GTT: 2024 HALF YEAR FINANCIAL REPORT

Contents

DECLARATION BY THE PERSON RESPONSIBLE................................................................ 3

HALF-YEAR ACTIVITY REPORT............................................................................................ 4

1. HIGHLIGHTS OF THE FIRST-HALF................................................................................................ 4

2. SUBSIDIARIES’ ACTIVITY............................................................................................................ 7

3. ANALYSIS OF THE CONSOLIDATED RESULTS FOR THE FIRST HALF OF 2024.................................. 9

4. ANALYSIS OF GTT’S STATEMENT OF FINANCIAL POSITION....................................................... 14

5. 2024 OBJECTIVES CONFIRMED.................................................................................................. 17

6. INTERIM DIVIDEND................................................................................................................... 17

7. RELATED-PARTY TRANSACTIONS.............................................................................................. 17

RISK FACTORS......................................................................................................................... 17

CONDENSED HALF-YEAR FINANCIAL STATEMENTS.................................................... 18

STATUTORY AUDITORS’ REVIEW REPORT ON THE HALF-YEARLY FINANCIAL ........

INFORMATION......................................................................................................................... 41

DECLARATION BY THE PERSON RESPONSIBLE

“I certify, to the best of my knowledge, that the financial information prepared in accordance with IFRS for the past half-year has been prepared in accordance with the applicable accounting standards and gives a true and fair view of the Group’s assets, financial situation and results, and that the accompanying half-year activity report presents a true and fair view of the significant events that occurred during the first six months of the financial year, their impact on the financial statements, the main related-party transactions as well as a description of the main risks and uncertainties for the remaining six months of the financial yearˮ.  

July 25, 2024

Jean-Baptiste Choimet, Chief Executive Officer

HALF-YEAR ACTIVITY REPORT

HIGHLIGHTS OF THE FIRST-HALF

1/ Group business activity in the first half of 2024

-       Continued momentum in orders for the core business

Following two record years in terms of order intake in 2022 and 2023, GTT booked 52 orders for LNG carriers in the first half of 2024, including 18 very-large capacity LNG carriers (271,000 m³). Deliveries are scheduled between 2026 and 2031. 

GTT also received four orders for large-capacity ethane carriers, which will be delivered in 2026 and 2027, as well as one FSRU order and one FLNG order.

-       Services to vessels in operation: new contracts

In January 2024, GTT signed two new technical services contracts with JOVO, a large energy supplier based in China. These contracts relate to the provision of operational assistance and support by GTT for LNG carriers operated by JOVO.

-       Digital solutions: new contracts, new certification and new acquisition

During the first half of 2024, the Group achieved new commercial successes. In particular, Ascenz

Marorka’s weather routing solution was chosen to equip several vessels of the Latsco shipping company’s fleet.

Moreover, Ascenz Marorka has been granted “cybersecurity” certification approval for its digital solutions by the classification society, Bureau Veritas.

Lastly, as a reminder, on February 25, 2024, GTT acquired the Danish company VPS (Vessel Performance Solutions), which specialises in vessel performance management. This acquisition complements the expertise of GTT and its subsidiary Ascenz Marorka in the field of smart shipping, with its innovative solutions based notably on the analysis of operational data from vessels, captured without on-board sensors. The systems designed by VPS now equip more than 1,200 vessels around the world. 

-       Elogen pursues its development

At the end of January 2024, Elogen began the construction of its electrolysers’ stacks manufacturing plant (or “gigafactory”) in Vendôme, which is largely funded by the IPCEI (Important Projects of Common European Interest) scheme.  

In addition, Elogen has obtained from the Korea Gas Safety Corporation (KGS) certification for its stacks, which are key components of its electrolysers for hydrogen production. This certification, valid for a period of three years, attests to the conformity of the products to the rigorous safety and quality standards set by the KGS. This recognition paves the way for the continued commercial deployment of Elogen on the Korean market.

-       Innovation: Development of new technologies

As part of a joint development project between GTT, TotalEnergies, LMG Marin and Bureau Veritas, aimed at developing a concept for a liquid hydrogen carrier with capacity of 150,000 m³, in January 2024, GTT received two approvals in principle from Bureau Veritas: one for the design of a cryogenic membrane containment system for liquefied hydrogen, and the other for the preliminary design of the hydrogen carrier. These approvals mark the first major achievement in the development of a liquid hydrogen transport sector.

In June 2024, GTT also received two major approvals from Bureau Veritas and Lloyd’s Register for GTT NEXT1, its latest generation LNG containment technology. This state-of-the-art solution combines the best of GTT’s technologies to deliver optimal performance and enhanced reliability for LNG transport. With these two approvals, GTT’s GTT NEXT1 technology is now ready for commercial deployment.

-       GTT Strategic Ventures

During the first half of 2024, the GTT investment fund acquired minority stakes in three companies:

-       Energo, the French technological expert in the production of synthetic molecules using plasma catalysis. Energo is developing a disruptive technology to produce renewable energies such as green hydrogen, biofuels or methane from CO₂, biogas and ammonia.

-       CryoCollect, a French engineering company specialising in technologies for the treatment, liquefaction and separation of gases such as biomethane, carbon dioxide or hydrogen.

-       Seaber.io, a Finnish software company specialising in the digitalisation of scheduling and chartering processes for bulk shipping. Seaber.io offers scenario simulation tools that enable ship-owners and charterers to make informed operational decisions, by assessing potential impacts on costs and operational performance.

Order book as of June 30, 2024

As of January 1, 2024, GTT’s order book excluding LNG as fuel comprised 311 units. The following changes have occurred since January 1:

-       Deliveries completed: 23 LNG carriers, 4 onshore storage tanks;

-       Orders received: 52 LNG carriers, 4 ethane carriers, 1 FSRU and 1 FLNG.

As of June 30, 2024, the order book, excluding LNG as fuel, stood at 342 units, breaking down as follows: 

-       325 LNG carriers;

-       8 ethane carriers;

-       2 FSRU;

-       2 FLNG;

-       5 onshore storage tanks.

Regarding LNG as fuel, with the delivery of 20 vessels, there were 56 vessels on in the order book as of June 30, 2024.

2/ Combined annual shareholder meeting

The combined shareholders’ Annual General Meeting (AGM) of GTT (Gaztransport & Technigaz) met on June 12, 2024 under the chairmanship of Philippe Berterottière, Chairman of GTT.

All resolutions submitted to the Annual General Meeting were approved.

The shareholders approved in particular the financial statements for the fiscal year 2023 including the payment of a dividend of 4.36 euros per share, it being specified that an interim dividend amounting to 1.85 euro was paid on December 14, 2023. The remaining balance amounting to 2.51 euros per share. 

The AGM of June 12^th ratified the co-option of Ms. Domitille Doat Le Bigot as director who was appointed by the Board of Directors at the close of the Annual General Meeting of 2023, to replace Mrs. Sandra Roche-Vu Quang, for the remainder of her term of office, i.e. until the Annual General Meeting of 2025. The Annual General Meeting of 2024 also approved the renewal of the term of office of Ms. Carolle Foissaud as director.

The AGM approved the information stipulated in Article L. 22-10-9, I. of the French Commercial Code provided in the report of corporate governance. It also approved the elements of the compensation paid or allocated to the Chairman and Chief Executive Officer for the year ended, as well as the compensation policy of the Chairman and Chief Executive Officer for the period from January 1, 2024 to June 12, 2024, the compensation policy of the Chairman of the Board and the Chief Executive Officer for the period starting from June 12, 2024 and the compensation policy of the members of the Board of Directors or the 2024 fiscal year.

Finally, the AGM authorized several financial delegations to the Board of Directors.

Furthermore, Ms. Frédérique Kalb resigned after the end of the June 12, 2024 Annual General Meeting, 

Therefore, the Board of directors is composed of 8 Directors (of which 3 are women and 5 are men) , and 6 are independent (i.e. 75%):

-          Philippe Berterottière, Chairman of the Board

-          Domitille Doat-Le Bigot, Independent Director

-          Carolle Foissaud, Independent Director

-          Luc Gillet, Independent Director

-          Pierre Guiollot, Director

-          Pascal Macioce, Independent Director

-          Catherine Ronge, Independent Director

-          Antoine Rostand, Independent Director

The composition of the Board of Directors is thus in accordance with the recommendations of the AFEP-

MEDEF Code as of the date of the Annual General Meeting.                                                                 

SUBSIDIARIES’ ACTIVITY  

Cryovision, a GTT subsidiary created in 2012, offers innovative services to ship-owners and vessel operators.  Cryovision markets Non-Destructive Tests of Cryogenic Containment Systems with GTT membranes, in particular by thermal camera (TAMI) during commercial vessel operations and by Acoustic Emission method in repair shipyards. Since 2021, Cryovision has also conducted tightness testing on vessels using NO96 technology (Global Tests).

GTT North America, created in 2013, continues its business development activities in the Americas. In the first half of the year, it signed service contracts for the maintenance of LNG carriers, regasification vessels (FSRUs) and the US bunker barge Clean Jacksonville, training contracts with major energy companies and the US Coast Guard, and a contract to equip vessels chartered by a major energy company with Ascenz Marorka’s digital platform. 

GTT Training Ltd., a subsidiary created in 2014, continues to offer all training services, including simulator courses “online”.

GTT South East Asia (GTT SEA), a GTT subsidiary established in Singapore in 2015, carries out commercial development activities on behalf of the Group in the Asia-Pacific region.

GTT’s presence in Singapore enables better collaboration with key players in countries such as Singapore, Indonesia, Malaysia and Japan, where the LNG bunkering markets and small-scale LNG chains are promising. In addition, the Singapore office extended its geographic coverage to South Korea in early 2021.

Ascenz Marorka Pte. Ltd. based in Singapore (formerly Ascenz) has historically been recognised as a leading operator for the transparency, traceability and reliability of ship bunkering and fuelling operations. Since its acquisition by GTT, Ascenz Marorka Pte. Ltd. has been offering dedicated solutions to LNG carriers to manage LNG sloshing and LNG evaporation (BOG) in the tanks. Ascenz Marorka Pte. Ltd. (Singapore) has its own brand of Flowmet^TM mass flow metres.

Ascenz Marorka ehf based in Iceland (formerly Marorka) designs travel management, operational reporting and energy performance optimisation systems for vessels, thereby saving money and reducing their environmental footprint. The solution addresses all sources of inefficiencies such as speed, trim, hull condition, engine balance etc. The company also offers managed services to proactively provide continuous performance analysis and real-time performance improvement advice.

OSE, the GTT Group’s centre of expertise in digital intelligence, continues to grow in the maritime transportation sector and particularly in tailored services for smart shipping. 

Moreover, OSE has considerably developed its know-how and its customer portfolio on autonomous systems and decision support solutions for the management of complex systems. OSE’s customers include some of the biggest shipbuilding and automotive names in the civil and defence sectors.

Elogen, a GTT subsidiary since October 2020, is the French leader in PEM (proton exchange membrane) electrolysis. Elogen designs and manufactures electrolysers for the production of green hydrogen. During the first half of 2024, in line with previous financial years, Elogen pursued the implementation of its strategy around three imperatives: “Be efficient, be reliable, be ready”. Within this framework, Elogen has continued to develop its R&D activities (stacks and Balance-of-Plant) to improve the competitiveness and energy efficiency of its solutions, diversifying its technologies to produce large-scale electrolysers and structuring its maintenance services. Construction of the gigafactory in Vendôme, as part of the Hydrogen IPCEI, began at the beginning of the year with a view to commissioning at the end of the second half of 2025.

ANALYSIS OF THE CONSOLIDATED RESULTS FOR THE FIRST HALF OF 2024

 Calculated indicator                                                                                                                                                                   

* Current operating income and current and non-current operating income are now presented separately to take into account non-current income in 2024.

** EBITDA now excludes provisions for losses on completion (reversal of 969 thousand euros at June 30, 2024). The impact on EBITDA at June 30, 2023 was 912 thousand euros, increasing EBITDA at June 30, 2023 to 105,107 thousand euros (vs reported EBITDA at June 30, 2023 of 104,195 thousand euros). Excluding provisions for losses on completion, at June 30, 2023 the EBITDA margin stood at 59.1%.

Operating income before depreciation, amortisation and impairment of assets (EBITDA) reached 177.2 million euros in the first half of 2024, up 70.1% compared to the first half of 2023. The EBITDA margin on revenue increased from 58.6% in the first half of 2023 to 60.1% in the first half of 2024. 

Current operating income amounted to 172.2 million euros in the first half of 2024 compared to 99.6 million euros in the first half of 2023, an increase of 72.9%.

Net income increased from 84.0 million euros in the first half of 2023 to 170.3 million euros in the first half of 2024, and the net margin increased from 47.3% to 57.8%.

The increase in net income is mainly due to a 65.8% rise in revenues over the period and to non-recurring items (including the reversal of the impairment recognised at December 31, 2023 of a receivable of 21 million euros that was paid in the first half of 2024). 

Change and distribution of revenues (see “Operating activities” in the income statement)

Consolidated revenues for the first half of 2024 amounted to 294.8 million euros, up 65.8% compared to the first half of 2023. 

Newbuild revenues amounted to 271.0 million euros, up 65.7% compared to the first half of 2023.

Royalties from LNG carriers amounted to 250.7 million euros, up 70.7%. This rise is linked to the increase in the number of LNG carriers under construction, thus generating additional income. 

Royalties generated by the LNG as fuel business rose sharply (+49.9% to 17.2 million euros), benefiting from the large number of orders received in 2021 and 2022.

Elogen’s Electrolyser revenues amounted to 6.1 million euros in the first half of 2024, up 178.4% compared with 2.2 million euros in the first half of 2023.

Revenues from services were up by 47% to 17.7 million euros in the first half of 2024, linked to assistance services for vessels in operation and the increase in Ascenz Marorka activity and in pre-project studies.

Composition of GTT’s operating income

External expenses

The Group’s external expenses increased compared to last year, from 37.5 million euros in the first half of 2023 to 51.0 million euros in the first half of 2024. This increase (+36.2%) compared to the previous half-year was due to the rise in sub-contracting (+47.2%) linked to the increase in activity.

Personnel expenses

Personnel expenses were up by 17.07 million euros compared to the previous period. This increase (+40.9%) is mainly due to the higher headcount at the subsidiaries (Elogen, Ascenz Marorka, OSE Engineering, GTT China) and to the increase in wages linked to inflation.

Depreciation and provisions

            Allocations (reversals) to impairments of non-current assets                                                       -                          -           N/A

Net allocations to depreciation, amortisation and provisions increased by 9.8 million euros.

Allocations to depreciation or amortisation of non-current assets increased by 30.6% over the period and stood at 5.3 million euros for the first half of 2024. 

Allocations  to depreciation or amortisation of non-current assets IFRS 16 were stable (0.6 million euros in the first half of 2024 compared with 0.5 million euros in the first half of 2023).

Allocations (reversals) of provisions were up by 8.4 million euros, following the reversal of the provision for the litigation with KFTC (8.1 million euros) in the first half of 2023.  Other current operating income and expenses

Other current operating income and expenses mainly comprise the Research Tax Credit, whose recognised amount of 4.3 million euros in the first half of 2024 includes estimate of the income for the current year plus the previous year adjustment. The estimate is based on projects considered eligible under the research tax credit criteria.

Other non-current operating income and expenses

In 2023, GTT recognised settlement payments for infringement and unauthorised use of its intellectual property rights. Operators conducted operations using GTT’s technology despite the absence of a contract. A settlement for an amount of 21,000 thousand euros was recognised in 2023 following the signature of an agreement and had been fully impaired given the uncertainty regarding its recoverability at the closing date of the financial statements.

As the receivable was paid in the first half of 2024, the impairment of 21 million euros was reversed accordingly and appears on the line “other non-current operating income and expenses”.

Change in operating income (EBIT) and EBITDA

* EBITDA now excludes provisions for losses on completion (reversal of 969 thousand euros at June 30, 2024). The impact on EBITDA at June 30, 2023 was 912 thousand euros, increasing EBITDA at June 30, 2023 to 105,107 thousand euros (vs reported EBITDA at June 30, 2023 of 104,195 thousand euros). Excluding provisions for losses on completion, at June 30, 2023 the EBITDA margin stood at 59.1%.

Operating income before depreciation and amortisation of non-current assets (EBITDA) amounted to 177.2 million euros in the first half of 2024, up 70.1% compared to the first half of 2023, benefiting from the increase in revenues and non-recurring items (including the reversal of impairment of the receivable of 21 million euros in the first half of 2024).

The EBITDA margin on revenue stood at 60.1% in the first half of 2024, compared with 58.6% in the first half of 2023.

Current operating income amounted to 172.2 million euros in the first half of 2024 compared with

99.6 million euros in the first half of 2023, an increase of 72.9%.

Composition of GTT’s net income and earnings per share

The Group’s net income increased from 84.0 million euros in the first half of 2023 to 170.3 million euros in the first half of 2024, taking into account the items presented above.

In the first half of 2024, earnings per share were calculated based on share capital made up of 36,978,533 shares, which corresponds to the weighted average number of ordinary shares outstanding excluding treasury shares during the period.

Therefore, earnings per share increased from 2.28 euro to 4.61 euros over the period.

Diluted earnings per share are calculated by taking into account the free share allocations decided by the Group. Diluted earnings per share increased from 2.27 euros in the first half of 2023 to 4.59 euros in the first half of 2024.

ANALYSIS OF GTT’S STATEMENT OF FINANCIAL POSITION

Non-current assets

The change in non-current assets between December 31, 2023 and June 30, 2024 of 29.4 million euros mainly resulted from (i) goodwill related to the acquisition of VPS on February 25, 2024 for 14.3 million euros and (ii) the acquisition of stakes (including convertible bonds) in companies for 8.3 million euros. 

Current assets

Current assets increased by 71.6 million euros between December 31, 2023 and June 30, 2024. 

This change is mainly due to increases of 35.5 million euros in cash, 14 million euros in tax receivables, 25.6 million euros in trade receivables and 6.7 million euros in inventories, offset by the 8.2 million euros decrease in contract assets.

Equity

Equity was up (+24.9%) between December 31, 2023 (336.3 million euros) and June 30, 2024 (420.2 million euros). This increase is mainly due to the net income for the first half of 2024 of 170.3 million euros offset by the payment of the balance of the 2023 dividend for 93 million euros.

Non-current liabilities 

Provisions at June 30, 2024 mainly consist of:

•           a provision corresponding to a risk on a construction project;

•           a provision for retirement benefits.

Financial liabilities – non-current part mainly consist of:

•           residual liabilities for past acquisitions linked to earn-outs conditional on the achievement of pre-defined objectives in the amount of 4 million euros. 

•           a debt of 8.9 million euros related to the IFRS 16 treatment of real estate contracts.

Current liabilities

Current liabilities increased from 268.1 million euros at December 31, 2023 to 278.3 million euros at June 30, 2024.

Provisions – current portion consist of provisions for litigation and provisions for losses on completion, which decreased by 1 million euros over the period. 

The Group recognises provisions for losses on completion when the estimated margin on a given project is negative.

The advance payments of subsidies, which amounted to 0.8 million euros at June 30, 2024 compared with 0.5 million euros at December 31, 2023, mainly correspond to the 0.3 million euros IPCEI subsidy received by Elogen and not used.

Current financial liabilities represent 1.5 million euros and mainly correspond to the classification at less than one year of a debt of 1 million euros related to the IFRS 16 treatment of real estate contracts. This item decreased by 0.9 million euros in relation to the payment of the 1.5 million euros Marorka share earn-out. 

Other current non-financial liabilities increased by 6.9 million euros mainly due to the increase in contract liabilities (8.6 million euros), prepayments received (0.8 million euros) offset by a decrease in tax and social security liabilities (3 million euros).

2024 OBJECTIVES CONFIRMED  

As of June 30, 2024, the Group benefits from greater visibility on its royalty revenues^[1], thanks to the order book of its core business. This corresponds to revenues of 2,016 million euros over the 2024-2028 period^[2] and beyond, broken down as follows: 548 million euros in 2024⁸, 692 million euros in 2025, 545 million euros in 2026, 298 million euros in 2027 and 187 million euros in 2028 and beyond.

In a context of very high activity at the shipyards and in the absence of any significant order delays, GTT confirms its objectives for the 2024 financial year:  

-          2024 consolidated revenues of between 600 million euros and 640 million euros;

-          2024 consolidated EBITDA of between 345 million euros and 385 million euros;

-          a 2024 dividend payout target corresponding to a minimum payout of 80% of consolidated net income^[3].

INTERIM DIVIDEND  

On July 25, 2024, the Board of Directors decided on the distribution of an interim dividend of 3.67 euros per share for the 2024 financial year, to be paid in cash according to the following schedule: - December 10, 2024: ex-dividend date; - December 12, 2024: payment date.

RELATED-PARTY TRANSACTIONS  

During the first half of 2024, there were no related-party transactions that could have a material impact on the Group’s financial situation or results; similarly, no change in related-party transactions likely to have a material impact on the Group’s financial situation or results occurred during this period.

RISK FACTORS

The Group’s activities are exposed to certain macroeconomic and sectoral, operational, market, industrial, environmental and legal risk factors. The main risk factors that the Group may face are detailed in the “Risk factors” section of the 2023 Universal Registration Document, filed with the AMF on April 29, 2024. 

CONDENSED HALF-YEAR FINANCIAL STATEMENTS

BALANCE SHEET 

COMPREHENSIVE INCOME

STATEMENT OF CASH FLOWS

STATEMENT OF CHANGE IN EQUITY

Conv

                                                                                                                                                              ersio                  Equity

Non-

In thousands of euros            Number of shares capitalShare  premiumShare  Treasury shares Reserves            Revenue    differn to owners of attributable controlling           Equity                                                                                   

interests ence   the parent s

Capital increase                39,415                         3,943                                                                                         3,943                                  3,943

NOTES TO THE FINANCIAL STATEMENTS

           Note 1.           GENERAL INFORMATION

Gaztransport & Technigaz – GTT is a Group whose parent company, Gaztransport & Technigaz S.A., is a société anonyme (joint stock limited liability company) under French law, whose registered office is domiciled in France, at 1, route de Versailles, 78,470 Saint-Rémy-lès-Chevreuse.

GTT is an engineering group specialising in membrane containment systems used to transport and store liquefied gas, and in particular LNG (Liquefied Natural Gas).  It offers engineering services, technical assistance and patent licences for the construction of LNG tanks installed mainly on LNG carriers. The Group operates mainly with shipyards in Asia.

The Group has been presenting consolidated financial statements since December 31, 2017. These include the accounts of the parent company as well as those of its 26 subsidiaries, a list of which is in note 4 “Principal subsidiaries as at June 30, 2024”.

These financial statements are presented for the period beginning on January 1, 2024, ended June 30, 2024.

           Note 2.           ACCOUNTING RULES AND METHODS

2.1. Basis of preparation of the financial statements

The condensed half-year consolidated financial statements, for the six months to June 30, 2024, are presented and have been prepared on the basis of the provisions of IAS 34 “Interim Financial Reporting”.

As these are interim financial statements, they do not include all the information required by IFRS for the preparation of financial statements. These notes must therefore be supplemented by GTT’s financial statements published for the financial year ended December 31, 2023.

The financial statements are presented in thousands of euros, rounded to the nearest thousand euros, unless otherwise indicated.

The condensed financial statements have been prepared in accordance with the accounting principles and policies applied by the Group to the financial statements for the 2023 financial year (described in note 2 to the IFRS financial statements as at December 31, 2023) and supplemented by the following standards and amendments applicable from January 1, 2024:

                             Amendment to IAS 7                                      Statement of cash flows

                             Amendment to IAS 1                                      Presentation of the financial statements - Classification of

liabilities as current or non-current

                             Amendments to IFRS 16                                Lease liability in a sale and leaseback

These standards, interpretations and amendments, mandatory as of January 1, 2024, have no material impact on the Group’s financial statements.

The Group does not apply standards, amendments and interpretations published by the IASB but not yet adopted by the European Union.

2.2. Use of judgements and estimates

In preparing these financial statements in accordance with IFRS, Management has made judgements, estimates and assumptions that affect the book value of assets and liabilities, income and expenses, and the information mentioned in some of the notes. 

The financial statements and information subject to significant estimates are mainly deferred income related to options, deferred tax assets, provisions for risks and retirement benefit plans. 

           Note 3.           EVENTS AFTER THE REPORTING PERIOD

There are no significant events to report.

           Note 4.          MAIN SUBSIDIARIES AS AT JUNE 30, 2024

The list of subsidiaries included in the consolidated financial statements is shown below. The acronym FCM denotes the full consolidation method and EAM denotes the equity-accounted consolidation method.

                                                                                                                                      Interest %                     Consolidation method

GTT acquired VPS on February 25, 2024.

Through its subsidiary GTT Ventures 1, the Group acquired stakes in Cryocollect, Energo and Seaber Oy in the first half of 2024. 

INFORMATION RELATING TO THE INCOME STATEMENT 

           Note 5.           OPERATING INCOME

5.1. External expenses

5.2. Personnel expenses

The amount of personnel expenses breaks down as follows:

5.3. Depreciation and provisions

Net allocations to depreciation, amortisation and provisions increased by 9.8 million euros. 

Allocations to depreciation or amortisation of non-current assets increased by 30.6% over the period and stood at 5.3 million euros for the first half of 2024. 

Allocations  to depreciation or amortisation of non-current assets IFRS 16 were stable (0.6 million euros in the first half of 2024 compared with 0.5 million euros in the first half of 2023).

Allocations (reversals) of provisions were up by 8.4 million euros, following the reversal of the provision for the litigation with KFTC (8.1 million euros) in the first half of 2023. 

5.4. Other current operating income and expenses

“Other operating income and expenses” mainly consist of the Research Tax Credit for 4.3 million euros. 

5.5. Other non-current operating income and expenses

In 2023, GTT recognised settlement payments for infringement and unauthorised use of its intellectual property rights. Operators conducted operations using GTT’s technology despite the absence of a contract. A settlement for an amount of 21,000 thousand euros was recognised in 2023 following the signature of an agreement and had been fully impaired given the uncertainty regarding its recoverability at the closing date of the financial statements.

As the receivable was paid in the first half of 2024, the impairment of 21 million euros was reversed accordingly and appears on the line “other non-current operating income and expenses”.

INFORMATION RELATING TO THE STATEMENT OF FINANCIAL POSITION 

           Note 6.           NON-CURRENT ASSETS 

6.1. Intangible assets

* Non-current assets in progress include investment subsidies deducted from the funded assets in accordance with the provisions of IAS 20, in the amount of 16.4 million euros as at June 30, 2024. The amount of the investment subsidy as at December 31, 2023 was 13.5 million euros.

The change in intangible assets between December 31, 2023 and June 30, 2024 is mainly due to the increase in the capitalisation of research and development projects as well as the development of IT projects.

                           6.2.      Goodwill

The 29.7 million euros item comprises goodwill related to the companies Ascenz (4.3 million euros), Marorka (2.8 million euros), OSE (1.8 million euros), Elogen (6.5 million euros) and VPS, a newly acquired company (14.2 million euros). The increase of 14.2 million euros is due to the recognition of goodwill related to VPS.

6.3. Property, plant and equipment

(*) Non-current assets in progress include investment subsidies deducted from the funded assets in accordance with the provisions of IAS 20, in the amount of 14.5 million euros as at June 30, 2024. The amount of the investment subsidy as at December 31, 2023 was 7.7 million euros.

(**) The “Other” category includes general installations, fixtures and fittings, furniture, and office and IT equipment.

In the absence of external debt related to the construction of property, plant and equipment, no interest expense was capitalised in accordance with IAS 23 – Borrowing Costs.

The 5.7 million euros increase in property, plant and equipment between December 31, 2023 and June 30, 2024 is mainly due to:

-       IFRS 16 non-current assets relating mainly to the offices leased by Elogen, GTT S.A. and GTT CHINA in 2024;

-       Various current projects (including the renovation of buildings at Saint-Remy-Lès-Chevreuse).

Note 7. INVESTMENTS IN EQUITY-ACCOUNTED COMPANIES AND NON-CURRENT FINANCIAL ASSETS

Equity investments in the amount of 11.7 million euros correspond to purchases of securities of Tunable and Sarus in 2022, bound4blue and Aegir in 2023, and Cryocollect, Energo and Seaber Oy in 2024.

“Financial assets at fair value” stood at 5 million euros and corresponded to UCITS managed as part of the liquidity contract and to bonds convertible into shares issued by Energo and Tunable in 2024.

           Note 8.           WORKING CAPITAL REQUIREMENT

Notes 8.1 and 8.2 detail the accounts in the statement of financial position that contribute to the change in working capital requirement presented in the statement of cash flows.

8.1 Inventories and trade receivables

The overall increase in trade receivables and contract assets is due to a high inflow of orders along with high billing levels in the first half of 2024.

The carrying amount of trade receivables corresponds to a reasonable approximation of their fair value.

8.2. Trade payables

Change 

           Note 9.           CASH AND CAHS EQUIVALENTS

Marketable securities mainly comprise term accounts and medium-term notes (MTN), measured at fair value and meeting the criteria for classification as cash equivalents.

           Note 10.        EQUITY

10.1. Share capital

As at June 30, 2024, the share capital was composed of 37,117,772 shares with a nominal unit value of

0.01 euros.

10.2. Dividends

The Shareholders’ Meeting held on June 12, 2024 approved the payment of an ordinary dividend of 4.36 euros per share for the financial year ended December 31, 2023, payable in cash. 

As an interim dividend of 68,363,183 euros was paid on December 14, 2023, the balance of 92,995,957 euros was paid on June 20, 2024.

10.3. Share-based payments

Allocation of Free Shares (AFS) 

(*) The allocation date corresponds to the date of the Board of Directors’ meeting that allocated these plans.

For these plans, the Board of Directors set the following vesting conditions:

- AFS no. 12 o Active employment at the end of the vesting period,  o Fulfilment of performance criteria during the financial year prior to the end of the vesting period. These criteria concern: 

§  Increase in revenues and consolidated net income, §            The performance of GTT shares compared to market indices. - AFS no. 13 o Active employment at the end of the vesting period,  o Fulfilment of performance criteria during the financial year prior to the end of the vesting period. These criteria concern: 

§  Increase in consolidated net income,

§  Growth in “LNG as fuel” revenue,

§  Growth in “Smart Shipping” revenue,

§  Growth in “Elogen” revenue,

§  Improving the energy performance of GTT solutions sold on LNG carriers, § The performance of GTT shares compared to market indices.

- AFS no. 14 o Active employment at the end of the vesting period,  o Fulfilment of performance criteria during the financial year prior to the end of the vesting period. These criteria concern: 

§  Increase in consolidated net income,

§  Growth in “LNG as fuel” revenue,

§  Growth in “Smart Shipping” revenue,

§  Growth in “Elogen” revenue,

§  Improving the energy performance of GTT solutions sold on LNG carriers, § The performance of GTT shares compared to market indices.

AFS no. 15

o Active employment at the end of the vesting period,  o Fulfilment of performance criteria during the financial year prior to the end of the vesting period. These criteria concern: 

§  Increase in consolidated net income,

§  Growth in “LNG as fuel” revenue,

§  Growth in “Smart Shipping” revenue,

§  Growth in “Elogen” revenue,

§  Improving the energy performance of GTT solutions sold on LNG carriers, § The performance of GTT shares compared to market indices.

Calculating the expense for the financial year

Pursuant to IFRS 2, an expense representative of the benefit granted to beneficiaries of these plans is recorded under “Personnel expenses” (Operating income) (note 5.2). 

The unit value is based on the share price on the allocation date weighted by the reasonable estimate of attaining the share allocation criteria.

The expense is calculated by multiplying these unit values by the estimated number of shares to be allocated. It is spread over the rights vesting period following the date of the decision by the Board of Directors on each plan, and according to the probability of performance criteria fulfilment.

For the period from January 1 to June 30, 2024, the expense recognised for the free share allocation plans was 1.5 million euros (excluding specific contributions). It was 0.5 million euros at June 30, 2023. 

10.4. Treasury shares

The Group entered into a liquidity contract in December 2018 to replace the contract from November 10, 2014.

In accordance with IAS 32, the buyback of treasury shares is deducted from equity. Treasury shares held by the entity are not taken into account when calculating earnings per share. 

At June 30, 2024, the Group held 500 treasury shares acquired under the liquidity contract and 67,435 shares outside the liquidity contract. 

                                                                                                                                                      June 30, 2024                  June 30, 2023

Earnings per share at June 30, 2024 was calculated on the basis of a share capital of 36,978,533 shares, excluding treasury shares.

To date, the Group has allocated 129,387 free shares included in the calculation of diluted earnings per share.      

           Note 11.        PROVISIONS 

                              11.1.  Provisions for risks and charges

Provisions at June 30, 2024 mainly consist of:

•       a provision corresponding to a risk on a construction project;

•       a provision for losses on completion for the design and manufacture of electrolysers 

•       a provision for employee litigation;

•       a guarantee provision for electrolysers;

•       a provision for retirement benefits, detailed in note 11.2.

11.2. Defined benefit plan commitments

Provisions for retirement benefit plans are calculated as follows:

The change in value of the commitments and of the fair value of the retirement plan assets is as follows:

Note 12. INCOME TAX

12.1.    Analysis of tax expenses

As at June 30, 2024, the change in the tax expense is mainly due to the increase in royalty revenues.

12.2.    Reconciliation of income tax expense

12.3.    Taxes and fees

In accordance with the application of IFRIC 21, property tax and the social solidarity contribution are recorded in full on January 1 of their year of payment.

12.4.    Deferred tax assets and liabilities

Note 13. Segment information

Financial information by segment follows the same principles as internal reporting. It replicates the internal segment information defined to manage and measure the Group’s performance, which is reviewed by the Group’s main operational decision-maker, the Board of Directors.

The Group has two operating segments as defined in IFRS 8 – “Operating Segments” that reflect the organisation of the Group’s activities.

-       A “Core Business” segment that includes services and offerings related to the construction of liquefied gas storage and transport facilities, and to LNG-as-fuel activities. Assets and liabilities are located in France. Fees and services rendered are invoiced to companies predominantly based in Asia.

-       A “Hydrogen” segment that includes the design and assembly of electrolysers for the production of green hydrogen, based in France.

13.1.  Information on products and services

13.2.  Information on key indicators (revenues and EBITDA)

Revenues and EBITDA are allocated between each business segment after consolidation restatements.

In accordance with IFRS 8 “Operating Segments” (paragraph 29), segment information for 2023 is presented below for comparative purposes, taking into account the exclusion from EBITDA of the provisions for loss on completion (the impact was 912 thousand euros on the EBITDA reported as at June 30, 2023).

13.3.  Information on geographical areas

Almost all customers are located in Asia. Assets and liabilities are located in France.

13.4.  Order book information

The order book of GTT’s core business as of June 30, 2024 corresponds to revenues of 2,016 million euros over the period 2024-2028 and beyond, broken down as follows: 548 million euros in 2024^[4], 692 million euros in 2025, 545 million euros in 2026, 298 million euros in 2027 and 187 million euros in 2028 and beyond.

Note 14. EXECUTIVE COMPENSATION

           Note 15.        OFF-BALANCE SHEET COMMITMENTS

The Group has granted a 17 million euros bank guarantee to BpiFrance (in connection with the IPCEI subsidy). This guarantee was granted on November 15, 2022 and expires on January 1, 2027.

The Group has also granted several guarantees to its customers for a total amount of 19.7 million euros:

           Note 16.         OTHER EVENTS      

None

STATUTORY AUDITORS’ REVIEW REPORT ON THE HALF-YEARLY

FINANCIAL INFORMATION

This is a free translation into English of the statutory auditors' review report on the half-yearly financial information issued in French and is provided solely for the convenience of English-speaking users. This report includes information relating to the specific verification of information given in the Group’s half-yearly management report. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

To the Shareholders,

In compliance with the assignment entrusted to us by your Annual General Meetings and in accordance with the requirements of article L. 451-1-2 III of the French monetary and financial code ("code monétaire et financier"), we hereby report to you on:

► the review of the accompanying (condensed) half-yearly consolidated financial statements of GTT for the period from January 1 to June 30, 2024,

► the verification of the information presented in the half-yearly management report.

These condensed half-yearly consolidated financial statements are the responsibility of the Board of Directors. Our role is to express a conclusion on these financial statements based on our review.

1. Conclusion on the financial statements 

We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-yearly consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 – standard of the IFRSs as adopted by the European Union applicable to interim financial information.

2. Specific verification

We have also verified the information presented in the half-yearly management report on the condensed half-yearly consolidated financial statements subject to our review.

We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements.

Paris and Paris-La Défense, July 26, 2024 

The Statutory Auditors

French original signed by

                               CAILLIAU DEDOUIT ET ASSOCIES                                                 ERNST & YOUNG Audit

                                              Sandrine Le Mao                                                                       Stéphane Pédron