H1 2020 results
Revenue and earnings up sharply; annual targets confirmed
Key figures for the first half of 2020
Highlights
Outlook for 2020
Paris – July 29, 2020. Gaztransport & Technigaz (GTT), an engineering and technology 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 2020.
Commenting on the results, Philippe Berterottière, Chairman and Chief Executive Officer of GTT, said: "In a context of health and economic crisis, the first half of 2020 was characterised by sustained business activity. After two years of very strong activity, LNG carrier orders remain at satisfactory levels and are accompanied by orders for floating units and onshore storage tanks that demonstrate GTT's ability to cover the entire LNG market value chain. This level of activity is reassuring as to the dynamics of the LNG market and its long-term prospects. However, GTT keeps a special focus on developments in the markets in which it operates.
In the field of LNG as fuel, the decline in fuel prices and the decline in new shipbuilding weighed on the six-month period. However, GTT continues to explore and support all possibilities for the development of this activity, which is a positive contributor to sustainable environmental improvement. In this regard, in order to highlight the importance of environmental factors in the Group's conduct, we are now adopting a new base line for our logo: "Technology for a Sustainable World".
From a financial perspective, revenue for the 1st half of 2020 benefited from the flow of orders over the last two years and results were up sharply. As a result, considering the backlog in our order book and shipbuilding schedules, we are confirming our outlook for revenues and EBITDA for the full 2020 financial year. We are also proposing an interim dividend of €2.50, in line with our long-term policy.”
Business activity
- Resumption of orders for LNG carriers
During the first half of 2020, GTT’s sales activity was marked by a number of successes, in particular in the field of LNG carriers: With 12 orders for LNG carriers booked during the first half of 2020, GTT's core business activity now stands at a very satisfactory level, particularly given the context (Covid 19 and lower energy prices) that is very unfavourable to investment decisions. All of the carriers will be equipped with GTT's recent technologies (Mark III Flex+, Mark III Flex and NO96 GW). They will be delivered between the beginning of 2022 and the end of 2023. It is worth noting, among these orders, those of two medium-capacity LNG carriers on behalf of the ship-owner "K" LINE destined for the Chinese market.
- A semester also marked by order diversification throughout the LNG chain
- New license agreement
At the end of June 2020, GTT signed a Technical Assistance and License Agreement (TALA) with the Russian yard Zvezda Shipbuilding Complex (Zvezda) for the construction of LNG carriers using GTT membrane tank systems. This contract represents another step forward in the deployment of GTT technologies in Russia. In July, five ARC7 icebreaking LNG carriers, equipped with GTT's membrane containment system, were ordered. These highly innovative and unique LNG carriers are intended for the transport of LNG produced in Russia.
- Four new service provision contracts since the beginning of the year
- Continued targeted acquisitions as part of the Group's digital strategy
Order book
Since January 1, 2020, GTT’s order book, excluding LNG as fuel, which at the time stood at 133 units, has evolved as follows:
At June 30, 2020, the order book excluding LNG as fuel, stood at 135 units, split as follows:
Regarding LNG as fuel, the number of vessels in the order book stood at 18 units as at June 30, 2020.
Change in consolidated revenues during H1 2020
(in thousands of euros) | H1 2019 | H1 2020 | |
Revenue | 122,637 | 203,767 | |
Of which royalties (new buildings) | 115,715 | 197,739 | |
From services | 6,922 | 6,027 |
Consolidated revenues for the first half of 2020 were €203.8 million, up 66.2% compared to the first half of 2019.
Analysis of the consolidated income statement for the first half of 2020
Summary consolidated income statement
(in € thousands, except earnings per share) | H1 2019 | H1 2020 |
Revenue | 122,637 | 203,767 |
Operating income before allocations for depreciation of fixed assets (EBITDA1) | 70,855 | 136,553 |
EBITDA margin (on revenue, %) | 57.8% | 67.0% |
Operating income (EBIT2) | 68,870 | 133,870 |
EBIT margin (on revenue, %) | 56.2% | 65.7% |
Net income | 56,603 | 115,527 |
Net margin (on revenue, %) | 46.2% | 56.7% |
Basic net earnings per share3 (in euros) | 1.53 | 3.12 |
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) reached €136.6 million during the first half of 2020, up 92.7% compared to the first half of 2019. The EBITDA margin on revenue increased from 57.8% in the first half of 2019 to 67.0% in the first half of 2020. External expenses were up compared to the previous half year (+28.3%), mainly due to the increase in R&D and subcontracting costs linked to the increase in business. It should be noted, however, that travel expenses were down 20.1% due to traffic restrictions related to the Covid crisis. Personnel expenses also increased by 33.2 %, reflecting the growth in incentive plans and profit-sharing and, to a lesser extent, the growth in the headcount.
Operating income totalled €133.9 million for the first half of 2020 versus €68.9 million for the first half of 2019, equivalent to a 94.4% increase.
Net income went from €56.6 million for the first half of 2019 to €115.5 million for the first half of 2020 (+104.1%) and the net margin from 46.2% to 56.7%.
Other consolidated financial data
(in thousands of euros) | H1 2019 | H1 2020 |
Investment expenditures (acquisition of fixed assets, including acquisition of Marorka) | (3,108) | (6,994) |
Dividends paid | (66,275) | (64,873) |
Cash position | 155,616 | 199,049 |
As at June 30, 2020, the Group had a positive cash position of €199 million.
Outlook for 2020
The Group has good visibility on its royalty revenues4 from now to 2023 thanks in particular to the order book for its core business as at the end of June 2020. This corresponds to revenues of 832 million euros over the 2020-20235 period (374 million euros in 20206, 266 million euros in 2021, 151 million euros in 2022 and 41 million euros in 2023).
Given the size of the backlog, and assuming there are no major delays or cancellations of orders, GTT confirms its targets for revenues and EBITDA for the 2020 financial year, i.e.:
Additionally, the Group is confirming its dividend distribution policy, i.e. for the 2020 and 2021 financial years a minimum distribution rate of 80% of consolidated net income.
Interim dividend payment
The Board of Directors meeting of July 29, 2020 decided the distribution of an interim dividend of 2.50 euro per share for the 2020 financial year, to be paid in cash according to the following schedule:
Covid-19
Health of GTT employees and their families
Although no severe cases have been identified, the Group continues to implement the recommendations of the health authorities and to update them regularly as the situation evolves.
How the Group operates
Registered office: except for employees at risk or close to a person at risk, all staff have returned to work on site.
Subsidiaries and seconded employees: same policy as the registered office, subject to local directives.
Main risks
For GTT, the main risk of the coronavirus epidemic consists of possible delays to the timetable for the construction of vessels, which may lead to a shift in the recognition of revenue from one financial year to another. On the date of this press release, GTT notes some delays, but without significant impact on revenues for 2020.
The risks related to the impact of the epidemic on the worldwide economy, and particularly on the market for LNG, are currently difficult to assess. The Group nevertheless reiterates that the LNG market is mainly based on long-term prospects and financing.
GTT's activities are therefore functioning normally, despite a particularly difficult environment. The Group closely monitors any changes that could affect the markets in which it operates.
Presentation of H1 2020 results
Philippe Berterottière, Chairman and Chief Executive Officer, and Marc Haestier, Chief Financial Officer, will comment on GTT's results, and answer questions from the financial community during a conference call in English on Thursday, July 30, 2020, 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:
Confirmation code: 4064836
This conference will also be broadcast live on GTT's website (www.gtt.fr/finance). The presentation document will be available on the website.
Financial agenda
About GTT
GTT (Gaztransport & Technigaz) is a technology and engineering company specialised in membrane containment systems 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 80 80
For further information, please consult www.gtt.fr, and, in particular, the presentation to be uploaded online for the conference of July 30, 2020.
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 filed with the AMF on April 27, 2020, and the half-year financial report released on July 29, 2020. 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
In thousands of euros | 31/12/2019 | 30/06/2020 | |
Intangible assets | 2,757 | 4,960 | |
Goodwill | 4,291 | 7,088 | |
Property, plant and equipment | 20,198 | 25,386 | |
Non-current financial assets | 5,084 | 4,187 | |
Deferred tax assets | 3,031 | 2,760 | |
Non-current assets | 35,360 | 44,381 | |
Inventories | 10,854 | 10,948 | |
Customers | 139,432 | 146,596 | |
Income tax assets | 41,771 | 31,904 | |
Other current assets | 8,496 | 8,339 | |
Current financial assets | 16 | 11 | |
Cash and cash equivalents | 169,016 | 199,049 | |
Current assets | 369,585 | 396,847 | |
TOTAL ASSETS | 404,945 | 441,228 | |
In thousands of euros | 31/12/2019 | 30/06/2020 | |
Share capital | 371 | 371 | |
Share premium | 2,932 | 2,932 | |
Treasury shares | (11) | (795) | |
Reserves | 55,614 | 134,124 | |
Net income | 143,377 | 115,536 | |
Total equity, Group share | 202,284 | 252,168 | |
Total equity - share attributable to non-controlling interests | (3) | (12) | |
Total equity | 202,280 | 252,156 | |
Non-current provisions | 5,001 | 5,282 | |
Financial liabilities - non-current part | 2,089 | 5,822 | |
Deferred tax liabilities | 120 | 106 | |
Non-current liabilities | 7,210 | 11,210 | |
Current provisions | 1,583 | 1,693 | |
Suppliers | 16,791 | 19,552 | |
Current tax debts | 6,192 | 5,328 | |
Current financial liabilities | 16 | 675 | |
Other current liabilities | 170,872 | 150,613 | |
Current liabilities | 195,454 | 177,862 | |
TOTAL EQUITY AND LIABILITIES | 404,945 | 441,228 |
Appendix 2: Consolidated income statement
In thousands of euros | H1 2019 | H1 2020 | ||
Revenue from operating activities | 122,637 | 203,767 | ||
Costs of sales | (2,627) | (2,823) | ||
External expenses | (23,932) | (30,700) | ||
Personnel expenses | (24,859) | (33,107) | ||
Tax and duties | (2,575) | (3,438) | ||
Depreciations, amortisations and provisions | (1,943) | (2,984) | ||
Other operating income and expenses | 2,281 | 3,190 | ||
Impairment following value tests | (111) | (35) | ||
Operating profit | 68,870 | 133,870 | ||
Financial income | 1 | (87) | ||
Share in the income of associated entities | - | 35 | ||
Profit before tax | 68,871 | 133,818 | ||
Income tax | (12,267) | (18,292) | ||
Net income | 56,603 | 115,527 | ||
Basic earnings per share (in euros) | 1.53 | 3.12 | ||
In thousands of euros | H1 2019 | H1 2020 | ||
Net income | 56,603 | 115,527 | ||
Items that will not be reclassified to profit or loss | ||||
Actuarial Gains and Losses | ||||
Gross amount | (624) | 139 | ||
Deferred tax | 92 | (14) | ||
Total amount, net of tax | (532) | 125 | ||
Items that may be reclassified subsequently to profit or loss | ||||
Conversion differences | 27 | (57) | ||
Other comprehensive income for the year, net of tax | (505) | 68 | ||
Comprehensive income | 56,098 | 115,595 |
Appendix 3: Consolidated cash flow statement
(in thousands of euros) | H1 2019 | H1 2020 | ||||
Group profit for the year | 56,603 | 116,129 | ||||
Removal of income and expenses with no cash impact: | ||||||
Allocation (Reversal) of amortisation, depreciation, provisions and impairment | (723) | 2,763 | ||||
Proceeds on disposal of assets | - | - | ||||
Financial expense (income) | (1) | 87 | ||||
Tax expense (income) for the financial year | 12,267 | 17,655 | ||||
Free shares | 822 | 1,419 | ||||
Cash-flow | 68,969 | 138,052 | ||||
Tax paid out in the financial year | (10,170) | (8,422) | ||||
Change in working capital requirement: | ||||||
- Inventories and works in progress | (1,770) | (23) | ||||
- Trade and other receivables | (1,585) | (6,371) | ||||
- Trade and other payables | 1,719 | 1,517 | ||||
- Other operating assets and liabilities | (3,911) | (21,180) | ||||
Net cash-flow generated by the business (Total I) | 53,252 | 103,573 | ||||
Investment operations | ||||||
Acquisition of non-current assets | (3,108) | (4,426) | ||||
Disposal of non-current assets | - | - | ||||
Control acquired on subsidiaries net of cash and cash equivalents acquired | (0) | (2,568) | ||||
Financial investments | (1,839) | (5) | ||||
Disposal of financial assets | 28 | 804 | ||||
Treasury shares | 582 | (2,189) | ||||
Change in other fixed financial assets | - | 47 | ||||
Net cash-flow from investment operations (Total II) | (4,338) | (8,338) | ||||
Financing operations | ||||||
Dividends paid to shareholders | (66,275) | (64,789) | ||||
Repayment of financial liabilities | (46) | (375) | ||||
Increase of financial liabilities | 3 | (11) | ||||
Interest paid | (25) | (18) | ||||
Interest received | 124 | 115 | ||||
Change in bank lending | (172) | - | ||||
Net cash-flow from finance operations (Total III) | (66,390) | (65,079) | ||||
Effect of changes in currency prices (Total IV) | (88) | (125) | ||||
Change in cash (I+II+III+IV) | (17,564) | 30,033 | ||||
Opening cash | 173,179 | 169,016 | ||||
Closing cash | 155,616 | 199,049 | ||||
Cash change | (17,564) | 30,033 |
Appendix 4: Consolidated revenue breakdown
In thousands of euros | H1 2019 | H1 2020 | |
Revenue | 122,637 | 203,767 | |
Royalties (newbuilt) | 115,715 | 197,739 | |
LNG carriers/VLEC | 95,625 | 176,203 | |
FSRU | 12,709 | 14,254 | |
FLNG | 2,546 | 2,530 | |
Onshore storage | 1,355 | - | |
GBS | - | 1,020 | |
Barges | 349 | - | |
LNG Fuel | 3,131 | 3,733 | |
Services | 6,922 | 6,027 |
Appendix 5: 10 year order estimates
In units | Order estimates* | |
LNG carriers Ethane carriers | 285-315** 25-40 | |
FSRU | 10-20 | |
FLNG | Up to 5 | |
Onshore storage tanks and GBSs | 15-20 |
* 2020-2029 period. The Company points out that the number of new orders may see large-scale variations from one semester to another and even one year to another without the fundamentals on which its business model is based being called into question.
** Includes the replacement market.
1 EBITDA defined as EBIT before amortisation and impairment of fixed assets.
2 EBIT means "Earnings Before Interest and Tax”.
3 For the first half of 2020, earnings per share were calculated based on the weighted average number of shares outstanding (excluding treasury shares), i.e. 37,064,997 shares.
4 Royalties from core business, i.e. excluding LNG fuel and services. Of which 194 million euros recognised for the first half of 2020.
5 Of which 194 million euros recognised for the first half of 2020.
Attachment