Technip: Full Year 2005 Results; Backlog Up 65% Proposed Dividend: + 11.5% Convertible Bond Call.PARIS Paris, in Greek mythology Paris or Alexander, in Greek mythology, son of Priam and Hecuba and brother of Hector. Because it was prophesied that he would cause the destruction of Troy, Paris was abandoned on Mt. -- Technip (BOURSE bourse (b  rs), term applied to a European stock exchange. The first international bourse was established in Antwerp in the 16th cent. :TEC)(EURONEXT:TEC)(NYSE NYSESee: New York Stock Exchange :TKP TKP Türkiye Komünist Partisi (Communist Party of Turkey; formerly Sosyalist Iktidar Partisi, Party of Socialist Power) TKP Tulajdonképpen (Hungarian) TKP Tausender-Kontaktpreis TKP Tamarind Kernel Powder ):
IFRS (excludes IAS 32/39 in 2004)
Euros in Millions (except EPS and E/ADS) 2005 2004 Change
------- ------ ------
-- Backlog at December 31 11,170 6,779 +64.8%
-- Revenues 5,376 5,141 + 4.6%
-- Income from Operations 231.0 225.9 + 2.3%
-- Net Income 93.3 111.8 -16.5%
-- Fully Diluted EPS (EUR) 1.11 1.09 + 2.4%
-- Fully Diluted E/ADS ($) 1.32 1.29 + 2.4%
On February 22, 2006, the Board of Directors of Technip (BOURSE:TEC)(EURONEXT:TEC)(NYSE:TKP)(ISIN Isin (ĭs`ĭn), capital of an ancient Semitic kingdom of N Babylonia. The city became important after the third dynasty of Ur fell to the Elamites and the Amorites (c.2025 B.C.). The phase from c.2025–c.1763 B.C. :FR0000131708)approved the audited full year 2005 consolidated accounts. Daniel Valot, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , commented: "Technip has fulfilled ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. several of its strategic objectives in 2005. We became a first-tier player on the LNG LNG (liquefied natural gas): see under natural gas. and ethylene ethylene (ĕth`əlēn') or ethene (ĕth`ēn), H2C=CH2, a gaseous unsaturated hydrocarbon. It is the simplest alkene. markets while consolidating our leadership on the deep offshore, refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar and hydrogen markets. In the area of non-conventional hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·b  nz),n. , we gained a foothold foot·hold n. 1. A place providing support for the foot in climbing or standing. 2. A firm or secure position that provides a base for further advancement. foothold Noun 1. in the high-growth Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. tar sands Tar sands is a common name of what are more properly called bituminous sands, but also commonly referred to as oil sands or (in Venezuela) extra-heavy oil. They are a mixture of sand or clay, water, and extremely heavy crude oil. market. For the first time in its history, Technip's backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. surpassed the EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 10 billion mark. The growth in our activities is expected to continue, thanks to the robust prospects of our markets and our strategic positioning. The Group is diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d working to manage this expected growth by strengthening its workforce, expanding its naval and manufacturing asset capacities and adapting its organization and working methods to deal with the step-change that has taken place in terms of contract size. As indicated in the press release of February 16, 2006, the 2005 income from operations and fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of are very close to their 2004 levels. 2005 net income is lower by EUR 18.5 million due to the accounting treatment under IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System of the Group's convertible bonds. The Group has decided to call these convertible bonds. This decision should lead to value creation for our shareholders as the Group's annual financial charges associated with the convertible/exchangeable bonds, which were EUR 38 million in 2005, will be eliminated. Given the size of our backlog, we have every reason to believe that our earnings growth, which was interrupted in·ter·rupt v. in·ter·rupt·ed, in·ter·rupt·ing, in·ter·rupts v.tr. 1. To break the continuity or uniformity of: Rain interrupted our baseball game. 2. in 2005, should resume significantly in 2006. In this favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. context, and bearing in mind the increase in our net cash position, we have decided to propose at the next Shareholders' Annual General Meeting an 11.5% increase, to EUR 0.92 per share, of the Group's annual dividend." I. OPERATIONAL HIGHLIGHTS A) Order Intake During 2005, Technip's order intake was EUR 9,806 million, an increase of 92.6% compared to 2004 (EUR 5,092 million). Listed below are the main contracts that came into force during 2005 along with their approximate values (Technip's share) if publicly disclosed: --a contract with Ras Laffan Liquefied Natural Gas liquefied natural gas: see under natural gas. Liquefied natural gas (LNG) A product of natural gas which consists primarily of methane. Its properties are those of liquid methane, slightly modified by minor constituents. Company Limited III (RasGas III) for two LNG(1) trains located at Ras Laffan in Qatar (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1,600 million), --a contract with Saudi Basic Industries Corporation (SABIC SABIC Saudi Basic Industries Corporation SABIC Sample-Band Image Coding (currency counterfeit deterrence technique) ) for a large-scale ethylene and propylene propylene /pro·pyl·ene/ (pro´pi-len) a gaseous hydrocarbon, CH3CHdbondCH2. propylene glycol a colorless viscous liquid used as a humectant and solvent in pharmaceutical preparations. production plant at Yanbu, Saudi Arabia Saudi Arabia (sä  `dē ərā`bēə, sou`–, sô–), officially Kingdom of Saudi Arabia, kingdom (2005 est. pop. ,--two contracts with Canadian Natural Resources Ltd for a coker and a hydrogen unit related to the Horizon Oil Sands Project in Northern Alberta Norhern Alberta is a region located in the Canadian province of Alberta. Its primary industry is oil and gas, with large heavy oil reserves being exploited at the Athabasca Oil Sands and Wabasca Area in the east of the region. , Canada (combined value: EUR 700 million), --a contract with PetroVietnam for a grass-root refinery at Dung DUNG. Manure. Sometimes it is real estate, and at other times personal property. When collected in a heap, it is personal estate; when spread out on the land, it becomes incorporated in it, and it is then real estate. Vide Manure. Quat QUAT quaternary ammonium compound. , Vietnam, --a contract with Chevron for the SURF surf: see wave, in oceanography; beach. (2) development of the Agbami field, offshore Nigeria (USD 800 million), --a contract with Qatar Petroleum Qatar Petroleum (QP) is a state owned petroleum company in Qatar. The company operates all oil and gas activities in Qatar, including exploration, production, refining, transport, and storage. , Chevron Phillips Chevron Phillips is a chemical producer jointly owned by Chevron Corporation and ConocoPhillips. The company was formed July 1st, 2000 by merging the chemicals operations of both Chevron Corporation and Phillips Petroleum Company. Chemical Company LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , Qatar Petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. Company and Total Petrochemicals for an ethylene cracker (1) A person who breaks into a computer system without authorization, whose purpose is to do damage (destroy files, steal credit card numbers, plant viruses, etc.). Because a cracker uses low-level hacker skills to do cracking, the terms "cracker" and "hacker" have become located at Ras Laffan, Qatar, --a contract with Yemen LNG This article or section contains information about a planned or expected future energy production, transmission, distribution or other energy related infrastructure. It may contain information of a speculative nature and the content may change dramatically as the construction Company for an LNG plant on the southern coast of Yemen (USD 667 million), --a contract with Total for an FPSO FPSO Floating Production Storage and Off-loading (shipping & oil industry) FPSO Foster Parent Society of Ontario FPSO Fleet Publication Supply Office (3) for the Akpo field development, offshore Nigeria (USD 540 million), --a contract with the Kuwait Olefins Company (Dow/PIC) for an ethylene plant at Shuaiba, Kuwait, --a contract with Petrobras for the SURF development of the Roncador field, offshore Brazil (USD 350 million), --a contract with Chevron for a Spar facility for the Tahiti field development in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east , --two contracts with Murphy Oil Murphy Oil Corporation NYSE: MUR is a petroleum corporation. It is a S&P 500 company. In 2007, it was ranked as the 169th largest company in America on the Fortune 500. The current President & CEO is Claiborne Deming. , for a Spar facility and associated SURF package related to the Kikeh field development, offshore Sabah, Malaysia, --a contract with Petrobras for the SURF development of the Campos Basin Campos Basin is a petroleum rich area located offshore of Rio de Janeiro, Brazil. It has a total area of 100,000 km², with 40 fields discovered and operated by Petrobras. Two major oil fields are Marlim and Albacora. (PDET PDET Portable Data Entry Terminal PDET Professional Development Education and Training ), offshore Brazil (USD 210 million), --a contract with Norsk Hydro Norsk Hydro ASA (OSE: NHY, NYSE: NHY) is a Norwegian aluminium and renewable energy company, headquartered in Oslo. Hydro is the fourth largest integrated aluminium company worldwide. It has operations in some 40 countries around the world and is active on all continents. for tie-ins from Fram East field to Troll C and from Vilje to Alvheim on the Norwegian Continental Shelf The Norwegian continental shelf is the continental shelf over which Norway exercises sovereign rights as defined by the United Nations Convention on the Law of the Sea. Its major parts are the shelves of the North Sea, Norwegian Sea and Barents Sea, with the sector line in the (EUR 147 million), --a contract with Hovensa for a new hydrotreating unit at the St. Croix refinery, U.S. Virgin Islands, and --a service contract with Saudi Aramco Saudi Aramco, the state-owned national oil company of Saudi Arabia, is the largest oil corporation in the world and the world's largest in terms of proven crude oil reserves and production. for a grass-root gas treatment plant at Khursaniyah, Saudi Arabia. The contract will later convert to a lump sum Lump sum A large one-time payment of money. turn key contract. As of December 31, 2005, the backlog amounted at EUR 11,170 million, up 64.8% compared to EUR 6,779 million at December 31, 2004: --the SURF backlog increased 44.5% from EUR 1,860 million at December 31, 2004 to EUR 2,688 million, mainly due to contracts won in West Africa West Africa A region of western Africa between the Sahara Desert and the Gulf of Guinea. It was largely controlled by colonial powers until the 20th century. West African adj. & n. (Agbami), South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. (Roncador and PDET), the North Sea (Fram-Vilje), and Asia Pacific (Kikeh SURF), --the Offshore Facilities backlog was EUR 1,207 million, up by 27.8% compared to EUR 944 million one year ago, and was primarily related to deepwater projects in West Africa (Akpo), the Gulf of Mexico (Tahiti) and Asia Pacific (Kikeh Spar), --the Onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. Downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). backlog grew 89.6% to EUR 7,127 million, up from EUR 3,758 million primarily due to projects won in the Middle East (RasGas III, Yemen LNG, SABIC, Dow/PIC and Ras Laffan Ethylene), North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. (Horizon and Hovensa) and Asia Pacific (Dung Quat), --The Industries backlog was EUR 148 million. Technip has also signed three contracts which are not included in the backlog at December 31, 2005: --a contract with Qatar Petroleum, ConocoPhillips and Mitsui for the Qatargas III Project and Qatar Petroleum and Shell Gas for the Qatargas IV Project. This contract is for two LNG trains An LNG train is the term used to describe the liquification and purification facilities on an LNG plant. In order to make it practical and commercially viable to transport LNG from one country to another, its volume has to be greatly reduced. located at Ras Laffan in Qatar (USD 1,600 million) and came into force in January 2006, --two contracts with Statoil for subsea Subsea is a general term frequently used to refer to equipment, technology, and methods employed to explore, drill, and develop oil and gas fields that exist below the ocean floors. This may be in "shallow" or "deepwater". services in the North Sea. (1) LNG: liquefied natural gas (2) SURF: subsea umbilicals, risers and flowlines (3) FPSO: floating production, storage and offloading unit B) Resource and Asset Management The Group continued to strengthen its staff: the number of employees grew from 19,100 at the end of 2004 to 20,900 at the end of 2005. The Group also decided to expand its offshore fleet capacity through the construction of a state-of-the-art diving diving Sport of plunging into water, usually headfirst and often following the execution of one or more acrobatic maneuvers. It emerged as a competitive sport in the late 19th century and became part of the Olympic Games in 1904. support and subsea construction vessel. Additional investments are being made to expand the capacities of our flexible pipe manufacturing facilities at Le Trait trait (trat) 1. any genetically determined characteristic; also, the condition prevailing in the heterozygous state of a recessive disorder, as the sickle cell trait. 2. a distinctive behavior pattern. , France (+20%) and Vitoria, Brazil (+50%). The Group continued its asset adaptation program, closing Technip BioPharm, an affiliate located in New Jersey, and selling its Texas fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. yard (Gulf Marine Fabricators) as well as a small engineering affiliate located in Portugal. II. FINANCIALS Fourth quarter and full year 2005 results are expressed according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. IFRS and are compared to fourth quarter and full year 2004 numbers which have been restated according to IFRS (excluding IAS See iPlanet Application Server. 1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle. 32 and 39 which were applied as of January 1, 2005). Full Year 2005 A) Income Statement Revenues in 2005 were up 4.6% to EUR 5,376.1 million. --SURF revenues increased 26.4% year-on-year from EUR 1,422.1 million to EUR 1,797.6 million, mainly due to the sustained activity in the North Sea (Alvheim, Norsk Hydro) and to the progress of deepwater contracts in West Africa (Dalia, Baobab baobab (bä`ōbăb', bā`ō–), gigantic tree of India and Africa, exceeded in trunk diameter only by the sequoia. The trunks of living baobabs are hollowed out for dwellings; rope and cloth are made from the bark and condiments ). --Offshore Facilities revenues were EUR 1,013.4 million, compared to 2004 (EUR 1,066.6 million) and were primarily related to projects in West Africa (East Area), the Caspian (Shah Shah is a Persian term for a monarch (ruler) that has been adopted in many other languages. This term is a Post Islamic Revolution term for monarchs in Iran which is replaced by valie faghih or Supreme Leader. Deniz) and Spar projects (Constitution, Kikeh). --Onshore Downstream revenues, at EUR 2,318.2 million, were essentially unchanged compared to EUR 2,384.1 million in 2004. 2005 revenues were primarily generated from projects in the Middle East (Oryx oryx (ôr`ĭks), name for several small, horselike antelopes, genus Oryx, found in deserts and arid scrublands of Africa and Arabia. They feed on grasses and scrub and can go without water for long periods. , Qatargas II, NEB), Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). (Gonfreville) and North America (Horizon). --Industry revenues were EUR 246.9 million (EUR 268.1 million in 2004). Income from operations in 2005 of EUR 231.0 million was up 2.3% compared to EUR 225.9 million in 2004. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ratio was 4.3%. The operating margin ratio was up year-on-year in all business segments except SURF, where the margin ratio was lower compared to 2004. --The SURF margin ratio was 6.6% in 2005 compared to 10.3% in 2004 and was impacted by the execution of a subsea pipeline contract which led to substantial cost overruns Noun 1. cost overrun - excess of cost over budget; "the cost overrun necessitated an additional allocation of funds in the budget" cost - the total spent for goods or services including money and time and labor related primarily to modifications to the original execution schedule and several technical incidents. Cost recovery is currently under discussion with the client and insurance companies. --The Offshore Facilities operating margin ratio was 2.7% in 2005 compared to 1.6% in 2004, in line with the execution progress of contracts signed in 2003. --In Onshore Downstream, the operating margin ratio was 3.8% compared to 3.5% in 2004. This is a solid improvement considering that a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. portion of these revenues came from contracts signed since the
end of 2004 and for which no margin is recognized during the initial
execution phases.--Industries returned to profit during the period with an operating margin ratio of 2.4%. This margin would have been 3.1% without the operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. incurred at Technip BioPharm which was sold at the end of July 2005. Net financial charges increased from EUR 66.4 million to EUR 88.8 million. This was mainly due to: --the application as of January 1, 2005 of IAS 32 and 39 under IFRS which resulted in:
-- a non-cash charge of EUR 16.6 million related to the IFRS
treatment of the convertible bond, and
-- a non-cash gain of EUR 3.2 million related to the
mark-to-market of hedging instruments;
--the interest expense on the Group's Eurobond, issued in May 2004, which was EUR 30.1 million in 2005 compared to EUR 18.4 million in 2004. Income tax in 2005 was EUR 43.5 million (compared to EUR 54.2 million in 2004), which represents a nominal tax rate of 30.3%. Discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. represented a charge of EUR 5.0 million related to the closure of Technip BioPharm. Net income in 2005 was EUR 93.3 million compared to EUR 111.8 million in 2004. Fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. and E/ADS were EUR 1.11 and USD 1.32, respectively (compared to EUR 1.09 and USD 1.29, respectively). The convertible bond financial charges are restated at the level of EPS and E/ADS. 2005 net income reconciled to U.S. generally applied accounting principles (U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) amounted to EUR 44.3 million (not audited). The main restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. to reported IFRS net income involves different treatment of cash under IAS 32 and 39 compared to FAS 133 under U.S. GAAP. B) Cash Flow Statement The Group's net cash position increased by EUR 834.8 million, going from EUR -166.7 million at the end of 2004 to EUR 668.1 million at the end of 2005. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. was EUR 286.2 million and the working capital position improved by EUR 622.3 million. C) Balance Sheet Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. increased by EUR 102.1 million during 2005 to EUR 1,953.7 million. EUR 32.8 million of this increase is related to the equity component of the convertible bond as applied under IAS 32 from January 1, 2005. Fourth Quarter 2005 Quarterly revenues were EUR 1,384.2 million, a 5.3% increase compared to EUR 1,314.3 million during the same period one year prior. Revenue growth was concentrated in the SURF segment which registered a 29.6% year-on-year progression. Income from operations for the fourth quarter of 2005 was EUR 30.7 million. Net financial charges were EUR 31.5 million and included a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of EUR 4.1 million related to IAS 32/39 split accounting as well as a non-cash gain of EUR 3.1 million related to mark-to-market of hedging instruments. Net income for the fourth quarter of 2005 was EUR 1.4 million. Fully diluted adjusted EPS and E/ADS were EUR 0.12 and USD 0.14, respectively. During the fourth quarter of 2005, operating cash flow was EUR 53.0 million. Change in working capital was EUR 291.3 million. III. CONVERTIBLE BOND CALL Technip has decided to call its convertible/exchangeable bonds issued in January 2002. As of January 31, 2006, there were 3,579,811 bonds outstanding. The early redemption will occur on March 23, 2006 based on a price of EUR 187.06 per bond (interest included). Convertible/exchangeable bondholders have the ability to exercise their option to receive 4 Technip shares for each convertible bond until the close of business in Paris on March 14, 2006. These bondholders will receive both existing and newly issued Technip shares. The Group today has 1,494,148 treasury shares and will acquire an additional 1,300,000 through the exercise of call options, which will bring the total of existing shares with dividend rights to 2,794,148. As a result, bondholders exercising their option to receive Technip shares will receive 19% in existing shares and 81% in newly created shares. Convertible/exchangeable bonds which are not presented for conversion or exchange by the close of business in Paris on March 14, 2006 will be redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. for cash on March 23, 2006. The redemption is not extended into, nor can it be accepted in, (i) the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or (ii) to any other country in which such an offer would be illegal or subject to restrictions, or (iii) to persons residing in the United States or in any other such countries. IV. 2006 PERSPECTIVES The market conditions of the engineering-construction sector remain favorable. The capital expenditure budgets of the majority of oil companies show for the most part strong increases. As a result, there is great demand for engineering-construction firms. In this environment, the Group's 2006 target is to achieve an operating margin ratio of at least 5.0% on annual revenues of about EUR 6.8 billion (based on an average annual euro/dollar rate of 1.25 and an unchanged scope of consolidation compared to 2005). Cautionary note regarding forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This presentation contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements, or statements of future expectations; within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . These forward-looking statements are not based on historical facts, but rather reflect our current expectations concerning future results and events and generally may be identified by the use of forward-looking words such as "believe", "aim", "expect", anticipate", "intend", "foresee fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. ", "likely", "should", "planned", "may", "estimates", "potential" or other similar words. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by these forward-looking statements. Risks that could cause actual results to differ materially from the results anticipated in the forward-looking statements include, among other things: our ability to successfully continue to originate o·rig·i·nate v. 1. To bring into being; create. 2. To come into being; start. and execute large integrated services In computer networking, IntServ or integrated services is an architecture that specifies the elements to guarantee quality of service (QoS) on networks. IntServ can for example be used to allow video and sound to reach the receiver without interruption. contracts, and construction and project risks generally; the level of production-related capital expenditure in the oil and gas industry as well as other industries; currency fluctuations; interest rate fluctuations; raw material, especially steel, price fluctuations; the timing of development of energy resources; armed conflict or political instability in the Arabic-Persian Gulf, Africa or other regions; the strength of competition; control of costs and expenses; the reduced availability of government-sponsored export financing; the timing and success of anticipated integration synergies; and the evolution, interpretation and uniform application and enforcement of International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). (IFRS), according to which we prepare our financial statements as from January 1, 2005. Some of these risk factors are set forth and discussed in more detail in our Annual Report on Form 20-F as filed with the SEC on June 30, 2005, and as updated from time to time in our SEC filings. Should one of these known or unknown risks materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , or should our underlying assumptions prove incorrect, our future results could be adversely affected, causing these results to differ materially from those expressed in our forward-looking statements. These factors are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could have material adverse effects on our future results. The forward-looking statements included in this release are made only as of the date of this release. We cannot assure you that projected results or events will be achieved. We do not intend, and do not assume any obligation to update any industry information or forward looking information set forth in this release to reflect subsequent events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Except as otherwise indicated, the financial information contained in this document has been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with IFRS, and certain elements would differ materially upon reconciliation to U.S. GAAP. With a workforce of more than 21,000 people, Technip ranks among the top five corporations in the field of oil, gas and petrochemical engineering, construction and services. Headquartered in Paris, the Group is listed in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Paris. The Group's main operations and engineering centers and business units are located in France, Italy, Germany, the UK, Norway, Finland, the Netherlands, the Netherlands, The officially Kingdom of The Netherlands byname Holland Country, northwestern Europe. Area: 16,034 sq mi (41,528 sq km). Population (2005 est.): 16,300,000. Capital: Amsterdam. Seat of government: The Hague. Most of the people are Dutch. USA, Brazil, Abu-Dhabi, China, India, Malaysia and Australia. In support of its activities, the Group manufactures flexible pipes and umbilicals, and builds offshore platforms in its manufacturing plants and fabrication yards in France, Brazil, the UK, the USA, Finland and Angola, and has a fleet of specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. vessels for pipeline installation and subsea construction.
ANNEX I (a)
CONSOLIDATED STATEMENT OF INCOME
IFRS
Euros in Millions Full Year
(except EPS, E/ADS Fourth Quarter (Audited)
and number of ------------------------- -------------------------
fully diluted
shares) 2005 2004* 2005 2004*
------------------ ------------ ------------ ------------ ------------
Revenues 1,384.2 1,314.3 5,376.1 5,140.9
------------------ ------------ ------------ ------------ ------------
Gross Margin 108.3 136.1 558.1 563.1
------------------ ------------ ------------ ------------ ------------
Research &
Development
Expenses (9.8) (8.0) (29.4) (30.2)
SG&A and Other
Costs (67.8) (74.2) (297.7) (307.0)
------------------ ------------ ------------ ------------ ------------
Income from
Operations 30.7 53.9 231.0 225.9
------------------ ------------ ------------ ------------ ------------
Financial Income
(Expense) (31.5) (22.4) (88.8) (66.4)
Income of Equity
Affiliates 0.5 0.3 1.3 1.2
------------------ ------------ ------------ ------------ ------------
Profit Before Tax (0.3) 31.8 143.5 160.7
------------------ ------------ ------------ ------------ ------------
Income Tax 3.7 (11.4) (43.5) (54.2)
Discontinued
Operations - 2.6 (5.0) 7.7
Minority Interests (2.0) 0.4 (1.7) (2.4)
------------------ ------------ ------------ ------------ ------------
Net Income 1.4 23.4 93.3 111.8
------------------ ------------ ------------ ------------ ------------
------------------ ------------ ------------ ------------ ------------
Net Income 1.4 23.4 93.3 111.8
Split Accounting
on Convertible
Bond 4.1 - 16.6 -
Post-tax
Convertible Bond
Financial Charges 8.4 3.4 18.6 13.9
------------------ ------------ ------------ ------------ ------------
Restated Net
Income 13.9 26.8 128.5 125.7
------------------ ------------ ------------ ------------ ------------
------------------ ------------ ------------ ------------ ------------
Number of Fully
Diluted Shares
(1) at Period End 115,349,102 115,544,936 115,349,102 115,544,936
------------------ ------------ ------------ ------------ ------------
------------------ ------------ ------------ ------------ ------------
Fully Diluted EPS
(EUR) 0.12 0.23 1.11 1.09
------------------ ------------ ------------ ------------ ------------
------------------ ------------ ------------ ------------ ------------
Fully Diluted
E/ADS ($)(2) 0.14 0.27 1.32 1.29
------------------ ------------ ------------ ------------ ------------
* Does not include IAS 32 and 39 which were applied as of January 1,
2005.
(1) The number of fully diluted shares includes those that would be
issued both if all outstanding convertible bonds were redeemed for
new shares and if all stock option plans were exercised, excludes
treasury shares and has been adjusted as of December 31, 2004 to
take into account the 4-for-1 share split which occurred on May
13, 2005.
(2) Earnings per American Depositary Share (E/ADS) are in U.S. dollars
and are calculated based upon fully diluted EPS in euros converted
into US dollars using the Federal Reserve Bank of New York noon
buying rate (USD/EUR) of 1.1842 as of December 31, 2005.
ANNEX I (b)
CONSOLIDATED STATEMENT OF CASH FLOWS
IFRS
AUDITED
Euros in Millions 2005
----------------------------------------------------- ----------------
Net Income 93.3
Depreciation of Property, Plants & Equipment 143.3
Provision for Redemption Premium on Convertible Bonds 13.3
Split Accounting of Convertible Bonds 16.6
Stock Option Charge 5.4
Long-Term Provisions (Employee Benefits) 0.7
Deferred Income Tax 17.5
Minority Interests and Other (3.9)
--------
Cash from Operations 286.2
--------
Change in Working Capital 622.3
--------
Net Cash Provided by (Used in) Operating Activities 908.5
-------
----------------------------------------------------- -------- -------
Capital Expenditures (165.7)
Proceeds from Assets Sales 15.0
--------
Net Cash Provided by (Used in) Investment Activities (150.7)
-------
----------------------------------------------------- -------- -------
Increase (Decrease) in Debt (90.3)
Capital Increase 63.0
Dividend Payment (32.0)
Treasury Shares (20.1)
Capital Structure (7.5)
--------
Net Cash Provided by (Used in) Financing Activities (86.9)
-------
----------------------------------------------------- -------- -------
Foreign Exchange Translation Adjustment 82.9
-------
Net Increase (Decrease) in Cash and Equivalents 753.8
=======
----------------------------------------------------- -------- -------
Cash and Equivalents as of December 31, 2004 1,434.0
Cash and Equivalents as of December 31, 2005 2,187.8
--------
(753.8)
=======
ANNEX I (c)
CONSOLIDATED BALANCE SHEET
IFRS
AUDITED
Euros in Millions Dec. 31, Dec. 31,
2005 2004*
------------------------------------------------------------- --------
---------------------------------------------------- -------- --------
Fixed Assets 3,262.8 3,232.5
Deferred Taxes 90.0 66.6
---------------------------------------------------- -------- --------
NON-CURRENT ASSETS 3,352.8 3,299.1
---------------------------------------------------- -------- --------
---------------------------------------------------- -------- --------
Construction Contracts 585.1 400.6
Inventories, Customer & Other Receivables 1,171.3 1,283.9
Cash & Cash Equivalents 2,187.8 1,434.0
---------------------------------------------------- -------- --------
CURRENT ASSETS 3,944.2 3,118.5
---------------------------------------------------- -------- --------
---------------------------------------------------- -------- --------
TOTAL ASSETS 7,297.0 6,417.6
---------------------------------------------------- -------- --------
---------------------------------------------------- -------- --------
Shareholders' Equity (Parent Company) 1,953.7 1,851.6
Minority Interests 13.9 9.8
---------------------------------------------------- -------- --------
SHAREHOLDERS' EQUITY 1,967.6 1,861.4
---------------------------------------------------- -------- --------
---------------------------------------------------- -------- --------
Convertible Bond 650.1 670.9
Other Long-Term Debt 680.5 737.8
Long-Term Provisions 135.4 115.4
Deferred Taxes 100.4 115.5
---------------------------------------------------- -------- --------
NON-CURRENT LIABILITIES 1,566.4 1,639.6
---------------------------------------------------- -------- --------
---------------------------------------------------- -------- --------
Short-Term Debt 189.1 192.0
Short-Term Provisions 112.9 121.4
Construction Contracts 1,672.4 915.6
Accounts Payables & Other Advances Received 1,788.6 1,687.6
---------------------------------------------------- -------- --------
CURRENT LIABILITIES 3,763.0 2,916.6
---------------------------------------------------- -------- --------
---------------------------------------------------- -------- --------
TOTAL SHAREHOLDERS' EQUITY & LIABILITIES 7,297.0 6,417.6
---------------------------------------------------- -------- --------
* Does not include IAS 32 and 39 which were applied as of January 1,
2005.
Changes in Shareholders' Equity (Parent Company)
----------------------------------------------------------------------
Shareholders' Equity at December 31, 2004 1,851.6
Net Income at December 31, 2005 93.3
Capital Increase for Employee Stock Option Plans 63.0
Equity Component of Convertible Bond (IAS 32) 32.8
Other Impacts of IAS 32 and 39 (76.3)
Dividend Payment (32.0)
Translation Adjustments and Other 21.3
Shareholders' Equity at December 31, 2005 1,953.7
------------------------------------------------------------- --------
ANNEX I (d)
TREASURY AND CURRENCY RATES
IFRS
AUDITED
Euros in Millions Treasury and Financial Debt
----------------------------------
Dec. 31, 2005 Dec. 31, 2004*
------------------------------------==================================
Marketable Securities 622 739
----------------------------------------------------------------------
Cash 1,566 695
----------------------------------------------------------------------
Cash & Cash Equivalents (A) 2,188 1,434
----------------------------------------------------------------------
Short-Term Debt 189 192
----------------------------------------------------------------------
Long-Term Debt 1,331 1,409
----------------------------------------------------------------------
Gross Debt (B) 1,520 1,601
----------------------------------------------------------------------
Net Financial Cash/(Debt) (A - B) 668 (167)
----------------------------------------------------------------------
* Does not include IAS 32 and 39 which were applied as of January 1,
2005.
Euro vs. Foreign Currency Conversion Rates
Statement of Income Balance Sheet
----------------------------- ------------------------------
Dec 31, June 30, Dec 31, Dec 31, June 30, Dec 31,
2005 2005 2004 2005 2005 2004
========= ========= ========= ========= ========= ========= ==========
USD 1.24 1.29 1.24 1.18 1.21 1.36
--------- --------- --------- --------- --------- --------- ----------
GBP 0.68 0.69 0.68 0.69 0.67 0.71
--------- --------- --------- --------- --------- --------- ----------
ANNEX II (a)
REVENUES BY REGION
IFRS
NOT AUDITED
Euros in Millions Fourth Quarter Full Year
-------------------- --------------------
2005 2004 Change 2005 2004 Change
============================ ====== ====== ====== ====== ====== ======
Europe, Russia, C. Asia 299 364 -17.9% 1,384 1,279 8.2%
---------------------------- ------ ------ ------ ------ ------ ------
Africa 261 358 -27.1% 1,258 1,285 -2.1%
---------------------------- ------ ------ ------ ------ ------ ------
Middle East 326 305 6.9% 1,108 1,269 -12.7%
---------------------------- ------ ------ ------ ------ ------ ------
Asia Pacific 211 68 210.3% 584 379 54.1%
---------------------------- ------ ------ ------ ------ ------ ------
Americas 287 219 31.1% 1,042 929 12.2%
---------------------------- ------ ------ ------ ------ ------ ------
Total 1,384 1,314 5.3% 5,376 5,141 4.6%
---------------------------- ------ ------ ------ ------ ------ ------
ANNEX II (b)
SUPPLEMENTAL INFORMATION BY BUSINESS SEGMENT
IFRS
NOT AUDITED
Euros in Millions Q4 Q4
2005 2004 Change FY 2005 FY 2004 Change
------ ------ ------ -------- -------- ------
------------------------
SURF
------------------------ ------ ------ ------ -------- -------- ------
Revenues 452.1 348.8 29.6% 1,797.6 1,422.1 26.4%
------------------------ ------ ------ ------ -------- -------- ------
Gross Margin 25.7 60.7 -57.7% 243.7 256.6 -5.0%
------------------------ ------ ------ ------ -------- -------- ------
Income from Operations (2.2) 36.8 nm 118.8 146.5 -18.9%
------------------------ ------ ------ ------ -------- -------- ------
------------------------ ------ ------ ------ -------- -------- ------
Depreciation 34.4 28.1 22.4% 107.7 97.0 11.0%
------------------------ ------ ------ ------ -------- -------- ------
------------------------
OFFSHORE FACILITIES
------------------------ ------ ------ ------ -------- -------- ------
Revenues 263.4 287.8 -8.5% 1,013.4 1,066.6 -5.0%
------------------------ ------ ------ ------ -------- -------- ------
Gross Margin 22.4 20.9 7.2% 91.3 81.4 12.2%
------------------------ ------ ------ ------ -------- -------- ------
Income from Operations 7.3 4.2 73.8% 27.1 17.5 54.9%
------------------------ ------ ------ ------ -------- -------- ------
------------------------ ------ ------ ------ -------- -------- ------
Depreciation 4.5 5.4 -16.7% 14.9 17.1 -12.9%
------------------------ ------ ------ ------ -------- -------- ------
------------------------
ONSHORE DOWNSTREAM
------------------------ ------ ------ ------ -------- -------- ------
Revenues 614.0 602.3 1.9% 2,318.2 2,384.1 -2.8%
------------------------ ------ ------ ------ -------- -------- ------
Gross Margin 52.4 49.3 6.3% 195.1 204.2 -4.5%
------------------------ ------ ------ ------ -------- -------- ------
Income from Operations 25.3 23.9 5.7% 88.3 84.4 4.6%
------------------------ ------ ------ ------ -------- -------- ------
------------------------ ------ ------ ------ -------- -------- ------
Depreciation 3.3 2.7 22.2% 11.2 12.4 -9.7%
------------------------ ------ ------ ------ -------- -------- ------
------------------------
INDUSTRIES
------------------------ ------ ------ ------ -------- -------- ------
Revenues 54.7 75.4 -27.5% 246.9 268.1 -7.9%
------------------------ ------ ------ ------ -------- -------- ------
Gross Margin 8.0 4.9 63.3% 28.0 20.4 37.3%
------------------------ ------ ------ ------ -------- -------- ------
Income from Operations 2.5 (2.9) nm 6.0 (7.1) nm
------------------------ ------ ------ ------ -------- -------- ------
------------------------ ------ ------ ------ -------- -------- ------
Depreciation 0.7 0.6 16.7% 2.4 1.7 41.2%
------------------------ ------ ------ ------ -------- -------- ------
------------------------
CORPORATE
------------------------ ------ ------ ------ -------- -------- ------
Income from Operations (2.2) (8.2) -73.2% (9.2) (15.5) -40.6%
------------------------ ------ ------ ------ -------- -------- ------
------------------------ ------ ------ ------ -------- -------- ------
Depreciation 1.9 2.4 -20.8% 7.1 7.2 -1.4%
------------------------ ------ ------ ------ -------- -------- ------
nm = not meaningful
ANNEX II (c)
ORDER INTAKE & BACKLOG
NOT AUDITED
Euros in Millions Order Intake by Business Segment
------------------------------------------
Fourth Quarter Full Year
--------------------- --------------------
2005 2004 Change 2005 2004 Change
--------------------------- ------- ------ ------ ------ ------ ------
SURF 445 402 10.7% 2,623 1,470 78.5%
--------------------------- ------- ------ ------ ------ ------ ------
Offshore Facilities 55 333 -83.4% 1,258 953 32.0%
--------------------------- ------- ------ ------ ------ ------ ------
Onshore Downstream 745 1,608 -53.7% 5,753 2,510 129.2%
--------------------------- ------- ------ ------ ------ ------ ------
Industries 78 34 130.6% 172 158 8.9%
--------------------------- ------- ------ ------ ------ ------ ------
Total 1,323 2,377 -44.3% 9,806 5,092 92.6%
--------------------------- ------- ------ ------ ------ ------ ------
------- ------ ------
Backlog by Business
Segment
---------------------
As of As of
Dec. Dec. Change
31, 31,
2005 2004
=========================== ======= ====== ======
SURF 2,688 1,860 44.5%
--------------------------- ------- ------ ------
Offshore Facilities 1,207 944 27.8%
--------------------------- ------- ------ ------
Onshore Downstream 7,127 3,758 89.6%
--------------------------- ------- ------ ------
Industries 148 217 -31.8%
--------------------------- ------- ------ ------
Total 11,170 6,779 64.8%
--------------------------- ------- ------ ------
------- ------ ------
Backlog by Region
---------------------
As of As of
Dec. Dec. Change
31, 31,
2005 2004
=========================== ======= ====== ======
Europe, Russia, C Asia 961 1,077 -10.8%
--------------------------- ------- ------ ------
Africa 2,008 1,743 15.2%
--------------------------- ------- ------ ------
Middle East 5,100 2,403 112.2%
--------------------------- ------- ------ ------
Asia Pacific 1,014 460 120.4%
--------------------------- ------- ------ ------
Americas 2,087 1,096 90.4%
--------------------------- ------- ------ ------
Total 11,170 6,779 64.8%
--------------------------- ------- ------ ------
Estimated Backlog Scheduling at December 31, 2005
-------------------------------------------------
SURF Offshore Onshore Industries Group
Facilities Downstream
==================== ====== =========== =========== ========== =======
2006 1,797 871 3,000 121 5,789
-------------------- ------ ----------- ----------- ---------- -------
2007 671 208 3,050 19 3,948
-------------------- ------ ----------- ----------- ---------- -------
2008 and Beyond 220 128 1,077 8 1,433
-------------------- ------ ----------- ----------- ---------- -------
Total 2,688 1,207 7,127 148 11,170
-------------------- ------ ----------- ----------- ---------- -------
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