Fugro Reports Major Developments in 1H 2013

Fugro Reports Major Developments in 1H 2013

Fugro, a leading service provider for the collection and interpretation of data relating to the earth’s surface and sub-surface and for associated services and advice in support of infrastructure development on land, along the coast and on the seabed, has recently released a report on the major developments in the first half of 2013.

On 31 January 2013, Fugro sold the majority of its Geoscience division, excluding the multi-client library and the ocean bottom node business, to CGG. The gain on the sale of the majority of the Geoscience division is EUR 204 million and is presented in these consolidated interim financial statements as discontinued operations.

The Airborne activities, as part of the divested group, will be transferred in the second half of 2013 as soon as governmental administrative formalities are finalised.

Fugro and CGG formed a seabed data acquisition joint venture called Seabed Geosolutions. This transaction was completed on 16 February 2013 and consists of a business combination of Fugro’s ocean bottom nodes activity with CGG’s ocean bottom nodes, shallow water, ocean bottom cable and permanent reservoir monitoring activities. Fugro has a 60% controlling interest in the joint venture.

Fugro is well underway with recalibrating its strategy. The review will be completed in the course of the third quarter. Several opportunities for performance improvement and growth have been identified within the existing businesses. These include geographic expansion in emerging markets and development of technologies and processes.

As of 1 January 2013, Fugro has four reportable segments. The performance of the Subsea activities is now reported separately. Previously, the Subsea activities formed part of the Survey division and their performances were reported jointly.

Solid performance in the Geotechnical and Survey divisions.

Subsea performance is similar to first half 2012 and continues to be under pressure. Specific reasons for the poor performance are caused by start-up losses in the new trenching business and the diving activities in West Africa. These issues are being addressed to improve overall performance.

The final tri-partite long term contract in Brazil is now in operation and is expected to contribute positively in the second half year.

Start of the Seabed Geosolutions business is below expectation due to start up issues and delays in contract awards.

To continue the successful survey and ROV operations in China, a ten-year extension was recently signed by Fugro to the 30-year joint venture with China Oilfield Services Ltd (COSL).

Continued and discontinued

Total revenue in the first half year of 2013 decreased by 6.5% to EUR 1,251.7 million (first half year of 2012: EUR 1,338.8 million). This is largely due to the fact that as per 31 January 2013 the majority of Fugro’s Geoscience activities were transferred to CGG.

The net result for the first six months of 2013 went up by EUR 199.8 million to EUR 314.3 million and includes the gain relating to the sale of the majority of the Geoscience division of EUR 204 million, which includes a write-off of EUR 8 million relating to a seismic technology development project.

Net profit margin (excluding the gain on the sale of the majority of the Geoscience division) was 8.8% (for the six months ended 30 June 2012: 8.6%).

The performance of the discontinued business (excluding the gain on the Geoscience divestment) in the first half of 2013 is EUR 0.9 million positive.


Revenue including multi-client sales in the first half year increased by 9.8% to EUR 1,181.0 million (first half year of 2012: EUR 1,075.5 million).

The net result from continued operations for the first six months of 2013 increased by EUR 1.8 million to EUR 109.4 million (first six months of 2012: EUR 107.6 million). The net result over the first six months 2013 includes EUR 4 million as a result of a positive change in the value of the warrant related to the vendor loan to CGG.

The first half 2013 net result for continued business is nearly the same as the first half of 2012. The EBIT of the first half 2013 is around EUR 20 million lower than the EBIT of the first half 2012 as the profit after tax for the first half of 2013 includes around EUR 17 million caused by lower financing cost and a positive contribution from the share of profit of equity accounted investees.

Multi-client sales were slower than expected.

EBIT includes an amount of EUR 18.5 million from a sale of IP licenses. This is more than offset by the loss related to the recently started trenching business of EUR 8.9 million, extraordinary costs related to the strategy review, the procedures following the whistleblower letter, etc. of EUR 5.5 million, and a EUR 15.1 million loss (100% share) in Seabed Geosolutions due to start-up delays. This amount includes EUR 3.4 million of amortisation of IP and contracts valued in the purchase price allocation for the Seabed Geosolutions joint venture.

Net profit margin was 9.4% (for the six months ended 30 June 2012: 11.1%).

The order backlog for the coming six months has strongly improved and amounts to EUR 1,227 million (30 June 2012: EUR 974 million).


Barring unforeseen circumstances, and assuming reasonably stable exchange rates, Fugro expects that the revenue from continued operations for 2013 will be around EUR 2,600 million (2012: EUR 2,400 million; both including multi-client sales) with a net result attributable to the owners of the Company of around EUR 230 million (2012: EUR 231.6 million). This excludes the net result in the sale of the majority of the Geoscience business and any possible effect of the valuation of the vendor loan warrant.

The abovementioned outlook of around EUR 230 million results in a net profit margin of 8.8% for 2013 (2012: 9.7%).

Multi-client sales started slowly in the first six months of 2013 but are expected to improve in the second half of the year.

The newly established Seabed Geosolutions joint venture is expected to continue to have weak utilisation in the shallow water and ocean bottom cable business in 2013, albeit improving in the second half of the year. The ocean bottom node business is developing well.

Continuing steady, good performance is expected in the Geotechnical and Survey divisions.

Press Release, August 13, 2013