Positive results driven by sustained growth in France and in Europe.

The Gaz de France Board of Directors, chaired by Jean-François Cirelli, today presented the Group's consolidated financial statements for the half year ended 30 June 2004.

- Natural gas sales by volume grew 12.5% (10% on a comparable basis and with constant weather conditions):

• sales to eligible customers abroad and to household customers in France rose sharply
• total natural gas sales reached 36 billion cu.m (BCM) in first-half 2004, compared with 32 BCM in first half 2003.

- Half-year sales totalled EUR 9,503 million, up 7.4% (6.1% on a comparable basis) :

• this growth illustrates the Group's ongoing development and expansion in Europe: 26.4% of sales were generated by international business, compared with 20.6% in first-half 2003.

- Half-year operating income stood at EUR 1,445 million, up 6.4%

• over two-thirds of this income is generated by infrastructure activities with regulated revenues.

- Net income, Group share, reached EUR 835 million, up 2.3%

- A healthy financial situation:

• cash flow remained stable in first half 2004 at EUR 1,826 million
• shareholder's equity rose to EUR 10,375 million
• net financial debt totalled EUR 3,708 million, down from EUR 5,164 million at 31 December 2003, notably due to the seasonal reduction in working capital requirements.

Outlook 2004

Commenting these results, Jean-François Cirelli, Chairman and CEO, declared: “In context of broader market opening, Gaz de France enjoyed steady growth in first half 2004, and its results have confirmed the validity of its development strategy. For the year as a whole, and taking into account the seasonal nature of our activities, with much higher business volumes in the first semester, Group net income, under average weather conditions, should exceed that of 2003 (EUR 910 million).”

Consolidated statement of income

Geographical breakdown

(*) sales by destination

Breakdown by branch

Unless otherwise stated, all figures given in this press release are established at 30 June 2004 and the changes are calculated with respect to first half 2003.

The data is presented in accordance with French accounting standards. Gaz de France is pursuing its transition programme to international standards and will adopt the IFRS system from 1 January 2005, while producing comparable data for 2004.

CONSOLIDATED ACCOUNTS

Business

The Group reported consolidated sales of EUR 9,503 million at end June 2004, a 7.4% increase over the same period in 2003. Excluding the change in scope of consolidation due to the acquisition of the German businesses of Preussag Energie on 1 June 2003, the increase is 6.1%.

Natural gas sales at end June 2004 totalled 397 TWh (around 36 BCM), up 12.5%. Excluding the impact of weather variations and the integration of Preussag Energie, the Group's natural gas sales rose 10 %, thanks notably to growth in sales to eligible customers abroad and to household customers in France. The contribution of international activities, including exports, to Group sales continued to increase. It represented 26.4% of consolidated sales in first half 2004, compared with 20.6% in first half 2003.

The Group's operating income, analysed below by activity, was up 6.4% to EUR 1,445 million at end June 2004.

The growth in Group sales is driven by the Energy and Services Branch

The Energy and Services Branch posted sales of EUR 8,727 million in first half 2004, an 8.2% increase over the same period in 2003. Its operating income totalled EUR 451 million at 30 June 2004 (31.2% of Group operating income), down EUR 2 million with respect to first half 2003, taking account of the activity of the Purchase and Sale of Energy segment.

The Exploration-Production segment posted sales of EUR 476 million at 30 June 2004 (EUR 273 million in first half 2003) and an operating income of EUR 139 million (EUR 93 million at 30 June 2003). These substantial increases can be attributed to the acquisition of the German businesses of Preussag Energie consolidated on 1 June 2003, combined with the positive impact of rising crude oil prices.

The Purchase and Sales of Energy segment posted sales of EUR 7,662 million, up 6.5% compared with first half 2003.

A new milestone in market liberalization was reached on 10 August 2003 with market broadening from 20% to 37%. However, thanks to a major sales drive, Gaz de France sales volumes to eligible customers in France remained stable from one half year to the next. Moreover, Gaz de France attracted 102,000 new residential heating customers in first half 2004, compared with 97,000 in first half 2003.

Sales to industrial customers are developing rapidly in Europe, notably in the United Kingdom, Italy, Belgium and the Netherlands, where sales volumes have risen by 59%.

The operating income of this activity amounts to EUR 280 million in first half 2004 compared to EUR 415 million in first half 2003, due to a reduction in gross margin caused partly by cyclical factors such as tariff adjustments, changes in supply conditions and gas destockings in first half 2004.

The Services segment posted sales of EUR 745 million, up 10% over the same period in 2003. Operating income was EUR 32 million in first half 2004, versus EUR 15 million in first half 2003. The Services activities in Italy have returned to profit, with an operating income of EUR 7 million in first half 2004, following a loss of EUR 4 million in first half 2003.

The Infrastructures Branch is contributing strongly to growth in consolidated operating income

The Infrastructures Branch reported sales of EUR 3,545 million in first half 2004, up slightly by 1.3%. This includes EUR 2,580 million of internal invoices that are eliminated from consolidation[1]. The Branch's operating income totalled EUR 999 million in first half 2004, up EUR 134 million compared with first half 2003.

Sales by Transmission and Storage-France (EUR 1,051 million in first half 2004) and Distribution-France (EUR 1,740 million in first half 2004) remained stable against first half 2003. The operating income of these segments increased by EUR 130 million compared with first half 2003 due to a decrease in payments to pension insurance funds and provisions : personnel disability benefits and occupational injury were fully provisioned in first half 2003.

Transmission and Distribution-International reported sales of EUR 765 million, up 6.7%. Operating income grew slightly to EUR 147 million in first half 2004 versus EUR 143 million in first half 2003.

Foreign exchange results reflecting the Group's asset protection policy

The Group's net financial expenses stood at EUR 129 million at 30 June 2004, compared with EUR 1 million at 30 June 2003. This variation is due mainly to a foreign exchange result which fluctuates in line with the US dollar-euro exchange rate. As part of its asset protection policy, the Group maintains a primary or synthetic debt in dollars, currently standing at around USD 1 billion, which reflects the exposure of certain of its assets to the US dollar.

The Group's tax charge totalled EUR 471 million, i.e., 35.8 % of pre-tax income.

Amortization of goodwill totalled EUR 29 million in first half 2004. The amount posted in first half 2003 (EUR 44 million) included the exceptional amortization of exploration-production assets in the United Kingdom for a total of EUR 20 million.

Net income, Group share, at end June 2004 stood at EUR 835 million, a 2.3% increase over first half 2003.

A HEALTHY FINANCIAL SITUATION

A traditional decrease in working capital requirements during the first half year

The decrease in working capital requirements in the first half is a traditional occurrence due to the seasonal nature of Gaz de France's activity. However, the drop is much more pronounced in 2004 than in 2003 mainly due to a decrease in corporate tax payments. In addition, the end, in June 2003, of a sale of commercial receivables programme launched in 1999 resulted in a one-off EUR 152 million increase in working capital.

Investments over the period

Total investments amounted to EUR 705 million in first half 2004, versus EUR 1,607 million in first half 2003.

Group capital expenditures stood at EUR 629 million, primarily for Transmission and Storage-France (EUR 92 million), Distribution-France (EUR 265 million), and Exploration-Production (EUR 178 million).

External growth investments totalled EUR 76 million at 30 June 2004, with no major transaction having been completed by this date. In first half 2003, they totalled EUR 919 million, and mainly included the acquisition of Preussag Energie in Germany for EUR 859 million.

Cash flow after the impact of the reduction in working capital totalled EUR 2,504 million. It was used to finance investments, to pay dividends for 2003 (EUR 338 million), and to reduce Group net debt by EUR 1,456 million compared with 31 December 2003.

A seasonal reduction in net financial debt at 30 June

Net financial debt at end June 2004 was EUR 3,708 million, versus EUR 5,164 million at 31 December 2003 and EUR 4,416 million at 30 June 2003.

The share of net debt held by the parent company continues to increase. It represented 76% of the total at 30 June 2004 compared to 73% at 30 June 2003.

Moreover, the majority of net debt is now at interest fixed rates: it represented 76% of the total at 30 June 2004, versus 65% at 30 June 2003.

Gross debt is primarily long-term: 84% at 30 June 2004 compared with 71% at 30 June 2003.

Lastly, 63% of loans were denominated in euros at end June 2004 versus 66 % at end June 2003.

The anticipated financial structure at end 2004 should be characterized by an increase in net debt against the level at 30 June 2004 due to the combined effects of seasonal variation in activity and external growth operations which may be concluded before the end of 2004. In particular, Gaz de France is pursuing negotiations with a view to acquiring a 35% interest in the capital of Société Nationale d'Electricité et de Thermique (Snet). Discussions with the Romanian government, which has selected Gaz de France as a “preferred bidder” for privatization of the local gas company Distrigaz Sud, have also reached an advanced stage.

[1] Transmission-Storage France and Distribution France provide the Energy Purchase and Sale segment entities with the capacities required to carry the gas they sell through the transmission and distribution networks.

Press Contact: Alix Griveaud - Tel +33 1 47 54 30 17 - Fax +33 1 47 54 74 42

Investor Relations: Valérie Duval - Tel +33 1 47 54 79 04 - Fax +33 1 47 54 70 45

ANNEX 1

KEY FIGURES SINCE 2001

EUR million

ANNEX 2 – TRANSITION TO IFRS

State of progress

Gaz de France is pursuing its programme of transition to international accounting standards and intends to adopt the IFRS system from 1 January 2005, while producing comparable data for fiscal year 2004.

The programme is being led by Group Finance, with support from a network of correspondents in the different business units and subsidiaries to ensure consistency between accounting policies, and with assistance from outside experts. Two progress reports have been presented to the Group Audit Committee, in September 2003 and in June 2004.

Project organization

The Group already applies all preferential methods of the regulation CRC 99-02, except for the posting of pensions and related benefits to the balance sheet. For this item, Gaz de France has decided to use the preferential method when the new pension scheme financing mechanisms for the electricity and gas industries come into force. As soon as the legislative and regulatory provisions of this reform become effective, Gaz de France's financial commitments relating to pensions and related benefits will be posted on the balance sheet.

In first half 2004, the Group adapted its reporting and consolidation information system with a view to gathering all data required to prepare the financial statements in IFRS format and to draw up comparative documents for the fiscal year 2004. The choice of format for the financial statements has been decided. In particular, Gaz de France will continue to present a statement of income by nature. The Group has also opted for non-restatement of acquisitions subsequent to 1 January 2004, the date of the opening balance sheet.

From July to September 2004, training in IFRS was provided to all operational players in accounts and management control, in the parent company and all its subsidiaries.

Other priorities for 2004 are to update the manual of the Group's accounting principles in compliance with IFRS and to develop the relevant new procedures.

Identifying the main divergences in accounting principles

As in 2003, the Group is keeping a close watch on all developments in the IFRS system since certain points, such as accounting methods for franchises and financial instruments, have not yet been finalized.

The other key points under close scrutiny concern goodwill and deferred taxes.

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