Good morning. Welcome all to our Presentation of the Results for the Third Quarter of 2023 for Reach Subsea ASA. Our report and presentation were released earlier this morning, and I hope you have had the time to take a look at it. I am Jostein Alendal, CEO of Reach Subsea, and with me is CFO Birgitte Wendelbo Johansen. Birgitte will present the financials shortly. The third quarter of 2023 was another record-breaking quarter for us, and we have now experienced robust revenue growth for nine straight quarters. On a rolling twelve-month basis, our revenue now stands at NOK 1.85 billion. Over the past two years, we have nearly tripled our revenue on this same basis.
It is good to deliver on our strategy and ambitions, and I do believe our results also this quarter validate our steady progress. So it is a pleasure for Birgitte and myself, on behalf of the whole team, to present this report. We value your insight and questions, so please feel free to submit your questions through the webcast player, and we will provide answers during our Q&A session, shortly after this presentation. Before diving into the numbers, allow me to provide a brief overview of the past quarter and offer some insight into our position today and our strategy for sustained growth also in the years to come. So let's begin by looking at the key highlights for the quarter, starting at slide number three.
Last quarter was another record-breaking period for us. Without question, these past months have been the busiest time of our history, and we are continuing with a strong resource utilization. On the revenue side, we can again report a great year-over-year growth. Even more encouraging is the ongoing improvement in EBIT and bottom line. In Reach Subsea, disciplined growth is our guiding principle, and I am pleased to report that we have achieved an EBIT margin of 17.3% this quarter. Looking at the rolling 12 months perspective, we have exceeded 15%, and this is a marked improvement from our position just a year ago. The pricing environment is improving rapidly, and together with the excellent execution of projects, contributes to the solid margins.
But most importantly, regarding our operations, I want to emphasize and repeatedly and clearly, safety at sea is of utmost importance to us, and we have continued our excellent operational performance. And once again, I am happy to report zero incidents during also this quarter. All credit again to all our people offshore and onshore. The record high revenue level, not only this quarter but also so far this year, reflects our increased capacities and global footprint. And there is one after quarter event that is worth mentioning today. This October, we made a significant move to strengthen our global presence. The acquisition of the Australian marine survey firm, Guardian Geomatics, not only paves our way into the Australian and Asian markets, but also position us to introduce our unmanned Reach Remote platform, both in Australia and in other international markets.
I will come back with more details on this shortly. But our noteworthy surge in revenue and profitability isn't just by chance; it is the tangible results of our deliberate strategic choices. We have not only enhanced our service offering with the targeted acquisitions over the past two years, but also expanded our vessel capacity through new long-term charters. Which takes us to slide number four. The order book you see on the right-hand side of this slide is continuously increasing, comparing year- by- year, and it is at a solid state going into the winter season. I have illustrated the added order book that comes with the Guardian, and a typical cycle is that the order book will increase during the winter quarters for execution next season.
That said, we are in the final stages on several contracts for next year and also into the winter. We expect that the coming quarters will show a similar trend in order intake as last year, and contract news will, of course, be announced when firm. There is a notable shift in our tender activity, also a big step up from second quarter. The volume is now up to NOK 7.5 billion. This is a firm sign of a rapidly growing global market in general, but also naturally, due to our increased capacity and the broadening of services, and also international footprint. Our clients recognize and appreciate, appreciate our increased capacity, and we get invited to bid on larger projects 2024 and beyond.
It is also good to see that our tendering also includes services being enabled with Reach Remote already in 2024. So longer visibility on future tenders requires good control of core assets. So to the fleet overview, partly ownership of Viking Reach and the ownership of the Reach Remote fleet gives us a long horizon beyond 2027. Long-term charters on Deep Cygnus, Go Electra, Olympic Triton, and Havila Subsea makes a core and flexible fleet for survey IMR and light construction the coming four years. In addition, we have the flexibility and capacity to take in project charters. One example this year is the Olympic Zeus for the FPSO hookup scope in West Africa, second quarter and third quarter this year.
Project charters will continue also in the years to come, and we are in constant dialogue with several vessel owners in the early tender phases year- by- year. Our current core fleet is a good foundation for further growth. Expansion of the core fleet with more long-term charters and or partly ownership is also constantly evaluated as the demand for our services is rising rapidly. Let's move to slide number five for a quick look at our services. In short, our services cover the whole subsea value chain for all types of offshore and subsea installations. Our wide and integrated offering and the capability to offer services through the whole life cycle of an installation is well received by asset owners in the ocean space.
From engineering and project management to final reporting, where our expertise in planning of complete and complex offshore operations is vital. Further, to construction support during installation and further through the lengthy period of inspection, maintenance, and repair, and also decommissioning and removal is a part of our services. So when an oil platform, offshore wind farm, subsea template, pipeline, or power cable, they all require various forms of subsea services. Data-related products, including surveying and inspection technology, data management and data analytics, and final reporting, are also becoming a larger part of our integrated services. Our core fleet of cost-efficient subsea spreads coupled with our globally recognized subsea services and survey and monitoring expertise. It is clear we are positioned to serve a diverse range of customers around the world for the coming years.
I would like to highlight the CCS, CO2 capture and storage industry that is also scaling up globally. Our monitoring technology and expertise in this is in the absolute forefront. Last quarterly presentation, I gave you a couple of project examples from Japan and Singapore. Today, I want to give you a bit of insight into the gravity and seafloor deformation campaign we did for Equinor in the North Sea, and how our technology is highly relevant to the global markets. Let's move to slide number six. This is a highly attractive, environmentally friendly alternative to traditional 4D seismic. Traditional seismic activities experience increased restrictions in many regions and countries when it comes to license to operate. Reducing the frequency and the need for seismic has a huge value for the reservoir owners.
This technology is unique, proven and protected, and developed over the past 15 years in the North Sea. The project example shown here is from this year's campaign for Equinor, covering numerous fields in the North Sea. These fields hold a significant potential for gas production for a long time, and you could say that more than 60% of the Norwegian gas production is monitored by us. Simply said, the gWatch measures changes in the gravity field and seafloor subsidence with an accuracy far beyond the reach of any alternative technology. This enhances understanding of these fields and their lifespan, enabling the optimization of production and strategies, and maximizing resource extraction.
So we have taken the technology and services with us outside Norway and experienced high interest from gas producers in all regions. One good example is our contract with Woodside in Australia for the next nine years. Equally exciting is the future carbon storage industry. The benefits will be the same: excellent technology and method for accurate monitoring of the reservoirs over time, with no impact on the marine life. We see the same interest among the future storage reservoir owners across the globe, and have several ongoing field studies for international clients. So our gWatch technology is set to be deployed for a massive gas field in Australia. That said, let's move to slide number seven to have a look at the several reasons supporting our decision to enhance our presence in the Australian and Asian market.
We have for several years articulated our ambition of extending Reach Subsea presence across all time zones, mostly with the Reach Remote in mind. The Reach Subsea Group are now today represented across regions from north to south in Norway, Sweden, U.S., U.K., Singapore, Trinidad, and Brazil, and now also in Perth, in Australia. The acquisition of Guardian aligns perfectly with our M&A strategy. It will bring us an established and ongoing business in a targeted region, as well as access to new international markets for further expansion. This acquisition complements our strategy of integrating new technology into existing services and ultimately driving revenue growth. In simpler terms, it is a profitable venture. Consequently, Guardian's expertise in surveying and operations offers valuable synergies with Reach Subsea on a global scale, particularly within traditional services.
Additionally, they are adding high competence and experience with unmanned and remote operations, which is an excellent fit with our global Reach Remote program, and as such serve as an enabler for launching the Reach Remote platform in Australia and other global markets. The DriX USV, shown in the picture, is a part of their assets and is currently in operations on a larger mapping project in the Middle East. This is a smaller 8-meter USV compared to the 24-meter Reach Remote units. Birgitte will come into more details around the transaction itself, and we have also all details around this in the quarterly report. But most importantly, they come with a team with the right attitude and ambition to make a difference. We share the belief in the growth and the future we can build together.
As a comparison on the M&A side, we bought two companies in 2022, Octio and iSurvey. People with the same right attitude, which gave us a non-organic lift in revenue in 2022. But the organic lift we have managed this year from NOK 1.1 billion to almost NOK 2 billion is a pure result of brilliant people. But from people to machines, let's move to slide number eight for a quick look at the Reach Remote. I won't spend much time on this slide, just to repeat, our Reach Remote initiative takes a huge step into the unmanned and robotic future. The advantages are many, related to CapEx, OpEx, safety, and not at least emissions. I say go green with robotics.
But before I give the word to Birgitte and the great numbers for the quarter, I will give a quick update on the building process with slide number nine. Last quarter, a major milestone was reached. The hulls are now well-placed at the Trosvik yard in Norway, and where they are outfitted with our Reach Remote technology. Also, on the equipment side, progressing well. ROVs and subsea equipment will be delivered later this year, and the plan and ambition is still as. When installation are completed, we will be ready for an extensive full-scale testing, certification, and client verification. And after that, ready for operations and market in the main season. And as I mentioned earlier, we are lining up projects for the first units in different geographical regions.
So in dialogue with our customers, we experience great interest in the concept. And still, Massterly, our bridge and navigator, gain more and more experience with their control center in Horten, where they operate today, Yara Birkeland and the ASKO vessels. In parallel, other aspects of the project, such as work towards clients and international regulators, continues with full force and is actually progressing well. And the best part, still in this market environment, with the higher and higher cost of manned vessels, the Reach Remote business case, with these savings, is getting better and better. But so now I will hand over the word to Birgitte with the good financial numbers.
Thanks, Jostein. Good morning. First of all, please remember to write any questions you may have in the chat on the webcast. A key summary of the financials we presented this morning is another strong quarter, with record high year-to-date figures. The third quarter was, like the second quarter, characterized by high activity for all vessels, equipment, and personnel. Revenue in the third quarter was NOK 651 million, a strong improvement from NOK 365 million in the third quarter last year, with the increase explained by a higher number of project days, increased service scope on projects, and higher margins. After the M&A transactions last year, we are now one company with integrated solutions and projects, including Gravimetrics, monitoring, and survey services, in addition to subsea and Walk- to- Work.
EBIT was NOK 112 million, compared to NOK 58 million last year, and the improved EBIT is primarily a result of higher utilization, with strong project margins, as well as contribution from the acquired businesses. Pre-tax profit for the third quarter was NOK 92 million, compared to NOK 67 million last year. So let's look into the details and what lies behind the figures on the next slide. As illustrated on these graphs, Reach has had a positive activity development the last couple of years, resulting in a substantial revenue growth. Reach has – the revenue has increased by 195% over the last two years, and our revenue, the last 12 months, is now above 1.8 billion, measured per quarter end.
Our operating result has also had a positive development, as you can see on the graph to the right. The last 12 months, we have surpassed NOK 250 million, and pre-tax profit reached well above NOK 200 million in the same period. Next slide, please. Looking at the development, year-on-year, to the left, we see that our third quarter turnover from renewables and other sector was about 29%, while projects in the oil and gas sector represents 71%, and the last year, the split was 10%-90%. Our activity in the renewable sector has increased, but we still experience that our revenue growth is driven by the demand from the oil and gas clients.
The year-on-year EBIT development from the third quarter last year to the same period this year shows an improvement of 93%. Pre-tax profit has improved by 37% the same period, and the improvements are primarily driven by higher activity, including strong performance on integrated projects within the group, combined with improved market conditions with higher pricing. Next slide, please. The illustration to the left splits our revenue in our two major market segments. Solutions refer to a service project where we do installations, maintenance, repair, decommissioning, et cetera. Data is where we deliver a data package to the clients, typically a survey of a pipeline or a cable route, positioning or an inspection of an infrastructure, to mention a few examples. The data segment will become even more important when the Reach Remote enters the market, as survey projects will be ideal for this type of equipment.
In 3Q, 85% of the turnover came from solutions due to a few larger service and Walk- to- Work contracts, including a high number of vessel days, while 15% came from data. The activity within data, which includes survey projects without vessel exposure, is higher, estimated to be around 50/50 to solutions measured in the number of project days. We also present our geographical distribution of turnover on the illustration to the right, to illustrate our strategic expansion to new areas, as well as meeting new and existing client needs. In the third quarter, the split between Europe, including Norway, to the rest of the world, was about 50/50, like the second quarter. The growth and this development in international projects is currently strongly driven by projects in Brazil and the Ivory Coast, to mention a few examples.
As mentioned, we continue to grow our international expansion by the acquisition of 100% of the shares in Guardian Geomatics. The deal is expected to close in about a week. This transaction will increase our activity in Australia and the Far and Middle East. Guardian comes with a normalized working capital level. They own survey and position equipment and will, upon closing, be free from financial debts. Yearly turnover the last couple of years has ranged from NOK 200 million-NOK 400 million, with a strong EBIT margin. Their business model is quite similar to ours, with a combination of owned and hired equipment and personnel and rented vessels. The key terms of the transactions can be found in the report. Next slide, please. We continue our sustainable growth also in the third quarter, balancing cash and working capital and debt with a robust equity level.
At the same time, we have delivered to our shareholders with paying dividend according to our policy. We have a cash and working capital position of NOK 386 million, and limited existing financial debts to credit institutions. We have increased our charter commitments, hence our leasing liabilities. Our equity share is still above 30% of the total balance sheet. Reach is well positioned for the remaining investments in Reach Remote and vessel and equipment mobilization for our fleet, in order for us to have all vessels ready for integrated subsea and survey projects. Next slide, please. Since our turnover and EBIT is strongly driven by the utilization of vessels and ROV equipment, we measure the number of ROV days sold and vessel days sold.
In addition to revenue and profits, it depends strongly on the complexity of the projects and also the seasonal changes. Pure survey and monitoring projects are not reflected in these figures. For those who have read the full report already, the number of offshore man-hours has increased substantially year- to- date, and this reflects the general increased activity volume and gives some flavor to the increased turnover, together with the increased number, number of sold vessel days, as you can see on the graph to the right. In Q3, we had full utilization of all vessels. Utilization of our vessels is our number one priority, and by growing into new areas such as Australia, Africa, and Americas, we reduce the seasonal changes in the North Sea.
As illustrated on the graph to the left, the number of sold ROV days is highest in the second, third, and sometimes fourth quarter. In the second or third quarter of 2023, we had two vessels in the Walk- to- Work segment and 1 vessel mobilized with a diver spread, leaving a few ROVs idle. Utilization was still 69%, which means the mobilized ROVs had more or less full utilization. Next slide, please. We report quarterly on our sustainability goals. Our ESG reporting is a combination of focus on emissions and the environment, and being a responsible employer worldwide, and keeping a high governance focus. In the full report on our web pages, you can read more about how our report complies with the United Nations sustainability goals and also the GRI standard.
Safety is always our utmost priority, and we are proud to have strong, positive HSEQ statistics, especially combined with growth in project size and complexity. Reducing fuel emissions is of utmost importance. Regrettably, our year-to-date data for 2023 reveals an increase in emissions rather than the desired reduction. Modifications in our fleet, we're taking in more flexible and complex vessels, have contributed to heightened fuel emissions. We always try to reduce our footprint, and upgrade with battery pack is an example of this. Further, in this regard, the introduction of our Reach Remote USVs holds promising potential and aligns with our long-term goals for emission reduction.
As you can see, there's a positive outlook on most of our 2023 ESG KPIs, and some of the activities are ongoing, and we expect to meet the majority of our goals also this year. Then I hand the word back to you, Jostein, for a summary.
Thank you, Birgitte. Let me sum up with the last slide as a backdrop. We have, over the years, built a strong reputation and solid operational track record as a supplier of subsea services. Also, over the past two years, we have taken steps in expanding both our product range and services through M&A, and also organic growth. In addition, reinforcing our long-term vessel capacity. Our financial strength is improving year- by- year and give a great flexibility to do the right investments and expansions going forward. Important note is that we will continue our growth plans, well-disciplined and shareholder-friendly, as we have done over the years. We will still continue to look at acquisition opportunities and cooperation partners in other geographical areas.
Also, they're important. We are looking for partners that will add value to our business. I believe that, combined with the great execution from our team in a strong market, we will continue to deliver both excellent services to our clients and good financial results. We are in the forefront when it comes to technology, and our internal technical systems give us a huge competitive advantage. Surveyor Interceptor, our high-speed survey ROV, is a good example where we increase the speed of subsea data collection 3x faster than traditional systems and methods. Also, our monitoring technology, as I mentioned, is unique and world-leading. Accurate monitoring of gas fields and future carbon storage reservoirs without seismic is not only extremely nature-friendly, but also very cost-efficient.
But for sure, also our robotic future, Reach Remote, will be another growth driver for us and, leading the way into more efficient and climate-friendly and sustainable future. We are looking very much forward to the coming quarters and years. First nine months of 2023 was great, and the market is very strong, both in oil and gas and renewables, and we expect this to continue for years. So with this positive note, let me sum up the presentation with our saying, "Everything within reach." Please continue to submit questions in the webcast player, and we will be back to answer your questions shortly.
Okay, so we have a few questions. The first one: Comparing the outlook for the winter season for 2023 and 2024 with the corresponding outlook one year ago, how would you describe the outlook for utilization and profitability? Well, we don't guide on profitability. We've said some--given some information and reports on, on the utilization for Q4. As always, the horizon is a little shorter in the Q4 and also in Q1 than than in Q2 and Q3. But we see a strong market, so there is definitely potential there. The next question is for you, Jostein. How long was Triton in dry dock in October?
In October, Triton was in dock the whole month, and she's now at work. So it's not only the dry dock of the vessel, but also mobilization of our LV systems and everything. So she's now ready for a good construction work the next years.
Yep, and the same—the next question is in the same, same area. How long will Deep Cygnus be out in Q1 2024?
That's estimated to a month, I think, with including a battery pack installation and so on. So, it's four weeks.
Yep. The tender pipeline is massive. Can you provide some color on the type of projects that you are now able to bid on, on 2024 and onwards?
Yeah, that's the, that's the good thing. Our tender activity covers everything from construction support to high-tech data collecting activities and survey and mapping. So, a call on this, some big construction support tenders. And there are some interesting seabed mapping tenders, quite big ones, in the- in that number. So, hopefully, we will win work in all sort of our services. That's the, that's the target, so...
Yep. And with full utilization in Q3, are you seeing clients being concerned about availability of people, ROVs, and vessels for the higher activity levels scheduled for the upcoming years? And if so, how is this being handled by the clients?
We see an increased sort of worrying about the supply chain from our clients, of course. And that's in a rising market, there will be some tension on the lack of resources, of course. And that will give us a longer visibility in the end. Pricing is good, and then you have the longer visibility coming after that. So but it is on the agenda for our clients as well. They see the same picture, so...
Yep. Can you say something about when you will build more vessels for the Reach Remotes?
We have the options for up to 10 units, and I guess we have to make a decision after we have got the two first ones into the action. So, I guess sometime in the late or after summer next year, I guess we will start evaluating that.
Yep. There's a question about Brazil. You mentioned it in the presentation. Will you be moving any more vessels to Brazil this winter?
That could be, I hope. Well, the Brazilian market is really picking up, so hopefully, we can supply them with more vessels down there. If it's the next months, but definitely for the next years, there will be a many opportunities in the Brazilian market.
Yep. I think that was, that was all. Thank you very much for submitting questions, and don't hesitate to be in touch with us if there should be anything else. So thank you very much.
Thanks. See you next quarter.