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2019 net loss for the BRGM group

Header introduction
In 2019 the BRGM EPIC activity suffered a marked downturn due to to a drop in income, particularly from contracts and agreements, both in France and abroad. Fiscal uncertainty about VAT policy led many of our major public partners to postpone the signing of significant contracts which caused difficulties for the establishment. A recovery plan was implemented.
Cameroon project field campaign. © BRGM

The BRGM EPIC closed its 2019 financial year with a net loss of €11.4 million (compared with a profit of €0.3 million in 2018). This 2019 net result is mainly due to the deterioration of two aggregate items: operating loss and financial loss (operating loss of €5.2 million, financial loss of €6.1 million, loss on extraordinary activities of €0.1 million). The operating loss in 2019 amounted to €5.2 million and was strongly marked by a drop in both production and the added value generated by projects.

With regard to operating resources, the public service subsidies decreased overall by €0.6 million (-1.2%), mainly for the "181" programme on Risk Prevention (for the record, the Stocamine project had received exceptional financing in 2018). The contracts and agreements amounted to €49.4 million at the end of 2019, down significantly compared to 2018 (-€7.2 million, i.e. -12.7%):

  • within France (-€5.8 million), the major decreases concern primarily the French Office for Biodiversity (OFB) and the Water Agencies, which represented a drop in production of €4.3 million (Water Agencies -€1.5 million and OFB -€2.8 million), illustrating in particular the difficulties in negotiating agreements with respect to the application of VAT following the tax audit of the establishment, the desire for an official position to be taken on the application of public procurement law and the reduction in the OFB's resources in the water sector. To a lesser extent, decreases in production were also noted in funding granted by the ANR and in investments for the future, research for companies and with ANDRA. Conversely, production from European H2020 financing remained particularly strong, with an increase of €0.4 million in 2019.
  • global production dropped by €1.4 million (-16%) compared to 2018, since 2018 benefited from sustained production in the Democratic Republic of the Congo with the Promine project.

The reduction in operating expenses did not offset the decline in income. In 2019, the BRGM Group incurred a net loss of €8.8 million, compared to a net profit of €1.9 million in 2018:

  • In 2019, BRGM contributed -€5.7 million to the Group’s consolidated loss, which is -€11.4 million adjusted to take account of entries for transactions with subsidiaries (mainly provisions for the depreciation of the BRGM SA subsidiary);
  • BRGM SA contributed -€3.8 million, -€3 million of which were provisions for the depreciation of the ERAMET portfolio;
  • CFG and IRIS INSTRUMENTS contributed respectively +€241,000 and +€553,000;
  • COFRAMINES and SAGEOS were close to break-even;

Along with five other public research institutes (IRSTEA, CIRAD, IFREMER, INRA and IRD), BRGM operated on behalf of the government under programme 172 of the Organic Act on Public Accounts (LOLF). BRGM also received subsidies for public service expenditure (SCSP) under programme 181, for its activities in post-mining and support to public-policy development in particular.

Change in total income and expenses

Between 2016 and 2017, the breakdown of income into "operating subsidies" and "turnover" changed when income previously allocated to signed agreements – including with local and regional authorities, and agencies – was reclassified as income from subsidies.
BRGM has implemented an action plan, including to reform the management of activities, prioritise jointly funded projects and improve its budget management system. By taking the actions planned, the institution should regain a profitable financial position.