Reach Subsea provides subsea services — remotely-operated-vehicle (ROV) operations, survey, and inspection-maintenance-repair (IMR) — to offshore oil & gas and, increasingly, offshore wind, chartering vessels rather than owning a heavy fleet. Its strategic bet is Reach Remote: a fleet of uncrewed/autonomous surface vessels intended to lower the cost of subsea work. That build-out, largely lease-funded, has roughly tripled invested capital since 2022 — and the returns have not yet followed.
The current numbers are trough-like: we add back a NOK 23M impairment (vessel ROU + customer-relationship intangibles) and remove a small disposal gain, reaching LTM adjusted EBIT ~−NOK 90M (FY2025 +NOK 170M) and an LTM adjusted ROIC of ~−3% (FY2025 ~5.5%) — well below the 9% WACC, for economic profit of −NOK 284M. The backlog has softened to ~NOK 1.0bn (from 1.3bn) and the dividend was cut from NOK 0.42 to 0.17. At EV/IC ~1.3x the equity already prices a utilisation recovery plus Reach Remote optionality; until utilisation visibly inflects or the USV economics prove out, the risk/reward is unattractive.
With LTM adjusted NOPAT negative, the reverse-DCF is not meaningful; on FY2025 NOPAT the returns sit below the WACC, so EV/IC ~1.3x is pricing a recovery rather than current economics.
Base NOK 5.5 (the market prices a utilisation recovery); bull NOK 7.5 if utilisation inflects, the backlog rebuilds and Reach Remote USVs scale profitably; bear NOK 3.8 if offshore softness persists and the USV build-out keeps dragging returns below the WACC.
Reverse-DCF panel unavailable: non-positive nopat.
| Scenario | 24m target | Upside | Prob. | Driver |
|---|---|---|---|---|
| Bull | NOK 8 | +42% | 30% | Utilisation inflects, backlog rebuilds, USVs scale |
| Base | NOK 6 | +4% | 40% | Market prices a utilisation recovery |
| Bear | NOK 4 | -28% | 30% | Offshore softness persists; USV build-out keeps dragging |
| Prob-weighted | NOK 6 | +5% | 100% | Scenario-weighted expected value |
Utilisation + day-rates drive the recovery — the dominant swing factor.
Uncrewed-vessel economics are the optionality — if they prove out, ROIC re-rates.
IMR/survey demand from offshore renewables is a structural growth vector.
A return of contract awards (from ~NOK 1.0bn) signals the inflection.
Reach Subsea is a cyclical subsea-services contractor in a trough — adjusted ROIC below its 9% WACC and economic profit deeply negative — after a lease-funded uncrewed-vessel build-out tripled invested capital ahead of the returns. HOLD, low conviction; base NOK 5.5.
Constructive only on a visible utilisation inflection, a rebuilding backlog, or a lower entry; the Reach Remote optionality is real but unproven, and the current price already discounts the recovery.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| Revenue (operating income, total) FY2025 | 2,677 | Consolidated statement of comprehensive income, p.87 📄 p.87 | Group operating income total NOK 2,677.0m; ties exactly to Borsdata anchor and the 12M column of the Q1 2026 report. |
| Operating result (EBIT) FY2025 | 149 | Consolidated statement of comprehensive income, p.87 📄 p.87 | Reported operating result NOK 149.4m, the starting point for the adjusted-EBIT bridge. |
| Impairment FY2025 (add-back) | 22.883 | Note 14/15 — Impairment, p.116-118 📄 p.116 | Non-recurring IAS 36 impairment: NOK 15.0m on the Northern Maria vessel right-of-use asset (Note 14) + NOK 7.9m on customer-relationship intangibles (Note 15). Added back to EBIT as a one-off. |
| Other income / asset-disposal gain FY2025 (removed) | 2.413 | Note 5 segment + Note 14, p.104 📄 p.104 | Gain on sale of assets booked in 'Other income/losses'; segment note states it is excluded from segment operating result, so removed from adjusted EBIT. |
| Depreciation & amortisation FY2025 | 970 | Consolidated statement of comprehensive income / Note 24, p.87,134 📄 p.87 | Heavy D&A (incl. NOK 707m ROU vessel-charter depreciation) confirms IFRS 16 lease accounting — lease interest sits below EBIT, so no NOPAT lease add-back. |
| PPA amortization (customer relationships) FY2025 — kept in opex | 5.163 | Note 15 — Intangible assets, p.117-118 📄 p.117 | Amortization of acquired iSurvey/Guardian customer-relationship intangibles; rejected as an add-back per mttssn convention (real cost of acquired customer base). |
| Share-based payments (IFRS 2) FY2025 — kept in opex | 17.17 | Cash flow statement / Note 19, p.90,125 📄 p.90 | IFRS 2 equity-settled SBC NOK 17.2m; rejected as an add-back — a genuine compensation expense retained in personnel cost. |
| Total interest-bearing debt (carrying) 31.03.2026 | 1,742 | Note 5 — Borrowings, p.46 📄 p.46 | Bank 131.2m + IFRS 16 leases 1,111.3m + bonds 499.9m. Leases dominate (chartered vessels = core asset), so retained in invested capital. |
| Cash and cash equivalents 31.03.2026 | 336 | Statement of financial position, p.39 📄 p.39 | Netted against gross IB debt to derive net IB debt; company convention also excludes NOK 11.4m accrued bond interest. |
| Total equity 31.03.2026 | 1,032 | Statement of financial position / Equity, p.39,41 📄 p.39 | Q1 2026 equity, down from 1,218.3m at year-end on the quarterly loss; 'Other reserves' 53.5m (translation) stripped to equity ex-OCI 978.3m for IC. |
| Income taxes FY2025 (benefit, overridden) | -27.102 | Note 10 — Taxes, p.108-109 📄 p.108 | FY2025 tax was a NOK 27.1m benefit (effective -33%) from deferred-tax-asset recognition; non-representative, so NOPAT uses 22% normalized Norwegian rate. |
| Investment in associated companies 31.03.2026 | 270 | Statement of financial position / Note 12, p.39 📄 p.39 | Equity-method associates (Eidesvik Reach, Eidesvik Agalas Reach, Guardian Geomatics Arabia); share-of-profit sits below EBIT, investment embedded in consolidated equity and thus in IC. |
| Q1 2026 EBIT (LTM driver) | -192 | Statement of profit or loss, p.38 📄 p.38 | Q1 2026 operating result -192.1m vs +68.2m a year earlier; the swing turns LTM adjusted EBIT negative and signals a cyclical trough. |
| Order backlog 31.03.2026 | 1,000 | Highlights / Key figures, p.3 📄 p.3 | Backlog NOK 1.0bn vs 1.3bn a year earlier; tender value steady ~NOK 10bn. Demand-visibility context for the recovery thesis. |
How the mttssn view has evolved — each prior dated note is preserved.