PARGESA HOLDING PRESS RELEASE N0 8/2014
Geneva, 5 November 2014
• Economic operating income stood at CHF 293.6 million, compared with CHF 187.9 million at
30 September 2013. As in previous reporting periods, this figure includes the non-cash impact of the derivative financial instruments embedded in the exchangeable and convertible bonds issued by GBL being marked to market, which resulted in a net gain of CHF +17.0 million for Pargesa (CHF -95.8 million at 30 September 2013). Excluding this non-cash impact, economic operating profit was CHF 276.6 million, compared with CHF 283.7 million at 30 September 2013.• Net income stood at CHF 524.9 million, compared with CHF 176.6 million at 30 September 2013. This includes gains, at the level of Pargesa, of respectively CHF 175.5 million resulting from GBL's disposal of 0.4% of Total's share capital since the beginning of the year, and CHF 74.7 million resulting from the delivery by GBL of Suez Environnement shares to bondholders who exercised their exchange rights early.
The Board of Directors of Pargesa Holding SA, meeting today, paid tribute to Christophe de Margerie, the Chairman and CEO of Total, who died tragically on 20 October. The Board then approved the unaudited consolidated financial results at 30 September 2014.
GBL increased its ownership in Umicore; at 30 September 2014, GBL held 10.7% of Umicore's capital (11.7% at end-October 2014) representing an investment of EUR 414 million.
During the first nine months of 2014 GBL sold a further 8.8 million Total shares, or approximately 0.4% of the capital. Proceeds from this disposal, most of which took place in the first half of the year, were EUR 412 million. GBL now holds 3.2% of Total's capital, which remains the Group's largest holding in value terms.
With respect to GBL's investments through the Financial Pillar, at the end of October Ergon Capital Partners II (ECP II) and the Sagard II fund, in which Pargesa is also an investor, finalised the sale of their holding in Corialis, a leading manufacturer of insulating and lacquered profiles in aluminium for doors, windows and verandas. This transaction already contributed to September 30, 2014 results, as ECP II (an equity-accounted shareholding in GBL's accounts) marked to market its investment in Corialis at its disposal price; GBL and Pargesa's share of the capital gain realised by Sagard II, which is accounted for as an available-for-sale asset,, will be recorded in Q4 2014.
Pargesa Holding SA - 11, Grand-Rue - CH-1204 Geneva Tel: +41 22 817 77 77 - Fax: +41 22 817 77 70 info@pargesa.ch - www.pargesa.ch
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Imerys announced today a strategic combination for the integration of the main activities of S&B to accelerate its development. S&B is a global player in industrial minerals with a wide range of products and applications notably based on bentonite, wollastonite and perlite and serving diversified end-markets in Western Europe, North America as well as European and Asian emerging countries. This transaction remains subject to the approval of the relevant regulatory authorities and should take place in the first quarter of 2015.
With this operation, that should be partially paid in Imerys shares, the Kyriacopoulos family, founder and majority shareholder of S&B, would hold approximately 4.4% of Imerys capital. Furthermore and with no intent to act in concert, it would enter into a shareholders' agreement with GBL group, which has agreed to be slightly diluted to facilitate the completion of this business combination, and would retain an interest of around 53.2% (versus 55.8% at 30 September 2014).
The simplified income statement in accordance with IFRS is as follows:
30 Sept. 30 Sept. CHF millions 2014 2013 | ||
Operating income Operating expenses Other income and expenses | 3'653.0 (3'293.8) 607.4 | 3'681.5 (3'322.0) 24.7 |
Operating profit Dividends and interest from long-term investments Other financial income and expenses Taxes Income from associates and joint ventures | 966.6 322.3 (158.2) (120.2) 129.9 | 384.2 383.6 (282.9) (115.9) 104.6 |
Consolidated net profit (before minority interests) Attributable to minority interests Attributable to Pargesa shareholders (Group share) | 1'140.4 615.5 524.9 | 473.6 297.0 176.6 |
Average number of shares in circulation (thousands) Basic earnings per share attributable to Pargesa shareholders (CHF) Average EUR/CHF exchange rate | 84'652 6.20 1.218 | 84'642 2.09 1.232 |
Operating income and expenses are primarily the revenues and operating expenses of Imerys, whose accounts are fully consolidated.
Other income and expenses includes net capital gains and losses and impairments on Group shareholdings and operations. At 30 September 2014, this line item mainly represented the capital gain recorded on GBL's sale of 0.4% of Total's share capital, and the capital gain recorded by GBL in Q2 2014 following the delivery of Suez Environnement shares to bondholders who exercised their right to exchange the bonds early.
The dividends and interest from long-term investments item comprises the net dividends recorded by the Group from its non-consolidated investments, mainly dividends from Total, SGS, GDF Suez, Suez Environnement and Pernod Ricard.
The other financial income and expenses and taxes items provide consolidated figures for Pargesa, GBL and Imerys. Other financial income and expenses include the non-cash impact of GBL's derivative financial instruments (mainly those implicitly embedded in convertible and exchangeable bonds) being marked to market.
Income from associates and joint ventures represents the share of the consolidated net profit contributed by shareholdings accounted for in the Pargesa financial statements using the equity method. This item includes Lafarge's contribution.
The item minority interests mainly relates to the share of income due to the minority shareholders of GBL
and Imerys, these two companies being fully consolidated into the Pargesa Group financial statements.
Pargesa Holding SA - 11, Grand-Rue - CH-1204 Geneva Tel: +41 22 817 77 77 - Fax: +41 22 817 77 70 info@pargesa.ch - www.pargesa.ch
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In addition to the accounts drawn up in accordance with IFRS, Pargesa continues to publish an economic presentation of its results, in order to provide continuous information over the long term about the contribution of each of its major shareholdings to its results. IFRS require different accounting treatments depending on the Group's percentage holding in each of its investments (full integration of Imerys, equity method for Lafarge, with other Group holdings being booked as financial instruments), so this continuous view would be interrupted without this additional economic presentation of the Group's results.
The economic presentation shows, in terms of the Group's share of results, the operating contribution of the main shareholdings to the consolidated income of Pargesa, together with the income from the operations of the holding companies (Pargesa and GBL), which now highlight in particular the income from private-equity activities and other investment funds (GBL's Financial Pillar) and the impact of net financial income. The analysis also draws a distinction between the operating and non-operating items in the income, the non-operating part being composed of net capital gains and losses in connection with disposals and any restructuring costs and impairment.
According to this approach, the economic results at 30 September 2014 can be analysed as follows:
30 Sept. 30 Sept. Year 2013 CHF millions 2014 2013 | ||
Operating contribution of the main shareholdings - Consolidated (Imerys) or equity-accounted (Lafarge): Imerys share of operating income Lafarge share of operating income - Non-consolidated: Total net dividend SGS net dividend GDF Suez net dividend Suez Environnement net dividend Pernod Ricard net dividend | 85.7 47.0 75.4 39.6 34.5 1.8 10.3 | 84.8 109.7 60.7 71.8 96.3 121.2 - - 75.0 75.0 14.6 14.6 10.1 21.0 |
Operating contribution of the main shareholdings per share (CHF) Contribution from private-equity activities and other funds Net financial income and expenses Other operating income from holding company activities General expenses and taxes | 294.3 3.48 20.2 (3.9) 6.2 (23.2) | 341.5 413.3 4.03 4.88 (9.9) (4.5) (126.6) (134.0) 3.7 4.1 (20.8) (28.4) |
Economic operating income per share (CHF) Non-operating income from consolidated or equity-account companies Non-operating income from holding companies | 293.6 3.47 (20.1) 251.4 | 187.9 250.5 2.22 2.96 (20.8) (13.5) 9.5 156.9 |
Net income per share (CHF) Average number of shares in circulation (thousands) Average EUR/CHF exchange rate | 524.9 6.20 84'652 1.218 | 176.6 393.9 2.09 4.65 84'642 84'643 1.232 1.231 |
Pargesa Holding SA - 11, Grand-Rue - CH-1204 Geneva Tel: +41 22 817 77 77 - Fax: +41 22 817 77 70 info@pargesa.ch - www.pargesa.ch
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The contributions from Total, SGS, GDF Suez, Suez Environnement and Pernod Ricard represent Pargesa's share of net dividends recorded by GBL from these companies. The contributions are not directly comparable to previous year numbers, as they reflect the impact of the evolution of the group's portfolio.
Total's final 2013 dividend plus the first two quarterly interim dividends declared for 2014 amount to EUR 1.83 per share, an increase of 3.4% compared with the year-earlier period. The decline in Total's contribution at 30 September 2014 (CHF 75.4 million for Pargesa compared with CHF 96.3 million in2013) is due to GBL's sale of Total's shares over the past 12 months.
GDF Suez paid its final 2013 dividend in Q2 2014 (EUR 0.67 per share, unchanged amount); in Q3 it announced an interim dividend of EUR 0.50 per share (compared with EUR 0.83 in 2013). GDF Suez's contribution to Pargesa at 30 September 2014 came to CHF 34.5 million, which is down compared with the year-earlier period, also as a result of GBL's sale of just over half of its stake in the company in H12013.
Suez Environnement paid its annual dividend of EUR 0.65 per share (unchanged amount) in Q2 2014, and Pargesa's share came in at CHF 1.8 million, compared with CHF 14.6 million at 30 September 2013. This decrease was due to the early conversion, in May 2014, of 85% of the GBL-issued bonds exchangeable for Suez Environnement shares, which resulted in the delivery of 29.8 million Suez Environnement shares before the dividend payment date.
In Q2 2014, Pernod Ricard paid an interim dividend of EUR 0.82 per share, representing a rise of 3.8%; Pargesa's share was CHF 10.3 million. The final dividend, expected to be EUR 0.82 per share, will be recorded in Q4 2014.
GBL's shareholding in SGS, which it acquired on 10 June 2013, contributed to Pargesa's financial results for the first time in 2014. Pargesa's share of the annual dividend of CHF 65 per share amounted to CHF 39.6 million and was recorded in Q1 2014.
Contributions from private-equity activities and other investment funds include those from the funds Ergon Capital Partners, PAI, Sagard and Kartesia, primarily held by GBL (as its "Financial Pillar"), as well as general expenses relating to these funds (including management fees). Their net contribution amounted to CHF 20.2 million at 30 September 2014. Included in this number is Pargesa's aforementioned CHF 12 million share of the marking to market by Ergon Capital Partners II of its holding in Corialis at the disposal price, prior to the actual sale which closed at the end of October 2014. This item also includes Pargesa's CHF 16.5 million share of the capital gain recorded by Ergon on its disposal in early 2014 of its holding in Zellbios, a leader in the production of active pharmaceutical ingredients.
In the fourth quarter, this item will include the capital gain from the disposal of Corialis by Sagard II fund, in which GBL and Pargesa are both investors.
30 September 2013 and CHF -41.3 million at 30 June 2014. It includes GBL's marking to market, at the end of each period, of the derivative instruments implicitly embedded in the bonds exchangeable for Suez Environnement and GDF Suez shares or convertible into GBL shares.
Pargesa's share of the marking to market of these implicitly embedded derivative instruments amounts to a net profit of CHF +17.0 million over the first nine months of 2014 (CHF -26.2 million at 30 June 2014 and CHF -95.8 million at 30 September 2013). This amount includes a non-cash gain of CHF +54.9 million, realised in the second quarter in connection with the early conversion of 85% of the bonds exchangeable for Suez Environnement shares; this figure represented the reversal of the total amount of the negative value adjustments recorded on the derivatives attached to these bonds since the bonds were issued. In particular, the decline since 30 June 2014 in the price of the shares underlying the exchangeable and convertible bonds in circulation led in the third quarter to a partial reversal, amounting to CHF +43.3 million, of the negative value adjustments previously recorded on the corresponding derivatives.
Pargesa Holding SA - 11, Grand-Rue - CH-1204 Geneva Tel: +41 22 817 77 77 - Fax: +41 22 817 77 70 info@pargesa.ch - www.pargesa.ch
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As mentioned in previous periods, exchangeable and convertible bonds lead to accounting asymmetry and volatility in reported financial results throughout the bonds' lifetime. This is clearly illustrated in the figures at 30 September 2014.
The general expenses and taxes line item represents Pargesa's general expenses and taxes as well as its share of those of GBL.
comprises Pargesa's share of the non-operating income of Imerys and Lafarge.
The net amount of non-operating income from holding companies was CHF 251.4 million, compared with
CHF 9.5 million at 30 September 2013.
Non-operating income from holding companies at 30 September 2014 mainly consisted of:
• Pargesa's CHF 175.5 million share of the income from GBL's sale of 0.4% of the share capital of
Total (mainly in H1 2014), including an historical exchange-rate gain of CHF 39.3 million for Pargesa.
• Pargesa's CHF 74.7 million share of the net gain (including an historical exchange-rate gain of CHF 40.4 million for Pargesa) recorded in Q2 2014 on the delivery of 29.8 million Suez Environnement shares (5.8% of the share capital of Suez Environnement) to bondholders who exercised their exchange rights early.
3. Adjusted net asset value
Pargesa's flow-through adjusted net asset value was CHF 107.6 per share on 30 September 2014. This figure is calculated on the basis of the current market values and exchange rates for the listed shareholdings, and on the basis of the book value per share (or fair value for private-equity activities) and current exchange rates for unlisted investments. The current figure breaks down as follows:
Pargesa's flow-through adjusted net asset value at 30 September 2014
% of % of economic
CHF millions capital interest
Share price and currency
Flow-through Weighting as a value % of total
Total 3.2% 1.6% EUR 51.5 2'388 26% Lafarge 21.1% 10.6% EUR 57.0 2'082 23% Imerys 55.8% 27.9% EUR 58.4 1'508 16% SGS 15.0% 7.5% CHF 1'981 1'162 13% Pernod Ricard 7.5% 3.8% EUR 89.6 1'075 12% GDF Suez (1) 2.4% 1.2% EUR 18.3 (2) 604 6%
Suez Environnement (1) 1.1% 0.6% EUR 11.5 (2) 36 1%
Incubator investments 251 3% Financial Pillar 350 4% Total portfolio 9'456 104% GBL treasury assets 267 3% Net cash (debt) (616) (7%) Adjusted net asset value 9'107 100%
per Pargesa share CHF 76.1 107.6
EUR/CHF exchange rate 1.206
(1) The percentages of capital provided for GDF Suez and Suez Environnement include shares held as treasury investments (0.1%
for GDF Suez and 0.2% for Suez Environnement), representing dividends received in the form of shares in 2011 and 2012.
(2) At 30 September 2014, the value of the shareholdings in GDF Suez and Suez Environnement was capped at the conversion prices for the exchangeable bonds (EUR 18.32 and EUR 11.45 respectively), which were lower than the share prices on that date.
Pargesa's flow-through adjusted net asset value is published every week on the company's website. It was
CHF 105.1 per share on 31 October 2014.
Pargesa Holding SA - 11, Grand-Rue - CH-1204 Geneva Tel: +41 22 817 77 77 - Fax: +41 22 817 77 70 info@pargesa.ch - www.pargesa.ch
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