Indicate by check mark whether
the registrant files or will file annual reports under cover of Form
20-F
or Form
40-F.
This document includes forward-looking statements. We have based these forward-looking statements on our current views and
assumptions about future events.
These forward-looking statements involve certain risks and uncertainties. Factors that could cause
actual results to differ materially from those contemplated by the forward-looking statements include, among others, the following factors:
We undertake no obligation to update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this document might not occur.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
N
OTE
1S
UMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
CGG S.A. (the Company), along with its subsidiaries (together, the Group) is a global
participant in the geophysical and geological services industry, providing a wide range of data acquisition, processing and interpretation services as well as related imaging and interpretation software to clients in the oil and gas exploration and
production business. It is also a global manufacturer of geophysical equipment.
Given that the Company is listed on a European Stock
Exchange and pursuant to European regulation n°1606/2002 dated July 19, 2002, the accompanying interim condensed consolidated financial statements have been prepared in accordance with IAS34 as issued by the International Accounting
Standards Board (IASB) and adopted by the European Union.
These interim condensed consolidated financial statements have been authorized
by the Board of Directors on July 27, 2017 for issue.
The consolidated financial statements were authorized for issue by the Board
of Directors on March 2, 2017. As part of a new financial statements authorization for issue, the Board of Directors held on April 27, 2017, updated the classification of part of our financial debt as current liability and amended the
notes 1.2, 1.3, 13, 18, and 30 to the 2016 consolidated annual financial statements. The 2016 consolidated annual financial statements are still subject to the approval of the Companys General Meeting of shareholders later this year.
The interim condensed consolidated financial statements are presented in U.S. dollars and have been prepared on a historical cost basis,
except for certain financial assets and liabilities that have been measured at fair value.
The preparation of consolidated financial
statements in accordance with IFRS requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates due to the change in economic conditions, changes in laws and regulations, changes in
strategy and the inherent imprecision associated with the use of estimates.
1.1 - Critical accounting policies
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial
statements, and should be read in conjunction with the Groups annual financial statements as of and for the year ended December 31, 2016 included in its report on Form
20-F
for the year 2016 filed
with the SEC on May 1, 2017.
The accounting policies adopted in the preparation of the interim condensed consolidated financial
statements are consistent with those followed in the preparation of the Groups annual financial statements for the year ended December 31, 2016, except for the adoption of the following new Standards, Amendments, and Interpretations:
|
|
|
Amendments to IAS 7 Disclosure initiative
|
|
|
|
Amendments to IAS 12 Recognition of deferred tax assets for unrealized losses
|
The
adoption of these Standards, Amendments, and Interpretations had no impact on the Groups interim financial statements.
The Group
decided not to early adopt those Standards, Amendments and Interpretations that the European Union adopted but that were not effective as of June 30, 2017, namely:
|
|
|
IFRS 15 Revenue from Contracts with Customers
|
|
|
|
IFRS 9 Financial instrument classification and valuation of financial assets
|
First analysis of the application of IFRS 15 is detailed below.
At the date of issuance of these consolidated financial statements, the following Standards, Amendments, and Interpretations were not
effective and not yet adopted by the European Union:
|
|
|
Amendments to IFRS 2 Share-based payment
|
|
|
|
Amendments to IFRS 15 Revenue from Contracts with Customers
|
|
|
|
Annual Improvements (2014-2016)
|
|
|
|
IFRIC 22 Foreign Currency Transactions and Advance Consideration
|
|
|
|
IFRIC 23 Uncertainty over income tax treatments
|
We are currently reviewing these
Standards, Amendments, and Interpretations to measure their potential impact on our consolidated financial statements.
- 10 -
First analysis of the application of IFRS 15 Revenue from Contracts with Customers
The IASB issued a new revenue recognition standard, IFRS 15, replacing all existing IFRS standards on revenues. This standard is effective on
January 1, 2018 with a full retrospective application (i.e. financial statements must be presented as if this standard had always been in force) or limited retrospective application (i.e. with cumulative impact reflected in the opening
statement of financial position of the year of first adoption). CGG will implement IFRS 15 on January 1, 2018 without early adoption.
IFRS 15 defines the framework of the revenue recognition as a five step process: i) identify the contract, ii) identify the performance
obligations, iii) determine the transaction price, iv) allocate the transaction price, v) recognize revenue. The second step still allows the revenue recognition over time provided certain criteria are met, depending on how the control of the goods
or services provided is transferred to the customer.
The Group analyzed this new standard at the corporate level starting in 2014.
Because CGG includes various business lines and considering that the application of this new standard implies significant familiarity with operations the Group initiated a bottom up assessment in June 2016 with the aim to go through the five steps
of the standard for each activity. The process of analysis and validation is at the final stage before starting the analysis of the new disclosures requirements.
CGG does not expect significant changes in its revenues recognition policies during the final conclusion phase for exclusive surveys sales and
after-sales of multi-client surveys. Revenue recognition for multi-clients during the prefunding phase (before delivery) was an area under close scrutiny. CGG, as well as all the major multi-client players, currently recognize revenue over time
based on the physical progress of the survey. CGG liaised with all major players of the multi-client industry to share views on the application of the new standard during this phase and compare operational practices. Under the umbrella of the IAGC
(International Association of Geophysical Contractors) a dedicated workgroup involving all major players in multi-clients business has been working during the past months to reach a common industry view. The preliminary analysis of this workgroup is
that the revenue during the prefunding phase should be recognized over time
- 11 -
1.2 - Use of judgment and estimates
Key judgments and estimates used in the financial statements are summarized in the following table:
|
|
|
Judgments and estimates
|
|
Key assumptions
|
Going concern
|
|
Assessment of going concern considering financial restructuring progress
|
Fair value of assets and liabilities acquired through purchase accounting
|
|
Pattern used to determine the fair value of assets and liabilities
|
Recoverability of client receivables
|
|
Assessment of clients credit default risk
|
Valuation of investments
|
|
Financial assets fair value
Equity method
companies fair value
|
Amortization and impairment of multi-client surveys
|
|
Expected margin rate for each category of surveys
|
Depreciation and amortization of tangible and intangible assets
|
|
Assets useful lives
|
Recoverable value of goodwill and intangible assets
|
|
Expected geophysical market trends and timing of recovery
Discount rate (WACC)
|
Classification of financial debts as current or
non-current
|
|
Progress of the negotiations on Financial Restructuring
|
Post-employment benefits
|
|
Discount rate
Participation rate to post
employment benefit plans
Inflation rate
|
Provisions for restructuring and onerous contracts
|
|
Assessment of future costs related to restructuring plans and onerous contracts
|
Provisions for risks, claims and litigations
|
|
Assessment of risks considering court rulings and attorneys positions
|
Revenue recognition
|
|
Contract completion rates
Assessment of fair
value of customer loyalty programs
Assessment of fair value of contracts identifiable parts
|
Development costs
|
|
Assessment of future benefits of each project
|
Deferred tax assets
|
|
Hypothesis supporting the achievement of future taxable benefits
|
1.3 - Going concern assumptions
On June 14, 2017, a French safeguard procedure was opened with respect to the Company and, on the same date, a US Chapter 11 procedure was
opened with respect to 14 of its direct or indirect subsidiaries which are guarantors of the secured debt (French and US Revolving Credit Facilities and Term Loan B) and / or the Senior Notes. Under the umbrella of these legal procedures, the
holders of such debt and holders of our convertible bonds (c. U.S.$2.8 billion outstanding principal amount in total) can no longer call for any accelerated repayment. This provides the Group with a protective framework to conduct its
businesses in the ordinary course and the Group stakeholders with a limited period of time to approve a restructuring plan.
The main
features of the proposed restructuring plan have been disclosed together with the announcement of the above-mentioned court procedures on June 14, 2017:
|
|
|
Full conversion of unsecured debt (Senior Notes and convertible bonds) into equity;
|
|
|
|
Secured debt (French and US Revolving Credit Facilities and Term Loan B) exchanged for new secured first lien senior notes with a
5-year
maturity;
|
|
|
|
Up to U.S.$500 million of new money raised through a U.S.$125 million Rights Issue and the issuance of U.S.$375 million of new secured second lien senior notes (with Warrants) with a
6-year
maturity.
|
As of July 27, 2017, the Group faces material uncertainties that
may cast substantial doubt upon its ability to continue as a going concern. Even under the protection of the court procedures mentioned above, and despite having successfully implemented during the first six months of 2017 all planned specific
actions related to marine liabilities, fleet ownership and major contract factoring, the U.S.$315 million of Group liquidity as of June 30, 2017 does not allow to fully fund our current operations until at least June 30, 2018.
The ability of the Group to continue as a going concern then depends essentially on the effective and timely implementation of the proposed
restructuring plan, especially the raising of up to U.S.$500 million of new money by early 2018. Should the creditors involved in the French safeguard and US Chapter 11 procedures or the shareholders fail to approve the proposed restructuring
plan and/or should the targeted implementation timetable of such restructuring plan not be met, the Group liquidity would decrease below the required level to run the operations no later than in the first quarter of 2018 according to the Company
cash flow forecasts. If the U.S.$500 million new money is raised in the first quarter of 2018 in accordance with the proposed restructuring plan, the Group liquidity is expected to be sufficient to fund our current operations until
June 30, 2018 at least.
Following the successful completion of the private placement of the commitments to subscribe the new money
secured second lien senior notes in a principal amount of U.S.$375 million (with Warrants) in early July, the proposed restructuring plan is now supported, through signed
lock-up
agreements, by the
required majorities of creditors. On that basis, and in the light of the respective merits of the proposed restructuring plan for the other Group stakeholders, the Company believes that the implementation of the restructuring plan in the first
quarter of 2018 is a reasonable assumption.
Having carefully considered the above, the Board of Directors on July 27, 2017 concluded
that preparing the June 30, 2017 consolidated financial statements on a going concern basis is an appropriate assumption.
- 12 -
1.4 - Accounting policies
Operating revenues
Operating
revenues are recognized when they can be measured reliably, and when it is likely that the economic benefits associated with the transaction will flow to the entity, which is at the point that such revenues have been realized or are considered
realizable.
Revenues related to multi-client surveys result from
(i) pre-commitments
and (ii) licenses after completion of the surveys (after-sales).
Pre-commitments
generally, we obtain commitments from a limited number of customers
before a seismic project is completed. These
pre-commitments
cover part or all of the survey area blocks. In return for the commitment, the customer typically gains the right to direct or influence the project
specifications, advance access to data as it is being acquired, and favorable pricing. We record payments that we receive during periods of mobilization as advance billing in the statement of financial position in the line item Advance
billings to customers.
We recognize
pre-commitments
as revenue when production has started
based on the physical progress of the project, as services are rendered.
After sales
generally, we grant a license
entitling
non-exclusive
access to a complete and ready for use, specifically defined portion of our multi-client data library in exchange for a fixed and determinable payment. We recognize after sales revenue
upon the client executing a valid license agreement and being granted access to the data.
In case after sales agreements contain multiple
deliverable elements, the revenue is allocated to the various elements based on specific objective evidence of fair value, regardless of any separate allocations stated within the contract for each element.
After sales volume agreements
we enter into a customer arrangement in which we agree to grant licenses to the customer for
access to a specified number of blocks of the multi-client library. These arrangements typically enable the customer to select and access the specific blocks for a limited period of time. We recognize revenue when the blocks are selected and the
client has been granted access to the data and if the corresponding revenue can be reliably estimated.
In exclusive surveys, we perform seismic services (acquisition and
processing) for a specific customer. We recognize proprietary/contract revenues as the services are rendered. Revenue is recognized using the percentage of completion method (or proportional performance method).
The billings and the costs related to the transit of seismic vessels at the beginning of the survey are deferred and recognized over the
duration of the contract by reference to the technical stage of completion.
In some exclusive survey contracts and a limited number of
multi-client survey contracts, we are required to meet certain milestones. We defer recognition of revenue on such contracts until all milestones before which the customer has a right of cancellation or refund of amounts paid have been achieved.
We recognize revenues on equipment sales upon delivery to the customer
when risks and rewards are fully transferred. Any advance billings to customers are recorded in current liabilities.
|
|
|
Software and hardware sales
|
We recognize revenues from the sale of software and
hardware products following acceptance of the product by the customer at which time we have no further significant vendor obligations remaining. Any advance billings to customers are recorded in current liabilities.
If an arrangement to deliver software, either alone or together with other products or services, requires significant production,
modification, or customization of software, the entire arrangement is accounted for as a production-type contract, i.e. using the percentage of completion method.
- 13 -
If the software arrangement provides for multiple deliverables (e.g. upgrades or enhancements,
post-contract customer support such as maintenance, or services), the revenue is allocated to the various elements based on specific objective evidence of fair value, regardless of any separate allocations stated within the contract for each
element.
Maintenance revenues consist primarily of post contract customer support agreements and are recorded as advance billings to
customers and recognized as revenue on a proportional performance basis over the contract period.
|
|
|
Other geophysical sales/services
|
Revenues from our other geophysical sales/services are
recognized as the services are performed and, when related to long-term contracts, using the proportional performance method of recognizing revenues.
|
|
|
Customer loyalty programs
|
We may grant award credits to our main clients. These award
credits are contractually based on cumulative services provided during the calendar year and attributable to future services.
These
credits are considered as a separate component of the initial sale and measured at their fair value by reference to the contractual rates and the forecasted cumulative revenues for the calendar year. These proceeds are recognized as revenue only
when the obligation has been fulfilled.
Multi-client surveys
Multi-client surveys consist of seismic surveys to be licensed to customers on a
non-exclusive
basis.
All costs directly incurred in acquiring, processing and otherwise completing seismic surveys are capitalized into the multi-client surveys (including transit costs when applicable). The carrying amount of our multi-client library is stated on our
statement of financial position at the aggregate of those costs less accumulated amortization. Whenever there is an indication that a survey may be impaired, an impairment test is performed. A systematic impairment test of all delivered surveys is
performed at least for the yearly closing.
Each survey is amortized in a manner that reflects the pattern of consumption of its economic
benefits during both prefunding and after-sale periods. An amortization rate of 80% corresponding to the ratio of capitalized costs to total expected sales over the accounting life of the survey is applied to each normative sale, unless specific
indications lead to application of a different rate. If that is the case, the amortization rate is adjusted to reflect the commercial effects of price elements. Given the life cycle of a multi-client project, our surveys are generally fully
amortized or impaired within five years after delivery.
Multi-client surveys are classified into a same category when they are located in
the same area with the same estimated sales ratio - with such estimates generally relying on historical patterns.
Development costs
Expenditures on research activities undertaken with the prospect of gaining new scientific or technological knowledge and understanding are
recognized in the income statement as expenses as incurred and are presented as Research and development expenses net. Expenditures on development activities, whereby research findings are applied to a plan or design for the
production of new or substantially improved products and processes, are capitalized if:
|
|
|
the project is clearly defined, and costs are separately identified and reliably measured,
|
|
|
|
the product or process is technically and commercially feasible,
|
|
|
|
we have sufficient resources to complete development, and
|
|
|
|
the intangible asset is likely to generate future economic benefits, either because it is useful to us or through an existing market for the intangible asset itself or for its products.
|
The expenditures capitalized include the cost of materials, direct labor and an appropriate proportion of overhead. Other development expenditures are
recognized in the income statement as expenses as incurred and are presented as Research and development expenses net.
Capitalized development expenditures are stated at cost less accumulated amortization and impairment losses.
Capitalized developments costs are amortized over 5 years.
Research and development expenses in our income statement represent the net cost of development costs that are not capitalized, of
research costs, offset by government grants acquired for research and development.
- 14 -
Convertible debt
|
|
|
The Company recognizes separately the components of convertible debt as (i) a financial liability and (ii) an option to the holder of the instrument to convert it into an equity instrument of the Company.
|
|
|
|
The Company first determines the carrying amount of the liability component by measuring the fair value of a similar liability (including any embedded
non-equity
derivative
features) that does not have an associated equity component.
|
|
|
|
The carrying amount of the equity instrument represented by the option to convert the instrument into ordinary shares is then determined by deducting the fair value of the financial liability from the fair value of the
compound financial instrument as a whole. The carrying amount is presented net of associated deferred taxes.
|
|
|
|
The sum of the carrying amounts assigned to the liability and equity components on initial recognition is always equal to the fair value that would be ascribed to the instrument as a whole.
|
N
OTE
2 S
IGNIFICANT
E
VENTS
Proactive management of maritime liabilities
On January 20 2017, CGG entered into agreements to substantially reduce the cash burden of the charter agreements in respect of three
cold-stacked seismic vessels. As part of the agreements to settle those amounts on a
non-cash
basis, CGG issued U.S.$58.6 million of its 2021 Notes bearing a 6.5% interest to the relevant charter
counterparties. On March 13, CGG entered into an agreement to substantially reduce the cash burden of the charter agreement in respect of the Oceanic Champion, an active seismic vessel. As part of the agreements to settle those
amounts on a
non-cash
basis, CGG issued U.S.$12.1 million of its 2021 Notes bearing a 6.5% interest to the relevant charter counterparties. The consequences of these agreements are reflected in the note 5
Other revenues and expenses of this document and in the note 18 Contractual obligations, commitments and contingencies to our consolidated financial statements of our annual report on Form
20-F
for the year ended December 31, 2016.
New ownership set up for our seismic fleet
In April 2017, we entered into agreements with Eidesvik, the lenders under our Nordic credit facility and the lenders under the credit
facilities of Eidesvik Seismic Vessels AS (ESV) and Oceanic Seismic Vessels AS (OSV) for the implementation of a new ownership set up for our seismic fleet.
Under the new arrangements, Global Seismic Shipping AS (GSS), a company organized under the laws of Norway and 50% owned by CGG
(through our subsidiary, Exploration Investment Resources II AS) and Eidesvik, holds (i) Geo Vessels AS, our former wholly-owned subsidiary, which owns the five previously cold-stacked vessels (Geo Coral
(re-rigged
in March 2017), Geo Caribbean, Geo Celtic, CGG Alize and Oceanic Challenger), and (ii) ESV and OSV (in which we previously held 49% stakes), which respectively own the Oceanic Vega and Oceanic
Sirius. Global Seismic Shipping AS is accounted for using the equity method.
- 15 -
The following table summarizes the consideration received and the carrying value of the assets
and liabilities contributed:
|
|
|
|
|
|
|
(in millions of U.S.$)
|
|
Consideration received
|
|
|
|
|
Fair value of our shares in Global Seismic Shipping AS
|
|
|
71.9
|
|
|
|
|
|
|
Total consideration received (a)
|
|
|
71.9
|
|
|
|
Carrying value of the contributed assets and liabilities
|
|
|
|
|
Cash and cash equivalents
|
|
|
7.5
|
|
Investments in companies under equity method
(1)
|
|
|
48.3
|
|
Property, plant and equipment, net
|
|
|
301.0
|
|
Finance lease net
|
|
|
(3.1
|
)
|
Current portion of financial debt
(2)
|
|
|
(182.5
|
)
|
Provisions current portion
|
|
|
(4.8
|
)
|
Provisions
non-current
portion
|
|
|
(13.4
|
)
|
Other Current Liabilities
|
|
|
(30.0
|
)
|
Liabilities linked to charter agreements
|
|
|
(72.1
|
)
|
|
|
|
|
|
Total carrying value of the contributed assets and liabilities (b)
|
|
|
50.9
|
|
|
|
Net gain realized (c)= (a) (b)
|
|
|
21.0
|
|
|
|
|
|
|
Reduction of the cash burden of the charter agreement (d)
|
|
|
(72.1
|
)
|
|
|
|
|
|
Net impact of the transaction in operating income (3) (e) = (c) + (d)
|
|
|
(51.1
|
)
|
|
|
Other financial income (loss)
|
|
|
(15.0
|
)
|
Cost of financial debt, net
|
|
|
(3.3
|
)
|
|
|
|
|
|
Net impact of the transaction in financial income (loss) (4) (f)
|
|
|
(18.3
|
)
|
|
|
Net impact of the transaction in the Net Income (e) + (f)
|
|
|
(69.4
|
)
|
|
|
|
|
|
(1)
|
This relates to the 49% equity in income that we held in ESV and OSV, accounted for under the equity method as of March 31, 2017.
|
(2)
|
This relates to the Nordic credit facility.
|
(3)
|
The net impact of the transaction in operating income is a loss of US$51.1 million broken-down as follows:
|
|
|
|
a gain of U.S.$21.0
million arising from our contribution to GSS is recorded in the line item Gains (losses) on sales of assets in our statement of operations (see note 5
Other revenues and expenses),
|
|
|
|
a loss of U.S.$72.1
million linked to the renegotiation and extension of the charter agreement in respect of the operated seismic vessels Vega and Sirius to reduce
the cash burden. This loss corresponds to the compensation granted to ESV and OSV following the renegotiation of the charter agreements. It is recorded in the line item Other revenues (expenses) net in our statement of operations (see
note 5 Other revenues and expenses).
|
(4)
|
The net impact of the transaction in financial income is a loss of US$18.3 million broken-down as follows:
|
|
|
|
a loss of U.S.$15.0
million recorded in the line item Other financial income (loss) in our statement of operations,
|
|
|
|
a loss of U.S.$3.3
million recorded in the line item Cost of financial debt, net in our statement of operations.
|
Financial restructuring process
On February 6 2017, CGG solicited consents from the holders of each series of Senior Notes and the creditors under the Term Loan B to
permit the appointment of a mandataire ad hoc without such action constituting an Event of Default. CGG had previously received consents from the creditors under its French and US RCFs for the appointment.
On February 20, 2017, CGG announced the receipt of requisite majority consent from holders of its Term Loan B, 2020 Notes, 2021 Notes and
2022 Notes and the extension of the consent solicitation in respect of its 2017 Notes.
On February 23, 2017, CGG announced execution
of supplemental indentures in respect of its 2020 Notes, 2021 Notes and 2022 Notes to allow for appointment of a mandataire ad hoc and its intention to discharge and satisfy the indenture in respect of its 2017 Notes. The payment to the
indenture trustee, in trust for the bondholders, of the aggregate outstanding principal ($8.3 million) and interest on the 2017 Notes was done on Friday, February 24, 2017. Following this operation, the amount of unsecured debt (Senior Notes
and Convertibles) reached U.S.$1,884 million.
On February 27, 2017, a mandataire ad hoc was nominated to better
organize and facilitate discussions with and between all stakeholders for the financial restructuring of the Group.
- 16 -
On March 3, 2017, CGG entered into a financial restructuring process with the aim of
significantly reducing debt levels and related cash interest costs to align them with its cash flows. In order to facilitate such restructuring discussions held under the aegis of a mandataire ad hoc, CGG executed
non-disclosure
agreements (NDAs) and initiated discussions with stakeholders.
On
June 2, 2017, CGG announced an agreement in principle on a financial restructuring plan that met the Companys objectives with its main creditors and DNCA, a creditor and shareholder.
On June 14, 2017, CGG announced that following agreement with key financial creditors, it has begun legal processes to implement balance
sheet restructuring and create sustainable capital structure with the opening of a safeguard proceeding in France and Chapter 11 and Chapter 15 filings in the U.S.
As part of this process, the French Court which opened the safeguard proceedings appointed the former mandataire ad hoc, as judicial
administrator of CGG SA.
Prior to the legal proceedings in the U.S. and France, CGG and certain of its financial creditors entered into a
lock-up
agreement on June 13, 2017, pursuant to which the relevant parties committed to take all actions reasonably necessary and appropriate to support, implement and consummate the restructuring. The
terms of the
lock-up
agreement are relatively customary and include a requirement for creditors to vote in favor of the safeguard and Chapter 11 plans (subject to receiving appropriate disclosure materials),
to provide various waivers, to enter into the required documentation to effect the restructuring and not to sell their debt holdings unless the transferee enters into the
lock-up
agreement or is already a
signatory (and is therefore bound by such terms). The
lock-up
agreement as of that date had been signed by (i) an ad hoc committee of secured lenders, who hold collectively approximately 53.8% of the
aggregate principal amount of the Groups Secured Debt, (ii) an ad hoc committee of senior notes holders, who collectively hold approximately 52.4% of the aggregate principal amount of the Companys Senior Notes, and (iii) DNCA,
which holds 5.5% of the aggregate principal amount of the Companys Senior Notes and approximately 20.7% of the aggregate principal amount of its convertible bonds. In addition, the Company entered into a restructuring support agreement with
DNCA (in its capacity as shareholder) in connection with its holding of 7.9% of the Companys share capital, pursuant to which DNCA committed to take all reasonably, necessary and appropriate actions as a shareholder to support, implement and
consummate the restructuring, including voting in favor of the relevant shareholder resolutions and not selling its shares in the Company during the restructuring process. See note 8 Subsequent EventsResults of the Private
Placement for more recent information about signatories to the
lock-up
agreement.
N
OTE
3 F
INANCIAL
DEBT
AND
C
ASH
UNDER
F
RENCH
SAFEGUARD
PROCEDURE
AND
U.S. C
HAPTER
11
PROCEDURE
Gross financial debt as of June 30, 2017 was U.S.$2,811.8 million compared to U.S.$2,850.4 million as of
December 31, 2016. Our gross debt as of June 2017 breaks down as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017 (unaudited)
|
|
|
|
Gross debt excluding
IFRS and
consolidation
adjustments
|
|
|
IFRS and
consolidation
adjustments
|
|
|
Gross debt
|
|
|
|
(in millions of US$)
|
|
High yield bonds
|
|
|
1,551.7
|
|
|
|
(22.1
|
)
|
|
|
1,529.6
|
|
Convertible bonds
|
|
|
410.9
|
|
|
|
(42.5
|
)
|
|
|
368.4
|
|
Term loans
|
|
|
337.9
|
|
|
|
(4.6
|
)
|
|
|
333.3
|
|
Credit facilities
|
|
|
464.2
|
|
|
|
(5.6
|
)
|
|
|
458.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt subject to renegotiation
|
|
|
2,764.7
|
|
|
|
(74.8
|
)
|
|
|
2,689.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loans and other loans
|
|
|
4.8
|
|
|
|
|
|
|
|
4.8
|
|
Finance lease debt
|
|
|
58.0
|
|
|
|
|
|
|
|
58.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub-total
|
|
|
2,827.5
|
|
|
|
(74.8
|
)
|
|
|
2,752.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued interests
|
|
|
59.1
|
|
|
|
|
|
|
|
59.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial debt
|
|
|
2,886.6
|
|
|
|
(74.8
|
)
|
|
|
2,811.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdrafts
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,886.6
|
|
|
|
(74.8
|
)
|
|
|
2,811.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The leverage ratio and interest cover ratio covenants in respect of our secured debt were not applicable as of
June 30, 2017 as a result of waivers granted pursuant to the
lock-up
agreement signed by certain of the secured lenders on June 13, 2017 (see note 2 Significant events for more
information).
- 17 -
Consistent with the financial statements as of December 31, 2016, it appears that
reclassifying the financial debt as a current liability is the most appropriate accounting treatment according to IAS 1 for the interim financial statements authorized for issue by the Board of Directors on July 27, 2017. This pure accounting
reclassification does not question the going concern assumption. Together, the coordinated proceedings in France and the U.S. mentioned above prevented acceleration of the debt in France and stayed enforcement in respect of the debt outside of
France. See note 1.3 Going concern assumptions.
Cash-pool under Chapter 11 and Safeguard proceedings
In order to manage cash under the Chapter 11 and Safeguard proceedings, four cash-pool perimeters have been implemented:
|
|
|
CGG SA, which filed for safeguard procedure in France,
|
|
|
|
7 US entities, which filed for US Chapter 11 protection,
|
|
|
|
7 non US entities, which filed for US Chapter 11 protection,
|
The limitations embedded in Chapter 11 and French safeguard procedures for cash
circulation among CGG Group could be broadly summarized as follows:
|
|
|
Netting of positions is only allowed inside a cash pool
|
|
|
|
Settlement of transactions between entities of different pools should be done through actual cash transfer
|
|
|
|
Intercompany loans or cash advance existing before the filing cannot be settled in principal or interest (except inside the Rest of the World pool) as long as the procedures are ongoing
|
|
|
|
Operational intercompany cash transactions are allowed provided they stay in the frame of the ordinary course of business
|
|
|
|
All debts, operational or financial, external or intercompany existing prior to the filing date cannot be paid in principal (very limited exceptions exist)
|
The cash positions for the four cash pool perimeters were as follows as of June 30, 2017:
|
|
|
|
|
(in millions of US$)
|
|
June 30, 2017
(unaudited)
|
|
CGG SA
|
|
|
37.8
|
|
Total Chapter 11 U.S.
|
|
|
16.5
|
|
Total Chapter 11 Non U.S.
|
|
|
5.7
|
|
Total Rest Of the World
|
|
|
254.8
|
|
|
|
|
|
|
TOTAL GROUP
|
|
|
314.8
|
|
|
|
|
|
|
Revolving Credit Facilities
A summary of our authorized revolving credit lines as of June 30, 2017 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
|
Final
Maturity
|
|
|
Used amount
|
|
|
|
|
|
|
|
|
|
(in millions of U.S.$)
|
|
US Revolving Facility
|
|
|
2013
|
|
|
|
2018
|
|
|
|
161.9
|
|
French Revolving Facility
|
|
|
2013
|
|
|
|
2018
|
|
|
|
302.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total credit facilities before issuing fees
|
|
|
|
|
|
|
|
|
|
|
464.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our French and US Revolving Facilities were fully drawn as of June 30, 2017.
- 18 -
7.75% Senior Notes due 2017
On February 24, 2017, we discharged and satisfied in full the indenture in respect of the U.S.$8.3 million outstanding principal
amount of our 7.75% senior notes due 2017.
6.5% Senior Notes due 2021
On January 20, 2017, CGG entered into agreements to substantially reduce the cash burden of the charter agreements in respect of three
cold-stacked seismic vessels. As part of the agreements to settle those amounts on a
non-cash
basis, CGG issued U.S.$58.6 million of its 2021 Notes bearing a 6.5% interest to the relevant charter
counterparties. On March 13, CGG entered into an agreement to substantially reduce the cash burden of the charter agreement in respect of the Oceanic Champion, an active seismic vessel. As part of the agreements to settle those
amounts on a
non-cash
basis, CGG issued U.S.$12.1 million of its 2021 Notes bearing a 6.5% interest to the relevant charter counterparties. The consequences of these agreements are reflected in the note 5
Other revenues and expenses of this document and in the note 18 Contractual obligations, commitments and contingencies to our consolidated financial statements in our annual report on Form
20-F
for the year ended December 31, 2016.
Nordic credit facility
The Fleet ownership changes transaction (see note 2 Significant events) led to a reduction of the gross debt of
the Group of U.S.$182.5 million, corresponding to the principal amount of loans under the Nordic credit facility outstanding as of March 31, 2017.
N
OTE
4A
NALYSIS
BY
OPERATING
SEGMENT
AND
GEOGRAPHIC
AREA
Since September 30, 2015, we have organized our activities in four segments for
financial reporting: (i) Contractual Data Acquisition, (ii) Geology, Geophysics & Reservoir, (iii) Equipment and
(iv) Non-Operated
Resources. Financial information by segment is
reported in accordance with our internal reporting system and provides internal segment information that is used by the chief operating decision maker to manage and measure performance.
Taking into account the long cyclical trough of the seismic market, which further worsened during the summer of 2015 as a consequence of a
renewed bearish forward view on the price of oil, CGG decided, during the third quarter of 2015, to implement new adaptation measures throughout the Group as a new step in its Transformation Plan and further reduce its marine fleet to five vessels
mainly dedicated to multi-client surveys. Going forward, the downsized CGG fleet will be dedicated on average
two-thirds
to multi-client surveys and only
one-third
to
exclusive surveys. As a result of the reduction of the fleet, part of our owned vessels will not be operated for a certain period of time. The costs of these
non-operated
resources, as well as the costs of the
Transformation Plan are reported, in the
Non-Operated
Resources segment.
A summary of
our four segments is set out below:
|
|
|
Contractual Data Acquisition
. This Operating segment comprises the following business lines:
|
|
|
|
Marine: offshore seismic data acquisition undertaken by us on behalf of a specific client;
|
|
|
|
Land and Multi-Physics: other seismic data acquisition undertaken by us on behalf of a specific client.
|
|
|
|
Geology, Geophysics
& Reservoir
(GGR). This operating segment comprises the Multi-client business line (development and management of seismic surveys that we undertake and
license to a number of clients on a
non-exclusive
basis) and the Subsurface Imaging and Reservoir business lines (processing and imaging of geophysical data, reservoir characterization, geophysical consulting
and software services, geological data library and data management solutions). Both business lines regularly combine their offerings, generating overall synergies between their respective activities. The GGR segment includes the costs, industrial
capital expenditures and capital employed related to the vessels dedicated to multi-client surveys.
|
|
|
|
Equipment
. This operating segment comprises our manufacturing and sales activities for seismic equipment used for data acquisition, both on land and marine. The Equipment segment carries out its activities
through our subsidiary Sercel.
|
|
|
|
Non-Operated
Resources
. This segment mainly comprises the costs of the
non-operated
marine resources as well as all the costs of our
Transformation Plan (mainly restructuring provisions and provisions for onerous contracts). The capital employed includes the
non-operated
marine assets and the provisions related to the Transformation Plan.
In this segment, the recoverable value retained is the fair value less costs of disposal.
|
As a complement to operating
income, EBIT may be used by management as a performance indicator for segments because it captures the contribution to our results of the significant businesses that are managed through our joint ventures. We define EBIT as operating income plus our
share of income in companies accounted for under the equity method.
- 19 -
Inter-company analytical transactions between segments are made at arms length prices. They
relate primarily to geophysical equipment sales made by the Equipment segment to the Contractual Data Acquisition and GGR segments (with the reference being the spot market). As GGR includes marine capacity dedicated to multi-client surveys, there
are no longer any services rendered by Contractual Data Acquisition to GGR for multi-client surveys. Transactions between subsidiaries of the Group are made at market prices.
These inter-segment revenues and the related earnings are eliminated in consolidation in the tables that follow under the column
Eliminations and other.
The inter-segment sales and the related earnings recognized by the Equipment segment are eliminated
and presented in the tables that follow as follows: (i) operating income and EBIT for our Contractual Data Acquisition and GGR segments are presented after elimination of amortization expenses corresponding to capital expenditures between our
Equipment segment and Contractual Data Acquisition and GGR segments; and (ii) capital expenditures for our Contractual Data Acquisition and GGR segments are presented after elimination of inter-segment margin.
Operating income and EBIT may include
non-recurring
items, which are disclosed in the reportable
segment if material. General corporate expenses, which include Group management, financing, and legal activities, have been included in the column Eliminations and other in the tables that follow. The Group does not disclose financial
expenses or financial revenues by segment because they are managed at the Group level.
Identifiable assets are those used in the
operations of each segment. Unallocated and corporate assets consist of investments and other financial assets and cash and cash equivalents of our consolidated statement of financial position. The group does not track its
assets based on country of origin.
Capital employed is defined as total assets excluding cash and cash
equivalents less (i) current liabilities excluding bank overdrafts and current portion of financial debt and (ii)
non-current
liabilities excluding
financial debt.
The following tables also present operating revenues, operating income and EBIT by segment, and operating
revenues by geographic area (by location of customers).
- 20 -
Analysis by segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
In millions of U.S.$,
except for assets and
capital employed in
billions of U.S.$
|
|
Contractual
Data
Acquisition
|
|
|
Non
Operated
Resources
|
|
|
GGR
|
|
|
Equipment
|
|
|
Eliminations
and other
|
|
|
Consolidated
Total
|
|
|
Contractual
Data
Acquisition
|
|
|
Non
Operated
Resources
|
|
|
GGR
|
|
|
Equipment
|
|
|
Eliminations
and other
|
|
|
Consolidated
Total
|
|
Revenues from unaffiliated customers
|
|
|
81.3
|
|
|
|
|
|
|
|
220.7
|
|
|
|
47.8
|
|
|
|
|
|
|
|
349.8
|
|
|
|
57.8
|
|
|
|
|
|
|
|
196.4
|
|
|
|
36.0
|
|
|
|
|
|
|
|
290.2
|
|
Inter-segment revenues
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
5.2
|
|
|
|
(5.9
|
)
|
|
|
|
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
8.3
|
|
|
|
(9.7
|
)
|
|
|
|
|
Operating revenues
|
|
|
82.0
|
|
|
|
|
|
|
|
220.7
|
|
|
|
53.0
|
|
|
|
(5.9
|
)
|
|
|
349.8
|
|
|
|
59.2
|
|
|
|
|
|
|
|
196.4
|
|
|
|
44.3
|
|
|
|
(9.7
|
)
|
|
|
290.2
|
|
Depreciation and amortization (excluding multi-client surveys)
|
|
|
(11.7
|
)
|
|
|
(3.3
|
)
|
|
|
(20.8
|
)
|
|
|
(7.1
|
)
|
|
|
0.2
|
|
|
|
(42.7
|
)
|
|
|
(8.9
|
)
|
|
|
(17.5
|
)
|
|
|
(28.3
|
)
|
|
|
(8.9
|
)
|
|
|
(0.2
|
)
|
|
|
(63.8
|
)
|
Depreciation and amortization of multi-client surveys
|
|
|
|
|
|
|
|
|
|
|
(88.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(88.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(76.4
|
)
|
|
|
|
|
|
|
|
|
|
|
(76.4
|
)
|
Operating income
|
|
|
(12.7
|
)
|
|
|
(100.0
|
)
|
|
|
37.3
|
|
|
|
(12.6
|
)
|
|
|
(10.2
|
)
|
|
|
(98.2
|
)
|
|
|
0.5
|
|
|
|
(24.3
|
)
|
|
|
28.8
|
|
|
|
(18.2
|
)
|
|
|
(10.9
|
)
|
|
|
(24.1
|
)
|
Share of income in companies accounted for under equity method (1)
|
|
|
0.3
|
|
|
|
(2.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.5
|
)
|
|
|
(4.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.8
|
)
|
Earnings before interest and tax (2)
|
|
|
(12.4
|
)
|
|
|
(102.8
|
)
|
|
|
37.3
|
|
|
|
(12.6
|
)
|
|
|
(10.2
|
)
|
|
|
(100.7
|
)
|
|
|
(4.3
|
)
|
|
|
(24.3
|
)
|
|
|
28.8
|
|
|
|
(18.2
|
)
|
|
|
(10.9
|
)
|
|
|
(28.9
|
)
|
Capital expenditures (excluding multi-client surveys) (3)
|
|
|
3.4
|
|
|
|
|
|
|
|
10.6
|
|
|
|
4.7
|
|
|
|
(1.2
|
)
|
|
|
17.5
|
|
|
|
5.2
|
|
|
|
|
|
|
|
12.9
|
|
|
|
3.8
|
|
|
|
4.2
|
|
|
|
26.1
|
|
Investments in multi-client surveys, net cash
|
|
|
|
|
|
|
|
|
|
|
60.0
|
|
|
|
|
|
|
|
|
|
|
|
60.0
|
|
|
|
|
|
|
|
|
|
|
|
92.9
|
|
|
|
|
|
|
|
|
|
|
|
92.9
|
|
(1)
|
Share of operating results of companies accounted for under the equity method was U.S.$(1.0) million and U.S.$(9.0) million for the three months ended June 30, 2017 and 2016, respectively.
|
(2)
|
At the Group level, operating income and EBIT before costs related to the Transformation Plan amounted to U.S.$(3.5) million and U.S.$(6.0) million, respectively, for the three months ended June 30, 2017, compared
to U.S.$(22.4) million and U.S.$(27.2) million, respectively, for the three months ended June 30, 2016.
|
For the three
months ended June 30, 2017,
Non-Operated
Resources EBIT included U.S.$(94.7) million related to the Transformation Plan. For the three months ended June 30, 2016,
Non-Operated
Resources EBIT included U.S.$(1.7) million related to the Transformation Plan.
For
the three months ended June 30, 2017, eliminations and other included U.S.$(8.3) million of general corporate expenses and U.S.$(1.9) million of intra-group margin. For the three months ended June 30, 2016, eliminations
and other included U.S.$(8.0) million of general corporate expenses and U.S.$(2.9) million of intra-group margin.
(3)
|
Capital expenditures included capitalized development costs of U.S.$(8.1) million and U.S.$(8.9) million for the three months ended June 30, 2017 and 2016, respectively. Eliminations and other
corresponded to the variance of suppliers of assets for the period.
|
- 21 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
In millions of U.S.$,
except for assets and
capital employed in
billions of U.S.$
|
|
Contractual
Data
Acquisition
|
|
|
Non
Operated
Resources
|
|
|
GGR
|
|
|
Equipment
|
|
|
Eliminations
and other
|
|
|
Consolidated
Total
|
|
|
Contractual
Data
Acquisition
|
|
|
Non
Operated
Resources
|
|
|
GGR
|
|
|
Equipment
|
|
|
Eliminations
and other
|
|
|
Consolidated
Total
|
|
Revenues from unaffiliated customers
|
|
|
147.1
|
|
|
|
|
|
|
|
378.7
|
|
|
|
73.4
|
|
|
|
|
|
|
|
599.2
|
|
|
|
145.0
|
|
|
|
|
|
|
|
360.4
|
|
|
|
97.8
|
|
|
|
|
|
|
|
603.2
|
|
Inter-segment revenues
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
12.0
|
|
|
|
(13.4
|
)
|
|
|
|
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
19.7
|
|
|
|
(23.0
|
)
|
|
|
|
|
Operating revenues
|
|
|
148.5
|
|
|
|
|
|
|
|
378.7
|
|
|
|
85.4
|
|
|
|
(13.4
|
)
|
|
|
599.2
|
|
|
|
148.3
|
|
|
|
|
|
|
|
360.4
|
|
|
|
117.5
|
|
|
|
(23.0
|
)
|
|
|
603.2
|
|
Depreciation and amortization (excluding multi-client surveys)
|
|
|
(25.1
|
)
|
|
|
(15.6
|
)
|
|
|
(40.2
|
)
|
|
|
(14.7
|
)
|
|
|
|
|
|
|
(95.6
|
)
|
|
|
(29.3
|
)
|
|
|
(34.5
|
)
|
|
|
(51.0
|
)
|
|
|
(18.7
|
)
|
|
|
(0.2
|
)
|
|
|
(133.7
|
)
|
Depreciation and amortization of multi-client surveys
|
|
|
|
|
|
|
|
|
|
|
(136.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(136.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(123.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(123.1
|
)
|
Operating income
|
|
|
(51.3
|
)
|
|
|
(150.0
|
)
|
|
|
55.6
|
|
|
|
(29.0
|
)
|
|
|
(20.4
|
)
|
|
|
(195.1
|
)
|
|
|
(33.8
|
)
|
|
|
(56.4
|
)
|
|
|
36.7
|
|
|
|
(29.1
|
)
|
|
|
(28.3
|
)
|
|
|
(110.9
|
)
|
Share of income in companies accounted for under equity method (1)
|
|
|
2.8
|
|
|
|
(2.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
Earnings before interest and tax (2)
|
|
|
(48.5
|
)
|
|
|
(152.8
|
)
|
|
|
55.6
|
|
|
|
(29.0
|
)
|
|
|
(20.4
|
)
|
|
|
(195.1
|
)
|
|
|
(33.9
|
)
|
|
|
(56.4
|
)
|
|
|
36.7
|
|
|
|
(29.1
|
)
|
|
|
(28.3
|
)
|
|
|
(111.0
|
)
|
Capital expenditures (excluding multi-client surveys) (3)
|
|
|
8.0
|
|
|
|
|
|
|
|
21.8
|
|
|
|
7.8
|
|
|
|
(0.7
|
)
|
|
|
36.9
|
|
|
|
9.3
|
|
|
|
|
|
|
|
25.4
|
|
|
|
5.7
|
|
|
|
5.5
|
|
|
|
45.9
|
|
Investments in multi-client surveys, net cash
|
|
|
|
|
|
|
|
|
|
|
108.3
|
|
|
|
|
|
|
|
|
|
|
|
108.3
|
|
|
|
|
|
|
|
|
|
|
|
162.8
|
|
|
|
|
|
|
|
|
|
|
|
162.8
|
|
Capital employed
|
|
|
0.4
|
|
|
|
|
|
|
|
2.3
|
|
|
|
0.6
|
|
|
|
|
|
|
|
3.3
|
|
|
|
0.5
|
|
|
|
0.2
|
|
|
|
2.3
|
|
|
|
0.7
|
|
|
|
|
|
|
|
3.7
|
|
Total identifiable assets
|
|
|
0.6
|
|
|
|
0.1
|
|
|
|
2.6
|
|
|
|
0.7
|
|
|
|
|
|
|
|
4.0
|
|
|
|
0.7
|
|
|
|
0.4
|
|
|
|
2.7
|
|
|
|
0.7
|
|
|
|
|
|
|
|
4.5
|
|
(1)
|
Share of operating results of companies accounted for under the equity method was U.S.$2.7 million and U.S.$(0.3) million for the six months ended June 30, 2017 and 2016, respectively.
|
(2)
|
At the Group level, operating income and EBIT before costs related to the Transformation Plan, both amounted to U.S.$(70.7) million, for the six months ended June 30, 2017, compared to U.S.$(103.7) million and
U.S.$(103.8) million, respectively, for the six months ended June 30, 2016.
|
For the six months ended June 30,
2017,
Non-Operated
Resources EBIT included U.S.$(124.4) million related to the Transformation Plan. For the six months ended June 30, 2016,
Non-Operated
Resources
EBIT included U.S.$(7.2) million related to the Transformation Plan.
For the six months ended June 30, 2017, eliminations and
other included U.S.$(16.4) million of general corporate expenses and U.S.$(4.0) million of intra-group margin. For the six months ended June 30, 2016, eliminations and other included U.S.$(17.6) million of general corporate
expenses and U.S.$(10.7) million of intra-group margin.
(3)
|
Capital expenditures included capitalized development costs of U.S.$(14.6) million and U.S.$(18.1) million for the six months ended June 30, 2017 and 2016, respectively. Eliminations and other
corresponded to the variance of suppliers of assets for the period.
|
- 22 -
Analysis by geographic area
The following tables set forth our consolidated operating revenues by location of customers, and the percentage of total consolidated operating
revenues represented thereby:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
In millions of U.S.$, except percentages
|
|
2017
|
|
|
2016
|
|
North America
|
|
|
96.7
|
|
|
|
28
|
%
|
|
|
85.1
|
|
|
|
29
|
%
|
Central and South Americas
|
|
|
105.6
|
|
|
|
30
|
%
|
|
|
50.4
|
|
|
|
17
|
%
|
Europe, Africa and Middle East
|
|
|
106.0
|
|
|
|
30
|
%
|
|
|
108.7
|
|
|
|
38
|
%
|
Asia Pacific
|
|
|
41.5
|
|
|
|
12
|
%
|
|
|
46.0
|
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
349.8
|
|
|
|
100
|
%
|
|
|
290.2
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
In millions of U.S.$, except percentages
|
|
2017
|
|
|
2016
|
|
North America
|
|
|
174.2
|
|
|
|
29
|
%
|
|
|
186.0
|
|
|
|
31
|
%
|
Central and South Americas
|
|
|
166.2
|
|
|
|
28
|
%
|
|
|
88.7
|
|
|
|
15
|
%
|
Europe, Africa and Middle East
|
|
|
179.1
|
|
|
|
30
|
%
|
|
|
224.8
|
|
|
|
37
|
%
|
Asia Pacific
|
|
|
79.7
|
|
|
|
13
|
%
|
|
|
103.7
|
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
599.2
|
|
|
|
100
|
%
|
|
|
603.2
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N
OTE
5 O
THER
REVENUES
AND
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
In millions of U.S.$
|
|
2017
|
|
|
2016
|
|
Restructuring costs
|
|
|
(235.8
|
)
|
|
|
(87.5
|
)
|
Change in restructuring reserves
|
|
|
90.4
|
|
|
|
80.3
|
|
Other
non-recurring
revenues (expenses)
|
|
|
|
|
|
|
(0.7
|
)
|
Other
non-recurring
revenues (expenses)
net
|
|
|
(145.4
|
)
|
|
|
(7.9
|
)
|
Exchange gains (losses) on hedging contracts
|
|
|
(0.2
|
)
|
|
|
0.2
|
|
Gains (losses) on sales of assets
|
|
|
27.4
|
|
|
|
(3.2
|
)
|
|
|
|
|
|
|
|
|
|
Other revenues (expenses) net
|
|
|
(118.2
|
)
|
|
|
(10.9
|
)
|
|
|
|
|
|
|
|
|
|
Six months period ended June 30, 2017
Other
non-recurring
revenues (expenses) net
Other
non-recurring
revenues and expenses net amounted to U.S.$(145.4) million for the six months ended June 30, 2017, of which U.S.$(115.7) million were recorded during the second quarter of 2017.
These restructuring costs are part of the Group Transformation Plan and include:
|
(i)
|
U.S.$12.3 million to reduce the cash burden of the charter agreement in respect of one vessel in operation. This loss corresponds to the compensation granted to the ship-owner following the renegotiation of the
charter agreements.
(see note 2 Proactive management of maritime liabilities),
|
|
(ii)
|
U.S.$72.1 million to renegotiate and extend the charter agreements in respect of two seismic vessels to reduce the cash burden following the implementation of a new ownership set up. This loss corresponds to the
compensation granted to ESV and OSV following the renegotiation of the charter agreements.
(see note 2 New ownership set up for our seismic fleet),
|
|
(iii)
|
U.S.$53.0 million of professional fees mainly linked to the US Chapter 11 and French Safeguard procedures (see note 2 Financial restructuring process),
|
|
(iv)
|
U.S.$8.0 million of other costs related to our Transformation Plan.
|
- 23 -
Gains (losses) on sales of assets
In 2017, we recognized a U.S.$21.0 million gain arising from our contribution to GSS, which was created as part of the Group
Transformation Plan on April 2017 between CGG and Eidesvik (see note 2 New ownership set up for our seismic fleet).
This line item also includes sales of assets and losses related to damaged or scrapped marine seismic equipment.
Six months period ended June 30, 2016
Other
non-recurring
revenues (expenses) net
Other
non-recurring
revenues and expenses net amounted to U.S.$(7.9) million for the six months ended June 30, 2016, of which U.S.$(0.2) million were recorded during the second quarter of 2016.
Gains (losses) on sales of assets
This line item included sales of assets and also losses related to damaged or scrapped marine seismic equipment.
N
OTE
6 C
URRENT
L
IABILITIES
ASSOCIATED
WITH
FUNDED
RECEIVABLES
In 2017, we entered into an agreement with a financial institution to obtain advance
payments for a marine acquisition and processing project with a client. The collection right of the invoices to be issued is transferred to the financial institution, based on monthly clients acceptance of the work in progress. Nonetheless the
terms of this agreement do not allow for
de-recognition
of the funded work in progress (thus recorded in Trade Accounts and Notes Receivables). The cash received has been accounted for in
Current liabilities associated to funded receivables in the Consolidated Statement of Financial Position.
As of June 30,
2017, we received U.S.$47.7 million of cash in respect of the above agreement.
N
OTE
7 R
ELATED
PARTY
TRANSACTIONS
The Group enters into contracts with related parties concluded at arms length.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
In millions of U.S.$
|
|
Joint
Ventures (a)
|
|
|
Associates (b)
|
|
|
Total
|
|
|
Joint
Ventures (a)
|
|
|
Associates (b)
|
|
|
Total
|
|
Sales of geophysical equipment
|
|
|
0.3
|
|
|
|
2.3
|
|
|
|
2.6
|
|
|
|
0.3
|
|
|
|
2.4
|
|
|
|
2.7
|
|
Equipment rentals, charter revenues and services rendered
|
|
|
7.0
|
|
|
|
4.5
|
|
|
|
11.5
|
|
|
|
5.2
|
|
|
|
20.6
|
|
|
|
25.8
|
|
Operating Revenues
|
|
|
7.3
|
|
|
|
6.8
|
|
|
|
14.1
|
|
|
|
5.5
|
|
|
|
23.0
|
|
|
|
28.5
|
|
Charter expenses
|
|
|
(14.9
|
)
|
|
|
|
|
|
|
(14.9
|
)
|
|
|
(13.3
|
)
|
|
|
|
|
|
|
(13.3
|
)
|
Ship management expenses
|
|
|
(11.6
|
)
|
|
|
|
|
|
|
(11.6
|
)
|
|
|
(23.4
|
)
|
|
|
|
|
|
|
(23.4
|
)
|
Costs of services rendered
|
|
|
(0.5
|
)
|
|
|
(1.2
|
)
|
|
|
(1.7
|
)
|
|
|
(1.7
|
)
|
|
|
(2.5
|
)
|
|
|
(4.2
|
)
|
Cost of operations
|
|
|
(27.0
|
)
|
|
|
(1.2
|
)
|
|
|
(28.2
|
)
|
|
|
(38.4
|
)
|
|
|
(2.5
|
)
|
|
|
(40.9
|
)
|
Other financial income (loss)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
(0.7
|
)
|
|
|
1.1
|
|
|
|
0.4
|
|
Trade accounts and notes receivable, other current assets, including agency arrangements
|
|
|
17.8
|
|
|
|
8.5
|
|
|
|
26.3
|
|
|
|
16.8
|
|
|
|
13.9
|
|
|
|
30.7
|
|
Other Financial assets Loans granted
|
|
|
16.5
|
|
|
|
|
|
|
|
16.5
|
|
|
|
25.2
|
|
|
|
38.0
|
|
|
|
63.2
|
|
Assets Total
|
|
|
34.3
|
|
|
|
8.5
|
|
|
|
42.8
|
|
|
|
42.0
|
|
|
|
51.9
|
|
|
|
93.9
|
|
Trade accounts and notes payable, other current liabilities, including agency
arrangements
|
|
|
12.6
|
|
|
|
14.4
|
|
|
|
27.0
|
|
|
|
19.1
|
|
|
|
39.0
|
|
|
|
58.1
|
|
Financial liabilities Finance lease debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.9
|
|
|
|
|
|
|
|
15.9
|
|
Liabilities Total
|
|
|
12.6
|
|
|
|
14.4
|
|
|
|
27.0
|
|
|
|
35.0
|
|
|
|
39.0
|
|
|
|
74.0
|
|
Future leases commitments
|
|
|
410.8
|
|
|
|
|
|
|
|
410.8
|
|
|
|
220.2
|
|
|
|
|
|
|
|
220.2
|
|
Future ship management costs
|
|
|
116.0
|
|
|
|
|
|
|
|
116.0
|
|
|
|
93.1
|
|
|
|
|
|
|
|
93.1
|
|
Contractual Obligations
|
|
|
526.8
|
|
|
|
|
|
|
|
526.8
|
|
|
|
313.3
|
|
|
|
|
|
|
|
313.3
|
|
(a)
|
Mainly correspond to investments in companies accounted for using the equity method in our Marine Contractual Data Acquisition segment;
|
- 24 -
(b)
|
Mainly correspond to investments in companies accounted for using the equity method in our Land and Multi-Physics Acquisition segment;
|
No credit facility or loan was granted to the Company by shareholders during the last three years.
N
OTE
8 S
UBSEQUENT
EVENTS
Results of the private placement agreement
On July 13, 2017, CGG announced that as of July 7, 2017 (the end of the placement period) eligible holders representing 86.08% of the
aggregate principal amount of the Senior Notes had committed to subscribe to U.S.$375 million of new secured lien senior notes with Warrants pursuant to the terms of a private placement agreement, and had acceded to the
lock-up
agreement. The issuance of the new secured lien senior notes with Warrants has been backstopped by members of the ad hoc committee of the holders of the Senior Notes holding, as of the date of the private
placement agreement, 52.38% of the aggregate principal amount of the Senior Notes, who have also committed to subscribe for their pro rata shares of the new secured lien senior notes with Warrants.
Convening of CGG SAs lenders committee and bondholders general meeting under French Safeguard
As of July 12, 2017, holders of 74.24 % of the combined aggregate principal amount of the Senior Notes and the convertible bonds,
together with holders of 77.66 % of the aggregate principal amount of the groups Secured Debt (as defined in the
lock-up
agreement), have executed or acceded to the
lock-up
agreement. This indicated a high level of support for the Financial Restructuring and satisfied a key milestone in the implementation process ahead of creditors meetings on July 28,
2017.
- 25 -
C G G
Item 2:
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Group
organization
Since September 30, 2015, we have organized our activities in four segments for financial reporting:
(i) Contractual Data Acquisition, (ii) Geology, Geophysics & Reservoir, (iii) Equipment and
(iv) Non-Operated
Resources. Financial information by segment is reported in accordance
with our internal reporting system and provides internal segment information that is used by the chief operating decision maker to manage and measure performance.
Taking into account the long cyclical trough of the seismic market, we decided, during the third quarter of 2015, to implement new adaptation
measures throughout the Group and to reduce our marine fleet to five 3D
high-end
vessels mainly dedicated to multi-client surveys. Going forward, the downsized CGG fleet will be dedicated on average
two-thirds
to multi-client surveys and only
one-third
to exclusive surveys. As a result of the reduction of the fleet, part of our owned vessels will not be operated for a
certain period of time. The costs of these
non-operated
resources, as well as the costs of the Transformation Plan are reported, in the
Non-Operated
Resources segment.
A summary of our four segments is set out below:
|
|
|
Contractual Data Acquisition
. This Operating segment comprises the following business lines:
|
|
|
|
Marine: offshore seismic data acquisition undertaken by us on behalf of a specific client;
|
|
|
|
Land and Multi-Physics: other seismic data acquisition undertaken by us on behalf of a specific client.
|
|
|
|
Geology, Geophysics
& Reservoir
(GGR). This operating segment comprises the Multi-client business line (development and management of seismic surveys that we undertake and
license to a number of clients on a
non-exclusive
basis) and the Subsurface Imaging and Reservoir business lines (processing and imaging of geophysical data, reservoir characterization, geophysical consulting
and software services, geological data library and data management solutions). Both business lines regularly combine their offerings, generating overall synergies between their respective activities. The GGR segment includes the costs, industrial
capital expenditures and capital employed related to the vessels dedicated to multi-client surveys.
|
|
|
|
Equipment
. This operating segment comprises our manufacturing and sales activities for seismic equipment used for data acquisition, both on land and marine. The Equipment segment carries out its activities
through our subsidiary Sercel.
|
|
|
|
Non-Operated
Resources
. This segment mainly comprises the costs of the
non-operated
marine resources as well as all the costs of our
Transformation Plan (mainly restructuring provisions and provisions for onerous contracts). The capital employed includes the
non-operated
marine assets and the provisions related to the Transformation Plan.
In this segment, the recoverable value retained is the fair value less costs of disposal.
|
Financial restructuring process
See note 2 - Significant events to our interim consolidated financial statements for further details on our financial restructuring process
Factors affecting our results of operations
Our
operating results are generally affected by a variety of factors, some of which are described below and others that are set out in Item 5: Operating and Financial Reviews and Prospects: Factors affecting our results of operations and
Trend Information of our annual report on Form
20-F
for the year ended December 31, 2016.
Geophysical market environment
Overall demand for geophysical services and equipment is dependent on spending by oil and gas companies for exploration, development and
production and field management activities. We believe the level of spending of such companies depends on their assessment of their ability to efficiently supply the oil and gas market in the future and the current balance of hydrocarbon supply and
demand. The geophysical market has historically been extremely volatile.
- 26 -
We believe many factors contribute to the volatility of this market, such as the geopolitical
uncertainties that can harm the confidence and visibility that are essential to our clients long-term decision-making processes and the expected balance in the mid to long term between supply and demand for hydrocarbons. Lower or volatile
hydrocarbon prices tend then to limit the demand for seismic services and products. In 2015 and 2016, oil and gas companies reduced their exploration and production spending due to falling oil prices, affecting demand for our products and services
as reflected in our results.
We expect that the challenging market conditions that we experienced in 2016 will remain similar in 2017 and
will continue to weigh on our revenues. Our perception is consequently unchanged, with operating results in line with 2016 and downward pressure on cash flow generation. Due to this difficult environment, we believe that the market recovery will be
delayed until 2018/2019 horizon.
(See Item 4: Information on the Company Industry Conditions of our annual report on Form
20-F
for the year ended December 31, 2016 for a discussion of developments in the geophysical industry).
Proactive management of maritime liabilities
See note 2 - Significant events to our interim consolidated financial statements for further details on our Proactive management of maritime
liabilities
New ownership set up for our seismic fleet
See note 2 - Significant events to our interim consolidated financial statements for further details on our new ownership set up for our
seismic fleet
Backlog
Our
backlog as of July 1, 2017 was U.S.$493 million. Contracts for services are occasionally modified by mutual consent and in certain instances are cancelable by the customer on short notice without penalty. Consequently, backlog as of any
particular date may not be indicative of actual operating results for any succeeding period.
Three months ended June 30, 2017 compared to
three months ended June 30, 2016
Operating revenues
The following table sets forth our operating revenues by business line for each of the periods stated:
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
In millions of U.S.$
|
|
2017
|
|
|
2016
|
|
Marine Contractual Data Acquisition
|
|
|
60.9
|
|
|
|
22.3
|
|
Land and Multi-Physics Acquisition
|
|
|
21.1
|
|
|
|
36.9
|
|
Contractual Data Acquisition Revenues
|
|
|
82.0
|
|
|
|
59.2
|
|
Multi-client data
|
|
|
132.7
|
|
|
|
95.6
|
|
Subsurface Imaging and Reservoir
|
|
|
88.0
|
|
|
|
100.8
|
|
GGR Revenues
|
|
|
220.7
|
|
|
|
196.4
|
|
Equipment Revenues
|
|
|
53.0
|
|
|
|
44.3
|
|
Eliminated revenues and others
|
|
|
(5.9
|
)
|
|
|
(9.7
|
)
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
|
349.8
|
|
|
|
290.2
|
|
|
|
|
|
|
|
|
|
|
Our consolidated operating revenues for the three months ended June 30, 2017 increased 21% to
U.S.$350 million from U.S.$290 million for the comparable period of 2016, mainly as a consequence of the positive operational performance of the Marine Contractual Data Acquisition business line in very challenging market conditions and
high multi-client sales thanks to the good positioning of our multi-client library.
Contractual Data Acquisition
Operating revenues for our Contractual Data Acquisition segment increased 39% to U.S.$82 million for the three months ended June 30,
2017 from U.S.$59 million for the comparable period of 2016, mainly due to the positive operational performance of the Marine Contractual Data Acquisition business line in very challenging market conditions.
- 27 -
Marine Contractual Data Acquisition
Total revenues of our Marine Contractual Data Acquisition business line for the three months ended June 30, 2017 increased 173% to
U.S.$61 million from U.S.$22 million for the comparable period of 2016, mainly due to higher allocation of the fleet to contractual business and strong production performance with a fully available fleet in the second quarter of 2017.
The availability rate increased to 100% for the three months ended June 30, 2017 from 90% for the three months ended June 30, 2016.
The production rate remained high at 98% for the three months ended June 30, 2017 compare to 94% for the three months ended June, and 2016. 48% of the fleet was dedicated to multi-client programs for the three months ended June 30, 2017
compared to 66% for the three months ended June 30, 2016.
Land and Multi-Physics Acquisition
Total revenues of our Land and Multi-Physics Acquisition business lines decreased 43% to U.S.$21 million for the three months ended
June 30, 2017, compared to U.S.$37 million for the three months ended June 30, 2016, with market activity remaining low.
Geology, Geophysics
& Reservoir
Operating revenues from our GGR segment for the three months ended June 30, 2017 increased 12% to U.S.$221 million from
U.S.$196 million for the comparable period of 2016 mainly due to the solid after-sales and high prefunding revenues in the Multi-client business line, partially offset by reduced revenues from SIR.
Multi-client data
Multi-client revenues increased 39% to U.S.$133 million for the three months ended June 30, 2017 from U.S.$96 million for the
three months ended June 30, 2016. The sales were the highest in the Gulf of Mexico, Brazil and Scandinavia.
Prefunding revenues
decreased 6% to U.S.$73 million for the three months ended June 30, 2017, from U.S.$78 million for the three months ended June 30, 2016. After-sales revenues increased to U.S.$59 million for the three months ended
June 30, 2017 compared to U.S.$18 million for the three months ended June 30, 2016. The prefunding rate reached a high of 122% for the three months ended June 30, 2017 compared to 84% for the three months ended June 30,
2016.
Subsurface Imaging & Reservoir
Operating revenues from our Subsurface Imaging & Reservoir business lines decreased 13% to U.S.$88 million for the three months
ended June 30, 2017 from U.S.$101 million for the comparable period of 2016. Reservoir businesses were impacted by clients lower capital expenditures spending, while Subsurface Imaging remains more resilient as evidenced by long term
dedicated centers awarded in Oman and Thailand.
Equipment
Total revenues of our Equipment segment, including internal and external sales, increased 20% to U.S.$53 million for the three months
ended June 30, 2017 from U.S.$44 million for the comparable period of 2016. Internal sales represented 10% of total revenues for the three months ended June 30, 2017 compared to 19% for the comparable period of 2016. External revenues
for our Equipment segment increased 33% to U.S.$48 million for the three months ended June 30, 2017 from U.S.$36 million for the comparable period of 2016. Land and Marine equipment sales were still impacted by low demand during the
period.
Land equipment sales represented 49% of total revenues, compared to 64% for the comparable period of 2016, with channels
delivered to Algeria and India and gauges business being active.
Marine equipment sales represented 51% of total revenues, compared to
36% for the comparable period of 2016, driven notably by some second hand equipment delivery.
Operating Expenses
Cost of operations, including depreciation and amortization, increased 10% to U.S $318 million for the three months ended June 30,
2017 from U.S.$289 million for the comparable period of 2016. The amortization expenses of our seismic library corresponded to 67% of the Multi-client data business line revenues for the three months ended June 30, 2017 compared to 80% for
the comparable period of 2016.
As a percentage of operating revenues, cost of operations decreased to 91% for the three months ended
June 30, 2017 from 100% for the comparable period of 2016. Gross profit increased to U.S.$33 million for the three months ended June 30, 2017 from U.S.$2 million for the comparable period of 2016, representing profit margins of
9% and 1% of operating revenues, respectively.
- 28 -
Research and development expenditures amounted to U.S.$8 million for the three months ended
June 30, 2017. This compared to an income of U.S.$10 million for the comparable period of 2016, including the
catch-up
of an U.S. Research and Development tax credit.
Marketing and selling expenses decreased 15% to U.S.$14 million for the three months ended June 30, 2017 from U.S.$17 million
for the comparable period of 2016, mainly as a consequence of our Transformation Plan.
General and administrative expenses decreased 7%
to U.S.$20 million for the three months ended June 30, 2017 from U.S.$21 million for the comparable period of 2016, as a consequence of the progress of our Transformation Plan. As a percentage of operating revenues, general and
administrative expenses represented 6% of operating revenues in the three months ended June 30, 2017 compared to 7% of operating revenues in the three months ended June 30, 2016.
Other expenses amounted to U.S.$89 million for the three months ended June 30, 2017, including mainly (i) U.S.$ 95 million
expenses related to our Transformation Plan of which U.S.$ 51 million loss related to our new ownership set up for our seismic fleet and U.S.$ 44 million costs being mostly financial restructuring fees and (ii) U.S.$6 million
gain on sales of
non-core
assets.
(See note 2 to our interim consolidated financial statements for further details on our new ownership
set-up
for our seismic
fleet)
Other expenses amounted to an income of U.S.$2 million for the three months ended June 30, 2016, mainly related to
gain on sales of
non-core
assets.
Operating Income
Operating income amounted to a loss of U.S.$98 million (or a loss of U.S.$3 million before restructuring costs net of gain on sale of
assets relating to our Transformation Plan) for the three months ended June 30, 2017 as a result of the factors described above. Operating Income was a loss of U.S.$24 million for the three months ended June 30, 2016 (or a loss of
U.S.$22 million before restructuring costs relating to our Transformation Plan).
Operating income from our Contractual Data
Acquisition segment was a loss of U.S.$13 million for the three months ended June 30, 2017 compared to a breakeven result for the three months ended June 30, 2016.
Operating income from our GGR segment was an income of U.S.$37 million for the three months ended June 30, 2017 compared to an
income of U.S.$29 million for the three months ended June 30, 2016.
Operating income from our Equipment segment was a loss of
U.S.$13 million for three months ended June 30, 2017 compared to a loss of U.S.$18 million for the three months ended June 30, 2016.
Operating income from our
Non-Operated
Resources segment was a loss of U.S.$100 million for three
months ended June 30, 2017 (or a loss of U.S.$5 million before restructuring costs net of gain on sale of assets relating to our Transformation Plan) compared to a loss of U.S.$24 million for the comparable period of 2016 (or a loss
of U.S.$23 million before restructuring costs relating to our Transformation Plan).
Equity in Income of Affiliates
Income from investments accounted for under the equity method amounted to a loss of U.S.$3 million for the three months ended
June 30, 2017 compared to a loss of U.S.$5 million for the three months ended June 30, 2016.
Earnings Before Interest and Tax
(EBIT)
EBIT, as disclosed in note 4 to our interim consolidated financial statements, amounted to a loss of
U.S.$101 million (or a loss of U.S.$6 million before restructuring costs net of gain on sale of assets relating to our Transformation Plan) for the three months ended June 30, 2017 as a result of the factors described above, compared
to a loss of U.S.$29 million (or a loss of U.S.$27 million before restructuring costs relating to our Transformation Plan) for the three months ended June 30, 2016.
EBIT from our Contractual Data Acquisition segment was a loss of U.S.$12 million for the three months ended June 30, 2017 compared
to a loss of U.S.$4 million for the three months ended June 30, 2016.
EBIT from our GGR segment was an income of
U.S.$37 million for the three months ended June 30, 2017 compared to an income U.S.$29 million for the three months ended June 30, 2016.
EBIT from our Equipment segment was a loss of U.S.$13 million for three months ended June 30, 2017 compared to a loss of
U.S.$18 million for the comparable period of 2016.
EBIT from our
Non-Operated
Resources
segment was a loss of U.S.$103 million for three months ended June 30, 2017 (or a loss of U.S.$8 million before restructuring costs net of gain on sale of assets relating to our Transformation Plan) compared to a loss of
U.S.$24 million for the comparable period of 2016 (or a loss of U.S.$23 million before restructuring costs related to our Transformation Plan).
- 29 -
(See note 5 to our interim consolidated financial statements for further details on
restructuring costs relating to our Transformation Plan).
Financial Income and Expenses
Net cost of financial debt increased 17% to U.S.$49 million for the three months ended June 30, 2017 from U.S.$42 million for
the comparable period of 2016.
Other financial income and expenses amounted to an income of U.S.$1 million for the three months
ended June 30, 2017 compared to an expense of U.S.$2 million for the comparable period of 2016.
Income Taxes
Income taxes amounted to U.S.$21 million for the three months ended June 30, 2017 compared to an expense of U.S.$6 million for
the comparable period of 2016.
Net Income
Net income was a loss of U.S.$170 million for the three months ended June 30, 2017 compared to a loss of U.S.$79 million for the
comparable period of 2016 as a result of the factors discussed above.
Six months ended June 30, 2017 compared to six months ended June 30,
2016
Operating revenues
The following table sets forth our operating revenues by division for each of the periods stated:
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
In millions of U.S.$
|
|
2017
|
|
|
2016
|
|
Marine Contractual Data acquisition
|
|
|
105.5
|
|
|
|
80.6
|
|
Land and Multi-Physics acquisition
|
|
|
43.0
|
|
|
|
67.7
|
|
Contractual Data Acquisition Revenues
|
|
|
148.5
|
|
|
|
148.3
|
|
Multi-client data
|
|
|
204.9
|
|
|
|
150.4
|
|
Subsurface Imaging and Reservoir
|
|
|
173.8
|
|
|
|
210.0
|
|
GGR Revenues
|
|
|
378.7
|
|
|
|
360.4
|
|
Equipment Revenues
|
|
|
85.4
|
|
|
|
117.5
|
|
Eliminated revenues and others
|
|
|
(13.4
|
)
|
|
|
(23.0
|
)
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
|
599.2
|
|
|
|
603.2
|
|
|
|
|
|
|
|
|
|
|
Our consolidated operating revenues for the six months ended June 30, 2017 remained stable at
U.S.$599 million compared to U.S.$603 million for the six months ended June 30, 2016.
Contractual Data Acquisition
Operating revenues for our Contractual Data Acquisition segment for the six months ended June 30, 2017 remained stable at
U.S.$149 million compared to U.S.$148 million for the comparable period of 2016.
Marine Contractual Data Acquisition
Total revenues of our Marine Contractual Data Acquisition business line for the six months ended June 30, 2017 increased 31% to
U.S.$106 million from U.S.$81 million for the comparable period of 2016, mainly due to our fleets strong operational performance, with a high production rate at 98%, despite weak pricing conditions.
- 30 -
Land and Multi-Physics acquisition
Total revenues of our Land and Multi-Physics Acquisition business lines decreased 36% to U.S.$43 million for the six months ended
June 30, 2017, from U.S.$68 million for the six months ended June 30, 2016 mainly due to a global low level of activity and slow decision processes by clients, especially for Land Acquisition.
Geology, Geophysics
& Reservoir
Operating revenues from our GGR segment for the six months ended June 30, 2017 increased 5% to U.S.$379 million from
U.S.$360 million for the comparable period of 2016, driven mainly by multi-client sales, while clients remain cautious and reduce their spending.
Multi-client data
Multi-client revenues increased 36% to U.S.$205 million for the six months ended June 30, 2017 from U.S.$150 million for the six
months ended June 30, 2016. The sales were the highest in the Gulf of Mexico and Brazil.
Prefunding revenues remained stable overall
at U.S.$127 million for the six months ended June 30, 2017 compared to U.S.$125 million the six months ended June 30, 2016. After-sales revenues amounted to U.S.$78 million for the six months ended June 30, 2017
compared to U.S.$25 million the six months ended June 30, 2016. The prefunding rate was 117% for the six months ended June 30, 2017 compared to 77% for the six months ended June 30, 2016.
Subsurface Imaging & Reservoir
Operating revenues from our Subsurface Imaging & Reservoir decreased 17% to U.S.$174 million for the six months ended
June 30, 2017 from U.S.$210 million for the comparable period of 2016. Overall demand for imaging, reservoir services and software has weakened in line with reductions in client spending.
Equipment
Total revenues
of our Equipment segment, including internal and external sales, decreased 27% to U.S.$85 million for the six months ended June 30, 2017 from U.S.$118 million for the comparable period of 2016 reflecting extremely low volumes driven
by the weakness of the seismic acquisition market.
Internal sales represented 14% of total revenues for the six months ended
June 30, 2017 compared to 17% for the six months ended June 30, 2016. External revenues for our Equipment segment decreased 25% to U.S.$73 million for the six months ended June 30, 2017 from U.S.$98 million for the
comparable period of 2016.
Marine equipment sales represented 48% of total revenues for the six months ended June 30, 2017 compared
to 31% for the six months ended June 30, 2016.
Operating Expenses
Cost of operations, including depreciation and amortization, decreased 5% to U.S.$594 million for the six months ended June 30, 2017
from U.S.$624 million for the comparable period of 2016. The amortization expenses of our seismic library correspond to 67% of the Multi-client data business line revenues for the six months ended June 30, 2017 compared to 79% for the
comparable period of 2016.
As a percentage of operating revenues, cost of operations decreased to 99% for the six months ended
June 30, 2017 from 103% for the comparable period of 2016. Gross profit increased to U.S.$6 million for the six months ended June 30, 2017 from a loss of U.S.$20 million for the comparable period of 2016, representing 1% and (3)%
of operating revenues, respectively.
Research and development expenditures increased to U.S.$16 million for the six months ended
June 30, 2017 from U.S.$2 million for the comparable period of 2016, principally as a result of a U.S. tax credit
catch-up
for Research and Development in the earlier period.
Marketing and selling expenses decreased 17% to U.S.$27 million for the six months ended June 30, 2017 from U.S.$33 million for
the comparable period of 2016, mainly as a consequence of the progress of our Transformation Plan.
General and administrative expenses
decreased 12% to U.S.$40 million for the six months ended June 30, 2017 from U.S.$45 million for the comparable period of 2016, as a consequence of the progress of the Transformation Plan. As a percentage of operating revenues,
general and administrative expenses represented 7% and 8% of operating revenues in the six months ended June 30, 2017 and 2016, respectively.
Other expenses amounted to U.S.$118 million for the six months ended June 30, 2017, including mainly (i) U.S.$124 million
expenses related to our Transformation Plan of which U.S.$51 million loss related to our new ownership set up for our seismic
- 31 -
fleet and U.S.$73 million costs being mostly financial restructuring fees and (ii) U.S.$6 million gain on sales of
non-core
assets.
(See
note 2 to our interim consolidated financial statements for further details on our new ownership
set-up
for our seismic fleet).
Other expenses amounted to U.S.$11 million for the six months ended June 30, 2016, including notably (i) restructuring costs
relating to our Transformation Plan for U.S.$7 million (mainly redundancy costs, net of reversal of provisions) and (ii) U.S.$4 million of losses mainly related to sales of assets and losses related to damaged or scrapped marine
seismic equipment.
(See note 2 to our interim consolidated financial statements for further details on our new ownership
set-up
for our seismic fleet)
Operating Income
Operating income amounted to a loss of U.S.$195 million for the six months ended June 30, 2017 (or a loss of U.S.$71 million
before restructuring costs net of gain on sale of assets relating to our Transformation Plan) as a result of the factors described above, compared to a loss of U.S.$111 million for the six months ended June 30, 2016 (or a loss of
U.S.$104 million before restructuring costs related to our Transformation Plan).
Operating income from our Contractual Data
Acquisition segment was a loss of U.S.$51 million for the six months ended June 30, 2017 compared to a loss of U.S.$34 million for the six months ended June 30, 2016 mainly as a consequence of weak pricing conditions in Marine
and low activity levels in Land and Multi-Physics business lines.
Operating income from our GGR segment was U.S.$56 million for the
six months ended June 30, 2017 compared to U.S.$37 million for the six months ended June 30, 2016 mainly driven by high multi-client sales.
Operating income from our Equipment segment was a loss of U.S.$29 million for the six months ended June 30, 2017 and for the
comparable period of 2016, mainly due to low volumes impacting the profitability despite very efficient cost management and manufacturing flexibility.
Operating income from our
Non-Operated
Resources segment was a loss of U.S.$150 million for the
six months ended June 30, 2017 (or a loss of U.S.$26 million before restructuring costs net of gain on sale of assets relating to our Transformation Plan) compared to a loss of U.S.$56 million for the comparable period of 2016 (or a
loss of U.S.$49 million before restructuring costs relating to our Transformation Plan).
Equity in Income of Affiliates
Net income from investments accounted for under the equity method was nil for the six months ended June 30, 2017 and for the comparable
period of 2016.
Earnings Before Interest and Tax (EBIT)
EBIT, as disclosed in note 4 to our interim consolidated financial statements, amounted to a loss of U.S.$195 million for the six months
ended June 30, 2017 (or a loss of U.S.$71 million before restructuring costs net of gain on sale of assets relating to our Transformation Plan) as a result of the factors described above, compared to a loss of U.S.$111 million for the
six months ended June 30, 2016 (or a loss of U.S.$104 million before restructuring costs related to our Transformation Plan).
EBIT from our Contractual Data Acquisition segment was a loss of U.S.$49 million for the six months ended June 30, 2017 compared to
a loss of U.S.$34 million for the six months ended June 30, 2016.
EBIT from our GGR segment was U.S.$56 million for the
six months ended June 30, 2017 compared to U.S.$37 million for the six months ended June 30, 2016.
EBIT from our Equipment
segment was a loss of U.S.$29 million for the six months ended June 30, 2017 and for the comparable period of 2016.
EBIT from our
Non-Operated
Resources segment was a loss of U.S.$153 million for the six months
ended June 30, 2017 (or a loss of U.S.$28 million before restructuring costs net of gain on sale of assets relating to our Transformation Plan) compared to a loss of U.S.$56 million for the comparable period of 2016 (or a loss of
U.S.$49 million before restructuring costs relating to our Transformation Plan).
(See note 5 to our interim consolidated
financial statements for further details on restructuring expenses related to our Transformation Plan).
- 32 -
Financial Income and Expenses
Cost of net financial debt increased 13% to U.S.$96 million for the six months ended June 30, 2017 from U.S.$85 million for the
comparable period of 2016.
Other financial expenses amounted to U.S.$1 million for the six months ended June 30, 2017 and for
the six months ended June 30, 2016.
Income Taxes
Income taxes amounted to an expense of U.S.$23 million for the six months ended June 30, 2017 compared to an expense of
U.S.$13 million for the comparable period of 2016.
Net Income
Net income was a loss of U.S.$315 million for the six months ended June 30, 2017 compared to a loss of U.S.$209 million for the
comparable period of 2016 as a result of the factors discussed above.
Liquidity and Capital Resources
Financial Restructuring developments
For more information please refer to note 2 Significant Events - Financial restructuring process.
Financial debt
The leverage ratio
and interest cover ratio covenants in respect of our secured debt were not applicable as of June 30, 2017 as a result of waivers granted pursuant to the
lock-up
agreement signed by certain of the secured
lenders on June 13, 2017 (see note 2 Significant events for more information).
Consistent with the financial
statements as of December 31, 2016, it appears that reclassifying the financial debt as a current liability is the most appropriate accounting treatment according to IAS 1 for the interim financial statements authorized for issue by the Board
of Directors on July 27, 2017. This pure accounting reclassification does not question the going concern assumption. Together, the coordinated proceedings in France and the U.S. mentioned in note 1.3 Going concern
assumptions. prevented acceleration of the debt in France and stayed enforcement in respect of the debt outside of France.
7.75% Senior Notes due 2017
On February 24, 2017, we discharged and satisfied in full the indenture in respect of the U.S.$8.3 million outstanding principal
amount of our 7.75% senior notes due 2017
6.5% Senior Notes due 2021
On January 20 2017, CGG entered into agreements to substantially reduce the cash burden of the charter agreements in respect of three
cold-stacked seismic vessels. As part of the agreements to settle those amounts on a
non-cash
basis, CGG issued U.S.$58.6 million of its 2021 Notes bearing a 6.5% interest to the relevant charter
counterparties. On March 13, CGG entered into an agreement to substantially reduce the cash burden of the charter agreement in respect of the Oceanic Champion, an active seismic vessel. As part of the agreements to settle those
amounts on a
non-cash
basis, CGG issued U.S.$12.1 million of its 2021 Notes bearing a 6.5% interest to the relevant charter counterparties. The consequences of these agreements are reflected in the note 4
Other revenues and expenses of this document and in the note 18 Contractual obligations, commitments and contingencies to our consolidated financial statements in our annual report on Form
20-F
for the year ended December 31, 2016.
Nordic credit facility
The Fleet ownership changes transaction (see note 2 Significant events) leads to a reduction of the gross debt of the Group by
U.S.$182.5 million, corresponding to the principal amount of loans under the Nordic credit facility outstanding as of March 31, 2017.
- 33 -
Revolving Credit Facilities
A summary of our authorized revolving credit lines as of June 30, 2017 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
|
Final
Maturity
|
|
|
Used amount
|
|
|
|
|
|
|
|
|
|
(in millions of U.S.$)
|
|
US Revolving Facility
|
|
|
2013
|
|
|
|
2018
|
|
|
|
161.9
|
|
French Revolving Facility
|
|
|
2013
|
|
|
|
2018
|
|
|
|
302.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total credit facilities before issuing fees
|
|
|
|
|
|
|
|
|
|
|
464.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our French and US Revolving Facilities were fully drawn as of June 30, 2017.
Cash Flows
Operating activities
Net cash used by operating activities was U.S.$(13) million for the six months ended June 30, 2017 (or U.S.$87 million provided by
operating activities before restructuring expenses relating to our Transformation Plan) compared to U.S.$283 million provided by operating activities (or U.S.$372 million before restructuring expenses relating to our Transformation Plan)
for the comparable period of 2016. Before changes in working capital, net cash provided by operating activities for the six months ended June 30, 2017 was U.S.$32 million compared to net cash provided by operating activities of
U.S.$50 million for the comparable period for 2016.
Changes in working capital had a negative impact on cash from operating
activities of U.S.$45 million in the six months ended June 30, 2017 compared to a positive impact of U.S.$234 million for the comparable period of 2016. This was mainly due to a negative change in trade accounts and notes receivable
for U.S.$38 million in the six months ended June 30, 2017, mainly as a consequence of the high level of multi-client sales in the second quarter of 2017, compared to a positive change of U.S.$340 million for the comparable period of
2016.
Investing activities
Net cash used in investing activities was U.S.$122 million in the six months ended June 30, 2017 compared to U.S.$194 million
for the six months ended June 30, 2016.
During the six months ended June 30, 2017, our industrial capital expenditures,
inclusive of Sercel lease pool and asset suppliers variance, amounted to U.S.$22 million (U.S.$23 excluding asset suppliers variance), down 20% compared to same period last year. During the six months ended June 30, 2016, our
industrial capital expenditures, inclusive of Sercel lease pool and asset suppliers variance, were U.S.$28 million (U.S.$22 excluding asset suppliers variance).
During the six months ended June 30, 2017, our capitalized development costs amounted to U.S.$15 million compared to
U.S.$18 million for the same period last year.
During the six months ended June 30, 2017, we invested U.S.$108 million in
Multi-client data, primarily in Latin America, Ireland and onshore U.S., compared to U.S.$163 million for the six months ended June 30, 2016. As of June 30, 2017 the net book value of our Multi-client data library was
U.S.$833 million compared to U.S.$848 million as of December 31, 2016.
Financing activities
Net cash used by financing activities during the six months ended June 30, 2017 was U.S.$85 million compared to net cash used of
U.S.$30 million for the six months ended June 30, 2016.
Net
Financial debt
Net financial debt as of June 30, 2017 was U.S.$2,497 million compared to U.S.$2,312 million as of
December 31, 2016. The ratio of net financial debt to equity was 337% as of June 30, 2017 compared to 206% as of December 31, 2016.
Gross financial debt is the amount of bank overdrafts, plus current portion of financial debt, plus financial debt, and net
financial debt is gross financial debt less cash and cash equivalents. Net financial debt is presented as additional information because we understand that certain investors believe that netting cash against debt provides a clearer picture of
our financial
- 34 -
liability exposure. However, other companies may present net financial debt differently than we do. Net financial debt is not a measure of financial performance under IFRS and should not be
considered as an alternative to any other measures of performance derived in accordance with IFRS.
The following table presents a
reconciliation of net financial debt to financing items of statement of financial position at June 30, 2017 and December 31, 2016:
|
|
|
|
|
|
|
|
|
In millions of U.S.$
|
|
June 30, 2017
(unaudited)
|
|
|
December 31, 2016
|
|
Bank overdrafts
|
|
|
|
|
|
|
1.6
|
|
Current portion of long-term debt
|
|
|
2,759.2
|
|
|
|
2,782.1
|
|
Financial debt
|
|
|
52.6
|
|
|
|
66.7
|
|
Gross financial debt
|
|
|
2,811.8
|
|
|
|
2,850.4
|
|
Less : cash and cash equivalents
|
|
|
(314.8
|
)
|
|
|
(538.8
|
)
|
|
|
|
|
|
|
|
|
|
Net financial debt
|
|
|
2,497.0
|
|
|
|
2,311.6
|
|
|
|
|
|
|
|
|
|
|
For a more detailed description of our financial activities, see Item 5: Operating and Financial
Review and Prospectus- Liquidity and Capital Resources in our annual report on Form
20-F
for the year ended December 31, 2016.
EBIT and EBITDAS (unaudited)
EBIT is
defined as operating income plus our share of income in companies accounted for under the equity method. EBIT is used by management as a performance indicator because it captures the contribution to our results of the significant businesses that we
manage through our joint ventures.
EBITDAS is defined as earnings before interest, tax, depreciation, amortization net of amortization
expense capitalized to Multi-client, and share-based compensation cost. Share-based compensation includes both stock options and shares issued under our share allocation plans. EBITDAS is presented as additional information because we understand
that it is one measure used by certain investors to determine our operating cash flow and historical ability to meet debt service and capital expenditure requirements.
However, other companies may present EBIT and EBITDAS differently than we do. EBIT and EBITDAS are not a measure of financial performance
under IFRS and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measures of performance derived in
accordance with IFRS.
The following table presents a reconciliation of EBITDAS and EBIT to Net Income for the periods
indicated:
|
|
|
|
|
|
|
|
|
In millions of U.S.$
|
|
Six months ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
EBITDAS
|
|
|
24.3
|
|
|
|
123.7
|
|
Depreciation and amortization
|
|
|
(95.6
|
)
|
|
|
(133.7
|
)
|
Multi-client surveys depreciation and amortization
|
|
|
(136.6
|
)
|
|
|
(123.1
|
)
|
Depreciation and amortization capitalized to multi-client surveys
|
|
|
12.9
|
|
|
|
22.0
|
|
Stock based compensation expenses
|
|
|
(0.1
|
)
|
|
|
0.2
|
|
Operating income
|
|
|
(195.1
|
)
|
|
|
(110.9
|
)
|
Share of (income) loss in companies accounted for under equity method
|
|
|
|
|
|
|
(0.1
|
)
|
EBIT
|
|
|
(195.1
|
)
|
|
|
(111.0
|
)
|
Cost of financial debt, net
|
|
|
(95.5
|
)
|
|
|
(84.6
|
)
|
Other financial income (loss)
|
|
|
(1.1
|
)
|
|
|
(0.6
|
)
|
Total income taxes
|
|
|
(23.1
|
)
|
|
|
(12.7
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(314.8
|
)
|
|
|
(208.9
|
)
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2017, EBIT at the Group level was a loss of U.S.$195 million,
corresponding to a loss of U.S.$71 million before restructuring costs net of gain on sale of assets relating to our Transformation Plan and to a loss of U.S.$42 million excluding NOR, compared to a loss of U.S.$111 million for the
comparable period of 2016, corresponding to a loss of U.S.$104 million before restructuring costs relating to our Transformation Plan and to a loss of U.S.$55 million excluding NOR.
- 35 -
For the six months ended June 30, 2017, Group EBITDAS was U.S.$24 million, representing
4% of operating revenues, U.S.$149 million before restructuring costs net of gain on sale of assets relating to our Transformation Plan, representing 25% of operating revenues and U.S.$158 million excluding NOR, compared to
U.S.$124 million for the comparable period of 2016, representing 21% of operating revenues, U.S.$131 million before restructuring expenses relating to our Transformation Plan, representing 22% of operating revenues and
U.S.$146 million excluding NOR.
The following table presents a reconciliation of EBITDAS and EBIT to Net Income for the
periods indicated:
|
|
|
|
|
|
|
|
|
In millions of U.S.$
|
|
Three months ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
EBITDAS
|
|
|
25.3
|
|
|
|
102.1
|
|
Depreciation and amortization
|
|
|
(42.7
|
)
|
|
|
(63.8
|
)
|
Multi-client surveys depreciation and amortization
|
|
|
(88.9
|
)
|
|
|
(76.4
|
)
|
Depreciation and amortization capitalized to multi-client surveys
|
|
|
7.5
|
|
|
|
13.8
|
|
Stock based compensation expenses
|
|
|
0.6
|
|
|
|
0.2
|
|
Operating income
|
|
|
(98.2
|
)
|
|
|
(24.1
|
)
|
Share of (income) loss in companies accounted for under equity method
|
|
|
(2.5
|
)
|
|
|
(4.8
|
)
|
EBIT
|
|
|
(100.7
|
)
|
|
|
(28.9
|
)
|
Cost of financial debt, net
|
|
|
(48.7
|
)
|
|
|
(41.6
|
)
|
Other financial income (loss)
|
|
|
0.5
|
|
|
|
(2.3
|
)
|
Total income taxes
|
|
|
(20.8
|
)
|
|
|
(6.4
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(169.7
|
)
|
|
|
(79.2
|
)
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2017, EBIT at the Group level was a loss of U.S.$101 million,
corresponding to a loss of U.S.$6 million before restructuring costs net of gain on sale of assets relating to our Transformation Plan and to an income of U.S.$2 million excluding NOR, compared to a loss of U.S.$29 million,
corresponding to a loss of U.S.$27 million before restructuring costs relating to our Transformation Plan and to a loss of U.S.$5 million excluding NOR for the comparable period of 2016.
For the three months ended June 30, 2017, Group EBITDAS was at U.S.$25 million, representing 7% of operating revenues,
U.S.$120 million before restructuring costs net of gain on sale of assets relating to our Transformation Plan, representing 34% of operating revenues and U.S.$122 million excluding NOR, compared to U.S.$102 million for the comparable
period of 2016, representing 35% of operating revenues, U.S.$104 million before restructuring expenses relating to our Transformation Plan, representing 36% of operating revenues and U.S.$109 million excluding NOR.
The following table presents EBITDAS by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
In millions of U.S
|
|
Contractual
Data
Acquisition
|
|
|
Non
Operated
Resources
|
|
|
GGR
|
|
|
Equipment
|
|
|
Eliminations
and other
|
|
|
Consolidated
Total
|
|
|
Contractual
Data
Acquisition
|
|
|
Non
Operated
Resources
|
|
|
GGR
|
|
|
Equipment
|
|
|
Eliminations
and other
|
|
|
Consolidated
Total
|
|
EBITDAS
|
|
|
(26.1
|
)
|
|
|
(134.4
|
)
|
|
|
219.5
|
|
|
|
(14.2
|
)
|
|
|
(20.5
|
)
|
|
|
24.3
|
|
|
|
(4.5
|
)
|
|
|
(21.9
|
)
|
|
|
188.6
|
|
|
|
(10.5
|
)
|
|
|
(28.0
|
)
|
|
|
123.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
In millions of U.S
|
|
Contractual
Data
Acquisition
|
|
|
Non
Operated
Resources
|
|
|
GGR
|
|
|
Equipment
|
|
|
Eliminations
and other
|
|
|
Consolidated
Total
|
|
|
Contractual
Data
Acquisition
|
|
|
Non
Operated
Resources
|
|
|
GGR
|
|
|
Equipment
|
|
|
Eliminations
and other
|
|
|
Consolidated
Total
|
|
EBITDAS
|
|
|
(0.9
|
)
|
|
|
(96.7
|
)
|
|
|
139.3
|
|
|
|
(5.5
|
)
|
|
|
(10.9
|
)
|
|
|
25.3
|
|
|
|
9.4
|
|
|
|
(6.8
|
)
|
|
|
119.3
|
|
|
|
(9.3
|
)
|
|
|
(10.5
|
)
|
|
|
102.1
|
|
For the six months ended June 30, 2017,
Non-Operated
Resources
EBITDAS included U.S.$(124) million of restructuring costs net of gain on sale of assets relating to our Transformation Plan. For the six months ended June 30, 2016,
Non-Operated
Resources EBITDAS
included U.S.$(7) million of restructuring expenses relating to our Transformation Plan.
- 36 -
The following table presents a reconciliation of EBITDAS to net cash provided by operating
activities, from our cash-flow statement, for the periods indicated:
|
|
|
|
|
|
|
|
|
In millions of U.S.$
|
|
Six months ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
EBITDAS
|
|
|
24.3
|
|
|
|
123.7
|
|
Other financial income (loss)
|
|
|
(1.1
|
)
|
|
|
(0.6
|
)
|
Variance on provisions
|
|
|
(30.9
|
)
|
|
|
(82.3
|
)
|
Net gain on disposal of fixed assets
|
|
|
(27.4
|
)
|
|
|
3.2
|
|
Dividends received from affiliates
|
|
|
2.0
|
|
|
|
13.0
|
|
Other non-cash
items
|
|
|
63.0
|
|
|
|
0.4
|
|
Income taxes paid
|
|
|
1.8
|
|
|
|
(7.8
|
)
|
Change in trade accounts receivables
|
|
|
(37.6
|
)
|
|
|
340.4
|
|
Change in inventories
|
|
|
0.9
|
|
|
|
23.8
|
|
Change in other current assets
|
|
|
(5.1
|
)
|
|
|
(6.3
|
)
|
Change in trade accounts payables
|
|
|
(21.8
|
)
|
|
|
(67.4
|
)
|
Change in other current liabilities
|
|
|
19.0
|
|
|
|
(49.1
|
)
|
Impact of changes in exchange rate
|
|
|
|
|
|
|
(7.6
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
(12.9
|
)
|
|
|
283.4
|
|
|
|
|
|
|
|
|
|
|
Contractual obligations (unaudited)
The following table sets forth our future cash obligations as of June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
In millions of U.S.$
|
|
Less than 1
year
|
|
|
2-3 years
|
|
|
4-5 years
|
|
|
More than
5 years
|
|
|
Total
|
|
Financial debt
|
|
|
41.9
|
|
|
|
1,658.0
|
|
|
|
1,157.7
|
|
|
|
|
|
|
|
2,857.6
|
|
Other long-term obligations (interests)
|
|
|
114.7
|
|
|
|
252.2
|
|
|
|
107.3
|
|
|
|
|
|
|
|
474.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long term debt obligations (a)
|
|
|
156.6
|
|
|
|
1,910.2
|
|
|
|
1,265.0
|
|
|
|
|
|
|
|
3,331.8
|
|
Finance lease obligations (not discounted)
|
|
|
7.9
|
|
|
|
15.0
|
|
|
|
14.8
|
|
|
|
0.1
|
|
|
|
37.8
|
|
Operating leases
|
|
|
129.0
|
|
|
|
175.5
|
|
|
|
135.1
|
|
|
|
270.7
|
|
|
|
710.3
|
|
- Bareboat agreements (a)
|
|
|
71.9
|
|
|
|
110.9
|
|
|
|
92.4
|
|
|
|
216.9
|
|
|
|
492.1
|
|
- Other operating lease agreement
|
|
|
57.1
|
|
|
|
64.6
|
|
|
|
42.7
|
|
|
|
53.8
|
|
|
|
218.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual cash obligations (b)
|
|
|
293.5
|
|
|
|
2,100.7
|
|
|
|
1,414.9
|
|
|
|
270.8
|
|
|
|
4,079.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
For the purposes of the table above, the various components of the financial debt are presented with their normal maturities even though these debts with the exception of finance lease debt are presented entirely as
current liabilities on our consolidated statement of financial position due to the application of IAS 1
|
(a)
|
As of June 30, 2017, the aggregate amount of our off balance sheet commitment for bareboat charters for our fleet is U.S.$492.1 million. Of this amount, U.S.$410.9 million corresponded to the vessels
operated through GSS (see note 2), U.S.$17.6 million corresponded to vessels that we have already coldstacked, and U.S.$63.6 million corresponded to the vessels operated in 2017 and beyond.
|
(b)
|
Payments in foreign currencies are converted into U.S. dollars at June 30, 2017 exchange rates.
|
- 37 -
Item 3:
|
CONTROLS AND PROCEDURES
|
There has been no change in our internal control over financial
reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
THIS FORM
6-K
REPORT IS HEREBY INCORPORATED BY REFERENCE INTO THE PROSPECTUS CONTAINED IN CGGS REGISTRATION
STATEMENTS ON FORM
S-8
(REGISTRATION STATEMENT NO.
333-166250,
NO.
333-173638,
NO.
333-188120,
NO.
333-197785,
NO.
333-210768
AND NO.
333-212796)
AND SHALL BE A PART
THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.