August 21 st 2015 2 nd Quarter 2015 Results Unaudited
CAUTIONARY STATEMENT This presentation contains both statements of historical fact and forward looking information. Any forward looking information is based on management assumptions and analysis and are subject to risks and uncertainties that are difficult to predict as they relate to events and/or circumstances in the future. Actual results and events may differ materially from those expected or projected in the forward looking statements. Spectrum undertakes no responsibility or obligation to update or alter forward looking statements. This presentation should be read in conjunction with the 2nd quarter 2015 Earnings Release issued by Spectrum August 21 st 2015.
Q2 2015 Highlights Q2-15 Q2-14 Change Net Revenue MUSD 35 MUSD 45-22% EBITDA MUSD 26 MUSD 34-26% EBIT MUSD 9 (*) MUSD 10-13% * Including transaction cost of MUSD 0.9 related to the acquisition of the Fugro MC library Sales of MUSD 5 in Q2 (sales April and May) related to Former Fugro library not included in the revenue numbers The sales for the first 5 months of 2015 from the acquired library is only impacting the balance sheet, not the revenue numbers Q2 2015 MC investments of MUSD 120 Amortization rate of 47% in the quarter Net cash of MUSD 18 end of quarter
Q2 2015 Highlights Acquisition of the Fugro Multi-Client Library successfully completed New Library builds momentum with our clients Time to enhance and realize value Take Ownership to Sales Reprocessing and Add-On Products Combine data sets to super-volumes
Q2 2015 Highlights Mexico campaign started in cooperation with SLB and PGS License round in Brazil sparks oil companies interest in new basins
Spectrum library expansion
Q2 2015 Highlights Q2-15 Q2-14 Operational Cash Flow MUSD 15 MUSD 28 MC Investment MUSD 120 MUSD 38 CAGR MC investment 2011-2014 40% 2.0 2.0 1.8 1.8 1.6 1.6 1.4 1.4 1.2 1.2 1.0 0.8 0.6 Rolling MC Net revenue 4 quarter / Rolling MC Investment 1.0 0.8 0.6 Rolling MC Net revenue 4 quarter / Rolling MC Investment (ex. Fugro lib.) 0.4 0.4 0.2 0.2 - -
Q2 2015 MC Revenue by Region Q2 Net revenue MUSD 35 1H 2015 Net revenue MUSD 49 12 15 1 22 2 32
Financials
Q2 2015 Income Statement Spectrum Group Quarter Quarter 6 months 6 months ended ended Change ended ended (USD 1000) 30.06.15 30.06.14 in % 30.06.15 30.06.14 Change in % Net revenue 34,743 44,590-22% 49,630 82,591-40% Amortisation of multi-client library (16,186) (23,504) (26,797) (43,010) Operating expenses (9,336) (9,436) -1% (16,534) (17,963) -8% Cost of stock options 141 (756) (474) (1,471) Depreciation (662) (887) -25% (1,427) (1,641) -13% EBIT 8,701 10,007-13% 4,397 18,507-76% Net Financial items (1,188) (500) (1,699) (296) Profit / (loss) before tax 7,513 9,507-21% 2,699 18,211-85% Earnings per share 0.12 0.16 0.05 0.30 Diluted earnings per share 0.11 0.14 0.04 0.26
Multi-Client NBV & Investments Q2 2015 MC investments MUSD 120 Library acquisition MUSD 108 Organic investment MUSD 12 (Prefunding of 23%) Amortization Q2 2015 46.6% (Q2 2014: 52.7%) 250 233 200 MUSD 150 100 50 0 54 2011 FY 57 76 2012 FY 87 86 20 36 108 116 112 111 125 126 131 129 16 13 18 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 38 27 30 13 120 Investment Closing NBV
Rolling Earnings & Net Sales / Book Value of MC library 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 EBITDA 4 quarter rolling / book value of MC library rolling EBIT 4 quarter rolling / book value of MC library rolling MC Net revenue 4 quarter rolling / book value of MC library rolling - MC library rolling includes library acquired in June 2015
Investment per Vintage Net Book Value (NBV) as % of original investment per financial year vs. allowed Maximum NBV MUSD 160 140 145.5 98% 120 84% 100 80 83.2 87.5 100% 60 40 20 0 3% 57.5 51.3 44.9 62% 44% 38% 63% 40% 23% 13% 3% 2011 2012 2013 2014 2015 Work in progress Original Investment % Actual NBV % Max allowed NBV
Balance Sheet Key Figures SPECTRUM GROUP Assets 30.06.15 31.03.15 31.12.14 (USD 1000) (Unaudited) (Unaudited) (Audited) MC Library 233,364 129,328 131,266 Other Intangible Assets 17,085 17,573 15,434 Tangible Assets 5,329 5,630 5,868 Receivables 85,351 69,606 90,448 Cash and Equivalents 17,445 17,670 8,364 Total Assets 358,573 239,808 251,379 Equity and Liabilities 30.06.15 31.03.15 31.12.14 (USD 1000) (Unaudited) (Unaudited) (Audited) Equity 211,036 171,994 174,267 Long Term Liabilities 48,875 1,500 2,066 Current Liabilities 98,663 66,315 75,045 Total Equity and Liabilities 358,573 239,808 251,379
Q2 2015 Cash Flow Statement SPECTRUM GROUP Quarter Quarter 6 months 6 months 12 months Cashflow ended ended ended ended ended (USD 1000) 30.06.15 30.06.14 30.06.15 30.06.14 31.12.14 Cash flows from operating activities: Profit / (Loss) before tax 7,513 9,507 2,699 18,211 54,654 Income taxes paid (1,085) (3,313) (1,085) (8,558) (12,878) Depreciation and amortisation 16,848 24,392 28,224 44,651 97,567 Other financial items inclusive share options 694 286 1,369 1,035 (2,173) Working capital changes (8,771) (3,196) 1,986 5,750 (9,000) Net cash flow from operating activities 15,199 27,676 33,193 61,088 128,170 Cash flows from investing activities: Investment in multi-client library (29,051) (38,266) (42,215) (55,975) (113,280) Investment in subsidiaries net of cash (91,193) - (91,193) - - Investment in other assets (2,439) (701) (2,716) (1,875) (3,866) Sale of assets - - 4,507 (159) - Net cash flow from investing activities (122,683) (38,967) (131,617) (58,009) (117,305) Cash flows from financing activities: Issued share capital 40,156 32 40,860 33 268 Equity transaction costs (1,429) - (1,429) - - Repayment of capital and dividends (5,797) (5,306) (5,797) (5,306) (5,306) Net of borrowings including interest 74,378 (373) 73,920 (99) 110 Net cash flow from financing activities 107,308 (5,648) 107,554 (5,372) (4,928) Net change in cash and cash equivalents (176) (16,939) 9,130 (2,293) 5,937 Net foreign exchange diff (unrealised) (49) (57) (49) (54) (292) Cash and cash equivalents at start of period 17,670 17,369 8,364 2,719 2,719 Cash and cash equivalents at end of period 17,445 373 17,445 373 8,364
Operations
Operations highlights Three active surveys during Q2 Pelotas Phase 2 MC2D Mexico JV MC2D Namibia-South Africa cross border MC2D Sales from the Brazil 13 th round surveys Taking ownership of the former Fugro MC library
Areas of High Interest Relevant Licensing activities Croatia - 2 nd round expected in 2015 Peru - round expected in 2015 Brazil - 13 th round ongoing Mexico - 1 st round ongoing Madagascar - round expected in 2015 Norway - 23 rd round in 2015 Ireland - round ongoing Australia - regular acreage release
MC2D projects in Q2 Brazil, Pelotas campaign 12,000 km MC2D phase 2 completed and products available Complementing 7,500 km phase 1 data and 12,000 km reprocessed data Partnering with Schlumberger for all data in the Pelotas Basin South Africa, x-border phase 2 3,500 km MC2D (black lines) Final products available Q3 2015 Supported by industry
MC2D projects in Q2 Mexico MC2D JV Combining strength with Schlumberger and PGS Phase 1 program of ~70,000 km broadband data 2 months ahead of competition, first mover advantage Cleanest data (no seismic interference) Fast track data available Supported by industry Fast-track data showing successful imaging of the emerging pre-salt play
Brazil license round update Three surveys relevant to the 13 th license round: 1. Sergipe Alagoas 30,000 km 2. Bahia Camamu 17,000 km 3. Pelotas Basin 31,500 km Round expected to close October 6 th Good synergy with former Fugro data Combined Spectrum (yellow) and former Fugro data (purple)
Spectrum is the market leader in MC2D MC2D (1) Thousand Km, 2014 MC2D MC3D Thousand Km 2, 2014 MC3D 45% 39% 7% 6% 2% 1% 0% 25% 23% 21% 20% 7% 2% 1% 0% Market share (%) (1) Excluding WG MC2D (library data unknown) (2) PGS MC3D data exclude double-counting of reprocessed data and old merged data Source: Company reporting
Significant MC3D coverage 20,000 km 2 Spectrum data 140,000 km 2 former Fugro data 200,000 km 2 Seamless Seismic merged data Distribution former Fugro MC3D library Other Brazil Netherlands USA Norway Australia Combined Spectrum (yellow) and former Fugro MC3D (purple)
Outlook
Outlook MC investment of MUSD160-180 full year Oil companies adapting to lower oil price regime Seismic market remains challenging Extensive pipeline of new projects Required prefunding is the hurdle for go-ahead