NHOA : Q4 2023 | FY 2023 Financial Statements – EN

NHOA

Société anonyme

28 Rue de Londres

75009 PARIS

___________________________________

Statutory auditors' report

on the consolidated financial statements

For the year ended December 31, 2023

RBB Business Advisors

133 Bis rue de l'université

75007 PARIS

Commissaire aux comptes

Membre de la compagnie régionale de Paris

Deloitte & Associés

6, place de la Pyramide

92908 Paris-La Défense Cedex

S.A.S. au capital de 2 188 160 €

572 028 041 RCS Nanterre

Société de Commissariat aux Comptes inscrite à la Compagnie Régionale de Versailles et du Centre

NHOA

Société anonyme 28 Rue de Londres

75009 PARIS

_______________________________

Statutory auditors' report

on the consolidated financial statements

For the year ended December 31, 2023

_______________________________

This is a translation into English of the statutory auditors' report on the financial statements of the Company issued in French and it is provided solely for the convenience of English speaking users. This statutory auditors' report includes information required by European regulation and French law, such as information about the appointment of the statutory auditors or verification of the management report and other documents provided to shareholders. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.

To the Nhoa Shareholders' Meeting,

Opinion

In compliance with the engagement entrusted to us by your Shareholders' Meeting, we have audited the accompanying consolidated financial statements of Nhoa for the year ended December 31, 2023.

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2023 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

The audit opinion expressed above is consistent with our report to the Audit Committee.

Basis for Opinion

Audit Framework

We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the "Statutory Auditors' Responsibilities for the Audit of the Consolidated Financial Statements" section of our report.

Independence

We conducted our audit engagement in compliance with independence requirements of the French Commercial Code (code de commerce) and the French Code of Ethics (code de déontologie) for statutory auditors for the period from January 1, 2023 to the date of our report, and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014.

Justification of Assessments - Key Audit Matters

In accordance with the requirements of Articles L.821-53 and R.821-180 of the French Commercial Code relating to the justification of our assessments, we bring your attention to the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period, as well as our responses to those risks.

These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon. and we do not provide a separate opinion on specific items of the consolidated financial statements.

Valuation of revenue from construction contracts

(Notes 3.9.10 "Recognition of revenues from rendering of services and construction contracts" and 5.1. "Revenue" to the 2023 consolidated financial statements).

Key audit matter

Consolidated revenue totaled €272.2 million for the year ended December 31, 2023, including €204.5 million from construction contracts recognized on a percentage completion basis This revenue is recognized on a percentage completion basis when the criteria are met in accordance with IFRS 15. The revenue on these construction contracts is recognized according to the percentage completion method on the basis of the costs incurred in relation to the budget. Revenue recognized on a percentage completion basis is carried by subsidiaries: Nhoa Energy for €129.7 million, Nhoa Australia for €56.4 million, Nhoa Latam for €11.2 million and Nhoa Americas for €7.2 million.

We considered that revenue recognition on a percentage completion basis to be a key audit matter as the estimated costs for these construction contracts are based on operating assumptions and budget monitoring performed by management using its judgment and these estimates have a direct material impact on the amount of revenue recognized in the consolidated financial statements.

Our response

We assessed the procedures adopted by Nhoa Australia, Nhoa Energy, Nhoa Latam and Nhoa Americas to recognize revenue on a percentage completion basis.

Our work mainly consisted in:

• Analyzing the contracts for the period and the accounting treatment used for the companies Nhoa Energy, Nhoa Australia, Nhoa Americas et Nhoa Latam as of 12/31/2023 in connection with the contracts and according to the completion of the services provided;
• Comparing current and past estimates by project to ensure the reliability and robustness of the budget forecasting system and obtain documentation (contract addendum) for projects with current estimates that are different from previous estimates;
• Obtaining an understanding of the process used to estimate the costs incurred for reviewed contracts against the estimated costs controlled by management and verifying the design and implementation of the controls implemented by the Company to estimate these costs;
• Corroborating the analysis of the reviewed contracts with the estimated costs and the reviews conducted by the management of Nhoa Energy, Nhoa Australia, Nhoa Latam and Nhoa Americas;
• Based on a selected sample of contracts, verifying the correct application of the revenue measurement and recognition process and the existence of costs incurred at the reporting date;
• Analyzing the margin for each contract tested and verifying the budget assumptions adopted by management to ensure the relevance of total budgeted costs.
• Assessing the appropriateness of the disclosures in the notes to the consolidated financial statements.

Recognition of fixed assets relating to developments

(Notes 3.9.5 and 5.15 "Intangible assets" to the 2023 consolidated financial statements)

Risk identified

As at December 31, 2023, intangible assets arising from development expenses represented a net carrying amount of €17.6 million in the Nhoa SA group balance sheet.

As indicated in Note 3.9.5 "Intangible assets" to the consolidated financial statements, the Nhoa group capitalizes its external and internal direct and indirect development costs once the corresponding developed project is probable in accordance with IAS 38.

We considered the recognition and measurement of internally generated development projects to be a key audit matter considering the level of judgment required by management to assess compliance with capitalization criteria for the corresponding costs to determine the recoverable amount.

Our response

Our procedures consisted in:

• Obtaining an understanding of the controls designed and implemented by Nhoa Energy and Free2Move to identify and measure development costs that may be capitalized;
• Obtaining an understanding of the process to identify projects under development;
• Verifying that the conditions for capitalizing projects in accordance with accounting standards are properly satisfied;
• Analyzing the estimated development costs incurred for eligible projects;
• Verifying the technical feasibility needed to complete the projects through interviews with project managers;
• Verifying the intention of Nhoa Energy and Free2Move to complete and sell the intangible asset;
• Checking the availability of appropriate resources (technical, financial and other) to complete the development and to use or sell the fixed asset;
• Analyzing the amortization method used and performing arithmetical controls.
• Assessing the appropriateness of the disclosures in the notes to the consolidated financial statements.

Specific verifications

We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations of the information pertaining to the Group presented in the Board of Directors' management report.

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

Other Legal and Regulatory Verifications or Information

Format of presentation of the consolidated financial statements included in the annual financial report

We have also verified, in accordance with the professional standard applicable in France relating to the procedures performed by the statutory auditor relating to the annual and consolidated financial statements presented in the European single electronic format, that the presentation of the consolidated financial statements included in the annual financial report mentioned in Article L.451-1-2, I of the French Monetary and Financial Code (code monétaire et financier), prepared under the responsibility of Management, complies with the single electronic format defined in the European Delegated Regulation No. 2019/815 of December 17, 2018. As it relates to consolidated financial statements, our work includes verifying that the tagging of these consolidated financial statements complies with the format defined in the above delegated regulation.

Based on the work we have performed, we conclude that the presentation of the consolidated financial statements included in the annual financial report complies, in all material respects, with the European single electronic format.

Due to the technical limits inherent to the macro-tagging of consolidated financial statements in accordance with the European single electronic format, it is possible that the content of certain tags in the notes to the consolidated financial statements are not presented in an identical manner to the accompanying consolidated financial statements.

Furthermore, we have no responsibility to verify that the consolidated financial statements that will ultimately be included by your Company in the annual financial report filed with the AMF are in agreement with those on which we have performed our work.

Appointment of the Statutory Auditors

We were appointed as statutory auditors of Nhoa by the Shareholders' Meeting of July 1, 2020 for Deloitte & Associés and March 6, 2015 for RBB Business Advisors.

As of December 31, 2023, Deloitte & Associés and RBB Business Advisors were in the 4th year and 9th year of total uninterrupted engagement, respectively.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to liquidate the Company or to cease operations.

The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk management systems and, where applicable, its internal audit, regarding the accounting and financial reporting procedures.

The consolidated financial statements were approved by the Board of Directors.

Statutory Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Objectives and audit approach

Our role is to issue a report on the consolidated financial statements. Our objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As specified in Article L.821-55 of the French Commercial Code, our statutory audit does not include assurance on the viability of the Company or the quality of management of the affairs of the Company.

As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor exercises professional judgment throughout the audit and furthermore:

• Identifies and assesses the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;
• Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the consolidated financial statements;
• Assesses the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report. However, future events or conditions may cause the Company to cease to continue as a going concern. If the statutory auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the consolidated financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein;
• Evaluates the overall presentation of the consolidated financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtains sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. The statutory auditor is responsible for the direction, supervision and performance of the audit of the consolidated financial statements and for the opinion expressed on these consolidated financial statements.

Report to the Audit Committee

We submit a report to the Audit Committee which includes in particular a description of the scope of the audit and the audit program implemented, as well as significant audit findings. We also report, if any, significant deficiencies in internal control regarding the accounting and financial reporting procedures that we have identified.

Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period and which are therefore the key audit matters that we are required to describe in this report.

We also provide the Audit Committee with the declaration referred to in Article 6 of Regulation (EU) no. 537/2014, confirming our independence pursuant to the rules applicable in France as defined in particular by Articles L.821- 27 to L.821-34 of the French Commercial Code and in the French Code of ethics for statutory auditors. Where appropriate, we discuss with the Audit Committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.

Paris- La Défense, April 2, 2024

The Statutory Auditors

RBB Business Advisors Deloitte & Associés

/DSS2//DSS1/

Marc BAIJOT

Benjamin HADDAD

I

FINANCIAL REPORT 2023

AS AT 31 DECEMBER 2023

	Index of Contents
1	MANAGEMENT REPORT	4
1.1	Definitions	5
1.2	NHOA S.A., the parent company	10
1.3	Outlook	10
1.4	Summary of the FY 2023 Group's Results	13
1.5	Important events during the period	15
1.6	Subsequent events	21
1.7	Main Risks and Uncertainties	22
1.8	Transactions between Related Parties	22
2	CONSOLIDATED FINANCIAL STATEMENTS	23
2.1	Consolidated Income Statement	23
2.2	Consolidated Statement of Other Comprehensive Income	24
2.3	Consolidated Balance Sheet	25
2.4	Consolidated Statement of Changes in Equity	26
2.5	Consolidated Statement of Cash Flows	27
3	ACCOUNTING STANDARDS AND METHODS	28
3.1	Accounting Principles and method evolution	28
3.1.1	New methods	28
3.1.2	Impacts of Middle East	29
3.1.3	Impacts of Ukraine Crisis	29

3.1.4 Risks associated with foreign exchange rate………………………………………..……………………………………..30

3.2	Format of the financial statements	30
3.3	Functional and presentation currency	30
3.4	Use of estimates	30
3.5	Key Performance Indicators	32
3.6	Segment information	32
3.7	Evolution of the consolidation area	32
3.8	Key Performance Indicators	34
3.9	Significant accounting policies	37
3.9.1	Business combinations	37
3.9.2	Financial instruments	37
3.9.3	Share capital	39
3.9.4	Property, plant and equipment	39
3.9.5	Intangible assets	40
3.9.6	Impairment of assets	41
3.9.7	Inventories	41
3.9.8	Employee benefits	42
3.9.9	Provisions	42
3.9.10	Revenues recognition	43
3.9.11	Income taxes	44
3.9.12	Treasury stock and earnings per share	45
3.9.13	Other information	45
		2