GTT: 2018 first-half results - Many orders received, new success in LNG fuel and solid financial performance

2018 first-half results
Many orders received, new success in LNG fuel and solid financial performance

Key figures for the first half of 2018

• 21 orders received during the first six months of the year
• 12% growth in revenues linked to royalties
• Interim dividend payment of 1.33 euro per share

Highlights

• LNG market strong
• Growth in LNG fuel^[1]
• New partnerships

Outlook

• Confirmation of revenue, EBITDA and dividend objectives

             
Paris - July 26, 2018. Gaztransport & Technigaz (GTT), an engineering company specialised in the design of membrane containment systems for maritime transportation and storage of liquefied gas, hereby presents its results for the first half of 2018.

Summarised consolidated income statement for H1 2018

Commenting on these results, Philippe Berterottière, Chairman and CEO of GTT, declared: "The first half of 2018 was characterised by the growth in the LNG market, with a very satisfying number of orders for LNG carriers, which confirms the trends that began last year. In the field of LNG fuel, the success recorded by GTT confirmed the attraction of ship-owners for its membrane technologies. After the order for nine giant container carriers from CMA CGM at the end of last year, in January the Group obtained one order for a bunker ship to be operated by TOTAL to supply the LNG to these container carriers. In early July, GTT obtained a major success with the order of LNG tanks intended for the future Ponant icebreaker cruiser. In this particular case, GTT will be responsible for the construction of these tanks, thereby offering its partners a true turnkey solution.
From a financial perspective, the cost reductions implemented in 2017 place us in a favourable position to manage closely the effects of the increase in activity. These elements lead us to confirm our revenues, EBITDA and dividend objectives for FY 2018 as a whole."

Business activity

• Main "vessel" activity

During the first half of 2018, GTT's sales activity was marked by a number of successes, in particular in the field of LNG carriers:

• 18 orders for LNG carrier tank design. These vessels are most often intended for liquefaction projects in construction, in particular in the USA. They will all be equipped with recent GTT technologies (NO 96 GW, Mark III Flex and Mark III Flex+);

                         
                        To that can be added three orders for LNG carriers recorded from 1^st to 26 July 2018 from SHI and HSHI.
                         

• two orders for FSRU tank designs. The pace of these orders is consistent with the Group's forecasts. The new LNG importer countries continue to favour these regasification vessels that are a flexible and economical solution.
   

• LNG fuel activity
   
  • One order for a bunker ship with a capacity of 18,600 m³. It will be equipped with the Mark III Flex technology and built at the Chinese shipyard Hudong Zhonghua. Positioned in northern Europe, its purpose will be in particular to supply LNG for the future CMA CGM container carriers. It will be operated by the Mitsui OSK Lines Ltd. ship owner and chartered by the dedicated bunker subsidiary Total Marine Fuels Global Solutions (TMFGS).
     
  • In July 2018, GTT also recorded one order from Vard to build LNG tanks for the PONANT Icebreaker, the first LNG-powered cruiser icebreaker. This is a new step in the development of the LNG fuel activity, as it is an especially new and environmentally-friendly vessel.
     
• New TALA (Technical Assistance and License Agreement)
   
  • In April 2018, GTT signed a Technical Assistance and License Agreement (TALA) with Sembcorp Marine, a company based in Singapore, to design and build FSRUs,average-size LNG carriers and Sembcorp Marine's Gravifloat platforms using GTT's membrane containment systems.
     
• Services: engineering studies on new projects for GBS terminals
   
  • Two FEED (Front End Engineering Design). GTT was mandated by two large companies to conduct preliminary engineering studies on new GBS (Gravity Based System) terminal projects. The first project, signed with a European EPC, concerns a large liquefication unit including several concrete chambers with liquefied gas membrane confinement tanks.  The second project, carried out by an Asian partner to supply energy to an island, concerns a smaller metallic GBS chamber.

Order book

Since January 1, 2018, GTT's order book - which comprised 89 units at the time - has changed as follows:

• 25 deliveries:
  • 24 LNG carriers
  • 1 FSRUs
• 20 orders received:
  • 18 LNG carriers
  • 2 FSRUs

             
At June 30, 2018, the order book stood at 84 units:

• 66 LNG carriers
• 13 FSRUs
• 2 FLNGs
• 2 onshore storage tanks
• 1 barge

In addition, as part of its LNG fuel activity, GTT received, in the first half of 2018, an order to equip a bunker ship, in addition to the 9 container carriers signed in 2017.

Change in consolidated revenues during H1 2018

Revenues totalled 127.2 million euros at June 30, 2018, compared with 113.7 million euros at
June 30, 2017, i.e. an 11.9% increase over the period.

• Revenues linked to royalties for the first half of 2018 were 120.4 million euros, up by 12.2% from the first half of 2017. LNG carriers were up by 12.4%, totalling 104.9 million euros, and FSRU royalties were grew by 37.9% to 14.3 million euros. Other royalties amounting to 1.2 million euros were derived from FLNGs and the bunker barge.
• Revenues linked to services grew by 7.1% over the first six months. In the second quarter, the Services activity benefited from the growth in engineering studies and the contribution from Ascenz business, thereby compensating the delay recorded in the 1^st quarter.

Analysis of the consolidated income statement

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) reached 84.2 million euros during the first half of 2018, up 8.8% compared to the first half of 2017. The EBITDA margin on revenues went from 68.0% in the first half of 2017 to 66.1% in the first half of 2018, mainly due to the decrease in the research tax credit (CIR); the Group had in fact benefited in the first half of 2017 from a non-recurring CIR profit for claims on prior years.

Operating income amounted to 82.4 million euros for the first half of 2018 versus 75.4 million euros for the first half of 2017, a 9.3% increase.

Net income increased from 63.1 million euros for the first half of 2017 to 75.7 million euros for the first half of 2018 and the net margin grew from 55.5% to 59.5%.

The growth in net income is explained by a good management of operating expenses, particularly out-sourcing, transport and fee items, as well by as a one-off decrease in income tax following the favourable outcome of the claim filed by GTT S.A. in relation to the cancellation of the 3% tax on dividends.

Other consolidated financial data

As at June 30, 2018, the Group had a positive cash position of 125.3 million euros.

Outlook

The Group has visibility concerning its royalties revenues up to 2022 based on its order book at the end of June 2018. In the absence of any significant order delays or cancellations, this corresponds to a revenue of 554 million euros^[6] for the 2018-2022^[7] period (228 million euros⁶ in 2018, 201 million euros in 2019, 102 million euros in 2020, 22 million euros in 2021 and 1 million euros in 2022).

Based on these items, the Group confirms its objectives for the 2018 financial year, i.e.: 

·       2018 consolidated revenues of 235 to 250 million euros;

·       2018 consolidated EBITDA^[8] for 2018 within a range of 145 to 155 million euros;

·       a 2018 dividend^[9] amount at least equivalent to the ones paid in 2015, 2016 and 2017 and, for 2019, a minimum payout rate of at least 80% of distributable net income.

Interim dividend payment

The Board of Directors of July 26, 2018 decided the distribution of an interim dividend of 1.33 euro per share for the 2018 financial year, to be paid in cash according to the following schedule:

• September 26, 2018: Ex-dividend date;
• September 28, 2018: Payment date.

Presentation of H1 2018 results

Philippe Berterottière, Chairman and Chief Executive Officer, and Marc Haestier, Chief Financial Officer, will comment on GTT's annual results, and answer questions from the financial community during a conference call in English on Friday, July 27, 2018, at 8:30 a.m. Paris Time.
To participate in the conference call, please dial one of the following numbers five to ten minutes before the start of the conference:

• France: + 33 1 70 72 25 50
• United Kingdom: + 44 330 336 9125
• United States: + 1 929 477 0448

Confirmation code: 8710082

This conference call will also be broadcast live on GTT's website (www.gtt.fr) in listen-only mode (webcast). The presentation document will be available on the website.

Financial agenda

• Payment of an interim dividend of 1.33 euro per share for the 2018 financial year: September 28, 2018
• Publication of the Q3 2018 revenues: October 26, 2018 (after closing)

About GTT
GTT (Gaztransport & Technigaz) is an engineering company expert in containment systems with cryogenic membranes used to transport and store liquefied gas, in particular LNG (Liquefied Natural Gas). For over 50 years, GTT has been maintaining reliable relationships with all stakeholders of the gas industry (shipyards, ship-owners, gas companies, terminal operators, classification societies). The Company designs and provides technologies which combine operational efficiency and safety, to equip LNG carriers, floating terminals, and multi-gas carriers. GTT also develops solutions dedicated to land storage and to the use of LNG as fuel for vessel propulsion, as well as a full range of services.

GTT is listed on Euronext Paris, Compartment A (ISIN FR0011726835, Euronext Paris: GTT) and is notably included in the SBF 120 and MSCI Small Cap indexes.

Investor Relations Contact

information-financiere@gtt.fr / +33 1 30 23 20 87

Press Contact

press@gtt.fr / +33 1 30 23 42 26 / + 33 1 30 23 47 31

For further information, please consult www.gtt.fr/en, and, in particular, the presentation to be uploaded online for the conference call of July 27, 2018.

Important notice
The figures presented here are those customarily used and communicated to the markets by GTT. This message includes forward-looking information and statements. Such statements include financial projections and estimates, the assumptions on which they are based, as well as statements about projects, objectives and expectations regarding future operations, profits, or services, or future performance. Although GTT management believes that these forward-looking statements are reasonable, investors and GTT shareholders should be aware that such forward-looking information and statements are subject to many risks and uncertainties that are generally difficult to predict and beyond the control of GTT, and may cause results and developments to differ significantly from those expressed, implied or predicted in the forward-looking statements or information. Such risks include those explained or identified in the public documents filed by GTT with the French Financial Markets Authority (AMF - Autorité des Marchés Financiers), including those listed in the "Risk Factors" section of the GTT Registration Document (in French) registered with the AMF on April 27, 2017 under number R.17-030, and the half-yearly financial report released on July 20, 2017. Investors and GTT shareholders should note that if some or all of these risks are realised they may have a significant unfavourable impact on GTT.

Appendices (Consolidated IFRS financial statements)

Appendix 1: Consolidated balance sheet

Appendix 2: Consolidated income statement

Appendix 3: Consolidated cash flow statement

Appendix 4: Consolidated revenues breakdown

Appendix 5: 10 year order estimates

⁽¹⁾ Over 2018-2027. The Company points out that the number of new orders may see large-scale variations from one quarter to another and even one year to another without the fundamentals on which its business model is based being called into question.