Reach Subsea : Quarterly Report

Everything is within REACH

Quarterly

Consolidated

Report

Q2 2021

Our vision is to be the preferred operator by those who need the best possible subsea partner, one that will always perform above expectations

Find out more at reachsubsea.no

2nd Quarter 2021

About Reach Subsea

Reach Subsea ASA is listed on EURONEXT Oslo Stock Exchange under the ticker REACH.

The Group's business concept is to offer subsea services as subcontractor and/or directly to end clients, based out of our head office in Haugesund. The core business of the Group is based on modern, high spec Survey- and Work ROVs operated by highly qualified offshore personnel, and supported by our competent onshore engineering resources.

The Group's objective is to be a preferred subsea partner and full-service provider of subsea operations for clients, among others by having focus on safety, environment, financial solidity and profitability. Moderate risk contracts are targeted, thus securing revenue and strong liquidity in parallel with increasing the fleet, asset base and staff size.

2

Contents

About Reach Subsea	02
Highlights	03
Operations	04
inancial results	05
Capital structure	05
The Share	06
News after quarter end	06
Outlook	07
Reach Subsea Fleet	08
Sustainability	10
Accounts	14
Notes	18

Reach Subsea | Quarterly Consolidated Report 2021

2nd Quarter 2021

Highlights

• Another strong quarterly result and the best first half result in Reach Subsea's history driven by continued high utilization and successful project execution
• High activity in renewables segment with 33 % and 52% of project days generated from non-oil & gas clients for 2Q2021 and year-to-date, respectively.
• On track to meet the fifteen Sustainability targets we have set for 2021.

Key figures

3

• 2Q2021 EBIT was NOK 17.8 million (NOK 29.0 million), while pre-tax result was NOK 15.9 million (NOK 27.6 million). EBIT for the first six months of 2021 ended at NOK NOK 30.0 million (NOK 12.3 million), while pre- tax result was NOK 27.2 million (NOK -4.3 million).
• Busy tendering activity during the quarter, and we have a good schedule for the third quarter to build upon for the upcoming 2021/22 winter season.
• Launch of new innovative subsea service solution, Reach Remote project, postponed to 2023 in order to mitigate risks associated with global supply chain challenges. Significant interest from clients and potential partners across the world.

See definitions on page 6

Reach Subsea | Quarterly Consolidated Report 2021

2nd Quarter 2021

Operations

REACH had per quarter end ten WROV-systems and two "Surveyor Interceptor" available for subsea operations.

REACH had 946 available ROV-days in 2Q2021 (875 ROV- days in 2Q2020), of which 608 days were sold (734) leading to a total utilization of 64% (84%). Furthermore, the number of vessel days that passed through our P&L in 2Q2021 was 296 (268). As per 30 June 2021 the ROV utilisation was 60 % (60 %), while vessel utilisation was 91 % (65 %).

REACH offshore personnel contracting business, Connect Offshore, continued sourcing highly skilled offshore personnel during the quarter. This personnel base is highly important in peak seasons, when the number of man hours in operation normally doubles compared to Reach Subsea's own staff.

REACH has not had any serious incidents during the quarter, which support our objective that the right procedures,well trained personnel, and high-quality equipment generate operational success.

REACH has per 16 August 2021 a firm order book of NOK 253 million and approximately 1 550 project days for execution in 3Q2021 and beyond.

The Reach Remote project, our new and future-proof, sustainable solutions for subsea services launched early 2021, is progressing. The project is carried out in cooperation with renowned industrial partners Kongsberg Maritime and Massterly, and is also supported by a grant from Innovation Norway.

Pre-commissioning work has been ongoing during 2Q2021, with emphasis on detail engineering and supply chain evaluations for the build phase. As reported after quarter end, disruptions in global supply chains has led Reach to postpone the commissioning of the first USVs, and the first vehicles are now expected to be launched early in 2023.

Also, developing pioneering new technology requires extensive testing, serious verification and certification that carries international recognition. To that end, an important milestone for Reach Remote was reached when it was announced in August that Sletta, Smedasundet and Karmsundet in the Haugalandet district of western Norway has been granted official status as a national test site for remote-controlled technologies and unmanned vessels by the Norwegian Coastal Administration and the Norwegian Maritime Authority.

Since Reach Remote was publicly launched earlier this year, Reach has experienced great interest from clients and potential partners across the world. There are several potential industrial partners Reach is in dialogue with who wish to be part of Reach Remote, and who could contribute to the funding and commercialization of the project. While still in the early stages, these dialogues form part of evaluating which financing strategy for Reach Remote is in the best interest of the company and its shareholders

4

Vessel update:

Stril Explorer is a survey vessel on a charter contract from Møkster to Reach Subsea's cooperation partner MMT Sweden AB ("MMT"). Reach Subsea provides ROV services consisting of one Supporter WROV and offshore personnel to the vessel. Projects performed by the Stril Explorer spread are to a large extent ROV/Survey work handled as a cooperation between Reach Subsea and MMT. The spread finished the Equinor Wind projectin USA early June 2021, withnew projects thereafter filling the schedule into 4Q2021. The "Surveyor Interceptor I" is currently mobilized onboard Stril Explorer.

Viking Neptun is mobilized with one Supporter WROV and one Constructor WROV and Reach Subsea delivers all ROV- services onboard the construction vessel. The vessel spread is signed for contracts between Eidesvik and Havfram, with Reach Subsea as ROV service provider lasting until the end of the third quarter 2021 plus +options. Eidesvik recently accounced that Viking Neptun is signed for a contract with Havfram that includes the use of Reach Subsea's WROVs for at least 180 days in 2022.

Olympic Artemis is mobilized with one Supporter WROV and is set up for projects in survey and light construction within the renewables and oil and gas sector. The subsea spread worked in the oil and gas segment in Europe in 2Q2021 and is scheduled for projects lasting through August 2021, whereafter she will operate in the spot market.

Olympic Delta is currently mobilized with two hired-in WROVs. The subsea spread worked on offshore wind projects in the northern part of Europe from delivery in March 2021 until May, and thereafter a complex project for a client in the oil and gas sector. The vessel currently has a schedule lasting throughout the third quarter.

Havila Subsea is equipped with two owned Schilling WROVs and offshore personnel from Reach Subsea's offshore pool and is scheduled for projects in cooperation with MMT. Havila Subsea had good utilization in the first half, and currently has a project schedule lasting into 4Q2021.

Olympic Challenger worked on a project without use of Reach ROVs in US Gulf of Mexico lasting until June 2021, whereafter she was demobilized and exited Reach Subsea's marketed fleet.

Olympic Zeuz was hired for this year's IMR call of with Equinor. The vessel was mobilized with hired WROVs and the project was executed with Reach Subsea personnel on- and offshore.

Reach Subsea | Quarterly Consolidated Report 2021

2nd Quarter

Financial results

As previously reported, Reach Subsea purchased cooperation partner MMT's shares in our jointly owned entity Surveyor AS at book value 31.03.2021. Surveyor AS owns the two "Surveyor Interceptor" high speed survey ROVs. The transaction was closed in the second quarter. Thus, Surveyor AS is fully consolidated into our Group accounts as from 31.03.2021. In the figures for 2020 (in brackets) Surveyor AS is presented as an associated company based on the equity method. The effects of the transaction are further described in the Notes.

Revenue for 2Q2021 was NOK 169.8 million compared with NOK 217.1 million for 2Q2020. The reduced revenue is primarily explained by a lower number of ROV days and manhours sold compared to the same period last year. Year to date revenue was NOK 271.6 million compared to NOK 295.9 million as per 30.06.2020.

Operating expense for 2Q2021 was NOK 152.0 million (NOK 188.1 million). Project-related expense represents the majority of the operating expense for the group. Operating expense for the first 6 months was NOK 241.6 million (NOK

283.6 million). Depreciation for 2Q2021 was NOK 75.2 million (NOK 56.6 million). The increase is explained by the consolidation of Surveyor AS from 31.3.2021 as well as higher number of vessel days compared with the same period last year, as expenses under IFRS 16 rules are classified as depreciation of right of use assets. There was no impairment in the quarter (NOK 7.5 million in 2Q2020). See further evaluation of impairment sensitivity in the Notes.

2Q2021 operating result (EBIT) was NOK 17.8 million (NOK

29.0 million). Operating result year to date was NOK 30.0 million (NOK 12.3 million). Improved project results and higher utilization are the primary explanations for the improved EBIT for the first six months. 2Q2020 The year- over-year reduction in 2Q2021 EBIT was due to higher utilization and stronger project results in a very strong 2Q2020. Also, project expenses related to Reach Remote are not capitalized and amounted to NOK 3.3 million in 2Q2021.

Net financial items for 2Q2021 were NOK -1.9 million (NOK -

1.5 million) and NOK -2.8 million year to date (-16.6 million). Financial cost in our 1H2020 accounts were influenced by the massive movements in the foreign exchange markets, causing fluctuating currency effects on charter hire in USD (classified as debt/lease liabilitywith quarterly revaluations according to IFRS 16), which was the main reason for a higher net financial cost the first six months 2020 compared to 2021. As per 30.06.2021 all charter hire is in NOK.

The total comprehensive income for 2Q2021 was NOK 15.9 million, compared with NOK 27.8 million for 2Q2020. Total comprehensive income for the first six months of 2021 ended at NOK 27.3 million compared to NOK -3.4 million the same period last year. Higher utilization and project results combined with less (negative) currency effects are the main reasons for the improvement. Also, comprehensive income for the first six months of 2020 contained special effects of NOK -13.6 million

5

For 2Q2021, Oil & Gas revenues constituted 73 % while Renewable/ Other constituted 27 % of total revenues. By comparison, in 2Q2020 Oil

• Gas revenues were 94 % while Renewable/Other constituted 6 % of total revenues.

Oil & Gas entails revenues from survey, IMR and light construction projects where the end client is an oil & gas company. Renewable/Other entails revenues from survey, IMR and light construction projects where the end client is a non-oil & gas company (typically a company in the renewables energy sector).

Capital structure

Total current assets at the end of the quarter were NOK 258.4 million (NOK 241.6 million per 30.06.2020), of which cash and cash equivalents amounted to NOK 73.4 million (NOK 57.3 million). Including the unutilized revolving credit facility, available liquidity

was NOK 93.4 million. Receivables and inventories were NOK

185.0 million (NOK 184.2 million). Total non-interest-bearing current liabilities were NOK 91.2 million (NOK 143.1 million). This leaves a net working capital of NOK 94.4 million (NOK 41.2 million). The working capital level has increased is in line with seasonal activity, but is also influenced by a couple of large client payments falling due right after quarter end.

Total non-current assets at the end of the quarter were NOK 161.1 million (NOK 237.1 million). Property, plant and equipment includes NOK 71.4 million of leases capitalized under IFRS 16 (NOK 113.8 million). Launch and Recovery Systems ("LARS") booked at NOK 25 million were sold during the quarter.

Net interest-bearing debt (total interest-bearing debt, including capitalized leases under IFRS 16, less cash) stood at NOK 39.5 million (NOK 115.6 million). Net financial interest-bearing debt to credit institutions (i.e. excluding IFRS 16 leases) was NOK

-33.6 million (NOK -23.6 million), i.e. cash positive. The year-over- year reduction in net debt is largely explained by positive cash flows the past year, partly offset by payment of NOK 21.5 million in dividend.

The Group's equity as of 30.06.21 was NOK 215.4 million, which represents 51.3 % of the total balance sheet (34.0 % 30.06.20).

Net cash flow from operating activities for 2Q2021 was NOK 12.4 million (NOK 90.7 million). Net cash flow from investing activities was NOK 0.9 million (NOK 0.1 million for 2Q2020). Net cash flow from financing activities was NOK -84.6 million (NOK -69.8 million) and includes vessel charter hire classified as "Repayment of borrowings and leases" according to IFRS 16. Details about cash outflow from leases can be found in the Notes. Net change in cash and cash equivalents for 2Q2021 was NOK -71.3 million (NOK 21.0 million), influenced by an increase in trade receivables, which was partly reversed right after quarter end, purchase of the shares in Surveyor AS and payment of dividend. Net change in cash and cash equivalents was NOK -32.5 million (NOK 19.8 million) for the first six months of 2021.

REACH has no major debt maturities to credit institutions or capital expenditure (investment) commitments for 2021 and onwards.

Reach Subsea | Quarterly Consolidated Report 2021