McCOY GLOBAL INC. ANNOUNCES FIRST QUARTER RESULTS FOR 2018
EXCERPT FROM NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the three months ended March 31, 2018
1. NATURE OF OPERATIONS
McCoy Global Inc. (“McCoy”, “McCoy Global” or the “Corporation”) is incorporated and domiciled in Canada and is a leading provider
of equipment and technologies designed to support wellbore integrity and assist with collecting critical data for the global energy
industry. McCoy Global’s core products are used predominantly during the well construction phase for both land and offshore wells
during both oil and gas exploration and development
2. STATEMENT OF COMPLIANCE
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard
34, Interim Financial Reporting, as issued by the International Accounting Standards Board and should be read in conjunction with the
Corporation’s annual financial statements for the year ended December 31, 2017 which have been prepared in accordance with
International Financial Reporting Standards (“IFRS”).
The accounting policies followed in these condensed consolidated interim financial statements are consistent with those of the previous
financial year, other than those described below.
Impact of standards issued but not yet applied:
IFRS 16 Leases
IFRS 16 was issued in January 2016. It will result in almost all leases being recognized on the statement of financial position, as the
distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and
a financial liability to pay rentals are recognized. The only exceptions are short-term and low-value leases. The standard will primarily
affect the accounting for the Corporation’s operating leases. The Corporation has not yet quantified its lease related assets and
liabilities or determined the impact on operating results and the classification of cash flows. The standard is mandatory and will be
adopted by the Corporation commencing with the interim period beginning January 1, 2019
New accounting pronouncements adopted in 2018
IFRS 9 Financial Instruments
IFRS 9 replaces the provisions of lAS 39 that relates to the recognition, classification and measurement of financial assets and financial
liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. The standard was adopted on
January 1, 2018, with the only impact being with respect to revising the Corporation’s impairment methodology for its trade and other
receivables.
The Corporation applies the simplified approach to measuring expected credit losses, which uses a lifetime expected credit loss
allowance for all trade receivables. The adoption of this standard has not had a material impact on the condensed interim financial
statements.
IFRS 15 Revenue from contracts with customers
The Corporation adopted IFRS 15 Revenue from contracts with customers, effective January 1, 2018. The Corporation considered factors
such as customer contracts with unique revenue recognition considerations, the nature and type of goods and services offered, the
degree to which contracts include multiple performance obligations or variable consideration, and the pattern in which revenue is
currently recognized, among other things.
The adoption of IFRS 15 resulted in certain procedural changes in accounting for revenue, however accounting policies and the timing
of revenue recognition for all revenue streams remains the same.
Management continues to evaluate the potential measurement, transitional and disclosure impacts, if any, of other amendments to
IFRS effective January 1, 2019 and onward on the Corporation’s consolidated financial statements.
3. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The fair value of financial instruments included in working capital approximates fair value due to their short-term or demand nature.
4. RESTRUCTURING PROVISION AND CHARGES
In the first quarter of 2018, McCoy continued to move forward its strategic initiative to deliver significant operational efficiencies and
re-align the Corporation’s cost structure to a lower revenue environment. During the quarter, efforts were made to complete the:
(i) transition of McCoy’s production facility in Edmonton, Alberta to Broussard, Louisiana. This resulted in the closure of operations
in Edmonton and the ramp up of production capabilities in Broussard. Canadian customers continue to be supported as a
service and rental shop was opened in the quarter in Edmonton; and,
(ii) consolidation of McCoy’s Eastern Hemisphere operations in the UAE. McCoy will continue to support the European and Asia
Pacific regions with a lower cost structure model.