CGG Announces its 2018 First
Quarter Results
2018
Q1: strengthened segment EBITDAs margin
in
gradual market improvement
- IFRS figures1: revenue at $246m, OPINC at $(67)m, net income at
$647m
- Segment revenue2 at $295m, up 18% year-on-year
- GGR: solid activity increase
- Equipment: robust Land volume recovery
- Contractual Data Acquisition: continued challenging market
environment
- Segment EBITDAs2 at $53m, up 85% year-on-year, an
18% margin
- Segment OPINC2 at $(22)m
Financial
restructuring plan fully implemented
- Financial restructuring plan implementation: Full
success of the January 2018 rights issue and all new
instruments delivered on February 21, 2018
- Restored capital structure with net debt of $659m at end
of March, liquidity of $538m and leverage ratio at 1.7x
Reiterated 2018 outlook
- Segment revenue2 expected up at c. $1.5bn +/-
5%
- Segment EBITDAs2 margin within 35% to 40%
range
- Multi-Client cash capex at $275/325m with cash
prefunding rate above 70% (79% in Q1 2018)
- Industrial and R&D capex at
$100/135m
1
Based on transitory IFRS 15 first time application2 Segment figures
presented before IFRS 15 and Non-Recurring Charges (NRC) |
PARIS, France - May 17th
2018 - CGG (ISIN: FR0013181864 - NYSE: CGG),
world leader in Geoscience, announced today its 2018 first
quarter unaudited results.
Commenting on these results, Sophie
Zurquiyah, CGG CEO, said:
"Our first quarter results are in line with
expectations, with solid revenue growth and an improvement in our
EBITDAs margin compared to the first quarter of 2017. These results
continue to confirm an upward trend initiated in 2017 that is
bringing improved volumes to GGR and Equipment. Contractual Data
Acquisition activities remain challenged by low demand and
deteriorated price conditions.
In the current context of strengthening oil
prices, we observe a gradual market improvement, even as the major
oil companies remain very cautious in their spending. In this
environment, we confirm our revenue growth and EBITDAs margin
targets for 2018.
The restructuring of CGG was successfully
completed at the end of February and our balance sheet has been
restored. My ambition, as the new CEO, and with the commitment of
all our teams, is to return CGG to a business of sustainable and
profitable growth, paving a new path to success for all our
shareholders, clients and employees."
Post-closing events
- April 24th: Completion of the first lien
refinancing
CGG S.A. announced the issuance by its
wholly-owned indirect subsidiary, CGG Holding (U.S.) Inc., of $300
million in aggregate principal amount of 9.000% First Lien Senior
Secured Notes due 2023 and €280 million in aggregate principal
amount of 7.875% First Lien Senior Secured Notes due 2023. These
new first lien senior secured notes represent a total principal
amount of $645m at a weighted average coupon of 8.40%. The
cumulated savings related to such refinancing over the period
running up to February 2021 (original non-call period) amount to c.
$70m.
- April 26th: Renewal of the governance
CGG's Board of Directors, meeting on April 26,
2018, elected Philippe Salle as Chairman of the Board of Directors.
Sophie Zurquiyah took up her position of CEO of the Group and was
appointed director by the general meeting on the same day. Since
the beginning of the year, CGG Board of Directors has completed the
process of renewing its governance with the appointment of 6 new
Directors.
Transitory first time application of IFRS
15
The application of IFRS 15 does not result in
any significant change to the Group's revenue recognition policies
but for multi-clients pre-commitments. CGG's preliminary
interpretation of the new standard was that the historical method,
relying on percentage of completion principles, was the best
accounting solution to timely provide a fair vision of the
industrial and financial performance of the Company and was
compliant with the new IFRS standard. However, our auditors'
technical panel eventually concluded early 2018 that it was not the
case.
Following this determination, CGG investigated
the merits and the practicability of an alternative revenue
recognition policy, based on two performance obligations: one
service with revenues to be recognized over time and weighting on
average between 80%-95% of total obligations, and one corresponding
to the final processed data with revenues to be recognized only
upon delivery. This alternative revenue recognition policy has,
however, not been endorsed by the Group's auditors and the
regulators of the financial markets where the Group's securities
are listed. In addition, some other seismic players have decided to
implement IFRS 15 in Q1 2018 through a revenue recognition policy
for pre-commitments based on a single performance obligation and
deferring the recognition of revenues upon delivery of final
processed data.
In that context and in the absence of a
finalized IFRS 15 accounting policy, CGG decided to present a dual
approach in the Group's first quarter 2018 results:
(i) one set of figures
(the "Segment Figures") corresponding to the figures used for
internal management reporting purposes and produced in accordance
with the Group's historical method (percentage of completion)
and
(ii) a second set of figures
(the "IFRS" figures) in line with the accounting practice adopted
by some other seismic players as described above, with
pre-commitment revenue recognized in full only upon delivery of the
final data.
CGG intends, through further discussions with
its auditors and with the regulators, to continue advocating for
the IFRS 15 compliance of the alternative revenue recognition
policy described above based on the two distinct performance
obligations contained in these contracts. This approach would allow
the Company going forward to base its financial communication only
on its IFRS accounts rather than on multiple sets of figures. The
Company aims to fix a definitive approach with its auditors and the
regulators prior to the release of the half-year 2018 financial
statements.
Key IFRS Figures - First Quarter 2018
In million $ |
First Quarter2017* |
Fourth Quarter2017* |
First Quarter2018 |
Group Revenue |
249.4 |
400.7 |
245.6 |
Operating Income |
(96.9) |
(8.0) |
(67.1) |
Equity from investments |
2.5 |
(8.9) |
1.3 |
Net cost of financial debt |
(46.8) |
(46.8) |
(33.2) |
Other financial income (loss) |
(1.6) |
1.0 |
762.8 |
Income Taxes |
(2.3) |
(12.2) |
(17.2) |
Net Income |
(145.1) |
(74.9) |
646.6 |
Net Debt |
2,334.9 |
2,639.9 |
659.3 |
Capital Employed |
3,342.0 |
3,168.0 |
3,149.4 |
*Previous
periods are not restated as per IFRS 15 guidelines
Key Segment Figures - First Quarter
2018
In million $ |
First Quarter2017 |
Fourth Quarter2017 |
First Quarter2018 |
Segment Revenue |
249.4 |
400.7 |
294.7 |
Segment EBITDAs |
28.7 |
134.1 |
53.0 |
Group EBITDAs margin |
11.5% |
33.5% |
18.0% |
Segment Operating Income |
(67.2) |
17.5 |
(22.3) |
Opinc margin |
(26.9)% |
4.4% |
(7.6)% |
Non-recurring charges (NRC) |
(29.7) |
(25.5) |
(33.9) |
IFRS 15 adjustment |
na |
na |
(10.9) |
IFRS Operating Income |
(96.9) |
(8.0) |
(67.1) |
Equity from investments |
2.5 |
(8.9) |
1.3 |
Net Financial Costs current part |
(48.4) |
(45.8) |
(30.4) |
Non-recurring financial items |
0 |
0 |
760.0 |
Income Taxes |
(2.3) |
(12.2) |
(17.2) |
Net Income |
(145.1) |
(74.9) |
646.6 |
Segment Operating Cash Flow |
34.4 |
143.4 |
62.8 |
IFRS Operating Cash Flow |
(10.8) |
117.0 |
7.1 |
Segment Free Cash Flow |
(74.3) |
13.4 |
(39.9) |
IFRS Free Cash Flow |
(119.5) |
(13.0) |
(95.6) |
Net Debt |
2,334.9 |
2,639.9 |
659.3 |
Capital Employed |
3,342.0 |
3,168.0 |
3,179.7 |
Key figures bridge: Segment to IFRS - First
Quarter 2018
Q1 2018 P&L items In million $ |
Segment figures |
IFRS 15 adjustments |
NRC* adjustments |
IFRS figures |
Total Revenue |
294.7 |
(49.1) |
0 |
245.6 |
OPINC |
(22.3) |
(10.9) |
(33.9) |
(67.1) |
Q1 2018 Cash Flow Statement items In million $ |
Segment figures |
IFRS 15 adjustments |
NRC adjustments |
IFRS figures |
EBITDAs |
53.0 |
(49.1) |
(33.9) |
(30.0) |
Change in Working Capital & Provisions |
31.0 |
49.1 |
(21.8) |
58.3 |
Cash Flow from Operations |
62.8 |
0 |
(55.7) |
7.1 |
Opening Balance Sheet - January 1st 2018 In million
$ |
Segment figures |
IFRS 15 adjustments |
NRC adjustments |
IFRS figures |
MC Data Library NBV |
831.2 |
119.4 |
0 |
950.6 |
Other current liabilities |
123.1 |
130.6 |
0 |
253.7 |
Closing Balance Sheet - March 31st 2018In million $ |
Segment figures |
IFRS 15 adjustments |
NRC adjustments |
IFRS figures |
MC Data Library NBV |
853.9 |
157.6 |
0 |
1,011.5 |
Other current liabilities |
104.9 |
153.1 |
0 |
258.0 |
*Non-recurring charges linked to Transformation Plan and
Financial Restructuring
First Quarter 2018 Financial Results by Operating Segment and
before non-recurring charges
Geology, Geophysics & Reservoir
(GGR)
GGR In million $ |
First Quarter2017 |
Fourth Quarter2017 |
First Quarter2018 |
VariationYear-on-year |
VariationQuarter-to-quarter |
Segment Revenue |
158.0 |
255.0 |
185.1 |
17% |
(27)% |
Multi-Client |
72.2 |
158.6 |
84.4 |
17% |
(47)% |
Prefunding |
53.2 |
72.1 |
49.2 |
(8)% |
(32)% |
After-Sales |
19.0 |
86.5 |
35.2 |
85% |
(59)% |
Subsurface Imaging & Reservoir (SIR) |
85.8 |
96.4 |
100.7 |
17% |
4% |
Segment EBITDAs |
80.2 |
164.5 |
96.9 |
21% |
(41)% |
Margin |
50.8% |
64.5% |
52.4% |
160 bps |
na |
Segment Operating Income |
18.3 |
63.3 |
38.4 |
110% |
(39)% |
Margin |
11.6% |
24.8% |
20.7% |
910 bps |
(410) bps |
Equity from Investments |
0 |
(0.2) |
(0.5) |
na |
(150)% |
Capital Employed (in billion $) |
2.3 |
2.2 |
2.2 |
na |
na |
GGR Segment Revenue was $185 million, up
17% year-on-year and down 27% sequentially.
- Multi-Client revenue was $84 million, up 17%
year-on-year and down 47% sequentially. 44% of the fleet was
allocated to multi-client programs compared to 29% in Q1 2017 and
75% in Q4 2017. Multi-client sales were the highest in Brazil and
North Sea.
- Prefunding revenue was $49 million, down 8% year-on-year and
32% sequentially. Multi-client cash capex was at $62 million, up
28% year-on-year and down 30% sequentially. The cash prefunding
rate was at 79% versus 110% in Q1 2017 and 82% in Q4 2017.
- After-sales were $35 million, up 85% year-on-year and down 59%
sequentially.
- Subsurface Imaging & Reservoir revenue was $101
million, up 17% year-on-year and 4% sequentially, with all
businesses on track.
GGR Segment EBITDAs was $97 million, a
52.4% margin.
GGR Segment Operating Income was $38
million, a 20.7% margin. The multi-client depreciation rate totaled
53%, leading to a library Net Book Value of $854 million at the end
of March 2018, split 89% offshore and 11% onshore.
GGR Capital Employed was stable at $2.2
billion at the end of March 2018.
Equipment
Equipment In
million $ |
First Quarter2017 |
Fourth Quarter2017 |
First Quarter2018 |
VariationYear-on-year |
VariationQuarter-to-quarter |
Segment Revenue |
32.4 |
116.0 |
65.7 |
103% |
(43)% |
External Revenue |
25.6 |
105.9 |
49.2 |
92% |
(54)% |
Internal Revenue |
6.8 |
10.1 |
16.5 |
143% |
63% |
Segment EBITDAs |
(8.7) |
16.4 |
(2.6) |
70% |
(116)% |
Margin |
(26.9)% |
14.1% |
(4.0)% |
na |
na |
Segment Operating Income |
(16.4) |
8.9 |
(9.9) |
40% |
(211)% |
Margin |
(50.6)% |
7.7% |
(15.1)% |
na |
na |
Capital Employed (in billion $) |
0.6 |
0.6 |
0.6 |
na |
na |
Equipment Segment Revenue was $66
million, up 103% year-on-year and down 43% sequentially.
External sales were $49 million, up 92%
year-on-year (down 54% sequentially) showing sign of a stronger
market, especially on the Land side.
Internal sales were up at $17m, compared to $7m
in Q1 2017.
Land equipment sales represented 78% of total
sales, compared to 58% in the first quarter of 2017, driven notably
by Unite deliveries.
Marine equipment sales represented 22% of total
sales, compared to 42% in the first quarter of 2017, driven notably
by various sentinel sections deliveries.
Equipment Segment EBITDAs was $(3)
million, a margin of (4.0)%.
Equipment Segment Operating Income was
$(10) million, a margin of (15.1)% notably due to an unfavorable
mix product.
Equipment Capital Employed was stable at
$0.6 billion at the end of March 2018.
Contractual Data Acquisition
Contractual Data Acquisition In
million $ |
First Quarter2017 |
Fourth Quarter2017 |
First Quarter2018 |
VariationYear-on-year |
VariationQuarter-to-quarter |
Segment Revenue |
66.5 |
41.5 |
61.3 |
(8)% |
48% |
External Revenue |
65.8 |
39.8 |
60.4 |
(8)% |
52% |
Internal Revenue |
0.7 |
1.7 |
0.9 |
29% |
(47)% |
Total Marine Acquisition |
44.6 |
9.9 |
28.9 |
(35)% |
192% |
Total Land and Multi-Physics Acquisition |
21.9 |
31.6 |
32.4 |
48% |
3% |
Segment EBITDAs |
(25.2) |
(26.3) |
(25.1) |
0% |
5% |
Margin |
(37.9)% |
(63.4)% |
(40.9)% |
(300) bps |
na |
Segment Operating Income |
(38.6) |
(33.0) |
(34.4) |
11% |
(4)% |
Margin |
(58.0)% |
(79.5)% |
(56.1)% |
190 bps |
na |
Equity from Investments |
2.5 |
(5.8) |
5.3 |
112% |
191% |
Capital Employed (in billion $) |
0.4 |
0.3 |
0.3 |
na |
na |
Contractual Data Acquisition Segment
Revenue was $61 million, down 8% year-on-year and up 48%
sequentially.
- Marine Contractual Data Acquisition revenue was $29
million, down 35% year-on-year and up 192% sequentially.
Our vessel availability rate was 93%. This
compares to 91% in the first quarter of 2017 and 82% in the fourth
quarter of 2017. Our vessel production rate was 96%. This compares
to 98% in the first quarter of 2017 and 97% in the fourth quarter
of 2017.
The decrease in revenue can be explained by the
higher dedication to multi-client surveys, as 44% of the fleet was
dedicated to multi-client programs versus 29% in the first quarter
of 2017 (75% in the fourth quarter of 2017) and different type of
contract this quarter. In Q1 2017, we were executing a large
contract for Pemex with high-end multi-source vessel setup.
- Land and Multi-Physics Data Acquisition revenue was $32
million, up 48% year-on-year and 3% sequentially. Land and Airborne
continued to recover from a very low point in Q1 2017.
Contractual Data Acquisition Segment
EBITDAs was $(25) million.
Contractual Data Acquisition Segment
Operating Income was $(34) million. Contractual Data
Acquisition activities continued to suffer from a competitive
market in marine. Weather downtimes and more specifically an
earthquake in Papua New Guinea affecting Land surveys operations,
further impacted activities.
The equity from investments contribution can
mainly be explained by the positive contribution from the ARGAS and
SBGS JVs this quarter.
Contractual Data Acquisition Capital
Employed was stable at $0.3 billion at the end of March
2018.
Non-Operated Resources
Non-Operated Resources In million $ |
First Quarter2017 |
Fourth Quarter2017 |
First Quarter2018 |
VariationYear-on-year |
VariationQuarter-to-quarter |
Segment EBITDAs |
(8.0) |
(2.8) |
(7.0) |
13% |
(150)% |
Segment Operating Income |
(20.3) |
(4.1) |
(7.0) |
66% |
(71)% |
Equity from Investments |
0 |
(2.9) |
(3.5) |
na |
(21)% |
Capital Employed (in billion $) |
0 |
0.1 |
0.1 |
na |
na |
The Non-Operated Resources Segment
comprises, in terms of EBITDAs and Operating Income, the costs
relating to non-operated resources.
Non-Operated Resources Segment EBITDAs
was $(7) million, including the restart costs of one vessel
(Caribbean).
Non-Operated Resources Segment Operating
Income was $(7) million.
The equity from investments includes the impact
of 50% of the Global Seismic Shipping (GSS) JV, which we own with
Eidesvik. Seven vessels were transferred to GSS in Q2 2017: three
are in operations for CGG, three are cold-stacked and one will come
back in operations during Q2 2018.
Non-Operated Resources Capital Employed
was stable at $0.1 billion at the end of March 2018.
First Quarter 2018 Financial Results
Consolidated Income Statements In
Million $ |
First Quarter2017 |
Fourth Quarter2017 |
First Quarter2018 |
VariationYear-on-year |
VariationQuarter-to-quarter |
Exchange rate euro/dollar |
1.06 |
1.18 |
1.22 |
na |
na |
Segment Revenue |
249.4 |
400.7 |
294.7 |
18% |
(26)% |
GGR |
158.0 |
255.0 |
185.1 |
17% |
(27)% |
Equipment |
32.4 |
116.0 |
65.7 |
103% |
(43)% |
Contractual Data Acquisition |
66.5 |
41.5 |
61.3 |
(8)% |
48% |
Elimination |
(7.5) |
(11.8) |
(17.4) |
na |
Na |
Gross Margin |
(26.5) |
58.0 |
18.0 |
168% |
(69)% |
Segment EBITDAs |
28.7 |
134.1 |
53.0 |
85% |
(60)% |
GGR |
80.2 |
164.5 |
96.9 |
21% |
(41)% |
Equipment |
(8.7) |
16.4 |
(2.6) |
70% |
(116)% |
Contractual Data Acquisition |
(25.2) |
(26.3) |
(25.1) |
0% |
5% |
Non-Operated Resources |
(8.0) |
(2.8) |
(7.0) |
13% |
(150)% |
Corporate |
(8.1) |
(13.8) |
(8.1) |
0% |
(41)% |
Eliminations |
(1.5) |
(3.9) |
(1.1) |
na |
na |
NRC before impairment |
(29.7) |
(25.5) |
(33.9) |
14% |
33% |
Segment Operating Income |
(67.2) |
17.5 |
(22.3) |
67% |
(227)% |
GGR |
18.3 |
63.3 |
38.4 |
110% |
(39)% |
Equipment |
(16.4) |
8.9 |
(9.9) |
40% |
(211)% |
Contractual Data Acquisition |
(38.6) |
(33.0) |
(34.4) |
11% |
(4)% |
Non-Operated Resources |
(20.3) |
(4.1) |
(7.0) |
66% |
(71)% |
Corporate |
(8.1) |
(13.8) |
(8.1) |
0% |
(41)% |
Eliminations |
(2.1) |
(3.8) |
(1.3) |
na |
na |
NRC |
(29.7) |
(25.5) |
(33.9) |
14% |
33% |
IFRS 15 adjustment |
na |
na |
(10.9) |
na |
na |
IFRS Operating Income |
(96.9) |
(8.0) |
(67.1) |
31% |
(739)% |
Net Financial Costs current part |
(48.4) |
(45.8) |
(30.4) |
(37)% |
(34)% |
Non-Recurring Financial Items |
0 |
0 |
760.0 |
na |
na |
Income Taxes |
(2.3) |
(12.2) |
(17.2) |
648% |
41% |
Equity from Investments |
2.5 |
(8.9) |
1.3 |
(48)% |
115% |
Net Income |
(145.1) |
(74.9) |
646.6 |
na |
na |
Shareholder's Net Income |
(144.1) |
(76.9) |
645.2 |
na |
na |
Earnings per share in $ |
(3.13) |
(1.67) |
2.05 |
na |
na |
Earnings per share in € |
(2.94) |
(1.36) |
1.68 |
na |
na |
Segment Revenue was $295 million, up 18%
year-on-year and down 26% sequentially. The respective
contributions from the Group's businesses were 63% from GGR, 17%
from Equipment and 20% from Contractual Data Acquisition.
Segment EBITDAs was $53 million, an 18.0%
margin, and $19 million after $(34) million of Non-Recurring
Charges (NRC).
Segment Operating Income was $(22)
million, a (7.6)% margin, and $(56) million after $(34) million of
NRC. Excluding NOR, and to focus solely on the performance of our
active Business Lines, Group Operating Income was $(15)
million.
Total non-recurring charges (NRC) were
$34 million, split as such:
- $13 million of professional fees mainly linked to the financial
restructuring; and
- $21 million of other costs related to our Transformation
Plan.
IFRS 15 adjustment at operating income
level was $(11) million.
IFRS Operating Income, after NRC and IFRS
15 adjustment, was $(67) million.
Equity from Investments contribution was
$1 million this quarter.
Net financial costs for the current part
were $30 million:
- Cost of debt was $33 million. The total amount of interest paid
during the quarter was $14 million
- Other financial items were positive $3 million
Non-recurring financial items (NRFI) were
positive $760 million:
- Mainly due to the strong positive $771 million financial
restructuring impact; and
- $(11) million first lien refinancing costs (on a prorata
temporis basis)
Income Taxes were $17 million.
Net Income was $647 million.
After minority interests, Net Income
attributable to the owners of CGG was a gain of $645 million /
€528 million.
Cash Flow
Cash Flow Statements In Million $ |
First Quarter2017 |
Fourth Quarter2017 |
First Quarter2018 |
VariationYear-on-year |
VariationQuarter-to-quarter |
Segment EBITDAs |
28.7 |
134.1 |
53.0 |
85% |
(60)% |
Net tax paid |
(3.1) |
1.9 |
(2.9) |
(6)% |
(253)% |
Segment Change in Working Capital & Provisions |
13.9 |
13.4 |
31.0 |
123% |
131% |
Other items |
(5.1) |
(6.0) |
(18.3) |
(259)% |
(205)% |
Segment Operating Cash Flow |
34.4 |
143.4 |
62.8 |
83% |
(56)% |
Paid Cost of Debt |
(44.2) |
(12.8) |
(14.1) |
(68)% |
10% |
Capex (including change in fixed assets payables) |
(67.7) |
(120.0) |
(90.5) |
34% |
(25)% |
Industrial |
(12.9) |
(18.9) |
(20.5) |
59% |
8% |
R&D |
(6.5) |
(12.1) |
(8.0) |
23% |
(34)% |
Multi-Client (Cash) |
(48.3) |
(89.0) |
(62.0) |
28% |
(30)% |
Marine MC |
(36.9) |
(74.0) |
(53.3) |
44% |
(28)% |
Land MC |
(11.4) |
(15.0) |
(8.7) |
(24)% |
(42)% |
Proceeds from disposals of assets |
3.2 |
2.8 |
1.9 |
(41)% |
(32)% |
Segment Free Cash Flow |
(74.3) |
13.4 |
(39.9) |
46% |
(398)% |
Cash NRC |
(45.2) |
(26.4) |
(55.7) |
23% |
111% |
IFRS Free Cash Flow |
(119.5) |
(13.0) |
(95.6) |
20% |
(635)% |
Non Cash Cost of Debt and Other Financial Items |
(2.6) |
(35.6) |
(19.1) |
(635)% |
46% |
Specific items |
(3.0) |
(3.3) |
2.7 |
190% |
182% |
Net proceeds from capital increase |
0 |
0 |
127.2 |
na |
na |
FX Impact |
(10.0) |
(17.3) |
0.4 |
104% |
102% |
Other variance non cash |
111.8 |
0 |
1,965.0 |
na |
na |
Change in Net Debt |
(23.3) |
(69.2) |
1,980.6 |
na |
na |
Net debt |
2,334.9 |
2,639.9 |
659.3 |
(72)% |
(75)% |
Segment Operating Cash Flow was $63
million compared to $34 million for the first quarter of 2017.
Including cash Non-Recurring Charges, the IFRS Operating Cash Flow
was $7 million.Global Capex was $94 million, up 37%
year-on-year and down 24% sequentially.
- Industrial capex was $24 million, up 76% year-on-year
and 5% sequentially
- Research & Development capex was $8 million, up 23%
year-on-year and down 34% sequentially
- Multi-client cash capex was $62 million, up 28%
year-on-year and down 30% sequentially
After the payment of interest expenses and
Capex, Segment Free Cash Flow was at $(40) million compared
to $(74) million for the first quarter of 2017. After cash NRC,
mainly linked to the payment of financial restructuring fees, IFRS
Free Cash Flow was at $(96) million.
Balance Sheet
Group gross debt was $1.197 billion at the end
of March 2018. Available cash was $538 million and Group net
debt was $659 Million.
The Group's liquidity amounted to $538
million at the end of March 2018.
Following the issuance of New Shares, Creditor
Shares 1 and Creditor Shares 2, the Company's share capital as of
February 21, 2018 amounted to €5,785,750.02, divided into
578,575,002 shares with a nominal value of €0.01 per share.
Financial restructuring impacts: in the
first quarter 2018, the settlement-delivery of all securities and
instruments resulted in a total equity increase of $2,081 million,
split as such:
- a $759 million gain in our consolidated statement of
operations
- an increase by $1,323 million in equity through the issuance of
new shares (coming from the equitization of the unsecured debt, the
rights issue and the future exercise of warrants #3, coordination
warrants and backstop warrants).
Q1 2018 Conference call
An English language analysts' conference call is scheduled today
at 9:00 am (Paris time) - 8:00 am (London
time) To
follow this conference, please access the live webcast:
From your computer at: |
www.cgg.com |
A replay of the conference will be available via webcast on the
CGG website at: www.cgg.com.
For analysts, please dial the following numbers 5 to 10 minutes
prior to the scheduled start time:
France call-in UK call-in Access code |
+33(0) 1
76 77 22 74+44(0) 330 336 91056971367 |
About CGG:
CGG (www.cgg.com) is a fully integrated
Geoscience company providing leading geological, geophysical and
reservoir capabilities to its broad base of customers primarily
from the global oil and gas industry. Through its three
complementary business segments of Equipment, Acquisition and
Geology, Geophysics & Reservoir (GGR), CGG brings value across
all aspects of natural resource exploration and exploitation. CGG
employs around 5,300 people around the world, all with a Passion
for Geoscience and working together to deliver the best solutions
to its customers.
CGG is listed on the Euronext Paris SA (ISIN:
0013181864) and the New York Stock Exchange (in the form of
American Depositary Shares. NYSE: CGG).
Contacts
Group
Communications Christophe BarniniTel: + 33 1 64 47 38
11E-Mail: : invrelparis@cgg.com |
Investor RelationsCatherine LeveauTel: +33 1 64 47 34
89E-mail: : invrelparis@cgg.com |
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
Amounts in millions
of US$, unless indicated |
March 31, 2018 |
December 31, 2017 |
ASSETS |
|
|
Cash and cash
equivalents |
538.1 |
315.4 |
Trade accounts and
notes receivable, net (2) |
402.5 |
522.6 |
Inventories and
work-in-progress, net |
246.9 |
239.3 |
Income tax assets |
65.0 |
61.6 |
Other current assets,
net |
123.4 |
117.0 |
Assets held for sale,
net |
14.6 |
14.6 |
Total current
assets |
1,390.5 |
1,270.5 |
Deferred tax assets
(2) |
21.8 |
21.9 |
Investments and other
financial assets, net |
61.9 |
62.6 |
Investments in
companies under equity method |
194.0 |
192.7 |
Property, plant and
equipment, net |
331.1 |
330.3 |
Intangible assets, net
(2) |
1,327.5 |
1,152.2 |
Goodwill, net |
1,236.9 |
1,234.0 |
Total non-current
assets |
3,173.2 |
2,993.7 |
TOTAL
ASSETS |
4,563.7 |
4,264.2 |
LIABILITIES AND
EQUITY |
|
|
Bank overdrafts |
0.1 |
0.2 |
Current portion of
financial debt (1) |
18.4 |
2,902.8 |
Trade accounts and
notes payables |
166.9 |
169.9 |
Accrued payroll
costs |
132.4 |
153.6 |
Income taxes
payable |
40.2 |
38.7 |
Advance billings to
customers |
21.2 |
25.9 |
Provisions -
current portion |
56.3 |
58.3 |
Current liabilities
associated with funded receivables |
9.8 |
9.8 |
Other current
liabilities (2) |
258.0 |
123.1 |
Total current
liabilities |
703.3 |
3,482.3 |
Deferred tax
liabilities (2) |
55.1 |
62.0 |
Provisions -
non-current portion |
118.6 |
121.6 |
Financial debt (1) |
1,178.9 |
52.3 |
Other non-current
liabilities |
17.7 |
17.9 |
Total non-current
liabilities |
1,370.3 |
253.8 |
Common stock
1,553,690,491 shares authorized and 685,408,097 shares with a €0.01
nominal value issued and outstanding at March 31,2018 and
22,133,149 at December 31, 2017 |
8.4 |
20.3 |
Additional paid-in
capital (1) |
3,184.4 |
1,850.0 |
Retained earnings (1)
(2) |
(729.9) |
(1,354.6) |
Other Reserves |
41.8 |
37.6 |
Treasury shares |
(20.1) |
(20.1) |
Cumulative income and
expense recognized directly in equity |
(0.8) |
(0.8) |
Cumulative translation
adjustment |
(35.7) |
(43.3) |
Equity attributable
to owners of CGG SA |
2,448.1 |
489.1 |
Non-controlling
interests |
42.0 |
39.0 |
Total
equity(1) |
2,490.1 |
528.1 |
TOTAL LIABILITIES
AND EQUITY |
4,563.7 |
4,264.2 |
____________
Closing rates were US$1.2321
per € and US$1.1993 per € for March 31, 2018 and December 31, 2017,
respectively.
- See note 2 of our interim financial statements for more
information regarding the impact of our financial restructuring on
February 21, 2018, on the financial debt and on the equity as of
December 31, 2017.
- See note 1 and note 3 of our interim financial statements for
more information regarding the impact of "IFRS 15 - revenues from
contracts with customers".
UNAUDITED INTERIM CONSOLIDATED
STATEMENT OF OPERATIONS
|
Three months ended March 31, |
Amounts in millions
of US$, except per share data or unless indicated |
2018 |
2017 |
|
|
|
|
|
Operating
revenues (1) |
|
245.6 |
|
249.4 |
Other income from
ordinary activities |
|
0.3 |
|
0.4 |
Total income from
ordinary activities |
|
245.9 |
|
249.8 |
Cost of operations
(1) |
|
(238.8) |
|
(276.3) |
Gross
profit |
|
7.1 |
|
(26.5) |
Research and
development expenses, net |
|
(7.3) |
|
(8.2) |
Marketing and selling
expenses |
|
(13.0) |
|
(13.1) |
General and
administrative expenses |
|
(21.1) |
|
(20.2) |
Other revenues
(expenses), net |
|
(32.8) |
|
(28.9) |
Operating
income |
|
(67.1) |
|
(96.9) |
Expenses related to
financial debt |
|
(34.1) |
|
(47.7) |
Income provided by cash
and cash equivalents |
|
0.9 |
|
0.9 |
Cost of financial
debt, net |
|
(33.2) |
|
(46.8) |
Other financial income
(loss) (2) |
|
762.8 |
|
(1.6) |
Income (loss) of
consolidated companies before income taxes |
|
662.5 |
|
(145.3) |
Income taxes (1) |
|
(17.2) |
|
(2.3) |
Net income (loss)
from consolidated companies |
|
645.3 |
|
(147.6) |
Share of income (loss)
in companies accounted for under equity method |
|
1.3 |
|
2.5 |
Net income
(loss) |
|
646.6 |
|
(145.1) |
Attributable to : |
|
|
|
|
Owners of CGG SA |
$ |
645.2 |
|
(144.1) |
Owners of CGG SA
(3) |
€ |
528.1 |
|
(135.6) |
Non-controlling
interests |
$ |
1.4 |
|
(1.0) |
|
|
|
|
|
Weighted average number
of shares outstanding (4) |
|
314,214,031 |
|
46,038,287 |
Dilutive potential
shares from stock-options (5) |
|
- |
|
- |
Dilutive potential
shares from performance share plans (5) |
|
- |
|
- |
Dilutive potential
shares from convertible bonds |
|
- |
|
- |
Dilutive potential
shares from warrants |
|
19,391,416 |
|
- |
Dilutive weighted
average number of shares outstanding adjusted when dilutive
(4) |
|
333,605,447 |
|
46,038,287 |
Net income (loss)
per share |
|
|
|
|
Basic |
$ |
2.05 |
|
(3.13) |
Basic (3) |
€ |
1.68 |
|
(2.94) |
Diluted |
$ |
1.93 |
|
(3.13) |
Diluted (3) |
€ |
1.58 |
|
(2.94) |
___________________
- Refer to note 1 and 3 of our interim financial statements for
information regarding the impact of "IFRS 15 - revenues from
contracts with customers".
- Refer to note 2 of our interim financial statements for
information regarding the impact of our financial
restructuring.
- Converted at the average exchange rate of US$1.2218 and
US$1.0630 per € for the periods ended March 31, 2018 and 2017,
respectively.
- As a result of the February 21, 2018 CGG SA capital increase
via an offering of preferential subscription rights to existing
shareholders, the calculation of basic and diluted earnings per
share for 2017 has been adjusted retrospectively. The number of
ordinary shares outstanding has been adjusted to reflect the
proportionate change in the number of shares.
- As our 2017 net result was a loss, stock options and
performance shares plans had an anti-dilutive effect; as a
consequence, potential shares linked to those instruments were not
taken into account in the diluted weighted average number of shares
or in the calculation of diluted loss per share.
UNAUDITED ANALYSIS BY SEGMENT
|
Three months ended March 31, 2018 |
In millions of US$,
except for assets and capital employed in billions of US$ |
Contractual DataAcquisition |
NonOperated Resources |
GGR |
Equipment |
Eliminationsand other |
Segmentfigures |
IFRS 15 adjustments |
Transformation Plan / Financial restructuring |
Consolidated Total / As reported |
|
|
|
|
|
|
|
|
|
|
Revenues from
unaffiliated customers |
60.4 |
- |
185.1 |
49.2 |
- |
294.7 |
(49.1) |
- |
245.6 |
Inter-segment
revenues |
0.9 |
- |
- |
16.5 |
(17.4) |
- |
- |
- |
- |
Operating
revenues |
61.3 |
- |
185.1 |
65.7 |
(17.4) |
294.7 |
(49.1) |
- |
245.6 |
Depreciation and
amortization (excluding multi-client surveys) |
(9.2) |
- |
(19.3) |
(7.3) |
(0.1) |
(35.9) |
- |
- |
(35.9) |
Depreciation and
amortization of multi-client surveys |
- |
- |
(44.6) |
- |
- |
(44.6) |
38.2 |
- |
(6.4) |
Operating income
(2) |
(34.4) |
(7.0) |
38.4 |
(9.9) |
(9.4) |
(22.3) |
(10.9) |
(33.9) |
(67.1) |
EBITDAS |
(25.1) |
(7.0) |
96.9 |
(2.6) |
(9.2) |
53.0 |
(49.1) |
(33.9) |
(30.0) |
Share of income in
companies accounted for under equity method (1) |
5.3 |
(3.5) |
(0.5) |
- |
- |
1.3 |
- |
- |
1.3 |
Earnings Before
Interest and Tax (2) |
(29.1) |
(10.5) |
37.9 |
(9.9) |
(9.4) |
(21.0) |
(10.9) |
(33.9) |
(65.8) |
Capital expenditures
(excluding multi-client surveys) (3) |
14.7 |
- |
14.9 |
2.1 |
(3.2) |
28.5 |
- |
- |
28.5 |
Investments in
multi-client surveys, net cash |
- |
- |
62.0 |
- |
- |
62.0 |
- |
- |
62.0 |
Capital
employed |
0.3 |
0.1 |
2.2 |
0.6 |
- |
3.2 |
(0.1) |
- |
3.1 |
Total identifiable
assets |
0.5 |
0.1 |
2.6 |
0.6 |
- |
3.8 |
0.1 |
- |
3.9 |
|
Three months ended March 31, 2017 |
In millions of US$,
except for assets and capital employed in billions of US$ |
Contractual Data Acquisition |
NonOperated Resources |
GGR |
Equipment |
Eliminationsand other |
Segmentfigures |
|
Transformation Plan |
Consolidated Total / As reported |
|
|
|
|
|
|
|
|
|
|
Revenues from
unaffiliated customers |
65.8 |
- |
158.0 |
25.6 |
- |
249.4 |
|
- |
249.4 |
Inter-segment
revenues |
0.7 |
- |
- |
6.8 |
(7.5) |
- |
|
- |
- |
Operating
revenues |
66.5 |
- |
158.0 |
32.4 |
(7.5) |
249.4 |
|
- |
249.4 |
Depreciation and
amortization (excluding multi-client surveys) |
(13.4) |
(12.3) |
(19.4) |
(7.6) |
(0.2) |
(52.9) |
|
- |
(52.9) |
Depreciation and
amortization of multi-client surveys |
- |
- |
(47.7) |
- |
- |
(47.7) |
|
- |
(47.7) |
Operating income
(2) |
(38.6) |
(20.3) |
18.3 |
(16.4) |
(10.2) |
(67.2) |
|
(29.7) |
(96.9) |
EBITDAS |
(25.2) |
(8.0) |
80.2 |
(8.7) |
(9.6) |
28.7 |
|
(29.7) |
(1.0) |
Share of income in
companies accounted for under equity method (1) |
2.5 |
- |
- |
- |
- |
2.5 |
|
- |
2.5 |
Earnings Before
Interest and Tax (2) |
(36.1) |
(20.3) |
18.3 |
(16.4) |
(10.2) |
(64.7) |
|
(29.7) |
(94.4) |
Capital expenditures
(excluding multi-client surveys) (3) |
4.6 |
- |
11.2 |
3.1 |
0.5 |
19.4 |
|
- |
19.4 |
Investments in
multi-client surveys, net cash |
- |
- |
48.3 |
- |
- |
48.3 |
|
- |
48.3 |
Capital
employed |
0.4 |
- |
2.3 |
0.6 |
- |
3.3 |
|
- |
3.3 |
Total identifiable
assets |
0.6 |
0.4 |
2.5 |
0.6 |
0.1 |
4.2 |
|
- |
4.2 |
- Share of operating results of companies accounted for under
equity method was US$3.9 million and US$3.7 million for the three
months ended March 31, 2018 and 2017, respectively.
- For the three months ended March 31, 2018, "eliminations and
other" includes US$(8.1) million of general corporate expenses and
US$(1.3) million of intra-group margin. For the three months ended
March 31, 2017, "eliminations and other" included US$(8.1) million
of general corporate expenses and US$(2.1) million of intra-group
margin.
- Capital expenditures include capitalized development
costs of US$(8.0) million and US$(6.5) million for the three months
ended March 31, 2018 and 2017, respectively. "Eliminations and
other" corresponds to the variance of suppliers of assets for the
period.
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF
CASH FLOWS
|
Three months ended March 31, |
Amounts in millions
of US$ |
2018 |
2017 |
|
|
|
|
|
OPERATING |
|
|
|
|
Net income (loss) (1) |
|
646.6 |
|
(145.1) |
Depreciation and
amortization |
|
35.9 |
|
52.9 |
Multi-client surveys
depreciation and amortization (1) |
|
6.4 |
|
47.7 |
Depreciation and
amortization capitalized in multi-client surveys |
|
(5.5) |
|
(5.4) |
Variance on
provisions |
|
(7.2) |
|
(29.1) |
Stock based compensation
expenses |
|
0.3 |
|
0.7 |
Net (gain) loss on
disposal of fixed and financial assets |
|
(1.2) |
|
(0.8) |
Equity (income) loss of
investees |
|
(1.3) |
|
(2.5) |
Dividends received from
investments in companies under equity method |
|
- |
|
- |
Other non-cash items |
|
(779.9) |
|
12.0 |
Net cash-flow including
net cost of financial debt and income tax |
|
(105.9) |
|
(69.6) |
Less net cost of financial
debt |
|
33.2 |
|
46.8 |
Less income tax expense
(1) |
|
17.2 |
|
2.3 |
Net cash-flow excluding
net cost of financial debt and income tax |
|
(55.5) |
|
(20.5) |
Income tax paid |
|
(2.9) |
|
(3.1) |
Net cash-flow before
changes in working capital |
|
(58.4) |
|
(23.6) |
Change in working
capital |
|
65.5 |
|
12.8 |
- change in trade
accounts and notes receivable (1) |
|
124.3 |
|
71.3 |
- change in inventories
and work-in-progress |
|
2.5 |
|
(7.6) |
- change in other
current assets |
|
(7.7) |
|
(17.6) |
- change in trade
accounts and notes payable |
|
(15.6) |
|
(3.0) |
- change in other
current liabilities |
|
(38.0) |
|
(27.1) |
- impact of changes in
exchange rate on financial items |
|
- |
|
(3.2) |
Net cash-flow
provided by operating activities |
|
7.1 |
|
(10.8) |
INVESTING |
|
|
|
|
Total capital
expenditures (including variation of fixed assets suppliers,
excluding multi-client surveys) |
|
(28.5) |
|
(19.4) |
Investment in
multi-client surveys, net cash |
|
(62.0) |
|
(48.3) |
Proceeds from disposals
of tangible and intangible assets |
|
1.9 |
|
3.2 |
Total net proceeds from
financial assets |
|
- |
|
4.5 |
Acquisition of
investments, net of cash and cash equivalents acquired |
|
- |
|
- |
Variation in loans
granted |
|
(0.2) |
|
(0.7) |
Variation in subsidies
for capital expenditures |
|
- |
|
- |
Variation in other
non-current financial assets |
|
1.4 |
|
(0.6) |
Net cash-flow used
in investing activities |
|
(87.4) |
|
(61.3) |
FINANCING |
|
|
|
|
Repayment of long-term
debt |
|
(150.3) |
|
(25.3) |
Total issuance of
long-term debt |
|
336.5 |
|
2.3 |
Lease repayments |
|
(1.5) |
|
(1.6) |
Change in short-term
loans |
|
(0.2) |
|
(1.5) |
Financial expenses
paid |
|
(14.1) |
|
(44.2) |
Net proceeds from capital
increase: |
|
|
|
|
- from
shareholders |
|
128.7 |
|
- |
- from
non-controlling interests of integrated companies |
|
- |
|
- |
Dividends paid and share
capital reimbursements: |
|
|
|
|
- to
shareholders |
|
- |
|
- |
- to non-controlling
interests of integrated companies |
|
- |
|
- |
Acquisition/disposal from
treasury shares |
|
- |
|
- |
Net cash-flow
provided by (used in) financing activities |
|
299.1 |
|
(70.3) |
Effects of exchange
rates on cash |
|
3.9 |
|
2.2 |
Impact of changes in
consolidation scope |
|
- |
|
(7.5) |
Net increase
(decrease) in cash and cash equivalents |
|
222.7 |
|
(147.7) |
Cash and cash
equivalents at beginning of year |
|
315.4 |
|
538.8 |
Cash and cash
equivalents at end of period |
|
538.1 |
|
391.1 |
- See note 1 and note 3 of our interim financial statements for
more information regarding the impact of "IFRS 15 - revenues from
contracts with customers".
- Press Release - pdf version.pdf