed and tradable at Oslo Axess. The Private Placement Shares do not entitle the subscribers to preferred allocation rights in the Subsequent Share Issue. Those of the shareholders who were offered to participate in the Private Placement will not be granted preferred allocation rights in the Subsequent Share Issue. The Private Placement Shares carry right to dividends, if any, in line with all other shares of the Company. Each Private Placement Share will confer the right to one vote at general meetings. For a description of rights attaching to Shares in the Company, see section 10 Shares and share capital of this Prospectus. 9.3 Terms of the Subsequent Share Issue Increase of share capital in connection with the Subsequent Share Issue In order to carry out the Subsequent Share Issue, the AGM on 26 June 2009 made the following resolution to increase the Company s share capital: The share capital of the Company is increased pursuant to section 10-1 of the Norwegian Public Limited Companies Act on the following terms: 1. The share capital is increased with minimum NOK 2,000 and maximum NOK 2,500,000 by issuing up to 2,500,000 new shares. 2. The nominal value of each shares is NOK The subscription price is NOK 5 per share. 76

78 4. The shares may be subscribed for by shareholders registered as shareholders in the Company as of 8 June 2009, and who were not offered participation in the Private Placemen (the Eligible Shareholders ). The Eligible Shareholders shall in the allotment be prioritised up to pro rata to their shareholding as of 8 June Management in the Company will further be invited to subscribe for up to 200,000 shares in the Subsequent Share Issue, but will only be allotted shares to the extent the Eligible Shareholders are not allotted all the new shares based on the above criteria. To the extent the Subsequent Share Issue is not fully subscribed for and allotted to the Eligible Shareholders and the management based on the above criteria, then, the other shareholders (those offered to participate in the Private Placement) and external investors may be invited to subscribe for and be allotted any remaining shares. The existing shareholders preferential right to subscribe for shares according to the Norwegian Public Limited Companies Act section 10-4, ref section 10-5, is set aside. 5. The company shall prepare a prospectus that shall be approved by the Oslo Stock Exchange. The shares shall be subscribed for on a specific subscription form. The subscription period shall expire on 17 July 2009, however so that the Board may extend this period until 31 July 2009 at the latest. The specific terms and conditions of the subscription shall be determined by the Board and shall be described in the prospectus. The Board is responsible for allocation of the shares in accordance with the principles described above and further explained in the prospectus. 6. The subscription amount shall be paid in cash my means of payment to a specific account with account number in Nordea Bank Norge ASA no later than 22 July 2009, however so that the Board may extend this period in accordance with any extension of the subscription period. The Board determines the specific terms and conditions for settlement that will be described in the prospectus. 7. The new shares will entitle the holder to dividends which are resolved subsequent to the increase in the share capital being registered in the Register of Business Enterprises. The new shares will in all other respects be equal to the existing shares in the Company from the registration of the capital increase in the Register of Business Enterprises. 8. The share issue is conditional upon the general meeting approving the agreement with GTB and the general meeting also resolving the Private Placement. 9. Section 4 of the articles of association is amended to read as follows: The share capital of the company is NOK [between 18,108,452 and 20,606,452] divided on [between 18,108,452 and 20,606,452] shares, each share with a nominal value of NOK 1. The final wording of section 4 of the articles shall be determined subsequently to the expiry of the subscription period and payment of the capital contribution, on basis of the actually paid-up share capital. The AGM resolution on the Subsequent Share Issue was immediately announced to the market by the Company. The share capital following the Subsequent Share Issue will be minimum NOK 18,106,452 divided into 18,108,452 Shares and maximum NOK 20,606,452 divided into 20,606,452 Shares. 77

79 The percentage of immediate dilution resulting from the Subsequent Share Issue on an isolated basis for Spectrum s shareholders is as a minimum 0.01% and as a maximum 13.81% compared to the situation after the Private Placement, while the percentage of immediate dilution resulting from the Share Issues jointly for Spectrum s shareholders is as a minimum % and as a maximum % The Subsequent Share Issue The Subsequent Share Issue comprises a minimum of 2,000 Shares and a maximum of 2,500,000 Shares, each with a par value of NOK Those of the Company s shareholders who were not offered to participate in the Private Placement will be given preferred allocation rights up to pro rata to their shareholding prior to the Private Placement. The Board of Directors considered it necessary to set aside the shareholders preferred rights in the Subsequent Share Issue in order to ensure that the shareholders who were not offered to participate in the Private Placement, could have the opportunity to keep their shareholding in the Company pro rata. The preferred allocation rights related to the Subsequent Share Issue Offering (ref. section below) will be non-transferable and non-tradable and will only serve as an instrument for the allocation process in connection with the Subsequent Share Issue Offering. If the preferred allocation rights are not used, they will lapse at the expiry of the subscription period without compensation to the shareholder. Shareholders offered to participate in the Private Placement will not have preferred allocation rights in the Subsequent Share Issue. The Company deemed this necessary in order to avoid that shareholders offered to participate in the Private Placement choose to postpone their acceptance of the offer to the Application Period related to the Subsequent Share Issue. It was important for the Company to make sure that the Company obtained funds sufficient in the Private Placement to meet its obligations in full under the Loan Redemption Agreement Offer Price The Offer Price for the Subsequent Share Issue Shares has been set at NOK 5 per Share, which is identical to the subscription price per shares in the Private Placement Application Period The Application Period will last from and including 3 July 2009 to 16:00 (Norwegian time) on 17 July All Applications must be made on the Application Form. Application Forms together with this Prospectus can be obtained from the Company and the Manager. Properly completed Application Forms must be received by the Application Office by 16:00 (Norwegian time) on 17 July Applicants resident in Norway can gather information and subscribe for Subsequent Share Issue Shares by using the following Internet pages: Application Forms that are incomplete or incorrect, or which are received after the expiration of the Application Period, may be disregarded without further notice to the applicant. The applicant bears the risk of any delay in the postal communication, busy fax lines and data problems preventing Application Forms from being received by the Manager. The Company reserves the right to extend the Application Period for the Subsequent Share Issue at any time, provided that the Application Period may not be extended beyond 31 July Any such extension of the Application Period will be announced through the information system of Oslo Børs no later than 12:00 hrs (Norwegian time) on the last day of the Application Period, under the Company s ticker code SPU. All 78

80 applications made will be irrevocable and binding upon receipt of a duly completed Application Form by the Application Office, or through subscription through irrespective of any extension of the Application Period. The Application Period may not be shortened. In the event of an extension of the Application Period for the Subsequent Share Issue, the allocation date, payment date, date of delivery of Subsequent Share Issue Shares, Listing and first day of trading of the Subsequent Share Issue Shares will be extended correspondingly Application Office Details of the Application Office are set out below: ABG Sundal Collier Norge ASA Munkedamsveien 45 E P.O. Box 1444 Vika NO-0115 Oslo Norway Fax: Internet: Allotment of Subsequent Share Issue Shares The allotment of the Subsequent Share Issue Shares will be made immediately after the expiry of the Application Period by the Board of Directors in consultation with the Manager. Allocation will be made in accordance with the main purpose of the Subsequent Share Issue, to ensure the right for Eligible Shareholders to maintain their (pro rata) shareholding in the Company as of 8 June 2009 following the completion of the Share Issues. Allotment of the Subsequent Share Issue Shares will be made based on the following principles and in the following priority: i. First, the Eligible Shareholders will be allotted Subsequent Share Issue Shares up to pro rata to their shareholding per 8 June 2009, prior to the Private Placement, meaning that each Eligible Shareholder shall be entitled to subscribe for and be allotted up to 1.52 Subsequent Share Issue Shares for each Share in the Company held by such Eligible Shareholder. Any subscriptions made by Eligible Shareholders above the said prioritised allocation, will not prioritised in this first step, but may receive allocations in the third step below. ii. Second, but only to the extent the Eligible Shareholders are not allocated all the Subsequent Share Issue Shares based on the above criteria, the Company s management may be allotted up to 200,000 Subsequent Share Issue Shares. iii. Third, but only to the extent there are Subsequent Share Issue Shares remaining after allotment to the Eligible Shareholders and the Company s management in accordance with the first and second steps above, the other shareholders (those offered to participate in the Private Placement), Eligible Shareholders and management for any subscriptions made over the thresholds referred to in the first and second steps above respectively, together with external investors, may be allotted Shares in the Subsequent Share Issue. Any allocations in this third step shall endeavour to treat the existing shareholders equally. 79

81 The preferred allocation rights to the Eligible Shareholders as referred to above will be non-transferable and non-tradable and will only serve as an instrument for the allocation process in connection with the Subsequent Share Issue Offering. If the preferred allocation rights are not used, they will lapse at the expiry of the subscription period without compensation to the shareholder. The minimum subscription in the Subsequent Share Issue is one share. There is no maximum subscription. All allocations will be rounded down to the nearest whole share. Each of the Eligible Shareholders and members of the management may over-subscribe, but each of these categories will only be prioritised to the extent stated above. Within the limitation stated in the Important Notice on page 2 and 3 and the above allocation criteria, there are no limitations on the percentage of foreign investors entitled to participate in the Subsequent Share Issue. Multiple applications will be admitted. Such applications will be aggregated in the allocation process and the date of the last application will be deemed to be the date of the aggregate application. The allotment of Subsequent Share Issue Shares will take place after the expiry of Application Period on or about 20 July 2009 (or up to 14 days later if the Application Period is extended). Allotment letters will be sent on or about 21 July 2009 (or up to 14 days later if the Application Period is extended). The Company will after the expiry of the Application Period, on or around 17 July 2009 (or up to 14 days later if the Application Period is extended), issue a stock exchange notification with the result of the Subsequent Share Issue Payment for the allocated Subsequent Share Issue Shares Each of the shareholders and other investors as described above having applied for Shares in the Subsequent Share Issue Offering will by signing the Application Form for the Subsequent Share Issue give the Manager a one-time authorisation to charge a specified bank account for the payment amount for the number of Subsequent Share Issue Shares the person is allotted. For all persons to be allotted Shares in the Subsequent Share Issue, payment of the share contribution is to take place on or about 22 July 2009, which means the bank account specified by the subscriber on the Application Form is expected to be debited on or around 22 July 2009 (or up to 14 days later if the Application Period is extended). Thus, the subscriber must ensure that the full subscription amount is available on the bank account at the latest 21 July Applicants who do not have a bank account in Norway must contact the Manager well ahead of the payment date in order to arrange for payment by other means as the Manager may instruct. Please note that it typically takes at least one business day to transfer money from one Norwegian bank account to another (international bank transfers may take a longer period to complete). If payment for allocated Subsequent Share Issue Shares is not made when due, the Subsequent Share Issue Shares will not be delivered to the investor. The Manager reserves the right, at the cost and risk of the investor, to cancel the allotment and to re-allot or otherwise dispose of all or parts of the allocated Subsequent Share Issue Shares on such terms and in such manner as the Manager may decide in accordance with applicable Norwegian law (however so that the investor will not be entitled to profits from such disposal, if any). The investor will remain liable for payment for the Subsequent Share Issue Shares together with any interest, costs, charges and expenses accrued, and the Manager may enforce payment for such amount outstanding in accordance with Norwegian law. 80

82 Interest will accrue on late payments at the applicable rate on overdue payment, which from 1 July 2009 is 8.25 % per annum Delivery and trading of allocated Subsequent Share Issue Shares Completion of the Subsequent Share Issue is conditional upon at least 2,000 Subsequent Share Issue Shares being subscribed for and paid-up in accordance with the terms of the Subsequent Share Issue Offering. The Subsequent Share Issue Shares will be issued when registered in the Register of Business Enterprises, and such registration is expected to take place on or about 28 July The Subsequent Share Issue Shares are, provided that sufficient payment and registration has been made, expected to be transferred to the relevant investors VPS accounts on or about 28 July 2009, or up to 14 days later if the Application Period is extended. Listing and trading on Oslo Axess of the Shares in the Subsequent Share Issue is expected to start on or about 28 July 2009, or up to 14 days later if the Application Period is extended The rights conferred by the Subsequent Share Issue Shares The Subsequent Share Issue Shares will in all respects carry full shareholder rights once the relevant shares have been issued and registered at the Norwegian Register of Business Enterprises. The Subsequent Share Issue Shares will, on a general basis and from the time they have been registered at the Norwegian Register of Business Enterprises, entitle the holders to preferential subscription rights in future rights issues in accordance with the Norwegian Public Limited Companies Act. The Subsequent Share Issue Shares will from the time they have been registered at the Norwegian Register of Business Enterprises carry right to dividends, if any, which is resolved distributed on basis of profits or liquidation of the Company, in line with all other shares of the Company. There are no specific dividend restrictions or procedures for non-resident shareholders. For taxation of non-resident shareholders, see sections and Each Subsequent Share Issue Share will confer the right to one vote at general meetings. For a description of rights attaching to Shares in the Company, see section 10 Shares and share capital of this Prospectus. 9.4 Publication of information in respect to the Share Issues In addition to press releases on the Company s web site, the Company has used and intends to use Newsweb at to publish information in respect to the Share Issues. The Company s ticker code is SPU. 9.5 Gross proceeds from the Share Issues The gross proceeds to the Company from the Private Placement were NOK 50 million, and the gross proceeds to the Company from the Subsequent Share Issue will be up to NOK 12.5 million. 81

83 9.6 VPS Registration The Shares are registered in the Norwegian Central Securities Depository (VPS) with ISIN NO The Company s registrar is Nordea Bank Norge ASA, Verdipapirservice, Essendrops gate 7, N-0367 Oslo. 9.7 Manager and advisors The Share Issues are being managed by ABG Sundal Collier Norge ASA, Munkedamsveien 45 E, N-0250 Oslo. As at the date of this Prospectus, neither the Manager, nor any of its employees, own any Shares in the Company. PWC has performed a limited financial and tax due diligence and Wiersholm Mellbye Bech, advokatfirma AS has performed a limited legal due diligence investigation on the Company in connection with the offering of the Subsequent Share Issue Shares. 9.8 Costs The estimated transaction costs of the Company related to the Share Issues will be approximately NOK million depending on the level of subscription in the Subsequent Share Issue, of which approximately NOK million is related to fees and costs to the Manager. No expenses or taxes are charged to the applicants in the Share Issues by the Company or the Manager. 9.9 Mandatory anti-money laundering procedures The Share Issues are subject to the Norwegian Money Laundering Act No. 41 of 20 June 2003 and the Norwegian Money Laundering Regulations No of 10 December 2003 (collectively the Anti-Money Laundering Legislation ). All applicants who are not registered as existing customers with the Manager must verify their identity to the Manager in accordance with requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Applicants that have designated an existing Norwegian bank account and an existing VPS-account on the Application Form are exempted, provided the aggregate subscription price is less than NOK 100,000, unless verification of identity is requested by the Manager. The verification of identification must be completed prior to the end of the Application Period. Investors that have not completed the required verification of identification will not be allocated Shares. Further, for participating in the Subsequent Share Issue, each applicant must have a VPS account. The VPS account number must be stated on the Application Form. VPS accounts can be established with authorised VPS registrars, which can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA. However, non-norwegian investors may use nominee VPS accounts registered in the name of a nominee. The nominee must be authorised by the Norwegian Ministry of Finance. Establishment of VPS account requires verification of identification before the VPS registrar in accordance with the Anti-Money Laundering Legislation. 82

84 9.10 Selling restrictions General No action has been or will be taken in any jurisdiction other than Norway by the Manager or the Company that would permit a public offering of the New Shares, or the possession or distribution of any documents relating thereto, in any jurisdiction where specific action for that purpose is required. Accordingly, this Prospectus may not be used for the purpose of, and does not constitute, an offer to sell or issue, or a solicitation of an offer to buy or subscribe for, any securities in any jurisdictions in any circumstances in which such offer or solicitation is not lawful or authorised. The Company and the Manager require persons in possession of this Prospectus to inform themselves about and to observe any such restrictions. Public Offer Selling Restriction under the Prospectus Directive In relation to each Member State of the EEA other than Norway which has implemented the Prospectus Directive (each, a Relevant Member State ) an offer of New Shares which are the subject of the offer related to the Share Issues contemplated by this Prospectus may not be made to the public in that Relevant Member State except that an offer to the public in that Relevant Member State of any New Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: (a) (b) (c) (d) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than 43,000,000 and (3) an annual net turnover of more than 50,000,000, as shown in its last annual or consolidated accounts; to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the Managers for any such offer; or in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of New Shares shall result in a requirement for the publication by the Company or any Underwriter of a Prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an offer to the public in relation to any New Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase any Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State. U.S. selling restriction The Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act ), and may not be offered or sold in the United States. The New Shares are being offered outside the United States in accordance with Regulation S under the Securities Act ( Regulation S ). Each purchaser of New Shares offered and sold in reliance on Regulation S will, by accepting delivery of this Prospectus and the New Shares, be deemed to have represented, warranted, acknowledged and agreed as follows (terms used in this paragraph that are defined in Regulation S are used herein as defined therein): (a) the purchaser (i) is, and the person, if any, for whose account it is acquiring such New Shares is, outside the United States and is not a U.S. person, and (ii) is acquiring the New Shares in an offshore transaction meeting the requirements of Regulation S; 83

85 (b) (c) the purchaser is aware that the New Shares have not been and will not be registered under the U.S. Securities Act and are being distributed and offered outside the United States in reliance on Regulation S; and the purchaser is not an affiliate of the Company or a person acting on behalf of such affiliate. This offer is made for the securities of a company incorporated in Norway. The offer is subject to Norwegian disclosure requirements, which are different from those of the United States. Financial statements included in the document have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as adopted by the EU. Prospective investors should review the accounting policies applied in the preparation of the financial statements and consult their own accounting experts in order to understand how such differences may be relevant to their review of the Company s financial statements. 84

86 10. SHARES AND SHARE CAPITAL 10.1 Current Share Capital The Company s share capital is currently, after completion of the Private Placement, NOK 18,106,452 divided on 18,106,452 Shares, each with a par value of NOK All Shares are fully paid. The rights connected to the Shares are governed by the Norwegian Public Limited Companies Act. Following the Subsequent Share Issue, the Company s share capital will be a minimum of NOK 18,106,452, divided into 18,106,452 Shares, and a maximum of NOK 20,606,452, divided into 20,606,452 Shares, each with a par value of NOK All Shares of the Company are of the same class and are equal in all respects. The Private Placement Shares were, at their issue, restricted shares in the meaning that they will not be distributed to the shareholders, listed and tradable at Oslo Axess before this Prospectus has been approved by Oslo Børs, and published. There are no outstanding rights to subscribe for Shares in the Company or require the Company to issue shares. To the Company s knowledge, there are no persons who, directly or indirectly, has an interest in the Company s capital or voting rights which is notifiable under the issuer's national law Authorization to increase the Share Capital The general meeting of the Company has not issued any authorisations to the board of directors to increase the Company s Share Capital Share Capital Development for the latest 3 financial years The Company was incorporated on 25 March 2008 with a share capital of NOK 1,000,000 divided into 1,000,000 shares each with a par value of NOK On 27 June 2008 a capital increase was resolved, and the share capital was increased to NOK 8,106,452 divided on 8,106,452 Shares, each with a par value of NOK On 26 June 2009, the Private Placement was resolved, and the share capital was increased to NOK 18,106,452, divided on 18,106,452 Shares, each with a par value of NOK All capital contributions in the Company have been made in cash Shareholder Structure As of 30 June 2009, the 20 largest shareholders in Spectrum registered in VPS and their ownership interest were the following: Name Shares % of shares SPENCER ENERGY AS NOR 1,600, FERNCLIFF DAI 1 AS NOR 1,567, SKAGEN VEKST NOR 680, GROSS MANAGEMENT AS NOR 535, SOLAN CAPITAL AS NOR 498, MUSTANG AS NOR 398, STOREBRAND NOR LIVSFORSIKRING AS 229, CURARE INVEST AS NOR 174, DAI INVEST AS NOR 160, ADRIAN FINANS AS NOR 150,

87 KOV INVEST HOLDING AS NOR 140, CAMACA AS NOR 129, FLISA EIENDOMSINVEST AS NOR 122, MP PENSJON NOR 108, MIDDELBOE AS NOR 107, PAN SIRIUS AS NOR 60, GLOBAL GEO SERVICES NOR 53, STOKO AS NOR 50, STOREBRAND NORGE I NOR 47, STOREBRAND NORGE H NOR 44, largest shareholders 6,853, % Other shareholders 1,252, % The total number of outstanding shares in Spectrum following the registration of the Private Placement Shares in the Register of Business Enterprises on 30 June 2009 is 18,106,452. The Private Placement Shares will be registered in the VPS on or about 2 July Shareholders owning 5% or more of the Company have an interest in the Company s share capital which is notifiable according to the Norwegian securities law. The Company has no information of the existence of shareholders agreements, veto rights or other means of influence over the Company than the share ownership. Since all shares have the same rights, it is the Company s view, that the control over the Company is reflected in the share ownership as described above. The Company has not introduced any specific measures to ensure that such control is not abused. Thus, the available protection is vested in the minority protection provisions provided for in the Norwegian Public Limited Companies Act, the Securities Trading Act, the Continuing Obligations for Oslo Børs and Oslo Axess and other relevant regulation Share price development Since 1 July 2008, the Shares have been publicly traded on Oslo Axess under the ticker SPU. The share price development since 1 July 2008 is shown below. The closing price of the Shares on Oslo Axess as of 25 June 2009 (the date of the latest trade reported prior to the date of this Prospectus) was NOK 5 per share. Share price (NOK) jul - 08 sep - 08 nov - 08 jan - 09 mar - 09 mai - 09 Traded volume ('000) shares Volume (RHS) Share price (LHS) 86

88 10.6 Own shares As of the date of this Prospectus, the Company does not hold any own Shares. The Board has not been granted any authorisation to acquire own Shares Dividend Policy The Company was incorporated on 25 March 2008 and has not paid any dividends to this date. In general, any future dividend will be subject to determination by Spectrum s Board of Directors based on its results of operations and financial condition, its future business prospects, any applicable legal or contractual restrictions and any other factors that the Board of Directors considers relevant. Any proposal by the Board of Directors must be approved by Spectrum s shareholders. All Shares carry the same right to dividend and other payments on the shares of the Company, also including dividend connected to liquidation Warrants, Options and Convertible Securities The Company has not, as of the date of this Prospectus, issued any share options, convertible securities, exchangeable securities or securities with warrants Share Purchases by or Share Issues to Related Parties There have since 1 July 2008 been no share purchases by or share issues to members of the administrative, management or supervisory bodies or senior management, or affiliated persons, except for the following three share allocations in the Private Placement both made on 9 June 2009: (i) Ferncliff DAI 1 AS which is represented on the board of directors of Spectrum, was allocated 2,050,000 Private Placement Shares, (ii) Gross Management AS which is affiliated with Ferncliff DAI 1 AS was allocated 1,650,000 Private Placement Shares, and (iii) David Rowlands, CEO of Spectrum, was allocated 200,000 Private Placement Shares. All allocations were made at NOK 5 per Shares, equal to the Offer Price Transactions with Related Parties Acquisition of the Seismic Business The Company completed the acquisition of the Seismic Business of GTB on 30 June This comprised 100% of the share capital in GGS-Spectrum Limited, GGS-Spectrum Incorporated, and their related companies, the ownership of certain libraries of Multi-Client data, 50% of the share capital of GeoBridge Pte. Ltd. and the chartering and operation of the Vessel. The total consideration paid was USD 54.1 million (NOK 275 million) settled by way of USD 24.6 million (NOK 125 million) in cash and a long term loan note from the seller of USD 29.5 million (NOK 150 million). 87

89 The value of the shares in GTB Spectrum Ltd was NOK 158 million. The cost of the multi-client library aquired was USD 14.2 million. The cost of a 50 % interest in GeoBridge Pte. Ltd. and the rights to the charter of the Vessel were USD 17.0 million. Assets acquired GTB carrying amount at 30 June 2008 Fair value adjustment Fair value Non- current intangible assets 18,084 10,290 28,374 Non-current tangible assets 4, ,750 Investments in associated companies (215) 1, Order backlog 0 1,613 1,613 Current assets 12, ,395 Cash and cash equivalents 1, ,181 Trade payables (4,002) (116) (4,118) Provision for operating lease costs (762) 0 (762) Deferred tax liability 0 (3,655) (3,655) Net assets 31,431 9,162 40,593 Goodwill arising on acquisition 13,534 Total purchase consideration 54,127 Cost Cash paid 24,603 Loan note from seller 29,524 Total 54,127 Net cash acquired with the business 1,181 Cash paid (24,603) Cash outflow (23,422) The excess values of the acquisition: o Multi-Client library: comprises significant surveys of including West Florida areas. The costs of all multi-client surveys will be fully amortised in four years, or less, in line with the group amortisation policy. o Software: is specialist software developed in-house as well as purchased products which have an estimated useful life of up to 20 years. o Order backlog: approximately USD 1.6 million at 30th June has been reduced to USD 0.4 million at 31 December 2008 and the remainder may be recognised in the following 6 months. o Investment in joint ventures: these are interests of Spectrum UK Limited in entities operating in Egypt and Libya. The goodwill recognised in this transaction relates to the technical know-how and business processes of the companies acquired. The entire profit of Spectrum in this reporting period arises from the business purchased from GTB. Spectrum has not provided pro forma figures for the acquired business as it is not practicable to do so, as a significant amount of information is not available to the Company. 88

90 Other Related Party Transactions Since the date of incorporation of the Company, the Company has entered into the following additional related party transactions: - On 2 May 2008 the Company entered in a Services Agreement with GTB. In 2008, Spectrum made sales to GTB under the Services Agreement of USD 326,000 for additional data processing services. The final element of the Services Agreement was connected to a charter by the Company of the Vessel from GTB (Reliance Industries), which was completed in the period from 5 February 2009 through 15 May The daily charter rate in this connection was USD 56,000 plus certain additional costs to cover specific expenses such as fuel, chase boats and seismic consumables. The Service Agreement has now been terminated and is no longer in force. - In 2008, the Company made the following transactions with related joint venture ( JV ) parties: Associate Sales to JV Sales from JV Amounts owed to JV Amounts owed by JV Spectrum Geopex Egypt Parent company Subsidiaries GeoBridge Pte. Ltd. Parent company Subsidiaries On 5 June 2009 Spectrum entered into the Loan Redemption Agreement with GTB regarding the redemption of the Loan as described in section 5.3 above. This agreement was approved by the AGM on 26 June On 5 June 2009 Spectrum entered into the Indemnification Agreement with GTB where GTB indemnifies Spectrum for all obligations which Spectrum is subject to under the Arbitration Award in the arbitration proceedings between Kjell Finstad on the one hand and GTB and Spectrum on the other, as further described in section 5.16 Legal and arbitration proceedings. The Company is of the opinion that the above mentioned transactions were made on arms length basis. 89

91 11. SHAREHOLDER MATTERS AND NORWEGIAN SECURITIES LAW 11.1 General meetings Through the general meeting, the Company s shareholders exercise the supreme authority in the Company, subject to the limitations provided by Norwegian law. All shareholders in the Company are entitled to attend and vote at general meetings, either in person or by proxy. See Voting rights with regard to certain restrictions on voting right applying for nominee registered shares, etc. General meetings are conveyed by the Company s Board of Directors. A notice of a general meeting shall be sent at the latest two weeks before the date of the meeting, and shall include a proposal for an agenda for the meeting. A shareholder is entitled to submit proposals to be discussed at general meetings provided such proposals are submitted in writing to the Board of Directors in such good time that it can be entered on the agenda of the meeting. The annual general meeting shall be called by the Board of Directors such that it can be held within six months from the end of each financial year. The annual general meeting shall deal with and decide on the adoption of the annual financial statement and annual report, the question of declaring dividend and such other matters as may be set out in the notice of the annual general meeting. Extraordinary general meetings can be called by the Board of Directors, and if applicable by the corporate assembly or the chairman of the corporate assembly. In addition, the Board of Directors shall call an extraordinary general meeting whenever so demanded in writing by the auditor or shareholders representing at least 5 % of the share capital, in order to deal with a specific subject Voting Rights Each share in the Company carries one vote. Each share held by a major shareholder carries the same voting right as each share held by any other shareholder. As a general rule, resolutions that shareholders are entitled to make pursuant to the Public Limited Companies Act or the Company's Articles of Association require a simple majority of the votes cast. In the case of election of directors to the Board of Directors, the persons who obtain the most votes cast are deemed elected to fill the positions up for election. However, as required under Norwegian law, certain decisions, including resolutions to waive preferred rights in connection with any share issue, to approve a merger or demerger, to amend the Company's Articles of Association or to authorise an increase or reduction in the share capital, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a shareholders' meeting. Norwegian law further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval of the holders of such shares or class of shares as well as the majority required for amendments to the Company's Articles of Association. Decisions that (i) would reduce any shareholder's right in respect of dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the shares, require a majority vote of at least 90 per cent of the share capital represented at the general meeting in question as well as the majority required for amendments to the Company's Articles of Association. Certain types of changes in the rights of shareholders require the consent of all shareholders affected thereby as well as the majority required for amendments to the Company's Articles of Association. In general, in order to be entitled to vote, a shareholder must be registered as the beneficial owner of Shares in the share register kept by the VPS. Beneficial owners of Shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor are any persons who are designated in the register 90

92 as holding such Shares as nominees. Readers should note that there are varying opinions as to the interpretation of Norwegian law in respect of the right to vote nominee registered shares. For example, Oslo Børs has held that in its opinion nominee-shareholders may vote in general meetings if they actually prove their shareholding prior to the general meeting Dividends Under Norwegian law, no interim dividends may be paid in respect of a financial period as to which audited financial statements have not been approved by the annual general meeting of shareholders, and any proposal to pay a dividend must be recommended or accepted by the directors and approved by the shareholders at a general meeting. The shareholders may vote to reduce (but not to increase) the dividends proposed by the directors. Dividends in cash or in kind are payable only out of (i) the annual profit according to the adopted income statement for the last financial year, (ii) retained profit from previous years, and (iii) distributable reserves, after deduction of (a) any uncovered losses, (b) the book value of research and development, (c) goodwill, (d) net deferred tax assets recorded in the balance sheet for the last financial year, (e) the aggregate value of any treasury shares the Company has purchased or been granted security over during the preceding financial years, (f) any credit or security given pursuant to Sections 8-7 to 8-9 of the Norwegian Public Limited Companies Act, and provided always that such distribution is compatible with good and prudent business practice with due regard to any losses which may have occurred after the last balance sheet date or which may be expected to occur. The Company cannot distribute any dividends if the equity, according to the balance sheet, amounts to less than ten per cent of the total assets, according to the balance sheet without following a creditor notification procedure as required for reducing the share capital. Under Norwegian foreign exchange controls currently in effect, transfers of capital to and from Norway are not subject to prior government approval except for the physical transfer of payments in currency, which is restricted to licensed banks. Consequently, a non-norwegian resident may receive dividend payments without Norwegian exchange control consent if such payment is made only through a licensed bank. The Company s Board will consider the amount of dividend (if any) to recommend for approval by the Company s shareholders, on an annual basis, based upon the earnings of the Company for the year just ended and the financial situation of the Company at the relevant point in time. Hence, the shareholders do not have a right to share in the Company s profits by way of dividends. All shareholders that are shareholders at the time of the general meeting making its resolution are entitled to dividend. There is no time limit under which the individual shareholders entitlement to a declared dividend lapses Transfer of Shares and change of control According to the Company s Articles of Association, there are no general limitations on transfer of the Company s Shares. There are no provisions in the Articles which would have an effect of delaying, deferring or preventing a change of control of the Company, or which require disclosure of ownership above any thresholds Additional issuances and preferred rights All issuances of Shares by the Company, including bonus issues, require an amendment to the Articles of Association, which requires the same vote as other amendments to the Articles of Association. Furthermore, under Norwegian law, the Company's shareholders have a preferred right to subscribe for issues of new shares 91

93 by the Company. The preferred rights to subscribe in an issue may be waived by a resolution in a general meeting by the same vote required to approve amendments to the Articles of Association. A waiver of the shareholders' preferred rights in respect of bonus issues requires the approval of all outstanding shares, irrespective of class. Under Norwegian law, bonus issues may be distributed, subject to shareholder approval, by transfer from the Company's free equity or from its share premium reserve. Such bonus issues may be effected either by issuing shares or by increasing the par value of the shares outstanding. For reasons relating to foreign securities laws or other factors, foreign investors may not be able to participate in a new issuance of shares or other securities and may face dilution as a result Change of rights of shareholders The Company s articles of association do not contain any special regulations for changing the rights of holders of the Company s Shares. Subject to specific requirements set out in the Norwegian Public Limited Companies Act, the general meeting may adopt a resolution to change rights attached on the Company s Shares. Such resolution requires an amendment to the articles of association, which requires the same vote as other amendments to the articles of association. In addition, stricter majority requirements may apply depending on the change of rights to be carried out Mandatory takeover bids and squeeze-out rules Pursuant to the Securities Trading Act, any person, entity or group acting in concert that becomes the owner of more than 1/3 (with a repeated obligation at 40 % and at 50 %) of the voting rights of a Norwegian company whose shares are listed on Oslo Axess is obliged to make an unconditional general offer for the purchase of the remaining shares in the company within four weeks or, within the same period, dispose of a number of voting shares which brings the percentage of voting rights down to or below 1/3. The shareholder must, immediately upon reaching any of the said thresholds, notify the company and Oslo Axess accordingly and of whether it will make a mandatory offer or perform a sell-down. A notice informing about a disposal can be altered to a notice of making an offer within the four week period, while a notice stating that the shareholder will make an offer cannot be amended and is thus binding. An offer is subject to approval by Oslo Axess before submission of the offer to the shareholders. The offer price per share must be at least as high as the highest price paid or agreed by the offeror in the six-month period prior to the date the offer threshold was exceeded, but equal to the market price if it is clear that the market price was higher when the offer threshold was exceeded. In the event that the acquirer thereafter, but prior to the expiration of the bid period acquires, or agrees to acquire, additional shares at a higher price, the acquirer is obliged to restate its bid at that higher price. A mandatory offer must be unconditional and in cash (NOK) or contain a cash alternative at least equivalent to any other consideration offered. Until an offer has been made or a disposal completed, the shareholder will have no voting rights or other rights relating to the shares exceeding the offer threshold apart from the right to receive dividends and pre-emption rights in the event of a share capital increase. A shareholder or consolidated group which has exceeded the 1/3, 40 % or 50 % threshold, and which has not made an offer for the purchase of the remaining shares in the company in accordance with the exemptions concerning mandatory offers, is as a main rule obliged to make a mandatory offer in the case of each subsequent acquisition. 92

94 11.8 Compulsory acquisition If a shareholder, directly or via subsidiaries, acquires Shares representing more than 90 per cent of the total number of issued Shares as well as more than 90 per cent of the total voting rights attached to such Shares, then such majority shareholder would have the right (and each remaining minority shareholder of the Company would have the right to require such majority shareholder) to effect a compulsory acquisition for cash of any Shares (minority shareholder requests only relates to its own shares) not already owned by such majority shareholder. Such compulsory acquisition decision by the majority shareholder leads to that the majority shareholder becomes the owner of the thus acquired shares with immediate effect subject to following certain procedures. Upon effecting the compulsory acquisition the majority shareholder would have to offer the minority shareholders a specific price per share, the determination of which price would be at the discretion of the majority shareholder. Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline not to be of less than two months' duration, request that the price be set by the Norwegian courts. Absent such request or other objection to the price being offered, the minority shareholders would be deemed to have accepted the offered price after the expiry of the two months deadline. The cost of such court procedure would, as a general rule, be for the account of the majority shareholder, and the courts would have full discretion in respect of the valuation of the Shares as per the effectuation of the compulsory acquisition within the scope of the real value of the Shares. In the event a shareholder, directly or via subsidiaries, exceeds the 90% threshold by way of a mandatory tender offer, and a compulsory acquisition is resolved within three months, then the share price in the compulsory acquisition shall equal the price in the mandatory offer, if no special circumstances call for a different price. Further, if the 90% threshold is exceeded pursuant to a voluntary tender offer, and a compulsory acquisition is resolved within 4 weeks, the shareholder can avoid to issue a mandatory tender offer provided that (i) the compulsory acquisition price is at least the same as it would have been in a mandatory tender offer, and (ii) the acquirer posts security according to the rules for mandatory tender offers Disclosure Obligations According to Chapter 4 of the Norwegian Securities Trading Act, an acquisition or another event that causes the acquirer s proportion of shares and/or rights to shares to reach or exceed 1/20, 1/10, 3/20 1/5, 1/4, 1/3, 1/2, 2/3 or 9/10 of the share capital or an equivalent proportion of the voting rights in a company whose shares are quoted on Oslo Axess, the acquirer shall immediately notify such acquisition to the stock exchange. This applies correspondingly to anyone who through disposal or another event changes his or her proportion of shares so that the proportion is reduced to or below the same thresholds. The non-participation in a share issue may cause the holdings to fall below a notification threshold and trigger the disclosure obligation. Furthermore, a share capital reduction may cause the holdings to reach, exceed or fall below a disclosure threshold and trigger the disclosure obligation Rights of redemption and conversion rights There are no redemption rights or conversion rights attached to the Company s Shares Rights on liquidation Under Norwegian law, the Company may be liquidated by a resolution in a general meeting of the Company passed by a two-thirds majority of the aggregate votes cast as well as two thirds of the aggregate share capital represented at such meeting. The Shares rank pari passu in the event of a return on capital by the Company upon a liquidation or otherwise. 93

95 11.12 Mandatory filing requirements under the Norwegian Competition Act The Norwegian Competition Act of 5 March 2004 No. 12 (the Competition Act ) stipulates a mandatory filing requirement for certain mergers and transactions involving acquisition of control of another undertaking. The Competition Act applies to concentrations as defined in art. 3 of EC Council Regulation 139/2004 (2004 ECMR), i.e. to mergers between two or more previously independent undertakings, and to acquisitions of direct or indirect control on a lasting basis of the whole or parts of another undertaking. The EC Commission s and the EC Court s interpretation of the notion of concentration under the said regulation is relevant when determining which mergers are comprised by the Competition Act. All mergers and transactions involving acquisition of control must be notified to the Norwegian Competition Authority (the NCA ) if the undertakings involved in the transaction have a combined annual turnover in Norway of NOK 50 million or more. However, if only one of the undertakings involved in the transaction has an annual turnover in Norway exceeding NOK 20 million, the transaction need not be notified. Notwithstanding the above, the filing requirements under the Competition Act do not apply to concentrations that are within the turnover thresholds of the EC Merger Regulation or equivalent thresholds in the EEA Agreement. Accordingly, the principle of one-stop-merger control applies. Transactions must be notified to the NCA no later than when a final agreement between the parties is reached or when control over another undertaking in fact is acquired. The Competition Act allows for voluntary filing at an earlier stage. The obligation to notify the transaction is imposed on the parties to the merger or on the acquirer(s) of an undertaking. The mandatory filing requirement under the Competition Act imposes an obligation to submit a so called simplified notification. If the NCA finds reason to consider the transaction more closely, the NCA may require that the parties to the merger/the acquirer(s) submit(s) a so-called complete notification. The NCA must make such a requirement within 15 working days after they have received the simplified notification. If this is not done, the NCA cannot intervene against the transaction after this deadline has expired. The parties may also voluntarily submit a complete notification without having received instructions from the NCA. Where the NCA has imposed an obligation to submit a complete notification, the implementation of the transaction must be suspended. The same applies if a complete notification is submitted voluntarily. For mergers or acquisitions of control, the stand-still obligation comes into effect as soon as the party/parties have received the order to submit a complete notification. For voluntary filings, the stand-still comes into effect from the time of submission of a complete notification. The suspension period lasts for 25 working days calculated from the time the NCA has received the complete notification. It is within this time limit that the NCA must decide whether to investigate the transaction further. The NCA may also order a prolonged prohibition on implementation of a transaction, provided that there is reason to believe that the concentration may create or strengthen a significant restriction on competition and that a temporary prohibition is necessary in order to ensure that a potential decision from the NCA can be carried out. If the NCA decides to investigate the transaction further, i.e. beyond the above mentioned 25 working days period, the NCA must provide a reasoned draft decision of intervention no later than 70 working days as from the receipt of the complete notification. The parties will then have 15 working days to submit their comments to the draft decision. The NCA must reach a final decision no later than 15 working days after the receipt of such comments. If the parties have submitted a proposal for commitments, they can request that an additional 25 working days are added to NCA's deadline to reach a final decision. 94

96 11.13 Reports to shareholders The Company publishes annual and interim reports that include financial statements. The consolidated financial statements are published in accordance with the International Financial Reporting Standards, IFRS, as issued by the International Accounting Standards Board Notification and publication requirements The Company will provide its shareholders, Oslo Axess and the market as a whole with timely and accurate information. The Company intends to use Newsweb at and the Company s Internet site to publish information Articles of Association The Articles of Association of the Company are set out in Appendix 1 to the Prospectus. The following is a summary of provisions of the Articles, some of which have not been addressed in the preceding discussions. The Company is a public limited liability company. As set forts in 3 of the articles of association of the Company, the Company s objectives are to offer services related to collecting, processing and marketing of geophysical and magnetic data and gravitation data, thereto related services, and participation in companies with similar and thereto related business. According to the Articles of Association, the Board shall have no less than three and no more than seven members. This signatory powers of the Company vests with the chairman of the Board alone, the CEO alone or two board members acting jointly. The Company shall have a nomination committee consisting of one to three members, elected for a period of two years. On the annual general meeting of shareholders the following matters shall be dealt with; - Approval of the annual accounts and report, including payment of dividends. - Election of Directors and auditor (if up for election) - Other matters that pursuant to law of regulations vests with the general meeting. 95

97 12. NORWEGIAN TAXATION OF SHAREHOLDERS The following is a summary of certain Norwegian tax considerations relevant to the acquisition, ownership and disposition of shares by holders that are residents of Norway for purposes of Norwegian taxation ("resident shareholders") and holders that are not residents of Norway for such purposes ("non-resident shareholders"). The summary is based on applicable Norwegian laws, rules and regulations as they exist as of the date of this Prospectus. Such laws, rules and regulations are subject to change, possibly on a retroactive basis. The summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to the shareholders and does not address foreign tax laws. Each shareholder should consult his or her own tax advisor to determine the particular tax consequences for him or her and the applicability and effect of any Norwegian or foreign tax laws and possible changes in such laws Taxation of dividends Resident corporate shareholders Dividends distributed from the Company to resident corporate shareholders (i.e. limited liability companies and similar entities) are currently almost exempt from taxation. As claw back for the deductibility of certain costs related to shareholding, 3% of a company shareholders net income on shares, including dividends, gains and losses, is subject to corporate tax at the rate of 28%, which brings the effective tax rate on such income down to 0,84% Resident personal shareholders Dividends distributed to personal shareholders exceeding a calculated tax free allowance, will be taxed as ordinary income for the shareholder. Ordinary income is taxed at a flat rate of 28%. The tax-free allowance is calculated as the acquisition cost of the share multiplied by a determined (risk-free) interest rate after tax. The tax-free allowance will be calculated on each individual share, not on a portfolio basis. Unused allowance may be carried forward and set off against future dividends or against gains upon realisation of the same share. The tax free allowance is allocated to the personal shareholders holding shares at the end of each calendar year. Personal shareholders who transfer shares will not be entitled to deduct any calculated allowance related to the year of transfer. Any unused allowance will also be added to the basis of computation of the allowance on the same share the following year Non-resident shareholders Dividends distributed to non-resident shareholders are in general subject to a withholding tax of 25 %, unless otherwise provided for in an applicable tax treaty (or exemptions for EEA shareholders apply, see below). Norway has entered into tax treaties with more than 70 countries. In most tax treaties the withholding tax rate is reduced to 15 %. Non-resident shareholders, who have been subject to a higher withholding tax than applicable in the relevant tax treaty, may apply to the Norwegian tax authorities for a refund of the excess taxes (withheld). The application is to be filed with the Central Office Foreign Tax Affairs. Dividends paid to a non-resident shareholder in respect of nominee registered shares are not eligible for reduced treaty-rate withholding at the time of payment, unless the nominee, by agreeing to provide certain information regarding beneficial owners, has obtained approval for reduced treaty-rate withholding from the 96

98 Central Office Foreign Tax Affairs. To obtain such approval the nominee is required to file a summary to the tax authorities including all beneficial owners that are subject to withholding tax at a reduced rate. Withholding tax on dividends distributed to corporate shareholders resident in the EEA has been abolished, provided that the corporate shareholders are genuinely established and carry out genuine economic activities within the EEA; such shareholders are moreover not subject to the 3 % shareholders income tax liability, ref. section Resident corporate shareholders. When distributing dividends to personal shareholders resident in EEA, the Company will deduct withholding tax according to the relevant tax treaty. If the withholding tax withheld by the Company exceeds the tax that would have been imposed according to the calculations applicable to resident personal shareholders (see section Resident personal shareholders ) the personal shareholder resident in the EEA may apply for a refund of the excess tax. When calculating such tax the general withholding tax rate of 25 % is applicable, and not the general tax rate of 28 % applicable to resident personal shareholders. In effect this gives the personal shareholder resident in the EEA the election between using the withholding tax rate determined in the tax treaty or, if more beneficial, the tax rate that would have applied had the foreign shareholder been a resident of Norway. In the case where a non-resident shareholder is engaged in business activities in Norway and the shares with respect to which the dividend is paid are effectively connected with such activities, the dividend will be taxed in the same manner as dividend paid to a resident shareholder, see description of taxation of resident shareholders in section Resident corporate shareholders and section Resident personal shareholders Taxation upon realisation of shares Resident corporate shareholders For resident corporate shareholders, gains from sale or other disposition of shares in the Company are currently nearly exempt from taxation, and losses suffered from such realisation are generally not tax deductible. Costs incurred in connection with the purchase and sale of shares are not deductible. As claw back for the deductibility of costs other than acquisition costs related to shareholding, 3 % of a company shareholders net income on shares, including dividends, gains and losses, is subject to corporate tax at the rate of 28 %, which brings the effective tax rate on such income down to 0,84 % Resident personal shareholders For resident personal shareholders gains from sale or other disposition of shares are taxable as ordinary income at a rate of 28 % and losses are deductible against ordinary income. Gain or loss is calculated per share, as the difference is the sales price minus the acquisition cost of the share. A taxable gain on a share may be reduced by unused calculated allowance connected to the same share (see section Resident personal shareholders on Taxation of Dividends) but may not lead to or increase a deductible loss. Further, unused allowance may not be set off against gains from realisation of the other shares. The tax free allowance is allocated to the personal shareholders holding shares at the end of each calendar year. Personal shareholders who transfer shares will not be entitled to deduct any calculated allowance related to the year of transfer. 97

99 If a shareholder disposes of shares acquired at different times, the shares that were first acquired will be deemed as first sold (the FIFO-principle) upon calculating taxable gain or loss. Costs incurred in connection with the purchase and sale of shares may be deducted in the year of sale. A resident personal shareholder who moves abroad and ceases to be tax resident in Norway or is regarded as tax resident in another jurisdiction according to an applicable tax treaty, will be deemed taxable in Norway for any potential gain related to the shares held at the time the tax residency ceased or the time when the shareholder was regarded as tax resident in another jurisdiction according to an applicable tax treaty, as if the shares were realised at this time (exit taxation). Currently, gains of NOK 500,000 or less are not taxable. If the shareholder moves to a jurisdiction within the EEA, potential losses related to shares held at the time tax residency ceases will be tax deductible. Taxation (loss deduction) will occur at the time the shares are actually sold or otherwise disposed of. The tax liability calculated according to these provisions will not apply i.a. if the shares are not realised within five years after the shareholder ceased to be resident in Norway for tax purposes or was regarded as tax resident in another jurisdiction according to an applicable tax treaty Non-resident shareholders Gains from the sale or other disposition of shares by a non-resident holder will not be subject to taxation in Norway unless the non-resident holder is an individual and (i) holds the shares effectively connected with business activities carried on in or managed from Norway, or (ii) has been a resident of Norway for tax purposes within the five calendar years preceding the sale or disposition, and the gains are not exempted pursuant to the provisions of a tax treaty. If the latter rule applies, the latent gain on the shares at the time the individual ceased to be a resident in Norway for tax purposes will be taxable in Norway. Such taxation may be limited according to an applicable tax treaty Net wealth tax Resident corporate shareholders are exempted from net wealth tax. For other resident shareholders, the shares will form part of the capital and be subject to net wealth tax. The maximum wealth tax rate is 1.1 %. Listed shares are valued at their quoted valued on 1 January in the assessment year. Shares listed on Oslo Axess will be regarded as listed in this respect. A non-resident shareholder is not subject to Norwegian wealth tax with respect to the shares, unless his shareholding is effectively connected with a business carried out by the shareholder in Norway. Such taxation may be limited according to an applicable tax treaty Stamp duty There is currently no Norwegian stamp duty or transfer tax on the transfer or issuance of shares Inheritance tax When shares are transferred either through inheritance or as a gift, such transfer may give rise to inheritance or gift tax in Norway if the deceased, at the time of death, or the donor, at the time of the gift, is a resident or citizen of Norway. However, in the case of inheritance tax, if the deceased was a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if inheritance tax, or a similar tax, is levied by the deceased's country of residence. Irrespective of residence or citizenship, Norwegian inheritance tax may be 98

100 levied if the shares are effectively connected with certain business activities carried out by the shareholder in Norway. 99

101 13. DEFINITIONS 13.1 Definitions ABG Sundal Collier AGM Application Application Form Application Office Application Period Arbitration Award Articles Basis point Board or Board of Directors Code of Practice Company Eligible Shareholders Exchange Act GTB Haavind IFRS Indemnification Letter ISIN Listing ABG Sundal Collier Norge ASA The annual general meeting of the Company held on 26 June 2009 in order to approve the Loan Redemption Agreement and both Share Issues. The submission of the Application Form to the Manager The application form attached as Appendix 2 to this Prospectus ABG Sundal Collier Norge ASA From 3 July 2009 to 17 July 2009 at 16:00 Norwegian time The arbitration award dated 25 March 2009 by the arbitration board in the arbitration proceedings initiated on 2 September 2008 by Kjell G. Finstad against GTB and Spectrum The articles of association of Spectrum ASA One-hundredth of a percentage point The board of directors of the Company Norwegian Code of Practice for Corporate Governance dated 4 December 2007 Spectrum The shareholders in the Company as of 8 June 2009 who were not offered to participate in the Private Placement and are not restricted from participating due to laws and regulations in their home country jurisdiction. The U.S. Exchange Act of 1934, as amended Global Tender Barges ASA, formerly Global Geo Services ASA. Advokatfirmaet Haavind AS International Financial Reporting Standards The letter dated 5 June 2009 from GTB to Spectrum according to which GTB accepted liability for all future payments to Kjell G. Finstad under the consultancy agreement and the Arbitration Award, and that Spectrum is free of such liability. Securities number in the Norwegian Registry of Securities (VPS) The listing of the New Shares on Oslo Axess to take place in two steps; the listing of the Private Placement Shares on or around 2 July and the listing of the Subsequent Share Issue Shares estimated to take place on or around 28 July

102 Loan The loan from GTB to Spectrum at a nominal value of NOK 150 million Loan Redemption Loan Redemption Agreement Manager New Shares NGAAP NOK or Norwegian kroner Norwegian GAAP Norwegian Public Limited Companies Act Norwegian Securities Trading Act Offer Price Oslo Axess Oslo Børs PPE Private Placement Shares R&D Register of Business Enterprises The redemption of the Loan to be made by Spectrum subsequent to the Private Placement, using the proceeds from the Private Placement The agreement between Spectrum and GTB regarding the Loan Redemption ABG Sundal Collier Norge ASA The 10,000,000 Shares issued in the Private Placement and the minimum 2,000 and maximum 2,500,000 Shares being issued in the Subsequent Share Issue Norwegian Generally Accepted Accounting Principles The lawful currency of Norway NGAAP; accounting principles generally accepted in Norway The Norwegian Public Limited Liability Companies Act of 19 June 1997 no. 45 The Norwegian Securities Trading Act of 29 June 2007 no. 75 NOK 5 per Share A regulated and authorised marketplace administered by Oslo Børs. Oslo Børs ASA (the Oslo Stock Exchange) Property, Plant and Equipment The 10,000,000 Shares to be issued in the Private Placement Research & Development The Norwegian Register of Business Enterprises, in Norwegian Foretaksregisteret Securities Act The United States Securities Act of 1933 Seismic Business Separation Share Capital Share Issues Shares The major party of GTB s seismic business, comprised by the acquisition, processing, marketing and sale of seismic data, which was transferred from GTB to Spectrum in the Separation The transaction whereby Spectrum in 2008 was separated from GTB and thereby acquired the majority of the seismic assets from GTB and assumed the Loan. The total amount of registered and outstanding Shares in the Company The issues of New Shares through the Private Placement and the Subsequent Share Issue Shares in the Company 101

103 Spectrum Spectrum UK Subsequent Share Issue Subsequent Share Issue Offering Subsequent Share Issue Shares USD VPS Spectrum ASA or Spectrum ASA and its subsidiaries and affiliated companies, as the context requires Spectrum UK Limited (GTB-Spectrum Ltd) The subsequent share issue resolved by the AGM immediately subsequent to the Private Placement, and under which the Company s shareholders as of 8 June 2009 who were not offered to participate in the Private Placement would be granted preferred allocation rights up to pro rata to their shareholding prior to the Private Placement. The offering of minimum 2,000 Shares and maximum 2,500,000 Shares in the Subsequent Share Issue The Shares to be issued in the Subsequent Share Issue American dollar The Norwegian Central Securities Depository (Verdipapirsentralen) 102

104 The Prospectus has been made publicly available at the below addresses: The Company's office: Spectrum ASA Sjølyst Plass Oslo Norway The Manager s office: ABG Sundal Collier Norge ASA Munkedamsveien 45 E N-0250 Oslo, Norway The following documents will for the lifetime of the Prospectus be available for review at the Company s offices, Sjølyst Plass 2, 0278 Oslo, Norway, and be available at the Company s internet pages 1 Articles of Association 2 Memorandum of incorporation 3 Annual report 2008 (audited) 4 Quarterly report for the first quarter of 2009 (unaudited) 5 IPO Prospectus dated 12 June

105 Appendix 1 Articles of Association of Spectrum ASA ARTICLES OF ASSOCIATION OF SPECTRUM ASA This is an unofficial office translation of the articles of association of Spectrum ASA. The official Norwegian version is available at the Company s offices. 1 Name The name of the company is Spectrum ASA. The company is a public limited liability company. 2 Registered address The registered address of the company shall be located in the municipality of Oslo. 3 Purpose The company shall be engaged in the business of offering services related to the acquisition, processing and marketing of geophysical, aeromagnetic and gravity data, and other services related to such business, including the participation in other companies engaged in similar and related business. 4 Share capital The company s share capital is NOK 18,106,452, divided into 18,106,452 shares, each with a par value of NOK 1. The company s shares shall be registered in the Norwegian securities depository (VPS). 5 The Board of Directors The Board of Directors shall comprise no less than three and no more than seven members. 6 Authority to sign on behalf of the company The Chairperson of the Board of Directors alone, the company s CEO alone, or two board members acting jointly, shall be authorised to sign on behalf of the company. 7 Nomination Committee The Company shall have a nomination committee consisting of between one and three members. The members shall be elected for a period of two years. 8 General Meeting The annual general meeting shall deliberate and resolve whether to approve the following matters: 1. Approval of the annual accounts and the annual report, hereunder the distribution of dividends, 2. Election of board members and auditor (if up for election), and 3. Other matters assigned to the Shareholders Meeting by statute or the Articles of Association. *** 104

106 Appendix 2 Application Form 105

107 106