Earnings Release • Feb 26, 2019
Earnings Release
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Paris, 26 February 2019 - GTT (Gaztransport & Technigaz) – an engineering company specialised in the design of membrane containment systems for maritime transportation and storage of liquefied gas – hereby presents its results for FY2018.
Philippe Berterottière, Chairman & CEO of GTT, made the following statement: "With 50 orders for LNG carriers and FSRUs, 2018 stands out as the best year of the decade for our core business, thus confirming our vision of market needs. The strong growth in LNG demand throughout the past two years, in particular in Asia, shows the current ongoing dynamics of the LNG market. The pace of future orders will notably depend on FIDs in new liquefaction trains.
On the promising market of LNG fuel, we achieved further successes, which once again confirmed our ability to meet the needs of ship-owners in this area. Less than a year away from the Global Sulphur Cap, and in an increasingly stringent regulatory environment, especially in the main trading ports, the interest of ship-owners for our LNG propulsion solutions is becoming clear. In conjunction with our partners, we are continuing our efforts to become a long-term player in this new ecosystem. I wish to reiterate that, beyond the benefits for GTT, the adoption of LNG as a fuel for merchant vessels is a major step forward for the planet in terms of reducing polluting emissions.
1 Subject to approval by the Shareholders' Meeting of 23 May 2019.
2 EBITDA: earnings before interest, taxes, depreciation and amortisation, in accordance with IFRS.
3 Subject to approval by the Shareholders' Meeting of 23 May 2019 and the amount of distributable profits in the corporate financial statements of GTT SA.
For our new activities, as well as for our core activities, we are continuing to prepare the future by developing new variants of our flagship technologies, such as NO96 Flex, and by creating new ones, such as LNG Brick®. The Group anticipates, for 2019, an increase of around 25% of its R&D expenses. Consequently, 2019 will be a year of innovation for GTT.
We will also continue to develop our service offering, particularly in the field of Smart Shipping.
Concerning our outlook for the year in progress, given our healthy order book in 2018 and for the beginning of 2019, as well as the efforts made by the Group to prepare the future, we expect our 2019 consolidated revenue to be between €255 million and €270 million, with consolidated EBITDA between €150 million and €160 million. Furthermore, we maintain our commitment to pay out dividends amounting to at least 80% of our net income4 for FY2019 and FY2020."
With 50 ship orders in 2018, GTT sales hit a ten-year high.
o In September 2018, GTT received an order from CERN (the European Organization for Nuclear Research) for the design of the containment system of a 12,500 m3 onshore storage tank for liquid argon intended for experimental purposes.
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4 Consolidated net income, subject to the amount of distributable profits in the corporate financial statements GTT SA, and subject to approval by the next Shareholders' Meeting
o In the third quarter, GTT obtained an approval in principle from the Bureau Veritas certification agency for the development of a new NO96-type cargo containment system. Called NO96 Flex, this new system has the benefits of the proven NO96 technology, as well as benefiting from the use of foam panels, which reduce the boiloff gas rate to 0.07%V per day, i.e. a level in line with that of GTT's most efficient technologies.
Since 1 January 2018, GTT's order book5 – which comprised 89 units at the time – has changed as follows:
At 31 December 2018, the order book comprised 97 units, of which:
Moreover, in 2018, in the field of LNG Fuel, GTT received an order to equip a bunker ship and an order to equip the Commandant Charcot Icebreaker cruise ship, bringing to 11 the number of units recorded in its LNG order book to 31 December 2018.
GTT has been publishing consolidated financial statements since FY2017. The consolidated subsidiaries are the following: Cryovision, Cryometrics, GTT Training, GTT North America, GTT South East Asia and Ascenz. The first five are wholly owned by GTT, while Ascenz is 75% held. All of the subsidiaries are fully consolidated. Moreover, following the adoption of IFRS 15 on 1 January, 2018 and to make the 2018 IFRS consolidated financial statements easier to read, the Group's 2017 data is presented proforma in accordance with IFRS 15.
| (in thousands of euros) | Proforma 2017 | 2018 | Change |
|---|---|---|---|
| Revenue | 240,801 | 245,987 | +2.2% |
| Of which newbuilds | 227,590 | 231,505 | +1.7% |
| From services | 13,211 | 14,481 | +9.6% |
Consolidated revenue amounted to €246.0 million in 2018, compared to €240.8 million in 2017, representing an increase of 2.2% over the period.
5 Excluding LNG fuel
6 Including the conversion of a LNGC order in FSRU
| (in € thousands, except earnings per share) | Proforma | 2018 | Change |
|---|---|---|---|
| 2017 | |||
| Revenue | 240,801 | 245,987 | +2.2% |
| EBITDA | 151,259 | 168,699 | 11.5% |
| EBITDA7 margin (on revenue, %) | 62.8% | 68.6% | |
| Operating income (EBIT) | 147,516 | 159,901 | +8.4% |
| EBIT margin (on revenue, %) | 61.3% | 65.0% | |
| Net income | 124,034 | 142,800 | +15.1% |
| Net margin (on revenue, %) | 51.5% | 58.1% | |
| Basic net earnings per 8 share in euros |
3.35 | 3.85 |
Net income reached €142.8 million in FY2018, up 15.1% compared to the previous year. The net margin amounted to 58.1%.
The change in net income compared to 2017 is mainly attributable to non-recurring items, in particular the 2018 reversal of a tax risk provision of €15.2 million booked in 2017, and tax income of €5.7 million following a claim relating to the tax on dividends during 2015 and 2016.
Excluding these non-recurring items, net income would amount to €127.2 million in 2018, and the net margin would reduce from 58.1% to 51.7%.
Operating expenses increased by €9.9 million, of which €3.7 million due to the change in scope following the acquisition of Ascenz, €2.1 million from the rise in sub-contracting expenses on a likefor-like basis, and €1 million from an increased in fees, particularly for patent filings.
| (in thousands of euros) | Proforma 2017 |
2018 | Change |
|---|---|---|---|
| Capital expenditure | |||
| (including the acquisition of Ascenz in | (3,434) | (11,819) | ns |
| 2018) | |||
| Dividends paid | (98,592) | (98,549) | -1.0% |
| Cash position | 99,890 | 173,179 | +73.4% |
At 31 December 2018, the Company's net cash position amounted to €173.2 million. This increase is mainly due to the change in working capital.
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7 EBITDA: earnings before interest, taxes, depreciation and amortization, in accordance with IFRS. 8 The calculation of net earnings per share is based on the weighted average number of shares outstanding, i.e. 37,052,681 shares at 31 December 2017 and 37,043,099
shares at 31 December 2018.
On 26 February 2019, after approving the financial statements, the Board of Directors decided to propose the payout of a dividend of €3.12 per share in respect of FY2018. This dividend, payable in cash, is subject to approval by the Shareholders' Meeting of May 23, 2019. As an interim dividend of €1.33 per share was paid on 28 September 2018 (in accordance with the Board decision of 26 July 2018), the payment of the outstanding balance, i.e. €1.79 per share, will take place on 29 May 2019 (ex- dividend date for the remainder of the dividend: 27 May 2019). The proposed dividend corresponds to a payout ratio of 80% of distributable profits.
Moreover, in accordance with the indications given by the Company upon its IPO, an interim dividend should be paid out in September 2019 in respect of FY2019.
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The Company has visibility as regards its revenue from royalties out to 2021 based on its order book at the end of 2018. In the absence of any significant order delays or cancellations, this corresponds to a revenue of €524 million for the 2019-20219 period (€251 million in 2019, €224 million in 2020, €49 million in 2021 and €49 million in 2021).
In a highly favourable environment for the LNG market, GTT is confirming its innovation strategy aimed at optimising its technologies marketed within the scope of its core business, and its growth strategy for LNG fuel and services. To this effect, the Group has decided to step up its efforts, particularly in 2019, in innovation and research & development.
On that basis, the Group:
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9 Royalties from the main business line, i.e. excluding LNG fuel and services , in accordance with IFRS 15.
10 EBITDA: earnings before interest, taxes, depreciation and amortization, in accordance with IFRS.
11 Subject to approval by the Shareholders' Meeting and the distributable profits in the corporate financial statements of GTT SA.
Philippe Berterottière, Chairman & CEO, and Marc Haestier, CFO, will comment on GTT's annual results, and will answer questions from the financial community during a conference call in English on Wednesday 27 February 2019, 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: 8382024
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.
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.
[email protected] / +33 1 30 23 20 87
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[email protected] / +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 27 February 2019.
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GTT's full-year IFRS financial statements have been audited, The auditor's report will be issued before the company's registration document is filed with the AMF scheduled for end-April 2019.
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 25 April 2018, and the half-year financial report released on 26 July 26 2018. 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.
| Proforma | ||
|---|---|---|
| In thousands of euros | December 31, | December 31, |
| 2017 | 2018 | |
| Intangible assets | 1,097 | 2,457 |
| Goodwill | - | 4,291 |
| Property, plant and equipment | 17,483 | 16,634 |
| Non-current financial assets | 3,240 | 3,158 |
| Deferred tax assets | 1,784 | 3,049 |
| Non-current assets | 23,605 | 29,590 |
| Inventories | 6,682 | 7,394 |
| Customers | 110,461 | 96,006 |
| Income tax assets | 18,975 | 34,079 |
| Other current assets | 5,098 | 6,556 |
| Financial current assets | - | 16 |
| Total cash and cash equivalent | 99,890 | 173,179 |
| Current assets | 241,105 | 317,229 |
| TOTAL ASSETS | 264,710 | 346,819 |
| In thousands of euros | Proforma December 31, |
December 31, 2018 |
|---|---|---|
| 2017 | ||
| Share capital | 371 | 371 |
| Share premium | 2,932 | 2,932 |
| Treasury shares | -3,728 | -1,529 |
| Reserves | 11,301 | 34,852 |
| Net income | 124,034 | 142,798 |
| Total equity - Group share | 134,910 | 179,424 |
| Total equity - share attributable to non-controlling | - | 17 |
| interests | ||
| Total equity | 134,910 | 179,441 |
| Non-current provisions | 3,967 | 4,075 |
| Financial liabilities - non-current part | 244 | 2,100 |
| Deferred tax liabilities | 222 | 210 |
| Non-current liabilities | 4,433 | 6,385 |
| Current provision | 15,604 | 3,372 |
| Suppliers | 10,574 | 11,483 |
| Current tax debts | 6,194 | 6,988 |
| Current financial liabilities | 379 | 337 |
| Other current liabilities | 92,617 | 138,813 |
| Current liabilities | 125,367 | 160,993 |
| TOTAL EQUITY AND LIABILITIES | 264,710 | 346,819 |
| In thousands of euros | Proforma 2017 | 2018 |
|---|---|---|
| Revenue from operating activities | 240,801 | 245,987 |
| Costs of sales | -1,830 | -2,998 |
| External expenses | -36,806 | -40,951 |
| Personnel expenses | -41,191 | -45,817 |
| Taxes | -4,183 | -4,325 |
| Depreciations, amortisations and provisions | -16,807 | 8,874 |
| Other operating income and expenses | 7,927 | 4,632 |
| Impairment following value tests | -394 | -5,502 |
| Operating profit | 147,516 | 159,901 |
| Financial income | 423 | 55 |
| Profit before tax | 147,939 | 159,956 |
| Income tax | -23,906 | -17,156 |
| Net income | 124,034 | 142,800 |
| Net income, Group share | 124,034 | 142,798 |
| Net income attributable to non-controlling interests |
- | 2 |
| Basic earnings per share (in euros) | 3.35 | 3.85 |
| Diluted earnings per share (in euros) | 3.34 | 3.84 |
| In thousands of euros | Proforma 2017 | 2018 |
|---|---|---|
| Net income | 124,034 | 142,800 |
| Items that will not be reclassified to profit | ||
| or loss | ||
| Actuarial Gains and Losses | ||
| Gross amount | 300 | 126 |
| Deferred tax | -45 | -19 |
| Total amount, net of tax | 255 | 107 |
| Items that may be reclassified subsequently | ||
| to profit or loss | ||
| Conversion differences | -59 | 139 |
| Other comprehensive income for the year, net of tax |
196 | 246 |
| Income statement | 124,230 | 143,046 |
| (In thousands of euros) | Proforma 2017 | 2018 |
|---|---|---|
| Group profit for the year | 124,034 | 142,800 |
| Removal of income and expenses with no cash impact Allocation (Reversal) of amortisation, depreciation, provisions |
||
| and impairment | 17,368 | -3,180 |
| Proceeds on disposal of assets | - | 191 |
| Financial expense (income) | -423 | -55 |
| Tax expense (income) for the financial year | 23,906 | 17,156 |
| Free shares | 830 | 266 |
| Cash-flow | 165,714 | 157,177 |
| Tax paid out in the financial year | -18,274 | -33,199 |
| Change in working capital requirement: | ||
| -Inventories and works in progress | 47 | -466 |
| -Trade and other receivables | -23,357 | 15,122 |
| -Trade and other payables | 1,997 | 545 |
| -Other operating assets and liabilities | -9,601 | 45,076 |
| Net cash-flow generated by the business (Total I) | 116,526 | 184,255 |
| Investment operations | ||
| Acquisition of non-current assets | -3,434 | -2,890 |
| Disposal of non-current assets | - | - |
| Control acquired on subsidiaries net of cash and cash | ||
| equivalents acquired | - | -8,929 |
| Financial investments | -2,821 | -6,637 |
| Disposal of financial assets | 13,257 | 6,645 |
| Treasury shares | -3,005 | -6 |
| Change in other fixed financial assets | - | 15 |
| Net cash-flow from investment operations (Total II) | 3,957 | -11,802 |
| Financing operations | ||
| Dividends paid to shareholders | -98,592 | -98,549 |
| Repayment of financial liabilities | -488 | -919 |
| Increase of financial liabilities | 13 | 40 |
| Interest paid | -34 | -31 |
| Interest received | 366 | 178 |
| Change in bank lending | - | -57 |
| Net cash-flow from finance operations (Total III) |
-98,736 | -99,338 |
| Effect of changes in currency prices (Total IV) | -65 | 174 |
| Change in cash (I+II+III+IV) | 21,681 | 73,290 |
| Opening cash | 78,209 | 99,890 |
| Closing cash | 99,890 | 173,179 |
| Cash change | 21,681 | 73,290 |
| In thousands of euros | Proforma 2017 | 2018 |
|---|---|---|
| Revenue | 240,801 | 245,987 |
| of which new builts (royalties) | 227,590 | 231,505 |
| LNG carriers/VLEC | 203,060 | 198,778 |
| FSRU | 19,212 | 25,087 |
| FLNG | 3,397 | 3,605 |
| Onshore storage | 1,535 | 1,433 |
| Barges | 386 | 962 |
| LNG Fuel | 0 | 1,640 |
| Services | 13,211 | 14,481 |
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| In units | Order estimates (1) |
|---|---|
| LNGC Carriers/VLEC | 280-310 |
| FSRU | 30-40 |
| FLNG | 5 |
| Onshore storage tanks and GBSs | 10-15 |
(1) 2019-2028 period. 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.
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