ELECTROMAGNETIC GEOSERVICES ASA

EMGS

ANNU

AL

REPOR

T

202

1

.

2

3

EMGS technology

9

Board of Directors

11

Board of Directors

’

Rep

ort

21

Responsibility Sta

tement

22

Report on Corporat

e Gover

nance

31

Report on Sustainab

ility and CSR

35

Determination of Salar

y State

ment

38

Financial Statements

EMGS Group

76

Financial Statements

EMGS AS

A

96

Auditor

’

s Report f

or 2021

3

EMGS technolo

gy

.

The

electromagnet

ic

(

EM)

technology

used

by

EMGS

in

its

survey

p

rojects

can

be

divide

d

into

two

disti

n

ct

methods:

controlled-source

electromagnetic

(CSEM)

surveying

and

magnetotellur

ic

(MT)

surveying.

EMGS

continues

to

develop

and

improve

its

acquisition

hardware, proces

sing software and

its inter

p

retation w

or

kflow

s. These i

nnovations

further enhan

c

e the value

of EMGS te

c

hnology to our

c

lients.

CSEM (Controlled-

So

urce Electr

omagnetic)

When performing a CSE

M survey, a

powerful horizontal electric

dipo

le source is towed abo

ve the seafloor

while a seri

es of

receivers are placed on

the seabed

.

The

dipole

source

tra

nsmits

a

low-frequency

electromagnetic

signal

into

the

sub

surface

underneath

the

seafloor.

The

resistivity

of

the

formations

under

the

seafloor

defines

the

way

in

which

the

electromagn

etic

energy

transmitted

by

th

e

dipole propagates

through the sub

surface. High resis

tivity is an ind

icator

of

a poss

ible hydrocarbon-filled reservo

ir.

Multi-component

r

eceivers

that

have

been

p

laced

on

the

se

abed

for

th

e s

urvey

m

easure

the

electro

magnetic

energy

that

has

propagated

through

the

subs

urface

and

the

sea.

The

i

nformation

from

these

receivers

is

processed

and

inverted

to

produce a 3D resistiv

ity image

of the su

rvey area. EMGS ty

pically deploy

s grids

of receivers in o

rder to acqu

ire full-azimuth

surveys

. This type of survey p

rovides o

ptimal imaging of the

subsu

rface.

CSEM data is a

valuable supp

lement to information on s

tructure and depos

ition of sediments p

rovided

by

seismic.

By

comb

ining both

datas

ets

(CSEM

and

s

eismic)

,

and

an

y oth

er complementary subsurface

information

that

is available,

the

accuracy and efficien

cy of oil & gas

exploration

can be improv

ed

,

In

add

ition,

CSEM

data

can

provide

information

of

the

shallow

s

ubsurface

resistiv

ity

which

is

important

in

marine

mineral

exploration

,

an

d

could

also

prov

e

to

be

valu

able

in

offshore

wind

turbin

e

and

cable

p

lacement

and

a

range

o

f

other

geotechnical application

s

.

,

EMGS has developed a workflow that allows companies to easily integrate CSEM in

formation

with seismic data and embed

the integrated

interpr

etation

in

to

their p

rospect

evaluation

work.

This

workflow,

the E

MGS

’

Exploration

Solutio

n,

includes

a wide

range of

analys

is

includ

ing; resistivity attribute a

naly

sis (similar

to working w

ith

seismic

attributes

), anomaly

identification and

delineation

, anomaly significan

ce tests, s

ensitiv

ity assessment for d

epth in

tervals of inter

est, correlatio

n

of

anomalies

to

s

eismic

observat

ions

such

as

con

formance

to

structure,

s

eismic

DHI

an

d

seismic

indicato

rs

of

lithological

resistors. The

resulting integrated

interpretation is

us

ed

to establish

the

likelihood of

a

p

rospect being

hydrocarb

on charge

d

and the

size/area

of a

possible hydrocarbon

accu

mulation.

Extensions

to the

workflow

are available

that

add

ress

subs

urface

questions

specific

to

field

ap

praisal,

s

uch

as

estimating

pay

d

istribution

and

interp

reting

the

hy

drocarbon

-water

conta

ct

,

both

of

which

can

further

refi

ne

a

company’s

as

sessment

of

the

pros

pect(s)

and

therefore

improve

the

understan

ding

of

the prospectivity

of the s

urvey area prior to tak

ing further steps in th

e exploration process

.

4

The

EMGS’

Exploration

Solution

workflow

transfo

rms

CSEM

data

into

information for improved e

xploration dec

ision

-making

MT

(Magnetot

elluric)

Similar to CSEM surveyin

g, the MT techniq

ue generates ins

ight into th

e subsurface by imaging s

ubsurface resis

tivity.

Marine

MT

surveys

map

subsurface

r

esistivity

var

iations

by

measuring

natu

rally

occurring

electro

magnetic

signals

o

n

the

seabed.

These

signals

ar

e ge

nerated

by

the

interactio

ns

of solar

wind

with

the Ear

th’s

magnetic

field,

which,

when

strong,

are known as ge

omagn

etic storms. The MT

signals are of

very low frequency, which offers e

xcellent depth penetration. The

unique design and sensitivity of the EMGS seabed receivers

enable EMGS to efficiently acquire high quality MT data as part

of a CSEM survey wh

en the con

trolled-source is in

active.

The

low

-frequency, dee

p

-s

ensing

nature

of

MT

surveyin

g

makes

the

technique

valuab

le

for

imaging

and

interpre

ting

re

gional geology.

MT su

rveys hav

e been

found most

useful in s

alt and b

asalt settin

gs where the

flanks

and/or the b

ase are

poorly

define

d

.

MT

measu

rements,

therefore,

form

a

useful

complement

to

seismic

techniques,

par

ticularly

in

settings

where high-impedan

ce volcanic rocks

or salt make th

e imaging and in

terpretation of seismic challenging.

Application of EM

technology

The

services

offered

by

EMGS

are

us

ed

in

all

stages

of

the

offshore

exploration

an

d

development

cycle.

Applicatio

ns

of

EMGS’ technology includ

e evaluat

ing regional prosp

ectivity, ranking of identified pro

spects and

appraisal of discoveries.

5

Figure 1: CSEM acquisition equipment

Regional Prospecti

v

ity

At

the

early s

tages

of

the explora

tion

and

production

pro

cess, oil

and

gas

companies

use

EM

services

to

evaluate

whether

an

offshore

acreage

is

viable

for

commercial

production

of

hydro

carbons.

EM

s

urv

eys

are

con

ducted

before

li

censing

decisions are

made

in order

to

better understand

the

acreage value,

as

well

as

p

rioritization

of potential

leads and

prospects

that may have been mapped

with seismic. EM may also be

used to de-risk new and unproven pla

ys

and generate new le

ad

s

and prospects

. Adopting EM early in the exploration cycle helps oil and gas companies

focus their investments on the most

valuable acreage.

Prospect Ranking and

Portfolio Polarisation

When a

pros

pect is

identified from

seismic information, EM surveys

can help operators

reduce uncertainties in

the

probability of success and expected hydrocarbon

volume, resulting in a more

r

eliable economic evaluat

ion of the prospect.

Using

EM

to

ran

k

pros

pects

redu

ces

the

risk

of

drilling

dry

wells

,

while

increasing

the

economic

success

of

exploration

projects.

Used

on

a

portfolio

of

existing

prospects

EM

can p

olarise

the

prosp

ect

portfolio

and

highlight

th

e p

rospects with

the largest volume potential and the highest chance of succ

ess. Through better targeting of exploration drilling activity, the

use of EM su

rveys can als

o help to diminish t

he overall environmental impact of an exp

loration p

roject.

Field Appraisal

Once

a

discov

ery

is

made, EM

su

rveys

can

be

u

sed

to

ascertain

a f

ield’s

commercial

viab

ility

and aid

in

d

evelopment

planning

by improv

ing reservoir

delineation

(i.e. the

size an

d shape o

f the

reservoir).

EM

can

also assist

in the

optimal placement

of

subsequent development wells and reduce the number

of appraisal wells that would typically be

required for field

delineation and reservoir characterisation

,

can result in

a positive impact on

a project’s financial outcome and

reducing its

environmental footprint.

EM source

towed

above seabed

Integrated interpretation

of seismic and EM

improves exploration

performance by reducing

uncertainties

EM receivers

dropped on the

seabed in a grid

6

Potential New Appli

cation Areas

EMGS’

core

technology

,

o

riginally

developed

for

th

e o

il

and

gas

industry

,

can

be

adapted

to

new

applicat

ion areas

such as

marine

min

eral

exploratio

n,

gas

hydrate

mapping,

geotechnical

and

s

hallow

h

azard

investigations,

and the

location

of

subsea

cables.

It

is

the

company

’s

goal

to

develop

these

new

busin

ess

fields

building

on

i

ts

world-renowned

exp

ertise

in

marine EM technology.

Marine minerals

The

electrificati

o

n

o

f

society

is

an

i

mportant

part

of

the

energy

transition.

In

its

“net

zero

2050”

scenario,

Net

Zero

by

2050

A

Roadmap

for

the

Global

Ene

r

gy

Sector

(2021),

the

International

Energy

Association

(IEA)

forecast

s

a

m

ore

than

si

xfo

ld

increase

in

the

demand

for

minerals

that

are

key

compo

nents

in

the

electrification

supply

chain, such

as

lithium,

copper, and

cobalt.

Currently, these

minerals

are mined

onshore,

but it

is

expe

cted that

mineral

dep

o

sits

o

n

or

b

eneath

the

sea

floor,

called

“

m

arine

minerals

,”

are

lik

ely

to

play

an

important

r

o

le

in

meeting this demand in

the coming years and decade

s

.

The

marine

mineral

industry

is

currently

in

its

infancy.

The

International

Seabed

Authority

(ISA)

has

granted

several

concessions

in

international

waters,

and

Norway

is

planning

a

concession

round

likely

to

start

in

2024.

There

are

already

several

Norwe

gian

and

international

companies

evaluating

a

possible

participation

in

the

upcoming concessi

on ro

und in Norwa

y

.

There are three

m

ain categ

o

ries of marine miner

als: nodules, crusts, and Seafloor Massi

ve

Sulfides (SMS).

Mo

st

of the

marine

mineral depo

sits discovered

to date

are at

the seabed

in u

ltra

-deep

waters. Within

the Norweg

ian

Exc

lusive

Economic

Zone

(EEZ)

both

crusts

and

SMSs

have

been

discovered

in

the

area

of

the

m

id-Atlantic

spreading ridg

e.

SMS

deposits

are

created

by

volcanic

activi

ty

.

Marine

life

thrives

while

the

system

is

volcanically

active.

Only

SMS

deposits tha

t have c

eased to

be volcanicall

y

acti

v

e (i.e.

, extinct) ar

e considered

for comm

ercial exploitation.

The

mineral

content

of

these

extinct

SMS

deposits

vary

in

both

mineral

content

and v

olume,

and

only

a

few

of

the

many

extinct SMS

deposits

are

expected

to

have v

aluable metallic minerals

in

large

enough

quantities

to

be

of

commercial interest

for o

ffshore mineral

excavation. Therefore,

geophysical techniques are

important in

order

to

cost-effectiv

ely search

for

and

identify

potential

SMS

prospects

for

sampling,

drilling

and

eventual

excavation.

Electromagnetic

systems

are

ex

pected

to

play

a

significant

role

in

the

exploration

and

appraisal

of

marine

minerals,

and

can

be an

important

part

of the

geophysical

too

lbox.

T

owards thi

s

end

, but

also

f

or ot

her

applications,

EMGS

is

developing

a

deep-towed

EM

streamer

solution

for

efficient

m

apping

of

seabed

geology

at, and near,

the seabed

.

It will be

possible to use the

towed system

o

n a stand-alone

basis or together

with EM

seabed

nodes,

Autonomous

Underwater

Vehicles

(AUV),

as

well

as with

acoustic

surveying

methods

such as

high

resolution seismi

c

and mul

ti

-beam

ec

hosounder

bathymetry.

Offshore wind

The offshore

wind

industry

is

rapidly

growing.

Govern

m

ents around the

world

are looking

for new areas

suited

for wind

farm

developments

and new

concession

rounds

are being

planned, particu

larly as energ

y transition

and

sustainability

are

acceleratin

g

in

importance,

and

climb

ing

to

the

top

of

the

investment

agenda

in

many

countries

across the globe

.

The

geoscience

industry

is

playing

an

increasing

ly

important

role

by

delivering

geoph

y

sical

and

geological

data

to

service

this

industr

y

.

Currently,

ther

e

is

an

emphasis

on

ac

o

ustic

measurements

such

as

seismic

and

multi-

beam

echo

sounder

bathymetry

to map

the seabed

prior t

o the

engineering and

installation

phases

of

wind farm

developments. EMGS

believes that EM data

co

uld add valuab

le insight to the investment-decision

stages of this

industry, as

we

ll as great

er cost-efficiency

and a reduced environ

m

ental impac

t, through our towed

EM system.

7

Development of EM

tec

hno

l

ogy

Development

o

f marine E

M

equipment

In

2017,

EMGS

com

mercialised

the

De

epBlue

so

urce

system,

whi

ch

is

the

most

p

owerful

deep

-to

wed

EM

source

in

the

industry.

The DeepBlu

e sou

rce sys

tem consis

ts o

f a

topside un

it, slip

ring,

umbilical,

sub

-sea

unit an

d an

tenna.

In addition,

the

onbo

ard

handling

equipment

was

up

graded

to

meet

the

comme

rcia

l

require

ments

f

or

marine

operation.

All

of

these

improvements

to

the

system

enable

a

higher

source

curr

ent

output,

wider

frequency

band

and

increased

operational

flexibility.

The

D

eepBlue increases the depth of

investigation

below the seabed

to depths

well

beyo

nd the

cap

abilities of

conv

entional

source

systems.

In

addition,

it

also

increases

imaging

confidence

and

resolution

for

targets

that

can

already

be

detected

with the conventional

sou

rce system.

The DeepBlue can

operate in water depth

s up to

4,000 m

etres.

Following the

commercialisation

of

the DeepBlue, the

first survey was perf

ormed in

J

uly 2017.

Th

e

DeepBlue has bee

n

used

actively since th

at time

,

particularly

for mature basin s

urveys in

the North Sea, N

orwegian Sea and th

e Gulf of Mexico.

All data acquired with Dee

p

Blue to date confirms the ability to

increase sensitivity and resolution through

a combination of

higher

source

output,

increased

frequency

bandwidth

and

better

accu

racy,

whi

ch

allo

ws

to

image

deeper

and

s

maller

targets.

As

a

result,

DeepBlue

increases

th

e

add

ressable

market

for

frontier

explora

tion

as

well

as

opens

new

markets

for

EM such as n

ear-field exploration a

nd appraisal.

Figure 2

:

Deep Blue subsea “towfish”

ready for deployment

8

Figure 3

: Deep Blue subsea “towfish”

Software devel

o

pment

EMGS

offers

workstation

and

high

-performance

compu

ting

software

for

all

sta

ges

of

a

n

EM

project:

feasib

ility

studies,

survey planning, processing, m

o

delling, inversion and interpretation. EMGS software

is

available for

licensin

g to customers.

The

latest

TTI

3D

Gauss-Newton

inversion

introduced

in

2020

has

become

a

standard

part

o

f

EMGS

’

off

ering

for

imaging

CSEM

data.

This

s

oftware

defines

a

s

tep-change

in

image

quality

for

data

acquired

in

areas

with

stru

ctural complexity

an

d

steep

dips.

The

i

mprovemen

t

in

imag

e

quality

directly

eq

uates

to

reduced

s

ubsurface

uncertainty

and

higher

value

of

information derived from CSEM data. EMGS software allows customers to take full control

of their electromagnetic data by

generating

h

igh

quality

inversion

images,

allowing

for

new

interpr

etation

insight

s

and

updatin

g

existin

g

p

rospect

evaluations

and prioritisat

ion.

Software development d

uring

20

21 was focu

sed on advancing th

e rock physics modelling

as well as improv

ing quantitative

interpretation capabilities, specifically

with regard to

descri

bing stacked and

segmented reservoirs. These

innov

ations were

the

result

of e

xp

erience

gain

ed

in customer

projects

gas

field

ap

praisal

,

and i

s

a

testament

to

EMGS’ drive

to

wards

keeping our technological ad

vantage

.

North Sea multi-client example of the imaging improvement from the latest TTI 3D Gauss-Newton inversion (left) when compared to

non

-TTI inversion (right): A good well match and geologically meaningful m

odel is achieved with the new TTI software.

9

Board of Direct

ors

.

Frederik W. Mohn, Chair

man of the Board

Frederik W. Mohn is

the sole owner an

d managing director

of

the Company’s

second largest

shareholder

Perestroika, a Norwegian investm

ent company with

investments in

oil and gas,

shipping, in

frastructure, real estate d

evelopment and finan

cial services

.

Frederik

was prev

iously

Chairman of the Board of Son

ga Offshore SE

and currently

is a member of the Boa

rd of Directors

of Transocean Ltd.

Petteri Soininen, B

oard member

Petteri

Soininen

is

Partn

er

at

Redwhe

el

and

Co-Head

of

th

e

Redwh

eel

Eu

ropean

Focus

Fund.

He

has

served

as

member

of

th

e

Supervisory

Board

of

AMG

Advan

ced

Metallurgical

Group

N.V

and

worked as strategy

consultan

t with The Boston Con

sulting Gro

up (BCG) in E

urope and th

e US. He

has

20

+

years

of

experience

in

collaborating

with

top

managem

ent

to

design

and

implement

change programs includ

ing major

transformations

to deliver sustainable sh

areholder value.

Petteri holds a MSc (with d

istinction) in I

ndustrial Engineering from th

e Helsinki Universit

y of

Technology and

is a Finn

ish citizen.

Beatriz Malo de

M

olina, Board member

Beatriz

Malo

de

Molina

has

h

eld

various

management

and

ad

visory

positions

in

Norway

and

internationally,

in

cluding

CFO

of

Agilyx

AS,

Head

of

M&A

at

Orkla

ASA,

Kistefos

Private

Equity,

McKinsey

&

Co.,

GoldmanSachs

&

Co.

and

E

Y.

Beatriz

currently

chairs

the

board

of

Crux

AS,

and

Dynea AS,

both p

rivately

-held companies,

and

is a

member of the

board of

Nel ASA

and

Horisont

Energi

AS

.

Beatriz is

Founder and

b

oard m

ember of

th

e

Oslo Philanthropic Exchange,

a foundation

promoting more efficiency in

capital ra

ising

for charities and

NGOs.

Beatriz is a Span

ish citizen and

resides in

Norway.

Beatriz

gradu

ated

summa

cum

lau

de

and

Phi

Beta

Kappa

from

Georgetown

Univ

ersity

in

Washington, D.C., and

holds a

Master’s Degree

in Philosophy

from

the University of

Oslo’s Facu

lty

of Law.

10

Mimi Berdal, Board

member

Mimi

Berdal

ru

ns

an

independent

corporate

cou

nseling

an

d

investment

bu

siness.

She

holds

a

Cand. Jur. (law) degre

e from the University

of Oslo

.

Mimi

Berdal

is

also

a

member

of

the

Board

of

Directors

of

th

e

listed

companies

Goodtech

ASA

(Chairman) and Nors

k Titanium AS, in ad

dition to Freyr Batt

ery SA (listed NYSE).

Jørgen Westad, Board

member

Jørgen

Westad

is

Executiv

e

Director

of

Siem

Industries

S.A.

He

is

also

a

Director

of

Deusa

GmbH

and BSR Holdings

Ltd.

Prior to

joining

the Siem Grou

p in

2015,

he was

CFO

of

a privately

-held ship

ping compan

y as

well

as

a

commercial

and

investment

ban

ker

at

Hambros

Bank

Ltd

and

Bankers

Trust

Com

p

any.

He

holds a BE

ng in Naval Architecture an

d Shipbuildin

g and an MSc in Manage

ment Studies.

Jørgen is a No

rwegian citizen

and resident

in Luxembourg.

11

B

o

a

r

d

o

f

Di

r

e

c

t

o

r

s

’

R

e

p

o

r

t

.

2021

marked

the

first

full

year

of

op

eration

for

a

streamline

d

EMGS,

with

a

more f

lexible

cost

base.

While

vessel

utilisati

on

in

2021

improved

significantly

compared

to

2020,

32%

vs

12%,

further

improvements

to

vessel

u

tilisation

remain

one

of

EMGS’

main

focus

areas.

Despite

low

utilis

at

ion,

EMGS

operated

profitably

for

the

year,

generating

a

N

et

Income of USD 4

.

9 millio

n

, compared to a

loss of USD 23.4 milli

on

for the pri

or

year.

In a

ddition, EMGS

made

significant

progress

towards

a strengthened

balance sheet

with

reduced

debt

levels.

In

2021,

the

Comp

any

c

ompleted

two

separate

voluntary

bond

buy

-

backs.

Both

b

ond

buy-backs

were done

at

75

p

er

cent of

par,

and h

ad

a n

ominal value

of

USD

4.0

m

illion

each

for

a

combined

total

repurchase

of

USD

8.0

million

in

nominal

values.

Conseq

uently,

EMGS

reduce

d

its

outsta

nding

interest-bearing

debt

by

approximately

25

per

cent

during

the

year.

Though

equity

remains

negative,

it

improved

significantly dur

in

g the

year.

2021

continued

to

be

a

challenging

year

given

a

significantly

reduced

employee

base,

the

ongoing

negative

impact

of

the

Covid-

19

p

andemic

on

b

usiness

developm

ent

globally

and

i

n

the

workp

lace

generally,

as

well

as

entering

the

year

wi

th

a

vessel

that

had

been

in

warm

stack

for

an

extended

period.

N

everthele

ss

,

through

the

dedication,

hard

work

and

professionalism

of

empl

oyees

and

contractors

alike,

2021

was

an

operational

success

for

EMG

S

.

The

Company

completed

three

campaigns

in

Mexico,

Southeast Asia and N

or

way, all of which were

completed on schedule, wit

hout materia

l

cost overruns, and

provided a high-quality end prod

uct to our customers.

During

2022

,

EMGS

is

focused

on

continuing

to

b

uild

upon

the

progress

made

in

2021.

Our

aim

is

to

continue

to

repair

the

balance

sheet

via

profitable

op

erations.

EMGS

is

reliant upon

securing

addi

tional

backlog and

multi-client

sales

in

2022

to

achieve

these

goals.

The

challenging geop

olitical

environment,

and

any

ongoing

Covid

-19

effects, wi

ll

be important risk

factors that could affe

c

t operating perf

ormance during the year

.

About EMGS

Vision, Values and Strat

egy

Electromagnetic

Geoservic

es

ASA

(“EMGS”

or

the

“Company”),

with

its

s

ubsidiaries

(together,

th

e

“Group”),

is

the

global

leader in electromagn

etic (“EM”) s

urveying technology

in the offshore oil and ga

s exploration in

dustry.

EMGS’

vis

ion is

to

make EM

an integral

part of

the

E&P

workflow and

make E

M as

fully adopt

ed as

seismic.

By

providing

EM

da

ta

inte

grated

with

other

subsurfac

e

mea

surement

,

we

enable

our

custom

ers

to

reduce

u

ncertainty

and

therefore

increase success in t

heir exploratio

n and de

velopment programmes.

EMGS’

cor

e

v

alues

ar

e: In

tegrity

,

Com

mitment,

Innovation

and

Qu

ality.

These

value

s

form an

integral

part

of

our

12

organisation

an

d

operations

and

are

included

as

a

topic

in

the

Co

mpany’s

an

nual

employee

app

raisal

process

.

EMGS

is

constantly

working

to

deliver

the

best

q

uality

p

roduct

to

its

customers.

The

Company

’s

technology

is

developed

on

an

ongoing

bas

is

to

improv

e

quality

and

efficiency,

as

well

as

to

broad

en

the

scope

of

ap

plication

and

ad

dressable

markets

.

EMGS also places

a high priority on

interacting with its cus

tomers, to assist in ensuring

that the full value of th

e

Company’s

service is captured

by our

customers.

The

in

tegration of EM

method

s into exploration w

o

rkflows provides oil

and

gas

com

panies with an

improv

ed de-risking and

appraisal

tool

when

compared to

using

seismic

exploration

techniques

alone.

The use

of EM

data

is complementa

ry to t

he

use

of

s

eismic

d

ata,

as

it

provides

oil

compan

ies

with

mor

e

information

about

the

subs

urface.

Inte

grating

the

us

e

of

EM

data into

the

explora

tion w

ork

flow

reduces exploration

risk through a

better

un

derstanding of

a reservoir’s

charge, seal

an

d

volume

estimates.

This

data

can

als

o

serve

to

decrease

the

environmental

impact

of

a

particu

lar

project,

sin

ce

better

targeting of drilling activities c

an s

erve to reduce the total number of wells d

rilled into the seab

ed.

EMGS

r

emains

a

glob

al leader

in the

planning, acquisition,

processing,

mod

elling,

int

erpretation

an

d

in

tegration of

EM

d

ata.

The Compan

y has

extensive e

xperience,

well-es

tablished

proprietary

routines

and

leading

-edge

processing,

modelling

an

d

inversion so

ftware.

EMGS has

cond

ucted ov

er 90

0 s

urveys

across

most

major

mature and

frontier

bas

ins

in

the world

in

water d

epths

ranging

from 20 to 3,600 m

etres for more than

150 customers.

Part

of

EMGS’

strategy

is

to

undertake

a

mix

of

pro

prietary

an

d

multi

-client

projects

with

a

flexible

and

scala

ble

operating

model.

This

will

be

enabled

by

maintaining

an

asset

-light

operating

model,

including

char

tering

vessels

from

third

-party

vessel

owning

companies.

The

Group

shall

undertake

a

mix

of

proprietary

contract

work

an

d

multi

-client

projects.

The

International

Oil

Compan

ies

(IOCs

)

part

of

th

e

Company’s

market

is

becoming

more

focused

on

the

multi

-cli

ent

business

model. T

he Company’

s key Nation

al Oil Company (N

OCs) customers’ p

referred business model continues t

o be

pro

prietary

work arrangements.

The

flexibility

and

scalability

of

the

bus

iness

model

comes

mainly

from

the

following

tw

o

arran

gements:

the

ch

artering

of

vessels and

the ability to u

ndertake a combination of contra

ct work and multi

-client

projects.

EMGS had, as of 31

Dec

ember 2021, one vessel on charter, the

Atlantic Guardian,

owned by the North Sea Shipping Group.

EMGS’

stron

g

focus

on

cost

optimisat

ion

and

control

continues.

Through

cos

t

discipline

and

efficiency

gains

,

th

e

product

offered

to

the

market

by

th

e

Company

remains

on

the

cutting

edge

of,

and

market

leade

r

within,

EM

techn

ology

and

can

improve an already

attractive valu

e proposition

of the products

and services

offered to the market year

-over-year.

EMGS was listed on t

he Oslo Stock E

xchange in March 2007.

EM technology

The

E

M technology used

by EMGS

in its EM

survey projects

can be

divid

ed into two

distinct methods: three-dimensional full

azimuth

controlled-sou

rce

EM

(3D

CSEM)

s

urveying

and

magnetotelluric

(MT)

surveying.

For

more

information

on

the

different methods, pleas

e see the separ

ate section in th

e annual report,

EMGS Techno

logy

.

Important events in 2021

Multi-client inves

tments

Since 2008, EMGS has

invested in

its multi

-

client data libr

ary. The Company’

s multi

-client busines

s has become an

increasingly

importa

nt

part

of

the

ov

erall

business

,

both

in

terms

of

revenu

es

an

d

in terms

o

f

marketing

v

alue

as

the

Company can more freely share 3D CSEM successes with its existing and new

custo

mers. The multi

-client busin

ess model is

well

suited

for

p

artnerships

with

seismic

p

layers

an

d

au

thorities

and

redu

ces

the

unit

cos

t

of

EM

d

ata

f

or

the

industry.

In

20

21, the revenues fro

m multi-cli

ent sales amounted

to

55

% of total revenues, u

p from

31

% in 20

20

.

13

EMGS key multi-cli

ent libraries

At the end of

2021

, the Group’s most important multi

-client libraries are in the following countries/basins: Norway, Mexico

(G

ulf o

f

Mexico), the US Gulf of Mexico, Brazil and Canada. The total carrying value of the library was USD 2.4 million at the

end of 2021. The major

ity of th

e carrying value of th

e multi-

client library is related

to the library

in Norway.

Norway

The

Group

has

acquired

approximately

90,000

s

quare

kilometres

of

3D

CSEM

data

in

Norway,

of

which

approximately

70,000 s

quare

kilometres

is

in

the

Barents

Sea.

The

Barents

Sea

has

proven

to b

e a

very

important

s

howcase

a

s

EMGS h

as

been

able

to

successfully

demonstrate

its

value

in

the

d

e

-risking

the

process

of

exploratio

n

and

project

appraisal.

In 202

1

,

the Company acqu

ired data on two multi

-client pro

jects in Norway

, both

in the North Sea.

In 2021, multi-client revenu

es in N

orway amounted to

USD 6.1

million.

Mexico

In 2016,

EMGS acq

uired

the ri

ghts

to license

16,000 s

quare

kilometres

of 3D

CSEM

data

to th

e indu

stry

from

th

e Comisió

n

Nacional

Hidrobarburos

(CNH

), the

regulator in

Mexico.

The d

ata w

as

originally

acquired

by

the Compan

y on

a pro

prietary

basis. After reprocess

ing the data,

the data has been made

available for sale t

o the industry.

In 2021, EMGS acquired a fu

lly prefund

ed multi

-client survey in Mexico, recognis

ing USD 7.2

million in r

evenue.

US Gulf of Mexico

EMGS

completed

its

first

commercial

multi-client

p

roject

in

the

US

Gulf

of

Mexico

in

2014.

In

total,

EMGS

h

as

acquired

approximately 14,500 sq

uare kilometr

es of 3D CSEM data i

n this b

asin.

Brazil

EMGS acquired 12,000 s

quare kilometres of

multi-cl

ient 3D CSEM dat

a in Brazil between 2011 an

d 2013.

In 2021, multi-client revenu

es in Brazil amou

nt to USD 2.6

millio

n.

Canada

EMGS

completed

a

multi-client

project

in

Canada

in

2014,

including

approximately

2,500

square

kilometres

of

3D

CSEM

data. The surv

ey targeted the Flemish Pas

s Basin, where ma

jor oil discoveries h

ave been made.

Sales and customers

The Group

’s

revenues

in

creased

16%

fro

m

USD

24

.9 million

in

20

to

USD

28.9

million

in

2021.

Sales

were

dominate

d

by

a

prefunded

multi

-client

survey

in

Me

xico

,

a

prefunded

multi-client

survey

in

Nor

way,

a

p

roprietary

survey

in

Southeast

Asia and

a large multi-client late s

ale in Brazil.

The EMGS sales

and bus

iness development

organisation

is head

quartered in Oslo,

and well repres

ented globally

with sales

offices in

Houston

,

Mexico City

and Braz

il. In

addition, EMGS

has

a

network of

busin

ess partners

serv

ing key

local markets.

The organisation

consists

of commercial sales, technical adv

isors and explora

tion advisors.

Other important

events

Bond buy

-back

In 2021, EMGS completed t

wo s

eparate bond buy

-backs.

On 19 July 202

1

, t

he Compan

y reso

lved to

repurchase 4

0,000 bon

ds with an

aggregate n

ominal value of

USD 4.0

million

at

75 percent of par.

On

23

December

2021,

the

Compan

y

resolved

to

complete

an

additional

repurchase

of

40,000

bonds

with

an

aggregate

nominal value of USD 4.

0 million at 75 p

ercent of p

ar.

Impairment of funds

held in Accendo Banco S.A.

On

7

October

2021,

the

Compan

y

anno

unced

that

the

banking

regulators

in

Mexico

had

revoked

Accendo

Banco

S.A.’s

banking license

an

d initiated

a liquidation process of

the bank. The

Compan

y had deposits of

approximately USD 2.1 million

in Accendo Banco S.A.

The Company impaired USD

1.9 million, which is the full a

mount deposited with Accendo Banco S.A.

14

less the

fund

s received

fro

m the

Mexi

can Bank Savings

Pro

tection Fund. EMG

S continues to

be a creditor

to

Accendo Banco

S.A. and is activ

ely pursuing any dis

bursements of remaining a

mounts

,

to the extent that

any are made.

Extraordinary General Meetin

g

At

th

e

extraord

inary

general

meeting

held

25

Nov

ember

202

1,

Frederik

W.

Moh

n

was

elected

as

the

Compan

y’s

new

Chairman of the Board

and Be

atriz Malo de Molina was

elected as a

new

Board member.

Events after the bal

ance sheet date

Extension of

Senior Unsecured Co

nvertible Bonds 2018/20

23

On

9

February

2022

,

Nordic

Tru

stee

AS,

as

tru

stee

o

f

E

MGS03,

notified

the

Compan

y

that

the

bon

dholder’s

resolu

tion

to

extend

the

maturity

date

by

24

months

and

increase

th

e

interest

margin

by

100

bps

from

5.5

to

6.5

per

cent

over

the

applicable

reference rate

was

resolv

ed

and

ad

opted.

As

a re

sult,

the

maturity date

for

EMGS’

outstand

ing

convertible

bonds

is extended from May 202

3 to May 2025.

Additional multi-cli

ent late sales

On 4 March

202

2, E

MGS anno

unced that

the Company

had secured app

roximately USD 2.8 million

in revenue from late

sales

and a chan

ge of control event related to t

he multi

-client librar

y in Norway.

Factors affecting the results of operations

The Group

’s

operational

re

sults

depend

on

several

factors,

where

the

most

important

o

nes are

con

sidered

to

be: d

emand

for EM services, fleet status and vessel utilisation,

the charter terms of the

Co

mpany’s

vessel

, and the cost of the e

mploy

ee

base.

Demand for EM ser

v

ices

The Company h

as two main sources of revenue: pro

prietary con

tract sales and multi

-client sales. In ad

dition, the Company

receives

some

revenu

e

consultancy,

processing

services

an

d

software

s

ales.

These

revenues

ar

e

presented

as

contract sales.

For more information

on the different rev

enue sources, pleas

e see the notes to t

he financial statements

.

The overall demand for

EMGS’ services is

dependent, in

large part, on offshore oil an

d gas E&P b

udgets.

Fleet status and utilis

ation

As per the end of

202

1, the Compan

y chartered one v

essel,

the Atlantic Guard

ian.

At

the end

of

the

reporting period,

the Atlantic

Guardian

has a

firm

charter agree

m

ent

u

ntil

20 October

2022, w

ith

an

option

to the Company to

extend the charter p

eriod.

The Atlantic

Guardian

operated

over th

e course

of 202

1

in Mexico,

Southeast

Asia

and

Norway. The

Atlantic Guard

ian was

warm stacked in Norway

in mid

-November 2021

.

In

total,

E

MGS

recorded

a

total

of

1

0.9

v

essel

months

in

2021,

an

average

of

2.7

per

quarter,

compared

with

18

.

0

ves

sel

months

in

20

and

an

average

of

4.5

per

q

uarter

in

20

.

The

Compan

y

had

a

vessel

utilisation

of

32% in

2021

,

up

fr

om

12

% in 20

20

.

EMGS’ ability

to

optimise

the performance

of its

vessels

through maximising

commercial

utilisation

and

minimising u

npaid

activities are key factors for

the Group’s longer

-term operating p

erformance. Technical d

owntime, steaming time bet

ween

surveys and u

np

aid stand

by time all negatively affect the Grou

p’s operating results

.

Seasonality

Adverse weather conditions

, including ice

an

d winter conditions offshore,

can result in lost time

wh

en vessels are forced to

remain

in

dry

do

ck,

relocate

and/or

reduce

act

ivity.

In

ad

dition,

the

Group’s

operational

results

fluctuate

from

quarte

r

to

quarter because of o

il and gas companies’ s

pending p

atterns and

/or as related t

o licensing round

s in Norway and

abroad.

15

Currency fluctuations

Currency

transaction

exposure

occurs

to

some

extent

during

the

ordinar

y

course

of

business

and when

the

relevant

exchange rates chan

ge between th

e date of a transact

ion and the date of the final p

ayment for the transaction.

The Group

records such ga

ins or losses in th

e financial

income and exp

enses line item of its cons

olidated income sta

tement.

Financial statements

Going concern

The

Group

h

as

prepared its

financial

statements

u

nder

the

g

oing

concern

as

sumption,

and

the

Board

confirms

in

acco

rdance

with Section

3-3a

of the

Norw

egian Accoun

ting Act

that

the goin

g concern

ass

umption is

applicable.

The Gro

up’s

reported

results, its business s

trategy, its current budgets and financing, as well as its lon

g

-term strategic forecasts

provide the basis

for

the

going

con

cern

assu

mption.

S

ee

also

“Liqu

idity

risk” be

low

for m

or

e

information

about the

going

concern

assu

mption.

The

Group

’s

equity

and

liquidity

have

both

improved

significantly

as

compared

to

last

year.

While

improved,

the

equity

remains

negative

at

USD

2.5

million

at

year

end

2021

(from

negative

USD

7.4

million

at

y

ear

end

2020)

.

The

cash

position

on

31 December

2021

was

USD

9.9 million

compar

ed

to USD

4.2 million at

the end

of 2020. As

further described

under Risks

and

uncertainty

factors,

the

Company’s

outstandin

g

convertible

bond

s

and

its

bank

facilities

contain

financial

covenants

requiring that the Compan

y has a minimum of US

D 2.5 million in

free cash and /

or cash equivalents

.

The goin

g

concern

as

sumption

is

d

ependent

on

s

ecuring

additional

backlog

for

H2

20

22

as

well as

securing

additio

nal

late

sales or some combinat

ion thereof.

The

Company’s

equity

amounted

to

negative

NOK

95

.4

million

as

of

31

December

202

1,

down

from

n

egative

NOK

87

.2

million

at

the

end

of

20

.

The

Board

of

Directors

is

taking

steps

to

ad

dress

the

negative

equity

and

are

considering

a

number of alternatives in this regard. Should these steps fail to

materiali

se in a time

ly

manner, the going concern

assumption

is

at

risk.

The

Board

con

tinuously

ass

esses

the

cap

ital

and

liquidity

situ

ation.

In

addition,

the

Board

closely

monitors

the

operating

cos

t base

as

well as

encourages

management

to

look

for

opportunities

to

enter

new

markets

such

as marine minerals an

d offshore wind

.

None

of

the

Compan

y’s

d

ebt

is

pas

t

due

and

the

Company

d

oes

not

expect

to

breach

the

financial

covenan

ts

of

the

convertible bond lo

an in the next 12 month

s.

Results of operations

The year ending 31 December

2021 is

compared in the s

ection below with th

e year ending 31 Dec

ember 20

20

.

The Group

p

repares its

accou

nts

in

accordan

ce

with International Financial Re

p

orting Standard

s (“IFRS”),

as

adopted by

the

European Union

. References to N

otes refer to Notes to t

he Con

solidated Finan

cial Statements.

Revenues and op

erating expens

es

In 2021, the Group record

ed revenues of USD 2

8.9 million,

up

16

%

from U

SD

24

.9 million

in 20

20

. Contra

ct sales and

other

revenue

ended at

USD 12.9 million,

while multi-client

sales totalled USD

15

.9. million.

USD

10

.2

m

illion

was

re

corded as

pre-

funding m

u

lti-client

revenues

an

d

USD 5.8

million w

as

record

ed

as late

sales

multi-client revenues.

In

20

,

USD

17

.1

million

was recorded as con

tract sales, while multi-client sales to

talled USD 7.8 million. This means

that sales from the multi

-client

projects accoun

ted for

55

% of t

he revenues in 202

1, compared with

31

% in 2

0

20

.

The

increase

in

revenues

from

20

to

2021

is

mainly

explained

by

the

higher

vessel

utilisation

in

2021

as

compared

with

2020.

Charter hire,

fuel and cre

w expenses ended at

USD 3.5

millio

n, down

41

%

from USD

5.9 million re

ported in

20

. The

Group

capitalised USD 1.4

million in multi-client

expenses in 2021,

compared to USD 0.

6 million

in multi-cli

ent during 20

20

.

Employee expenses

amounte

d

to USD

3.0

million

in

2021,

down

69

%

from th

e USD

9.8

million

as

reported in

20

A

more

detailed overview

of the Group’s employee

expenses can be

found in

Note 8.

The

number of e

mploy

ees remained

unchanged at

17 from the beginnin

g of 2021 to the end of

2021

.

16

Other

operating

expenses

amoun

ted

to

USD

3.

0

million

in

2021

,

in

line

with

USD

3.1

million

in

20

.

A

more

detailed

overview of the Group’

s other operatin

g expenses can b

e found in No

te 9.

Depreciation and amortis

ation

Depreciation and ord

inary amortisation

totalled USD 4.

2 million in

2021, down from U

SD 4.5 million in

20

.

Mu

lti-client amortisation amou

nted to USD 2.5 million in 2021

,

down f

ro

m USD 4.1 million recorded in 20

20

. The Company

uses

straight

-line

amort

isation

for

its

completed

multi

-clie

nt

projects,

ass

igned

over

the

useful

lifetime

of

four

years.

The

amortisation

is

then dis

tributed

evenly,

independently

of

sales d

uring

the

period.

As

a result

of implementing

IFR

S

15,

the

Group started to capitalise multi-client projects with only one customer that were previously expensed as incurred

(converted

contracts).

For

these,

the

full

amortisation

of

the

book

value

is

now

recorded

at

th

e

point

in

time

when

the

revenues are recognised at d

elivery to th

e customer.

No impairments of long

-term assets were made in 2021

.

In 2020, the Group recorded imp

airments of lo

ng

-term assets of a

total of USD 7.4 million

.

In 2021, depreciation of right

of use a

ssets amoun

ted to USD

3.5 million, compared with

USD 7.

9 million in 202

0.

Financial items and res

ult for the year before and

after taxes

Interest expens

es ended

at

USD

2.9 million

in

2021,

a decrease

from USD

4.1

million

in 20

20

. EMGS

recorded

a

loss

on

net

foreign currency of USD

290 th

ousand in 202

1 compared with

a gain

of USD 25 thousan

d in 20

20

.

The Group

recorded

a gain

of

USD 2.0

million

on

the repurc

hase

of bon

ds

with

a

nominal v

alue of

USD 8.0

million

in

2021.

The bonds were repurchas

ed at 75 p

er cent of par.

In

September

o

f

2021,

M

exican

bank

regulators

revoked

Accendo

Banco

S.A.’s

ban

king

license

and

initiated

a

liquidation

process

o

f

the

ban

k.

The

Grou

p

had

d

eposits

with

Accendo

of

approximately

USD

2.1

million.

The

Group

was

entitl

ed

to

receive approximate

ly USD

135 th

ousand from

the Mexican

Savings Pro

tection Fu

nd. An

impairment of

the deposits

in the

Accendo

account,

less

the

USD 135

th

ousand

(which

was

received

on

[date]),

was

mad

e

in

2

021

in

the

amount

of

USD

1.9

million.

Net financial items ended at

negative USD

3.9 million in

2021, a d

ecrease from USD 5.

0 million in 20

20

.

For 2021,

EMGS recorded a profit

befor

e income

taxes of USD 5.3

million, compared with a

los

s before

income taxes of

USD

22

.7 million in 20

20

.

Income tax expenses of U

SD 0.

4 million were recorded in

2021, co

mpared with USD

0.7 million

in 20

20

.

EMGS reported a net

profit of USD

4.9 million for

20

21

,

up

from a net los

s of USD

23

.4

million for 20

20

.

Cash flow and balance

sheet

Cash flow from op

erating, investing a

nd financing act

ivities

For 2021,

net cas

h flow

from o

perating activ

ities was

positive

USD

23

.6

million,

compared

with

negative

USD 1.9

million

in

2020

.

EMGS

applied

USD

2.

7

mill

ion

in

investing

activities

in

202

1.

The

inv

estments

con

sist

of

USD

0.

1

million

in

property,

plant

and

equ

ipment

and

USD

2.7

million

in

multi-client

inves

tments.

In

20

,

cas

h

ap

plied

in

investin

g

activities

amounted

to

USD

1.8 m

il

lion. The

investments consisted

of USD

0.6

million in

property, plant

and

equipment and

USD

1.

1 m

illion

in multi-

client investments.

Cash flow

from financial

activ

ities ended at

negative USD

15

.2 m

illion

in

2021. The

cash

flow

from financial activities

in 2021

includes

financial

lease

liabilities

USD

6.2

mil

lion,

convertib

le

b

ond

repurchas

e

of

USD

6.0

million,

interest

lease

liabilities

USD 0.8 million and USD 2.3 million

in

interest payments. In 20

20

, cash flow from financial activ

ities ended at negative USD

11.9 million.

Th

e cash

flow

from finan

cial activiti

es

in 2020

includes

finan

cial lease

liabili

ties USD

8.0

million, inter

est leas

e

liabilities USD 1.1 million

and USD

3.0 million in in

terest payments.

17

In

s

ummary,

cash

increas

ed

by

USD

5.7

million

in

2021

.

As

of

31

December

2021,

ca

sh

and

cash

equivalents

to

talled

USD 9.9 million.

Financial position

EMGS total

assets

amoun

ted to USD

40

.2 million

as

of 31

December 202

1,

down

from USD

54

.3

million as

of

31 Dec

ember

2020

.

The carrying value of the Gro

up’s mu

lti

-client library was

USD 2.4 million

at the end of 20

21

, a

n increas

e of USD 0.2 mi

llion

since the end of 20

20

.

Total borrowings were US

D

31

.1 million at the end o

f 2021,

down from 43.8

million at t

he end of 20

20

.

Liquidity requirements a

nd financing facilities

The

Group’s

need

for

liquidity

fluctuates

from

quarter

to

q

uarter

depending

on

reven

ues,

cap

ital

expenditures,

vess

el

operations

and cash balan

ce.

The Company’s

conv

ertible bond

con

tains a finan

cial cov

enant requiring

free cash

and cash

equivalents

of at leas

t USD

2.5

million.

As

of

31

December

2021,

the

free

cash

and

cash

equivalents

totalled USD

9.9

million

.

EMGS’

management

follows

the Company’s liquidity risk closely,

includin

g weekly updates of the Group’s sales forecast

and vessel schedule, in addition

to a correspon

ding update of the cos

t and free cash forecas

t.

As per 31 December 2021, EMGS has one listed convertible b

ond with a carrying value of USD

24

.3 million and non-curr

ent

lease liabilities of USD 0.5

million a

nd current lease liab

ilities of USD 6.2 m

illion.

Research and develop

ment

To

mainta

in

its

stro

ng

p

osition

within

the

EM

market,

EMGS

has

invested

significant

time

and

resources

in

research

and

development (“R&D”)

over several years. The industry in

which E

MGS operates is

h

ighly technical and the re

q

uirements for

the acquisition a

nd processing of EM dat

a evolve continu

ousl

y.

As

a

result

of

th

e

in

dustry

downturn

and

the

decision

to

move

to

a

low

-cost

setup

in

2020,

EM

GS

found

it

necessary

to

significantly

reduce its

investments

in R&D.

The reduction

is

likely to h

ave limited

revenue impact

in

the s

hort term, as th

e

Company

maintains

its

stro

ng

techno

logical

position.

EMGS

expects

to

in

crease

R&D

investments

in

2022

compared

with

the level in 2021.

In

2021,

EMGS

did

not

incur

R&D

.

The

R&D

were

USD

1.7

mil

lion

in

20

.

Wher

e

pos

sible,

the

Company seeks to

offset internal R&

D costs b

y industry funding and p

artnerships.

In accordance

with IFRS, the

G

roup capitalised USD

0.2 million

of its employee

costs

in 20

20 as development. T

h

e G

ro

up did

not capitalise an

y employee costs in

2021.

Allocation of Net

Income

The Board of Directors p

roposes that t

he net income of EMGS, the par

ent company, s

hall be attributed to

Other equity

NOK

13

.7 million

Net income/(loss) a

llocated

NOK

13

.7 million

Distributable equity

as of 31 December 202

1 was

NOK 0.

18

Financial risk

The

Group’s

p

rincipal

financial

liab

ilities

are

trade

and

other

payables

and

loans

an

d

borrowings.

Th

e

Group

has

various

financial assets

such as trad

e receivables, cash and s

hort

-term deposit which arise directl

y from its op

erations.

The

Group

is

exposed

to

market

risk,

credit

risk

and

liquidity

ris

k.

The

Group’s

man

agement

and

Board

review

an

d

agree

policies

for

managin

g

each

of

these

risks

which

ar

e

summarised

below.

For

furth

er

details

s

ee

Note

3

to

the

financial

statements.

Market risk

Market

risk

is

the

risk

that

the fair

valu

e o

f futu

re

cash

flows

of

a

financial

instrumen

t

will

fluctuate

be

cause

of

changes

in

market

prices.

Market

prices

comprise

two

types

of

ris

k

for

the

Group:

interest

rate

risk

and

currency

risk.

Financial

instruments

affected

by

market

risk

includ

e

bonds,

loans

,

and

borrowings

Available

For

Sale (

AFS

)

investments.

Pleas

e s

ee

sensitivity a

nalysis in Note 3.

i) Interest rate risk

Interest rate

risk is the

risk that

the fair

valu

e of

future cash

flows of

a financial instrument

will fluctuate

becaus

e of

c

han

ges

in market interest rates. The Group has limited e

xp

osure to interest rate risk, as this is primarily only related

to

the Gro

u

p’s

long-term

convertible

bond

of

USD

24

.

3

million

with

floatin

g

interest

rate

(

3-month

LIBOR

+

5.5%).

Subs

equent

to

an

extension of the conv

ertible bond by

24 months

in February 2022, t

he new floating intere

st rate is

3-month LIBOR + 6.5

%.

ii) Foreign currency risk

Foreign

currency

risk

is

the

risk

that

the

fair

value

of

future

cash

flows

of

a

financial

instrument

will

fluctu

ate

because

o

f

changes in foreign exchange rates. The

Grou

p operates internationally

and therefore

has

exposure to foreign e

xch

ange

risk

arising

from

transaction

s

executed

in

oth

er

currencies

than

the

functio

nal

currency

of

each

company

.

EMGS

ASA

has

USD

as functional

currency, so the foreign curren

cy risk is

primarily with respect to N

OK in EMGS ASA.

For

2021,

approximately

91

%

of

the

Group’s

sales

revenues

were

denominated

in

USD,

whils

t

app

roximately

70

%

of

the

costs were denominated in U

SD.

Foreign exchange

risk arises fr

om future commercial

transact

ions, recognised a

s

as

sets and

liabilities. The

Group

’s e

xposure

to

foreign currency changes o

n equity

and for all o

ther currencies is not material.

Liquidity risk

Liquidity risk is the

ris

k that

the Company will

not hav

e sufficie

n

t liquidity to be able

to meet its financial obligations.

EMGS’

sources

of

liquidity

include

cash

balances,

cash

flow

from

operations,

borrowings

,

existing

and

new

b

ank

facilities

and

further debt and eq

uity issues. It is th

e Company’s objective to b

alance these sou

rces of liquidity.

The Company’s

conv

ertible bond

contains

a financial

covenant

requiring free cas

h and

cash equ

ivalents of

at least

USD 2.5

million.

As

of

31

December

2021,

the

free

cash

and

cash

equivalents

totalled USD

9.9

million

.

EMGS’

management

follows

the Company’s liq

uidity risk closely

.

The

financial

liabilities

with

maturity

less

th

an

one

year

will

be

settled

thro

ugh

cash

flow

from

operating

activities

in

202

2. Based

on

current

risk-

weighted

forecas

ts

an

d

information,

management

con

siders

the

liquid

ity

throu

ghout

202

2

sufficient to cover both

the Group’

s net current l

iab

ilities per 31 December 2021 and

estimated cas

h n

eeds in 2022.

Credit risk

Credit

risk

is

th

e

risk

that

a

counterparty

will

not

meet

its

obligations

un

der

a

financial

instru

ment

or

customer

con

tract,

leading

to

a

financial

loss.

The

Group

is

exposed

to

credit

risk

from

its

op

erating

activities

(primarily

for

trade

receivables

and

cash

and

cash

equivalents

,

but

als

o

from

banking

in

foreign

jurisdictions

).

See

Note

20

for

the

aging

analysis

of

trade

receivables and N

ote 4 for additional

information regard

ing t

he Accendo Bank ban

kruptcy

.

In 2021, the Company implemented a new

Cash repatr

iation and risk management sta

ndard

, which formalises and

streamlines certain mitigat

ing measures u

ndertaken by

EMGS to reduce risk related t

o banking in

foreign

jurisdictions

.

EMGS’ clients

are

major

internation

al, nat

ional and

independent

oil and

gas

companies, mos

tly with

good

credit s

tandings

and histo

ries.

19

Occasionally,

a

smaller

oil

and

gas

company

may

be

on

the

client

list

.

In

these

cases,

caution

is

cond

ucted

in

the

credit

evaluation.

It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In

addition, receivable bala

nces are monitored on

an ongoin

g basis.

Corporate governance

EMGS

is

committed

to

good

corporate

gov

ernance.

EMGS’

corp

orate

governance

prin

ciples

are

based

on

equ

al

treatment

of all

shareholders

,

mainta

ining open

and reliable

lines of co

mmunication

with

sharehold

ers and

other stakeholders,

h

aving

a

Board

that

is

auton

omous

and

independent

of th

e

executive

manage

ment

and

ensu

ring

a

clear

division

o

f res

ponsibility

between the Board an

d the executive manage

ment.

The Co

mpany

produces

a

comprehensive

annual

statement

o

n

corp

orate

gov

ernance

as

part

o

f

its

annual

repo

rt.

Electromagnetic

Geoservices

ASA h

olds

a

Directors

and

Officers

Liability

Insuran

ce on

behalf

of

the

Board

of

Directors

and

executive

man

agement.

For

furth

er

d

etails,

please

see

the

section

tit

led

Corporate

Governance

in

this

annual

report.

The

informat

ion is als

o available on the Compan

y’s homepage.

CSR, working environment, discrimination and external environment

EMGS

has

adopted

a

policy

and

a

standard

for

sustain

ability

and

corp

orate

social

responsibility

(“CSR”).

The

principles

in

the policy cover

areas related to

labour rights

, anti-corruption,

environment and

human rights.

All work in the Group related to

sustainability

and

corporate social respon

sibility

(together “the CSR work”) is bas

ed on the

CSR policy and th

e standard.

As the

Company

is

a Norwegian

pub

lic limited compan

y lis

ted on

the Oslo

Stock

exchange, it

complies with

Section 3

-3c of

the Norwegian Accounting Ac

t in respect o

f corporate social resp

onsibility.

The Company p

roduces an a

nnual sta

tement on its CS

R work,

including information

abou

t the working

environment

in th

e

Group, equ

al opp

ortunities

and dis

crimination s

tatement, th

e external

environment

and

human

rights.

For

further details,

please see the section t

itled Sus

tainability and Corp

orate Social Respons

ibility in this annual repo

rt. The information is a

lso

available on th

e Company’s homepage.

Company outlook

EMGS is dependent on the underlying value of

th

e commodities its technology is used to detect, wheth

er oil, gas or m

a

rine

minerals.

While

there

are

als

o

ther

factors

that

affect

the

demand

for

CSEM,

high

oil

an

d

gas

prices

do

tend

to

positively

impact

demand.

Althou

gh

the

Company

does

n

ot

undertake

an

ind

ependent

an

alysis

of

expected

future

oil

and

gas

price

levels, the Company notes that

th

ere are

s

everal factors which

cou

ld suggest that the

cu

rrent strong price

environ

ment will

persist for

s

ome

tim

e, including the

geopolitica

l considerations such as

s

ecurity an

d energy

independence considerati

ons in

the aftermath of

Russia’s

invasion of Ukraine, or th

e inclusion of gas

, under certain criter

ia, as env

ironmentally su

stainable

in the EU Taxonomy Regulat

ions.

In

2022,

the

Compan

y

is

depe

ndent

upon

b

uilding

backlog

for

th

e Atla

ntic

Guardian

to

be

e

xe

cuted

in

H2

2022,

as

well

as

securing addition

al late sales

.

The

Compan

y

contin

ues

to

have

a

stron

g

focus

on

keeping

operational

costs

as

low

as

possib

le

and

taking

adv

antage

of

a

more

flexible

business

mod

el.

The

Atlantic

Guar

dian

will

remain

warm

stacked

u

ntil

sufficient

work

is

secured

to

justify

mobilising

the

vessel.

The

Co

mpany

anticipates

taking

th

e

vessel

out

of

warm

stack

in

Q2

2022,

but

as

of

end

Q1

2022,

sufficient backlog has

not

yet been secured.

In the

longer ter

m,

the Co

mpan

y believes

that

its

unique

CSEM technology

could

play

an

important

role in

the

explora

tion

for

marin

e

min

erals

of

fshore Norway

and

intern

ationally. CSEM technology

is

ab

le

to

detect

the

p

resence of

marine mineral

deposits (primarily

Seafloor

Massiv

e Sulphides) and

EMGS believes th

at it will als

o be ab

le to estimate the

mineral

con

tent

of such depos

its. The Compan

y is undertaking early

-stage initiativ

es to pos

ition itself in this future market.

20

The

Company managed

to secure

a two-year

extension of

the

USD 32.5

million

con

vertible bond

to

May

2025. The

Company

was

also

able

to

reduce

the

total

ou

tstandin

g

amount

of

the

conv

ertible

bon

d

by

USD

8

million

to

USD

24.5

million.

Th

e

bond buy-back

was made at 75 per cent o

f par.

The

Co

mpany

maintains

its

cutting-edge

technological

position

in

the

EM

market

an

d

is

well

po

sitioned

to

be

able

to

capitalise on the expected u

pturn in t

he market with a more s

treamlined and efficient org

anisat

ion.

Oslo,

20

April 2022

Board of Directo

rs and CEO of E

lectromagne

tic Geoservices ASA

Sign.

21

Responsibility St

atement

.

Today the

Board

of

Directors and

the

Chief Executive Officer reviewed

and approved the Board of

Directors’ Report and the

consolidated

and s

eparated annu

al financial

statements

for

Electromagnetic

Geoservices

ASA (“EMGS”

or th

e “Co

mpany”)

for the year ended 31 De

cember 202

1.

EMGS’ consolidated financial

statements have been

prepared in

accord

ance with

IFRSs and

IFRICs

as

adopted by

the EU

and

additional

dis

closure

requirements

in

the

Nor

wegian

Accoun

ting

Act.

The

separate

financial

statements

for

the

Com

pa

ny

have

b

een

prepared

in

accordan

ce

with

Norwegian

Accounting

Act

and

Norwegian

accountin

g

sta

ndards.

The

Board

o

f

Directors’

report

is

in

a

ccordan

ce

with

the

require

ments

in

the

N

orwegian

Accounting

Act

and

No

rwegian

accountin

g

standard no 16.

To the best of ou

r knowledge:

.

The consolidated an

d separate annual

financial statements for

202

1 have been prepar

ed in accord

ance with

applicable financial reportin

g sta

ndards.

.

The consolidated an

d separate annual

financial statements giv

e a true and fair v

iew of the assets, lia

bilities,

financial position

and profit/(loss

) as a whole as of 31 December 202

1 for the Group a

nd the Compan

y.

.

The Board of Directors’ r

eport for the G

roup and

the Company in

cludes a fair review of

-

The development and

performance of the b

usiness a

nd the position o

f the Group and

the Company.

-

The principal risks a

nd uncertainties th

e Group and th

e Company face.

Oslo,

20

April 2022

Board of Directo

rs and CEO of Electro

magnetic Geoser

vices ASA

Sign.

22

Report on Corporate G

overnance

.

EMGS

is

committed

to

healthy

corporate

governance

practices

which

strengthen

and

maintains confidence in

the

Company,

thereby contributing to

op

timal long-term

value

creation

for

shareholders

and

oth

er

stakeholders.

Th

e

objective

of

corpor

ate

governance

is

to

regulate

the

division

of

roles

between

shareholders,

th

e

Board

and

executive mana

gement more comprehe

n

sively than is re

quired by legislation.

EMGS’ principles for corp

orate governan

ce are based on

the following elem

ents:

•

All shareholders are treated e

qually

•

EMGS

will

prov

ide

open,

reliable

and

relevant

communication

to

sh

areholders,

governmental

bodies

and

th

e

public

about the Compan

y’s activities and

its corporate governan

ce commitment

•

EMGS’ Board is fully

independent from the Co

mpany’s exec

utive management

•

EMGS pays

particular atten

tion to

ensu

ring that there are no conflicts

of interest

between the in

terests of its

shareholders, th

e members of its Board

and its executive man

agement

•

EMGS will ensure a clear d

ivision of resp

onsibility b

etween the Board and the executive m

anagement

1. Implementation and reporting on corporate governance

Implementation and r

eporting

The

bo

ard

of

directors

(the

“Board”)

o

f

E

lectromagnetic

G

eoservices

ASA

(the

“Company”

or

“EMGS”)

is

committed

to

maintaining

a

high

standard

of

corp

orate

governan

ce,

in

line

with

both

Norwegian

and

international

best

practice

s

tandards.

In

additio

n

to

maintaining

a

high

standard

of

corp

orate

governan

ce,

the

Board

and

the

executive

manage

ment

of

the

Company

carry

o

ut,

on

an

annual

basis,

a

comprehens

ive

review and

evalu

at

ion

o

f its

principles

for

corporate

governan

ce

and

the

implementation

of

these.

This

report

(th

e

“Report”

)

summarises

the

Co

mpany’s

corporate

gov

ernance

work

a

nd

compliance

with

applicab

le

requirements

and

fulfils

th

e

Company

’s

reportin

g

obligation

s

un

der

ap

plicable

law

and

oth

er

legal frameworks.

EMGS

is

a

Norwegian-registered

public

limited

liability

co

mpan

y,

with

its

shares

listed

on

th

e

Oslo

Stock

Exchange

(

Oslo

Børs

).

The

Norwegian

Accoun

ting

Act Se

ctio

n

3-3b, w

h

ich

th

e

Company

is

subject

to

,

sets out

certain

corporate

governance

rel

ated

information

which

is

to

be

dis

closed

an

d

reported

on

through

the

iss

uance

of

an

annual

reporting

d

ocument.

This

Rep

ort

meets the requirements

provided by th

e Accounting Act. The Accoun

ting Act is availa

ble on www.lo

vdata.n

o.

Furthermore, the Continuing

Obligations

of Stock Exchan

ge Listed Companies (th

e “OSE Continuin

g Obligations”) issu

ed by

the

Oslo

Stock

Exchange

requires

listed

compan

ies

to

publish

an

annu

al

statement

o

f

their

practice

their

policy

on

corporate governan

ce. In ad

dition to s

etting out certain minimu

m requirements for

such r

eporting (equivalent t

o those

under

th

e

Accounting

Act),

th

e

OSE

Continu

ing

Obligation

s

requ

ires

that

the

Company

re

ports

on

its

complian

ce

with

th

e

recommendations

of

the

Norwegian Cod

e o

f Pra

ctice

for

Corpora

te Gov

ernance

(the

“Code”)

publis

hed by

the Norwegian

Corporate

Governanc

e

Board

.

Both

th

e

OSE

Continuin

g

Ob

ligations

and

the

Code

require

that

an

explanat

ion

is

provid

ed

where a company h

as chos

en an alternative

approach

to specific recommendation

s in the Code (i.e.

,

a

“comply or expl

ain”

basis).

EMGS

complies

with

the

current

Code,

issued

on

14

October

20

21

.

The

Company

provides

a

report

o

n

its

principles

for

corporate

governan

ce

in

its

annual

report and

on

it

s

website,

www.emgs.com.

E

MGS’

objec

tive

is

to

comply

with all

s

ections

of the Code, but th

e Company may deviat

e from principles in

the Code if required for sp

ecial purp

oses.

23

The OSE continuing Ob

ligations

are available on www.oslob

ors.no, and t

he

Code is a

vailable on www.nues.n

o.

This Report sets o

ut how the Code is accom

modated through

the financial year 202

1.

Values and guidelin

es

for busin

ess

ethics and c

o

rporate social re

sponsibility

EMGS

has

a

set

o

f

clearly

defined

core

values:

Integrity,

C

ommitment,

Innovat

ion

and

Quality.

The

values

are

operationalised in E

MGS’ daily operation

s and management,

including in o

ur approach to corporate go

vernance.

The

Board

recognis

es

that

confidence

in

EMGS

as

a

company

and

in

its

business

activities

is

ess

ential

for

the

Company’s

continuing

competitiveness.

Therefore,

EMGS is

co

mmitted to

trans

parency

and openn

ess about

its

management s

ystems

and

pro

cedures.

This

strengthens

value

creation,

builds

internal

and

external

confidence

an

d

promotes

an

ethical

and

sustainable app

roach to business.

The Board

has,

in

close

cooperation

with

the

Company’s

executiv

e manag

ement, es

tablished

a compr

ehensive

framewo

rk

of

guidance

d

ocuments.

The

core

element

and

top

-tier

in

this

framework

are

the

Com

pany’s

po

licy

documents

,

which

include

th

e

Compan

y’s e

thics policy,

the

corp

orate

s

ocial

resp

onsibility policy

(see

also separate

report in

the annual

repor

t)

and

th

e

health,

safety

and

env

ironment

policy

.

Other

core

guidan

ce

documents

include

the

Compan

y’s

Code

of

Cond

uct

Standard

and

th

e

EMGS

Sustainability

and

Corp

orate

Social

Respons

ibility

Standard.

These

p

olicies

an

d

stand

ards

are

evaluated

and

updated

on

a

regular

bas

is.

The

Company

h

as

adopted

a

program

me

for

corporate

social

respon

sibility,

including an a

nti-corruption

compliance programme incorp

orating mandat

ory training of all employees

.

EMGS’ website provides mor

e in

formation about th

e Company’s bus

iness activities, policies and s

tandards.

2. Business

EMGS

is

the

mark

et

leader

in

contro

lled-source

e

lectromag

netic

(CSEM)

imaging.

Pursuan

t

to

Section

3

of

the

Compa

ny’s

Articles of Association

, the Company’s

purpose is as follows:

“The

Compan

y's

activity

is

to

engage,

by

itself

or

through

proprietary

intere

sts

in

o

ther

com

panies,

in

the

prospecting

for

hydrocarbon de

posits in connectio

n with the exploration,

development and prod

uction of hydrocarbons.”

The Company h

as clear obje

ctives an

d strategies for its

busin

ess within the s

cope of the d

efinition of

the busin

ess purpo

se

in its Articles of As

sociation.

The

Board

of

Directors

’

report

in

the

Company’

s

an

nual

report

includ

es

a

description

of

the

Company’s

objectives

and

principal s

trategies accord

ing

to th

e bus

iness

activities

clause from th

e Articl

es of

Associ

ation.

The Artic

les are

ava

ilab

le at

the Company’s

homepage, www.

emgs.com.

3. Equity and dividends

Equity and share capital

As of 31 December 2021, t

he EMGS Group had

a combined equity

of

negative USD 2.5 mil

lion, representing an

equity ratio

of negative 6.3

%.

The Board’s ass

essment of the Company’s eq

uity pos

ition is set out in the Board

of Director’s Report.

The Company’s

registered share capital is N

OK 130,969,690

divided into 130,969,690

shares each

having a

par value of

NOK 1.

Dividends

The Company h

as at present no intention

to pay divid

ends. The Board will establish a

dividend policy when relevan

t.

The

Compan

y’s objective is

to ge

n

erate a

long

-term return

for its

s

hareholders through di

vid

ends and

increas

es

in the

share

price that are, at

least, in line with the return a

vailable on s

imilar investment opportunities

of comparable risk.

24

Authorisations to incr

ease share capital and

t

o acquire own shar

es

At the

Annual

General Meeting

(AGM) held

on 21

May

202

1,

the

Board

was authoris

ed to increase

the s

hare capital

of the

Company b

y up to

NOK

26

,193,

968

(being 20%

of the

registered

share cap

ital

of the

Company) th

rough one or

more s

hare

issues.

Further

details are

set out

in

the resolu

tion b

y the AGM

that

states,

amongst

others, th

at the

authorisat

ion may

be

utilised in conn

ection with potential tra

nsaction / M&

A activity, an

d/or to finance g

enera

l corporate p

urposes.

The Board

was

als

o

given

an

authorisat

ion

to

increase

the

share

capital

b

y

up

to

NOK

9,

822,726

to

be

utilised

for

ful

filling

the

Company’s

obligation

s

towards

holders

of

options,

should

su

ch

options

be

exercised.

All

options

ar

e

bas

ed

on

the

Employee Option Program

me.

The

two authorisations are

valid until

the

next AG

M

of the

Compan

y, but

in no

event

beyond 30

June 202

2. As

of

31

December 2021, the Board

had

not used thes

e authorisations.

4. Equal treatment of shareholders and transactions with close associates

Equal treatment

Equal

treatment

of

shareholders

is

an

importa

nt

principle

for

corporate

governance

in

EMGS.

Th

e

Company

has

one

class

of shares, an

d any purchases or sales o

f own shares a

re carried out over th

e stock ex

change.

The Articles of Asso

ciation do not impos

e any restrictions

on voting rights

. All shares have equal rights

.

Pursuant to the Norwegian Public Limited Liability Compan

ies Act, existing shareholders have pre

-emption rights in

connection

with

share

ca

pital

increas

es

and

issu

ance

of

fin

ancial

instru

ments

which

gran

t

the

holder

a

right

to

have

new

shares

issued.

Ho

wever,

th

is

right

can

be

waiv

ed

from

time

-

to

-ti

me

b

y

a

qualified

majority

of

th

e

s

hareholders.

When

proposing to

the shareholders to resolve s

uch a waiver, the Board s

hall explain the rationale for s

uch a waiver.

Where a

share

capital in

crease is

resolved

by

the Board

in accordance

with an

auth

orisation b

y the general

meeting o

f th

e

Company, the

p

re-emption right m

ay

only

b

e

set aside where

th

is has

b

een pre-approved

b

y the

shareholders

as

part of

the

issuance

of

the

authorisation.

Where

the

Board

resolves

to

carry

out

an

increase

in

the

share

capital

and

waive

the

p

re

-

emption rights

of

the

existing

sharehold

ers on

the

basis

of such

an

authoris

ation granted to

the Boa

rd, an

explanat

ion will

normally be pub

licly disclosed in a s

tock exchange anno

uncement issued in co

nnection with the in

crease of the capital.

The

Board

of

E

MGS

will

waive

th

e

pre

-emption

of

e

xisting

sharehold

ers

in

connection

with

any

share

capita

l

increases

to

meet the Company’s

obligations t

owards holders of optio

ns if and when su

ch options are exercis

ed.

Transactions with cl

ose associates

In

the

event

of

any

material

transaction

between

th

e

Company

and

its

sh

areholders,

a

shareholder’s

parent

Company,

members

of

the

Board,

memb

ers

of

the

executive

person

nel

o

r

clos

e

as

sociates

of

any

such

parties,

the

Board

will,

as

a

general rule, arrange fo

r a valuation

by an independ

ent third party.

EMGS

has

implemented

procedures

for

the

Board,

th

e

board

committees

an

d

the

executive

person

nel

to

ensure

th

at an

y

conflicts of interest conn

ected to agreements

entered into by

the Company are reported

to the

full Board.

5. Freely negotiable shares

The shares in E

MGS are freely negotiab

le and the Articles of

Association

do not contain any restriction

s on negotiab

ility.

EMGS is listed on t

he Oslo Stock E

xchange, and t

he Company works a

ctively to attract

the i

nterest of n

ew shareholders.

6. General meetings

General Meeting

s

General m

eetings

are th

e Company’s

ultimate corp

orate bod

y. E

MGS encourages

all shareholders

to p

articipate in

general

meetings.

The

Board

endeav

ours

to

o

rganise

the

general

meetings

to

ens

ure

that

as

many

shar

eholders

as

possible

may

exercise

their

rights

by

participat

ing,

and

that

such

meetings

are

an

effective

forum

for

t

he

views

of

shareho

lders

and

the

Board.

25

Preparation for th

e

Annual

General Meeting

(

AGM)

The AGM is normally held in

J

une each year, and in any

case no later than 30 June, which is the

latest dat

e permitted under

applicable law. The 2021

AGM was

held on

21

May

202

1.

The 2022 AGM

is scheduled t

o be held on

21

Ju

ne

202

2.

The

n

otices calling

the general mee

tin

gs are

made available on

the Company’s website

and sent

to shareholders in

the f

o

rm

requested in their VPS accou

nt, in

each event no la

ter than three weeks prior to

the meeting.

According to article 8

o

f the Company’s

registered Articles

of Ass

ociation an

d provided th

at the sh

areholders may

participate

in

general

meetings

electronically,

ref.

articl

e

9

in

th

e

articles,

the

A

GM

may

,

with

the

majority

required

to

amend the Articles

of Association

and with effect un

til the next AGM, de

cide that the notices

calling Extraordin

ary General

Meetings

shall

be

s

ent

no

later

than

two

weeks

be

fore

th

e

date

o

f

th

e

meeting.

This

alternativ

e

was

u

sed

to

call

for

the

Extraordinary General Meetin

g h

eld on 25 November 202

1

.

Shareholders

who wish

to take p

art in a

general

meeting must

give

notice to th

e Company

by the

date stated

in the n

otice

of meeting, which date mus

t be at least two

business day

s before the general meeting.

Each shar

e carries one vote in the Compan

y's general meetin

gs.

Article 10 of

the Articles

of

Association

stipulates

that the sup

porting d

ocuments dealing with

matters

to b

e considered

by

the

AGM

can

be

made

avail

able

on

the

Compan

y’s

website

rather

than

being

s

ent

to

shareho

lders

directly.

How

ever,

shareholders are s

till entitled to receive the docum

ents by pos

t upon request.

The

calling

n

otice

to

the

gen

eral

meeting

along

with

a

for

m

for

appointing

a

proxy

and

su

fficiently

detailed

supporting

information,

including

p

roposals

for

resolutions

and

comments

on

matters

where

no

resolution

is

propos

ed, are

dis

closed

on

the

Company’s

website.

Resolutio

ns

and

supportin

g

information ar

e s

ufficiently

detailed

and

comprehensiv

e

to

enable

shareholders to

form

a view

on matters

on the

agenda to

be

cons

idered

in the

meeting.

The Company

will

make appropriate

arrangements

for

the

general meeting

to

vote

separat

ely

on

each

candidate

n

ominated

for

the

Company’s

corporate

bodies.

As

a

routine,

th

e

financial

calendar

for

the

coming

year

is

pub

lished

no

lat

er

than

31

December

as

a

stock

exchange

announcement, and

it is also made available on t

he Company

’s website.

Participation in gen

eral meetings

Shareholders who

do

n

ot

at

tend the

general meeting

may be

represented

an

d

ex

ercise

th

eir

voting righ

ts by

way

of

a proxy.

A person

will be

nominated

to

be av

ailable to

vote

as

a p

roxy on

behalf o

f sharehold

ers. Proxy

forms

will enab

le the

proxy

holder

to

cast

v

otes

for

each

item

on

the

agenda

separately.

The

final

d

eadline

for

sh

areholders

to

give

no

ti

ce

o

f

their

intention

to

attend

the

meeting

or

to

v

ote

by

proxy

will

be

set

in

the

notice

for

the

meeting.

According

to

articl

e

9

of

th

e

Articles

of

As

sociation,

the

Bo

ard

may

decide

that

the

shar

eholders

can

participat

e

in

the

general

meeting

b

y

m

ean

of

a

n

electronic aid, including th

at they may exercise th

eir rights a

s sharehold

ers electronically.

The

Chairman

of

th

e

Board

,

t

h

e

CEO,

th

e

CFO

and

the

auditor

will

be

present

at

the

AGM.

Other

board

members

will,

if

possible, att

end the general meetings.

Ag

enda and conduct of

the AGM

The

Board

decides

th

e

agenda

for

th

e

AGM.

The

main

agenda

items

are

determined

by

the

requirements

of

th

e

Public

Limited Liability Compan

ies Act.

The

Code

stipulates

that

th

e

Board

sh

ould

have

arran

gements

to

ensu

re

an

independ

ent

Chairman

for

th

e

general

meeti

ngs.

The Company has evaluated the recommendation but decided that it was in the interest of the Company and the

shareholders th

at the general meeting held in

2021

was chaired

by the Chairman o

f the Board.

The

AGM

minutes

are

p

ublish

ed

by

the

is

suance

of

a

stock

exchange

an

nouncement

and

are

also

made

availab

le

on

the

Company’s h

omepage.

7. Nomination Committee

EMGS

has

a

N

omination

Committee

el

ected

by

th

e A

GM.

A

ccording

to

articl

e 1

1

in

the

C

ompany’s

Articles

of

As

sociatio

n,

the

committee

s

hall

consis

t

of

2

to

3

m

embers

who

shall

b

e

el

ected

b

y

the

AGM

for

a

p

eriod

of

2

y

ears,

unless

th

e

AGM

decides a shorter p

eriod.

26

At

the

Extraord

inary

General

Meeting

held

o

n

25

November

2021,

in

which

Fred

erik

W.

Moh

n

replaced

the

mpany, Ch

ristos Makry

giannis replaced Fred

erik W. Mohn

as a Memb

er of the Nomination Com

mittee.

As per 31 December 202

1, the N

omination Com

mittee cons

isted of two members;

•

Kristian Siem (Chairperso

n)

•

Christos Makr

ygiannis

The Nomination

Committee

has

refrained from

ac

cepting a

fee

for th

eir work on

the N

omination Co

mmittee. The

Nomination

Committee

proposes

candidates

for

election

to

the

Board

and

for

the

remuneration

of

the

members

of

the

Board.

Also,

the

Nomination

Committ

ee

propo

ses

candidates

for

election

to

the

Nomin

ation

Committee

and

suggest

s

changes to the man

date or guidelines

of the N

omination Co

mmittee.

EMGS’

Nomination C

ommittee is in contact with shareholders, the Board and the Company’s executive

management when

searching for candid

ates for election to the Board

.

The recommendat

ion to

the

AGM

relating

to th

e el

ection s

hould

be availa

ble in

time to

be sent

with

the no

tice call

ing

the

meeting,

so

that

the

shareholders

hav

e

the

opp

ortunity

to

su

bmi

t

their

views

on

the

recommendation

to

the

Nomination

Committee ahead of the mee

t

ing. Further details are set out

in article 11 of the

Articl

es of Association and in the guidelines

for the nomination comm

ittee, which were ap

proved by t

he AGM in 2012.

8. Board: composition and independence

The composition

o

f the Bo

ard

EMGS does not h

ave a corporate ass

embly.

According to

article

5 in

the

Company

’s Articles

of As

sociation,

the

Board s

hall con

sist

of 3

–

11 board

memb

ers. At

the

end

of 2021

, EMGS’ Board

consis

ted of five directors.

Two

of th

e directors

are female and

three are male.

The sharehold

er-elected

members

represent

varied an

d b

road exp

erience from r

elevant

indu

stries and

areas

of s

peciality,

and

th

e

members

bring

experiences

from

b

oth

No

rwegian

and

international

companies.

An

y

proposal

for

the

election

of

shareholder-elected

b

oard

members

are

made

with

a

view

to

ens

ure

that

the

Board

can

attend

to

th

e

shareholders’

common inte

rest an

d the

Compan

y’s

need for

competence,

capacity

and

diversity

. Also,

the Board

sho

uld fun

ction well as

a collegial body. The Chair

man o

f the Board i

s elected by th

e general meeting.

As of 31 December 2021, t

he Board

consisted o

f the following directors:

•

Frederik W. Mohn, Chairman

•

Beatriz Malo de Molina

•

Mimi Berdal

•

Jørgen Westad

•

Petteri Soininen

Independence of the

Board

The Board does not

include any members fro

m the Compan

y’s executive managem

ent.

Two

of

the

five

sh

areholder-

elected

board

members

are

cons

idered

independent

of

th

e

Company’s

material

business

associations

and

major

sharehold

ers.

The th

ree

memb

ers

that

are

not

considered

ind

ependent

are

one

of

each

of the

Company’s

three larges

t shareholders

and

hold the majority of the con

vertible bond

.

As the

majority of the members of

the Board

ar

e not

considered independent, the Company deviates

from the

Code on this

point.

However,

the

Company

b

elieves

th

at

this

deviation

is

in

t

h

e

interest

of

b

oth

E

MGS

and

its

stakeh

olders,

including

other shareholders, as it allows

for short lines of comm

u

nication between the Company and its

largest shareholders as well

as

significant

experience

an

d

competenc

e

to

th

e

Board

which

the

Compan

y

may

not

be

able

to

retain

without

these

directors.

27

9. The work of the Board

The Board’s duties and

responsibilities

The Boa

rd

h

as

the ultimate

responsib

ility for

the

man

agement o

f

the

Company

and

for

supervising

its

day

-

to

-day

management and activities

in ge

n

eral. T

h

is includes developing

the Company’s strategy a

nd monitoring its

implementation.

In

add

ition,

the

Board

exercises

su

pervision

respo

nsibilities

to

ensure

th

at

the

Compan

y

manages

its

business

and

as

sets

and carries

ou

t risk

man

agement

in a

prud

ent and

satis

factory

manner. The

Board is re

sponsib

le

for the appointment of

the

CEO. The Board has

an annu

al plan for its work.

Mandate for the B

o

ard

In accord

ance with

the p

rovisions

of

Norwegian compan

y law,

the

terms of

reference

for

the Boa

rd are

set o

ut in

a

formal

mandate

that

includ

es

specific

rules

and

guidelines

on

the

work

of

the

Board

and

decision

making.

The

Chairman

of

the

Board is responsible for ensuring that the work of the Board is carried out in an effective and proper manner in accordance

with legislation.

Mandate for the C

EO

The Board issues a mandate for the work of the CEO. There is a clear division of responsibilities between the Boa

rd

and the

CEO. The CEO is respon

sible for th

e operational manageme

nt of the Company

.

Financial reporting

The Board receives

p

eriodic reports on the

Compan

y’s commercial and financial

status. The Com

p

any follows the timetable

laid down by t

he Oslo Stock E

xchange for the pu

blication of interim and

annual repo

rts.

Board meetings

The

Board

holds

regular

meetings

an

d

a

s

trategy

meeting

each

y

ear.

Extraordinary

Board

meetings

are

h

eld

as

and

when

required,

to

consider

matters

that

cannot

wait

until

the

n

ext

re

gular

meeting.

In

ad

dition

,

the

Board

has

appointed

three

sub-committees composed of

board members to work on matters in these areas. The Board has establis

hed and stipulated

instructions

for these committees.

Audit Committe

e

The

Audit

Committee

is

appoi

n

ted

by

the

Board.

Its

main

respons

ibilities

are

to

supervise

the

Company

’s

systems

for

internal

control,

to ens

ure that

the

auditor

is

independent

and

ass

ist the Board

with

oversight.

Th

e Audit

Com

mittee has

revie

wed

the procedures for ris

k

management

and financial con

trols for the major

areas of the Comp

any’s bus

iness activities.

The

Audit

Committee

receive

s

repo

rts

on

th

e

work

o

f

the

external

aud

itor

and

th

e

results

of

the

audit.

Also,

the

Audit

Committee meets regularly wi

th the au

ditor where no member of the execu

tive management is p

resent.

As per 31 December 202

1, the A

udit Committee cons

isted

of the following:

•

Beatriz Malo de Molina

, Chairman

•

Petteri Soininen

Compensation C

ommittee

The

Compensation

Committee

makes

proposals

to

the

Board

on

the

em

p

loyment

terms,

as

well

as

conditions

and

total

remuneration of the CEO and

other executive person

nel.

As per 31 December 202

1, the Co

mpensation

Committee con

sisted of th

e following:

•

Frederik W. Mohn, Ch

airm

an

•

Beatriz Malo de Molina

•

Mimi Berdal

•

Jørgen Westad

•

Petteri Soininen

28

Strategy Committ

ee

A

Strategy

Committee

was

es

tablish

ed

by

the

Board

o

n 11

February

2015.

The

Strategy

Committee

shall

con

tribute

t

o

the

Company’s s

trategy development.

The committee consis

ts of the following:

•

Frederik W. Mohn, Chairman

•

Beatriz Malo de Molina

•

Mimi Berdal

•

Jørgen Westad

•

Petteri Soininen

Annual evaluati

o

n

The Board’s working methods

and interactio

ns are subject to

annual revis

ion.

10. Risk management and internal control

The Board

ensures

that

the

Company

has

sound

risk

management

and

an

intern

al control

system

that

is approp

riate to

its

activities.

The

risk

man

agement

an

d

internal

control

systems

in

E

MGS

are

bas

ed

on

its corp

orate

valu

es,

ethics

guidelines

and

principles

for

s

ustainability

and

corporate

social

responsibility

(“

CSR

”).

The

Board

reviews

the

Co

mpany’s

internal

control sys

tem and the main areas of ris

k annually

.

EMGS’

management

condu

cts

day

-

to

-day

follow-up

of

financial

management

and

reporting.

Management

reports

to

the

Audit

Committee,

which

conducts

a

review

of

the

qu

arterly

and

ann

ual

reports

before

pu

blication.

The

Audit

Committee

inquires into

the integrity

of EMGS’ accoun

ts

, a

lso in its interaction

s with the independ

ent auditor

.

It also inquiries into, on

behalf

of

the

Board,

issues

finan

cial

review

and

internal

control,

and

the

external

aud

it

of

EMGS’

accounts.

The

Board ensures t

hat EMGS is cap

able of produ

cing reliable ann

ual reports and th

at the external auditor’s

recommendations

are given thorough co

nsideration.

A

d

escription

of

the

Compan

y’s

financial

risk

management

objectiv

es

and

policies

are

included

in

Note

3

to

t

h

e

financial

accounts.

11. Remuneration for the Board

The

AGM

decid

es

the

remunera

tion

paid to

members

of

the

Board

an

nually. T

he Nomination Comm

itt

ee

prepar

es

pro

posals

for

the AGM

regarding

r

emuneration for

Board me

mb

ers. The

remuneration

of

the Board

reflects the

Board’s responsibility,

expertise and time comm

itment, and

the complexity of the Compan

y’s activities.

The

Code

re

commends

that

remuneration

of

the

Board

should

n

ot

be

linked

to

the

Company’s

performance

an

d,

further,

that the Company

should not grant o

ptions to members of its

Board.

None

of

the

shareholder

-elected

bo

ard

members

are

engaged

b

y

the

Company

in

any

other

role

(e.g.

,

as

con

sultant)

tha

n

that as

Board members.

Details on the remuneration t

o the Board can b

e found in notes t

o the financial sta

tements of the Company.

12. Remuneration of the executive personnel

The

Board

determines

salary

and

oth

er

remuneration

systems

for

key

managem

en

t

perso

nnel

pursuant

to

the

p

rovisions

of

the

Norwegian

Pu

blic

Li

mited

Lia

bility

Compan

ies

A

ct.

The CEO’

s

employ

ment

conditions

and

remuneration

are

determined

by

th

e Board

and are

presented

to

the

AGM.

The

Board

annually

evalu

ates salary

an

d o

ther

remuner

ation

for

the CEO. Details on the rem

u

neration to the Company’s executive personnel are included in notes to the f

in

ancial

statements of the Compan

y.

The guidelines of the remuner

ation system for th

e executive person

nel is determined by th

e Board and is

presented t

o the

AGM th

rough

a

declaration

on

principles

for

managem

ent

remuneration,

which

is

requir

ed

by

law.

This

d

eclaration

is

also

included in the Compan

y’s annual

report.

29

Performance-related remuneration of

the

executive personnel

is

linked to

valu

e

creation

for shareholders

o

r

the Com

p

any’s

performance over time. The p

erformance

-related r

emuneration to

the executive personnel is

subject to a

n absolute limit.

The Board believes th

at the salary levels of executiv

e personn

el should be

competitive.

In accordance with th

e public limited liability co

mpanies act

(ASAL §6

-

16

), a remuneration

report will be mad

e available

on

www.emgs.com

p

rior to the AGM to b

e held on 21 Jun

e 2022.

13. Information and communications

EMGS

maintain

s

regular

dial

ogue

with

analys

ts

and in

vestors.

The

Company

considers

it

very

important

to

inform

shareholders an

d investors about the Compan

y’s commercial an

d financial performance.

The Company strives to continuously publish all relevant information to the market in a timely, eff

ectiv

e and non

-

discriminatory

manner. All

stock

exchange

announ

cements are

made availab

le both

on the Company

’s website

and o

n the

Oslo Stock Exchan

ge news website at

www.newsw

eb.no, an

d are also d

istributed to news a

gencies (via Hugin).

Financial reports

EMGS

publishes

its

pro

visional

annu

al

accounts

as

soon

as

p

ossible

after

the end

of

each

finan

cial

year.

Th

e

complete

ann

ual

report

and

accoun

ts

are

made

av

ailable

to

sharehold

ers

no

lat

er

than

three

weeks

prior

to

th

e

AGM

an

d

no

later

th

an

by

the end of April, as

required by th

e Securities Trading Act (s

ection 5

-5 (1)).

Quarterly

reports

are

nor

mally

pub

lished

within

six

weeks

following

the

end

of

the

qua

rter,

exc

ept

for

the

report

for

th

e

second quarter which

is normally p

ublished aro

und seven weeks following the end o

f the quarter.

The Company’s

financial calen

dar for the co

ming year is pub

lished no later t

han 31 D

ecember in accordan

ce with the ru

les

of

the

Os

lo

Stock

Exchange.

The

financial

calendar

is

av

ailable

on

th

e

Company’s

website

and

on

th

e

Oslo

Stock

Exchan

ge

website.

EMGS

holds re

cord

ed

web-ba

sed

presentation

s

in

connection

with

the

publication

of

its

interim

results.

These

presentations

revie

w

the

pub

lished

resu

lts,

market

conditions

and

the

Company’

s

future

pros

pects.

The

presenta

tions

ar

e

given

by

the

CEO

and/or

the CFO

an

d are

distributed by

webcast so

that

any

one

can f

ollow

the presentation. Quarterly

reports,

presentation material an

d web

casts are all a

vailable on the Company’s

website.

Other market inf

o

rmation

In

addition

to

the

dialogue

between

the

shareholders

in

the

general

meeting,

the

Board

aspires

to

mainta

in

contact

with

shareholders

throughout

th

e

y

ear.

If

pos

sibly

in

relation

t

o

the

q

uarterly

p

resentations

and

the

par

ticipation

in

seminars

mainly aimed at investo

rs. This conta

ct is coordinat

ed between the Chairman of the Boar

d, the CEO

and/or the CFO.

The

Compan

y has

a policy

identifying the

positions entitled

to speak

on behalf of

the Company

on various

sub

jects

,

and w

ho

should communicate with

the media, inv

estors an

d investment bankers.

14. Takeovers

The

Boa

rd

end

orses

the

r

ecommendation

of

the

Code

for

corporate

governanc

e

on

ta

keover

bid

s.

EMGS’

Articles

of

Associa

tion d

o not contain a

ny restrictions, limitation

s or defence mechanisms

on acquiring t

he Company’s s

hares.

In accordance with th

e Securities Trading Act an

d the Code, th

e Board has a

dopted guidelines for pos

sible takeovers.

In the event of a tak

eover bid, the Board will, in a

ccordance with its o

verall responsibility for corp

orate governance, a

ct for

the benefit of all Company shareholders. The Board will not seek to hinder or obstruct takeover bids for EMGS’ activities or

shares, un

less the interests of

th

e Company’s s

hareholders

s

o warrants.

If

an

offer

is

mad

e

for

E

MGS’

shares,

the

Boa

rd

will

normally

bo

th

make

a

recommendat

ion

on

whether

th

e

shar

eholders

should accept th

e offer and arrange a v

aluation from an

independent expert.

30

15. Auditor

The external auditor presents an annual plan

to the Audit Committee covering the main features for carrying out the audit.

The external auditor presents the result of the audit to the Au

dit Committee and the Board in the meeting dealing with the

annual

fi

nan

cial s

tatements, includ

ing p

resenting an

y material

chan

ges in

the Company

’s accoun

ting p

rinciples and

significant

acco

unting

es

timates,

an

d

reportin

g

any

material

matters

on

which

there

has

been

dis

agreement

betw

een

th

e

external auditor an

d EMGS’ execut

iv

e management.

The

external

au

ditor

annu

ally

presents internal

control

weaknesses and

improvement

opportunities to

the Audit

Committee

and, when appropriate, to the Board. The

Board

holds a meeting with the

au

ditor at least once a year

wher

e no member o

f

the executive manage

ment is present.

The

Board

h

as

ad

opted

instructions

as

to

the

executiv

e

personnel’s

access

to

the

use

of

the

external

auditor

for

services

other than auditing.

The external auditor provides an

ov

erview

o

f his

remun

eration divided int

o fee

paid

for

audit work and

any

fees

paid

for

other

specific

as

signments,

which

are

pres

ented

at

the

Annual

General

Meeting.

This

is

als

o

included

in

the annual report.

The

external

auditor

has

given

the

Board

a

writt

en

notification

confirming

that

the

req

uirements

for

in

dependence

are

satisfied.

Oslo,

20

April 2022

Board of Directo

rs and CEO of Electro

magnetic Geoser

vices ASA

Sign.

31

R

e

p

o

r

t

o

n

S

u

s

t

a

i

n

a

b

i

l

i

t

y

a

nd

C

o

r

p

o

r

a

t

e

S

o

c

i

a

l

R

e

s

p

o

n

s

i

b

i

l

i

t

y

.

Introduction

This

report

from

the

Board

of

Directors

(the

“Board”)

of

Electromagnetic

G

eoservices

ASA

(“EMGS”

or

“the

Company”)

describes

EMGS’

p

rinciples, e

f

forts,

measu

res

and

res

ults

relat

ed

to

su

stainability

and

corporate

social

respons

ibility

(“CS

R

”)

in the year of 2021.

The

report

is

based

on

the

pr

in

ciples

in

EMGS’

policy

for

sustainability

and

corporate

social

responsib

ility

and

the

EMG

S

sustainability

an

d

corporate

social

responsib

ility

standard

(together,

the

“CSR

Po

licy

Doc

uments”).

These

principles

cover

th

e

areas

labour

rights,

anti

-corruption,

the

environment

an

d

h

uman

rights.

The

CSR

Po

licy

Documents

applies

to

both

national and

international operations.

It is the intention of EMGS that the Company

’s efforts within (i) working environ

ment issues, includi

ng safety measures,

(ii)

anti-corruption

procedures

and

training,

and

(iii)

the

culture

encouraged

from

our

employees

through

the

CSR

Policy

Documents shall contribute to improved understanding for

h

uman rights, working ethics,

work environ

ment, health, sa

fety

and environ

mental impact.

The work related to s

ustainability an

d CSR (together “the CSR work

”) in EMGS is bas

ed on the core v

alues of the Comp

any:

•

Integrity

in all our relation

ships

We earn trust through demonstrating integrity. We dare to challenge, and we are honest. Our honesty benefits all

our relationship

s.

•

Commitment

to value creation

We are strong

believers in the value our

techn

ology creates

for both customers and

shareholders. We go the

extra

mile.

•

Innovation

in p

roducts and serv

ices

We set the stage for th

e future of the ind

ustry. We a

re passionate abou

t developing what

our customers n

eed.

•

Quality

in every step

We care about our p

eople, our custo

mers and our d

eliveries. We don’t compromise on

safety or on qu

ality.

This report covers

CSR work related to

EMGS with

its subsidiaries (together, th

e “Group”

) in 202

1.

The

r

eport

is

primarily

bas

ed

on

feedback

from

man

agement

in

the

Grou

p

and

various

internal

committees,

reporti

ng

systems

and

reports

.

Throughout

2021,

as

in

CSR

iss

ues

were

discuss

ed

in

management

meetings

an

d

by

the Board.

This

report

includ

es

an

in

troduction to

the

abovementioned

principles, the

EMGS

commitment,

implem

entation

an

d

actions

as well as the measures

and outcome specific for 20

2

1

.

The CSR policy is a

vailable on the Company’s

homepage

www.e

mgs.com

.

32

Statement on CSR work 2021

All work

in

the

Group

CSR

is

based

on

the

CSR

Policy

Documents.

Below

is

an

o

verview of

th

e p

rinciples,

as

well

as

a

description

of

how

the

Company

reports

issues

relate

to

CSR,

and

measures

taken

und

er

each

of

the

main

CSR

principles.

Quality, Health, Se

curity, Safety and Environ

ment

In

2021,

the

general

objectives

for

Quality,

Health,

Security,

Safety

and

Environ

ment

(QHSSE)

were

me

t.

Several

areas

of

improvement

were

identi

fied

during

th

e cou

rse

of

20

21,

as

is

natural

given

the

nature

of

CSR

compliance.

The

Compan

y’s

five-year trailing QHSSE s

tatistics are in line with it

s peers.

EMGS

complies

with

the

h

ighest

standards

from

IOGP,

the

International

Association

of

Oil

and

Gas

Pro

ducers,

as

w

ell

as

with specific QHSSE requ

irements from cu

stomers

and au

thorities.

QHSSE performance

is reviewed o

n a regular bas

is with the Board an

d management team

.

Labour rights

EMGS adheres to the follow

ing principles for lab

our rights:

•

Freedom of associatio

n and right to collective b

argaining;

•

No forced and compu

lsory l

abour;

•

No child labou

r; and

•

No discrimination

The working environment an

d the

employees

As

of

31

Decemb

er

2021, the

E

MGS

Group had

17

employees, of

which

four

work

in

T

rondheim,

Norway,

nin

e

at

the

regio

nal

office in Oslo, No

rway

,

three offshore

and one

in Mexico City, Mexico

.

EMGS

ta

kes

a

proactive

approach

to

the

welfare

and

safety

of

its

employees

and

has

in

itia

ted

a

number

of

measures

to

keep short

-and

long-term

sick

leave amon

gst th

e employe

e

group

at current

low

levels.

The Compan

y exper

i

enced n

o los

t

time injury events in

2021.

Equal opportunities and

discrimination statemen

t

EMGS’

17

employees repr

esent

four d

ifferent nationalities with d

ifferent cultures.

EMGS

h

as

defined

and

implemented

guidelin

es

to

protect

against

gender

discrimina

tion.

At

the

end

o

f

20

21

,

two

of

the

Group’s

17

employees, or 12

%, were

f

emale, which is the s

ame as compared to male/female ratio as of

31 December 20

20

.

The Group

will con

tinue

to

prioritis

e

its

goa

l

of

improving

the

current

imbalance

by

activ

ely

following a

recruiting

strategy

to

this

effect.

EMGS

recognis

es

th

at

the

average

compensation f

o

r

its

female

employees

is lowe

r than

the

average

workforce

figure.

This

can

be

explained

by

a

high

degree

of

repr

esentation

of

males

at

manage

ment

level

and

among

the

techn

ical

professionals. As

per 31 December

2021

,

the

executive m

an

agement team

consisted

of three

person

s, w

h

ereof

all are

male

.

The

Discrimination

Act’s

objective

is

to

promote

gender

equa

lity

,

ensure

equal

opportunities

and

rights,

and

to

pre

vent

discrimination

due to

ethnicity,

national origin,

descent, s

kin colour,

language,

religion

and faith.

The Group

is

actively a

nd

systematically

working

to

enc

ourage

the

Act’s

p

urpose

with

in

its

bus

iness.

The

activities

include

recruiting,

remuneration

,

working

cond

itions,

promotion,

development

opportunities

and

protection

against

harassment.

These

are

issues

of

importance

for

EMGS’

worki

ng

environment,

as

the

Group

has

employees

from

fou

r

nation

s

with

a

various

languages,

cultures, ethnicities, religions

and faiths

.

The

Grou

p’s aim

is

to have a

workplace w

ith

no

discrimination due to

reduced functional a

b

ility. There

fore, EMGS

is actively

working

to

design

and

implement

th

e

p

hysical

conditio

ns

of

its

workplaces

s

o

that

as

many

people

as

pos

sible

can

utilize

the variou

s fun

ctions.

For emp

loyees or

new

applicants

wit

h reduced

functional

ability,

ind

ividual

arrangements

are m

ade

concerning

workp

lace

and

respons

ibilities.

For

offshore

work,

the

Group

h

as

limited

p

ossibilities

for

offering

work

to

employees with reduced fun

ctional ab

ility.

33

Working environment m

easures

EMGS

management

encoura

ges

and

facilitates

close

dialo

gue

between

management

a

nd

employees,

and

between

th

e

different

departments

within

the

Group.

Some

of

the

action

s

to

facilitate

dialogue

are

through

weekly

meetings

held with

all employees

.

Office inspections a

re carried out

on a regular bas

is to capture potential working env

ironment hazard

s.

The

Maritim

e

La

bour

Convention

,

MLC

2006

was

imple

mented

in

August

2013

and

the

Norwegian

law

implementing

this

convention,

the

Ship

worker

Act,

was

implemented

on

th

e

same

d

ay.

By

the

end

of

2019,

th

e

MLC

2006

had

be

en

ratified

by

94

countries.

EMGS’

worki

ng

environ

ment

and

terms

w

ere

already

in

line

w

ith

th

e

MLC

2006

and

the

Sh

ipworker

Act

requirements before its imple

mentation.

Anti-Corruption

Corruption undermines all sound business activities and free competition.

Business shou

ld work

aga

inst corruption in all its

forms,

includ

ing

extortion

and

bribery. EMGS has

a zero-tole

ra

nce

policy

with respect

to corruption

in all

its

forms, including

bribery

and

facilitation

payments.

Adherence

to

this

princi

ple

is

a

b

asic

and

fundamental

requirement

for

all

contractors

and suppliers.

The

Group

and all

o

f

its

employees

s

hall

at

all time

s

adhere

to

all

ap

plicable

legislation

related to

b

ribery

and

anti

-corruption

,

and as a minimum always

to the prov

isions of the FCPA, the

UK B

ribery Act and t

he Norwegian penal

code.

The

Compan

y

has

over

the

years

giv

en

significant

attention

to

th

e

Company’

s

active

pursuit

to

prevent

corruption

and

bribery.

EMGS has sev

eral policies and

standar

ds related to its anti

-corruption

compliance pro

gram

me

, including b

ut not limited t

o

the

E

thics

Policy

and

Code

of

Conduct

as

well

as

an

anti

-corruption

complian

ce

train

ing

p

rogram

me

.

Th

e

trainin

g

is

a

combination of web bas

ed and more in

-depth train

ing in meetings.

The

Group

has

esta

blished

a

whistle

-blower

procedure

in

line

with

best

practice

in

dustry

standards

and

all

applicable

regulations. EMGS

encourages

an

d su

pports employees

who

report dilemmas

an

d incidents

in relation

to attempted

and

/or

actual

corruption,

bribery

and/or

fraud

to

management

(

“whistle

blowers”).

The

Comp

any

has

not

received

an

y

reports

from employees related t

o anti-corru

ption du

ring 2021.

EMGS continues to h

ave a high priority

on the Company’s compliance work.

External environm

ent

EMGS is

of th

e opinion

that

a

more sys

temat

ic use

of its

EM

d

ata in

offshore

oil explorati

on

will reduce th

e

environmental

footprint

of

oil

exploration

activities

by

among

oth

er

things

reducing

the

number

of

dry

or

non

-comme

rcial

wells

being

drilled before finding an

d appraising hy

drocarbon reserv

o

irs.

EMGS

is

committed

to

act

responsib

ly

an

d

in

full

tra

nsparency

to

monitor

and

reduce

its

environmental

impact

and

continually improve

the overa

ll environmental

performanc

e

of its

services. This

is

an integral

and

fundamental

part of

EMGS

business

stra

tegy,

operating

methods

and

technology

development

i

mplemented

through

EMGS’

QHSSE

Po

licy,

Environmental Stan

dard and Environ

mental Management Plan

.

EMGS

is

tracking

its

environmental

footprint

on

each

survey

an

d

identifyin

g

and

monitoring

the

main

waste streams

including hazar

dous waste.

The technology

EMGS u

ses

supports the Compan

y’s env

ironmental ambitions.

The an

chors used

to keep receivers

in place

are made from

an

eco-friend

ly compou

nd which

dissolves

in th

e months

after the

receivers

are

released, th

us

the anchors

do

not

harm

the

environmen

t.

This

means

that

th

e

an

chors

are

reduced

to

disaggregat

ed

s

and

after

a

survey,

leav

ing

no

discernible survey foo

tprint and no h

azard to subs

ea operations or fishing.

34

Human Rights

Principles related to

Human Right

s:

•

Support and

respect the protection of hu

man rights; and

•

Make sure not to

be complicit in human r

ights abuses.

Human

rights

abuses

shall

not

o

ccur

at

EMGS.

It

is

the

intention

of

EMGS

that

the

working

env

ironment

effort,

including

safety

measures,

the

an

ti-

co

rruption

p

rocedures

and

training

as

well

as

th

e

attitude

encouraged

from

the

Co

mpany’s

employees

shall

contribu

te

to

improved

understand

ing for

human

rights

, working

ethics

and

a

cleaner

environ

ment in

the

areas of the world wher

e the Group o

perates.

The

reputation

of

th

e

Company

is

created

b

y

the

collective

conduct

of

each

individual

employee.

The

employees

are

obligated

to

s

tudy

th

e

EMGS

p

olicies,

including but

not

limited

to Ethics

Policy

and

Cod

e

of

Conduct

and

perfor

m

their

du

ties

accordingly.

On an

operating

level, E

MGS

seeks

to ens

ure that

there

is

a goo

d working

environm

ent

without

discrimination

of an

y

k

ind

in

th

e

Group. The m

an

agers handle

all minor

issu

es

related to

h

uman

rights. If/w

h

en there

are

is

sues of

broader magnitude,

HR, legal and the E

thics Committee are invo

lved.

No claim regarding Human Ri

ghts h

as been reported to the HR,

QHSE or Legal in

20

21.

Oslo,

20

April 2022

Board of Directo

rs and CEO of Electro

magnetic Geoser

vices ASA

Sign.

35

Determination o

f Salary

Statement

.

Th

e follo

wing s

tatement

has b

een prepared

by

the Board

of

Directors of

Electromagn

etic

Geoservices AS

A (“E

MGS” or

the

“Company”)

and

outlin

es

th

e

main

principles

for

th

e

curr

ent

renumeration

policy

,

bu

t

does

not

constitute

the

official

accepted guidelines. The official guidelines made in accordance

with section

6-16a of

th

e Norwegian

Pu

blic Limited Liability

Companies Act was

accepted by the 2021 AGM an

d is published on

www.emgs.com

.

The Board

’s Senior Executiv

e

Remuneration R

eport for

202

1 wil

l b

e availa

ble in

the

2022

AGM

Calling Notic

e and

on

www.emgs.co

m

following

AGM

on

21 June 2022.

1.

Main principles for determination of management remuneration

The

objective

of

the

Compan

y’s

compensation

p

olicy

for

the

executive

management

(“Management”

),

is

to

attract

an

d

retain

the

bes

t

leadership

capabilities

available

to

lead

and

develop

the

Compan

y

and

th

us

maximise

sharehold

er

and

stakeholder

v

alue.

The com

pensat

ion

is

based

both

on

a

non

-

variable

element

(“Base

S

alary”)

and

variable

elements

s

uch

as

bonus,

stock

options

and variable

sp

ecial p

ayments

(“Variable

Compensat

ion”,

and,

together with

Bas

e Salary

,

“Overall

Compensation”).

For the CEO, the

compensa

tion level is

determined by t

he

Board

of directors without

involvement from th

e CEO. For

other

members

of

Management,

compensation

is

d

etermined

by

the

Board

based

on

recomm

endations

from,

and

discussions

with, the CEO.

The Base Salary shall be competit

ive to local market le

vels and is determined by the manager’s skills and

level of

responsibility

in

th

e

organis

ation.

The

Bas

e

Salary

is

d

etermined

by

us

ing

indu

stry

benchmarks

with

local

relev

ance

for

similar roles.

The

Variable

Compens

ation,

su

ch

as

bo

nus

es,

is

applied

using

Company

performance

an

d

individual

performance.

Long

term

incentiv

es,

such

as

stock

option

p

lan,

are

applied

by

as

sessing

the

criticality

of

the

role

to

the

Compan

y,

an

d

as

an

instrument to retain crit

ical skills in th

e Company.

When determining comp

ensation

for the CEO and

other members

of Managem

ent, the Boar

d takes into

consideration not

only in

dustry b

enchmarks

and individ

ual p

erformance, but

also

the av

erage compensati

on

level for

all other

employe

es of

the Company.

2.

Salaries and remuneration

2.1

Base Salary

The Management’s fixed an

nual salary

is defined as the Base s

alary and is sub

ject to annual review.

2.2

Performance Bonus

The

Co

mpany

has

a

performa

nce

b

onus

program

me

link

ed

to

ann

ual

performance.

The

objectiv

e

of

the

program

me

is

to

compensate individu

als bas

ed on the achievement of

Company

objectives as

well as pers

onal performance.

The objectiv

es

of the Company are estab

lished by th

e Board of Directors.

All e

mployees

of

EM

GS

ASA

received

a

on

etime

bonu

s

in

2021,

in

the

equivalent

amoun

t,

conditional

u

pon

the

su

ccessful

completion of certain o

perational

objectives.

36

Management

has

a

bonus

p

otential

of

up

to

40%

of

Bas

e

Salary,

and

th

e

rates

are

specified

in

the

indiv

idual employment

agreements.

A Bonus pro

gram

me

is established a

s a general program

me

for all

employees with a bonus p

otential of 10

–

40% of Annual

Base Salary.

2.3

Share Option Progra

m

me

Management

particip

ates in

the

Company’s

Stock

Option Plan

which

is

used to

attract

an

d

retain

employees.

The

programme was estab

lished with the aim to p

rovide a lon

g

-term incentive.

For new

grants, the minimum

exercise price

is set at

fair market

v

alue at

th

e

date

of grant.

The

v

esting of

su

ch options

take

s

place over a four-year p

eriod from the dat

e of the grant.

Any

new

grants

under

th

e

share

optio

n

programm

e

will

be

d

etermined

by

the

Board based

on

authoris

ation

from

the annual

general meeting (as d

escribed directly below).

The

Co

mpany’s

s

hare

option

progr

amme

is

based

on

an

authoris

ation

from

the

annual

general

meeting

of

the

Co

mpany

.

The

authorisation

was

renewed

for

a

period

of

t

wo

years

at

the

annual

general

meeting

in

20

21

and

is

th

us

sub

ject

to

renewal at

th

e

202

3

annual

general

m

eeting.

The

authoris

ation,

which

covers

all

employ

ees an

d

not

on

ly

management,

is

limited to a maximum of 9,8

22,726 optio

ns over a two

-year p

eriod.

The total number of outstanding options (for all e

mploy

ees and not only management) under

the share option programme

as of 31 December 202

1 was 1

68

,

75

0.

2.4

Pension plan

Management participates

in t

h

e

Company

´s

general collective

pension

plan. The

Company

has defined

contribution pension

plans, and th

e plan applicable in N

orway

involves a contrib

ution level of 5% of Base Salary

from 0 G up to 7.1 G and

15% of

Base Salary

from 7.1

G up

12 G,

where G is

the

base

amount (Folketrygdens

grunn

beløp) that

equals NOK

10

6 3

99

as of

31

December 2021

.

The Company d

oes not offer any t

op

-

up

pension plan for Management.

2.5

Benefits in kind

Management

participates

in

the

Compan

y’s

ordinary

benefits

in

kind

schemes

(i.e.

telep

hone

expenses,

laptop

and

free

broadband

conn

ection

and

use).

The

Board

may,

on

a

case

-

by

-case

basis

and

based

on

their

own

discretion,

award

other

reasonable

an

d

benefits

in kin

d

provided tha

t such

benefits

do

not

d

eviate

from

what

is ge

n

erally

acce

pted

in

the

N

orwegian

market.

2.6

Severance plan

As

is

customary

in

the

Norwe

gian

market,

th

e

CEO

has,

in

his

employm

ent

agreement,

agreed

th

at

he

may

b

e

termin

ated

at

the

discretion

of

the

Board

(i.e.

termination

at

will).

In

t

he

event

of

such

terminat

ion

,

the

CEO

is

entitled

to

severance

pay

equal

to

12

month

s’

Base

Salary.

No

oth

er memb

ers

of

Management

hav

e

any

agreements

to

receive

Bas

e s

alary

and

benefits beyond th

e statutory notice p

eriod.

Agreements

may

be signed

regarding severance

pay for

other

members of

general

manag

ement to

attend

to the

Company's

needs

at

all

tim

es

to

ensure

that

the

selection

of

managers

is

in

commensu

ration

with

the

Company's

needs.

Pu

rsuant

to

the Working

En

vironment Act,

such agreements may

not have

a binding effe

ct on general management other

than

the

CEO.

3

.

Management salaries and remuneration in subsidiaries of EMGS

Companies within the E

MGS grou

p are to follow the main p

rinciples of th

e Company’s man

agerial salary policy

as

described in section 1.

It is an

ambition of the Company

to globally coo

rdinate the wage policy a

nd the plans u

sed for

variable compensation

throughou

t the EMGS Group.

37

4.

Review of the executive management remuneration policy that has

been carried out in the

financial year 2021

The remuneration policies s

et out

in the declaration o

n determination of salary a

nd other compensation t

o the

Management for 2021

were followed in a

ll respects

.

All employees o

f EMGS ASA receive

d a bonus,

in the equivalent

amount, conditio

nal upon the successful co

mpletion of certain o

perational objectives.

All employe

es also received a

onetime bonus of N

OK 10 thousan

d in December 2021 as a

result of the significan

t efforts of employe

es in the su

ccessful

achievement of profit

able operation

s during t

he year.

Oslo,

20

April 2022

Frederik W. Moh

n

for and on be

half of the Board of Director

s of Electrom

agnetic Geoservices ASA

Sign.

38

F

i

n

a

n

c

i

a

l

s

t

a

t

e

m

e

n

t

s

.

E

M

G

S

G

r

o

u

p

41

Consolidated St

atement

of Financial Posit

ion

.

Osl

o,

20

Apri

l 2

022

Boa

rd o

f Di

rec

tors

and

CEO

of

Elec

tro

magn

etic

Geos

erv

ices

AS

A

Si

gn.

Sh

a

re capital

, s

hare pr

emium

a

nd

oth

er paid-in equity

14

71,490

As of

31

Decembe

r

Am

oun

ts

i

n

USD 1 0

00

No

te

2021

2020

AS

SE

TS

No

n

-cu

rr

ent

assets

M

ulti-c

li

ent

l

ibr

a

ry

16

2,412

2,209

Other

intangible a

s

ets

16

422

939

Pr

oper

ty, plant

a

nd

equip

men

t

17

12,747

16,374

Ri

ght-o

f

-use

as

s

ets

27

4,465

8,246

Financial

l

eas

e

receivables

18

72

141

Ass

ets

un

der con

s

tr

uction

17

3

Tot

al

no

n

-cu

r

ren

t

assets

20,121

27,911

Curren

t

assets

Sp

a

re par

ts

,

fuel, a

ncho

rs

and batt

eries

19

3,813

4,726

Trade r

ec

eiva

bles

20

1,267

6,246

Other

receivables

18

3,759

3,142

Financial

l

eas

e

receivables

18

68

Ca

s

h and ca

s

h equivalent

s

21

9,855

4,179

Res

tricted

ca

s

h

21

1,278

7,995

Tot

al

cu

rr

en

t

assets

20,041

26,357

Tot

al

assets

40,162

54,269

EQUITY

Capital

an

d

r

eserves at

t

rib

u

tab

le

to

equ

it

y

h

old

ers

Other

reserves

-1,570

-1,544

Retained earnings

-72,433

-77,361

Tot

al

equ

it

y

-2,514

-7,417

LIABILITIES

No

n

-cu

rr

ent

liab

ilit

ies

Pr

ovis

ions

25

4,812

9,625

Bor

row

ings

23,27

24,295

31,816

No

n-cur

rent

lea

s

i

ng l

ia

bili

ties

23,27

522

6,501

Tot

al

no

n

-cu

r

ren

t

liab

ilit

ies

29,629

47,942

Curren

t

lia

bili

ties

Trade payables

24

1,981

1,461

Curr

ent

tax

li

abil

ities

12

3,376

4,035

Other

s

ho

rt ter

m lia

bili

ties

26

1,451

2,774

Curr

ent

l

eas

i

ng

li

abili

ties

23,27

6,239

5,474

Tot

al

cu

rr

en

t

liab

ilit

ies

13,048

13,744

Tot

al

liab

ilit

ies

42,677

61,686

Tot

al

equ

it

y

an

d

lia

bilit

ies

40,162

54,269

45

Generally, there is a presumption that a

majority of voting rights re

sults in control. To

s

upport this presumption and wh

en

the Group has

less than

a majority of the votin

g or similar rights

of an inv

estee, the

Grou

p cons

iders all relevant facts

and

circumstances in a

ssessing whether it has

power over an in

vestee, including:

-

The contractual agre

ement(s) with t

he other vote ho

lders of the investee

-

Rights arising from o

ther contractual ar

rangements

-

The Group’s votin

g rights and potential v

oting rights

The Group re-assess

es whether or not it controls an investee if facts and circumsta

nces indicate that there are changes to

one

or

more

of

th

e

three

elements

of

con

trol.

Con

solidation

of

a

subs

idiary

begins

when

the

Grou

p

obta

ins

control

over

the

subsidiary

and

ceases

when

the

Group

loses

control

of

the

s

ubsidiary.

Ass

ets,

liabilities,

income

and

exp

enses

of

a

subsidiary

acqu

ired

o

r

disposed

d

uring

the

year

are

included

in

the

conso

lidated

financial

statements

f

rom

the

date

th

e

Group gains con

trol until th

e date the Group ceas

es to control t

he subs

idiary.

All intra-group balances, income and expenses and unrealised gains and losses resulting from

intra

-group transact

ions are

eliminated in full.

The

financial

statements

of

the

subs

idiaries

are

prepared

for

the

same

re

porting

period

as

the

parent

company,

using

consistent accou

nting policies.

2.3

Business combin

atio

ns and good

will

a) Business co

mbinations and goodwill

Business

combinations

are

accoun

ted

for

using

the

acquis

ition

method

.

The

cost

of

an

acquis

ition

is

measured

as

the

aggregate of

th

e consid

eration

transferred,

which

is

measured

at acq

uisition

date

fair v

alue

, an

d th

e amount

of

any

non

-

controlling

interest

in

the

acquiree.

For

each

b

usiness

combination,

the

Group

elects

whether

to

measure

the

n

on

-

controlling

interests

in

the

acquiree

at

fair

value

or

at

the

proportionate

share

of

the

acquiree’s

identifiable

net

assets.

Acquisition-related cos

ts incurred are expens

ed and includ

ed in other op

erating expenses

.

When

the

Group

acqu

ires

a

bu

siness,

it

asses

ses

the

financial

as

sets

and

liab

ilities

assumed

for

ap

propriate

clas

sification

and

designatio

n

in

accordance

with

the

con

tractual

terms,

economic

circu

mstances

an

d

pertinent

conditions

as

at

the

acquisition d

ate.

Goodwill is

initially

meas

ured at

cost,

being

the exces

s of

th

e aggregate

of

the

consideration

tran

sferred and

the

amount

recognised

for

non-controlling

interest

over

the

net

identifiable

as

sets

acquired

and

liabilities

assumed.

If

this

consideration is lower than the f

air valu

e of the

n

et assets of the

s

ubsidiary acquired, the difference is

reco

gnised in prof

it

or loss.

After initial

recognition, goodwi

ll is

measured at cost less any

accumulated impairment losses. For

the purpose

of

impairment

testing,

goodwill

acq

uired

in

a

bus

iness

combination

is,

from

the

acquisition

date,

allocated

to

each

of

the

Group’s

cash

-generating

units

th

at

are

expected

to

ben

efit

from

the

combination,

irrespective

of

whether

the

as

sets

or

liabilities of the acquiree ar

e assigned to

those units.

b) Joint operatio

n

A joint operation is a j

oint arrangement whereby the parties th

at have joint control of the arrangem

ent have righ

ts to

th

e

assets,

and

ob

ligations

for

the liabilities,

relating

to

the

arrangement.

The

Group

recognises

in

relation

to

its

interest

in

a

joint

operation:

its

assets,

in

cluding

its

share

of

any

ass

ets

held

jointly;

its

liab

ilities,

incl

u

ding

its

sh

are

o

f

a

ny

liab

ilities

incurred

join

tly;

its

revenue

fr

om

sale

of

its

share

of

the

output

o

f

the

joint

op

eration;

its

share

of

the

revenue

from

t

he

sale of the outpu

t by the joint operation; an

d its expens

es, including its share of an

y expenses incu

rred jointly.

2.4 Current versus n

on-current classification

The Group presents assets and liabilities in statement of financial position based on current/non

-current classification. An

asset is classified as

current when it is:

-

Expected to be realised o

r intended to

be s

old or consumed in n

ormal operating cycle

-

Held primarily for the purp

ose of trading

-

Expected to be realised with

in twelve months

after the reportin

g period, or

46

-

Cash or cash

equivalent unless r

estricted from being excha

nged or u

sed to settle a

liability for at

least twelve months

after the reporting period

All other assets a

re classified as n

on

-current.

A liability is current

when:

-

It is expected to be s

ettled in normal operatin

g cycle

-

It is held primarily for th

e purpose o

f trading

-

It is due to

be settled within twelve month

s after the repor

ting period, or

-

There

is

no

unconditional

right

to

defer

the

s

ettlement

o

f

t

he

liability

for

at

leas

t

twelv

e

month

s

after

the

r

eporting

period

The Group classifies all oth

er liabilities as

non

-current.

2.5 Foreign curr

encies

a) Functional an

d presentation currency

The

financial

statements

of

each

entity

within

the

Group

reflect

tra

nsactions

recorded

in

the

currency

o

f

th

e

economic

environment in which it

operates (th

e functional currency).

The

functional

currency of th

e Company is US Dollars

(USD).

The

consolida

ted

financial

statements

are

presented

in

USD

which

is

the

Group

's

presentation

cu

rrency.

For

each

entity,

in

the Group

determines the

functional currency

and item

s

includ

ed

in the

financ

ial

statements

of each

entit

y

are

measured using th

at functional currency.

b) Transactions

and balances

Transactions in foreign currencies are

initially recorded by the Group’s entities

at their respective functional currency s

p

o

t

rate

on

the

date

the

tr

ans

action

first

q

ualifies

for

recognition.

Monetary

as

sets

and

liabilities

deno

minated

in

foreign

currencies

are

translated

at

the

functional

currency

s

pot

rate

at

the

reporting

date.

All d

ifferences

are

record

ed

in

profit

and loss

.

Non-monetary items that

are measured in terms

of

historical

cos

ts in

a foreign

currency

are

tran

slated using the

exch

ange

rates

on

the

dates

of

the

initial

tran

sactions.

Non

-monetary

items

measured

at

fair

value in

a

foreign

currency

are

translated

using

the

exchan

ge rates

on the

date

when

the

fair

value

is

determined.

The

gain

or

loss

arising

on tra

nslation

of

non

-monetary

items

measu

red

at

fair

valu

e

is

treated

in

line

with

the

recognition

o

f

th

e

gain

or

loss

on

the

ch

ange

in

fair value of the item.

c) Group companies

The

resu

lts

and

financial

po

sition

of

Group

companies

(no

ne

of

which

has

th

e

currency

of

a

hyperinflation

ary

economy)

that h

ave a

functional

currency different from

the presenta

tion

currency

are tran

slated into th

e presentatio

n currency as

follows:

(i)

Assets

an

d

liabilities

for e

ach

balance

s

heet

presented

ar

e

tra

nslated

on

the

rate

of

exchan

ge

ruling at

the

reporting

date.

(ii)

Revenues

an

d

expens

es

for

each

income

statement

presented

ar

e

trans

lated

at

average

exchange

rate

for

the

period. However, i

f this average is n

ot a reasonab

le approximation o

f the cumulativ

e effect on the rat

es prevailing on t

he

actual

trans

action

dat

es,

revenues

and e

xp

enses

are

tra

nslated

using the

foreign e

x

change

rates

on

the

specific

transact

ion

date.

All resulting exchange dif

ferences are recognis

ed in other c

omprehensive incom

e.

2.6 Revenue fro

m

contract

s w

ith customers

Revenue

from

contracts

with

cus

tomers

is

recognised

when

control

of

the

goods

and

s

ervices

are

tran

sferred

to

the

customer

at

an

amoun

t

that re

fle

cts the

consideration

to w

hich

th

e Company

expects the

be

entitled in

exchange for

those

goods or s

ervices.

The disclosu

res of

significant accoun

ting ju

dgements, estimates

and

assumptions

relating to

revenue from

contracts

with

47

customers ar

e provid

ed in

Note

4

.

Revenue

is

shown

net of withh

olding an

d v

alue

-added taxes.

Revenue is

recognised

as

follows:

a) Proprietary contra

ct sales

The Group performs E

M services u

nder contract

for a specific custo

mer, whereby t

he EM data is

owned by th

e customer.

The

Group

recognises

con

tract

revenues

(whether

priced

as

Lump

Sum,

Day

Rate

or

Unit

Price)

o

ver

time.

Progress

is

measured in a mann

er generally con

sistent with th

e physical progress on t

he project.

Mobilisation Fees

Revenues

for

mobilisation

are

us

ually

contracted

with

th

e

customer

and

should

cover

the

vessel

’

s

tra

nsit

to

t

h

e

survey

area.

Revenu

es

and

costs

mobilisation

are

def

erred

and

recognis

ed

over

the

acquisition

period

(which

is

the

time

from

the

firs

t

receiver

is

d

ropped

to

th

e las

t

retrieval)

of

the

contra

ct,

using

th

e p

ercentage

of

co

mpletion

metho

d.

The deferral of mobilisat

ion costs

can only begin after a

n a

greement has b

een signed b

etween EMGS and

the client. Until

a contract is s

igned, costs are expensed as

incurred.

b) Sales of multi-client libr

ary dat

a

Pre

-funding agreemen

ts

Multi-client licensing sales made prior to

commencement of acquisition for a

p

roject and licensing sales while the projec

ts

are

in

progress

,

are

p

resented

as

pre-funding

revenues.

The

advan

tages

for

p

re-funding

customers

are

generally

the

possibility t

o influence the project spec

ifications, early a

ccess to a

cquired data, and

discounted prices.

The Group recognises

pre-fund

ed revenue at t

he point in t

ime when data is

made accessible to th

e customer

.

Late sales

Customers

ar

e

granted

a

license

from

the

Grou

p

which

entitles

th

em

to

access

a

s

pecific

part

of

the

multi

-client

data

library. The license payment is

fixed and is required when the license is gran

ted. The late sale revenue is recognised when

a valid licensin

g agreement is s

igned, and

the multi-client libra

ry data

is made accessible to the cu

stomer.

Uplift

Uplift revenu

es

can

arise

if

a

customer

that

has

alread

y bought

a

license

for E

M dat

a, is

awarded

acreage

cover

ed

by

the

data bough

t. Uplift revenue is r

ecognised when th

e customer is a

warded the acreage.

Contract b

alances

Contract assets

A contract asset is the right to

cons

ideration in exchange for goods or services transferred to the

cu

stomer. If the Group

is

transferring goods or services to a custo

mer before the customer pays consideration or before payment is due, a contract

asset is recognis

ed for the earned cons

ideration that is condition

al.

Trade receivables

A

receivable

represents

the

Group

’s

right

to

an

amount

of

consideration

th

at

is

uncondition

al

(i.e.,

only

the

passage

of

time is required before pay

ment of the cons

ideration is

due).

Contract liabilities

A contract

liability is t

he obligation to

transfer goods or

services to a

customer for

which the

Group has rece

iv

ed

consideration

(or

an

amount

of

consid

eration

is

due)

from

the

cus

tomer.

If

a

customer

pays

consideration

b

efore

the

Group

transfers

goods

or

s

eries

to

the

custo

mer,

a

contra

ct

liability

is

re

cognis

ed

when

th

e

payment

is

mad

e,

or

the

payment

is

due

(whichever

is

earlier)

.

Contract

liabilities

are

recognised

as

revenue

when

the

Group

performs

under

the

contract.

Significant financing compon

ent

The

Group

has

received

fundin

g

from

third

parties

building

the

EM

equ

ipment.

There

is

a

significan

t

financing compo

nent

for th

ese con

tracts

considering

the l

ength

of time

betw

een the

parties’

payment

and

the

beneficial

period.

As

such

,

inte

rest

cos

ts

are

calculated

on

this

contr

act

liability

record

ed

as

pro

vision

in

the

balance

s

heet.

The

interest

ra

te

is commensurate

with the

rate

that would

be

reflected in

a

separ

ate

financing transaction

b

etween

the G

ro

up

and the parties

at contract incep

tion.

48

2.7 Government gran

ts

Government

grants

are

recognised

where

there

is

reasonab

le

assu

rance

that

the

grant

will

be

received,

an

d

all

attached

conditions

will

be

complied

with.

When

the

grant

relates

to

an

expense

it

em,

it

is

recognised

as

income

on

a

s

ystematic

basis over

the periods that

th

e

related costs, for

which it i

s intended to

compensate, are e

xp

ensed. When

the grant

relates

to an asset, it is

recorded as a reduction o

f the asset u

p to the amount that

covers the cost price.

When

the

Group

receives

grants

of

non

-monetary

assets,

the

asset

and

the

grant

ar

e

recorded

at

nominal

amounts

and

released

to

profit

or

loss

o

ver

the

expected

useful

life

in

a

pattern

of

consumption

o

f

the

benefit

of

the

u

nderlying

asset

by equal an

nual instalments

.

EMGS

received

USD

200

thousan

d

as

part

of

th

e

Norwegian

Business

Compensation

Scheme

in

2020.

The

Company

did

not apply for,

nor receive compensation

under the Norwegian Bu

siness Compens

ation Scheme in 2021.

2.8 Property, plant and

equipment

Property,

plant

and

equipment

are

stated

at

historical

cost

less

accumulated

depreciation

and

an

y

accu

mulated

impairment

losses

.

Historical

cost

includes

costs

directly

attributab

le to

the

acquisition

of

the

item.

Cos

ts

are

included

in

the

as

set’s

carry

ing

amount

or

recognised

as a

separate

asset,

if appropriate,

only

when it

is

pro

bable

that future

economic

benefits

ass

ociated

with

the

i

tem

will

flow

to

th

e

Group

a

nd

th

e

cost

of

the

item

can

b

e

meas

ured

reliably.

Costs

of

all

repairs and main

tenance are expens

ed as incurred.

Depreciation on assets is

calcu

lated using the

s

traight

-line method. The

as

sets are depreciated over

th

eir estimated us

eful

life, as follows:

Useful life:

Machinery and equ

ipment*

3

- 8 years

Cluster **

5 years

Hardware equipment

and furnitu

re

3

- 5 years

*Machinery

and

equipment are

mainly placed

onboard the

vessel. Parts

of

the equipment

are

under water

durin

g

operation and h

ave a shorter useful life.

** A cluster consists

of IT equipment comprising o

f large

number of p

rocessors for d

oing advan

ced data processing.

The

as

sets’ residual values,

useful lives,

an

d method

of depreciation are

reviewed at e

ach

balance

s

heet date

and adjusted

if

app

ropriate.

I

f

an

asset’s

carrying

amount

is

greater

than

its

estimated

recoverable

amount,

the

a

s

set

i

s

imm

ediat

ely

written down to the recovera

ble amount (No

te 2.12).

Assets

under

con

struction

are

carried

at

cos

t,

less

accu

mulated

impairment.

Depreciatio

n

commences

when

the

asset

is

ready for its inten

ded use.

An

item

of

p

roperty,

plant

and

equipment

an

d

a

n

y

significan

t

part

initially

recognised

is

derecognised

upon

d

isposal

or

when

no

future

economic

b

enefits

are

exp

ected

from

its

u

se

or

dis

posal.

Any

gain

or

loss

arising

on

derecognition

of

t

he

asset (calculated as th

e difference between the net disposal proceeds an

d the carrying amount of the asset) is included in

the statement of profit or los

s when the a

sset is derecognis

ed.

2.9 Leases

The

Group

ass

esses

at

th

e

contract

inception

whether

a

co

ntract

is

,

or

contains,

a

leas

e.

That

is,

if

th

e

contract

conve

ys

the right to contro

l the use of an identified as

set for a period of time in exchan

ge for cons

ideration.

Group as a lessee

The Group

app

lies a

single

rec

ognition

and

measurement

a

pproach

for all

leases,

except

for s

hort

-ter

m leases

and

leases

of

low

-value

as

sets. The

Group

recognises

l

ease

liab

ilities to

make le

as

e

pay

ments and

righ

t

-

of

-use

as

sets representing the

right to use th

e underlying assets.

49

a) Right-

of

-use ass

ets

The

Group

recognises

right-

of

-use

assets

at

the

commencement

date

of

the

lease

(i.e.,

the

date

the

underlying

asset

is

available f

o

r

us

e).

Right

-

of

-use assets

are me

as

ured at

cost, le

s

s any

accumulated depreciation

and

impairment los

ses, and

adjusted

for an

y remeasurem

ent of

lease liabiliti

es. The

cost

of

right

-

of

-use

assets

includ

es the

amount

of lease

liabilities

recognised,

initial

direct

costs

incurred,

and

le

as

e

payments

made

at

or

before

the

commencement

dat

e

less

any

lease

incentives received. Right-

of

-use ass

ets are depreciated on a straight

-line bas

is over the shorter of the lease term and the

estimated useful lives of th

e ass

ets.

If

ownership

of

the

leased

asset

transfers

to

the

Group

at

the

end

of

th

e

lease

term

or

the

cos

t

reflects

the

exercise

of

a

purchase

option,

depreciation

is

calculated

using

the

estimated

useful

life

o

f

th

e

asset.

The

right

-

of

-us

e

as

sets

are

also

subject to impairment.

b) Lease liabilities

At the commencement d

ate of the lease, t

he Group recognis

es

lease liabilities measu

red at th

e present value

of

lease

p

ayments

to

be

made

over

the

lease

term.

The

lease

payments

include

fixed

payments

les

s

any

lease

incentives

receivable,

variable

lease

pay

ments

that

depend

on

an

index

or

a

ra

te,

and

amounts

exp

ected

to

b

e

paid

under

residual

value

guarantees.

The

lease

pay

ments

also

includ

e

the

exercise

price

of

a

purchas

e

option

reaso

nably

certain

to

b

e

exercised by the

Group and

p

ayments of

p

enalties for

terminat

ing the

lease, if

the lease term

reflects the Group exercising

the option

to

terminate.

Variable

lease pay

ments th

at do

not d

epend on

an in

dex or

a

rate are recognised

as

expenses

in

the period in which

the event or conditio

n that triggers th

e payment occurs.

In

calculatin

g

the

p

resent

valu

e

of

lease

payments

,

the

Group

us

es

its

incremental

borrowing

ra

te

at

th

e

le

ase

commencement date because

the interest rate

i

mplicit in the lease is not readily determinable. After the

commencement

date,

the

amount

of

lease

liabilities

is

increased

to

reflect

the

acc

retion

of

interest

and

redu

ced

for

th

e

lease

pay

ments

made.

In

addition,

th

e

carry

ing

amount

o

f

l

ease

liabilities

is

remeasured

if

there

is

a

mod

ification,

a

change

in

th

e

l

ease

term, a

change

in

the

leas

e p

ayments

(e.g., ch

anges

to

fut

ure

payments

resulting

from

a

change

in

an

ind

ex

or

rate

us

ed

to determine such lease p

ayments) o

r a change in th

e as

sessment of an op

tion to purch

ase the underlying asset.

c

)

Short-term leases a

nd leases

of low-value a

ssets

The Group

applies

the s

hort-t

erm leas

e reco

gnition

exemption

to

its

short

-term leases

of

machinery

and

equipment

(i.e

.,

those

leases

that

hav

e

a

lease

term

of

12

month

s

or

less

from

th

e

commencement

date

and

d

o

not

con

tain

a

purchase

option). It also

applies the

lease of

low

-value assets recognition exemption

to leases of

office equipment that

are

considered to

be

low value.

Leas

e

pay

ments

on

s

hort

-term

leases and

leases of

low-value assets are

recognised

as expense

on a straight

-line basis over the lease term.

2.10 Intangible ass

et

s

Intangible

assets acq

uired separately

are measu

red on

initial recognition

at

cost. The

cost of in

tangible as

sets acq

uired in

a business combination is fair value as at

th

e date of

acq

uisition. Following initial recognition, intangible assets

are

carr

ied

at cost less

any accumulated amortis

ation and a

ny accumulated impairment

losses.

The useful lives of intangible a

ss

ets are assessed to

be either finite or indefinite.

Intangible

as

sets

with

finite

u

seful

lives

are

a

mortised

o

ver

the useful

economic

life

and

as

sess

ed

for

impairment whenever

there

is an

indication

th

at

th

e

intan

gible

as

set

may

be impaired.

The amortisation

period

an

d m

eth

od

ar

e

reviewed at

least

every financial year end.

Intangible ass

ets with indefinite us

eful lives are not amortis

ed, but are teste

d for impairment an

nually, either in

dividually

or at the cash

-generating unit level.

a) Patents

Patents

h

ave

a

finite

us

eful

li

fe

and

are

recorded

at

his

torical

cos

t

less

accumulated

am

ortisation

and

any

accumulated

impairment

los

ses.

Amortisation

is

calc

ulated

using

th

e

straight

-line

meth

od

to

allocate

th

e

cost

of

pat

ents

ov

er

their

estimated useful lives (10

-15 years

). Administrative cos

ts associated with

patents are expens

ed as incu

rred.

b) Computer softwar

e

The

cost

of

acqu

ired

computer

software

lice

n

s

es

is

capitalised

b

ased

on

t

h

e

expenses

i

ncu

rred

to

acquire

and

bring

the

specific software to u

se. These costs a

re amortised over the estimated u

seful life (3 year

s).

50

The

costs

o

f

design

of

software

interfaces,

installing,

testing,

creating

system

and

u

s

er

docu

mentation,

defining

u

ser

reports and d

ata conversion are capitalised t

ogether with the s

oftware cost.

These costs are directly relate

d to developin

g the software application

for the Group’s

use.

Costs associated with maintaining computer software are expensed as incurred. Costs directly associated with the

production of identifiable

and unique software

prod

ucts controlled

by the Group,

which are expected

to generate

economic

b

enefits

in

excess

of

cost

(beyond

one

year)

are

recognised

as

in

tangible

assets.

Direct

costs

includ

e

s

oftware

development

employee

costs

an

d

an

appro

priate

portion

of

relevant

ov

erheads.

Computer

software

developm

ent

costs

recognised as as

sets are amortised o

ver their estimat

ed useful life, not

to exceed three year

s.

c) Research and developm

ent costs

Research

costs

are

expensed

as

incurred.

Development

ex

penditure

o

n

indiv

idual

p

rojects

is

recognised

as

an

in

tangible

asset when the Group

can demonstra

te:

-

The technical feasib

ility of completing th

e intangible ass

ets so th

at it will be available for u

se or sale

-

Its intention t

o complete and its ability t

o use or sell the asset

-

How the asset will generat

e future economic b

enefits

-

The availability of resou

rces to complete the ass

et

-

The ability to measure reliabl

y the expenditu

re during development

Following initial recognition

of the developm

ent expenditure as a

n asset, the asset

is carried at co

st less any a

ccumulated

amortisation

and

accu

mulated

impairment

los

ses.

Amortis

at

ion

o

f

the

asset

begins

when

development

is

complete

an

d

the asset is availa

ble for use. It is a

mortised over the period

of expected future b

enefit (normally 3 years

).

During the period of d

evelopment, th

e asset is tested

for impairment ann

ually.

Contributions

from

extern

al

cu

stomers

an

d

govern

ment

gran

t

in

the

d

evelopment

stage

are

re

corded

as

a

reduction

of

the intangible ass

et up to the amount

that covers t

he cost price. Any surplus

is recorded as revenues.

d) Multi-client library

The

multi-client

library

con

sists

of

surv

eys

of

electromagnetic

dat

a.

The

s

urveys

can

be

li

censed

to

customers

on

a

n

on

-

exclusive

bas

is.

Directly

attrib

utable

cos

ts

associated

with

th

e

productio

n

an

d

developm

ent

of

multi

-c

lient

proje

cts

s

uch

as acquis

ition costs, process

ing costs, and direct p

roject costs are cap

italised.

A

multi

-client

project

is

cons

idered

co

mplete

when

all

co

mponents

or

processes

asso

ciated

with

the

acquisition

and

processing of

th

e

dat

a

are finished, and

all components of

the

data have been

properl

y stored

an

d made

ready for

delivery

to customers.

After

a

project

is

completed,

a

straight

-line

amortisation

i

s

ap

plied.

The

straight

-line

amortisation

is

as

signed

ov

er

the

useful

life,

which

is

set

at

four

years. T

h

e

straight

-line

amortisation

is

distributed evenly

throu

gh

the

financial

year

independently of s

ales during the quarters

.

2.11 Inventories

Inventories

are

valued

at

the

lower

o

f

cost

or

net

realisab

le

v

alue.

Cost

is

determined

using

the

first

-in,

first-out

(FIFO)

method.

Net

realisable

value

is

the

estimated

selling

price

in

the

ordinary

course

of

b

usiness,

less

estimated

costs

of

completion and the estimated

costs

necessary t

o make the sale.

The Group’s invento

ry consis

ts primarily of equipment comp

onents and par

ts, anchors, batteries, and

fuel.

2.12 Impairmen

t of non-financial

assets

The Group

as

sesses, at each

reportin

g date,

wheth

er there

i

s an

in

dication that an

asset may be

impaired. I

f any indication

exists, o

r when

annual

impairment testing

for an

ass

et is

required,

such

as for

goodwill an

d intan

gible ass

ets with

infinite

useful life, the Group estimat

es the ass

et’s recoverable amount.

An asset’s recoverable amount is

the higher of an

asse

t’

s

or cash-

generating unit’s (CGU) fair value le

s

s costs of disposal and its value in u

s

e. Recoverable amount is determined for

an

in

dividual

asset,

unless the

asset

does not

generate

cash i

nflows

th

at

are largely

independent

o

f

those from

other

asse

ts

51

or groups of

assets. When the

carry

ing amount

o

f an

ass

et or

CGU exceeds its

recoverabl

e amount, the

as

set is

cons

idered

impaired and is written d

own to its recov

erable amount.

In

assessing

valu

e

in

use,

the

estimated

future

cash

flows

are

discou

nted

to

their

present

value

using

a

pre

-tax

discount

rate that

reflects current m

ar

ket assessments of

the time

value of

money and the

risks specific

to the

as

set. In

determining

fair value

less costs of

d

isposal, re

cent market transactions are

taken into account. If no

such transaction can

be identified,

an approp

riate valuation model is applied.

The Group bases it

s impairment calculat

ion on budget an

d forecast calculation

s.

Non-financial assets, other than goodwill previously impaired, are reviewed at each reporting date for possible reversal of

the previou

sly record

ed impairment.

A previou

sly recogn

ised impairment

loss

is

reversed only

if there

has

been a

change

in the

estimates

used

to det

ermine th

e

asset’s

recoverable

amount

since

the las

t impair

ment loss

was reco

gnised.

If t

hat

is the

case, the carrying

amou

nt of

th

e asset

is

increased

to its recoverable

amoun

t. That

in

creased amount cannot

exceed

the carrying

amount

that

would

have

been determin

ed, net

of depreciation

, had

no

impairment los

s

been recogni

sed for

the asset in p

rior periods.

2.13 Financial instru

ments

A

financial

instrument

is

any

con

tract

that

gives

rise

to

a

financial

ass

et

of

one

entity

and

a

financial

liability

or

equity

instrument of anoth

er entity.

a) Financial ass

ets

Initial recognition and

measurement

Financial assets

are class

if

ie

d, at initia

l recognition, as s

ubsequently

measured at amortis

ed

cost, fair valu

e through oth

er

comprehensive income (O

CI), an

d fair value thro

ugh profit or loss.

The

classification

of

financial

assets

at

initia

l

recognition

depends

on

the

financial

asset’s

contractual

cash

flow

characteristics

and

th

e

Grou

p’s

busines

s

model

for

managing

th

em.

With

th

e

exception

of

trade

receivables

th

at

do

not

contain

a

significant

financing

component,

the

Group

in

itially

measures

a

finan

cial

as

set

at

its

fair

v

alue

plus

tran

saction

costs. Trade receivables

that do n

ot contain

a significant finan

cing component are meas

ured at th

e transaction price.

Subsequent m

easurement

For purposes

of subsequent measurements

, financial ass

ets are classified in fou

r categories:

-

financial assets

at amortised cost (debt

instruments)

-

financial assets

at fair valu

e through OCI with recycling o

f cumulative gains a

nd losses (debt in

struments)

-

financial

as

sets

d

esignated

at

fair

valu

e

through

OCI

with

n

o

recycling

o

f

cumul

ative

gain

s

an

d

loss

es

upon

derecognition (equity ins

truments)

-

financial assets

at fair valu

e through profit or los

s

Financial

assets

at

amortised

cost

is

th

e

most

relevant

to

the

Group.

The

Group

measures

financial

ass

ets

at

amortised

cost if both o

f the following conditio

ns are met:

-

the

finan

cial

as

set

is

held

wi

thin

a

business

model

w

ith

t

he

objective

to

h

old

financial

assets

in

order

to

collect

contractual cas

h flows, and

-

the

contra

ctual

terms

of

the

financial

asset

give

rise

on

s

pecified

dates

to

cas

h

flows

that

ar

e

solely

payments

of

principal and in

terest on the principal a

mount

ou

tstanding

Financial assets

at amortised cost are s

ubsequently measured usin

g the effective interest (EIR) method a

nd are subject to

impairment.

Gains

and

loss

es

are

recognised

in

pro

fit

o

r

loss

when

th

e

asset

is

derecognised,

mod

ified

or

impaired.

The

Group’s financial a

ssets at amortis

ed cost

includes tra

de receivables.

The Group

does

not have an

y financial as

sets measured

at

fair value th

rough OCI, financial

ass

ets designated at

fair value

through OCI, or

financial ass

ets at fair value throu

gh profit or loss.

Derecognition

A

financial

asset

is

derecognised

when

the

rights

to

receive

cas

h

flows

from

the

as

set

have

expired;

or

th

e

Group

h

as

52

transferred

its

rights

to

receive

cash

flows

from

the

ass

et

or

has

as

sumed

an

ob

ligation

to

pay

the

received

cash

flows

in

full

without

ma

terial

delay

to

third

party

u

nder

a

“pass

-

through”

arrangement;

and

either

(i)

the

Group

has

trans

ferred

substantially

all

the

risks

and

rewards

of

th

e

ass

et,

or

(ii)

the

Group

has

neither

transferred

nor

retained

s

ubstantially

all

the risks an

d rewards relating to th

e ass

et, but has transferred con

trol of the ass

et.

Impairment of financ

ial assets

For

trade

receivab

les,

the

Gr

oup

ap

plied

a

simplified

app

roach

in

calculating

expected

credit

loss

es

(ECL

).

The

Group

recognises

a

los

s

allowance

based

on

lifetim

e

E

CLs

at

ea

ch

reporting

date.

This

is

b

ased

on

the

h

istorical

credit

los

s

experience, adjusted

for forward

-looking factors

specific to th

e debtors and

the economic environment

,

see Note 3 b).

b) Financial liabilities

Initial recognition and

measurement

Financial

liab

ilities

are

clas

sified,

at

initia

l

recognition,

as

financial

liabilities

at

fair

value

th

rough

profit

or

loss,

loans

and

borrowings, pay

ables, or as derivatives d

esignated as

hedging instruments in a

n effective hedge, as a

ppropriate.

All

financial

liabilities

are

r

ecognised

initially

at

fair

value

and,

in

the

cas

e

of

loans

and

borrowings

an

d

pay

ables,

n

et

of

directly attributab

le transaction costs

.

The Group’s financial liab

ilities includ

e trade and oth

er payables, loans and bo

rrowings

.

Subsequent

measurement

The measurement of finan

cial liabilities d

epends on th

eir classification, as

described below:

Financial liabilities a

t fair value through p

rofit or loss

Financial

liabilities

at

fair

value

through

profit

or

loss

include

financial

liabilities

held

for

tradin

g

and

financial

liabilities

designated upo

n initial recognition a

t fair value

through

profit or loss.

This

category

most

relevan

t

to

the

Group.

After

initial

recognition,

in

terest

-bea

ring

loan

s

an

d

borrowings

are

subsequently

me

asured at amortised

cost using the

E

IR method.

Gains

and

losses

are

recognised in

p

rofit or

loss

when

the

liabilities are derecognis

ed as well as th

rough the EIR

amortisation p

rocess.

The EIR amortization is

included as fin

ance costs in

the statement of profit or loss

.

This category app

lies to interest

-bearing loans an

d borrowings.

Convertible bond

The con

vertible

bond

is

separated

in

to

a

liability

and

an

equity

component.

On

issuance

of

the

convertible

bon

d,

the

fair

value

o

f

the liability

compon

ent is

determined using

a market

rate for

equivalent non

-convertible instrument. T

h

is amount

is

class

ified

as

a f

in

ancial lia

bili

ty me

as

ured at

amortised

costs (net

of

tra

nsaction co

s

ts) u

n

til

it

is

extinguis

hed

on

conversion

or

redemption.

The

remaind

er

of

th

e

proce

eds

is

allocated

to

the

conv

ersion

option

that

is

recognised

and

included

in

equity.

Trans

action

costs

are

dedu

cted

fr

om

equity.

The

carrying

amount

of

th

e

conversion

option

is

not

remeasured

in

sub

sequent

years.

Trans

action

costs

are

apportioned

between

the

liabil

ity

an

d

equity

components

of

the

convertible

bond,

based

on

the

allocation

of

proceeds

to

th

e

liab

ility

and

e

quity

components

when

the

instrument

is

initially recognised.

Derecognition

A

financial

liability

is

derecognis

ed

when

the

obligation

u

nder

the

liab

ility

is

dis

charged,

cancelled

or

expires.

When

an

existing financial

liability

is

replaced by

another

from the

same lender

on s

ubstan

tially different terms,

or th

e terms

of an

existing liability are substantially modified, this is

treat

ed as derecognition of

th

e original liability and

recognition of a new

liability. The difference in t

he respectiv

e carrying amounts

is recognis

ed in the income s

tatement.

2.14 Taxes

a) Current income tax

Current income

tax as

sets

and liabilities

for th

e current

and p

rior period

s are measu

red us

ing the

amount expected to

be

53

recovered from or paid to the taxation au

thorities. The tax rates and tax laws used to compute the amoun

t are those that

are

enacted

or

sub

stantively

enacted

at

the

reporting

dat

e

in

the

countries

where

the

Group

operates

and

generat

e

s

taxable income.

Current income tax relating

to

items recognised directly in equity is

recognised in equity and not

in the income statement.

Management

periodically

evalu

ates

positions

taken

in

the

ta

x

returns

with

respect

to

s

ituations

in

which

applicab

le

tax

regulations are su

bject to interpretation

and estab

lishes provisions where app

ropriate.

b) Deferred tax

Deferred

tax

is

pro

vided

for

us

ing

the

liability

method

on

temporary

differences

b

etween

the

tax

b

ases

of

assets

and

liabilities

and

their

carr

ying

amounts

in

the

consolida

ted

financial

statements.

Deferred

tax

is

d

etermined u

sing

tax

rates

(and laws)

that

have

been enacted or

s

ubstan

tially enacted

on the balance

s

heet date

and

are

exp

ected to

app

ly when

the

related deferred tax ass

et is realised

or the deferred t

ax liability is s

ettled.

Deferred tax

ass

ets are

recognised

to the

extent that it

is

probable that

futu

re

taxab

le profit

will be

availab

le

against which

the temporary differences

can be utilised.

Deferred ta

x

is

provid

ed

on

t

emporary

differenc

es

arising

on

investments

in

subsid

iaries, except

where

th

e ti

ming

of

the

reversal

of

the

te

mporary

diff

erence

is

controlled

by

th

e

Grou

p

an

d

it

is

probab

le

that

the

temporary

difference

will

n

ot

reverse in the foreseeable fut

ure.

Deferred tax relating to ite

ms recognised directly in eq

uity is recognised in

equity an

d not in the income statement.

c) Sales tax

Expenses an

d assets are recognised n

et of the

amount

of sales tax, except:

-

When

the

s

ales

tax

incurred

on a

purchase

of

ass

ets

or

services is

not

recoverable

fro

m

the

taxation

authority

,

in

which

case,

the

sales

ta

x

is

recognised

as

part

of

the

cost

of

acqu

isition

of

th

e

ass

et

o

r

as

part

of

the

expens

e

item,

as

applicable

-

When receivables and p

ayables are stated with

the amount of s

ales tax in

cluded

The

net

amou

nt

of

sales

tax

recov

erable

f

rom,

or

payable

to,

th

e

ta

xation

authority

is

included

as

part

of

receivables

or

payables in t

he statement of financial p

osition.

2.15 Employee benefit

s

a) Pension ob

ligations

The

Compan

y

operate

s

a

defined

contribution

plan.

The

net

pens

ion

cos

t

for

the

period

is

presented

as

an

employee

expense.

b) Share-based p

ayments

The

Group operates

an e

q

uity-settled, share-based compensation

plan. T

h

e

cost of

equity

-settled transactions

with

employees is

measured

by

reference to th

e fair

value at

the

date o

n which

they

are granted.

The fair v

alue is

determined

by an external v

aluation expert using a

n appropriate pricing model, furth

er details are given in

Note 1

5.

The

cost

of

equity

-settled

tra

nsaction

s

is

recognised

in

Employ

ee

expenses

,

together

with

a

correspon

ding

increase

in

equity, o

ver the period

in which

the

performance and

/or service con

ditions

are fulfilled,

ending on

the dat

e on which

the

relevant employees be

come fu

lly entitled to

the a

ward (the

vesting d

ate). The cu

mulative expens

e recognised

for equity

-

settled

trans

actions

at

each

repo

rting

date

u

ntil

the

vestin

g

dat

e

reflects

the extent

to

which

the

vestin

g

period

has

expire

d

and the

Group

's best

estimate of

the number of

equity

instruments that

will ultimately

v

est. The

income statement charge

or

credit

for

a

period

represents

the

moveme

n

t

in

cumulative

expense

recognis

ed

as

at

the

beginn

ing

and

end

of

that

period.

When

option

s ar

e exe

rcised,

the

proceeds

received

net

of

any

dir

ectly

attrib

utable trans

action

costs

are

credited

to share capita

l (nominal value) and s

hare premium.

Social

security

ta

x

on share-based compensation

is recorded

as a

liability and

recognised

o

ver

the estimated

option period.

The

social security tax

is

ca

lculated using

the appropriate

tax

rate

on

th

e

difference between

market price

and the

ex

ercise

price on the measure

ment date.

54

c) Bonus plan

s

The

Group

recognises

a

provision

for

bonus

expenses

where

con

tractually

obliged

or

where

there

is

a

past

practice

th

at

has created a con

structive ob

ligation.

2.16 Provisions

Provisions

are recognised

when

th

e

Group

has a

present o

b

ligation as

a

result of a

past

event, it

is

probab

le

that an

outflow

of resources embodying economic benef

its

will be

requ

ired to settle the

obligation and a r

eliable estimate can be

made of

the amount of the ob

ligation.

2.17 Cash and short-t

erm deposits

Cash

an

d

sh

ort-term

depos

its

in

th

e

statement

of

financial

position

and

consolida

ted

statement

of

cash

flows

compris

e

cash

at

banks

and

o

n han

d and

s

hort-term

highly

liquid

deposits

with

a

maturity

of

three

months

or

less,

that

are

readily

convertible to a kn

own amoun

t of cash

and subject to an insignifican

t risk of chan

ges in value.

2.18 Changes in acc

ounting policies and disclosures

The accounting principles

adopted are con

sistent with th

ose of the previous y

ear.

2.19

Standard

s and interpretations issued,

but not yet adopted

The

finan

cial

statem

ents

h

ave

been

prepared

based

on

standard

s

effective

for

the

year

ending

31

Decemb

er

2021.

IASB

has

iss

ued

standards/amendments

to

standar

ds

that

are

not

y

et

effective

.

The

Group

does

not

expect

these

standards/amendments

to

hav

e

an

impact

on

th

e

Gro

up’s

financial

p

osition,

p

erformance,

pres

entation

and/or

disclosures.

The

Group plans

to implement

the new

standards, amendments and

interpretations when

they

are effective

and

approved

by EU.

Note

3

–

Financial ri

sk management objectives

and policies

The Group

’s

principal

finan

cial

liabilities

comprise

trade

an

d

other

pay

ables

and

loans

and

bo

rrowings.

Payments

EMGS’s

Senior

Unsecur

ed

Convertible

Bond

2018/

2023

are

p

aid

qu

arterly

and

are

interest

only.

Th

e

main

purpos

e

of

these

financial

lia

bilities

is

to

finance

for

the

Group’s

operation

s.

The

Group

has

various

finan

cial

assets

such

as

trade

receivables, cash an

d short

-term deposit which derive

directly from its

operations.

The

Group

is

expos

ed

to

ma

rket

risk,

credit

risk

and

liquidity

ris

k.

The

Group's

execut

ive

management

o

versees

th

e

management of these risks. The Board of Directors reviews and agrees

p

olicies for managing each of these risks which are

summarised below.

The Group d

id

n

ot apply h

edge accounting in

202

1 or

2020

.

a) Market risk

Market risk is th

e risk that

the fair value of future cas

h flows of a

financial instru

ment will fluctuate becaus

e of changes i

n

market prices. Market prices

comprise two types o

f risk for the Group: in

terest rate risk and

currency ri

sk.

The

sensitivity

analy

sis

in

the

following

sections

relate

to

th

e

positio

n

as

of

31

Dece

mber

20

21

and

2020

.

The

s

ensitivity

analysis

has

been

prepared

on

th

e

b

asis

that

the

amount

of

n

et

d

ebt

and

the

portion

of

financial

instruments

in

foreign

currencies

are

al

l

consta

nt.

The

analys

is

excludes

the

impact

of

mov

ements

in

market

v

ariables

on

the

carrying

valu

e

of

pension, pro

visions and on the non

-financial ass

ets and liabilities of fore

ign operations

.

The sensitiv

ity of

the relevant

income

statement

item is

the effect

of the

assumed

changes

in respective market

risk.

This

is based o

n the financial assets and

financial liabilities held

as o

f 31 December

20

21 and

2020

.

i) Interest rate risk

Interest

rate

risk is

th

e

risk

that

the

fair

v

alue

of

future

cas

h

flows

of

a

financial instrument

will

fluctu

ate

because

of

c

han

ges

55

in

market

interest

rates.

The

Group's

exposu

re

to

the

risk

of

chan

ges

in

market

int

erest

rates

relates

primarily

to

t

he

Group's long-ter

m loan with float

ing interest rate.

With all

other

variables

held c

onstan

t

, a

reasonably

possible

increase

in

LIBOR o

f 1

% will

increas

e th

e Grou

p's an

nual

net

interest expense on th

e long-term loa

n by a

pproximately 32

5 as of 31 Dece

mber 2021 (

20

:

31

7

).

ii) Foreign currency risk

Foreign

currency

risk

is

the

risk

that

the

fair

valu

e

of

future

cash

flows

of

a

finan

cial

instrument

will

fluctu

ate

because

o

f

changes

in

foreign

exchange

rates.

The

Grou

p

operates

internationa

lly

and

therefore

ha

s

exp

osure

to

foreign

exchan

ge

risk

arising

from

trans

actions executed

in

o

ther

currencies

than

th

e fun

ctional

currency

of each

compan

y.

EMGS

ASA

has

USD as

functional

currency,

hence

the for

eign currency

risk

is

primarily with

respect

to

NOK

in E

MGS ASA.

Approximat

ely

91

% of the Group’s

sales are denominated

in USD, whilst

app

roximately

70

% o

f costs a

re denominated in USD in

202

1

.

Foreign exchange risk

arises from future com

mercial transaction

s, recognised as

assets and liabilities.

The

follo

wing

table

summarises

th

e

sensitivity

to

a

reasonably

po

ssible

ch

ange

in

the

NOK

exchange

rate,

with

all

oth

er

variables held

constant, of

the

Group’s

profit before

tax

(due to

changes in

the f

air value

of

monetary

as

sets and

liabilities).

The Group's exposure to forei

gn currency ch

anges on equ

ity and for all

other currencies is n

ot material.

b) Credit risk

The

Group is

exposed to

credit

risk

from its

operating

activities (primarily

for

trade rece

iv

ables and

cash

and cash

equivalents). See Note 2

0 for aging an

alysis of tra

de receivables.

i) Trade receivables

The Group trades with recognised,

creditworthy third parties. It is the Group’s policy that all customers who wish to trade

on credit

terms are

s

ubject to

credit verification procedures. In

ad

dition, receivable

b

alances are

monitored

on an

ongoing

basis.

The requirement for an i

mpairment charge is analy

sed at each reportin

g date on an

individual bas

is for each customer.

For trade receivables, the Gro

up app

lied a simplified approach in ca

lculating expected credit

losses (ECL). The Grou

p

recognises a loss

allowance bas

ed on expected credit los

ses at each reportin

g date. This is b

ased on the his

torical credit

loss experience, adjus

ted for forward

-looking factors s

pecific to the debto

rs and the economic environ

ment

, s

ee Note

2.13

a)

.

The

maximum

expos

ure

to

cr

edit

ris

k

at

the

repor

ting

date

is

the

carry

ing

valu

e

o

f

each

clas

s

of

financial

ass

ets.

With

respect

to

cr

edit

risk

arisin

g

from

the

other

financial

ass

ets

of

the

Group

su

ch

as

cash

and

cash

equivalents,

the

Group’s

exposure

to

credit

risk

aris

es

from

default

of

the

cou

nter

party,

with

maximum

exposu

re

equal

to

the

carrying

amount of these ins

truments.

c) Liquidity risk

Liquidity risk

is

the risk

that

the

Company

will not

have

s

ufficient

liquidity

to be

able

to m

eet its

financial

ob

l

igations. EMGS’

sources

of liquidity

include cash

balances,

cash flow

from operations,

borrowings, it’s

existing

and new

bank facilities

and

further debt and eq

uity issues. It is th

e Company’s objective to b

alance these sou

rces of liquidity.

The

Group

’s

convertible

bond

contains

a

finan

cial

cov

enant

requiring

free

cash

an

d

cash

equiv

alents

of

at

least

USD

2

.5

million. As of 31 D

ecember

20

21, th

e free cash

and cash

equivalents t

otaled USD

9.9 milli

on

. E

MGS’ management follo

ws

the Group

’s liq

uidity risk

clos

ely.

The financial liabilities with maturity less than one year

will be settled through cash flow from

op

erating activities in

2022.

A

mounts

i

n

USD 1 00

0

In

c

reas

e/

decr

eas

e i

n

NOK r

a

te

Ef

fect on

incom

e/(l

oss

)

befo

re t

a

x

2021

+20%

25

-

-20%

25

2020

+20%

70

-20%

70

-

56

While

EMGS

is

still

working

on

s

ecuring

meanin

gful

backlog,

the

flexible

operating

cost

base

allows

EMGS

to

significantly

reduce costs

d

uring periods

of vessel warm

s

tack. Management considers the liquidity

throughout

202

2 sufficient

to cover

both the Group

’s net current liabilities per 31 De

cember

20

21 an

d estimated cas

h-need in

202

2.

The

table

below

summarises

the

mat

urity

p

rofile

of

the

Group’s

financial

liabilities

31

December

based

on

contra

ctual

payments.

See Note 23 for financial liab

ilities.

Electromagnetic

Geoservices

ASA

Senior

Unsecured

Con

vertible

Bonds

2018/2023

with

a

current

outstanding

amou

nt

of

USD

24

.5

million

con

tains

a

finan

cial

covenan

t

requiring

free

cas

h

an

d

cas

h

equ

ivalents

of

at

least

USD

2.5

million

.

In

addition,

t

he

bond

agreemen

t

restricts

the

Compan

y

's

ability,

among

other

things,

to

sell

multi

-client

library,

declare

or

make

any

dividend

payments,

incur

add

itional

indebtedness

,

change

our

b

usiness, an

d

enter

speculative

financial

derivative agreements.

i) Capital management

For

th

e

purp

ose

o

f

the Group's

cap

ital

managem

ent,

capital includes

equity attributable

to the

equity

h

older

of the

parent.

The

pri

mary

objective

o

f

th

e

Group’s

cap

ital

management

is

to

ensure

healthy

capita

l

ratios

to

s

upport

its

business

and

ma

ximise shareholder v

alue.

In

order

to

achieve

this

overall

ob

jective,

the

Group's

capital

management,

amongs

t

other

th

ings,

aims

to

ensure

that

it

meets

finan

cial

covenan

ts

attached

to

the

interest

-bearing

loans

and

b

orrowings

th

at

d

efine

capital

structu

re

requirements.

Breaches

in meeting

th

e

financial

covenan

ts

would

permit

the

lend

ers

to

immediately

call

loans and

borrowings.

There

have

b

een

no

breaches

in

the

financial

covenants

of

any

interest-bearing

loans

and

borrowings

in

the

current period.

The Group

manages its

cap

ital structure

and

ad

justs it

considering

changes

in economic

conditions

. To

maintain or

adjust

the capital stru

cture, the Group may r

efinance its

debt, issue new sh

ares or

sell assets

.

Note 4

–

Signifi

can

t accounti

ng estimates,

judgements and assu

m

ptions

The

preparation

of

the

Group’s

financial

statements

requires

management

to

mak

e

estimates,

judgements

and

assumption

s

that

affect

the

reported

amounts

of

revenues,

expenses

,

assets

and

liabiliti

es.

Uncertainty

ab

out

these

assumption

s

and

estimates

could

result

in

outcomes

that

could

requ

ire

a

material

adjustment

to

th

e

carrying

amount

of

the

assets

or

liab

ilities

affected

in

the

future

periods

.

Estimates

and

judgements

are

con

tinually

evaluat

ed

a

nd

are

based

on

historical experie

n

ce

and

other

factors,

including

exp

ectations

of

futu

re

events

that

are

believed

to be

reas

onable

under

the circumstances.

4.1 Estimates and

assumptions

The

Group

makes

estimates

and

assumptions

con

cerning

the

futu

re.

Th

e

resulting

accounting

estimates

could

deviate

from the actual results. The

es

timates and assu

mptions that have a significant risk of

caus

ing a m

at

erial adjustment to the

carrying amounts

of assets and liabilities with

in the next fin

ancial year are discu

ss

ed b

elow.

A

mounts

i

n USD 1 0

0

On

d

em

and

Les

s

th

a

n

3 m

on

th

s

3 to

6

m

o

n

th

s

6 m

on

th

s

to

1

year

1 to

2

year

s

2 to

5

year

s

> 5

year

s

Tot

a

l

Ye

ar

en

d

ed

31 Decemb

er

2021

In

ter

es

t bear

i

ng l

oans

a

nd

b

o

rr

ow

ings

0

411

822

25,322

0

26,96

6

Tr

a

de a

nd

ot

her

payables

0

3,00

4

289

3,5

15

0

6,808

Oth

er fi

nan

c

ia

l

li

a

bili

ties

0

1,86

0

1,906

2,47

4

522

0

6,761

Ye

ar

en

d

ed

31 Decemb

er

2020

In

ter

es

t bear

i

ng l

oans

a

nd

b

o

rr

ow

ings

0

472

944

1,88

7

33,459

0

37,23

4

Tr

a

de a

nd

ot

her

payables

0

2,70

8

314

5,3

39

0

8,361

Oth

er fi

nan

c

ia

l

li

a

bili

ties

0

679

1,480

3,442

6,10

0

274

0

11,976

57

Impairment of non-

financial a

ssets

An

impairment

exists

when

the

carrying

value

of

an

as

set

or

cash

generating

unit

exceeds

its

recoverable

amoun

t,

which

is the higher

of its fair value

less

costs of

dispos

al and its

value in use. The

valu

e in use cal

culat

ion is based

on a

dis

counted

cash

flow

(DCF)

model.

The

cash

flows

ar

e

derived

fro

m

th

e

financial

budget

approved

by

th

e

management

and

do

n

ot

include restru

cturing act

ivities

that

the Grou

p is

not

yet committ

ed to

or

significant

future

investm

ents

that

will

enhance

th

e

asset’s

performance

of

t

he

cash

generating

unit

being

(CGU)

tested.

Th

e

recoverab

le

amount

is

sensitive

to

the

discount

rate used

for the

DCF

model

as

well as

th

e expected

futu

re cash

-inflows

and

the

growth

rate

used

for

extrapolation purposes. These e

s

timates are m

o

st relevant to the

multi-

client library

an

d DeepBlue (see description

u

nder

Assets

under

con

struction

below)

recognised

b

y

the

Group

.

The

key

assumptions

used

to

d

etermine

the

recoverable

amount, includ

ing a sensitivity analys

is, are disclosed and furth

er explained in Note 16.

DeepBlue

At least

annually, management forecasts future

cash flows

from the

Join

t

In

d

ustry Project (

“the

DeepBlue

”). T

he

DeepBlue

is

the

EM

eq

u

ipment.

The

project

has

been

o

n

-going

s

ince

20

12

.

E

MGS

performed

its

first

commercial

survey

with

the

DeepBlue

equipment

in

2017.

T

he

net

carr

ying

valu

e of

th

e

DeepBlue

as

of

31

December

20

21

of

11

414

(

2020

:

15

0

00

) has

been recorded as prop

erty, plant and equipment.

The partner con

tributions with a total value of

4

812

as of 31 December 2

021 (

2020

:

9

625

) are recorded as

contract liability

.

In

estimating

future

cash

flows,

future

market

demand

and

addition

al

expenses

to

operate

the

v

essel

are

ta

ken

in

to

account

.

Becaus

e

the

inherent

difficulty in

estimating

these

factors,

it

is

possib

le

that

future

cash

flows

from

th

ese

activities

will

not

b

e

sufficient

to

recover

the

existi

ng

carry

ing

valu

e

of

the

DeepBlue.

S

ee

Note

17

for

more

details

regarding

the

impairment test.

Impairment of financial as

sets

In

September

20

21,

Mexican

bank

regulato

rs

revoked

Accend

o

Banco

S.A.’s

banking

lic

ense

and

initiated

a

liquidation

process

of

the

bank.

EMGS

had

deposits

with

Accendo

of

approximately

USD

2.1

million.

E

MGS

was

entitled

to

receive

approximately

USD

135

thou

sand

from

the

Mexican

Bank

Savings

Protection

Fund.

An

im

p

airment

of

the

depos

its

in

the

Accendo

account,

less

th

e

U

SD

135

thous

and,

was

made

a

t

the

end

of

the

third

qu

arter

2021

in

th

e

amount

o

f

USD

1.9

million.

A

reliable

recovery

estimate

is

n

ot

po

ssible

at

this

time,

s

o

no

adju

stment

to

the

impairment

has

b

een

ma

de

subsequent

to the end of 2021

.

Delayed revenue recognition

In the

fourth q

uarter of 2021,

EMGS

elected to

delay

recognition

of USD 0.8

million in

uplift revenu

e as

a cons

equence of

a dispute with a

customer, for which E

MGS cannot reliably estimate t

he outcome.

Taxes

Uncertainties exist with respect to the interpretation of

complex tax regulations, changes in tax laws, and the

amou

nt and

timing

of

futu

re

taxable

income.

The

Group

is

subject

to

income

taxes

in

several

ju

risdictions.

Given

the

wide

range

of

international

business

relationships,

differences

aris

ing

between

the

act

ual

resu

lts

an

d

the

assu

mptions

made,

or

future

changes

in

su

ch

as

sumptions,

could

necess

itate

future

adju

st

ments

to

tax

income

and

expense

alread

y

r

ecorded.

The

Group establish

es provisions, bas

ed on reason

able estimates, for pos

sible consequences of aud

it by the tax

authorities of

the

respective

countries

in

wh

ich

it

operates.

The

a

mount

of

such

prov

isions

is

based

on

several

factors,

s

uch

as

the

experience of previous tax audits and differing interpretation

s of tax regulations by the taxable entity and the responsible

tax

au

thority.

Such

differences

in

interpretation

may

arise

for

a

wide

variety

of

iss

ues

depe

nding

on

the

cond

itions

prevailing in the respective domicile of

the Group companies

. EMGS has USD 1.5 million included as a rece

iv

able based on

prepaid taxes in M

alaysia related to a 2019 s

urvey.

Deferred

tax assets

are

recognised for

unused tax lo

s

ses to

the

extent

that it

is probable

that

taxab

le

profit will

be

availab

le

against

which

the

loss

es

can

be

utilis

ed.

Significant

management

judgement

is

required

to

determine

th

e

amou

nt

of

deferred

tax

assets

th

at

can

be

recognised,

bas

ed

upon

the

like

ly

timing

and

the

lev

el

of

future

taxable

pro

fits

together

with future tax plan

ning strategies.

Unrecognised tax ass

ets as

of 31 December

20

21 ar

e

89

058

(

2020

:

90

569

).

Useful lives of the Group’s

property, p

lant and equipment, a

nd intangible a

ssets

The

Group’s management determines the e

s

timated useful lives and related depreciation and amortisation charges for its

58

property,

plant,

and

equipment

an

d

in

tangible

assets.

This

es

timate

could

change

s

ignificantly

as

a

result

of

technical

innovations

and

incr

eased

competition

.

When remaining

useful

lives

o

f

ass

ets

are

det

ermined to

be

too

high, management

will

make

ap

propriate

estimat

e

revis

ions

and

ad

just

depreciation

charges

pros

pectively.

Items

determined

to

be

technically obsolete or which

hav

e been abando

n

ed will be written off completely.

4.2 Judgement

In the

process

of ap

plying

the Group's

accounting

policies,

management

has

made the

following

judgements,

which

have

the most significant

effect on the amounts

recognised in the conso

lidated

finan

cial statements:

Revenue recognition

IFRS

15

requires

entities

to

exe

rcis

e

ju

dgement

taking

into

consideration

all

the

rele

vant

facts

and

circumstances

when

applying each s

tep of the model to contracts with their customers.

The Group u

ses the percentage o

f completion meth

od

in

accoun

ting

for

its

proprietary

contract

s,

as

the

revenu

e

shou

ld

be

recognised

ov

er

time

by

meas

uring

th

e

progre

ss

towards complete satis

faction of the performance obligatio

n.

Progress

is measured in a manner generally cons

istent

with

the

physical

progress

on

the

project.

Use

of

the

percentage

of

completion

method

requires

the

Group

to

estimate

the

services performed to date as a proportion of the total services to be

perfor

med. The proportion of services performed to

total servic

es to

be performed can d

iffer from management’

s estimates, influencing

the amount of revenue recognis

ed in

the period.

Determining the lease term of

contracts

with renewal option

s

–

Group a

s lessee

The

Group

deter

mines

the

le

ase

term

as

th

e

non

-cancella

ble

term

of

the

l

ease,

together

with

an

y

periods

cov

ered

by

an

option

to

extend

the

lease

if

it

is

reas

onably

certain

to

be

exercised.

The

Group

has

lease

contra

cts

for

o

ne

vessel

that

includes extension

options. The Group ap

plies judgement in evaluation whether it is reasonably

certain whether or not to

exercise the

option

to

renew th

e lease.

That

is,

it con

siders all

relevant

factors th

at create

an

economic inc

entive for

it

to

exercise the renewal. After the commencement date, the Group reassesses

the lease term

if there is a significant event or

change in circumstances

that is within

its control a

nd affects its ability to

exercise or not to exercise the option t

o renew

.

The

rene

wal periods f

or the vessel

Atlan

tic Guardian are

not included as part

of the

lease term

as

these

are not re

as

onably

certain to be exercised.

Refer to Note 27 for infor

mation on

leases.

Development costs

Development

costs

are

capitalised

in

accord

ance

with

accounting

policy

in

Note

2.10

c).

Initial

cap

italisation

of

costs

is

based

on

management’s

ju

dgement

that

technological

and

economic

feas

ibility

is

confirmed,

usually

when

a

p

roduct

development

project

h

as

reached

a

defined

mil

estone

according

to

estab

lished

project

manag

e

ment

model.

As

of

31

December 2021, the carry

ing amoun

t of capitalised

development cos

ts is

419

(

2020

:

9

35

).

4.

3 Liquidity and G

oing Concern Assumption

The Group has

prepared

its financial

sta

tements under the going con

cern ass

umption, and the Board

confirms in

accordance

with

Section

3

-3a

of

th

e

Norwegian

Accoun

ting

Act

th

at

the

goin

g

concern

as

sumption

is

applicable.

The

Group’s reported

results, its

bu

siness

s

trategy, it

s

current budgets

and

financing,

as well

as

its long-term

strategic forecasts

provide th

e bas

is for

the goin

g concern

ass

umption.

See als

o “Liqu

idity

risk”

above

for more

information ab

out

the goi

ng

concern assu

mption.

The

Group

is

operating

with

negative

equity,

an

d

with

limited

liquidity.

The

cash

position

as

of

31

December

2021

was

USD 9.9

m

illion.

As

further

described

under

Risks

an

d

un

certainty

factors

,

t

h

e

Compan

y’s

outstanding

convertible

b

ond

and

its

bank

facilities

contain

finan

cial

covenan

ts

requirin

g

that

the

Compan

y

has

a

minimum

of

USD

2.5

m

illion

in

free

cash and /

or cash equivalents.

The going concern as

sumption is d

ependent on, amongs

t other things,

s

ecuring backlog in H2

2022

.

As of 31 December 2021,

the carrying value of the Group’s

equity was negative USD

2.5

million,

up

from negative USD 7.4

million at the end of 20

20

. Th

e free cash bala

nce at the end of 202

1 was U

SD 9.9 million.

59

The

Compan

y’s

equity

amounted

to

negativ

e

N

OK

95

.4

million

as

of

31

December

202

1,

down

from

N

OK

87

.2

million

at

the

end

of

20

.

The

Board

of

Directo

rs

are

taking

steps

to

address

the

negative

equity

an

d

are

considering

a

n

umber

of

alternatives

in

this

regard

.

Sh

ould

these

steps

fail

to

mate

rialize

in

a

timely

manner,

th

e

going

concern

ass

umption

is

at

risk.

Note 5

–

Shared reve

nue

The

Gr

o

up

has

entered

several

coop

eration

agreements

regarding

E

M

multi-clien

t

surveys

in

th

e

Barent

s

Sea,

Gulf

of

Mexico and Brazil

.

Th

e cooperation

agreements are joint

o

perations.

EMGS

has

received

funding

and/or

seismic

data

against

a

revenue

share

on

prefunding

,

late

sales

and

uplift

revenues

.

EMGS

has

provided

the

vessel,

performed

the

data

acq

uisition

and

finally

pro

vide

d

the

data

proces

sing

services.

The

acquired dat

a remains the prop

erty of EMGS.

When

EMGS

licenses

d

ata

to

custo

mers

in

areas

sub

ject

to

revenue

sharing,

the

Group

invoices

and

collects

pay

ments

from the customers for

th

e entire

sales

amount. The related accounts receivable is presented

gros

s, while the

p

ortion due

to the partner up

on collection from the cus

tomer is present

ed as a s

hort

-term liability.

EMGS'

s

hare

of

the

revenue

from

the

sale

of

multi

-client

library

with

cooperation

agreements

in

20

21

is

3

0

37

(

2020

:

1 016

).

Note 6

–

Segme

n

t

For

management

purpos

es,

the

Group

is

organ

ised

into

one

reportable

segment.

The

Group

offers

E

M

services,

and

the

sale contracts a

nd costs are incurred worldwid

e.

The

Group

uses

a

patented

electro

magnetic

s

urvey

method

to

find

hydrocarbons

in

offshore

reservoirs.

The

Group

’s

services help oil and

gas companies

to improve their exploratio

n success rat

es.

Management

monitors

th

e

operating

result

o

f

th

e

single

reportable

segment

for

the

purpos

e

of

making

decision

s

about

resource allocation an

d performance asses

sment.

No

op

erating

s

egments

hav

e

been

aggregated

to

for

m

the

above

reportable

o

perating

s

egment.

The

customers

are

international oil compan

ies and th

e risk and pro

fitability a

re similar in the different geog

raphical areas.

The Group's

property,

plant

and equipment

are mainly

the survey

equipment

on the vessels.

As

the surveys

are executed

worldwide, the Group is

not able to allocate an

y assets

to different geograph

ical ar

eas.

EMGS'

rev

enu

e shar

e

Mult

i-c

lien

t

surv

ey

Brazil

2013

95 %

Ba

r

ents

Sea 2013

70 %

Ba

r

ents

Sea 2014

50 %

Gu

l

f

of M

exi

co 2014

90 %

Ba

r

ents

Sea 2015

50 %

Ba

r

ents

Sea 2016

50 %

Ba

r

ents

Sea 2017

50 %

60

Geographic infor

mation

Revenues from external cus

tomers:

The revenue information a

bove is bas

ed on the location o

f the survey.

T

wo

external customers amou

nted to 10% or more of the Group's total revenues in

20

21 (one single external customer in

2020

). Total revenues fro

m

th

ese

customers were in

20

21 7

278

and

7 190 (for

2020

:

8

040

).

Note 7

–

Charter

hire,

fu

el and crew expenses

Note 8

–

Employee

expenses

The average number of full

-time equiv

alents was

15.5 in

20

21 (

20

:

72

).

The average number of full

-time equ

ivalents in

management

was

3

in

202

1 (

2020

:

3.75

).

See Note 6 in the Financial

Statements o

f EMGS ASA for Ex

ecutive Manage

ment and Board o

f Directors remuneration.

A

mounts

i

n USD 1 0

00

2021

2020

Eur

op

e, Midd

le

Ea

s

t and Afr

ic

a*

0

2

,155

No

rw

ay

11,4

66

14,4

21

No

rt

h and

So

uth

Am

erica

10,1

48

8,26

8

Asi

a

nd

the Pacifi

c

O

cean

7,26

1

73

Tot

al

28,875

24,916

A

mounts

i

n

USD 1 00

0

2021

2020

Chart

er hir

e

and cr

ew expenses

658

456

Fu

el

1,847

1,848

Agent

fee

0

With

ho

l

din

g

tax

cost

261

-161

Ca

pitali

s

a

tio

n of mu

lti-c

li

ent

cos

ts

-1,431

-62

9

Other

exter

nal

s

er

vic

es

2,166

2,262

Obs

olete inven

to

ry

0

2,148

Tot

al

c

har

t

er

hir

e, fu

el

and

cr

ew expen

ses

3,502

5,924

A

mounts

i

n

USD 1 0

0

2021

2020

Emp

loy

ee

expenses

Sala

r

i

es

2,453

7,730

So

ci

a

l

s

ec

ur

ity tax

247

892

Pen

s

ion

c

osts

(

No

te 22)

189

514

Other

paym

ent

s

118

672

Cos

t of s

hare bas

ed paym

ent

(No

te 15)

6

10

Tot

al

emp

loy

ee

expenses

3,012

9,818

Compen

sation

o

f k

ey

man

ag

ement

p

erson

nel

o

f t

h

e Gr

ou

p

Sala

r

y

720

944

Bon

us

paid in the year

43

0

Sh

a

r

e

op

tion

s

2

Pen

s

ion

ben

ef

its

42

Other

benefits

5

19

Tot

al

man

ag

ement

remu

n

erat

io

n

812

1,007

61

Note 9

–

Other o

p

erating expen

ses

The fees to auditor

are for the Group

included su

bsidiaries,

and do not includ

e VAT.

Note 10

–

Resear

ch

and developme

nt costs

Research

and

d

evelopment

co

sts consist

of

0

(

2020

:

1

688) charged

to

the

incom

e

statement as

part

of

operating

expens

es.

Employee costs cap

italised as development amoun

ted to

0 (

2020

:

170

).

Note 11

–

Fina

n

cial items

The

exchange rate

e

ffects in

2

021 and 20

20

are mainly related to

accounts

rece

iv

ables and trade

payab

les in

NOK in EMG

S

ASA, and accoun

ts receivables and

trade payables in N

OK or other currencies than

USD in other group co

mpanies.

The Interest

paid

under

Financial Activ

ities in

the

Consolidated Sta

tement of Cas

h Flows

in

cludes

the Interest

expense

on

the partner contribution of the DeepBlue source in the amount of USD 491 as well as the cash paid related to interest and

fees on the convertib

le bond USD 1

766.

A

mounts

i

n USD 1 0

0

2021

2020

Off

ic

e ren

tal

and

ho

us

i

ng ex

pen

s

es

320

266

Consum

ables

a

nd

m

a

inten

a

nce

250

420

Consultancy fees

*

1,727

1,461

Travel expenses

50

220

Insur

a

nce

428

243

M

a

r

keting

34

66

Other

op

erating ex

pen

s

es

155

389

Tot

al

o

t

h

er

op

er

at

in

g

expen

ses

2,964

3,067

* Fees

t

o

aud

it

o

r

in

c

lud

ed

in

c

on

sult

an

c

y

fees:

St

a

tu

to

ry aud

i

t s

ervices

110

97

Fu

rt

her

as

s

ur

a

nce s

er

vic

es

20

54

Ta

x a

dvis

or

y s

ervices

5

93

Tot

al

fees t

o

au

d

it

or

135

244

A

mounts

i

n USD 1 0

0

2021

2020

Financ

ial

in

co

me:

Int

erest i

nco

me o

n s

ho

rt

ter

m

bank

dep

os

its

28

208

Gains

/(l

oss

es

)

of fi

nancial

as

s

ets

and li

abili

ties

2,000

0

Tot

al

fin

an

cial

in

c

ome

2,028

208

Financ

ial

expen

ses

:

Int

erest expense

on

fi

nan

c

ia

l

ea

s

es

a

nd

bank

bo

rr

ow

i

ngs

762

1,111

Int

erest expense

on

bo

nd

s

2,306

2,793

Int

erest expense

par

tner

c

on

tr

i

bu

tion

DeepBlue s

ou

rce

491

830

Fo

reign exc

han

ge

l

oss

es

l

oans

and r

ec

eivables

290

-21

Fo

reign exc

han

ge

l

oss

es

l

ia

bili

ties

a

t am

or

tis

ed cos

t

0

Finan

c

ia

l

c

osts

r

epaym

ent

of bo

nd

0

Im

pairm

en

t f

inancia

l

a

s

es

t

1,920

0

Other

fi

nancia

l

expen

s

es

127

482

Tot

al

fin

an

cial

expen

ses

5,897

5,195

Net

fina

nc

ial

it

ems

-3,

869

-4,

987

62

Note 1

2

–

Income tax

expense

The expense/(benefit) for income

ta

xes from continuing operations differs f

ro

m the amount computed when

apply

ing the

Norwegian statuto

ry tax rate to income/(loss) befor

e taxes as

the result of th

e following:

The

curr

ent

tax

liabiliti

es

in

2

021

of

USD

3

376

mainly

con

sist

o

f

accru

als

for

taxes

relat

ed

to

operations

in

Brazil

,

do

wn

from USD 4 035 in 2020.

Note 13

–

Deferred t

ax

Deferred

tax

assets

are

recognis

ed

only

to

th

e

extent

th

at

the

realisation

of

the

benefit

th

rough

the

future

taxable profits is

probable.

Unused

tax

los

ses

are

generated

in

Brazil,

Norway,

Mexico,

Malaysia

and

the

US.

It

can

be

carried

forward

indefinitely

in

Brazil, Mexico, Norway an

d Malaysia whils

t in

the US it can be carried for

ward in 20 years.

A

mounts

i

n USD 1 00

0

2021

2020

Change i

n defer

r

ed tax a

s

et

0

Cur

ren

t tax

417

671

Tot

al

inc

o

me tax expense

417

671

A

mounts

i

n

USD 1 00

0

2021

2020

Inco

m

e/(L

oss

) befor

e tax

5,339

-22,715

Tax

a

t th

e

do

m

es

tic

r

a

te of 22%

1,175

-4,997

No

n-d

edu

c

tible expen

s

es

336

-29

Change

in no

n reco

g

nis

ed defer

red

tax

as

s

et

-1,511

5,026

Effec

t o

f c

hange i

n tax rate

0

Effec

t o

f c

hange i

n ac

cou

nt

i

ng

pr

inciples

0

Fo

reign incom

e taxes

417

671

Tot

al

t

ax ch

ar

g

e

417

671

A

mounts

i

n USD 1 0

0

2021

2020

Deferred

t

axes

d

etail

ed:

Pr

op

ert

y, plant and

equ

i

pm

en

t

262

1,074

Inv

ent

or

y

0

Accr

ued for

eig

n incom

e taxes

-743

-888

Loss

ca

r

ried for

war

d

-88,577

-

90,75

5

Tot

al

d

eferred

tax (a

ss

et)/

liab

ilit

y

-89,0

58

-90,5

69

No

n

-rec

og

n

ised d

eferr

ed

t

ax ass

et

s

89,058

90,569

Net

deferr

ed

t

ax asse

t

0

63

Note 14

–

Share ca

p

ital, share

premium and other pai

d

in capita

l

The

Board

is

gran

ted

auth

orisation

to

increase

the

sh

are

capital

by

36,016,664

shares

so

the

total

authoris

ed

number

of

ordinary shares is

1

66

986

3

54

(

2020

:

1

53 889

385) with a

p

ar value

of USD 0.11

(NOK 1) per

sh

are. Total

number of shares

as of 31 December 2

021 is 130

969

690 (

2020

:

130

969

690

). All issu

ed shares are d

enominated in NOK an

d fully paid.

The largest shareho

lders as of 31 Decemb

er

20

21:

Note 15

–

Share ba

sed payment transactio

n

s

Share options a

re granted to employees.

In 2021 n

o

options

were granted to the Co

mpany’s employ

ees.

The expense recognised for

employee services

during the

year is:

The vesting period is the period during which the conditions to obtain the right to e

xer

cise are to be satisfied. The options

granted vest as

follows:

•

25% on the on

e-year anniv

ersary of the

Grant Date

• 2

5% on the two

-year annivers

ary of the

Grant Date

• 2

5% on the thre

e-year anniversary o

f the Grant

Date

A

mounts

i

n

USD 1 00

0

(exc

e

pt numbe

r

of s

ha

r

e

s

)

Nu

m

ber

of

s

har

es

Ord

i

nar

y s

har

e

capital

Sh

are pr

em

i

um

Other

paid-in

capital

Tot

al

At

1 Janu

ary

2020

130,969,690

15,285

0

56,206

71,490

0

At

31 December

2020

130,969,690

15,285

0

56,206

71,490

At

1 Janu

ary

2021

130,969,690

15,285

0

56,206

71,490

0

At

31 December

2021

130,969,690

15,285

0

56,206

71,490

Nu

m

ber

of

or

din

a

ry

s

hares

Per

centage

Siem

Inves

tm

en

ts

SA

R

L

31,32

7,467

23

.92%

PERESTRO

IKA AS

29,45

2,795

22

.49%

M

or

g

an Stanley & C

o. LL

C

25,89

1,805

19

.77%

SP

O

R

TSM

AGA

SINET AS

3,398

,211

2.59

%

RAGE,PER

EGIL

1,50

0,000

1.15

%

FOLKESETH,LIV

GRET

E

860,1

25

0.66%

RYGG,JAN

WIGGO

789,0

25

0.60%

NORDNET

L

IVSF

O

RSIKRIN

G

AS

778,8

58

0.59%

NÆ

R

INGS

L

IVETS HO

VEDO

R

GAN

ISAS

JON

766,19

0

0.59%

No

rd

net

B

ank AB

7

20,270

0

.55%

HAA

V

HO

LDING AS

700,0

00

0.53%

KRISTIA

N FALNES

AS

650,0

00

0.50%

No

rd

ea

B

ank Ab

p

573,9

78

0.44%

JAG

L

AND,ERIK SM

ITH

550,00

0

0.42%

KONGS

RUD,R

UN

E

JAC

OB

507,8

37

0.39%

Dans

ke B

ank A/S

475,0

69

0

.36%

ØVER

LAND,JA

RL

E

457,0

39

0.35%

EIKA

NGER

INVEST AS

448,0

00

0.34%

Other

31,12

3,021

23

.76%

Tot

al

130,969,690

100%

A

mounts

i

n

USD

1 0

00

2021

2020

Expe

nse a

r

i

s

i

ng fro

m

s

har

e

based paym

ent

tr

ans

action

s

6

10

64

• 2

5% on the four

-year anniversary

of the Gran

t Date

The

Grant

expires

two

years

following

the

Vesting

Date.

A

condition

to

hold

options

within

the

Compan

y

is

con

tinued

employment.

The expected volatility reflects the assumption that

th

e historical

v

olatility is indicative of

future trends, which may not b

e

actual outcome.

The Group has n

o legal or constru

ctive obligation to

repurchase or settle the optio

ns in ca

sh.

The cost of the option

s is calculated b

ased on t

he Black Scholes option p

ricing model.

The

following

table

lists

the

inputs

to

the

model

used

for

the

plan

for

the

option

granted

du

ring

the

year

ended

31

December

20

21:

Expected

volatility

was

d

etermined

bas

ed

on

his

toric

volatility on

comparable

listed

comp

anies.

Movements

in

th

e

num

ber

of share options

outstanding and their related weight

ed average exercise p

rices are as follo

ws:

Share options o

utstanding at the end o

f the year have th

e fo

llowing expiry date an

d exercise prices:

The w

eighted

average

remain

ing

contra

ctual

life for

th

e s

hare

op

tions

outstan

ding

as

of

31

December

20

2

1

is

2.55

years

(

2020

:

3.6 years

).

No options were granted in 2021.

The weight

ed average fair v

alue of o

ptions granted du

ring the year

2020

was USD

0.14

.

2021

Expect

ed vo

l

atil

ity

86%

Ri

s

k free int

erest rat

e

1.28

%

1.2

8%

Expect

ed l

ife

of op

tio

ns

(year

s

)

3.5

Weight

ed a

ver

ag

e

s

har

e

pr

ice

(USD)

2.14

Aver

age exe

r

cis

e

price in

U

SD per share

Opt

ions

Aver

age exe

r

cis

e

price in

U

SD per share

Opt

ions

At

1 Ja

nu

ary

0.25

187,5

00

36.09

4

6,250

Gr

a

nt

ed

0.00

0

0.25

1,512

,500

Exercis

ed

0.00

0

Rel

eas

ed

0.00

0

Fo

rfeited

0.25

-18,7

50

0.65

-1,3

71,250

Expir

ed

0.00

0

0.00

0

At

31

December

0.2

5

168,750

0.25

187,500

Exercisable

at

31 Dec

ember

0

.25

168,750

0.25

187,500

2020

2021

In

USD per

s

hare

Opt

i

on

s

2023

0.25

42,1

88

2024

0.25

42,1

88

2025

0.25

42,1

88

2026

0.25

42,1

88

168,7

50

65

Note 16

–

Inta

n

gible assets

Asset

Estimated usefu

l life

Patents

10

–

15 years

Software and licenses

3 years

Lease agreements

2.5

–

3.5 years

Multi-client library

4 years

Impairment of

multi-client li

brary

The Group perfor

ms impairm

ent tests when t

here are ind

icators o

f impairment at l

east o

nce a year.

The Group con

siders

the

relationship

between

th

e

total

revenue

forecast

an

d

the

book

valu

e

of

ea

ch

multi

-cli

ent

project

wh

en

reviewing

for

indicators

of

impairment,

hen

ce

the

b

ook

value

of

the

multi

-client

projects

is

highly

influenced

by

the

future

sales

forecasts

.

The

Group

did

not

record

impairments

of

the

multi

-client

library

in

2021,

but

did

impair

USD

844

thousan

d

in

2020

.

The

impairment

test

was

done

for

each

multi-cli

ent

project

individ

ually.

The

net

present

value

of

the

future

sales

for

each

project was compared to t

he book valu

e of the project.

When calculatin

g the net present v

alue of future sales, a

discount

rate

of

15% was

used.

A

1

%

increas

e in

the

discount

rate would

hav

e

reduced

the

total

net

present

valu

e

of futu

re

sales

by

USD

54

thousand

, but it would not

have resulted in

an impairment

in

20

21

.

Multi-client revenue recogn

ised in

20

21 amounted to

15

936 (

2020

:

7

770

).

A

mounts

i

n

USD 1 00

0

So

ft

ware

an

d

licen

ses

Pat

en

t

s

Mult

i-c

lient

libr

ary

Tot

al

Year en

ded

31

December

2020

Openin

g

ca

rr

ying va

lue

945

676

5,9

96

7,617

Ad

dition

s

0

1,1

35

1,135

Transferr

ed fro

m as

s

ets

un

der

constr

uction

to

i

nt

a

ngible

as

s

ets

587

0

587

Am

or

tis

ation char

g

e

-593

-137

-4,077

-4,80

7

Im

pairm

ent

0

-540

-844

-1,384

Closing

car

ry

in

g

v

alu

e

939

0

2,210

3,148

At

31

December

2020

Accum

ulated

cos

t

17,366

3,6

67

157,63

8

178,671

Accum

ulated

a

m

or

tis

a

tion

and imp

ai

rm

ent

-16,427

-3,667

-155,42

8

-175,52

3

Net

car

ry

in

g

v

alu

e

939

0

2,210

3,148

Year en

ded

31

December

2021

Openin

g

ca

rr

ying va

lue

939

0

2,21

0

3,148

Ad

dition

s

0

2,6

59

2,659

Am

or

tis

ation char

g

e

-517

0

-2,457

-

2,974

Im

pairm

ent

0

Closing

car

ry

in

g

v

alu

e

422

0

2,412

2,834

At

31

December

2021

Accum

ulated

cos

t

17,366

3,6

67

160,29

7

181,331

Accum

ulated

a

m

or

tis

a

tion

and imp

ai

rm

ent

-16,944

-3,667

-157,88

5

-178,49

7

Net

car

ry

in

g

v

alu

e

422

0

2,412

2,834

66

Note 17

–

P

ro

perty, plant and eq

u

ipment and assets u

nder construction

Asset

Estimated usefu

l life

Machinery and equ

ipment

3

–

8 years

Hardware and furnitu

re

3

-

5

years

Cluster

5 y

ears

Assets under cons

truction

Assets

under

constru

ction

are

in

ternal

cap

ital

expenditu

re

projects

that

are

not

completed.

These

proje

cts

are

mainly

development and production of acquisition the EM equipment, including receivers, the source and the navigation system.

In

2020

,

EMGS

recorded

an

impairment

of

USD

569

thousan

d

which

relates

to

hardware

development

cost

th

at

will

not

be commercialized du

e to the cost cu

tting measures implemented in

2020

.

No imp

airment

was recorded in 2021.

The DeepBlue

EMGS has

been

working

on a

Joint

Industry

Project (“th

e

DeepBlue

”),

sup

ported

by Shell

and

E

quinor,

for

developing

the

EM

equipment.

The

ben

efit

of

using

the

DeepBlue

equipm

ent

is

deep

er

penetration

and

s

ignificantly

improved imaging

at increas

ed

bu

rial depth

s.

The

improved

imaging leads

to improved

confidence and

enhan

ced

interpretation

pos

sibilities.

T

he

p

roject

commenced

2012

and

the

prototy

pe

equipment

was

compl

eted

in

2017

with

it

s

first commercial survey summer

2017

.

The carrying value

o

f the De

epBlue equipm

ent as of 31

December

202

1 was

11

414

thousand

(

2020

:

15

000 th

ousand

).

See Note 25 for

funding from th

e DeepBlu

e partners recorded as

a

contract liability

.

Impairment test of the

DeepBlue

The

Group

performs

impair

ment

tests

when

ther

e

are

indicators

of

impairment

and

at

least

o

nce

a

year.

The

Group

considers

th

e

relationship between

the

total

revenue f

o

recas

t

and

th

e total

carrying

valu

e

of

the

D

eepBlue

when reviewing

for indicators of impa

irment.

A

mounts

i

n

USD 1 0

0

Mach

in

ery

and

equ

ip

ment

Hard

ware

an

d

fur

nit

u

r

e

Cluster

To

t

al

A

ss

et

s un

d

er

co

n

stru

ct

io

n

Year en

ded

31 Decemb

er

2020

Openin

g

ca

rr

ying va

lue

24,61

7

39

-32

24,624

1,023

Ad

dition

s

159

163

138

460

159

Accum

u

l

a

ted

cos

ts

on

dis

posa

ls

0

-78

0

-78

-

23

Tran

s

ferr

ed fro

m

as

s

ets

un

der

con

s

tr

uctio

n to

PPE

0

Tran

s

ferr

ed fro

m

as

s

ets

un

der

con

s

tr

uctio

n to

i

nt

a

ngible

as

s

ets

0

-587

Depr

eci

ation char

g

e

-3,667

-35

-27

-

3,728

0

Accum

u

l

a

ted

dep

recia

tion

on dis

po

s

a

l

s

0

78

0

78

0

Im

pairm

ent

-4,981

0

-4,981

-569

Closing

car

r

yin

g

va

lue

16,128

168

79

16,374

3

At

31 Decemb

er

2020

Accum

u

l

a

ted

cos

t

153,0

78

21,998

1

2,513

187,588

3,127

Accum

u

l

a

ted

amo

rt

i

s

a

tion

a

nd

i

m

pairm

ent

-136,95

1

-

21,831

-12,434

-171,21

6

-

3,124

Net

car

r

yin

g

va

lue

16,128

168

79

16,374

3

Year en

ded

31 Decemb

er

2021

Openin

g

ca

rr

ying va

lue

16,12

8

168

79

16,374

3

Ad

dition

s

69

21

0

90

0

Accum

u

l

a

ted

cos

ts

on

dis

posa

ls

0

Tran

s

ferr

ed fro

m

as

s

ets

un

der

con

s

tr

uctio

n to

PPE

0

Tran

s

ferr

ed fro

m

as

s

ets

un

der

con

s

tr

uctio

n to

i

nt

a

ngible

as

s

ets

0

Depr

eci

ation char

g

e

-3,677

-67

28

-3,716

0

Accum

u

l

a

ted

dep

recia

tion

on dis

po

s

a

l

s

0

Im

pairm

ent

0

Closing

car

r

yin

g

va

lue

12,520

121

107

12,748

3

At

31 Decemb

er

2021

Accum

u

l

a

ted

cos

t

153,1

47

22,019

1

2,513

187,678

3,127

Accum

u

l

a

ted

amo

rt

i

s

a

tion

a

nd

i

m

pairm

ent

-140,62

8

-

21,899

-12,405

-174,93

2

-

3,124

Net

car

r

yin

g

va

lue

12,520

121

107

12,748

3

67

No impairment was

made to th

e DeepBlue equip

ment set in 2021.

During 2020, it

was d

etermined th

at an impairmen

t of

the DeepBlue

equipment

set was

required

given th

e downtu

rn in

the

market.

The DeepBlue

equipment

set was

impaired

in

the

amount

of

USD

4

981

t

h

ousand

.

The

recov

erable

amou

nt

used

in

the

impairment

test

was

determined

based

on

cash

flow

projections

from

the

202

2

budget

and

assumptions

regarding

additional

revenue

stream

from

the

DeepBlue

equipment. The discou

nt rate ap

plied to

cash flow pro

jections was

12

%

.

The

Company

used

the

best

estimate

of

additio

nal

revenu

e

stream

from

the

De

epBlue

equipment

co

mpared

with

the

conventional

equip

ment

as revenu

e

forecast

in

the impairment

model.

The

DeepBlue o

pens

a

new

market

for

the

Group

as it

increases

th

e

wat

er

dept

h f

rom

3

000

metr

es

as

th

e

lim

it

o

n

th

e

conv

entional source

to 4

500 metres on

the

D

eepBlu

e

source.

The discount rate used in the net present value calcu

lation was based on the specific circums

tances of the Group and was

derived from

its weight

ed av

erage cost

of capita

l (WACC).

The

WACC took

both

debt

and equity

into

account. The cos

t

o

f

equity

was

derived

from

the

expected

return

on

investmen

t

by

the

Group's

investo

rs. The

cost

of d

ebt

was

based

on

the

interest-bearing borrow

ings the Group is

obliged to service. The beta fact

or was

in

line with the in

dustry beta.

Sensitivity analysis fo

r key assump

tions

The table below sh

ows how the recoverable a

mount

of US

D

590

132

o

f the DeepBlue wi

ll be affected by chan

ges in the

various

assumptions, given that th

e remainder of the assumption

s are consta

nt

as of 31 December 2021:

Note 18 - Othe

r receivables

The

Compan

y, at

the end

of 2020,

entered into an

agreeme

nt to

subleas

e one

of our

offices for

th

e re

mainder of

the office

lease.

The

present

valu

e

of th

e

sub

lease

is

recognized

as

a

Financial

lease

re

ceivable

an

d

as

of

31 Dec

ember

20

21

is

sp

lit

between current USD 68 a

nd non

-current USD

72

.

Note

19

–

Spare part

s, fuel, anchors and batteries

No impairments

were made in 2021 or 2020

related to spare parts, fuel anch

ors and batteries.

A

mounts

i

n

USD 1 0

0

C

h

an

g

e in

rec

ov

er

able

amou

n

t

Dis

cou

nt r

a

te

1%

i

ncr

ea

s

e

-297

1%

decreas

e

311

Dayr

a

te

20%

incr

ea

s

e

4,366

20%

d

ec

r

ea

s

e

-4,366

Nu

m

ber

o

f

s

ur

vey

days

per

year

33%

incr

ea

s

e

3,523

33%

d

ec

r

ea

s

e

-3,523

A

mounts

i

n USD 1 0

00

2021

2020

Pr

epaym

en

ts

1,70

2

1,7

52

Recei

vables

VAT

and

taxes

1,83

0

1,0

99

Oth

er receivables

227

292

Tot

al

ot

h

er

r

eceivab

les

3,759

3,142

A

mounts

i

n USD 1 0

00

2021

2020

Equ

i

pm

ent com

p

on

ents

and

par

ts,

at c

ost

3,0

78

3,54

5

An

cho

rs

a

nd

batt

eries,

a

t cost

603

891

Fu

el,

a

t cost

133

289

Tot

al

S

par

e p

ar

ts, fuel,

an

ch

or

s an

d

b

att

er

ies

3,813

4,726

68

Note 20

–

Trade recei

vables

Trade receivables are non

-interest

bearing and

the payment terms

are generally

net 30 days

.

Fair value of the receivab

les approximates t

he nominal valu

es, less prov

ision for doubtful receivables.

Generally, the Group trades with recognised, creditworthy cus

tomers. The customers are usually large oil companies with

an approp

riate credit history.

Only in a few insta

nces, serv

ices are performed for small

er companies with

limited credit

h

istory.

Per

31

December

20

21

EMGS

d

id

not

fi

nd

it

necessary

to

make

a

provision

for

doubtful

trade

receivables

(

2020

:

48

).

As

of

31 December

202

1, t

he aging an

alysis of tra

de receivables is as follows

:

Note 21

–

C

ash

and cash equivale

nts

Cash earns in

terest at floating rates

based on

daily b

ank deposit rates

.

Restricted

cash

cons

ists

of

USD

1.3

million

held

in

restricted

accounts

as

security

against

guarantees

is

sued

as

well

as

employee taxes withheld

.

Note 22

–

Employee

benefit obligations

The

Compan

y

is

required

to

hav

e

an

occup

ational

pension

plan

in

accord

ance

with the

Norwegian

law

on

requi

red

occupational

pension

("lov

om

obligatoris

k

tjenes

tepensjo

n").

The

Company's

pen

sion

arrangements

fulfill

the

requirements of the law.

In

202

1

, t

he defined contribu

tion

plan involved a con

tribution level of

5 % of Base Salary

from 0 to 7.1

G and

15

% of

Base Salary from 7.1 up t

o 12 G, wher

e G is the

National In

surance basic amount

(Folketry

gdens grunnb

eløp). G equals

to

NOK

10

6 3

99

as of 31 D

ecember

20

21.

The Company`s co

ntribution to th

e Norwegian defined con

tribution plan

for the year ended 31 Decemb

er

20

2

1

wa

s

175

(

2020

:

405

).

As of 31 December

20

21, there wer

e 16 employees co

vered by

the defined contributio

n pension plan

(

20

:

17

).

Defined contributi

o

n schemes

Employees not eligible for coverage under

th

e defined contribution

plan applicab

le in Norway are

elig

ible to participate in

A

mounts

i

n USD 1 0

00

2021

2020

Accou

nt

s

receivable

821

6,1

99

Accr

ued

rev

enu

es

446

95

Im

paired

receivable

0

-48

Tot

al

t

rad

e

receiv

ab

les

1,267

6,246

A

mounts i

n USD 1 00

0

Total

N

ot

Due

<

30

30 -

60 days

60 - 90 days

90 - 120 days

> 120

821

810

0

11

A

mounts

i

n USD 1 0

00

2021

2020

Ca

s

h

9,85

5

4,179

Res

tr

i

cted

ca

s

h

1,27

8

7,995

Tot

al

cash

and

cash

equ

iv

alent

s

11,

133

12,

175

69

other

Compan

y

p

ension

schemes

or

to

receive a

pension

compens

ation.

All

the

s

chemes

are

considered

defined

contribution

plans.

For

s

ome

of

the

s

chemes,

subject

to

s

tatutory

limitations,

employees

may

make

volun

tary

contributions

in

addition

to

the

Company’s

contributions

.

Total

p

ension

sch

eme

con

tribu

tions

made

by

the

Co

mpany

in

20

21 was

189

(

20

:

514

).

Note 23

–

Fina

n

cial liabilities

USD 32.5 million c

o

nvertible bond

On

9

May

201

8,

E

MGS

secured

a

USD

3

2.

5

million

con

vertible

b

ond

bearing

an

interest

at

3

months

LIBOR

+

5.50%

p

.a

.

The

loan

can

at

any

time

be

con

verted

into

common

shares

in

E

MGS

at

th

e

conversion

price

of

USD

0.42677

until

the

maturity date on

9

May

2023

.

The

U

SD

3

2.5

million

convertib

le

bo

nd

can

be

s

een

as

a

contract

s

ettled

b

y

an

entity

by

delivering

a

fixed

amoun

t

of

i

ts

own equity instruments in exchange for

a fixed amount of foreign currency. The economic components of this convertible

bond are:

(a)

A

liab

ility.

On

issuance

of

the

convertible

bond

,

the

fair

value

of

the

liab

ility

component

was

determined

us

ing

a

market

rate

for an

equiv

alent

non

-conv

ertible b

ond;

and

clas

sified

as

a

financial

liability

measured

at

amort

ised

cost

(n

et

of

transaction co

sts) until it

is extinguished on co

nversion or redemption.

(b)

An

equity

component.

The

residu

al

o

f

th

e

pro

ceeds

was

allocated

to

the

conv

ersion

option

th

at

was

recognised

in

shareholders’ equ

ity.

At inception, the

value of

th

e liability

component was estimated to USD

30.2 million. Amortised cost

as

31

December

20

21

was USD

24

.3 million

including

two s

eparate b

ond buy

-backs

with a comb

ined nominal

value o

f USD 8

million

(

2020

: U

SD

31.

8

million).

The

equity

comp

onent,

the

carrying

amount

of

th

e

conversion

option,

was

estimated

to

USD

1.9

million

at

inception and is

not remeasured in sub

sequent periods.

The con

vertible

bond

conta

ins

financial

cov

enants

requiring

free cas

h

and

cas

h

equivalents

of

at

leas

t USD

2.5

million.

In

addition,

the

b

ond

agreement

has

restrictions

regarding

the

Company's

ability

to

sell

the

multi

-

client

library,

declare

or

make dividend

pay

ments, incur

additional

indebtedness,

change its

business

or enter

into

speculative

fi

nancial

derivative

agreements. As

of

31 December

202

1,

the free

cash

and cash

equivalents to

taled USD

9.9 million

(

2020

: US

D 4.2

million).

The convertible bond

is unsecured.

Lease liabilities

The

Group

h

as

lease

contracts

for

various

items

of

IT-

equi

pment,

offices

and

vessels.

The

Group’s

obligations

under

its

leases are secured by

the lessor’s t

itle to the leased as

sets, see

N

ote 27.

The

exposure

of

th

e

Group’s

borro

wings

to

interest

r

ate

c

hanges

floating

rat

e

obligat

ions

an

d

th

e

contractu

al

repricing dates of thos

e obligations a

t the balance sheet dates

are as follows:

A

mounts

i

n USD 1 0

0

In

ter

es

t rat

e

M

a

tu

rity

2021

2020

No

n

-cu

r

ren

t

US

D

32.5 m

i

ll

ion con

ver

tible bo

nd

3 m

on

th LIBO

R

+

5.50%

5/

9/2023

24

,295

31,81

6

Lea

s

e

li

a

bilites

4.0-8.1

%

2-3 years

522

6,50

1

24,817

38,317

C

u

r

ren

t

Lea

s

e

li

a

bilites

4.0-8.1

%

U

p to

1 year

6

,239

5

,474

6,239

5,474

Tot

al

fin

an

cial

liab

ilit

ies

31,056

43,791

70

The maturity of non

-current bo

rrowings is as follo

ws:

The carrying amounts a

nd fair valu

e of the no

n-current borro

wings are as follows:

The Company p

erformed two

separate bon

d buy

-backs

, both with a n

ominal value of

USD 4 mill

ion

each.

The fair valu

e is

set to equal th

e carrying value in 2021 and

2020.

The carrying amount of th

e Group’s

borrowings

are as follows:

The liabilities arisin

g from financing act

ivities are as follows:

The effective interest

rates at the balance s

heet date were as follows:

Fair values

The

fair

value

h

ierarchy

disclos

es

how

fair

v

alue

is

determined

for

financial

instruments

recorded

at

fair

value

in

the

A

mounts

i

n

USD 1 00

0

2021

2020

6 m

on

th

s

or

l

es

s

31,0

56

43,7

91

6-12 m

on

th

s

0

1-5 year

s

0

Over

5 years

0

Tot

al

31,056

43,791

A

mounts

i

n USD 1 0

00

2021

2020

1-3 year

s

24,8

17

38,317

4-5 year

s

0

Over

5 years

0

Tot

al

24,817

38,317

A

mounts i

n

USD

1

0

00

2021

2020

US

D

32.

5

m

il

li

on

c

on

ver

tib

l

e bo

nd

24,2

95

31,8

16

Leas

ing l

ia

bilities

6,7

61

11,97

5

Ca

r

ry

i

ng a

m

ou

nt

s

A

mounts

i

n USD 1 0

00

2021

2020

US

D

den

om

inated

30,251

42,6

97

NOK d

eno

min

a

ted

805

1,08

0

Oth

er

0

14

Tot

al

31,056

43,791

Ca

s

h flows

Closing

Cur

rency

New

Lea

s

es

&

M

odifica

tion

s

Finan

c

ia

l

Gain

Finan

c

ia

l

lea

s

e

lia

bili

ties

Cur

rent

inter

es

t bearin

g

loans

0

Cur

rent

lea

s

e l

ia

bili

ties

5,474

0

901

0

-136

6,239

No

n-cur

ren

t i

nt

ers

t bear

i

ng l

oans

31,816

479

0

-2,00

0

-6,000

24,295

No

n-cur

ren

t l

eas

e

l

iabli

ties

6

,501

0

92

0

-6,071

522

Tot

al

43,791

479

993

-2,000

-12,206

31,056

Am

ounts

i

n USD 1 0

00

Openin

g

No

n- ca

s

h changes

2021

2020

US

D

32.5

m

i

ll

ion

con

ver

tible bo

nd

6.88

%

7.37%

Leas

ing

li

abili

ties

4.18%

7

.11%

71

consolidated finan

cial statement.

Level 1: quoted prices (un

adjusted) in

active markets for ide

ntical ass

ets and liabilities.

Level 2: assets

and liabilities

whose valu

es a

re based on

quoted

prices in

markets that a

re not activ

e or mode

l inputs t

hat

are observable either directly

or indirectly.

Level

3:

techniques

for

which

all

inp

uts

which

have

a

significant

effect

on

the

recorded

fair

value

th

at

is

not

based

on

observable market d

ata.

The

carry

ing

amounts

of

cash

an

d

cash

equivalent

s,

res

tricted

cash,

trade

receivables,

oth

er

receivables,

trade

pay

ables

and other

short-term liabilities

approximate their resp

ective fair values becaus

e of short maturities

of those ins

tr

uments

.

Note 24

–

Trade paya

bles

Trade

pay

ables are

generally

no

n-interest bearing

and the

payment terns

are net

30 days.

Fair value

of the

payables equals

the nominal value o

f 1 981 (

20

:

1 461

).

Note 25

–

P

ro

visions

The

Group recognises

a contract liability

for

prepayments from

Shell and

Equino

r in

a

joint industry

project

(th

e

DeepBlue

)

.

EMGS,

Shell

an

d

Equinor

decided

to

collaborate

o

n

the

development,

cons

truction,

and

testing

of

an

advanced

marine

electromagnetic

acquis

ition

system.

The

p

rototype

of

the

new

source

was

completed

in

2017

.

The

contra

ct

liability

was

previously recognised

as revenue

over an

eight

-year period,

which is

the same

as the

depreciation period f

o

r

the DeepBlue

source

ass

et.

In

2019, Shell,

E

quinor and

EMGS

signed

a

n

amendment

to

th

e

initial

agreem

ent,

which

chan

ged

the

liabilit

y’s

revenue recognition period fr

om eight to four years

starting from 1 Jan

uary 2019.

The Group has record

ed 4 812

as prov

ision for DeepBlue prepay

ments per 31 Dece

mber

20

21 (

20

:

9 625

).

The prepayments from

Shell a

nd E

quinor

hav

e been recorded at fair valu

e, and

the differ

ence between th

e

fair value a

nd

the

nominal

amount

of

th

e consid

eration

was

recognised

as

interest.

This

interest

expense

is

recorded

aga

inst

revenues.

Total interest expense r

ecorded in

20

21 was

491

(

2020

:

830).

Note 26

–

Other s

h

ort-term liabi

lities

Accrued expenses are g

enerally on 30

days payment terms.

Note 27

–

Le

ases

The

Group

h

as

lease

contracts

for

various

items

of

IT-

equi

pment,

offices

and

vessels.

The

Group’s

obligations

under

its

leases

are

secured

by

the

lessor’s

tit

le

to

the

leased

asse

ts.

Some

of

th

e

leas

e

con

tracts

include

extension

optio

ns.

See

Note 4 for information on ext

ension o

ptions.

The

Grou

p also

h

as certain

leas

es with

lease terms

o

f 12

months

or

less and

leases

of

office equipment

with low value. The

Group applies th

e “short

-

term lease” and “lease of low

-

value a

ssets” recognition

exemptions for

these leases.

Set

out

below

are

the

carryin

g

amou

nts

of

right

-

of

-use

as

sets

an

d

leas

e

liabilities

recognised

and

the

movements

during

the period:

A

mounts

i

n

USD 1 00

0

2021

2020

Accr

ued

expen

s

es

584

987

Ho

l

i

day p

a

y

261

224

So

ci

al

s

ecur

i

ty

taxes

and

ot

her

pu

blic

du

ties

258

202

Oth

er s

ho

rt

ter

m

li

a

bilities

347

1,361

Tot

al

ot

h

er

shor

t

er

m liab

ilit

ies

1,451

2,774

72

The maturity analys

is of the lea

se liabilities is d

isclosed below:

The following amounts

are recognised in

profit or loss

:

The

Group

had

total

cash

outflows

for

leas

es

of

6,

968

in

202

1.

The

futu

re

cas

h

outflows

relating

to

leases

that

have

not

yet commenced are disclos

ed in

Note 29.

Depreciation

o

f

right

-of

us

e

a

ssets

as

p

resented

in

the

Con

solida

ted

Income

Statement

USD

3

524

is

net

of

depreciati

on

capitalised

as

multi-client

ex

pense

as

op

posed

to

the

Con

solidated

Statement

of

Cas

h

Flows,

in

which

the

gross

depreciation of USD

4

751

is in

cluded in op

erating activities and

USD 1 228 is

included in in

vesting activities

.

Note 28 - Conti

ngencies

The

Group

has

con

tingent

liabilities

in

respect

of

guarante

es

and

matters

arisin

g

in

the

ordinar

y

course

of

business.

It

is

not anticipated t

hat any material liabilities will aris

e from th

e contingent liabilities.

The Group has giv

en guarantees in t

he ordinary cou

rse of

business t

o third parties as specified below:

Guarantees on

o

ffice

premis

es are

v

alid as

long as

the contracts are

active. All

guaran

tees

are secured by

bank guarantees.

Note 29 - Commit

ments

Lease commitments

:

The Group has leas

e agreements

o

n

IT

-equipment, offices an

d vessels.

The future aggregate minimu

m lease payments u

nder non

-cancellable l

eases are as

follows:

Lease liabil

ities

Inter

est expense

on

lease

liabil

itiles

Am

oun

ts

i

n

USD 1 00

0

Ve

ssel leases

Office leases

IT

equ

ipmen

t

Tot

al

Tot

al

As at

1

Januar

y

2021

7,629

213

404

8,246

11,975

Ad

dition

s

0

Depr

eci

ation

expense

-3,223

-18

4

-

117

-3,5

24

0

Depr

eci

ation

ca

pitali

s

ed as

mu

lti-c

li

ent

expen

s

es

-1,228

0

-1,228

0

Im

pairm

ent

/M

odifica

tion

578

414

-22

971

993

Int

erest expense

0

Paym

ent

s

0

-6,206

-762

As at

31 Decemb

er

2021

3,757

443

265

4,465

6,762

-762

Righ

t

-of-u

se ass

et

s

A

mounts

i

n

USD 1 00

0

2021

2020

Lease agr

eement

s – min

imu

m lease p

ay

ment

s:

No

la

ter

than

1

year

6,506

6,302

Aft

er 1 year and n

o m

or

e

th

a

n 5 years

550

6,66

8

Aft

er m

or

e

th

a

n 5 years

0

Tot

al

min

imum

lease pa

ymen

ts

7,056

12,970

Fu

tu

re finance c

har

g

es

on

l

eas

es

-295

-995

Pr

esent

v

alu

e o

f lease ag

r

eement

s

6,761

11,975

A

mounts

i

n

USD

1 0

00

2021

Dep

reciation

exp

ens

e of r

i

g

ht

-of-u

s

e

as

s

ets

3,524

In

ter

es

t expen

s

e

on

l

eas

e

li

abili

ties

762

Tot

al amo

un

ts r

ecog

nised in

pr

ofit

o

r

lo

ss

4,2

86

A

mounts

i

n USD 1 0

00

2021

2020

Gu

a

r

a

nt

ees

on

cl

ient

c

o

nt

r

a

cts

594

7,330

Oth

er g

uar

antee

s

/collater

a

l

267

547

Tot

al

gu

ar

ant

ees

861

7,877

73

Contract terms

on

renewal of

the leases

are

to be n

egotiated at or

before th

e expiry

of the contracts

. The

vessel contrac

t

ha

s renewal options o

f different durations.

Note 30

–

Le

gal claims

EMGS is involved in

the following legal pro

cesses:

EMGS

is

engaged

in

s

everal

tax

discussion

s

with

the

Brazilian

internal

revenue

s

ervice.

These

d

iscussions

are

two main

categories of

claims

by

the IRS; (i)

a n

on

-approval by

the

IRS of certain

tax o

ffset requests

by E

MGS related

to a

credit

of Social

Contribution

on

Net

Profits

(all as

p

rov

ided

for und

er Braz

ilian

law);

and

(ii) pay

ment

of

an

administrative

penalty

fee

of 50%

ov

er a

previously

disputed

tax

credit

claim.

EMGS

dispu

tes

all

of

the claims

received

fro

m

the

IRS

and

has initiated a

dministrative proceedings in Bra

zil to that eff

ect.

While EMGS vie

ws a negative ou

tcome as unlikely, s

h

ould

EMGS

ultimately

be

unsuccessful

in

disputin

g

these

claims,

the

aggregate

potentia

l

ad

ditional

tax

liability

amoun

ts

to

approximately USD 2

43 thousan

d (exclusiv

e of interest and p

enalties).

Note 31

–

Earni

n

gs/(loss) per s

h

are

Basic

earnings/(loss

) p

er s

hare is

calculated

by

div

iding net

p

rofit

attributable

to

o

rdinary

equity

holders

of the

Company

by the weighted average num

ber of ordinary

shares ou

tstanding during the year.

The Company h

as one category o

f dilutive potentia

l ordinary shares: s

hare options.

Note 32

–

Related pa

rty transactions

The

following

ta

ble

provid

es

the

amounts

paid

on

trans

actions

that

have

been

entered

into

with

for

the

relevant financial year:

In 2019,

the Group

secured

a

new gu

arantee

facility

(th

e "New

Facility")

that

has

a

maximum limit

of

USD 7

.5 million

and

is

limited

in

scop

e

to

providing

certain

performance

and

warranty

guarantees

required

u

nder

the

multi

-

y

ear

acquis

ition

contract

with

Pem

ex.

The

New

Facility

was

prov

ided

by

the

Company's

existing

bank.

At

the

tim

e

of

establishment

and

during 2019,

the

Ne

w

Facility w

as

fully guaranteed

by

Siem

Europe S

à r.l.,

Perestroika

AS and RWC

European Focus

Master

A

mounts

i

n USD 1 0

00

2021

2020

No

l

ater

th

a

n 1 year

6

,478

6,3

02

Aft

er 1 year

a

nd

no

m

or

e

th

a

n 5 year

s

563

6,6

68

Tot

al

op

erat

in

g

lease co

mmitment

s

7,0

41

12,9

70

A

mounts

i

n

USD 1 0

0

2021

2020

Inco

m

e/(l

oss

)

attr

ibu

table to equ

ity ho

lder

s

of the Com

pan

y

4,922

-

23,38

5

Basic ear

nin

g

s per

shar

e

0.0

4

-0.18

Dilut

ed

ear

nin

g

s per

share

0.0

4

-0.18

Weighted

aver

a

g

e num

b

er of or

din

a

ry

s

hares

for

th

e

pu

rp

ose

of bas

i

c

earn

i

ngs

per

s

har

e

(tho

usa

nd

s

)

130,97

0

1

30,970

Effec

t o

f dil

ut

i

ve po

ten

tia

l

s

hares:

Sh

are op

tion

s

0

Weighted

aver

a

g

e num

b

er of or

din

a

ry

s

hares

for

th

e

pu

rp

ose

of diluted

ea

rn

ings

per

s

har

e

(th

ousa

nd

s

)

1

30,97

0

1

30,970

A

mounts

i

n USD 1 0

00

2021

2020

Siem

Eur

op

e

S.A.

R

.L.

2,3

50

68

Per

es

tr

oika AS

2,35

0

69

RWC

Eur

op

ea

n Fo

cus

Mas

ter

Inc.

1

,215

34

Tot

al

5,915

170

74

Inc.

(the

"Shareholder

Guarantors").

The

shareholder

guarantees

were

replac

ed

b

y

a

p

ledged

cash

depot

(the

"Pledged

Depot")

which

served

as

security

for

the

New

Guarantee.

A

cou

nter

guaran

tee

agre

ement

enter

ed

into

between

EMGS

and

the

Shareholder

Guaran

tors

regulates

th

e Co

mpany's

obligations

toward

s

the Sh

areholder

Guarantors

in

connection

with

the

New

facility.

The

Gro

up

paid

the

Shareholder

Guaranto

rs

a

gu

arantee

commission

of

8%

p.a.

of

the

guaran

teed

amount

,

1.5%

p.a.

for

such

parts

of

the

New

Guar

antee

which

were

covered

by

the

Pledged

Depot,

an

d

to

0%

as

the

Shareholder Guaran

tors

were

released

form

their

obligation

s to

wards th

e ban

k.

The

Pledged

Depot

was

fully replac

ed

as

of May 2020.

In 2021, the Com

p

any performed two separate bond buy-backs with a

to

tal combined nominal value of

USD 8 million. The

bonds

were

repurchased

at

75%

of

par.

The

total

p

aid

to

arties

as

part

of

th

e

bond

buy

-back

program

was

USD

5.9 million.

Note 33

–

Invest

m

ent in subsi

d

iaries

The

Grou

p consolidates Electromagnetic

G

eoservices Malaysia Sdn Bhd

and emgs

Shipp

ing

Mexico S. de

R.L. de

C.

V. at

100

% as the Company h

as contro

l over these companies.

The

Group

has

sta

rted

the

process

of

voluntary

winding

up

of

emgs

Asia

Pacific

Sdn

Bh

d

,

emgs

Labuan

Ltd.,

emgs

Asia

Pacific Labuan Ltd

., Electromagnetic Geoservices Mala

ysia Sdn Bh

d.

Side agreements s

how that EMGS has

all the rights a

nd obligations of 100 % owne

rship.

Am

oun

ts

i

n

USD 1 00

0

Compan

y

S

ha

re

own

ership

/

vo

t

ing

rig

ht

s

2021

S

ha

re

own

ership

/

vo

t

ing

rig

ht

s

2020

Equ

it

y

31

December

2021

Equ

it

y

31

December

2020

Loc

at

ion

Sea B

ed Logg

ing

- D

ata

St

orage

Com

pany AS

100%

28

4

Tro

ndh

eim, No

rw

a

y

em

g

s

Am

ericas

1 AS

100%

12,44

0

11,938

Tro

ndh

ei

m

,

Nor

way

CSEM Pr

od

uction

AS

100%

13

-2

Tro

ndh

eim, No

rw

a

y

EM M

ulti-cl

ient AS

100%

1,225

905

Tr

on

dheim

, Nor

way

EMG

S Gl

ob

a

l

AS

100%

6,28

8

1,254

Tro

nd

heim, No

rw

a

y

em

g

s

Am

ericas

Inc

100%

-945

-854

Dela

war

e,

USA

em

g

s

Sh

i

pp

i

ng

M

exi

co S. de R

.L. de C

.V.

99%

/100%

99%

/100%

104

1,59

3

Col.

Del

Val

le,

Mexico

em

g

s

Sea B

ed Logg

ing

Mexico S.A

.

de C

.V.

100%

-2,518

-4,119

Col.

Del

Val

le,

Mexico

em

g

s

Ser

vic

es

Mexico S.A. de C.V.

99%

380

235

Col.

Del

Val

le,

Mexico

Elec

tr

om

ag

netic Geos

erv

i

ces

C

anada Inc

100%

-1,011

-824

Britis

h Colum

bia,

Ca

nada

Ser

vici

os

Geologicos

E

lec

tr

om

ag

neticos

do

Bras

il

Ltda

100%

-51,122

-53,1

11

Rio de Ja

neir

o, B

rasi

l

EMG

S Sur

veys

AS

100%

7,339

7,341

Tro

ndh

ei

m

,

No

rway

Elec

tr

om

ag

netic Geos

erv

i

ces

UK Ltd

100%

4,114

4,154

Lon

don

,

UK

Elec

tr

om

ag

netic Geos

erv

i

ces

Malays

i

a

Sd

n B

hd

1%

/100%

1%

/100%

810

811

Ku

a

la

L

um

pu

r, Malays

ia

em

g

s

Asi

a

Pac

ifi

c

Sd

n B

hd

100%

472

531

Ku

a

la

L

um

pu

r, Malays

ia

em

g

s

La

bu

a

n Ltd

100%

-21

Labuan, M

a

la

ys

ia

em

g

s

Asi

a

Pac

ifi

c

La

bu

a

n Ltd

100%

-149

La

bu

a

n, Malays

ia

em

g

s

Au

s

tr

a

li

a

Pty

Ltd

100%

96

102

Pert

h, Austr

al

ia

75

Note 34

–

Events afte

r the reporting perio

d

Extension of maturit

y date

In February 2022

,

b

ondholders’ res

olution to ;

a) extend t

he maturity dat

e by 24 months (Ma

y 2023 to May 202

5); and

b)

increase

the

interest

margin

by

100

b

ps

from

5.5

to

6.5

percent

ov

er

th

e

applicable

reference

rate

was

resolv

ed

and

adopted for FRN E

lectromagnetic Geos

ervices ASA Senior U

nsecured Co

nvertib

le Bonds 2018/2023

.

Multi-client late

sales

In

March

202

2

,

Electromagnetic

Geoservices

ASA

secured

USD

2.8

million

in

revenue

from

late

sales

and

a

change

of

control event related to it

s existing multi

-client library in N

orway.

Multi-client re

v

enue

In

March

202

2

,

Electro

magnetic

Geoservices

ASA

secured

ap

proximately

USD

1

million

in

uplift

revenue

its

existing multi-client library

in Norway.

Pre-funded multi-client

revenue

In April

202

2

,

Electromagnetic Ge

o

services ASA secured approximately USD 1

million in

pr

e-funding for 3D

CSEM

survey in

Norway.

Ukraine

Electromagnetic Geos

ervices ASA does n

ot expect to be n

egatively impacted by

the war in

Ukraine.

76

F

i

n

a

n

c

i

a

l

s

t

a

t

e

m

e

n

t

s

.

E

M

G

S

A

S

A

77

Income Stat

ement

.

A

mounts

i

n NOK 1

0

No

te

2021

2020

Op

erat

in

g

r

ev

enu

es

Cont

ract s

a

les

1, 11

75,85

9

44,518

M

ulti-cl

ient s

a

les

1, 11

66,36

2

123,6

70

Other

reven

ue

1, 11

45,51

4

45,980

Tot

al

o

p

erat

in

g

r

ev

enu

es

187,735

214,168

Op

erat

in

g

expen

ses

Chart

er hir

e,

fuel

and crew

expenses

4

66,49

2

104,0

01

Em

ploy

ee

expenses

5, 6

26,38

5

78,667

Depr

eci

ation

a

nd

or

dinar

y a

m

or

tis

a

tion

7

26,18

3

26,558

M

ulti-cl

ient am

or

tis

ation

7

10,88

8

33,748

Im

pairm

en

t of l

on

g

-ter

m as

s

ets

7

0

7

0,199

Other

op

erating ex

pen

s

es

4, 22

26,14

3

31,003

Tot

al

o

p

erat

in

g

expen

ses

156,091

344,177

Op

erat

in

g

in

c

ome

31,643

-130,0

09

Financ

ial

in

co

me

an

d

expen

ses

Finan

c

ia

l

i

nco

me

16

-

885

77,012

Finan

c

ia

l

expense

16

-16,940

-40,892

Net

fina

nc

ial

it

ems

-17,825

36,120

Inco

me/(lo

ss

)

b

efor

e in

c

ome

t

ax

13,818

-93,8

89

Inco

m

e

tax

expen

s

e

8

78

7,136

Inco

me/(lo

ss

)

for

t

he

y

ear

13,741

-1

01,0

25

78

Balance Sheet

.

A

s

o

f 3

1

De

c

em

b

er

A

mounts

i

n NOK

1

00

0

N

ot

e

2021

2020

AS

S

ETS

No

n

-c

u

rr

en

t

ass

et

s

M

ulti-cl

ient li

br

ary

7

20,52

5

18,23

0

Other

i

nt

a

ngible

a

s

ets

7

3,676

8,11

6

Pr

o

per

ty, plant

a

nd

equ

ipm

ent

7, 9

82,62

1

103,81

9

As

s

ets

un

der

c

on

s

tr

u

c

tion

7

0

In

ves

tm

ents

i

n s

ub

s

i

diaries

10

50,56

0

1,091

Tot

a

l n

o

n

-c

u

rr

en

t

a

ss

ets

157,382

131,256

C

u

r

ent

ass

et

s

Sp

are par

ts

,

fuel,

ancho

rs

a

nd

batt

er

i

es

3

23,46

5

31,44

4

Trad

e

receivables

9, 11, 12

11

,153

10

,085

Rec

eivables

g

r

ou

p c

om

panies

12, 23

0

29,976

Other

receivables

18

17,80

4

18,10

1

C

as

h and

c

as

h equ

i

val

ent

s

28,31

9

16,30

2

Res

tr

ic

ted

ca

s

h

13

8,914

67,95

6

Tot

a

l c

u

r

ren

t

ass

et

s

89,654

173,864

Tot

a

l a

ss

et

s

247,036

305,119

79

Balance Sheet

.

Oslo,

20

April

20

22

Board of Directo

rs and CEO

of Electromagnetic Ge

oservices ASA

Sign.

A

s

o

f 3

1

De

c

em

b

er

A

mounts

i

n NOK

1

00

0

No

te

2021

2020

EQUI

TY

P

aid

-in

-c

ap

it

al

Sh

are ca

pital

14, 15

130,9

70

130,97

0

Sh

are pr

em

ium

14, 15

0

Other

paid-in-ca

pital

1

4,

15

41

5,621

415

,568

Tot

a

l p

aid

-i

n-

cap

it

al

546,591

546,538

Retain

ed

earn

in

g

s

Other

equ

i

ty

15

-642,031

-633,749

Tot

a

l r

et

ain

ed

ear

n

in

g

s

-642,031

-633,74

9

Tot

a

l eq

u

it

y

-95,441

-87,212

LIABILITIES

No

n

-c

u

rr

en

t

liab

ilit

ies

Pr

o

vi

s

i

on

s

19

42,418

82,17

2

Bor

r

ow

i

ngs

7, 17

214,14

8

271,629

No

n-cu

rr

ent

lea

s

ing

l

i

abil

ities

17

1,178

2,879

Tot

a

l n

o

n

-c

u

rr

en

t

li

abi

lit

ies

257,744

356,681

C

u

r

ent

liab

ilit

ies

Trad

e

payables

16,46

8

11,31

7

Payable g

ro

up

com

p

a

nies

23

55,38

7

0

C

ur

r

ent

tax

li

a

bili

ties

8

2,818

8

,113

Pu

blic

taxes

a

nd

du

ties

payable

20

2,160

1

,476

Other

s

ho

r

t ter

m

l

ia

bili

ties

21

6,485

12,91

2

C

ur

r

ent

l

eas

i

ng l

i

abil

ities

17

1,414

1,83

2

Tot

a

l c

u

r

ren

t

liab

ilit

ies

84,732

35,650

Tot

a

l li

ab

ilit

ies

342,477

392,331

Tot

a

l eq

u

it

y

an

d

lia

bi

lit

ies

247,036

305,119

80

Cash Flow State

men

t

.

1 Ja

nua

r

y - 3

1 Decembe

r

A

mounts

i

n NOK 1

0

2021

2020

A)

Cas

h

flow

fro

m

o

per

at

in

g

ac

t

iv

iti

es

Fu

nd

s

ou

rced

fro

m o

per

a

tion

s

*)

54,05

5

56,580

Changes

i

n inven

tor

ies

,

a

cc

ou

nt

s

receivable

a

nd

ac

cou

nts

payables

97,426

136,416

Other

c

hanges

in wo

rk

i

ng

ca

pital

-62,6

18

-110,786

Net

ca

sh flo

w

fro

m o

p

era

tin

g

act

iv

it

ies

88,863

82,211

B) Cash flo

w

fro

m in

v

estin

g

ac

t

iv

it

ies

Pu

rch

a

s

e of pr

op

ert

y,

plant

a

nd

equ

i

pm

en

t

-761

-11,221

Inv

es

tm

en

t i

n m

ulti-cl

ient li

br

ary

-13,183

-11,11

3

Inv

es

tm

en

t i

n s

ub

s

i

diaries

-49,4

69

0

Net

ca

sh flo

w

fro

m i

nv

estin

g

ac

t

iv

it

ies

-63,413

-22,3

34

C) C

ash

flo

w fr

o

m fin

an

ci

al a

ct

iv

it

ies

Repaym

ent

/s

ettlem

ent

of loan

-53,582

0

Paym

ent

of i

nt

eres

ts

on

l

oans

-16,774

-20,5

69

Finan

c

ia

l

eas

e

paym

en

ts

-2,119

-1,510

Net

ca

sh flo

w

fro

m fin

an

c

ial

act

iv

it

ies

-72,47

5

-22,079

A+B+C) N

et

c

h

ang

e

in

c

ash

an

d

c

ash eq

u

iv

alen

ts

-47,025

37,797

Ca

s

h a

nd

ca

s

h equ

ival

ent

s

as

01.01

84,25

8

46,461

Cas

h

an

d

cash

eq

uiv

al

ent

s as 31.12

37,233

84,258

Calculat

io

n

o

f

cash

an

d

c

ash

equ

iv

alen

t

s

Ca

s

h a

nd

ca

s

h equ

ival

ent

s

28

,319

16,302

Res

tr

ic

ted

ca

s

h

8,914

67,9

56

Cas

h

an

d

cash

eq

uiv

al

ent

s 31.1

2

37,233

84,258

*) Calcu

lat

io

n

o

f fu

n

d

s sour

ced

fro

m o

p

era

tio

n

s

Inco

m

e/(l

oss

)

befo

re incom

e tax

13,81

8

-93,889

Depr

eci

ation

a

nd

amo

rt

is

a

tio

n

37,28

7

60,306

Inco

m

e

tax

expen

s

e

-78

-

7,136

Im

pairm

en

t of l

on

g

-ter

m as

s

ets

0

70,199

Am

o

rt

i

s

a

tion

of inter

es

t

20,88

7

27,100

Finan

c

ia

l

g

a

in on

rep

a

ym

ent

of bo

nd

-17

,861

0

54,055

56,580

81

Notes

.

Accounting Principle

s

The

finan

cial

s

tatements

have

been

prepared

in

accordance

with

the

Norwegian

Accounting

Act

and

generally

accepted

accounting principles

in Norway.

Use of estimates

The

man

agement has used

estimates and assumptions that

have had an im

p

act on

ass

ets, liabilities,

income, expenses and

information on po

tential liabilities in accord

ance with gener

ally accepted accoun

ting principles in

Norway.

Business combin

atio

ns

Business

combination

s

are

accounted

for

u

sing

the

acquisition

method.

The

cost

of

an

acquisition

is

measured

as

the

aggregate

of

the

cons

ideration

transferred,

measured at

acquisition

date

fair

value.

Acquisition

costs i

ncurred are

expensed

and included in

other operating expenses.

When

the

Co

mpany

acq

uires

a

busines

s,

it

as

sesses

the

f

inan

cial

assets and

liabilities

assumed f

o

r

appropriat

e

classificatio

n

and

d

esignation

in

accordance

with

the

contra

ctual

terms

,

economic

circumstan

ces

and

pertinent

conditions

as

at

the

acquisition d

ate.

Revenue recogniti

on

Revenue

from

contracts

w

ith

cus

tomers

is

recogn

ised

when

control

of

the

goods

and

s

ervices

are

tran

sferred

to

the

customer at an amount that ref

le

cts the consideration to which the Company expects to be

entit

led in exchange for those

goods or s

ervices.

Revenue is recognised as

follows:

a) Proprietary contra

ct sales

EMGS perfor

ms EM

services

under contra

ct for

a specific cu

stomer,

whereby the

EM

data is

owned b

y the

customer. The

Company

recognis

es

contract

revenues

(whether

p

riced

as

Lump

Su

m,

Day

Rate

or

U

nit

P

rice)

over

time.

Progress

is

measured in a mann

er generally consis

tent with the ph

ysical progress on the pro

ject.

Mobilisation Fees

Revenues

for

mobilisation

are

us

ually

contracted

with

the

cus

tomer

and

should

cover

t

h

e

vessel’s

transit

to

t

h

e

actual

area.

Revenu

es

and

costs

mobilisation

ar

e

deferred

and

recognised

over

the

acquisition

period

(which

is

th

e

time

from

the

firs

t

receiver

is

d

ropped

to

th

e las

t

retrieval)

of

the

contra

ct,

using

th

e p

ercentage

o

f

completion

method.

The deferral of mob

ilisation c

osts can

only begin after an agreement h

as been signed b

etween EM

GS and the client.

Until

a contract is s

igned, costs are expensed as

incurred.

b) Sales of multi-client libr

ary dat

a

Pre

-funding agreemen

ts

Sales made

p

rior to commencement of

acquisition

for

a project and sales w

h

ile the projects are

in progress, are

p

resented

as

p

re-funding

revenues.

The

advanta

ges

for

pre

-funding

cus

tomers

are

generally

the

possibility

to

influence

the

project

specifications, early a

ccess to a

cquired data,

and discoun

ted prices.

The Company

recognises pre-fun

ded revenue at

the point in

time when data

is made acces

sible to the cus

tomer.

82

Late sales

Customers

are

granted

a

lic

ense

from

the

Co

mpany

which

entitles

th

em

to

access

a

s

pecific

part

of the

multi

-client

d

ata

library. The license payment is

fixed and is required when the license is gran

ted. The late sale revenue is recognised when

a valid licensing a

greement is signed, a

nd the multi

-client libra

ry data is made access

ible to the customer

.

Uplift

Uplift revenu

es

can

arise

if

a

customer

that

has

alread

y bought

a

license

for E

M dat

a,

is awarded

acreage

cover

ed

by

the

data bough

t. Uplift revenue is recognised when t

he custom

er is awarded the acreag

e.

Contract balances:

Contract assets

A

contra

ct

as

set

is

th

e

right to

consideratio

n

in exchange

for goods or

services

transferred

to the

customer. If

the

Co

mpany

performs

by

transferring

good

s

or

services

to

a

customer

before

th

e

custom

er

pays

cons

ideration

or

before

pay

ment

is

due, a contract

asset is recognis

ed for the earned cons

ideration that is con

ditional.

Trade receivables

A receivable represents t

he Company’

s right to an

amount of consideration

that is u

nconditional (i.e., only t

he passage o

f

time is required before pay

ment of the cons

i

deration is due).

Contract liabilities

A

contract

liability

is

the

obligation

to

transfer

good

s

or

services

to

a

customer

for

which

the

Company

has

received

consideration

(or

an

amount

of

consid

eration

is

due)

from

the

cus

tomer.

If

a

customer

pay

s

consideratio

n

before

the

Company

transfers

good

s

or

series

to

the

cus

tomer,

a

con

tract

liability

is

recognised

when

the

payment

is

mad

e,

o

r

the

payment

is

due

(which

ever

is

earlier).

Contract

liab

ilities

are

reco

gnised

as

revenue

when

the

Compan

y

performs

und

er

the contract.

Significant financing comp

onen

t

The

Co

mpany

has

received

fu

nding

from

third

parties

b

uilding

the

EM

equipment.

There

is

a

s

ignificant

financing compo

nent

for th

ese con

tracts

considering

the l

ength

of tim

e betw

een th

e parties’

payment

and

the

beneficial

period.

As

su

ch,

in

terest

cos

ts

are

calculated

o

n

this

contr

act

liability

record

ed

as

pro

vision

in

the

balance

s

heet.

The

interest

rate

is

commensurate

with

the

rate

that

would

be

reflected

in

a

separ

ate

financing

transact

ion

between

th

e

Company and t

he parties at cont

ract inception

.

Balance sheet classif

ication

Current as

sets

and sho

rt term

liabilities

consis

t of

receivables

and

payab

les due within

one

year, an

d items

related to

the

inventory cycle. Other b

alance sheet items are c

lassified as fixed as

sets / long t

erm liabilities.

Current assets a

re valued at the lower of cos

t and fair

v

alue. Short term liabilities a

re recognised at n

ominal value.

Fixed

assets

are

v

alued

at

cost,

less

depreciation

and

impairment

losses

.

Long

term

liabil

ities

are

recognised

at

nomin

al

value.

Subsidiaries

are

valued

at

cost

in

the

Company's

accounts.

The

investments

are

v

alued

at

th

e

cos

t

of

acquiring

shares

in

the subsidiary or

joint venture,

p

rovided that

no

write

down is

requ

ired. A

write down to

fair value will

be carried out

if t

he

reduction in

v

alue is

caused by

circumstances which may not

be regarded

as

incidental

and deemed

necess

ary by

generally

accepted

accou

nting principles.

Write downs

will

b

e

rev

ersed when

the

caus

e

of the

initial write

down

is

no longer

presen

t.

83

Foreign currency

translation

Transactions in

foreign curren

cy are trans

lated at the rate ap

plicable on the tran

saction date. Monetary

items in a for

eign

currency are

translat

ed into NOK

using

the exchan

ge rate

applicable on

the

balance s

heet date.

Non

-monetary items

that

are

measured

at

their

histo

rical

price

expr

essed

in

a

foreign

currency

are

translated

in

to

NOK

using

th

e

exchange

rate

applicable

on

the

tra

nsaction

date.

Non

-monetary

items

that

are

measured

at

th

eir

fair

value

expressed

in

a

fore

ign

currency are

translated at

the

exchange rate

applicable on

the

balance

sheet date.

Changes to

exchange rates

are

recognised in the income sta

tement as

they occur

during

the accounting p

eriod.

Property, plant and

equipment

Property,

plant

and

equipment

are

capitalised

and

depreciated

linearly

over

the

estimated

useful

life.

Significan

t

fixed

assets

which

con

sist

of

substantial

components

with

dissimilar

economic

life

hav

e

been

unb

undled;

depreciation

of

each

component

is

based

on

the

economic

life

of

the

componen

t.

Cos

ts

for

maintenan

ce

are

expensed

as

incu

rred,

whereas

costs

for improvin

g and upgrading

property,

plant and

equipment ar

e added

to the

acquisition

cost and

depreciated with

the related

asset.

If carryin

g value

of a

non

-current

ass

et exceeds

the

estimated

recov

erable amou

nt,

the as

set is

written

down

to

the

recoverable

amoun

t.

The

recoverab

le

amou

nt

is

the

greater

of

the

net

realisable

valu

e

an

d

v

alue

in

use.

In

assessin

g value in use, the discounted estimated

future cash flows from t

he asset are us

ed.

Research and develop

ment

Development costs are

capital

ised provid

ed

that

a future

ec

onomic benefit

as

sociated with development of

th

e intangible

asset

can

be

established

an

d

costs

can

be

measured

reliably.

Otherwise,

the

costs

are

expensed

as

incurred.

Capita

l

ised

development costs a

re amortised linearly

over its us

eful life.

Research costs are expens

ed as they a

re incurred.

Multi-client librar

y

The

multi-client

library

cons

ists

of

surv

eys

of

electromagnetic

dat

a.

The

s

urveys

can

be

li

censed

to

customers

on

a

no

n-

exclusive

basis.

Directly

attributable

costs

associated

with

the

production

and

development

of

multi

-client

projects

such

as acquis

ition costs, processing costs

, and direct project cos

ts are capitalis

ed.

A

multi-client

project

is

con

sidered

complet

e

when

all

components

or

processes

ass

ociated

with

the

acquis

ition

and

processing of

th

e

dat

a are

finished, and

all components of

the data

have been

p

roperly

s

tored and

made ready

for delivery

to customers.

After

a

project

is

completed,

a

stra

ight-line

amortis

ation

is

applied.

The

stra

ight-line

a

mortisation

is

assigned

ov

er

the

useful

life,

which

is

set

at

four

years. T

h

e

straight

-line

amortisation

is

distributed

evenly through

th

e

financial

year

independently of s

ales during the quarters

.

Leased assets

Leases that

provide

EMGS with

substantia

lly

all the

rights

and obligations

of

owners

hip

ar

e

accoun

ted

for as

finance

leases.

Such leases are valu

ed at the

present value o

f minimum lea

se payment and

recorded as as

sets und

er tangible assets

. The

assets are

subsequently

depreciated, and the re

lated liabilities a

re reduced by t

he amoun

t of the lease p

ayments less t

he

effective

interest

expense.

Other

leas

es

are

accounted

fo

r

as

operating

leases

with

le

ase

pay

ments

recognised

as

an

expense over the lease ter

m.

Inventories

Inventories are valued at the lower of cost or net selling price. The selling price is the estimated selling price in the cas

e of

ordinary

operations

minus

the

es

timated

completion,

marketing

and

distribution

costs.

The

cos

t

is

arrived

at

usi

ng

t

h

e

FIFO

m

ethod

and

includ

es

the

costs

in

curred

in

acquiring

the

goods

and

the

costs

of

b

ringing

th

e

goo

ds

to

their

current

state and locat

ion.

84

Trade and other rec

eivables

Trade

receivables

and

other

current

receivables

are

recorded

in

the

balance

s

heet

at

nominal

value

less

provisions

for

doubtful accou

nts. Provisions for doubtfu

l accounts a

re based on an in

dividual assessment of th

e different receivables.

Income tax

Tax

expenses

in

the

profit

and

loss

accounts

comprise

of

both

tax

pay

able

for

th

e

accounting

period

and

changes

in

deferred tax. Deferred tax/tax

assets are calculated o

n all differences between the book value and

tax value of assets and

liabilities.

Deferred

tax

is

calculat

ed

at

22

percent

on

th

e

basis

of

existing

temporary

d

ifferences

and

the

tax

effect

of

tax

losses

carried forward.

Temporary differences, both positive

and ne

gative, that

will reverse

with

in the

same period,

are recorded

net.

Deferred tax

ass

ets

ar

e

record

ed

in the

balance sheet

when it

is

more

likely than

not t

h

at

the

tax assets

will be

utilised.

Taxes payable and

deferred taxes a

re recognised directly in

equity to th

e extent that they relate to equity

transaction

s.

Share based paym

ents

Options for employees are valued at the fair

valu

e of the

o

ption at the time the option plan is adopted. The

Black

-Scholes

model

is

used

for

valu

ation

of

options

.

The

cos

t

of

the

opt

ions

is

allocated

ov

er

the

period

during

which

the

employe

es

ea

rn

the

right

to

receive

su

ch

op

tions

.

This

arrangement

is

presented

as

oth

er

paid

-in

capital

in

the

balance

sheet.

Provisions

are

made

for

the

social

security

ta

xes

th

e

share

option

plan

,

which

are

the

difference

between the issu

e price and the market price o

f the share at

year

-end, on the bas

is of the vesting p

eriod of the program.

Provisions

are

recognis

ed when the Company has a

present obligation as a result of

a past event, where it is probable that

an outflow of resources embod

ying economic benefits will be required to settle the obligation and a reliable estimate can

be made of the amount of th

e obligation

. Provisions for los

s on contracts

are recognised when it is clear that t

he contract

will result

in a

loss

. The ca

lculat

ion is

made

by

comparing th

e contracted

revenues

to

the expect

ed direct

operating c

osts

for the contract period.

Cash flow statement

The

cash

flow

sta

tement

is presented

using

the

indirect

method

.

Cash

an

d

cash

equ

ivalents

include

cash and

bank

dep

os

its.

Note 1

–

Operating r

evenues

15

053

of the 187

735

in total

operating revenues in

2021,

was intercompan

y revenues (20

20

:

50

780

).

The Company con

sists of on

e bus

iness area only. EMGS op

erates glob

ally.

Note 2

–

Share

d revenue

The

Compan

y

has

since

2013

entered

several

coo

peration

agreements

regarding

E

M

multi-cli

ent

s

urveys

in

th

e

Barents

Sea and Brazil.

EMGS

has

received

funding

and/or

seismic

data

against

a

revenue

share

on

prefunding

,

late

sales

and

uplift

revenues

.

A

mounts

i

n NOK

1 0

0

2021

2020

Regio

ns

No

rw

ay

98,37

3

129,536

Eur

op

e,

M

i

dd

l

e Ea

s

t a

nd

Afr

ic

a

194

22,03

2

No

rt

h and So

ut

h Am

erica

25,688

61,039

Asi

a

and th

e Pac

ifi

c

Oc

ean

63

,479

1,560

Tot

al

187,735

214,168

85

EMGS

has

provided

the

vessel,

p

erformed

the

dat

a

acquisition

and

finally

provide

d

the

data

proces

sing

services.

The

acquired dat

a remains the prop

erty of EMGS.

When EMGS licens

es data to

customers in

areas su

bject to revenu

e sharing, th

e Company in

voices and

collects payments

from the customers for

th

e entire sales amount. The related accounts receivable

is

presented gross, w

h

ile the portion

due

to the partner up

on collection from the cus

tomer,

is presen

ted as a s

hort-term liability.

EMGS' share of the rev

enue fro

m the sale of multi

-client library

with cooperation

agreements in

20

21 is 3

465

(20

20

:

10

225

).

Note 3

–

Spare parts,

fuel, anchors and batteries

Note 4

–

Operating le

ases

Note 5

–

P

ensions

The

Co

mpany is

required

to have

an occupational

pens

ion

p

lan

in

accordance w

ith

the

Norwegian

law

on re

quired

occupational

pens

ion

("lov

om

obligatorisk

tjen

estepensjo

n").

The

Company

's

pension

arrangements

ful

fill

the

requirements of the law.

In 2021,

the

pension

plan

involved a

contrib

ution level

of

5

% of

Base

Salary fro

m 0

to 7.

1 G

and

15

%

of Base

Salary

from

7.1 up to 12

G, where G

is the

N

ational Ins

urance basic

amount (Folketrygd

ens grunnb

eløp)

. G is equ

al to NOK

106

3

99

as

of 31 December 202

1.

The

Co

mpany`s

con

tribution

to

the

Norwegian

defined

contrib

ution

plan

for

the

year

ended

31

Decemb

er

20

21

is

1

477

(20

20

:

2

786

).

As of 31 December 2021

,

th

ere are 15.5

employees covered

by th

e defined contribution pens

ion plan (20

20

:

19

).

EMGS'

rev

enu

e

share

Mult

i-c

lien

t

sur

vey

Brazil

2013

95%

Ba

r

ents

Sea 2013

70%

Ba

r

ents

Sea 2014

50%

Ba

r

ents

Sea 2015

50%

Ba

r

ents

Sea 2016

50%

Ba

r

ents

Sea 2017

50%

A

mounts

i

n NOK 1

0

00

2021

2020

Inven

t

or

y

t

yp

e

Equ

i

pm

ent, com

p

on

ents

and

part

s

16,7

29

21,0

42

An

cho

rs

a

nd

batt

eries

5,311

7,60

7

Fu

el

1,425

2,795

Tot

al

23,465

31,444

A

mounts

i

n NOK 1

0

00

2021

2020

Oper

atin

g

leases

r

ecog

n

ised as expense in

t

he

per

iod

Chart

er

hire

38,78

8

63,4

13

Offi

ce

pr

em

is

es

5,260

6,119

Tot

al

44

,047

69,5

31

86

Note 6

–

Remune

ration

The average number of e

mployees du

ring 20

21 was 15.5.

Executive Manageme

nt remuneration

**Other benefits include el

ectronic communicatio

n,

group life insura

nce and h

ealth insurance.

Remuneration P

olicy

All

members of the Executiv

e Management

Group

have fixed s

alaries. In a

ddition to the fixed salary,

a bonus plan

is in place. The bonus

system is bas

ed on a combination of fulfillment of E

MGS´s goals an

d individu

al goals.

The Executive Manag

ement Group

is incl

uded in the Company´s

ordinary pension

plan.

There are no other v

ariable elements in

cluded in th

e remuneration for the Executive Man

agement Grou

p.

Board of Directo

rs remuneration

The amounts listed u

nder Directors fee have b

een expensed

and paid in 2

021.

Share base payment

The Company h

as an option

program (more details abo

ut the program is

presented in no

te 15 for the Group).

The Company u

ses Black Scholes mod

el to estimate the val

ue of the option

s.

A

mounts

i

n

NOK 1

00

0

2021

2020

Emplo

y

ee expenses

:

Salaries

and

bo

nu

s

21,7

97

62,572

Payr

oll tax

1,97

3

7,610

Pen

s

i

on

costs

1,577

2,92

0

Oth

er ben

efi

ts

1,039

5,565

Tot

al

26,385

78,667

Am

ounts

i

n NOK

1 0

0

Salarie

s

Bonus

Share options

Pe

nsi

on

ben

ef

i

t

Other bene

f

i

ts**

To

tal

remunera

tion

Execut

ive

Manag

ement

Bjørn Petter Lindhom

2021

2,4

14

126

5

123

14

2

,68

2

Knut Ande

rs E

i

mstad, CFO

2021

1

,67

5

126

5

122

14

1

,

94

3

Dag

Hel

l

and-Hansen, Global EA /

P

resi

de

nt EM

E

A

2021

2,2

62

126

5

126

14

2

,53

3

Tot

al

6,351

379

14

371

43

7,158

A

mounts

i

n

NOK 1

00

0

Direct

o

rs fee

Boar

d

o

f Dir

ect

o

rs

Fr

edr

ik W. Mo

hn

C

hairm

an of th

e

Board

25.11

.-31-12.

0

Silje

Au

g

us

tson

Chai

r

man

of th

e

B

oar

d

2

1.05.-02.1

1.

0

M

i

m

i

B

er

dal

Chai

r

man

of th

e

B

oar

d/Bo

a

rd

m

em

ber

01.01

.-31.12.

220

Bea

tr

iz Malo de M

olina

Boar

d mem

ber

25.11.-31

.12.

0

Pet

ter

i

Soin

i

nen

Boar

d mem

ber

21.05.-31

.12.

0

Jø

rgen Wes

tad

Board

mem

b

er

0

1.01.-31.1

2.

0

Øyvind

Gr

ea

ker

Bjør

nd

a

l

Boar

d mem

ber

01.01.-21

.05.

124

344

87

B

–

average exercis

e price for number of

options

by 31 December 20

21

.

Loans and guarantees

No

loans

or

loa

n

guarantees

hav

e

been

granted

to

the

Exe

cutive

Management

of th

e

Boar

d

of

Directors

or

oth

er

Auditor expense

Note 7

–

Tangi

b

le and intangible

assets

Depreciation/amortisat

ion of fixed assets

is calculated u

sing the straight

-line m

ethod.

The registered patents

rights relate to electromagn

etic surveys (E

M).

The DeepBlue

EMGS has

been

working

on a

Joint

Industry

Project (“th

e

DeepBlue

”),

sup

ported

by Shell

and

E

quinor,

for

developing

the

EM

equipment.

The

ben

efit

of

using

the

DeepBlue

equipm

ent

is

deep

er

penetration

and

s

ignificantly

improved imaging

at increas

ed

bu

rial

d

epths.

The

improv

ed imaging

leads

to

improved

confidence and

enhan

ced

interpretation

poss

ibilities.

T

he

p

roject

commenced

2012

and

the

prototy

pe

equipment

was

compl

eted

in

2017

with

it

s

first commercial survey summer

2017

.

The carrying value

o

f the

DeepBlu

e equipment as of

31 December 2021 was

67

710

A

mounts

i

n

NOK 1

00

0

Nu

m

ber

of

op

tio

ns

OB

Fo

rfeit

ed

op

tio

ns

Gr

a

nt

ed

op

tio

ns

Nu

m

ber

of

op

tio

ns

CB

Weighted

aver

a

g

e

excercis

e pr

i

ce

B

Weighted

aver

a

g

e

r

emainin

g

con

tr

a

ctu

a

l

ife

Execut

iv

e Man

agemen

t

Bjør

n Pet

ter

Li

nd

ho

m

12,5

00

0

12,5

00

2.1

7

2.60

Kn

ut

An

der

s

Ei

m

s

tad

12,5

00

0

12,5

00

2.1

7

2.60

Dag

Hell

and

-

Hansen

12,5

00

0

12,5

00

2.1

7

2.60

A

mounts

i

n NOK 1

0

00

2021

2020

Au

dit

o

r

expenses

St

atut

or

y audit

s

ervices

(excl

VAT)

726

675

Tax

a

dv

i

s

or

y s

ervices

(excl

VAT)

166

436

Fu

rt

her

a

s

ur

ance s

ervices

(excl

VAT)

42

213

Tot

al

934

1,324

Am

oun

ts

i

n

NOK 1

00

0

P

ro

p

ert

y

,

plan

t

an

d

equ

ipmen

t

P

at

ent

s

S

oft

war

e

licen

ses

etc

.

Mu

lt

i-clien

t

libr

ary

To

t

al

A

ss

et

s un

d

er

co

nstr

u

ct

ion

Acqu

is

ition

cos

t at 1

Januar

y 2021

1,128,7

72

26,41

5

105,342

70

1,310

1

,961,839

24,906

Ad

j

ustm

ent o

f

open

ing

val

ue

0

Transferr

ed fro

m as

s

ets

un

der

constr

uction

to int

a

ngible

as

s

ets

0

Pu

rchas

es

761

0

13,1

83

13,944

0

Dis

po

s

a

ls

0

Ac

qu

isitio

n

co

st

at

31 Dec

ember

2021

1,129,533

26,415

105,342

714,493

1,975,783

24,906

Accum

ulated

depr

ecia

tion

1 Ja

nu

a

ry

2021 (Res

tated

*)

1,024,8

92

26,41

5

97,226

6

83,081

1,831,61

4

24,906

Depr

eci

ation/

a

m

ort

is

ation for

the year

21,743

0

4,440

10,888

37,071

0

Transferr

ed fro

m as

s

ets

un

der

constr

uction

to intangible a

s

ets

0

Dis

po

s

a

ls

0

Im

pairm

ent

0

Ac

cu

mulat

ed

d

ep

rec

iatio

n

31

December

2021

1,046,635

26,415

101,666

693,969

1,868,685

24,906

Net

car

ry

in

g

v

alue

82,897

0

3,676

20,525

107,098

0

Depr

eci

ation r

a

te (%)

13-33

7-10

33

25

*Se

e cha

n

ge

s

i

n a

cc

ou

nti

ng po

l

i

c

y un

der notes

88

(20

20

:

74

436

)

(more

details about

the

DeepBlue

in

presented in

n

ote

17

for

the

Group)

. T

h

e

carrying

valu

e

of

the

DeepBlue

equipment as presented

in note 17 for th

e Group is USD

11 414 thous

and.

See Note

19

for funding from th

e DeepBlue partn

ers recorded a

s a

contract liability

.

Assets under cons

truction

Assets un

der construction are intern

al capital expenditu

re projects t

hat

are not completed

. These projects are mainly

development and pro

duction of acquisition

equipment, but also

interpretation an

d modelling software.

Finance leases

Finance leases are capitalis

ed at th

e lease’s commencement

at the lower of the present

v

alue and cos

t.

The leasing contracts h

ave a duration o

f 5 years and the as

set will be depreciated over a

3

-5

-year period.

The terms of the agre

ements are 3 mon

th NIBOR +

1.11% a

nd 1.40%.

A

mounts

i

n

NOK 1

00

0

2021

2020

Ca

pitalis

ed in th

e

bala

nce s

heet

31 Decemb

er

5,62

4

5,631

Accum

ula

ted

dep

reciation

-3,36

5

-2,171

Net

car

ry

in

g

v

alu

e

2,259

3,460

Depr

ecia

tion

1,1

92

344

A

mounts

i

n NOK 1

0

00

2021

2020

Spe

cif

i

ca

ti

on

of R

&D

e

x

pe

ns

e

s

Exte

rnal ex

pe

nse

s

0

616

-

M

ateri

als

0

421

Inte

rnal hours

0

11

,56

9

Tota

l

0

1

1,3

74

A

mounts

i

n

NOK 1

00

0

No

minal

Present

No

minal

Present

valu

e

v

alue

v

alu

e

val

ue

Leas

es

du

e

wit

hin 12 m

on

ths

1 261

1 178

1 975

1 832

Leas

es

du

e

wit

hin th

e

on

th

s

3 029

1 414

3 029

2 879

Remainin

g

d

ebt

on

leasing

co

n

tr

ac

ts 31 Decemb

er

4 290

2

592

5 005

4

711

2021

2020

89

Note 8

–

Inco

me taxes

Current tax liabilities are relat

ed to operation

s abroad

. Accrued year end is 2 818 (2020 8

113)

Note 9

–

Collate

rals

There are no long

-term liabilities d

ue in more than five

years from 31 De

cember 202

1 or 31 December 20

20

.

A

moun

ts

i

n NOK

1

00

0

2021

2020

Tax ba

se specificat

io

n

Pr

ofit befo

re tax

13,818

-93,889

Per

m

a

nen

t differen

c

es

18,8

15

-61,921

Changes

i

n tem

po

r

ary

differen

c

es

-19,193

22,4

00

Rec

ieved gro

up con

tr

i

bu

tion

0

22,022

Tax

expense

a

br

oad

,

paid

0

Taxable

pr

o

fit

(t

h

is year

ta

x base)

13,440

-111,3

88

Tax

l

oss

es

ca

rr

ied for

ward

-13,440

111,38

8

Taxable

pr

o

fit

(t

h

is year

ta

x base)

0

Inco

me t

ax expen

ses

:

No

n-cr

editable

for

eig

n i

nco

me taxes

78

7,13

6

Tot

al

in

co

me

ta

x expense

78

7,136

Tempo

ra

ry

differ

enc

es

Fixed as

s

ets

-55,975

-69,471

Accou

nt

s

r

ec

eiva

ble

0

Inv

ento

r

y

0

Pr

ov

i

s

i

on

s

tax

l

ia

bili

ty

a

br

oad

9,997

4,299

Other

a

cc

r

ual

s

-

40,559

-35,527

Tax

l

oss

es

ca

rr

ied for

ward

-1,528,425

-1,525,0

86

Tot

al

t

empo

r

ary

d

ifferen

ces

-1,614

,962

-1,625,78

5

No

n

-r

eco

gn

ised

d

eferred

ta

x ass

et

-355,2

92

-357,67

3

No

n-cr

editable

for

eig

n i

nco

me tax i

s

Malays

i

a

.

No

n

-r

eco

gn

ised

d

eferred

ta

x ass

et

A

moun

ts

i

n NOK

1

00

0

T

ax ba

se

2

2%

t

ax

Explan

at

io

n

wh

y

t

h

e t

ax is n

o

t

22%

o

f in

c

ome

b

efor

e t

ax

22%

tax of i

ncom

e befo

re tax

13,81

8

3,040

Per

m

a

nen

t differen

c

e

18,815

4,139

Change

i

n defer

r

ed tax

a

s

ets,

no

t reco

gnis

ed

-10,82

3

-2,381

Cor

rectio

n of err

or

s

i

n pr

eviou

s

years

213

47

Rever

s

ed g

r

oup

con

tr

i

bu

tion

pr

eviou

s

year

s

-22,022

-4,845

Effec

t of tax on gro

up

c

on

tr

ibut

i

on

0

Calculat

ed

t

ax

0

Effect

iv

e t

ax r

at

e in

%

0%

A

mounts

i

n NOK 1

0

00

2021

2020

Pled

g

ed

ass

ets:

Tr

a

de r

ec

eivables

13,287

8,93

3

Ass

ets

held

un

der

f

inance lea

s

es

3,1

70

4,3

62

Tot

al

car

ry

in

g

v

alu

e o

f p

ledg

ed

ass

et

s

16,458

13,295

90

Note 10

–

Invest

m

ent in subsi

d

iaries

Note 11

–

On

-g

oing projects

Part of

trade receivables that are

recogn

ised in

20

21, but not invoiced per

31 December 2021 amounts to 3

928

(20

20

:

0).

Deferred revenue as o

f 31 December 20

21 amoun

ts to 1

286

(20

20

:

2

433

).

The Company d

oes not expect an

y loss on con

tracts in 20

21.

Note 12

–

Receiva

b

les

The Company h

as no accounts receivables with

due dates la

ter than 12 month

s.

There has not been mad

e any provis

ion for loss on

external receivables per 31 December

20

21 (20

20

: 0

).

Note 13

–

Bank de

posits

Restricted cash as

of 31 December 202

1

:

A

mounts

i

n NOK 1

0

Profit

/L

oss 20

2

1

L

oca

t

ion

Sea B

ed Logg

i

ng -

Da

ta

St

or

a

g

e C

om

pan

y AS

100%

0

-18

163

Tr

on

dh

eim, No

rw

ay

EM

GS Am

ericas

1 AS

100%

0

2,658

271

Tro

ndh

eim, No

rw

ay

CSEM Pr

od

uctio

n AS

100%

118

-14

112

Tr

on

dheim

, Nor

way

EM

Mu

lti-c

li

ent

AS

100%

0

2,507

10,461

Tr

ond

heim

,

No

rw

a

y

EM

GS Gl

ob

al

AS

100%

49,586

-

97

53,745

Tr

on

dheim

, Nor

way

EM

GS Sur

vey

s

AS

100%

0

-18

1,141

Tro

nd

heim

,

No

rw

a

y

EM

GS Ship

ping

M

ex

ic

o S. d

e

R

.L

de C

.V.

99%

0

-12,66

5

920

Col. Del

Va

ll

e,

M

exi

co

EM

GS Sea

Bed L

ogg

ing

M

exic

o S.A

.

de C

.V.

100%

0

13,924

-22,195

Col.

Del

Va

ll

e,

M

exi

co

Ser

vicos

Geologic

os

El

ectro

m

a

gneticos

Do B

raz

il

L

TD

A

99%

0

17,110

-450,6

02

R

io de Janeiro

,

Brazil

Elec

tr

om

ag

net

i

c

Geoservices

M

al

ays

i

a

Sdn

B

hd

1%

0

7,143

Ku

a

la

L

um

pu

r, M

a

la

ys

ia

em

g

s

As

ia

Paci

fi

c

Sd

n Bhd

100%

856

-51

1

4,161

Ku

a

la

L

um

pu

r, M

al

a

ys

ia

EM

GS L

abuan

L

td

100%

0

-1

89

La

bu

a

n, M

a

la

ys

i

a

EM

GS As

i

a

Paci

fi

c

La

bu

a

n Ltd

100%

0

-1,314

L

abuan

,

Malays

i

a

em

g

s

Au

s

tr

a

li

a

Pty

L

td

100%

0

-50

847

Per

th

,

Au

s

tr

a

li

a

Tot

al

50,560

22,826

-395,335

Ne

t

ca

r

ying v

alue

sha

r

e

s in

subsi

diaries

Equi

t

y 3

1

Decem

be

r 2

0

2

1

Sha

r

e

owne

r

ship/

Vot

ing rights

A

mounts

i

n NOK 1

0

00

2021

2020

Res

t

r

ict

ed

cash

Gu

a

r

a

nt

ees

7,66

8

66,865

Em

ploy

ee

tax

1,24

6

1,091

Tot

al

8,9

14

67,9

56

91

Note 14

–

Share ca

p

ital and Sha

reholder information

The

tota

l

authorised

nu

mber

of

ordinary

s

hares

is

166

986

3

54

as

of

3

1

December

202

1

(20

20

:

153

889

385

)

with

a

par

value of NOK 1 p

er share. All iss

ued shares are denominat

ed in NOK and fu

lly paid.

The largest shareho

lders as of 31 Decemb

er 20

21:

Note 15

–

Equity

Nu

m

ber

of

or

din

a

ry

s

hares

Per

centage

Siem

Inves

tm

en

ts

SA

R

L

3

1,327,467

23.92

%

PERESTRO

IKA AS

29,45

2,795

22.49%

M

or

g

an Stanley & C

o. LL

C

25,891,80

5

19.7

7%

SP

O

R

TSM

AGA

SINET AS

3,398,21

1

2.59%

RAGE,PER

EGIL

1,500,000

1.15%

FOLKESETH,LIV

GRET

E

86

0,125

0.66%

RYGG,JAN

WIGGO

789

,025

0.60%

NORDNET

L

IVSF

O

RSIKRIN

G

AS

7

78,858

0.59%

NÆ

R

INGS

L

IVETS HO

VEDO

R

GAN

ISAS

JON

766,1

90

0.59

%

No

rd

net

B

ank AB

720,27

0

0.55%

HAA

V

HO

LDING AS

700,0

00

0.53

%

KRISTIA

N FALNES

AS

650,0

00

0.50

%

No

rd

ea

B

ank Ab

p

573

,978

0.44%

JAG

L

AND,ERIK SM

ITH

550,000

0.42%

KONGS

RUD,R

UN

E

JAC

OB

507,83

7

0.39

%

Dans

ke B

ank A/S

475,0

69

0.36

%

ØVER

LAND,JA

RL

E

457,0

39

0.35

%

EIKA

NGER

INVEST AS

44

8,000

0.34%

Other

31,12

3,021

23.76%

Tot

al

130,969,690

100%

Am

ounts

i

n NOK 1

0

00

Sha

re

c

apital

Sha

re

premium

Other

paid-in ca

pital

Ava

i

lable

-f

or-

sale reserve

Act

uarial

gains/

(l

osses)

Other

e

quity

(uncovered loss)

Tot

al

At

31 Dec

em

ber

2020

130,9

70

0

413,5

17

2,05

0

13,377

-64

7,126

-87,212

Gr

oup

con

trib

ution

changed in 2020

0

-22,022

-22,02

2

At

1 Ja

nu

a

ry

2021

130,9

70

0

413,5

17

2,05

0

13,377

-66

9,148

-109,23

4

Other

tran

s

actions

0

53

0

53

Inco

me for

the year

0

13,741

At

31 Decemb

er

2021

130,970

0

413,570

2,050

13,377

-655,40

7

-95,

441

92

Note 16

–

Fina

n

cial items

Note 17

–

Fina

n

cial liabilities

USD 32.5 million c

o

nvertible bond

On

9

May

2018,

EMG

S

secured

a

USD

3

2.

5

million

convertible

b

ond

bearing

an

interest

at

3

month

s

LIBOR

+

5.50%

p

.a

.

The

loan

can

at

any

time

be

con

verted

into

common

shares

in

EMGS

at

the

con

version

price

of

NOK

3.

76

(USD

0.42677)

until the maturity d

ate on

9

May

2023

.

The

U

SD

32.

5

million

con

vertible

bond

can

b

e

s

een

as

a

contract

settled

by

an

entity

by

delivering

a

fixed

amount

o

f

its

own equity instruments in exchange for

a fixed amount of foreign currency. The economic components of this convertible

bond are:

(a)

A

liab

ility.

On

issu

ance

of

the

convertible

b

ond,

the

fair

value

of

th

e

liability

component

was

d

etermined

using

a m

ar

ket

rate

for

an

equivalent

non-conv

ertible

bond

;

and

classified

as

a

financial

liability

measured

at

amortised

cost

(net

of

transaction co

sts) until it is extinguish

ed on conv

ers

ion or redemption.

(b)

An

equity

component.

The

residu

al

o

f

th

e

pro

ceeds

was

allocated

to

the

conv

ersion

option

th

at

was

recognised

in

shareholders’ equ

ity.

At

inception,

the

value

of

the

liability

compon

ent

was

estimated

to

NOK

246.4

million

,

and

amortised

cos

t

as

o

f

31

December

2021

was

NOK

2

14

.1

million

(20

20

:

NOK

271.6

million).

The

equity

component,

th

e

carrying

amount

of

the

conversion op

tion, was estimated to

NOK 15.8 million

at inception

and is n

ot remeasured in s

ubsequent periods.

Two

separate

bon

d

repurchases,

at

a

75

per

cent

discount,

were

completed

in

2021

wit

h

a

combined

nominal

v

alue

of

NOK 71.4 million.

The con

vertible

bond

conta

ins

financial

covenants

requiring

free

cash

and

cash

equivalents

of

at

least

USD

2.5

million

on

group le

v

el.

In addition,

the

bond agreem

ent has

restrictio

ns

regarding the

Company's abi

lity

to sell

the

multi

-client

library,

declare or

make dividend

payments,

incur addition

al indebtedness,

change its b

usiness o

r enter into s

peculative

financial

derivative agreements. As of 31 De

c

ember 2021, the free cash and cash equivalents of the

Group totalled USD 9.

9 million.

The convertible bond

is unsecured.

A

mounts

i

n NOK 1

0

2021

2020

Financ

ial

in

co

me:

Gr

ou

p c

on

tr

ibut

i

on

0

22,120

Int

erest i

nco

me s

ub

s

idia

r

i

es

0

Int

erest i

nco

me o

n s

ho

rt

ter

m

bank

dep

os

its

19

1,866

Net

for

eig

n exc

hange g

a

ins

0

16,346

Gain on b

ond

bu

y back

17,86

1

0

Net

g

ai

ns

of fi

nancia

l

a

s

ets

0

36,680

Tot

al

17,880

77,012

Financ

ial

expen

ses

:

Int

erest expense

s

ubsi

diaries

0

2,599

Int

erest expense

24

,241

34,535

Net

for

eig

n exc

hange l

oss

3

0

Net

los

s

on

fi

nancial

as

s

ets

and li

abil

ities

10,42

7

0

Finan

c

ia

l

expenses

rep

a

ym

ent

of bo

nd

l

oan

0

Other

fi

nancia

l

expen

s

es

1,033

3,758

Tot

al

fin

an

cial

35,705

40,892

Net

fina

nc

ial

it

ems

-17,

825

36,120

93

Lease liabilities

The

finance

lease

liab

ilities

relate

to

certain

prop

erty,

plant

and

equ

ipment

and

ar

e

capitalised

leases

for

finan

cial

report

ing

purposes.

The related leased property, p

lant and equipment s

erve as the collateral un

der such leases

.

Note 18

–

Other re

ceivables

Note 19

–

P

ro

visions

The

Company

recognises

a

contract

liability

for

prepayments

from

Shell

and

Equinor

in

a

joint

ind

ustry

project

(the

DeepBlue). EMGS,

Shell and Equinor decided

to collaborate

on the development,

construction

, and

testing of

an advanced

marine

electro

magnetic

acq

uisitio

n

s

ystem. T

h

e

proto

type of

the new

source w

as

completed

in 2017.

The contract

liability

was

previously

recognised

as

rev

enue

over

an

eight

-year

period,

which

is

th

e

same

as

the

depreciation

period

for

the

DeepBlue so

urce ass

et. In

2019,

Shell, Equ

inor

and

EMGS si

gned an

amendm

ent to

the

initial

agreement,

which

changed

the liability’s revenu

e recognition period

from eight to four

years sta

rt

ing from 1 Jan

uary 2019.

The Company

has recorde

d

4

2 418

as provis

ion for DeepBlu

e prepayments p

er 31 December 20

21

(20

20

:

82

172).

The prepayments from Sh

ell and E

quinor

have been recorded a

t fair value,

and the difference between the

fair value a

nd

the nominal

amount

of th

e

consid

eration

was

recognised

as

interest.

This inter

est

expense is

recorded

against

revenue

s.

Total interest expense r

ecorded in 20

21 was 4

216

(20

20

:

6

763

).

Note 20

–

P

u

blic taxes an

d

duties payable

A

mounts

i

n

NOK 1

00

0

Int

erest rate

M

atur

ity

2021

2020

No

n

-cu

r

ren

t

US

D

32.5 m

i

ll

ion con

ver

tible bon

d

3 m

on

th LIBO

R

+

5.50%

5/

9/2023

214,1

48

271,6

29

Lea

s

e

li

abil

ites

4.0-8.

1%

2-4 years

1,414

2,879

Tot

al

215,561

274,508

Curren

t

Lea

s

e

li

abil

ites

4.0-8.

1%

Up to

1

year

1,178

1,832

Tot

al

1,178

1,832

Tot

al

fin

anc

ial

liab

ilit

ies

216,740

276,340

A

mounts

i

n

NOK 1

00

0

2021

2020

Ot

her

r

eceiv

ables

Pr

epaid expen

s

es

3,544

4,188

VAT

1,44

5

795

With

ho

lding

tax

12,8

15

12,413

Oth

er

0

706

Tot

al

17,804

18,101

A

mounts

i

n

NOK 1

00

0

2021

2020

Pu

b

lic

t

axes

an

d

ut

ies p

ayab

le

Em

ploy

ee

taxes

w

ith

held

1,23

1

617

Em

ploy

m

ent t

a

x

930

859

Tax

for

ei

gn em

ploy

ees

0

Oth

er

0

Tot

al

2,160

1,476

94

Note 21

–

Other c

u

rrent liabilitie

s

Note 22

–

Other o

p

erating ex

p

enses

Note 23

–

Related pa

rties

Sales and pu

rchases of services, receivable and

liabilities:

receivables a

nd liabilities are s

how on a net bas

is.

In 2021, the Company a

ccru

ed

for los

s on group compan

y receivables with

10

427 (20

20

accrued

:

36

680)

A

mounts

i

n

NOK 1

00

0

2021

2020

Ot

her

c

u

rr

ent

liab

ilit

ies

Pr

ov

i

s

i

on

for

oner

o

us

con

tr

a

ct

0

Accr

ued ho

li

day pay

2,148

1,757

Accr

ued s

al

a

r

i

es

0

Deferr

ed r

evenu

es

1

,286

2,433

Accr

ued s

har

ed rev

enues

664

1,292

Accr

ued vess

el

expen

s

es

1,220

6,123

Other

l

ia

bili

ties

1,167

1,30

9

Tot

al

6,485

12,913

A

mounts

i

n

NOK 1

00

0

2021

2020

Ot

her

o

p

erat

in

g

expen

ses

Rent

a

l

a

nd

ho

us

ing

expen

s

es

6,645

7,570

Consum

ables

and m

ai

nt

enance

2,132

3,368

Consultancy

fee

11,924

9,647

Travel expen

s

es

279

1,400

Insur

ance

3,615

1,607

M

a

r

keting

276

571

Int

er

c

om

p

a

ny

expenses

0

4,169

Other

op

eratin

g

expen

s

es

1,2

73

2,672

Tot

al

26,143

31,003

Am

oun

ts

i

n NOK

1

00

0

Liab

ilit

ies

Receiv

ab

les

Pu

rc

h

ase

S

ales

Liabi

lities

Receiv

ables

P

u

rc

hase

Sales

ar

ties

Sea Bed L

ogg

ing

- D

ata

St

orage C

om

pany AS

0

em

g

s

Am

ericas

1 AS

13

0

CSEM Pr

od

uction

AS

0

EM M

ulti-cl

ient AS

11,674

0

11

,356

0

em

g

s

Global AS

9,079

0

8,704

0

em

g

s

Am

ericas

1 AS Mexican B

r

anch

0

em

g

s

Am

ericas

Inc

0

1

3,047

0

EMG

S Shipp

i

ng Mexico S. de R.L

de C

.V.

636

0

5

0,160

0

-5,033

EMG

S Sea

Bed L

oggi

ng

M

exi

co S.A. de C.V.

0

9,997

0

-15,053

0

31

0

-

44,825

EMG

S Sevices

Mexico S.A d

e

C

.V

0

Elec

tr

om

ag

netic Geos

erv

i

ces

C

anada Inc

0

Ser

vicos

Geologic

os

El

ectr

om

a

g.

Do B

r

azil

LT

DA

0

EMG

S Sur

veys

AS

0

EMG

S UK Ltd

34,744

0

34

,511

0

139

0

Elec

tr

om

ag

netic Geos

erv

i

ces

Malays

ia

Sd

n B

hd

1,160

0

1,123

0

em

g

s

Asi

a

Paci

fi

c Sdn

B

hd

8,029

0

3,682

0

-922

em

g

s

La

bu

a

n Ltd

49

0

48

0

EMG

S AP La

buan

Ltd

0

1

0

65,384

9,997

0

-15,053

59,423

50,192

13,186

-50,

780

Acc

u

mulat

ed

p

ro

vi

sion

for

lo

ss related

par

ti

es

385,100

374,674

2020

2021

95

Note 24

–

Events

after the reporting perio

d

Extension of maturit

y date

In February 2022

,

b

ondholders’ res

olution to ; a) extend

the maturity d

ate by 24 months

(May 2023 to May 202

5); and

b)

increase

the

interest

margin

by

100

b

ps

from

5.5

to

6.5

percent

ov

er

th

e

applicable

reference

rate

was

resolv

ed

and

adopted for FRN E

lectromagnetic G

eoservices ASA Senior

Unsecured Conv

ertible Bonds 2018/2023.

Multi-client late

sales

In

March

202

2

,

Electromagnetic

Geoservices

ASA

secured

USD

2.8

million

in

revenue

from

late

sales

and

a

ch

ange

of

control event related to it

s existing multi

-client library in N

orway.

Multi-client re

v

enue

In

March

202

2

,

Electro

magnetic

Geoservices

ASA

secured

ap

proximately

USD

1

million

in

upl

ift

revenu

e

relat

ed

to

its

existing multi-client library

in Norway.

Pre-funded multi-client

revenue

In April

202

2

,

Electromagnetic Ge

o

services ASA secured

ap

proximately USD 1 million

in pre

-funding for 3D

CSEM

survey in

Norway.

Ukraine

Electromagnetic Geos

ervices ASA does n

ot expect to be n

egatively impacted by

the war in

Ukraine.

96

A

u

d

i

t

o

r

’

s

r

e

p

o

r

t

.

202

1

97

98

99

100

101

102

E

M

G

S

A

S

A

K

a

r

e

n

s

l

y

s

t

A

l

é

4

,

4

t

h

f

l

o

r

N

-

0

2

7

8

O

s

l

o

N

o

r

w

a

y