WENDEL : 2017 Full-Year Results Increase in Net Asset Value and Net Income in 2017

Donnerstag, 22. März 2018 07:31

2017 Full-Year Results

Increase in Net Asset Value and Net Income in 2017

Net Asset Value up 14.6% in 2017 to €176.4 per share

Net Asset Value as of March 7, 2018 of €167.3 per share, up 3.3% over 12 months

Consolidated 2017 sales of €8.3 billion; net income, Group share of €200 million

- Consolidated sales increased 8.4% to €8,329.1 million

- Net income from operations dipped by 2.3%, in part because Saint-Gobain was deconsolidated in H1 after 21.7 million shares were sold in late May and early June

- Net income of €534.1 million and net income, Group share of €200.0 million

Development of portfolio companies with 29 value-creating transactions

            · Stahl acquired BASF's leather chemicals business

            · The sale of Constantia Flexibles' Labels business

            · Portfolio companies made a total of 27 acquisitions in 2017


Principal changes in the portfolio

            · Tsebo acquisition closed in February 2017

            · Further disposal of Saint-Gobain shares in 2017, Wendel now owns 2.6% of the share capital

            · Stake in exceet sold in November 2017

            · Plan to sell Saham investment announced in March 2018


Return to shareholders

- Share buyback program: 599,412 shares repurchased in 2017 and 2% of share capital cancelled in October 2017

- Ordinary dividend of €2.65 per share, up 12.8%, to be proposed at the Annual Shareholders' Meeting on May 17, 2018


Changes to the composition of the Supervisory Board

·         Nicolas ver Hulst to be appointed Chairman of the Supervisory Board after the May 17, 2018 Shareholders' Meeting

·         Gervais Pellissier to be appointed Vice-Chairman of the Supervisory Board after the Annual Shareholders' Meeting of May 17, 2018


André François-Poncet, Wendel Group CEO, said:

"In 2017, Wendel focused on its portfolio, continuing to divest from Saint-Gobain and finalizing transformational deals such as Stahl's acquisition of BASF's leather chemicals business and Constantia Flexibles' sale of its Labels business at favorable terms. 2017 also saw Bureau Veritas return to organic growth.


Since the beginning of the new year, as Wendel's new Group CEO, I have been working alongside Bernard Gautier, focusing our efforts on Wendel's portfolio, on strengthening and focusing our resources on our core markets: Europe, the United States and Africa. In the coming months, we will orient our research toward companies of a significant size while taking into account current valuations, which are generally favorable to sellers. In this context, we will not hesitate to seize opportunities to simplify our portfolio, as we did by selling our minority stake in Saham at favorable terms."


Contribution of Group companies to 2017 sales


2017 consolidated sales


(in millions of euros) 2016 2017 var. Organic var.
Bureau Veritas 4,549.2 4,689.4 +3.1% +2.2%
Constantia Flexibles (1) 1,461.1 1,487.5 +1.8% +1.6%
Cromology 737.3 704.6 -4.4% -1.3%
Stahl 655.7 733.3 +11.8% +2.2%
Oranje-Nassau Développement 279.3 714.3    
CSP Technologies 114.5 120.5 +5.2% +1.0%
Mecatherm 118.7 84.3 -29.0% -29.0%
Nippon Oil Pump 46.1 48.5 +5.2% +10.4%
Tsebo (2) n.a. 461.0 n.a. +7,2 %(3)
Consolidated net sales 7,682.7 8,329.1 +8.4% +1.3%
  1. Following the sale of the Labels division, and in accordance with IFRS 5, the 2016 and 2017 contributions of this division have been reclassified in "Net income from discontinued operations and operations held for sale".
  2. Company consolidated from February 2017.
  3. Organic growth over 12 months.


2017 sales of equity-accounted companies


(in millions of euros) 2016 2017 var. Organic var.
Allied Universal (1) 1,916.1 4,704.0 n.a. +2.8%(2)
IHS 817.9 982.2 +20.1% n.a.
Oranje-Nassau Développement        
PlaYce (formerly SGI Africa) (3) 2.1 7.3 n.a. n.a.

(1) Since August 1, 2016, the date the merger between AlliedBarton and Universal Services of America was finalized, Allied Universal has been consolidated by the equity method. In accordance with IFRS 5, AlliedBarton's activities in the first seven months of the year, until the merger with Universal Services of America, are presented in the income statement under "Net income from operations to be accounted for by the equity method".

(2) Total proforma growth over 12 months was 10%, and organic growth is calculated proforma, taking into account the merger.

(3) Company accounted for by the equity method since August 2016.

2017 consolidated results


(in millions of euros) 2016 2017
Consolidated subsidiaries 720.2 703.6
Financing, operating expenses and taxes -203.3 -198.6
Net income from operations(1) 516.9 505.0
Net income from operations,(1) Group share 199.4 169.0
Non-recurring net income -537.9 142.7
Impact of goodwill allocation -120.1 -113.6
Total net income -141.1 534.1
Net income, Group share -366.8 200.0

(1) Net income before goodwill allocation entries and non-recurring items.

2017 net income from operations


(in millions of euros) 2016 2017 Change
Bureau Veritas 424.7 437.8 +3.1%
Stahl 95.3 84.0 -11.9%
Constantia Flexibles 67.1 82.9 +23.6%
Cromology 17.5 7.5 -57.2%
AlliedBarton 29.8 - n.a.
Allied Universal (equity method) 0.7 11.9 n.a.
Saint-Gobain (equity method until May 31, 2017) 106.6 40.7 -61.8%
Saint-Gobain dividend - 17.8 n.a.
IHS (equity method) -44.5 4.1 n.a.
Oranje-Nassau Développement 23.0 16.8 -26.7%
Tsebo - 2.2 n.a.
Parcours 4.1 - n.a.
Mecatherm 8.3 3.4 -59.5%
CSP Technologies 8.7 5.0 -43.1%
Nippon Oil Pump 2.9 5.8 +97.6%
exceet (equity method) -0.5 0.8 n.a.
PlaYce (Equity method) -0.5 -0.3 n.a.
Total contribution from Group companies 720.2 703.6 -2.3%
of which Group share 402.7 367.7 -8.7%
Total operating expenses -60.6 -53.9 +11.0%
Total financial expense -142.8 -144.8 -1.4%
Net income from operations 516.9 505.0 -2.3%
of which Group share 199.4 169.0 -15.2%

The Supervisory Board met on March 21, 2018, under the chairmanship of François de Wendel, to review Wendel's consolidated financial statements, as approved by the Executive Board on March 13, 2018. The financial statements were audited by the Statutory Auditors prior to publication.

The Wendel Group's consolidated sales totaled €8,329.1 million, up 8.4% overall and up 1.3% organically.

The overall contribution of the Group's companies to net income from operations was €703.6 million, down 2.3% from 2016. This slight decline came about largely because the changes in the scope of consolidation (deconsolidation of Saint-Gobain following the June 2017 sale and equity accounting for Allied Universal from August 2016) were not fully offset by IHS's positive contribution to recurring earnings and the improvement in the earnings of Constantia Flexibles and Bureau Veritas.

Financial expense, operating expenses and taxes totaled €198.6 million, down 2.3% from 2016 (€203.3 million). This reduction was concentrated in the financial expense line item and resulted from liability management transactions initiated by Wendel that reduced the cost of Wendel's debt. Specifically, borrowing costs declined by 36.0% between 2016 and 2017, from €148.4 million to €94.9 million. Nevertheless, the decline of the US dollar had a negative impact of €44.5 million on the Group's cash and financial investments in 2017 (€+20.2 million in 2016).


Non-recurring net income was €142.7 million in 2017 vs. a loss of €537.9 million in 2016. In 2016, the non-recurring loss in Wendel's consolidated statements derived principally from a loss on the sale of Saint-Gobain shares (€229.6 million), IHS's currency translation loss from the devaluation of the Nigerian naira (€159.9 million) and an accounting loss of €123.6 million on the repurchase of bond debt in June 2016, which was not offset by the accounting gain of €78.3 million[1] on the sale of Parcours.

In comparison, Wendel recorded a non-recurring gain in 2017, which resulted from the following items:

            · a €318.9 million net gain on the sale of Constantia Flexibles' Labels division;

            · an €84.1 million accounting gain following the sale of Saint-Gobain shares at the end of May and the beginning of June 2017, which applied to all shares held by Wendel, in line with IAS 28;

            · a €68.3 million currency loss on IHS's financial debt;

            · a €47.8 million expense related to the early repayment of Constantia Flexibles' debt following the sale of the Labels division;

            · a €46.0 million currency gain on Stahl's financial debt;

            · €190.2 million expense made up of asset impairment and other non-recurrent items.


Wendel's net income, Group share, was thus €534.1 million in 2017, compared with a loss of €141.1 million in 2016. Net income, Group share was €200.0 million, vs. a loss of €366.8 million in 2016.


Results of Group companies

Bureau Veritas

(Full consolidation)


Revenue in FY 2017 reached €4,689.4 million, a 3.1% increase compared with FY 2016.

- Group organic revenue growth achieved 2.2% in FY 2017, with an acceleration in H2 including +3.8% in the last quarter. This positive momentum resulted from strong growth for the five Growth Initiatives (a third of Bureau Veritas' revenue), up 6.9% organically and year-on-year (vs. 4.9% in FY 2016). High double-digit growth was achieved in both Automotive and SmartWorld and a mid-single digit for Agri-Food, Opex and Buildings & Infrastructure.

-  Gradual improvement through the year for the Base Business (two-third of Bureau Veritas' revenue), up 0.1% organically and year-on-year with an organic growth of 2.6% in the last quarter. Apart from Marine & Offshore (8% of Bureau Veritas' revenue) and Oil & Gas Capex-related activities (less than 5% of Bureau Veritas' revenue) which remained under cyclical pressure (down 5% and 16% respectively in 2017), the other activities performed well, with notably Metals & Minerals in a recovery mode, and Certification maintaining robust growth.

In 2017, Bureau Veritas completed nine acquisitions, representing around €150 million in annualized revenue (or 3.2% of 2016 Bureau Veritas' revenue) which supported four of the five Growth Initiatives: Currency fluctuations had a negative impact of 1.6% on total revenue, mainly due to the appreciation of the euro against USD as well as some emerging countries' currencies.

Adjusted operating profit was €745.5 million, with a margin of 16.1% organically. FY 2017 adjusted operating margin was down ca. 25 basis points to 15.9% compared to 16.2% in FY 2016. Adjusted for foreign exchange (ca. -10bps) and scope (ca. -10bps) margin declined organically by ca. 5bps year-on-year at 16.1%. FY 2017 operating cash flow stood at €581.2 million vs. €594.4 million in FY 2016. This slight decrease is notably led by negative currency effects, and the increase in working capital linked to revenue growth in Q4 at 3.8%. These are partially offset by the organic increase in the net cash flows and the decrease in taxes paid in 2017. At December 31, 2017, adjusted net financial debt was €2,094.4 million, i.e. 2.37x last-12-month EBITDA as defined in the calculation of bank covenant, compared with 2.20x at December 31, 2016.

A dividend of €0.56 per share, up 9.8% over two years, will be proposed to Bureau Veritas' shareholders at its Annual Meeting on May 15, 2018.


Constantia Flexibles

(Full consolidation - In accordance with IFRS 5, 2016 and 2017 figures for the Labels business are presented in the income statement under "Net income from discontinued operations and operations held for sale".


Refocus on flexible packaging business

On October 31, 2017, Constantia Flexibles sold its Labels business to Multi-Color Corporation ("MCC"), for an enterprise value of approximately €1.15 billion (USD1.3 billion). Constantia Flexibles has received c. €830 million in cash and will continue to participate in the future success of Multi-Color through a 16.6% shareholding.

This value-creating transaction gives Constantia Flexibles additional resources to bolster its growth strategy in the flexible packaging market. The newly-won financial flexibility will fuel external growth in new markets, investments in new machinery and exciting innovation projects being developed by in-house teams. Moreover, in becoming the largest shareholder of a company bringing together Constantia's and Multi-Color's labels businesses, Constantia Flexibles will retain an exposure to the growth of the labels market.


FY 2017 performance

Constantia Flexibles' sales stood at €1.5 billion in 2017, up 1.8%. Organic growth was 1.6%. Fluctuations in exchanges rates and a change in the consolidation scope had a slightly positive impact of 0.2%.

In 2017, top-line organic growth benefited from a favorable change in the mix (~+3%) nevertheless burdened by ongoing pressure on sales prices (~-1%). In order to pass on raw material price increases, senior management issued a formal letter in November to Constantia's customers announcing double-digit price increases for all forms of flexible packaging products, which should start to materialize in Constantia Flexibles' numbers beginning of 2018.

Food division sales decreased by 0.7% to €1.2 billion in 2017. Organic growth in the division was 1.0% driven by solid growth in Europe and America which compensated a weaker performance in some of emerging markets.

In 2017, Pharma division sales rose by 11.2% to € 348 million. Organic growth was 3.7% driven by improved volumes with Blister lidding and Cold Form in Europe and America. 

Constantia Flexibles' 2017 EBITDA was €188.2 million, representing a 20 bps year-on-year increase in margin to 12.7%. Constantia Flexibles' profitability benefited from positive mix impacts predominantly due to strong growth in high-margin Pharma products as well as the first-time consolidation of newly acquired companies. At the same time, it was negatively impacted in 2017 by rising raw material prices (key raw material prices all increased during the year e.g. Aluminum ~+8%, Films e.g. BOPP ~+11%, solvents) as well as temporarily challenging business environments in certain emerging markets.

Following the disposal of its Labels business, Constantia Flexibles was able to refinance its debt. The company repaid its €1.34bn syndicated loan facilities and contracted a new 5-year bank facility amounting to €375 million. "All in" interest rates amount to 2.25% representing annual interest savings of approximately €40 million. The new financing agreement sets a maximum leverage ratio at 4.5x EBITDA. As of December 31, 2017, Constantia Flexibles' net debt (excluding capitalized transaction costs) was €398.9m, i.e. 2.14x EBITDA.


(Full consolidation - In accordance with IFRS 5, 2017 figures for Colorin are presented in the income statement under "Net income from discontinued operations and operations held for sale". All the figures presented here exclude Colorin for 2016 and 2017.)


Cromology posted pro forma 2017 sales of €704.6 million, taking into account the sale of Colorin, up slightly (0.6%) from 2016. Changes in consolidation scope contributed positively (2.0%), owing in particular to acquisitions completed in 2016 (the Natec brand in France and the Jallut paint business in Switzerland). However, Cromology's activity showed an organic decline of 1.3% over the year, reflecting sluggish growth in France and under-performance in Italy. Currency fluctuations also had a negative impact on sales (0.1%).

Cromology's business in France (+0.7%) benefited from an increase in prices (+0.6%), which was partially offset by a negative sales mix. The business in Italy (decline of 7.0%), was strongly affected by the unfavorable conditions on the Italian paint market (-2.5%) and by the closure of underperforming shops. France and Italy represented 66% and 13% of Cromology's sales, respectively.

To offset the increase in raw material prices, driven notably by the sharp rise in titanium dioxide prices since Q2 2016 (up 34% over 2017), Cromology has adapted its sales & marketing policy and increased the sales prices of its products. Cromology is constantly working to optimize its purchases by approving new suppliers, and by keeping a tight grip on all costs.

Notwithstanding these efforts, EBITDA fell by 12.5% to €49.0 million, representing a margin of 7.0%. Owing to strict control of working capital requirements, Cromology maintained net debt at €239.5 million as of December 31, 2017, in line with December 31, 2016.

In July 2017, Cromology obtained an amendment to the terms and conditions of its bank loans. This increased the financial flexibility the company will have as it pursues its plans for growth and development. As part of the transaction, Cromology also obtained increased drawdown capacity of €20 million under its lines of credit. The cost of Cromology's debt remained the same. In addition, Wendel granted a shareholder loan of €25 million to Cromology on March 14, 2018.

On February 6, 2018, Cromology completed its divestment of Colorin, its Argentinian subsidiary, which represented around 4% of sales.



(Full consolidation)


Stahl's sales totaled €733.3 million in 2017, up 11.8% from 2016. This increase in sales resulted from a combination of robust organic growth (+2.2%) and a scope effect (+10.6%) deriving from the consolidation of Eagle Performance Products over the full year and that of BASF's leather chemicals business over the 4th quarter of 2017. Fluctuations in exchange rates had a negative impact of 0.9% on sales.

Sales growth at Stahl were driven by ongoing double-digit growth in the Performance Coatings business and strong volume growth in Leather finishes, partly offset by Wet-End.

Stahl continued to pursue its external growth strategy, acquiring Eagle Performance Products, announced on November 21, 2016. Founded in 1974, Eagle Performance Products is specialized in flame retardants. This acquisition adds new technologies and products to Stahl's existing ranges of high-performance coatings and chemicals for the treatment of leather products. This product diversification is important for Stahl's key automotive, aeronautics and interior solutions segments. In 2015, Eagle Performance Products achieved sales of around $19 million and an EBITDA of around $4 million.

Stahl's EBITDA rose 10.1% in 2017 compared with 2016, to €171.3 million, representing a margin of 23.4%. EBITDA growth was driven by growth in sales, good cost control and the consolidation of BASF's leather chemicals business over the last quarter of the year. Stahl's EBITDA margin contracted slightly because of the integration of BASF's business and of the increase of the cost of certain raw materials not yet offset by price increases (initiated in February 2018) nor by the synergies from the acquisition of BASF's business.

Stahl paid a dividend of €242.7 million to Wendel in 2017. As of end-2017, its net debt was up slightly from end-2016 as a result of the refinancing required to finance a cash consideration of €111 million paid by Stahl when the acquisition of BASF's leather chemicals business was finalized in the fourth quarter, although leverage ratio decreased slightly.

On September 29, 2017, Stahl finalized the acquisition of BASF's leather chemicals business, announced in March 2017. Stahl took over all of this activity, including a Spanish production site and around 160 employees and medium-to-long-term supply agreements under which BASF will become Stahl's exclusive supplier of finished products from the production sites over which BASF will retain ownership. In exchange for the sale of its assets to Stahl, BASF received 16% of Stahl's capital and a cash payment from Stahl of around €111 million. This payment ended up below the €150 million estimated at the time of the signature, as a result of closing adjustments, principally due to net debt and working capital adjustments.

With this acquisition, Stahl has strengthened its product portfolio and increased its innovation capacity. The combined group generated proforma 2017 sales of €880 million and EBITDA (excl. non-recurring items and goodwill allocation entries) of approximately €210 million.



(Equity method) [2]


IHS sales for 2017 totalled $1,107 million, up 22.2% from the year-earlier period driven by the growth in tenants, the contractual price reset in early 2017 as well as the consolidation of HTN towers since June 2016. At the end of 2017, total number of towers was 22,861[3], up 1.9%.

The Point-of-Presence lease-up rate decreased by 1.3% year-on-year while the technology tenancy ratio increased by 7.8% year-on-year.

With regards to profitability, IHS continued the successful development and rationalization of its installed base of towers. The company also maintained a tight operating cost control policy. EBIT for the year increased by +137.3% to $264.4 million (vs. $111.4 million in 2016 [4], representing a margin of 23.9% in 2017 (vs. 12.3% in 2016).

In Nigeria, former Etisalat Nigeria operations are now continued under the "9mobile" brand, and the company is pursuing its business relationship with IHS, though IHS has increased its provision on part of their customer account receivables.

On October 10, 2017 IHS signed an agreement to acquire more than 1,600 towers in Kuwait from Mobile Telecommunications Company K.S.C.P. (Zain), Kuwait's leading mobile operator, for $165 million. This transaction is part of IHS' broader strategy to apply its operational expertise throughout emerging markets. Upon the conclusion of this transaction which is expected to close in H1 2018, IHS total number of towers will be around 24,500 2..

During the course of 2017, the Nigerian foreign exchange market has evolved. In April 2017, the CBN issued a circular which led to the introduction of a new foreign exchange window, called the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX). This FX window was designed to facilitate the access to hard currencies for economic players operating in Nigeria. In this context, IHS Management's analysis concluded that the NAFEX rate should be applied in translating foreign currency transactions in its Nigerian subsidiaries starting from December 31, 2017. This change in rate had a negative impact on IHS' balance sheet and financial expenses. It will also probably have an unfavorable impact on the company's accounting profitability in 2018.

Moreover, Wendel has been informed that certain accounts belonging to IHS Nigeria Limited, INT Towers Limited and IHS Towers NG Limited domiciled in Nigerian banks have been blocked at the end of 2017. These measures relate to certain "post no debit" instructions received by some of IHS' banks in Nigeria from the Nigeria Economic and Financial Crimes Commission (EFCC).

IHS has indicated that, to its knowledge, no formal allegation or investigation has been notified to them as part of the EFCC's inquiries, and that it will continue to fully co-operate with the EFCC's information requests, while working constructively with them to understand the basis of their actions in respect of IHS' accounts.

As of December 31, 2017, the amount held in those bank accounts that are affected was $106.8 million out of total cash and cash equivalents held by IHS of $753.0 million inclusive. While IHS' management currently expects that the "post no debit" instructions on the affected accounts will be released once the EFCC's enquiries are completed, it is not possible at this time to predict the matter's likely duration or outcome.  All necessary governance measures are taken by the IHS' Board of Directors to closely monitor this matter.

As of December 31, 2017, IHS' net debt was $1,334.7 million.


Allied Universal

(Allied Universal has been consolidated by the equity method since August 1, 2016, when merger between AlliedBarton and Universal Services of America was finalized. In accordance with IFRS 5, AlliedBarton's activities in the first seven months of 2016 are presented in the income statement under "Net income from operations to be accounted for by the equity method").


In 2017, Allied Universal generated revenue of $5.3 billion, representing a 9.9% increase over the prior year[5]. This growth includes the benefit of completed acquisitions and 2.8% organic growth, driven by growth with existing customers, improved customer retention and the net addition of new customers. This organic growth rate does not account for the negative impact of one fewer working day in 2017 and does not reflect the organic growth of businesses acquired since the start of 2016. Factoring in these items, pro forma organic growth was 3.8%. In 2017, Allied Universal completed the acquisitions of Yale Enforcement Services, ALERT Protective Services, and the contracts of Lankford Protective Services.

Adjusted EBITDA for 2017 increased by 13.1% year-over-year to $388.3 million, or 7.3% of revenue1. The growth was driven by the aforementioned acquisitions, organic business growth and the partial-year benefit of merger-related synergies realized during the period, partially offset by the impact of the labor costs in the historically tight U.S. employment environment. In addition, during the second half of 2017, the Company launched enterprise-wide initiatives to improve profitability that are demonstrating positive early results and are expected to drive further improvement in 2018. These initiatives include key additions to senior management and investments in technology and business intelligence tools aimed at driving higher productivity and employee and customer engagement throughout the organization.

As of the end of December 2017, nearly 100% of the $100 million synergy target from the merger had been implemented, and the complete annual effect of these synergies is expected to benefit full-year 2018 results.

As of December 31, 2017, Allied Universal's net debt totaled $3,033.6 million, or 6.9 times EBITDA as defined in the company's credit agreement.


Oranje-Nassau Développement 


Through Oranje-Nassau Développement, Wendel brings together opportunities for investment in growth, diversification and innovation. In particular, it has invested in France (Mecatherm), Japan (Nippon Oil Pump) and the United States (CSP Technologies), as well as in Africa (Tsebo and PlaYce).



(Full consolidation)

New orders slowed in 2016 and early 2017, particularly as a result of operating difficulties experienced in 2015. This led to a 29.0% decline in sales, which totaled €84.3 million in 2017.

New orders[6] increased by 12% over the year, reflecting the sharp increase in sales efforts since the end of the first half of 2017. This good sales performance confirmed that historical customers have confidence in Mecatherm and that Mecatherm has successfully penetrated growing market segments (Soft & Pastry, services, baking systems, emerging markets, etc.), after devoting significant resources to sales and marketing. These trends have continued into the early part of 2018. As of December 31, 2017, the order book1 was up 17% compared with the end of 2016.

EBITDA declined €13.7 million to €7.3 million, representing a margin of 8.6% in 2017, vs. 11.5% in 2016. The decline in sales affected 2017 profitability, but after a difficult first half (margin of 6.3%), a continuing policy of strict cost control combined with healthy margins on orders and on service activities mitigated the impact on Mecatherm's profitability. Cost optimization measures continue, including supply chain optimization, redesign-to-cost, automation of production processes, etc.

In this context of improved sales performance-supported by a rising order book- and continued cost optimization, 2018 is set to be a year of growth both in sales and EBITDA.

Finally, cash receipts have improved since sales recovered in the second half of 2017, and this has enabled Mecatherm to reduce debt by €7.5 million. Debt stood at €31.3 million as of December 31, 2017.


(Full consolidation since February 1, 2017)

Tsebo's 2017 sales reached $563.2 million, up 20.5% year-on-year. Tsebo benefited from strong organic growth (+8.0%) driven by its Cleaning, Catering and Facilities Management businesses, and favorable exchange rate fluctuations (+9.1%), in particular the South African rand's appreciation against the U.S. Dollar. Growth was also supported by a positive scope change (+3.4%) with acquisitions completed in Protection (Malandela in February 2016), Leasing solutions (Sovereign Seeker in April 2016), Cleaning (Superclean in January 2017) and Facilities Management (Rapid Facilities Management in September 2017). The acquisition of Rapid Facilities Management Pty Ltd in Nigeria was the first transaction completed by Tsebo as part of the Wendel Group. This modest acquisition (annual sales of $350k) further establishes Tsebo in the attractive Nigerian market, where Tsebo already has several clients.

Tsebo's EBITDA was $37.0 million in 2017, an increase of 7.0% compared to 2016. EBITDA margin decreased to 6.6% compared to 7.4% in the previous year, partly due to the integration of newly acquired businesses and progressive ramp up of new pan-African facility management contracts.

As of December 31, 2017, Tsebo's net debt stood at $130.5 million.

CSP Technologies

(Full consolidation)

CSP Technologies posted sales of $135.8 million in 2017, representing total growth of 7.2%. External growth during the year totaled 5.6%, reflecting the consolidation of Maxwell Chase which began only in mid-March 2016.Following the particularly strong organic growth in the 3rd quarter (+14.8%) across many of its key business segments, organic growth slowed in the 4th quarter as anticipated due to timing of certain orders. Organic growth for the year was 1.0%, which does not reflect the robust organic growth of Maxwell Chase acquired in 2016. Factoring in this item, pro forma organic growth was 3.6%. Sales of Food Safety products performed particularly well, with double digit-growth over the year. Foreign exchange rate fluctuations contributed 0.6% to total sales growth.

During the year, CSP Technologies announced a capacity expansion initiative for its Auburn, AL site. Construction of a new structure, located adjacent to the existing facility, is currently underway and will expand manufacturing and warehousing capacity by 110,000 sq. ft.

CSP Technologies generated adjusted EBITA of $27.0 million in 2017, or 19.9% of sales. The EBITA margin was impacted in particular by an increase in certain raw material costs and certain development projects undertaken to provide for future growth.

Finally, on March 2, 2017, CSP announced that it had repriced and upsized its "Term Loan B" facility. As part of the transaction, the size of the existing Term Loan B was increased by $12 million to a total of $178 million, and the interest rate was reduced by 75 basis points to Libor + 525 bps. Proceeds from the increased Term Loan were used to repay outstanding borrowings on the existing $25 million revolving credit facility. As a result of the transaction, CSP reduced its annual interest expense by approximately $1.3 million. As of December 31, 2017, CSP's net debt equaled $175.9 million.

Nippon Oil Pump (NOP)

(Full consolidation)

NOP posted sales of ¥6,132 million in 2017, up 10.8% overall. Organic growth was 10.4% and exchange rate fluctuations had a positive impact of 0.4%.

Thanks to the buoyancy of the global machine tool market, all product segments and regions experienced growth. In particular, Vortex sales were up 28% from the same period last year. Core products also grew strongly due to high demand with trochoid pump sales up 9% and hydraulic motor sales up 12%. Foreign markets have also been extremely encouraging with sales outside of Japan growing close to 40% since last year.

Leveraging the elevated topline growth and still reaping the fruits of the strict cost control and prices increase policies set up last year, NOP achieved a significantly improved level of profitability: EBITDA has increased by 31% since last year and EBITDA margin went up 340bps to 22.0%.

In late 2017, NOP completed a small acquisition in Germany to solidify its presence in Europe and gain direct exposure to the manufacture of cooling units for its Vortex pumps.

PlaYce (formerly SGI Africa)

(Full consolidation)

Two PlaYce shopping centers opened in 2017: one in Abidjan in June (PlaYce Palmeraie) and one in Douala (Carrefour Market Bonamoussadi).

PlaYce Marcory is 100% leased, and welcomed over 3 million visitors during 2017. PlaYce Palmeraie and Carrefour Market Bonamoussadi are both 100% leased. Eight other projects are underway-two in Côte d'Ivoire, three in Cameroon and three in Senegal-and are at different stages of completion.

Wendel has not yet invested beyond its initial equity contribution of €25 million.

NAV of €167.3 per share as of March 7, 2018

Net asset value was €7,740 million or €167.3 per share as of March 7, 2018 (see Appendix 1 below for details), representing a 12-month rise of 3.3% from €162.0 per share as of March 10, 2017. The discount to NAV was 16.1% as of March 7, 2018.

As of December 31, 2017, NAV was €176.4 per share, or €8,158 million, vs. €153.9 per share as of December 31, 2016, or €7,248 million, representing a 14.6% rise per share.

In light of the sharp rise in equity markets, Wendel has adjusted its NAV calculation methodology so as to better reflect the size of certain investments and the change in their relative performance. The immediate impact of these adjustments on NAV per share was -2.7% as of December 31, 2017 and -1.9% as of March 7, 2018. The adjusted methodology is described in the appendix.




Confirmation of the 2017-20 strategic orientation

Invest around €3 billion in equity between now and 2020, depending on market conditions, in Europe, Africa and North America in companies exposed to long-term trends. Part of this amount could derive from partners who share our investment philosophy, as we have done in the past.

Develop and crystallize value by pursuing the long-term growth of our portfolio companies and by taking advantage of opportunities to divest, form partnerships, list companies on the stock exchange or reinvest in our companies.

Remain cautious, keeping debt under strict control, under €2.5 billion, while maintaining a balance in the portfolio between listed and unlisted companies;

Achieve our ambitious financial objectives: double-digit average return to shareholders, with dividends increasing at a similar rate year after year, and with regular share repurchases, depending on opportunities.


Highlights of 2017

Continued divestment of Saint-Gobain shares

On June 2, 2017, Wendel announced that it had successfully sold 20 million Saint-Gobain shares. This sale, as well as gradual share sales of 0.3% in May 2017, at an average price of €50.113 per share, represented total proceeds of €1,085 million for Wendel. Wendel now holds 2.6% of Saint-Gobain's share capital and approximately 4.5% of its voting rights. Pursuant to the governance agreements in effect with Saint-Gobain, Wendel has reduced its representation on the Board of Directors from three seats to one.

The sale of Saint-Gobain shares led to an accounting gain of €84.1 million in Wendel's 2017 financial statements. This capital gain was calculated on all of the Saint-Gobain shares Wendel held before the sale, in line with accounting rules currently in force.

Wendel has finalized the acquisition of 65%[7] of the share capital of Tsebo.

Following the September 2016 announcement that Wendel had signed an agreement to acquire Tsebo, Wendel announced on February 1, 2017 that it had obtained all necessary authorizations and completed the acquisition of 65%2 of the share capital of Tsebo Solutions Group, the pan-African leader in corporate services for a total enterprise value of ZAR 5.25 billion (ca. €362 million[8]).

Wendel has invested €159 million[9] in Tsebo via Oranje-Nassau Développement and holds a 65%2 stake in the company, alongside Capital Group Private Markets (35%2). After the agreement to acquire Tsebo was signed, Wendel implemented hedging contracts that led to a net gain of €3.5 million.

The transaction was also financed by bank borrowings of ZAR 1.85 billion from Standard Chartered Bank, Investec Bank and Nedbank. Tsebo also has a ZAR 150 million revolving credit and a ZAR 325 million line of credit to finance future acquisitions. Wendel and Capital Group Private Markets will continue to support Tsebo's acquisition strategy through additional investments, if necessary.

Disposal of 2.8 million Bureau Veritas shares purchased in November 2016

In November 2016, Wendel purchased an additional 2.8 million Bureau Veritas shares that it did not intend to keep over the long term. The shares were purchased because Wendel believed their price had fallen too far, and was able to buy them at an average price of €17.05 per share. Wendel had indicated that these shares would be resold when the share price reflected the gradual increase expected from the strategic plan and growth initiatives. After a first quarter with organic growth of 1.9% and growth of 4.6% from strategic initiatives, Wendel felt this momentum was underway. The 2.8 million shares were sold in Q2 at an average price of €21.50. Wendel thus achieved a cash gain of €12.4 million. In accordance with IFRS 10, the accounting capital gain (€52 million) has been recognized in shareholders' equity in Wendel's consolidated financial statements. As of December 31, 2017, Wendel held 40.6% of Bureau Veritas' share capital and 56.2% of theoretical voting rights.


Other significant events since the beginning of 2018

Sale of Saham

On March 3, 2018, Wendel announced the sale of its shares in the Saham group's holding company for $155 million (ca. €125 million). The announcement was concomitant with an agreement signed on March 7, 2018 under which the Saham group sold its insurance division (Saham Finances) to Sanlam. Leader in financial services in Africa, South Africa-based Sanlam has been a shareholder in Saham Finances for the past three years and held 46.6% prior to the transaction. The transaction between Saham group and Sanlam, which should be completed in the second half of 2018, is a condition precedent for Wendel's sale. Wendel will also have the right to receive 13.3% of the capital gains Saham realizes in the event it sells the group's other activities (Customer service centers, Real estate, Healthcare and Education) during the next 24 months at valuations in excess of certain pre-defined thresholds.





Shareholders' Meeting / Publication of NAV and trading update (before Shareholders' Meeting)


H1 2018 earnings / Publication of NAV (pre-market release).

By conference call


2018 Investor Day / Publication of NAV and trading update (pre-market release).

About Wendel

Wendel is one of Europe's leading listed investment firms. The Group invests in Europe, North America and Africa in companies that are leaders in their field, such as Bureau Veritas, Saint-Gobain, Cromology, Stahl, IHS, Constantia Flexibles and Allied Universal. Wendel plays an active role as industry shareholder in these companies. It implements long-term development strategies, which involve boosting growth and margins of companies so as to enhance their leading market positions. Through Oranje-Nassau Développement, which brings together opportunities for investment in growth, diversification and innovation, Wendel is also a shareholder of Mecatherm in France, Nippon Oil Pump in Japan, PlaYce and Tsebo in Africa, and CSP Technologies in the United States.

Wendel is listed on Eurolist by Euronext Paris.

Standard & Poor's ratings: Long-term: BBB-, stable outlook - Short-term: A-3 since July 7, 2014. Wendel is the Founding Sponsor of Centre Pompidou-Metz. In recognition of its long-term patronage of the arts, Wendel received the distinction of "Grand Mécène de la Culture" in 2012.

For more information:

Follow us on Twitter @WendelGroup


Appendix 1: NAV as of March 7, 2018: €167.3 per share

(in millions of euros)     3/7/2018 12/31/2017
Listed equity investments Number of shares Share price (1) 4,465 4,691
Bureau Veritas 177.2 million €21.7 / €22.7 3,837 4,024
Saint-Gobain 14.2 million €44.4 / €47.1 629 667
Unlisted investments and Oranje-Nassau Développement (2) 4,365 4,532
Other assets and liabilities of Wendel and holding companies (3)   73 69
Cash and marketable securities (4)     1,665 1,730
Gross asset value     10,569 11,021
Wendel bond debt and accrued interest     -2,828 -2,863
Net Asset Value     7,740 8,158
Of which net debt     -1,163 -1,133
Number of shares     46,259,146 46,253,210
Net Asset Value per share     €167.3 €176.4
Average of 20 most recent Wendel share prices   €140.4 €142.8
Premium (discount) on NAV     -16.1% -19.1%
  1. Average share price of the 20 trading days prior to March 7, 2018 and December 31, 2017.
  2. Unlisted equity investments (Cromology, Stahl, IHS, Constantia Flexibles, Allied Universal) and Oranje-Nassau Développement (Nippon Oil Pump, Saham, Mecatherm, exceet, CSP Technologies, PlaYce (formerly SGI Africa), Tsebo and indirect investments and debt). Similarly to the NAV calculation as of November 17, 2017, IHS's valuation as of December 31, 2017 and March 7, 2018 was calculated solely on the basis of EBITDA so as to take into account the special nature of this developing company. The Sanlam/Saham transaction was finalized on May 10, 2017 and was included in the NAV calculation as of November 17, 2017. The agreement to sell Saham was signed on March 7, 2018 and reflected in the NAV calculation as of December 31, 2017 and March 7, 2018. With the sale of Constantia Flexibles' Labels business having been finalized, the shares of MCC held by Constantia were valued at the average of the closing price of the last 20 trading days. In accordance with Wendel's methodology, Tsebo was valued at its acquisition price (in ZAR) as of December 31, 2017 and on the basis of peer-group multiples as of March 7, 2018.
  3. Includes 629,953 Wendel shares held in treasury as of March 7, 2018 and 669,402 as of December 31, 2017.
  4. Cash and marketable securities of Wendel and holding companies: €1.3 billion in cash on hand and €0.4 billion in liquid financial investments as of March 7, 2018.

Assets and liabilities denominated in currencies other than the euro have been converted at exchange rates prevailing on the date of the NAV calculation.


If co-investment conditions are realized, there could be a dilutive effect on Wendel's percentage ownership. These items have been taken into account in the calculation of NAV. See page 259 of the 2016 Registration Document

Appendix 2: NAV calculation method

In light of the sharp rise in equity markets, Wendel has adjusted its NAV calculation methodology so as to better reflect the size of certain investments and the change in their relative performance. The immediate impact of these adjustments is described in the table hereunder:


(in euros per share)   3/7/2018 12/31/2017
NAV after methodological adjustments €167.3 €176.4
NAV before methodological adjustments €170.6 €181.3
Difference   -1.9% -2.7%


NAV calculation method after adjustments

Net asset value publication dates and publication-related verification

The annual schedule of NAV publication dates is available in advance on Wendel's website at the following address: http://www.wendelgroup.com.

At each NAV publication date, the Statutory Auditors verify that the methodology used for calculating net asset value complies with the Group's methodology and confirm consistency with accounting data.

The Audit Committee reviews each published NAV and compares Wendel's valuation of unlisted investments with one performed by an independent expert.

Presentation of NAV


Presentation format (publication at the level of detail indicated) Comments
Equity investments valuation date  
+ Listed investments, including:  
Bureau Veritas

Average closing price over 20 trading days
+ Unlisted investments and Oranje-Nassau Développement Unlisted investments are valued using the method described below.
+ Other assets and liabilities of Wendel and holding companies Includes Wendel shares held in treasury
Cash and marketable securities Pledged & unpledged cash of Wendel and holding companies
Wendel's bond debt and syndicated credit line Face value + accrued interest
Bank debt with margin calls Face value + accrued interest
Net Asset Value  
Number of Wendel shares  
Average of 20 most recent Wendel share prices  
Premium (discount) on NAV  


NAV is a short-term valuation of the Group's assets. It does not take into account any control premiums or illiquidity discounts.


Listed equity investments

Listed investments are valued on the basis of the average closing price of the 20 trading days prior to the valuation date.


Valuation of unlisted investments

Valuation at cost for the 12 months following their acquisition.

New, unlisted investments are valued at cost for the first 12 months following their acquisition. After this period, the company is valued on the basis outlined below.

Valuation by listed peer-group multiples

The preferred method for valuing unlisted investments is comparison with the multiples of comparable listed companies.

The value of shareholders' equity of the companies in Wendel's portfolio is determined as their enterprise value minus net financial debt of investments (gross face value of debt less cash) appearing in the most recent financial statements.

If net debt exceeds enterprise value, the value of shareholders' equity remains at zero if the debt is without recourse to Wendel.

Wendel's percentage ownership is determined by the features of the equity instruments held by Wendel, non-controlling interests and co-investor managers, if any (see note 4 "Participation of managers in Group investments" to the consolidated financial statements).

Enterprise value is obtained by multiplying measures of each company's earnings by stock-market multiples of similar listed companies.

The measures of earnings most often used in the calculation are recurring EBITDA (earnings before interest, taxes, depreciation and amortization) and recurring EBIT (before goodwill). The choice of earnings measures used can be adjusted depending on the sector in which the subsidiary operates or its business model. In this case, Wendel publishes an explanation of the adjustment. The enterprise value corresponds to the average of the values calculated using EBITDA and EBIT of two reference periods: the previous year and the budget (or budget update) for the current year. For NAV as of December 31, the budget for the new year being available, the calculation is based on the latest estimate for the year just ended (or the actual if available) and the budget for the new year.

Stock-market multiples of comparable companies are obtained by dividing their enterprise value by their realized or expected EBITDA or EBIT for the reference periods, or in the case of fiscal years that are different from the calendar year, the closest fiscal year. 

Enterprise value of the comparable companies is obtained by adding market capitalization (the average closing price over the last 20 trading days) and net financial debt (gross face value of debt less cash) at the same (or similar) date as that applied to the net debt of the company being valued.

Comparable listed companies are chosen based on independent data and studies, information available from Wendel's subsidiaries, and research carried out by Wendel's investment team. Certain peer-group companies can be more heavily weighted if their characteristics are closer to those of the company being valued than are those of the other companies in the sample.

The peer group remains stable over time. It is adjusted when a company is no longer comparable (in which case it is removed from the peer group) or when a company is newly considered as belonging to the peer group for the investment being valued.

Non-representative multiples are excluded from the peer group, such as occur during takeover offers or any other exceptional circumstance affecting the measures of income or the share price.

The data, analyses, forecasts or consensus values used are based on information available as of the date of the NAV calculation. If actual data are available when the calculation is performed, they are given priority. For portfolio companies as for comparables, EBITDA, EBIT and net debt figures used are adjusted for significant acquisitions or asset sales.

Significant non-controlling interests in portfolio companies are excluded from the portion of equity value attributed to the Group.

For small portfolio companies whose average revenue (over the reference periods used for the NAV calculation) is less than €500 million, the enterprise value is the smaller of (i) the value based on peer-group multiples, calculated according to the usual method (discounted in the event of disappointing financial performance, as explained below) and (ii) the value based on the acquisition multiple applied to the EBITDA or EBIT of the current year.

In the event the financial performance of a portfolio company is disappointing, a discount of 10% is applied to peer-group multiples. This discount is applied when the EBITDA or EBIT for the current year is more than 10% less than that of the previous year, unless the decline is due to currency fluctuations or an operational decision. The discount is cancelled only when the EBITDA or EBIT for the full year is at least equal to that of the year that preceded the date the discount was activated. Nevertheless, no discount is applied if an identical trend is observed in the sample of peer-group companies.


Valuation by transaction multiples

Transaction multiples may be used when the transaction involves a company whose profile and business are similar to those of the company being valued. In this case, reliable information must be available on the transaction, in sufficient detail. In some cases, the multiple used to value an investment will be an average, either straight or weighted, of the peer-group multiple and the transaction multiple. If used, the transaction multiple is applied for a period of 12 months, in line with the methodology of using the price paid in an acquisition.


Other methods

If a valuation by peer-group comparison is not accurate, other methods may be used, depending on the nature of the business, the characteristics of the asset and market practices. These include expert appraisals, valuation by discounted future cash flows, sum of the parts, and other methods.


Purchase offers

Purchase offers received for unlisted investments are taken into account if they are serious, i.e. relatively firm, and reasonable. In this case, Wendel uses the average, either straight or weighted based on the probability of acceptance, of the internal valuation and the average purchase price offered. Depending on the specific terms of these offers, they might be used as the sole basis for the valuation. The price of a purchase offer is applied for a period of 12 months, in line with the methodology of using the price paid in an acquisition. A purchase offer is taken into account if it was received prior to the date of the NAV.


Price of dilutive transactions on the share capital of portfolio companies

Capital increases that have a significant dilutive or accretive effect on the whole or on certain shareholders are considered as a transaction between shareholders. The price of such a transaction can be used to value the entire related investment, and is maintained for a period of 12 months, just as in the case of the price paid in an acquisition. These transactions are taken into account in the NAV if a firm commitment was signed prior to the date of the NAV calculation.

The principle of valuation at the price paid is not applied in the event Wendel exercises an option to acquire shares or subscribe to a capital increase at an exercise price set on the basis of a situation that pre-dates the exercise.



Cash of Wendel and its holding companies includes available cash at the valuation date (including liquid financial investments) and pledged cash.

Financial debt

Financial debt (Wendel's bond debt, syndicated loan outstandings and bank debt with margin calls) is valued at its face value plus accrued interest.

For the purposes of the calculation, financial debt is valued at face value, which is not affected by changes in interest rates or credit quality. Accordingly, interest-rate swaps are not valued at their market value, as the swaps are treated as part of the debt.


Other NAV components

Current assets and liabilities are considered at their net book value or their market value, depending on their nature, i.e. at face value, less any impairment, in the case of receivables, and at market value in the case of derivatives, with the exception of interest-rate swaps. Real estate is valued on the basis of appraisals carried out at regular intervals.

Shares held in treasury and earmarked for sale upon the exercise of stock options are valued at the lower of the strike price of the options or the average price of the shares over the last 20 trading days. Shares held to cover performance share plans are valued at zero. Other shares held in treasury are valued at the average price over the last 20 trading days.

As NAV is a short-term valuation of the Group's assets, Wendel's future operating expenses do not enter into the calculation. Similarly, future tax effects are not included so long as the sale price of an investment and the form of the sale (in particular the tax consequences) are not both known and certain.

The number of Wendel shares taken into account in the calculation of NAV per share is the total number of shares composing Wendel's equity at the valuation date.

Assets and liabilities denominated in a foreign currency are converted at the exchange rate prevailing on the date of the NAV calculation. If several exchange rates exist, the rate used for the preparation of the consolidated financial statements is applied.

Some aspects of the method described above may be amended if such a change produces a more faithful valuation. Any such changes would be announced by Wendel.

Appendix 3: Conversion from accounting presentation to economic presentation

Bureau Veritas

Constantia Flexibles




Equity-method investments

Wendel and holding companies


(in millions of euros)



Allied Universal

Net income from operations

Net sales























Adjusted operating income (1)











Other recurring operating items











Operating income











Finance costs, net












Other financial income and expense











Tax expense











Share in net income of equity-method investments











Net income from discontinued operations and operations held for sale











Recurring net income from operations











Recurring net income from operations - non-controlling interests











Recurring net income from operations - Group share











Non-recurring net income

Operating income











Net financial income (expense)











Tax expense











Share in net income of equity-method investments











Net income from discontinued operations and operations held for sale











Non-recurring net income












of which:




-5.4 - - -47.4
Non-recurring net income - non-controlling interests -60.3 80.4 -8.0 4.3 -17.6 - -0.4 -0.2 0.0 -1.9
Non-recurring net income - Group share -41.6 124.7 -76.4 15.1 -46.1 -4.7 -43.0 -49.4 152.4 31.0
Consolidated net income 335.9 288.1 -76.9 103.4 -46.9 36.0 -39.3 -37.7 -28.4 534.1
Consolidated net income - non-controlling interests 207.7 120.3 -7.7 29.2 -14.9 - -0.3 -0.2 0.0 334.1
Consolidated net income - Group share 128.2 167.8 -69.2 74.2 -32.0 36.0 -38.9 -37.6 -28.4 200.0


      (1) Before the impact of goodwill allocation, non-recurring items and management fees.

      (2) Cromology's EBITDA is currently presented after changes in impairment of current assets.

      (3) This €17.8 million amount corresponds to dividends received from Saint-Gobain after the date of deconsolidation.

      (4) This €83.8 million amount is related mostly to the sale of Saint-Gobain shares.

      (5) This amount includes the €318.9 million gain on the sale of the Labels division.

      (6) This line item includes €17.8 million in impairment on Mecatherm and €21.2 million in impairment recognized by Tsebo on its "Security" division.

      (7) This amount includes a €27.3 million dilution gain on IHS as well as a €68.3 million currency loss (offset by a change in currency translation reserves of the same amount).

[1]Adjusted for the discontinuation of depreciation as required by IFRS 5 "Non-current assets held for sale and discontinued operations". The capital gain on the investment totaled €129.3 million.

[2] 2017 figures are non-audited

[3] Tower count excluding managed services and WIP as of December 31, 2017

[4] 2016 EBIT adjusted from the restatement of the early termination fees of a telecom operator in 2016

[5] Change in sales, EBITDA, net debt presented as if the merger and acquisitions before the merger had been completed in January 1, 2016.

[6]Orders adjusted for the cancellation in 2017 of a €9 million order received from North Africa in 2016.

[7]Percentage ownership before co-investment by Tsebo's managers of approximately 2.5% of share capital.

[8] EUR/ZAR = 14.4955 as of January 31, 2017.

[9] After taking currency hedging into account.

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: WENDEL via Globenewswire

Kapcsolódó linkek: Wendel SE
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