PARGESA HOLDING PRESS RELEASE NO. 5/2015
Geneva, 5 May 2015
Annual General Meeting of 5 May 2015:
- Dividend of CHF 2.27 per bearer share approved, for a total distribution of CHF 192 million to be paid on 11
May 2015.
- All other resolutions approved, including the amendments to the Articles of Association aimed primarily at bringing them into line with the Ordinance of 20 November 2013 against excessive compensation in listed corporations (known as "ORAb").
Q1 2015 financial results:
- Economic operating profit stood at CHF 53.7 million, compared with a loss of CHF 49.8 million in Q1 2014.
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, for a net amount of
+CHF 10.9 million (−CHF 102.8 million in Q1 2014). Excluding this non-cash impact, economic operating profit was CHF 42.8 million, compared with CHF 53.0 million in Q1 2014.
- Net profit came in at CHF 86.7 million, compared with CHF 47.8 million in Q1 2014. This included Pargesa's CHF 34.6 million share of the capital gain generated from GBL's sale of 0.1% of Total's share capital at the beginning of the year. The Q1 2014 figure included Pargesa's CHF 95.5 million share of the capital gain generated from GBL's sale of 0.2% of Total's share capital at the beginning of 2014.
- The Q1 2015 results also reflect the impact of the euro's depreciation against the Swiss franc since the beginning of the year. Income comes for the most part from GBL's contribution, which is denominated in euros. The average EUR/CHF exchange rate in Q1 2015 was 1.07, compared with 1.22 in Q1 2014, a year- on-year decline of 12%.
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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Since the beginning of 2015, GBL has sold 1.8 million Total shares for EUR 84 million, generating a gain of EUR 42 million, or CHF 34.6 million at the level of Pargesa. GBL still holds 2.9% of Total's capital, which remains one of the Group's largest holdings. At 31 March 2015, GBL's holding in Total represented a market value of EUR 3.2 billion (CHF 1.7 billion for Pargesa).
During Q1 2015, the boards of directors of Holcim and Lafarge announced that they had reached an agreement concerning the revised terms of their merger of equals. Both parties agreed on a new exchange ratio of 9 Holcim shares for 10 Lafarge shares. Based on the revised ratio, GBL should have an approximately 9% stake in the new entity. The boards of directors also selected their candidates for the combined company's future board of directors. Finally, Eric Olsen, who is currently Executive Vice-President of Lafarge, in charge of Operations, was appointed CEO of the new group and will take up this position once the merger is completed. The next major step in the merger process is the Holcim Extraordinary General Meeting on 8 Ma y 2015, when Holcim shareholders will vote on the merger. It should be noted that, at 31 March 2015, GBL recognised no impact related to the change in the accounting treatment of its investment in Lafarge.
Imerys' acquisition of Greek group S&B was completed on 26 February 2015. The acquisition price was determined on the basis of an equity value of EUR 525 million for all shares, plus an additional performance - related amount not to exceed EUR 33 million. The acquisition was partially paid in Imerys shares issued to the Kyriacopoulos family, the founding shareholder of S&B, who now own 4.7% of Imerys' capital. GBL's holding has therefore been slightly diluted, from 56.5% at end-2014 to 53.5%. In accordance with the shareholders' agreement (with no intent to act in concert) between the Kyriacopoulos family and GBL, the appointment of Ulysses Kyriacopoulos to the Imerys Board of Directors was approved at the Annual General Meeting on 30 April
2015.
In Q1 2015, GBL received additional requests for early conversion of bonds exchangeable for Suez Environnement shares maturing in September 2015. GBL therefore delivered 1.7 million Suez Environnement shares, representing EUR 20 million in par value for the bonds. The conversions reduced debt by the amount of the converted par value and the outstanding debt now amounts to EUR 39 million. It also generated a gain on the Suez Environnement shares delivered. At 31 March 2015, GBL held 0.7% of Suez Environnement's share capital, compared with 1.1% at end-2014.
In terms of incubator-type investments, GBL slightly increased its stake in Umicore; at 31 March 2015, GBL held
13.1% of Umicore's capital (versus 12.4% at end-2014) worth EUR 570 million.
GBL also continued to expand its portfolio of incubator investments in Q1, acquiring for EUR 129 million a 7.4%
stake in the capital of listed Belgian group Ontex, a leading global provider of disposable hygiene products.
Within GBL's Financial Pillar, (Sienna Capital), Ergon Capital Partners II (ECP II) disposed in Q1 of its majority stake in Joris Ide, a leading manufacturer of insulating sandwich panels and steel profiles. This transaction generated a net consolidated gain of EUR 14 million. In February 2015, Sienna Capital announced that it was investing EUR 150 million in PrimeStone, a fund whose strategy consists of making medium to long-term investments in medium-sized listed companies in Europe. By 31 March 2015, debt fund Kartesia had invested EUR 152 million (approximately 30% of the fund's size) in primary and secondary financing transactions. In addition, Kartesia ended its fundraising on 23 March 2015 with total commitments of EUR 507 million, EUR 150 million of which came from Sienna Capital.
At the end of March, Pargesa Holding SA issued a CHF 150 million Swiss domestic bond in order to increase its financial resources and partially fund the redemption of its 2.5% bond of CHF 150 million maturing in November
2016. The nine-year bond pays an annual coupon of 0.875% and is redeemable on 24 April 2024. The
transaction took place under favourable market conditions and significantly increased the average debt maturity.
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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Pargesa Holding SA's Board of Directors met today and reviewed the unaudited Q1 2015 consolida ted financial results.
2.1. Presentation of results in accordance with IFRSThe simplified income statement in accordance with IFRS is as follows:
CHF millions Q1 2015 Q1 2014 | ||
Operating income Operating expenses Other income and expenses | 1,138.7 (1,041.1) 83.7 | 1,171.7 (1,085.4) 234.8 |
Operating profit Dividends and interest from long-term investments Other financial income and expenses Taxes Income from associates and joint ventures | 181.3 71.8 (5.7) (32.3) (5.7) | 321.1 76.2 (215.0) (41.2) 0.2 |
Consolidated net profit (before minority interests) Attributable to minority interests Attributable to Pargesa shareholders (Group share) | 209.4 122.7 86.7 | 141.3 93.5 47.8 |
Average number of shares in circulation (in thousands) Basic earnings per share attributable to Pargesa shareholders (CHF) Average EUR/CHF exchange rate | 84,659 1.02 1.070 | 84,645 0.56 1.223 |
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. In Q1 2015, this line item mainly represented the capital gain recorded on GBL's sale of 0.1% of Total's share capital. In Q1 2014, this line item mainly represented the capital gain recorded on GBL's sale of 0.2% of Total's share capital.
The dividends and interest from long-term investments item comprises the net dividends received by the Group from its non-consolidated investments. In Q1 2015, this item represented the SGS annual dividend received by GBL, as most of the dividends from other holdings will be paid from Q2 onwards.
The other financial income and expenses and taxes items provide consolidated figures for Pargesa, GBL and Imerys. This line item included the non-cash impact of GBL's derivative financial instruments 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 highlight in particular the income from private-equity activities and other investment funds (GBL's Financial Pillar, now combined under Sienna Capital) 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 for Q1 2015 were as follows:
CHF millions Q1 2015 Q1 2014 | ||
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 Engie (GDF Suez) net dividend Suez Environnement net dividend Pernod Ricard net dividend | 23.3 (7.2) - 37.3 - - - | 26.3 (16.8) - 39.6 - - - |
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 | 53.4 0.63 2.1 6.2 - (8.0) | 49.1 0.58 13.1 (104.1) - (7.9) |
Economic operating income per share (CHF) Non-operating income from consolidated or equity-accounted companies Non-operating income from holding company activities | 53.7 0.63 (6.9) 39.9 | (49.8) (0.59) 0.4 97.2 |
Net income per share (CHF) Average number of shares in circulation (thousands) Average EUR/CHF exchange rate | 86.7 1.02 84,659 1.070 | 47.8 0.56 84,645 1.223 |
Q1 2015 results were affected by the euro's depreciation against the Swiss franc since the beginning of the year. Income comes for the most part from GBL's contribution, which is denominated in euros. The average EUR/CHF exchange rate in Q1 2015 was 1.07, compared with 1.22 in Q1 2014, a decline of
12%.
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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-CHF 7.2 million, compared with −CHF 16.8 million in Q1 2014.
Non-consolidated holdings:
The contributions from Total, SGS, ENGIE1 and Pernod Ricard represent Pargesa's share of net dividends recorded by GBL from these companies. In Q1 2015, Pargesa's share of SGS' annual dividend was CHF 37.3 million; this represents a slight year-on-year drop in the contribution from SGS even though SGS increased its dividend by 4.6%, mainly because GBL had hedged the Swiss-franc-denominated SGS dividend before the Swiss National Bank removed the EUR/CHF floor. The other holdings did not contribute to the Q1 financial results, as their dividends will be paid from Q2 onwards.
Contributions from private-equity activities and other investment funds come primarily from investments held by GBL under its "Financial Pillar" (Sienna Capital), as well as from general expenses relating to these funds (including management fees). In Q1 2015, the net contribution of CHF 2.1 million included Pargesa's CHF 7.9 million share on the gain realised by ECP II on the disposal of its majority holding in Joris Ide. In Q1 2014, the net contribution of CHF 13.1 million was underpinned by Pargesa's CHF 16.6 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.
Pargesa's share of the marking to market of these implicitly embedded derivative instruments represented a net amount of +CHF 10.9 million in Q1 2015, compared with −CHF 102.8 million in Q1 2014. This increase was due primarily to the 5% drop in the ENGIE share price in Q1 2015, compared with a 16% rise in Q1 2014. The impact of the 11% rise in the Suez Environnement share price in Q1 2015 (+13% in Q1 2014) was limited by the early redemption, since Q2 2014, of almost all the bonds exchangeable for Suez Environnement shares. The item also included a non-cash gain of CHF 2.3 million in connection with the early conversion of EUR 20 million in par value of the bonds exchangeable for Suez Environnement shares; this figure represented the reversal of the total amount of the negative value adjustments recorded since the corresponding bonds were issued.
As mentioned at end-2013 and throughout 2014, 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 for Q1 2015.
The general expenses and taxes line item represents Pargesa's general expenses and taxes as well as its share of those of GBL.
1
GDF Suez has changed its name to ENGIE
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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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 39.9 million, compared with
CHF 97.2 million in Q1 2014.
Q1 2015 non-operating income mainly consisted of:
Pargesa's CHF 34.6 million share of the income from GBL's sale of 1.8 million Total shares, including an historical exchange-rate gain of CHF 11.2 million for Pargesa.
Pargesa's CHF 5.0 million share of the net gain (including an historical exchange-rate gain of CHF 3.0 million for Pargesa) recorded in Q1 2015 on the delivery of 1.7 million Suez Environnement shares (0.4% of the share capital of Suez Environnement) to bondholders who exercised their exchange rights early.
Q1 2014 non-operating income of CHF 97.2 million primarily included Pargesa's CHF 95.5 million share of the capital gain generated from GBL's sale of 0.2% of Total's share capital.
3. Adjusted net asset valuePargesa's flow-through adjusted net asset value was CHF 99.30 per share at 31 March 2015. It is calculated on the basis of the current market values and exchange rates for the listed shareholdings, and on the book value of consolidated shareholders' equity (or fair value for private-equity activities) and current exchange rates for unlisted investments. It is broken down as follows:
Pargesa's flow-through adjusted net asset value at 31 March 2015
% of % of economic
CHF millions capital interest
Share price and currency
Flow-through Weighting as a value % of total
Lafarge 21.0% 10.5% EUR 60.4 1'908 23% Total 2.9% 1.5% EUR 46.3 1'689 20% Imerys 53.5% 26.8% EUR 68.4 1'528 18% SGS 15.0% 7.5% CHF 1'860 1'091 13% Pernod Ricard 7.5% 3.8% EUR 110.2 1'144 14% ENGIE (1) 2.3% 1.2% EUR 18.3 (2) 523 5%
Suez Environnement (1) 0.7% 0.4% EUR 11.5 (2) 20 1%
Incubator 461 5% Financial Pillar 359 4% Total portfolio 8'723 104% GBL treasury assets 242 3% Net cash (debt) (556) (7%)
per Pargesa share CHF 68.4 99.3
EUR/CHF exchange rate 1.044
(1) The percentages of capital provided for ENGIE and Suez Environnement include shares held as treasury investments
(0.1% for ENGIE and 0.1% for Suez Environnement), representing dividends received in the form of shares in 2011 and 2012.
(2) At 31 March 2015, the value of the shareholdings in ENGIE 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 Pargesa website. It was
CHF 103.2 per share on 30 April 2015.
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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