2016
PARGESA HOLDING SA PARGESA
Pargesa Holding SA
ANNUAL REPORT Pargesa E 2016 Holding SA Pargesa Holding SA 11, Grand-Rue www.pargesa.ch Pargesa Holding SA CH – 1204 Genève T +41 (0) 22 817 77 77 [email protected]
Pargesa Holding SA
Annual Report 2016 Pargesa Holding SA Annual Reportreport 20152016
2 Pargesa Holding SA Annual Report 2016 Contents
Contents
Structure and key data 4
Board of Directors, Committees, Auditor and Management 6
Letter from the Chairman 8
01 Business report 11
Introduction 12
Highlights 12
2016 consolidated results 15
Adjusted net asset value 19
Proposals at the Annual General Meeting of 4 May 2017 22
02 Group portfolio 25
GBL 26
Imerys 28
LafargeHolcim 30
SGS 32 adidas 34
Pernod Ricard 36
Umicore 38
Total 40
Other GBL assets 42
03 Corporate Governance report 49
04 Compensation report 61
05 Consolidated financial statements 67
06 Parent company financial statements 145
3 Pargesa Holding SA Annual Report 2016 Structure and key data
Structure and key data
Organisation chart at 31 December 2016 (1) Pargesa Holding SA
50.0% (2)
Sienna Capital Other (5) 53.9% 9.4% 16.2% 7.5% 7.5% 17.0% 0.7% Incubator Strategic investments (3) investments (4) EUR 14’615 (6) EUR 730 (6) EUR 955 (7)
(1) Shareholdings are expressed as a percentage of the capital held. (2) 51.9% of voting rights, taking into account the suspended voting rights relating to treasury shares. (3) Investments generally larger than EUR 1 billion, primarily in listed companies in which the Group can exercise clear influence. These represent the bulk of the portfolio. (4) Comprising a selection of listed or unlisted shareholdings that range in size from CHF 250 million to EUR 1 billion and have the potential to become strategic over time. (5) Comprising significant investments in private equity, debt or specific thematic funds. (6) Market value in EUR millions of the investments held by GBL at 31 December 2016. (7) Estimated value in EUR millions at 31 December 2016. Group portfolio key data at 31 December 2016
% of % flow- 2016 31.12.2016 Direct Total voting through net profit shareholders equity Company interest % interest % rights interest (1) Currency (CHF millions) (2) (CHF millions) (2) GBL 50.0 50.0 51.9 (3) 50.0 EUR (499) 15’966 Imerys 53.9 69.7 27.0 EUR 319 3’074 LafargeHolcim 9.4 9.4 4.7 CHF 1’791 30’822 SGS 16.2 16.2 8.1 CHF 543 1’773 adidas 7.5 7.5 3.8 EUR 1’109 6’950 Pernod Ricard (4) 7.5 6.8 3.8 EUR 1’346 14’323 Umicore 17.0 17.0 8.5 EUR 143 1’964 Total 0.7 1.3 0.4 EUR 6’104 100’535 Ontex (5) 19.98 19.98 10.0 EUR 131 1’073 Burberry (5) (6) 2.95 2.95 1.5 GBP 414 1’963 Exchange rate EUR / CHF 1.090 1.074 Exchange rate GBP / CHF 1.335 1.254
(1) Flow-through interest assessed at the level of Pargesa. (2) Attributable to Group shareholders. (3) Taking into account the suspended voting rights relating to treasury shares. (4) Financial year ending on 30 June ; net profit is that of the 2015/2016 financial year ; shareholders’ equity is the figure at 30 June 2016. (5) Portfolio of incubator-type investments. (6) Financial year ending on 31 March ; the net income is that of the 2015/2016 financial year ; shareholders’ equity is the figure at 31 March 2016. 4 Pargesa Holding SA Annual Report 2016 Structure and key data
Global and per-share data
CHF millions 2012 (1) 2013 2014 2015 2016
Consolidated shareholders’ equity, Group share 7’230 7’545 7’725 7’011 7’863 Operating income 346.0 250.5 339.5 308.4 320.9 Non-operating income 59.2 143.4 297.4 329.8 (352.9) Consolidated net profit, Group share 405.2 393.9 636.9 638.2 (32.0) Gross dividend 217.5 223.5 192.2 201.5 206.6 (2) Shares entitled to dividend 84’640’770 84’643’980 84’659’190 84’659’190 84’659’190 Market capitalisation at year-end 5’303 6’086 6’523 5’376 5’613 Adjusted net asset value at year-end 7’648 8’820 8’876 7’970 8’884
CHF per share 2012 (1) 2013 2014 2015 2016 Share price year-end 62.65 71.90 77.0 5 63.50 66.30 high 68.20 72.25 82.90 76.95 68.25 low 51.20 61.10 70.60 55.95 54.50 average 61.66 67.07 76.55 65.11 63.90 Consolidated shareholders’ equity, Group share 85.42 89.14 91.25 82.81 92.88 Adjusted net asset value at year-end 90.36 104.20 104.85 94.14 104.93 Operating income (3) 4.09 2.96 4.01 3.64 3.79 Non-operating income (3) 0.70 1.69 3.51 3.90 (4.17) Consolidated net profit, Group share (3) 4.79 4.65 7.52 7.54 (0.38) Total dividend 2.57 2.64 2.27 2.38 2.44 (2) (Average) total return 4.2% 3.9% 3.0% 3.7% 3.8%
(1) Certain amounts have been adjusted to take account of the amendments to IAS 19 concerning the reporting of employee benefits and the correction of an error concerning the tax bases of Imerys tangible assets. (2) Recommendation at the Annual General Meeting on 4 May 2017.
(3) Calculated on the weighted average number of shares outstanding during the year.
Market Data
1 0 1 0 1 0 1 0 120 120 110 110 100 100 0 0 0 0 0 0 60 60 0 0 0 0 2012 201 201 201 2016
Market price CHF Flow-through adjusted net asset value CHF SPI relative to market price (CHF)
5 Pargesa Holding SA Annual Report 2016 Board of Directors
Board of Directors
Chairman
Paul DESMARAIS Jr Chairman of the Board and Co-Chief Executive Officer, Power Corporation of Canada
Vice-Chairmen
Gérald FRÈRE Executive Director, Frère-Bourgeois SA
André DESMARAIS Deputy Chairman, President and Co-Chief Executive Officer, Power Corporation of Canada
Directors
Bernard DANIEL Member of the International Committee of the Red Cross (ICRC)
Victor DELLOYE Director and Secretary General, Frère-Bourgeois SA and its subsidiary Compagnie Nationale à Portefeuille SA (CNP)
Paul DESMARAIS III Senior Vice President, Power Corporation of Canada
Cedric FRÈRE Director, Frère-Bourgeois SA
Ségolène GALLIENNE Director, Frère-Bourgeois SA
Jean-Luc HERBEZ Attorney-at-Law
Barbara KUX Company Director
Jocelyn LEFEBVRE* Member of the Management Board, Power Financial Europe BV
Michel PÉBEREAU Honorary Chairman of the Board of Directors, BNP Paribas
Michel PLESSIS-BÉLAIR** Vice-Chairman, Power Corporation of Canada
Gilles SAMYN Chairman of the Board, Compagnie Nationale à Portefeuille SA (CNP)
Amaury de SÈZE Vice-Chairman, Power Financial Corporation
Arnaud VIAL Senior Vice-President, Power Corporation of Canada
* Appointment to be proposed at the Annual General Meeting on 4 May 2017.
** Not seeking another term of office.
6 Committees, Auditor, Pargesa Holding SA Annual Report 2016 Management
Committees, Auditor, Management
Audit Committee
Chairman Jean-Luc HERBEZ
Members Bernard DANIEL*
Barbara KUX
Jocelyn LEFEBVRE*
Michel PLESSIS-BÉLAIR**
Gilles SAMYN
Amaury de SÈZE**
Compensation Committee
Chairman Bernard DANIEL
Members Jean-Luc HERBEZ*
Barbara KUX
Michel PLESSIS-BÉLAIR**
Gilles SAMYN
Amaury de SÈZE
Auditor
Deloitte SA
Management
Paul DESMARAIS Jr Executive Director
Gérald FRÈRE Executive Director
Pierre HAAS Advisor to the Chairman
Arnaud VIAL Managing Director
Mark KELLER Financial Director
Fabienne RUDAZ BOVARD Treasurer
* As of the Annual General Meeting on 4 May 2017, subject to his election as Director. ** Up to the Annual General Meeting on 4 May 2017.
7 Pargesa Holding SA Annual Report 2016 Letter from the Chairman
Letter from the Chairman
Dear Shareholders,
In an environment marked by macroeconomic and political uncertainties, which sparked periods of significant volatility on the financial markets, the Pargesa Group pressed ahead with the portfolio rotation strategy first adopted five years ago. We once again reduced our exposure to the energy sector, which now accounts for only 5% of our portfolio.
Overall, we have made disposals amounting to nearly EUR 6.7 billion from within our portfolio of strategic holdings since 2012, including EUR 2.5 billion in 2016 and early 2017. Most of the proceeds from these sales have been reinvested in new strategic shareholdings such as SGS, adidas and Umicore. The rest has been used to expand our Incubator investments, grow Sienna Capital and reduce the Group’s net debt.
This portfolio restructuring, which is perfectly in keeping with the Group’s investment philosophy, has enabled us to achieve greater diversification and improve our sector allocation, while at the same time keeping our portfolio focussed on a limited number of shareholdings. At 31 December 2016, none of our seven strategic shareholdings, which had a combined value of EUR 14.6 billion, accounted for more than 19% of the portfolio, whereas at end-2011 the two largest shareholdings alone accounted for 50%. Our portfolio is built around three asset categories – strategic shareholdings, incubator-type investments and Sienna Capital – and we feel that it now strikes the right balance between growth and returns. It should create value for our shareholders over the long term and prove resilient to external headwinds.
Our main holdings performed well in 2016, and LafargeHolcim saw the first positive effects of the merger. In addition, less than two years after Imerys acquired S&B, we supported our subsidiary in another large-scale project : the contemplated acquisition of Kerneos. This deal will allow Imerys to expand its specialty minerals offering for industry in complementary growth markets.
8 Pargesa Holding SA Annual Report 2016 Letter from the Chairman
These solid operating performances resulted in share price rises for most of our holdings in 2016. As a result, Pargesa’s adjusted net asset value was up 11.4% over the year, in line with GBL’s adjusted net asset value per share.
The significant impairment recorded on the Group’s holding in LafargeHolcim in the first half of the year weighed on our bottom line. This impairment, which is the result of strict application of accounting standards, did not have any impact on our adjusted net asset value and has no bearing on LafargeHolcim’s growth potential. And while the impairment brought down our non-operating economic income for the year, this was partially offset by the gains realised on the reduction of our stake in Total.
We believe that the evolution of the economic operating income, which excludes non-recurring and exceptional items, is more important than that of net income. As part of the portfolio restructuring mentioned above, the Group has significantly reduced its stakes in Total and ENGIE in recent years. These companies offer high dividend yields and therefore made a major contribution to Pargesa’s economic operating income. Although the proceeds from these sales is gradually reinvested, the contribution from shareholdings to operating income could level off or even decrease slightly in the short term. This will depend on the pace of reinvestment and the return offered by the newly acquired assets.
Such a situation would be temporary and does not dent our confidence in the quality and solidity of our portfolio. I am therefore pleased to announce that at the Annual General Meeting to be held on 4 May 2017, the Board will recommend a dividend for the 2016 financial year of CHF 2.44 per bearer share, representing a 2.5% increase on the previous year.
I would like to close by paying tribute to Michel Plessis-Bélair, a member of the Board of Directors of Pargesa Holding SA since 1999 and also a member of the Audit Committee and the Compensation Committee, who informed the Board that he regretfully would not seek another term as Director. On behalf of the Board of Directors, I would like to thank Mr Plessis-Bélair for his invaluable contribution to the Board’s work over the years.
Geneva, March 2017
Paul Desmarais Jr
9
01 BUSINESS REPORT
Mont Blanc mountain range – Haute Savoie – France – Gouache – F.E. Kastin – 1811 11 Pargesa Holding SA Annual Report 2016 Business report
1. Introduction
Pargesa Holding SA, which has its registered office in Geneva, is the parent company of Pargesa Group, which is active in various industry and service sectors through its holdings in a number of operating companies.
Pargesa Group’s main business strategy is built around the following key principles :
• focus the portfolio primarily on a limited number of major strategic holdings, with a view to creating value over the long term ;
• hold positions that enable the Group to fulfil its role as a professional, long-term shareholder ;
• work continuously as a strategic shareholder in the companies in which the Group invests, through its representatives on the boards of directors and board committees, particularly with regard to :
– discussing and approving the business development strategies put forward by senior management ;
– regularly monitoring the course of business and taking part in important decision-making ;
– being involved in defining financial policy.
On the basis of these principles, the Group’s portfolio is composed primarily of the strategic holdings, of which there were seven at 31 December 2016 : Imerys, LafargeHolcim, SGS, adidas, Pernod Ricard, Umicore and Total. Details of these companies’ operations and financial results in 2016 are provided in chapter 2 “Group portfolio” of this Annual Report.
These investments are held through the subsidiary Groupe Bruxelles Lambert (GBL), which is listed on Euronext Brussels. At 31 December 2016, Pargesa held 50.0% of the share capital and 51.9% of the voting rights of GBL, taking into account the suspended voting rights relating to GBL treasury shares.
In addition to the large strategic holdings that make up the majority of its portfolio, GBL began to diversify into two areas in 2012 :
• a portfolio of “Incubator” investments, made up of a limited selection of smaller listed and unlisted holdings – each representing an investment of between EUR 250 million and EUR 1 billion – that have the potential to become strategic assets over time. GBL aims to become a core shareholder in these companies and, for mid-sized enterprises, to possibly hold a majority stake. This type of investment may eventually account for 10-15% of the portfolio;
• the “Financial Pillar”, comprising major stakes in private equity funds, debt funds and theme-based funds, grouped under Sienna Capital. These investments may eventually account for up to 10% of the portfolio.
These two investment arms are presented on pages 42 to 47 of this Annual Report.
At 31 December 2016, the breakdown of the Group’s portfolio was as follows : strategic holdings : 89% ; Incubator investments : 5% ; Financial Pillar : 6%.
The breakdown and analysis of Pargesa’s financial results are provided in section 3 of this Business Report, while information on the adjusted net asset value can be found in section 4. 2. Highlights of 2016 and early 2017
2.1 The Group’s portfolio
• In 2016, GBL continued to gradually reduce its stake in Total. In Q1 2016, GBL sold an additional 27.5 million Total shares, representing 1.1% of the company’s capital, both in the market and through a private placement by way of an accelerated bookbuilding process for institutional investors. These transactions represented a total amount of EUR 1.1 billion and generated a capital gain of EUR 428 million for GBL. GBL also sold an additional 16.0 million Total shares, representing 0.7% of that company’s capital, through forward sales contracts that matured in December 2016. The net proceeds from these sales amounted to EUR 666 million, generating an additional capital gain of EUR 304 million for GBL. Following these transactions, GBL’s stake in Total’s share capital was reduced from 2.4% at 31 December 2015 to 0.7% at 31 December 2016.
12 Pargesa Holding SA Annual Report 2016 Business report
Given the high dividend yield on this holding, these disposals have a significant impact on Total’s contribution to Pargesa’s economic operating income. However, the proceeds from the sales will be used over time to make investments that will gradually contribute to income depending on when the proceeds are reinvested and the level of return on the new investments.
It is also worth noting that the forward sales of Total shares initiated and completed in 2016 allowed GBL to continue to record the interim dividends related to the underlying shares. This was also the case for the forward sales of ENGIE shares initiated and completed in 2016 (see below). Had all these transactions been executed through straight sales, Pargesa’s 2016 economic operating income (see section 3.2) would have been lower by CHF 21.5 million.
• In 2016, GBL repurchased EUR 233 million of principal amount in bonds exchangeable for ENGIE shares. In Q2, GBL also launched a competitive tender offer for the bonds exchangeable for ENGIE shares ; at offer closing, EUR 458 million in principal amount had been repurchased. Taking into account the early redemption requests representing EUR 3 million in principal amount, around 31% of the initial EUR 1 billion issue was still outstanding at 31 December 2016. The outstanding amount (EUR 306 million) was redeemed in cash at maturity on 7 February 2017.
• During 2016, GBL sold 42.7 million ENGIE shares, representing approximately 1.8% of that company’s capital, through forward sales contracts which matured in Q4. The net proceeds from these sales amounted to EUR 572 million, generating a loss of EUR 11 million for GBL. Further forward sales contracts on 4.5 million ENGIE shares (around 0.2% of the company’s share capital) were entered into in Q4 2016 and matured in January 2017, for a net amount of EUR 55 million.
Excluding the forward sales contracts that matured in January 2017, GBL’s stake in ENGIE stood at 0.6% at 31 December 2016, compared with 2.3% at 31 December 2015 (1).
In addition to the forward sales of ENGIE shares entered into in December 2016 and completed in January 2017, a further 7.4 million shares, representing 0.3% of ENGIE’s capital, were sold in early 2017. As a result, including the forward sales completed in January, GBL has sold 11.9 million ENGIE shares (or 0.5% of the company’s capital out of the 0.6% held at 31 December 2016) since the beginning of 2017, representing a net amount of EUR 145 million and generating an accounting gain of EUR 1 million for GBL. As a result of these transactions, GBL now holds 0.1% of ENGIE’s share capital.
• As previously mentioned, in 2016 GBL continued to increase its stake in adidas, which is now considered a strategic shareholding. At 31 December 2016, GBL held 7.5% of the company’s capital (4.7% at 31 December 2015), representing a market value of EUR 2.4 billion. GBL has a representative on adidas’ Supervisory Board.
• GBL increased its stake in SGS in 2016 and held 16.2% of that company’s capital at end-2016, compared with 15.0% at end-2015. At 31 December 2016, the market value of this holding was EUR 2.4 billion.
• In 2016, GBL also slightly increased its stake in Umicore, a group specialized in materials technology and recycling. At 31 December 2016, it held 17.0% of the company’s capital (16.6% at 31 December 2015), representing a market value of EUR 1.0 billion. Given the value of this shareholding and GBL’s presence on the company’s Board of Directors, the stake in Umicore is considered a strategic shareholding.
• Within the portfolio of incubator-type investments, GBL’s investment in Ontex, a world leader in hygienic consumables, stood at 19.98% at 31 December 2016 (7.6% at 31 December 2015). At end-2016, the market value of this investment amounted to EUR 423 million.
The Incubator portfolio also includes a stake in Burberry, which is listed on the London Stock Exchange. At 31 December 2016, GBL held 2.95% of Burberry’s capital, representing a market value of EUR 230 million on that same date. On 28 February 2017, Burberry announced that GBL had reached the threshold of 3% of its voting rights.
• On 11 December 2016, Imerys announced the contemplated acquisition of Kerneos, world leader in calcium-aluminate-based high- performance binders, for an estimated enterprise value of EUR 880 million. The transaction, which would be fully funded by Imerys’ available resources, is subject to relevant workers’ council consultation, as well as approval by the relevant regulatory authorities.
(1) Given the value of the remaining stake in ENGIE (which is also a high dividend yield investment), this shareholding was no longer considered a strategic shareholding as of 31 December 2016.
13 Pargesa Holding SA Annual Report 2016 Business report
• Within Sienna Capital (GBL’s “Financial Pillar”):
- In Q1 2016, Ergon Capital Partners III (ECP III) acquired an indirect majority stake in Financière Looping S.A.S., a European theme-park operator. In Q2 2016, ECP III sold its interests in De Boeck Education SA, De Boeck Digital SA and Larcier Holding SA, generating a total capital gain of EUR 51 million for GBL, with Pargesa’s share amounting to CHF 29.1 million. In July 2016, the fund increased its size from EUR 350 million to EUR 500 million. New funds were committed by Sienna Capital and by European institutional investors active in private equity. Following this funding round, the interest of Sienna Capital in ECP III, which was previously 100%, was slightly diluted. Finally, in December 2016, ECP III acquired a majority stake in Deutsche Intensivpflege Holding GmbH, a company involved in intensive care services.
In March 2017, ECP III sold its majority stake in Golden Goose, an Italian designer of shoes, clothes and contemporary accessories. This transaction generated a consolidated capital gain of around EUR 110 million for GBL, which will be booked in 2017.
- The Sagard funds : in March 2016, a group of investors led by Sagard 3 announced that they had signed an agreement with the founder and majority shareholder of Prosol to acquire a minority stake in that company, the parent company of Grand Frais, a chain of French supermarkets that specializes in fresh food. In October 2016, Sagard II and Equistone sold their stake in FläktWoods, a leading provider of critical air functions for HVAC systems. Pargesa’s share of the capital gain generated by this transaction amounted to CHF 9.1 million. In Q4 2016, the size of Sagard 3 was increased by EUR 404 million and nine new investors made commitments to the fund. More recently, in February 2017, Sagard 3 announced that it had taken a majority stake in Ipackchem, a leading global manufacturer of “barrier” packaging whose products are mainly used in the transport and storage of aromas, fragrances and agrochemical products, for which permeability, contamination and evaporation constraints are critical.
- At 31 December 2016, debt fund Kartesia had invested EUR 468 million in primary and secondary financing transactions. Kartesia also launched in 2016 a new investment fund, to which Sienna Capital committed EUR 150 million.
- In March 2016, a group of investors, including BDT Capital Partners, a fund to which Sienna Capital committed EUR 113 million in 2015, finalized the acquisition of Keurig Green Mountain, Inc., a group active in personal beverage systems. In October 2016, BDT Capital Partners II acquired a stake in Lou Malnati’s Pizzeria, and in December 2016, the fund made an investment in Athletico Physical Therapy, one of the largest providers of orthopaedic rehabilitation services in the USA.
- In 2016, through its fund Mérieux Participations II (MPII), Mérieux Développement, an investment manager specialized in growth and venture capital investments in the healthcare sector, acquired minority stakes in Novacap, an international player in the chemical field (June 2016), and in Le Noble Age, a French company that operates in the healthcare sector (November 2016).
- Finally, PrimeStone, a fund in which Sienna Capital invested EUR 150 million in February 2015 and whose strategy consists of making medium to long-term investments in medium-sized listed companies in Europe, completed six new investments in 2016.
At 31 December 2016, GBL’s commitments under its Financial Pillar amounted to EUR 601 million (EUR 413 million at 31 December 2015).
2.2 Company organisation
Michel Plessis-Bélair, a member of the Board of Directors of Pargesa Holding SA since 1999 and also a member of the Audit Committee and the Compensation Committee, informed the Chairman of the Board of Directors that he regretfully would not seek another term as Director at the Annual General Meeting on 4 May 2017. The Board of Directors wishes to thank Mr Plessis-Bélair for his loyalty and invaluable contribution to the Board’s work over the years.
At the Annual General Meeting on 4 May 2017, the Board of Directors will submit a proposal to elect Jocelyn Lefebvre as Director for a one-year term that will expire at the end of the 2018 Annual General Meeting.
14 Pargesa Holding SA Annual Report 2016 Business report
3. 2016 consolidated financial results
3.1 Presentation of results in accordance with IFRS
The simplified income statement in accordance with IFRS is as follows :
CHF millions 2016 2015 Operating income 5’011.1 4’774.4 Operating expenses (4’500.4) (4’478.8) Other income and expenses (579.4) 820.3 Operating profit (68.7) 1’115.9 Dividends and interest from long-term investments 368.9 345.2 Other financial income and expenses (48.8) (31.1) Taxes (163.2) (69.8) Income from associates and joint ventures 31.2 ( 77.6) Consolidated net profit (before minority interests) 119.4 1’282.6 Attributable to minority interests (151.4) (644.4) Attributable to Pargesa shareholders (Group share) (32.0) 638.2
Basic earnings per share attributable to Pargesa shareholders (CHF) (0.38) 7.54
Average number of shares in circulation (in thousands) 84’659 84’659
Average EUR/CHF exchange rate 1.090 1.067
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 as well as impairments and reversals of previous impairments on Group shareholdings and operations. In 2016, this figure mainly comprised the impairments recorded by GBL on its holdings in LafargeHolcim and ENGIE, for a total net amount of CHF −1’914 million (of which CHF −1’848 million related to LafargeHolcim), as well as the capital gain realized by GBL on the sale of 1.8% of Total’s share capital (CHF +1’288 million, including an historical exchange rate gain of CHF 490 million) and the accounting loss recorded on the sale of ENGIE shares (CHF −12.2 million). At 31 December 2015, this figure included the net accounting impact of the deconsolidation of Lafarge on 10 July 2015, for an amount of CHF +469 million. It also included the capital gain recorded on GBL’s sale of 0.5% of Total’s share capital, together with the capital gain recorded during the period by GBL following the delivery of Suez shares to holders of bonds exchangeable for Suez shares who had exercised their right to exchange the bonds, for a net amount of CHF 491 million, including an historical exchange rate gain of CHF 150 million.
The dividends and interest from long-term investments item comprises the net dividends recorded by the Group from its non-consolidated investments, mainly LafargeHolcim, SGS, Total, ENGIE, Pernod Ricard, adidas, Umicore, Ontex and Burberry.
The other financial income and expenses and taxes items provide consolidated figures for Pargesa, GBL and Imerys. Other financial income and expenses includes 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. In 2015, this item included GBL’s CHF −107 million share of the net loss recorded in H1 2015 by Lafarge, which was accounted for using the equity method until 30 June 2015.
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.
15 Pargesa Holding SA Annual Report 2016 Business report
3.2 Economic presentation of Pargesa financial results
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 for Imerys, equity method for Lafarge up to 30 June 2015, with other major Group holdings being booked as financial investments), so this continuous view would be interrupted without this additional economic presentation of the Group’s results.
The economic presentation shows, in terms of Pargesa’s share of results, the operating contribution of the main shareholdings to Pargesa’s consolidated income, together with the operating income from the holding companies (Pargesa and GBL), which highlight in particular the income from private equity activities and other investment funds (combined under Sienna Capital at GBL) 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 impairments or reversals of previous impairments.
According to this approach, the economic results for 2016 were as follows :
CHF millions 2016 2015 Operating contribution of the main shareholdings - Consolidated (Imerys) or equity-accounted (Lafarge) (1) : Imerys share of operating income 111.7 102.3 Lafarge share of operating income – 12.5
- Non-consolidated : LafargeHolcim net dividend 44.3 – SGS net dividend 41.5 37.3 Total net dividend 28.0 85.0 ENGIE net dividend 26.4 25.5 Pernod Ricard net dividend 21.2 19.7 Umicore net dividend 14.1 8.4 adidas net dividend 10.7 1.7 Suez net dividend – 0.3 Operating contribution of the main shareholdings 297.9 292.7 per share (CHF) 3.52 3.46
Contribution from private-equity activities and other funds 38.2 13.7 Net financial income and expenses 8.1 34.1 Other operating income from holding company activities 6.2 0.6 General expenses and taxes (29.5) (32.7) Economic operating income 320.9 308.4 per share (CHF) 3.79 3.64
Non-operating income (loss) from consolidated or equity-accounted companies (21.4) (150.0) Non-operating income (loss) from holding company activities (331.5) 479.8 Net income (loss) (32.0) 638.2 per share (CHF) (0.38) 7.54
Average number of shares in circulation (thousands) 84’659 84’659
Average EUR/CHF exchange rate 1.090 1.067
(1) Up to 30 June 2015.
Most income comes from GBL, whose results are denominated in euros. In 2016, the average EUR/CHF exchange rate was 1.090, compared with 1.067 in 2015, a rise of +2.1%.
16 Pargesa Holding SA Annual Report 2016 Business report
Economic operating income:
Consolidated and equity-accounted holdings :
Pargesa’s share of Imerys’ net income from current operations, in Swiss-franc terms, was CHF 111.7 million, compared with CHF 102.3 million a year earlier.
Imerys’ 2016 net income from current operations was EUR 362.1 million, a rise of 6.0% on 2015 (EUR 341.5 million). Net income stood at EUR 292.8 million in 2016 after non-recurring items of EUR −69.3 million (1) relating to restructuring operations (including an impairment of EUR −25 million relating to Minerals Refractories in China) as well as transaction costs. In 2015, net income stood at EUR 68.4 million, after non-recurring items of EUR −273.1 million net of taxes, made up of restructuring costs amounting to EUR −64.1 million and a non-cash impairment charge of EUR −209.0 million in the Oilfield Solutions division of the Energy Solutions & Specialties business group (half of the amount representing the total impairment of goodwill and the remainder the impairment on part of the assets).
As already indicated, the holding in Lafarge was deconsolidated in 2015 and has not contributed to income since 30 June 2015. As of 2016, it was replaced by the contribution, in the form of a dividend, from LafargeHolcim (see below). In 2015, the contribution from Lafarge (accounted for using the equity method for six months of that year) to Pargesa’s operating income amounted to CHF 12.5 million.
Non-consolidated holdings :
The non-consolidated holdings (LafargeHolcim, SGS, Total, ENGIE, Pernod Ricard, Umicore and adidas) contribute to operating income through the net dividends recorded at GBL.
The contribution from LafargeHolcim, which corresponded to Pargesa’s share of the dividend received by GBL for the first time in Q2 2016 (CHF 1.50 per share), amounted to CHF 44.3 million.
The contribution from SGS, which corresponds to Pargesa’s share of the annual dividend received by GBL, stood at CHF 41.5 million, compared with CHF 37.3 million in 2015. In 2016, SGS paid a dividend of CHF 68 per share, the same as the year-earlier dividend. The increase in SGS’ contribution relative to 2015 is due to exchange rate effects.
Total’s contribution was CHF 28.0 million in 2016, versus CHF 85.0 million in 2015. The four quarterly dividends booked in 2016 each amounted to EUR 0.61 per share, the same as those booked in 2015. The smaller contribution from this holding resulted from GBL’s sales of Total shares in 2015 and in Q1 2016 (2).
In 2016, ENGIE paid the final 2015 dividend of EUR 0.50 per share, and the interim 2016 dividend, also EUR 0.50 per share. These amounts were the same as those paid in 2015. ENGIE’s contribution was CHF 26.4 million (2) in 2016, versus CHF 25.5 million in 2015.
Pernod Ricard’s 2015-2016 dividend amounted to EUR 1.88 per share (made up of an interim dividend of EUR 0.90 and a final dividend of EUR 0.98), compared with EUR 1.80 for the previous period (made up of an interim dividend of EUR 0.82 and a final dividend of EUR 0.98). Pernod Ricard’s contribution was CHF 21.2 million 2016, versus CHF 19.7 million in 2015.
The contribution from Umicore, which is now a strategic holding, amounted to CHF 14.1 million for Pargesa in 2016, versus CHF 8.4 million in 2015. This increase resulted from GBL’s increased stake in the company’s capital, as well as from the higher dividends paid by Umicore (EUR 1.30 per share in 2016, made up of the final 2015 dividend of EUR 0.70 per share paid in Q2 2016 and the interim 2016 dividend of EUR 0.60 per share in Q3). In 2015, Umicore paid a total of EUR 1.00 per share in dividends (EUR 0.50 per share for the final 2014 dividend, and EUR 0.50 per share for the interim 2015 dividend).
The contribution from adidas, which is also a strategic holding since 2016, amounted to CHF 10.7 million for Pargesa in 2016, versus CHF 1.7 million in 2015. This increase primarily reflects GBL’s larger stake in the company and, to a lesser extent, the increase in the dividend paid by adidas (EUR 1.60, up from EUR 1.50 in 2015).
(1) In the economic presentation of results, Pargesa’s share of non-recurring items of consolidated holdings or equity-accounted holdings appears under “non-operating income (loss) from consolidated or equity-accounted companies”. (2) For the Total and ENGIE shares subject to forward sales contracts that matured in 2016, GBL continued to receive the interim dividends paid before maturity of the contracts. Over 2016, this represented a total amount of CHF 21.5 million at the level of Pargesa.
17 Pargesa Holding SA Annual Report 2016 Business report
Contributions from holding company activities :
Contributions from private equity activities and other investment funds come primarily from investments held by GBL through Sienna Capital, and also includes general expenses and management fees. In 2016, the net contribution from these activities came in at CHF 38.2 million and mainly included Pargesa’s share of the gains realized by ECP III on the sale of its interests in the De Boeck Group in H1 2016 (CHF 29.1 million) and by Sagard II on the sale of its stake in FläktWoods in Q4 2016 (CHF 9.1 million), as well as Kartesia’s contribution (CHF 12.6 million, including the impact from the revaluation of certain assets). In 2015, the net contribution of CHF 13.7 million included Pargesa’s share of the gain realized by ECP II on the disposal of its majority holding in Joris Ide (CHF 7.9 million), of the gain realized by Sagard II on the disposal of Cérélia (CHF 12.4 million), and of the gain realized by Sagard 3 on the disposal of the Santiane Group (CHF 3.7 million).
Net financial income and expenses includes interest income and expenses as well as other financial income and expenses. It amounted to CHF 8.1 million in 2016, compared with CHF 34.1 million in 2015. In 2016 this line item included :
• the CHF +40.8 million impact of GBL’s marking to market, at the end of each period, of the derivative instruments implicitly embedded in the exchangeable and convertible bonds issued by GBL, reflecting in particular the evolution in the prices of the underlying shares over the period ;
• the net CHF −9.8 million impact resulting from the cancellation of the derivatives embedded in the bonds exchangeable for ENGIE shares repurchased by GBL during the year ;
• Pargesa’s share of the realized and unrealized results recorded by GBL from trading activities (including dividends) and derivatives that GBL uses to manage its portfolio. Pargesa’s share of the income from these activities was CHF 3.1 million in 2016.
In 2015, this line item included the CHF +48.6 million impact of the marking to market of the embedded derivatives, together with an amount of CHF +7.2 million representing the reversal of the cumulative value adjustments previously recorded on the derivatives implicitly embedded in the bonds exchangeable for Suez shares that were converted during the period or redeemed at maturity in September 2015. It also included an amount of CHF +11.6 million, corresponding to Pargesa’s share of the gains realized by GBL from trading activities and derivatives.
Other operating income from holding company activities represents Pargesa’s share of net dividends booked by GBL on its incubator-type investments. The figure for 2015 has been adjusted (by CHF 10.1 million), as the holdings in adidas and Umicore are now considered strategic investments. The year-on-year increase mainly reflects GBL’s investments in Ontex and Burberry in 2016.
The general expenses and taxes line item represents Pargesa’s own general expenses and taxes as well as its share of those of GBL.
Non-operating income (loss) :
Non-operating income (loss) from consolidated or equity-accounted shareholdings represents in 2016 Pargesa’s share of Imerys’ non-operating items. In 2015, it reflected Pargesa’s share of Imerys’ non-operating items of EUR −273.1 million (see above), as well as Pargesa’s share of the impairments, restructuring costs and other costs related to the merger with Holcim booked by Lafarge in H1 2015, before this holding was deconsolidated.
The net non-operating loss from holding company activities was CHF −331.5 million in 2016 and consisted primarily of :
• Pargesa’s CHF −959.4 million share of the EUR 1’682 million impairment charge booked by GBL on its holding in LafargeHolcim in H1 2016, based on LafargeHolcim’s share price of EUR 37.1 (1). Even though the share price had risen to EUR 49.9 by 31 December 2016, since this holding is classified as an “available-for-sale financial asset” and has already been impaired, any subsequent rise in the share price must be recorded directly in equity and not in the income statement (unless the asset is sold), while any further decline from the price used for the impairment in 2016 (EUR 37.1) leads to an additional impairment being recognised in the income statement ;
• Pargesa’s CHF 666.8 million share of the capital gain recorded by GBL on the sale of 1.8% of Total’s share capital, including an historical exchange-rate gain of CHF 252.6 million at the level of Pargesa ;
• the CHF −40.6 million impact of a further impairment charge on ENGIE shares as well as the accounting loss on the sale of shares of that company ;
• Pargesa’s CHF 2.7 million share of the net impact of the repurchase of around 69% of the bonds exchangeable for ENGIE shares and their subsequent cancellation.
(1) Share price at 30 June 2016. An impairment was recognised on the holding in LafargeHolcim at 31 March 2016, followed by an additional impairment at 30 June 2016, as the share price had dropped below the 31 March 2016 figure.
18 Pargesa Holding SA Annual Report 2016 Business report
As a reminder, 2015 non-operating income from holding company activities was CHF 479.8 million and mainly consisted of :
• Pargesa’s CHF 243.7 million share of the net impact of the accounting entries related to the deconsolidation of Lafarge on 10 July 2015 ;
• Pargesa’s CHF 225.2 million share of the gain from GBL’s sale of 0.5% of Total’s share capital, including an historical exchange-rate gain of CHF 68.9 million at the level of Pargesa ;
• Pargesa’s CHF 14.3 million share of the net gain recorded on the delivery by GBL of Suez shares to bondholders who exercised their exchange rights early or at maturity (including an historical exchange-rate gain of CHF 8.4 million at the level of Pargesa). 4. Adjusted net asset value Pargesa’s flow-through adjusted net asset value amounted to CHF 8’884 million at 31 December 2016, or CHF 104.9 per share, representing a rise of 11.4% on the year-earlier figure of CHF 94.1. The adjusted net asset value is calculated based on the following principles :
• listed shareholdings are valued based on current market prices and exchange rates ;
• u nlisted investments are valued on the basis of the book value of shareholders’ equity and current exchange rates, or based on their fair value if this is used by GBL to calculate its adjusted net asset value ;
• v alues per share are shown in relation to one bearer share with a par value of CHF 20, with one tenth of the CHF 2 registered shares being retained.
31.12.15 31.12.16 Amount Weighting Amount Weighting Share price and in CHF as a % Share price and in CHF as a % currency millions of total currency millions of total Imerys EUR 64.4 1’499 19% EUR 72.1 1’658 19% LafargeHolcim EUR 46.7 1’453 18% EUR 49.9 1’534 17% SGS CHF 1’911 1’123 14% CHF 2’072 1’313 15% adidas (1) – – EUR 150.2 1’265 14% Pernod Ricard EUR 105.2 1’137 14% EUR 103.0 1’100 12% Umicore (1) – – EUR 54.2 554 6% Total EUR 41.3 1’338 17% EUR 48.7 424 5% ENGIE (2) EUR 16.3 485 6% – – Other shareholdings Incubator adidas (1) 484 6% – – Umicore (1) 391 5% – – Ontex 98 1% EUR 28.3 227 3% Burberry 1 0% GBP 15.0 124 1% Other – – 42 1% Financial Pillar 388 5% 513 6% Other Pargesa 24 1% 26 0% Total portfolio 8’421 106% 8’780 99% GBL treasury shares 256 3% 251 3% Net cash (debt) (3) (707) (9)% (147) (2)% Adjusted net asset value 7’970 100% 8’884 100% per Pargesa share CHF 63.5 94.1 CHF 66.3 104.9 EUR/CHF exchange rate 1.086 1.074
(1) The investments in adidas and Umicore became strategic holdings in 2016. (2) The remaining investment in ENGIE was no longer a strategic holding at 31 December 2016. (3) This item includes Pargesa’s share in the market value of GBL’s trading portfolio. At 31 December 2016, it also includes Pargesa’s CHF 90.8 million share of the market value of the remaining 0.6% stake in ENGIE (including the 0.2% stake corresponding to the shares sold forward at the end of 2016 and delivered in 2017).
19 Pargesa Holding SA Annual Report 2016 Business report
The rise in Pargesa’s adjusted net asset value in 2016 (+11.4%) was in line with that of GBL’s adjusted net asset value over the period (+11.9%). This increase reflects the share price rises of the holdings. They all recorded gains in 2016, with the exception of Pernod Ricard and Ontex (Incubator investment), which saw their share prices drop 2.1% and 13.7%, respectively. The charts below show the effects of the portfolio restructuring begun in 2012. There has been a gradual reduction in Pargesa’s exposure to the energy sector, with increased exposure in the industry, services and consumer goods sectors. In addition the “Financial Pillar” has been expanded. Over the last five years, GBL has made disposals amounting to EUR 6.7 billion, including EUR 2.5 billion in 2016 and early 2017. GBL has reinvested a total of EUR 5.7 billion, primarily in its new strategic holdings (SGS, adidas and Umicore).
Portfolio composition at end-2011
Value / Cyclicals 28%
Growth 15%
Sienna Capital 3%
Yield 54%
Value / Cyclicals : Imerys, Lafarge, Arkema Growth : Pernod Ricard Yield : Total, ENGIE, Suez, Iberdrola
Energy/Utilities 54%
Other (incl. Sienna Capital) 6%
Construction materials 13%
Minerals 12%
Consumer goods 15%
Energy / Utilities : Total, ENGIE, Suez, Iberdrola Other : includes Sienna Capital, Arkema Construction materials : Lafarge Minerals : Imerys Consumer goods : Pernod Ricard
20 Pargesa Holding SA Annual Report 2016 Business report
Portfolio composition at end-2016
Growth 48%
Incubator 4%
Sienna Capital 6%
Yield 5%
Value /Cyclicals 37%
Growth : Pernod Ricard, SGS, adidas, Umicore Incubator : Ontex, Burberry Sienna Capital Yield : Total Value / Cyclical : Imerys, LafargeHolcim
Consumer goods 31%
Energy 5%
Other (incl. Umicore and Sienna Capital) 13% Services 15%
Construction materials 17%
Minerals 19%
Consumer goods : Pernod Ricard, adidas, Burberry, Ontex Energy : Total Other : includes Umicore and Sienna Capital Services : SGS Construction materials : LafargeHolcim Minerals : Imerys
At the end of 2011, the holdings in the energy and utilities sectors accounted for 54% of the portfolio, with the two largest holdings representing 50%. Today, the portfolio is more diversified in terms of profile and sectors, and no one holding accounts for more than 19% of the portfolio. As mentioned in section 2.1 above, the holdings in Total and ENGIE offer a high dividend yield and used to make a significant contribution to Pargesa’s economic operating income. As a result, the portfolio restructuring has an impact on economic operating income. However, the proceeds from the sales will be used over time to make investments that will gradually contribute to income depending on when the proceeds are reinvested and the level of return on the new investments.
21 Pargesa Holding SA Annual Report 2016 Business report
5. Proposals at the Annual General Meeting of 4 May 2017
5.1 Appropriation of profit
At the Annual General Meeting, the Board of Directors will recommend a 2016 dividend of CHF 2.44 per bearer share and CHF 0.244 per registered share, an increase of 2.5% on the year-earlier dividend. If approved, a total of CHF 206.6 million will be paid out to shareholders on 10 May 2017.
5.2 E lection of Board members, election of the Chairman of the Board of Directors and election of the members of the Compensation Committee
In accordance with the company’s Articles of Association, at the Annual General Meeting shareholders must each year individually elect the members of the Board of Directors (including the Chairman) and of the Compensation Committee. The Board of Directors of Pargesa Holding SA will therefore recommend that the following individuals be re-elected for a one-year term expiring at the end of the 2018 Annual General Meeting : Paul Desmarais Jr (also as Chairman of the Board), Bernard Daniel, Amaury de Seze, Victor Delloye, Andre Desmarais, Paul Desmarais III, Cedric Frere, Gerald Frere, Segolene Gallienne, Jean-Luc Herbez, Barbara Kux, Michel Pebereau, Gilles Samyn and Arnaud Vial.
As mentioned above, Michel Plessis-Belair announced that he would not seek another term as Director at the Annual General Meeting on 4 May 2017. The Board of Directors will recommend that shareholders elect Jocelyn Lefebvre to the Board for a one-year term that will expire at the end of the 2018 Annual General Meeting. Jocelyn Lefebvre has dual Canadian and French citizenship. He holds a degree from HEC Montreal and is a member of the Canadian Institute of Chartered Professional Accountants. He began his career at Arthur Andersen in Montreal, before moving to Europe in 1982. He joined the Canadian industrial group M.I.L. Inc. in 1986, where he served as CEO of Vickers Inc., one of the group’s main production units. In 1992, Jocelyn Lefebvre joined the Power Group and is now a partner at Sagard Equity Partners and a member of the management boards of Power Financial Europe B.V. and Parjointco N.V.
The Board of Directors will also recommend that Bernard Daniel, Barbara Kux, Amaury de Seze and Gilles Samyn be re-elected to the Compensation Committee and that Jean-Luc Herbez be elected to replace Michel Plessis-Belair as a member of the Committee.
22 Pargesa Holding SA Annual Report 2016 Business report
23
02 GROUP PORTFOLIO
Eiger, Mönch, Jungfrau – Bernese Oberland – Switzerland – Gouache – Bleuler – early 19th century 25 Pargesa Holding SA Annual Report 2016 Group portfolio GBL
Groupe Bruxelles Lambert (GBL) is a holding company that has been listed on the Brussels Stock Exchange since 1956
GBL owns the Pargesa Group’s strategic shareholdings, which at 31 December 2016 included : Imerys, LafargeHolcim, SGS, adidas, Pernod Ricard, Umicore and Total. www.gbl.be In addition to these large strategic holdings, which make up the majority of its portfolio, GBL began to gradually diversify into two areas in 2012 : • “Incubator” investments, made up of a limited selection of listed and unlisted holdings – each representing an investment of between EUR 250 million and EUR 1 billion – that have the potential to become strategic assets over time. GBL aims to become a core shareholder and, for mid-sized companies, to possibly hold a majority stake in these companies. This type of investment may eventually account for 10-15% of the portfolio ; • the “Financial Pillar”, comprising major stakes in private equity funds, debt funds and thematic funds, grouped under Sienna Capital. These investments may eventually account for up to 10% of the portfolio.
2014 2015 2016 Overall data (EUR millions) Shareholders’ equity at 31 December (group share) 13’173 13’246 14’867 Market capitalisation at 31 December 11’416 12’720 12’863 Consolidated net income (loss) (group share) 875 1’026 (458) Per-share data (EUR) Consolidated net income (loss) 5.64 6.61 (2.95) Dividend 2.79 2.86 2.93 (1) Shares issued (in millions) 161.4 161.4 161.4 Pargesa’s interest (%) 50.0 50.0 50.0 (1) Subject to approval at the Annual General Meeting on 25 April 2017.
In 2016, GBL continued to reduce its exposure to the energy sector by disposing of close to 1.8% of the capital of Total and ENGIE for a net amount of EUR 2.3 billion. In addition, GBL repurchased around 61% of the bonds issued in 2013 and exchangeable for ENGIE shares. The remaining bonds (EUR 306 million in par value) were redeemed in cash in February 2017.
At 31 December 2016, GBL still held a 0.7% stake in Total and a 0.6% stake in ENGIE. Following the additional sales of ENGIE shares in early 2017 (for an amount of EUR 145 million), GBL’s stake in this company, which is no longer considered a strategic holding, amounts to 0.1%.
Proceeds from the sales of Total and ENGIE sales were primarily used to strengthen GBL’s positions in SGS, adidas, Umicore and Ontex, for a total amount of EUR 1’055 million. Umicore and adidas, which were previously part of the “Incubator” portfolio, became strategic holdings in 2016. At 31 December 2016, GBL held 7.5% of adidas’ capital (4.7% at 31 December 2015), 16.2% of SGS’ capital (15.0% at end-2015), 17.0% of Umicore’s capital (16.6% at end-2015), and 19.98% of Ontex’ capital (7.6% at end-2015).
In terms of its portfolio of “Incubator” investments, in 2016 GBL acquired a 2.95% stake in the capital of Burberry, which announced in February 2017 that GBL had crossed the threshold of 3% of the company’s voting rights.
Regarding Sienna Capital (see page 43), last year ECP III disposed of its majority stake in the De Boeck group and Sagard II sold its interest in FläktWoods, which generated gains of EUR 63 million for GBL.
26 Pargesa Holding SA Annual Report 2016 Group portfolio GBL
GBL © David Plas
ECP III, Sagard 3, Mérieux Développement, BDT Capital Partners Excluding these non-recurring items, the 2016 results reflect the and PrimeStone all made new investments. In March 2017, ECP increased contribution from other holdings within the portfolio (1) III sold its majority stake in Golden Goose, generating a capital which more than offset the lower contribution from Total following gain of around EUR 110 million for GBL, which will be recorded the sales of Total shares in 2015 and 2016. The contribution from in Q1 2017. Sienna Capital amounted to EUR 63 million, reflecting the impact of the net gain on the sale of De Boeck by ECP III, with GBL’s share Given the net divestments made in 2016, GBL’s cash position went amounting to EUR 51 million. from a net debt of EUR 740 million at end-2015 to a positive cash position of EUR 225 million at end-2016. As a reminder, GBL recorded net income of EUR 1’026 million in 2015, which included : GBL recorded a net loss (group share) of EUR 458 million, which • the net impact of the deconsolidation of the holding in included the impairment of EUR 1’682 million recognised in H1 Lafarge (EUR 442 million) after its merger with Holcim to form 2016 on the holding in LafargeHolcim and the additional impairment LafargeHolcim ; the EUR 282 million net gain realised on the sale of EUR 62 million on the holding in ENGIE. These impairments of 0.5% of Total’s capital ; the net gain of EUR 24 million on the were partially offset by the capital gain of EUR 732 million realised conversion of bonds exchangeable for Suez shares ; and the on the sale of around 1.8% of Total’s capital. In accordance with additional impairment of EUR 32 million on the holding in ENGIE ; accounting rules, the impairment on LafargeHolcim was calculated • GBL’s EUR 100 million share of Lafarge’s loss in H1 2015, when based on the company’s share price trend during H1 2016. Even Lafarge was accounted for using the equity method ; though LafargeHolcim’s share price then rose sharply in H2 2016, • a EUR 37 million contribution from Imerys and a EUR 18 million under accounting rules, this increase cannot be recorded in the contribution from Sienna Capital. income statement. At GBL’s Annual General Meeting on 25 April 2017, a total dividend for the 2016 financial year of EUR 2.93 per share will be recommended. This represents a rise of 2.4% on the 2015 dividend of EUR 2.86.
(1) In Q2 and Q3 2016, GBL entered into forward sales contracts on Total and ENGIE shares that matured in Q4 2016. GBL therefore continued to receive the interim dividends paid before the contracts matured, which represented a total amount of EUR 38 million. 27 Pargesa Holding SA Annual Report 2016 Main shareholdings Imerys
Imerys is the world leader in mineral specialties, with close to 260 locations in 54 countries
The Imerys group holds leading positions in each of its four main business groups : Energy Solutions & Specialties, Filtration & Performance Additives, Ceramic Materials, and High Resistance Minerals. Imerys processes, enhances and combines a unique range of minerals, in many cases mined from its own deposits, to bring essential features to its customers’ products and production processes. Thanks to their properties, these specialty products have a wide range of applications and are www.imerys.com gaining traction in many growth markets.
2014 2015 2016 Overall data (EUR millions) Shareholders’ equity at 31 December (group share) 2’444 2’644 2’862 Market capitalisation at 31 December 4’629 5’126 5’734 Net income from current operations (group share) 316 342 362 Consolidated net income (group share) 272 68 293 Per-share data (EUR) Net income from current operations 4.15 4.31 4.60 Dividend 1.65 1.75 1.87 (1) Shares issued (in millions) 75.9 79.6 79.6 Pargesa Group’s interest (%) 56.5 53.9 53.9 (1) Subject to approval at the Annual General Meeting on 3 May 2017.
Owing to the positive impact of changes in the scope of consolidation, Imerys recorded growth in 2016 despite difficult overall markets conditions. In organic terms, revenue was down due to lower volumes in a mixed economic environment and because of the difficulties encountered in the ceramic proppants market. In Q4 2016, however, Imerys posted organic revenue growth of 1.4%, as a result of a favourable base effect and the relative improvement in certain markets and regions. The operating margin improved as a result of a positive exchange rate effect, operational excellence programmes, synergies relating to the integration of new acquisitions and especially S&B and a favourable activity mix.
On 11 December 2016, Imerys announced that it intended to acquire Kerneos. This transaction, which has an estimated enterprise value of EUR 880 million, will further strengthen the group’s specialty offering in high-potential markets and enhance growth and profitability in order to create value. The transaction is subject to relevant workers’ council consultation, as well as approval by the relevant regulatory authorities. It should be completed in mid-2017. Using its expertise in calcium aluminate technologies, Kerneos develops performance binders, bringing key properties to customers’ innovative solutions in the construction, civil engineering and refractory sectors. With operations in Europe, North America and emerging countries and 1’500 employees, Kerneos posted consolidated revenue of EUR 415 million and EBITDA of close to EUR 100 million over the 12 months up to 30 September 2016. Imerys took advantage of favourable market conditions to prepare its financing for the transaction and issued, in early January 2017, a EUR 600 million bond with a ten-year maturity and a 1.50% annual coupon.
Finally, Imerys also completed several additional acquisitions during the year (mainly Damolin, Alteo and Spar). These should contribute more than EUR 100 million to group revenue in 2017.
2016 revenue amounted to EUR 4’165 million, up 1.9% on the 2015 figure. On a like-for-like basis, 2016 revenue fell 1.4% year on year. However, it rose 1.4% in Q4, owing to a favourable base effect and the relative improvement in certain markets and regions. Revenue from new products grew 6.7% to EUR 523 million. The price/mix effect remained firm at +0.7% (EUR +27 million) for the whole group in 2016.
28 Pargesa Holding SA Annual Report 2016 Group portfolio Imerys
Imerys site in Milos – Greece – © Imerys
2016 highlights by business group : • High Resistance Minerals, which mainly serves the high temperature (steel, casting, glass, aluminum, etc.) and abrasive • Energy Solutions & Specialties’ revenue totalled EUR 1’251 product industries, posted revenue of EUR 598 million in 2016, million in 2016, unchanged year over year on a reported basis. down 5.0% year on year on a reported basis. On a like-for- On a like-for-like basis (i.e. constant scope and exchange rates), like basis, revenue fell 3.1%, mainly due to the slump in the revenue was down 3.0%, primarily because of the slump in the refractories market. refractories market, which nevertheless saw an improvement in Q4 2016. Net income from current operations rose 6.0% to EUR 362 million in 2016, compared with EUR 342 million in 2015. After other operating • Filtration & Performance Additives, which serves the agro-food income and expenses net of tax, group share of net income came industry and a large number of intermediary industries, recorded in at EUR 293 million in 2016, as against EUR 68 million in 2015, revenue of EUR 1’145 million in 2016, a year-on-year rise of 5.8%. which was impacted by an EUR 209 million impairment recorded The sharp increase was a result of the integration of S&B (scope on the ceramic proppants business. effect of EUR +54 million), together with growth of 1.4% on a like-for-like basis. The business group experienced robust growth Current free operating cash flow was higher in 2016, at EUR 395 in Q4 2016 (+6.0% on a like-for-like basis). This rise in sales was million (EUR 343 million in 2015). spurred by new products. Net financial debt stood at EUR 1’367 million at 31 December • Ceramic Materials posted revenue of EUR 1’222 million in 2016. 2016, down EUR 114 million on the 31 December 2015 figure On a reported basis, revenue rose 4.2% thanks to the positive as a result of strong cash flows. At 31 December 2016 net debt impact of changes in scope (EUR +57 million), resulting primarily accounted for 47% of equity (55% in 2015) and represented 1.7x from the acquisition of BASF’s hydrous kaolin business in the EBITDA (2.0x in 2015). USA and of Matisco’s roofing accessories operations in the At the Annual General Meeting on 3 May 2017, a 2016 dividend of Roofing division in November 2015, as well as to a positive EUR 1.87 per share will be put to shareholders for approval. This exchange rate effect (EUR +9 million). However, owing to a –1.9% represents a rise of 6.9% on the dividend for the 2015 financial year. drop in the clay roof tiles market in 2016, revenue was down –1.4% on a like-for-like basis.
29 Pargesa Holding SA Annual Report 2016 Group portfolio LafargeHolcim
LafargeHolcim is the world leader in building materials : cement, aggregates and concrete
LafargeHolcim – the product of the merger between Lafarge and Holcim finalised in July 2015 – is the world leader in building materials and operates in the cement, aggregates and concrete sectors.
The company employs around 90’000 people in more than 80 countries and has an equal presence in developing and mature markets. This means that it is extremely well positioned to meet the challenges www.lafargeholcim.com of increasing urbanisation.
2015 2016 pro-forma Overall data (CHF millions) Shareholders’ equity at 31 December (group share) 31’365 30’822 Market capitalisation at 31 December 30’528 32’561 Net recurring income (group share) 798 1’615 Consolidated net income (group share) (1’469) 1’791 Per-share data (CHF) Net recurring income 1.32 2.67 Dividend 1.50 2.00 (1) Shares issued (in millions) 607 607 Pargesa Group’s interest (%) 9.4 9.4 (1) Subject to approval at the Annual General Meeting on 3 May 2017.
2016 was marked by a decrease in revenues but a solid operating performance. All regions recorded a like-for-like rise in adjusted operating EBITDA. The group faced some challenging markets in 2016 : Brazil’s economic crisis further depressed the construction sector and decisive measures were taken to reduce costs. In the Asia Pacific region, Indonesia and Malaysia continued to feel the effects of market overcapacity and tough competition through Q4. In response, additional cost reduction measures were implemented to mitigate the earnings impact in both countries.
Cement volumes were down by 2.5% like for like over the full year. In Q4 2016 volumes declined 5.8% on a like-for-like basis, due in part to demonetisation in India, tough trading conditions in Indonesia and unusually favourable weather conditions in the US during the same period in 2015.
Sequentially, cement prices improved by 1.1% in Q4 2016 compared with Q3 2016, due largely to Nigeria and China, and were 5% above Q4 2015 at constant exchange rates. The steady improvement in pricing over the year means that overall price levels are now higher than before the marked decline experienced in 2015.
In Asia Pacific, the construction market was relatively flat, and more intense competition affected prices in some markets. LafargeHolcim’s cement volumes were down slightly on the prior year, but adjusted operating EBITDA was up on a like-for-like basis. Cement volumes in India were affected by the government’s demonetisation programme.
In Europe, LafargeHolcim delivered a solid performance in a difficult economic environment, spurred by disciplined cost management and restructurations. The UK continued to grow strongly despite the uncertainty surrounding the Brexit process. France and Switzerland proved to be resilient performers in soft markets.
30 Pargesa Holding SA Annual Report 2016 Group portfolio LafargeHolcim
Millau Viaduct – France – © LafargeHolcim image library
Latin America benefited from pricing and cost saving measures Recurring earnings per share reached CHF 2.67 – more than double that helped offset the effect of the ongoing economic crisis in the 2015 figure of CHF 1.32 – mainly reflecting an improved business Brazil and more moderate economic slowdowns in other markets. performance and reduced financial charges.
The Middle East and Africa region overcame challenges in Nigeria At the Annual General Meeting on 3 May 2017, a 2016 dividend of and the impact of continued low oil and commodity prices on EUR 2.00 per share, up on the year-earlier dividend of EUR 1.50, many African economies. will be put to shareholders for approval.
Finally, LafargeHolcim posted solid results in the North America Outlook : In 2017, sales growth should be supported by an expected region, supported by a strong performance in the US and despite rise in demand of between 2% and 4% in all markets, bearing in mind challenging conditions in the Canadian market. that the macro economic climate is likely to remain difficult in some emerging markets. This will be combined with price increases in line Net sales in 2016 were down 1.7% on a like-for-like basis, as a result with inflation across the group, with sharper rises in Nigeria, India of lower volumes, which were not offset by the rise in cement prices. and the USA. This year should be an important step in achieving Operating EBITDA adjusted for merger costs and other non- the company’s 2018 targets. LafargeHolcim expects double-digit recurring items was CHF 5’825 million, up 8.7% on a like-for-like like-for-like growth in adjusted operating EBITDA and a rise in basis. All regions delivered increased adjusted operating EBITDA on recurring EPS of more than 20%. Net debt should decrease to a like-for-like basis in 2016, driven by synergies, costs reductions around 2x adjusted operating EBITDA. The group also intends to and price increases in most markets. Synergies contributed a total implement a share buyback programme of up to CHF 1 billion over of CHF 638 million over the full year, well ahead of the target of 2017-2018 and to expand its divestment plan (from CHF 3.5 billion CHF 550 million. in 2016 to CHF 5.0 billion in 2017). Net debt was down CHF 2.5 billion to CHF 14.7 billion at 31 December 2016 (CHF 17.3 billion a year earlier) thanks to cautious investments, the proceeds from divestments, strong free cash flow and rigorous working capital management.
31 Pargesa Holding SA Annual Report 2016 Group portfolio SGS
SGS is the world leader in inspection, verification, testing and certification
SGS was founded in 1878 and listed in 1981. The company provides innovative solutions for inspection, verification, testing and certification to help clients streamline their businesses, making them swifter and more efficient. SGS’ global network comprises more than 2’000 offices and laboratories staffed www.sgs.com by 90’000 employees in over 150 countries. At 31 December 2016, the company’s organisational structure consisted of nine business lines : Agriculture, Food and Life ; Minerals ; Oil, Gas & Chemicals ; Consumer and Retail ; Certification and Business Enhancement ; Industrial ; Environment, Health and Safety ; Transportation ; and Governments and Institutions.
2014 2015 2016 Overall data (CHF millions) Shareholders’ equity at 31 December (group share) 2’327 1’906 1’773 Market capitalisation at 31 December 15’997 14’949 16’208 Consolidated net income (group share) 629 549 543 Per-share data (CHF) Net income (diluted) 81.65 71.95 71.47 Dividend 68.00 68.00 70.00 Shares issued (in thousands) 7’822 7’822 7’822 Pargesa Group’s interest (%) 15.0 15.0 16.2
SGS has four types of activity :
• Inspection : Offers clients a comprehensive range of inspection services across the globe, including verifying the integrity and weight of goods exchanged during transshipment. SGS helps clients verify the quality and quantity of goods and comply with all regulatory requirements in the various markets and regions ;
• Testing : Offers clients a global network of product-testing facilities staffed by qualified, experienced personnel. This service enables clients to reduce risk, shorten time to market and demonstrate the quality, safety and effectiveness of their products with regard to applicable health, safety and other regulations ;
• Certification : Enables clients to demonstrate that their products, processes, systems and services are compliant with national and international regulations and standards or consumer norms, via certification ;
• Verification : Enables clients to verify compliance of products and services with international standards and local regulations. Underpinned by a powerful combination of global coverage and local knowledge across industries, SGS covers the entire value chain, from raw materials to end-users.
The SGS group turned in resilient results in 2016. It delivered revenue growth of 6.0% over the prior year (constant currency basis) to CHF 6.0 billion, corresponding to organic growth of 2.5%, with an additional 3.5% contributed by recently acquired companies. However, due to the continued appreciation of the Swiss franc against the currencies of several of the countries in which SGS operates around the world, growth in revenue stood at 4.8% on a reported basis.
Organic revenue growth was boosted by the non-energy-related business lines, which account for the majority of revenue and adjusted operating income. Overall, these business lines generated growth of 6.2%, which can be broken down as follows : 10% for Government and Institutions ; 9.1% for Certification and Business Enhancement ; 7.9% for Transportation ; 6.9% for Environment, Health and Safety ; 4.7% for Consumer and Retail ; and 4.5% for Agriculture, Food and Life.
32 Pargesa Holding SA Annual Report 2016 Group portfolio SGS
©S SGS A
The difficult environment for the oil and gas and minerals industries Group share of consolidated net income after restructuring costs continued to weigh on energy-related business lines (Oil, Gas & was CHF 543 million, a decline of 1.1% on the previous year. Chemicals, Industrial, and Minerals). Against this backdrop, SGS Operating cash flow remained very robust, at CHF 1’014 million, took certain restructuring measures, which resulted in non- driven by solid management of working capital needs. recurring charges, including asset impairments, for an amount of CHF 40 million after tax. The group paid a total cash consideration of CHF 193 million for acquisitions completed during the year. In 2016, the group pressed ahead with its external growth strategy. Nineteen companies were acquired, including fifteen outside Europe, After the payment of CHF 517 million in dividends and share buybacks thereby strengthening SGS’ presence in seven of its business lines. of CHF 161 million, the group’s net debt amounted to CHF 736 million at end-2016, as against CHF 482 million at end-2015. SGS’ adjusted EBITDA rose 0.6% year on year to CHF 1’198 million (+2.5% on a constant currency basis). Adjusted operating income At the Annual General Meeting on 21 March 2017, a 2016 dividend stood at CHF 919 million, up 0.2% from the previous year on a of CHF 70 per share (up from the previous year’s dividend of reported basis but 2.4% on a constant currency basis. The adjusted CHF 68) was approved by shareholders. operating margin fell to 15.4% from 15.9% in 2015, primarily as a Outlook : SGS will press ahead with its organic and external growth result of the pressure on energy-related business lines, investments strategy and continue to keep costs under strict control. In 2017, in IT systems and the development of new infrastructure for shared SGS intends to deliver solid organic growth in revenue, higher services. adjusted operating income (on a like-for-like basis), and strong cash flow.
33 Pargesa Holding SA Annual Report 2016 Group portfolio adidas
adidas is the European leader in sportswear
adidas is a global group specialised in the design, development, production and distribution of sportswear (footwear, clothing and equipment). Its business is built around four main brands : adidas, Reebok, TaylorMade and CCM. Products are distributed through the company’s own stores, online and through third-party retailers.
www.adidas-group.com 2014 2015 2016 Overall data (EUR millions) Shareholders’ equity at 31 December (group share) 5’624 5’666 6’472 Market capitalisation at 31 December 11’773 18’000 30’254 Net income from continuing operations (1) 642 720 1’019 Consolidated net income (group share) 490 634 1’017 Per-share data (EUR) Net income (diluted) (1) 2.72 3.32 4.99 Dividend 1.50 1.60 2.00 (2) Shares issued (in millions) 204 200 201 Pargesa Group’s interest (%) 0.0 4.7 7.5 (1) Excluding a good will impairment of EUR 78 million in 2014 and EUR 34 million in 2015. (2) Subject to approval at the Annual General Meeting on 11 May 2017.
adidas has four main brands :
• adidas (85% of 2016 sales) : adidas is world co-leader in sports equipment and offers a range of products through adidas Sport Performance (specialised in sports products), adidas Originals and Neo (specialised in sportswear and streetwear), as well as through partnerships with designers such as Yohji Yamamoto and Stella McCartney ;
• Reebok (9% of 2016 sales) : Reebok, a subsidiary acquired in 2005, is one of the world leaders in fitness equipment. The company offers products through its Functional Training, Combat Training, Studio, Running, Walking and Reebok Classics lines ;
• TaylorMade (5% of 2016 sales) : TaylorMade is a US company that produces golf clubs and other golf accessories (bags, hats and gloves). Its brands include TaylorMade, adidas Golf, Adams and Ashworth ;
• CCM (1% of 2016 sales) : CCM was acquired by Reebok in 2004 and specialises in ice hockey equipment.
In 2016, sales stood at EUR 19’291 million, up 18% on a currency-neutral basis (+14% on a reported basis). Currency-neutral sales increased in all geographical areas, with double-digit growth in almost all areas.
China, the USA and Western Europe recorded the strongest growth, with sales up by 28%, 24% and 20%, respectively (on a currency-neutral basis).
In China, the group achieved double-digit growth in most categories, with a 28% rise in sales for adidas and a 17% increase for Reebook, boosted by Training, Running and Classics.
In North America, the adidas brand saw sales increase by 30%, mainly thanks to Training, Running, US Sports, Originals and Neo. Reebok’s sales, however, were down 1%, as a result of a challenging US market.
adidas and Reebok performed well in Western Europe, with currency-neutral sales up 20% for adidas (18% growth in 2015) and up 18% for Reebok, boosted by Training and Classics.
34 Pargesa Holding SA Annual Report 2016 Group portfolio adidas
© adidas
Latin America, Japan and MEAA recorded growth of 16% in currency- After payment of EUR 322 million in dividends, EUR 229 million in neutral sales. Russia/CIS delivered sales growth of 3% on the same treasury share repurchases and the conversion of EUR 226 million basis despite the difficult environment. convertible bonds, net debt stood at EUR 103 million at end-2016 (versus EUR 460 million at end-2015). The Golf business line posted a 1% decline in sales on an organic basis, owing to a slowdown in the Adams Golf and Ashworth brands. At the Annual General Meeting on 11 May 2017, a 2016 dividend CCM Hockey’s sales fell 13%. of EUR 2.00 per share, representing a 25% rise on the year-earlier dividend of EUR 1.60, will be put to shareholders for approval. In spite of the negative currency impact, gross profit rose 15% to EUR 9’379 million (EUR 8’168 million in 2015), representing 48.6% Outlook : The adidas group should continue to experience double- of sales (48.3% in 2015). This was due to a more favourable pricing, digit growth in sales, supported by : (i) increased spending on product and channel mix, as well as lower input costs. EBIT came sportswear ; (ii) the growing athleisure trend ; and (iii) increasing in at EUR 1’491 million, a rise of 40.7% on 2015 (+36.3% excluding awareness in all regions of health problems and the benefits of the goodwill impairments recorded in 2015). The EBIT margin was doing sport. Western Europe, North America and China should 7.7%, up 130 bps. see the strongest growth. The adidas brand, which accounts for 85% of sales, should continue to grow strongly. For 2017, the Net income from continuing operations reached EUR 1’019 million company’s operating margin is expected to improve to between in 2016, compared with EUR 686 million in 2015 (EUR 720 million 8.3% and 8.5% (against 7.7% in 2016), and operating profit should excluding the goodwill impairment). Group share of net income rise by between 18% and 20%, to EUR 1’200 to EUR 1’225 million. was EUR 1’017 million in 2016, compared with EUR 634 million in 2015 (EUR 668 million excluding the goodwill impairment).
Operating cash flow rose to EUR 1’348 million (EUR 1’090 million in 2015).
35 Pargesa Holding SA Annual Report 2016 Group portfolio Pernod Ricard
The world’s co-leader in wines and spirits, Pernod Ricard holds a top position on every continent
Since it was created in 1975, Pernod Ricard has achieved significant organic growth and made numerous acquisitions – most notably Seagram in 2001, Allied Domecq in 2005 and Vin&Sprit in 2008 – and www.pernod-ricard.com has become the world’s co-leader in the wines and spirits market.
With a strong presence on every continent and a sound position in the emerging markets of Asia, Eastern Europe and South America, the group produces and distributes a range of 13 strategic international brands of spirits and champagne and four “Priority Premium” wines, as well as 15 stratetic local brands that are leaders in their markets, and a large number of regional brands.
In spirits, the group’s main brands are : Absolut, Ballantine’s, Beefeater, Chivas Regal, Havana Club, Jameson, Malibu, Martell, Ricard, Royal Salute et The Glenlivet ; in champagnes : Mumm and Perrier Jouët ; and in “Priority Premium” wines : Brancott Estate, Campo Viejo, Graffigna, Kenwood and Jacob’s Creek.
30 June 2014 30 June 2015 30 June 2016 Overall data (EUR millions) Shareholders’ equity (group share) 11’621 13’121 13’337 Market capitalisation (1) 24’488 27’922 27’325 Net profit from recurring operations (group share) 1’185 1’329 1’381 Consolidated net profit (group share) 1’016 861 1’235 Per-share data (EUR) Net profit from recurring operations (diluted) 4.46 4.99 5.20 Dividend 1.64 1.80 1.88 Shares issued (in millions) 265.4 265.4 265.4 Pargesa Group’s interest (%) (1) 7.5 7.5 7.5 (1) At year-end.
For the 2015-2016 financial year ending on 30 June 2016, Pernod Ricard delivered solid results in a mixed macro environment. Net sales came in at EUR 8’682 million, a year-on-year rise of 2% in organic terms (adjusted for the technical impact of shipments in France being brought forward from July to June 2015 ahead of the pooling of Ricard and Pernod’s back-offices on 1 July 2015). On a reported basis, net sales were up 1%, with a −1% impact from changes in scope and a negligible exchange rate effect.
On an organic basis, sales of the Top 14 (1) remained stable, while key local brands were up 6%, spurred mainly by sales of Indian whiskies, and Priority Premium wines sales were up 5%.
Profit from recurring operations was EUR 2’277 million, up 2% in organic terms and on a reported basis. The operating margin rose 7 bps to 26.2%, thanks to strict control of advertising expenses and structure costs (as a percentage of sales), together with initiatives to boost operational efficiencies, and despite a slight decline in the gross margin (–13 bps to 61.9%, compared with a 105 bps drop in 2014-2015) caused by the negative mix effect (growth in India and slowdown in China).
Group share of net profit from recurring operations was up 4% to EUR 1’381 million, compared with EUR 1’329 million in 2014-2015. This rise was mainly due to the increase in profit from recurring operations and lower average debt servicing costs. Group net profit came in at EUR 1’235 million, up 43% on the previous year, in which an impairment was recognised on the Absolut vodka brand.
Group net debt decreased to EUR 8’716 million at 30 June 2016, thanks to the strong rise in free cash flow, partly as a result of the decrease in non-recurring charges. The net debt/EBITDA ratio went from 3.5x to 3.4x.
(1) Following changes within the “House of Brands” in July 2016, there are now 13 strategic international brands and 15 strategic local brands.
36 Pargesa Holding SA Annual Report 2016 Group portfolio Pernod Ricard
© Pernod Ricard Medialibrary
At the Annual General Meeting on 17 November 2016, the group’s Cash generation was robust, with free cash flow of EUR 658 shareholders approved a dividend of EUR 1.88 per share for the million, representing a year-over-year rise of 34%, which was 2015-2016 financial year, a rise of 4% on the year-earlier dividend partly enhanced by phasing. Net debt rose by EUR 237 million of EUR 1.80. in H1 2016-2017 to EUR 8’953 million, due in particular to an unfavourable impact of exchange rates on debt denominated in Net sales for the first half of the 2016-2017 financial year, which USD (EUR/USD exchange rate : 1.11 at 30 June 2016 versus 1.05 ended on 31 December 2016, were EUR 5’061 million, representing at 31 December 2016). The net debt/EBITDA ratio at average rates organic growth of 4% (2% on a reported basis, owing to unfavourable fell below 3.4x at 31 December 2016, an improvement on both 31 exchange rates). This increase was mainly due to higher sales for December 2015 (<3.6x) and 30 June 2016 (3.4x). the strategic international brands (organic growth of 6%), while strategic local brands recorded slower growth (+1%, compared Outlook : In H1 2016-2017, Pernod Ricard delivered organic growth with 6% in H1 of the previous year), particularly in India. of 4% in sales and operating profit (3% after the adjustment for the Chinese New Year). The group saw growth in all regions, confirming The gross margin was 62.4% compared with 62.1% in H1 2015- a gradual improvement in a still-mixed operating environment. For 2016. On an organic basis, however, the gross margin was the full 2016-2017 year, Pernod Ricard expects to see a further down 31 bps, with a positive price/mix effect despite a limited growth in the USA, in Jameson worldwide and in innovation, and price effect and strict control of costs. H1 2016-2017 profit from a year-over-year improvement in sales trend in China and from recurring operations came in at EUR 1’500 million, an organic rise Absolut and Chivas. A temporary slowdown in growth is of 4% on the year-earlier period. Group share of net profit from nevertheless expected in India as a result of demonetisation. recurring operations was EUR 957 million, up 5%, while group net Furthermore, the group remains focussed on its operating margin profit rose 3% to EUR 914 million. and cash-flow generation and expects to deliver organic growth in profit from recurring operations in line with the guidance of +2% to +4%.
37 Pargesa Holding SA Annual Report 2016 Group portfolio Umicore
Umicore is a global group specialised in materials technology and recycling
Umicore was GBL’s first investment in its “Incubator” portfolio in 2013. It became a strategic holding in 2016. At 31 December 2016, GBL held 17.0% of Umicore’s capital and was the company’s largest shareholder. The market value of GBL’s stake stood at EUR 1’032 million at year-end. www.umicore.com Umicore focuses on areas in which its expertise in materials science, chemistry and metallurgy stands out. Umicore has three core business groups : Catalysis (including catalysts for emissions controls), Energy & Surface Technologies (including rechargeable batteries materials), and Recycling (including recycling of precious metals).
2014 2015 2016 Overall data (EUR millions) Shareholders’ equity at 31 December (group share) 1’705 1’732 1’790 Market capitalisation at 31 December 3’730 4’331 6’065 Recurring net profit (group share) 193 246 233 Consolidated net profit (group share) 171 169 131 Per-share data (EUR) Recurring net profit 1.79 2.27 2.14 Dividend 1.00 1.20 1.30 (1) Shares issued (in millions) 112 112 112 Pargesa Group’s interest (%) 12.4 16.6 17.0 (1) Subject to approval at the Annual General Meeting on 25 April 2017.
Umicore’s 2016 revenues (excluding metals) rose slightly to EUR 2’667 million, up from EUR 2’629 million in 2015. This represents a rise of 1% including discontinued operations (+3% excluding discontinued operations). Strong growth in Automotive Catalysts and Rechargeable Battery Materials more than offset the impact of falling metal prices on the group’s recycling activities.
Recurring EBIT, including associates, stood at EUR 351 million in 2016, versus EUR 330 million in 2015, representing a rise of 6% (+7% excluding discontinued operations). The recurring EBIT margin excluding associates was 12.5%, compared with 12.0% in 2015.
The segment performances were as follows :
• Ca talysis : Revenues in Catalysis increased by 6%, driven by strong growth in Automotive Catalysts. Recurring EBIT grew by 23% to EUR 153 million, compared with EUR 124 million in 2015, with volume growth in Automotive Catalysts complemented by a positive mix effect and scale effects following the ramp up of production in recently commissioned investments.
• E nergy & Surface Technologies : Revenues were up 4%, with strong volume growth in cathode materials for automotive applications more than offsetting lower demand in certain other end markets served by the business group. EBIT was up 16% in 2016 (EUR 81 million as against EUR 70 million in 2015) as a result of higher revenues as well as margin improvements in some divisions.
• Re cycling : Revenues and EBIT were down 3% and 12% respectively, reflecting the impact of lower metal prices. Recurring EBIT stood at EUR 125 million, compared with EUR 142 million in 2015.
38 Pargesa Holding SA Annual Report 2016 Group portfolio Umicore
© Umicore
Group share of recurring net profit was EUR 233 million (including The balance sheet remained sound with net financial debt of discontinued operations) ; it came in lower than the 2015 figure of EUR 296 million, or 0.6x recurring EBITDA (EUR 321 million and EUR 246 million as a result of a rise in financial expenses and taxes. 0.6x at 31 December 2015).
Group share of net profit stood at EUR 131 million, compared with At the Annual General Meeting on 25 April 2017, the Board of EUR 169 million in 2015. Non-recurring items resulted in a charge of Directors will recommend an annual dividend of EUR 1.30 per EUR 110 million to EBIT (charge of EUR 75 million in 2015), of which share, of which EUR 0.60 was already paid out as an interim EUR 69 million corresponded to the fine imposed by the French dividend in August 2016. The dividend paid for the previous year Competition Authority in relation to Umicore’s Building Products amounted to EUR 1.20 per share. activities in France (discontinued operation). The remaining non- Outlook : Umicore’s clean mobility activities are expected to deliver recurring items related primarily to the closing of two production solid growth in 2017. Strong demand for cathode materials for sites, in Europe and China. automotive applications should drive an increase in volumes this Capital expenditure amounted to EUR 287 million, most of year. Although no major new emission norms are expected in 2017, which related to growth projects in clean mobility and recycling. demand for automotive catalysts is also set to grow. In recycling, Most of the capital expenditure came from Energy & Surface the ramp up of capacity in the Hoboken plant should lead to Technologies as expansion works to triple production capacity for higher processed volumes compared to 2016. As anticipated, the cathode materials in China and Korea by the end of 2018 began. incremental volumes are likely to be somewhat less beneficial in In Catalysis, the new production plant in Thailand has been terms of margins. commissioned and production is ramping up. In Recycling, there were additional investments in auxiliary equipment in connection with the expansion of the Hoboken site.
39 Pargesa Holding SA Annual Report 2016 Group portfolio Total
Total is a global integrated oil and gas group with a presence in chemicals
Total is one of the world’s leading international oil and gas groups. It has operations in more than 130 countries and spans all upstream and downstream sectors. Total also has a major presence in the chemicals industry and works to develop renewable energies.
Total’s integrated business model leverages synergies among its various operations throughout the world. The group’s activities are divided into five segments.
In the Upstream segment, the group has oil and natural gas exploration and production operations in more than 50 countries. As a result of a sharp drop in the price of crude oil, the segment reviewed its objectives in order to develop a more resilient, profitable and sustainable model for hydrocarbon www.total.com production.
In the Refining & Chemicals segment, Total is one of the main global players in refining and petrochemicals, two highly complementary activities that the group develops in synergy.
The Marketing & Services segment is the group’s sales and marketing arm, provided through its service stations network and the sale of fuel and other products. In 2016, the segment’s products were available in more than 150 countries, with a network of more than 16’000 service stations serving around 4 million customers daily.
The Trading & Shipping segment sells crude oil, supplies refineries, charters tankers and conducts transactions on derivatives markets.
The Gas, Renewables & Power segment develops the group’s new low carbon activities and aims to strengthen Total’s position within the electricity value chain. Total is developing its natural gas markets and is expanding into renewable energies.
2014 2015 2016 Overall data (millions) Shareholders’ equity at 31 December (group share) (USD) 90’330 92’494 98’680 Market capitalisation at 31 December (EUR) 101’420 100’689 118’376 Adjusted net income (group share) (USD) 12’837 10’518 8’287 Consolidated net income (group share) (USD) 4’244 5’087 6’196 Per-share data Adjusted net income (diluted) (USD) 5.63 4.51 3.38 Dividend (EUR) 2.44 2.44 2.45 (1) Shares issued (in millions) 2’385 2’440 2’430 Pargesa Group’s interest (%) 3.0 2.4 0.7 (1) Subject to approval at the Annual General Meeting on 26 May 2017.
Oil prices were extremely volatile in 2016, ranging from USD 27/b to USD 58/b. Last year’s average was USD 43.7/b, compared with USD 52.4/b in 2015, a drop of 17%. The Upstream business was hit by this decline, which was partially offset by higher output (up 4.5% from 2’347 kboe/d to 2’452 kboe/d), a reduction in operating costs and a lower average tax rate than in 2015.
In the Downstream segment, the ERMI indicator of refining margins in Europe came in at USD 34.1 per tonne in 2016 versus USD 48.5 per tonne a year earlier, a decline of 30%. Petrochemicals continued to record solid results, thanks in particular to the contribution from integrated platforms in Asia and the Middle East.
In Marketing & Services, adjusted net operating income was stable excluding New Energies, despite asset disposals in Turkey.
40 Pargesa Holding SA Annual Report 2016 Group portfolio Total
Floating unit – Angola – © Thierry Gonzalez - Total
Total pressed ahead with its cost cutting programme, which Net investments in 2016 came in at USD 17.8 billion, representing resulted in savings of USD 2.8 billion, above the USD 2.4 billion a 13% decline on 2015 (USD 20.4 billion). Group net cash flow was target, thereby once again reducing production costs. USD –0.8 billion, compared with USD –1.0 billion in 2015. The drop in investments offset the decline in the gross margin caused by lower Adjusted net operating income from the business segments was oil prices and a lower ERMI. The net-debt-to-equity ratio stood at USD 9’420 million, a 17% decrease on 2015 (USD 11’362 million), 27% at the end of 2016, as against 28% at 31 December 2015. owing to the declines in the Brent oil price and the ERMI, which were partially offset by the rise in production and lower costs. At the Annual General Meeting on 26 May 2017, a 2016 dividend of EUR 2.45 per share will be put to shareholders for approval. This The average tax rate for the segments was 25.8%, compared with represents a EUR 0.01 rise on the year-earlier dividend. 33.9% in 2015. Outlook : Total expects hydrocarbon prices to remain volatile this Adjusted net income stood at USD 8’287 million as against year. The group will continue its efforts to contain costs and aims USD 10’518 million in 2015, a decline of 21%. Group share of net to achieve USD 3.5 billion in savings in 2017. Investments are income after non-recurring items (including asset impairments, moving into the sustainable range needed to deliver profitable provisions) amounted to USD 6’196 million, compared with future growth and are expected to be between USD 16 billion and USD 5’087 million in 2015. USD 17 billion in 2017, including resource acquisitions. Total’s breakeven should continue to fall, reaching less than USD 40/b pre-dividend. Cash flow from operations is expected to cover investments and the cash portion of the dividend at USD 50/b. Total plans to eliminate the discount on the scrip dividend when Brent is at USD 60/b.
41 Pargesa Holding SA Annual Report 2016 Group portfolio Other GBL assets
In addition to the large strategic holdings that make up the majority of its portfolio, GBL began to gradually diversify into two areas in 2012 :
• “Incubator” investments, made up of a limited selection of listed and unlisted holdings – each INCUBATOR representing an investment of between EUR 250 million and EUR 1 billion – that have the potential FINANCIAL PILLAR to become strategic assets over time. This was the case in 2016 for the investments in adidas and (SIENNA CAPITAL) Umicore, which are now considered strategic holdings, owing to their market value and the Group’s presence on their boards of directors. This type of investment may eventually account for 10–15% of the value of GBL’s portfolio ;
• Significant stakes in private equity, debt or thematic funds, grouped under GBL’s wholly owned subsidiary, Sienna Capital. These investments may eventually account for up to 10% of the value of GBL’s portfolio.
Incubator
www.ontexglobal.com
Ontex specialises in disposable hygiene products for babies, women and adults. Ontex products are distributed in more than one hundred countries under the company’s own brands and distributors’ private labels. They are available through a range of channels, mainly including retail stores, medical facilities and pharmacies.
In 2016, GBL strengthened its position in Ontex, and at 31 December 2016 it held 19.98% of the company’s capital (7.6% at 31 December 2015), representing a market value of EUR 423 million.
2014 2015 2016 Overall data (EUR millions) Shareholders’ equity at 31 December (group share) 671 852 999 Market capitalisation at 31 December 1’614 2’363 2’115 Adjusted net income 65 103 132 Consolidated net income (group share) 9 99 120 Per-share data (EUR) Adjusted net income 0.95 1.50 1.77 Net income 0.13 1.43 1.61 Dividend 0.19 0.46 0.55 (1) Shares issued (in millions) 68.1 72.1 74.9 Pargesa Group’s interest (%) 0.00 7.60 19.98 (1) Subject to approval at the Annual General Meeting on 24 May 2017.
2016 revenues stood at EUR 1’993 million, a rise of 0.2% in organic terms and 18.0% on a reported basis, thanks to the acquisition of Grupo Mabe in Mexico in March 2016. Growth was supported by adult incontinence products, while babycare and femcare saw lower sales on an organic basis. From a regional perspective, growth was spurred by countries in Eastern Europe, the Middle East and North Africa.
Adjusted EBITDA rose 18.9% to EUR 249 million, compared with EUR 209 million in 2015. The adjusted EBITDA margin stood at 12.5%, a rise of 10 bps on 2015, thanks to the improvement in the gross margin, which was offset by a negative currency effect.
42 Pargesa Holding SA Annual Report 2016 Group portfolio Other GBL assets
Net debt rose from EUR 255 million at 31 December 2015 to EUR 665 million at 31 December 2016 (2.7x 2016 EBITDA), as consequence of the acquisition of Grupo Mabe.
At the Annual General Meeting on 24 May 2017, a 2016 dividend of EUR 0.55 per share, compared with EUR 0.46 a year earlier, will be put to shareholders for approval.
In early 2017, Ontex acquired the Personal Hygiene division of the Brazilian group Hypermarcas, for an enterprise value of EUR 305 million. This transaction will enable Ontex to strengthen its incontinence business, increase the proportion of brand products, and develop its platform in the Americas.
Outlook : In 2017, Ontex expects to grow revenue ahead of its markets in all divisions in 2017, supported by commercial investments in the brand portfolio and in retail partners’ brands. The operating environment is expected to remain challenging in 2017, with volatile exchange rates and some pressures on raw material costs. Ontex remains committed to moderate margin expansion over time.
www.burberryplc.com
At 31 December 2016, GBL held 2.95% of the capital of Burberry, representing a market value of EUR 230 million. On 28 February 2017, Burberry announced that GBL had crossed the threshold of 3% of the company’s voting rights.
Burberry, listed on the London Stock Exchange, is a British luxury brand that specialises in designing, manufacturing and distributing high- end clothes and accessories. Products are sold throughout the world through its network of proprietary retail stores, online and through third-party retailers. Burberry employs close to 11’000 staff, and sales for the 2015-2016 financial year amounted to around GBP 2.5 billion.
Sienna Capital (“Financial Pillar”) www.sienna-capital.com
GBL intends to continue diversifying its portfolio and achieve its value creation objectives through alternative investments made via its subsidiary Sienna Capital.
Sienna Capital aims to generate attractive, risk-adjusted returns by constructing a diversified portfolio of investment managers that each perform well in their area of expertise (equity funds, debt funds and theme-based funds).
Sienna Capital is an active partner, working closely with the companies in which it invests. It provides support to managers, helping them to raise money, attract talent and identify investment opportunities. It also offers guidance on matters of good governance and best practice.
At 31 December 2016, Sienna Capital’s portfolio comprised six managers investing in close to 100 companies through 12 funds. The portfolio includes investments in private equity funds (Ergon and Sagard), a debt fund (Kartesia), a fund specialised in the healthcare sector (Mérieux Développement), a fund whose strategy consists of acquiring long-term shareholdings in mid-sized European companies (PrimeStone), and a fund that provides long-term capital to family-owned and founder-led businesses (BDT Capital Partners).
Sienna Capital’s portfolio was valued at EUR 955 million at 31 December 2016.
43 Pargesa Holding SA Annual Report 2016 Group portfolio Other GBL assets
Strategy
Sienna Capital offers a differentiated approach, providing fund managers with long-term capital in exchange for attractive financial terms. It is an active partner that aims to create value. Its strategy is to support new funds while also looking to make direct investments with existing external managers. Sienna Capital generates revenue through capital gains, interest income, dividends and fees earned through revenue-sharing agreements with its underlying managers.
Sienna Capital – key figures since its creation (in EUR millions)
Mérieux BDT Capital Ergon Sagard Kartesia Développement PrimeStone Partners Total
Initial commitment 663 398 300 75 150 113 1’699 Called up capital 480 250 138 33 150 48 1’098 Residual commitment 183 149 163 42 – 65 601 Distributions 322 194 10 – – – 526 Value of holding (Sienna Capital portfolio) 342 144 155 34 161 53 889 (1) (1) Excluding a claim of EUR 66 million on Sagard 3.
Activity in 2016 In 2016, Sienna Capital made new commitments amounting to EUR 268 million, including additional commitments of EUR 100 million in ECP III and EUR 17 million in Sagard 3, together with a commitment of EUR 150 million to Kartesia’s new fund.
Through its underlying funds, Sienna Capital invested EUR 161 million in 2016. This included capital calls to support investments in Financière Looping and Deutsche Intensivpflege Holding GmbH (DIH) by Ergon Capital Partners III (ECP III) ; Sagard 3’s investment in two holding companies (including Prosol, the parent company of Grand Frais) ; the investments made by Mérieux Participations II in Keranova, NovaCap and Le Noble Age ; and other investments made by Kartesia and BDT Capital Partners.
In 2016, Sienna Capital received EUR 83 million, primarily from the sales of De Boeck and Larcier by ECP III and the disposal of FläktWoods by Sagard II.
Sienna Capital contributed EUR 18 million in net dividends to GBL in 2016.
Sienna Capital – 2016 key figures (in EUR millions)
Mérieux BDT Capital Ergon Sagard Kartesia Développement PrimeStone Partners Total
New commitments 100 17 150 – – – 268 Called up capital 58 36 (1) 23 14 – 30 161 Distributions 58 18 (1) 7 – – – 83 Contribution to GBL’s net dividends 18 (1) Excluding the impact of Sagard 3’s funding round.
44 Pargesa Holding SA Annual Report 2016 Group portfolio Other GBL assets
Ergon Capital Partners (“ECP”) www.ergoncapital.com
Company profile
Ergon Capital Partners (ECP) was created in 2005 as a family of private equity funds operating in the mid-market segment. It invests between EUR 20 million and EUR 70 million in companies operating in niche markets in the Benelux, Italy, Spain, France, Germany and Switzerland, with positions that are dominant and sustainable over the long term.
Sienna Capital & Ergon
ECP I was founded in 2005, and its initial shareholders were GBL and Parcom Capital, a subsidiary of ING. The first fund totalled EUR 150 million. In 2007, these same shareholders backed a second fund, ECP II, in the amount of EUR 275 million. In 2010, GBL supported a third fund of EUR 350 million, ECP III. ECP III was increased by EUR 150 million in 2016, bringing its total size to EUR 500 million.
2016 financial year
During the year, ECP completed the sale of its stake in Stroili. ECP III also invested in Financière Looping and DIH and sold its interests in De Boeck and Larcier.
Sagard www.sagard.com
Company profile
Created in 2002 on the initiative of Power Corporation of Canada, Sagard invests in companies that are valued at more than EUR 100 million and that are leaders in their markets, primarily in French-speaking European countries. It works closely with management teams and supports them in their growth.
Sienna Capital & Sagard
GBL committed EUR 50 million to the first Sagard fund (Sagard I). GBL then committed EUR 150 million to the second fund, Sagard II, in 2006. This amount was then reduced to EUR 113 million in 2014. In 2013, Sienna Capital committed EUR 200 million to the launch of Sagard 3.
2016 financial year
In 2016, Sagard II finalised the sale of its stake in FläktWoods. Sagard 3 invested in Prosol (Grand Frais), raised an additional EUR 404 million in new commitments, including a commitment of EUR 17 million by Sienna Capital.
Kartesia www.kartesia.com
Company profile
Kartesia offers liquidity and credit solutions to mid-sized European companies, while providing a higher stable return to its investors. More generally, Kartesia aims to facilitate the participation of institutional and high net worth investors in the European LBO debt market by offering them exposure to highly rated, resilient and diversified credit through primary, secondary or rescue financing operations carried out with selected mid-sized companies.
Sienna Capital & Kartesia
The final closing of the Kartesia fund took place in March 2015 for an amount EUR 508 million, of which EUR 150 million came from Sienna Capital. In 2016, Sienna Capital committed EUR 150 million to the new fund launched by Kartesia.
2016 financial year
At 31 December 2016, Kartesia had invested EUR 468 million in primary and secondary market transactions. Last year, Kartesia distributed EUR 24 million to its investors.
45 Pargesa Holding SA Annual Report 2016 Group portfolio Other GBL assets
Mérieux Développement www.merieux-developpement.com
Company profile
Mérieux Développement was created in 2009 and is an investment manager specialised in growth and venture capital investments in the healthcare and nutrition sectors. It works alongside entrepreneurs and companies whose products and services can bring genuine advances to the health of patients and consumers worldwide. Mérieux Développement is a subsidiary of Institut Mérieux.
Sienna Capital & Mérieux Développement
In 2014, Sienna Capital committed to invest EUR 75 million in the two funds managed by Mérieux Développement : Mérieux Participations I and Mérieux Participations II.
2016 financial year
In 2016, Mérieux Participations II made three new investments, in Keranova, NovaCap and Le Noble Age, for a total amount of EUR 40 million.
PrimeStone www.primestonecapital.com
Company profile
PrimeStone was founded in 2014 by three former partners from The Carlyle Group. These buyout specialists had worked and invested together across Europe for more than 15 years. PrimeStone’s strategy is based on a constructive and active approach in mid-sized listed European companies that offer significant value creation potential through strategic, operational or financial improvements. PrimeStone creates value by taking a long-term perspective, adopting an active approach and exercising significant influence over its portfolio investments through a constructive dialogue with Boards of Directors and management teams.
Sienna Capital & PrimeStone
As part of a long-term agreement, Sienna Capital invested EUR 150 million in February 2015.
2016 financial year
In 2016, PrimeStone made six new investments.
BDT Capital Partners
Company profile
BDT Capital Partners was created in 2009 by Byron Trott, a longstanding partner of Goldman Sachs, with the aim of meeting the strategic and financial needs of family-owned and/or founder-led businesses around the globe. BDT Capital Partners successfully raised USD 3 billion over two rounds of fund-raising in 2010 and 2012 and then created a second fund in 2014, BDT Capital Partners Fund II (“BDTCP II”), with a size of USD 5 billion. In 2015, BDTCP II was reopened to new investors in order to raise USD 1 billion in additional capital.
Sienna Capital & BDT Capital Partners
In 2015, Sienna Capital committed EUR 113 million to the additional fund-raising for BDTCP II.
2016 financial year
BDTCP II made three investments in 2016, for a total amount of USD 2 billion.
46 Pargesa Holding SA Annual Report 2016 Group portfolio Other GBL assets
47 48 03 CORPORATE GOVERNANCE
Source of the Arve river – Haute Savoie – France – Etching – early 18th century 49 Pargesa Holding SA Annual Report 2016 Corporate Governance
1. Group structure and shareholders
1.1 Group structure
For the purposes of this Corporate Governance Report, Pargesa Group companies include the Swiss parent company Pargesa Holding SA (the “Company”), and its subsidiaries and consolidated shareholdings.
Listed companies within the scope of consolidation :
Place of Market capitalisation % of voting Name and registered office listing at 31.12.2016 % of capital rights ISIN Pargesa Holding SA SIX Swiss Grand-Rue 11 Exchange parent CH – 1204 Geneva Zurich CHF 5.6 billion company CH0021783391
Groupe Bruxelles Lambert (GBL) Avenue Marnix 24 Euronext B – 1000 Brussels Brussels EUR 12.9 billion 50.0 51.9 (1) BE0003797140
Imerys Rue de l’Université 154 / 156 Euronext F – 75007 Paris Paris EUR 5.7 billion 53.9 (2) 69.7 (2) FR0000120859
(1) Taking into account the suspended voting rights relating to treasury shares. (2) Owned through GBL.
Unlisted companies controlled by the parent company :
Name and registered office Share capital % of capital/vote Pargesa Netherlands BV ; Herengracht 540 ; NL – 1017 CG Amsterdam CHF 109 million 100.0
1.2 Significant shareholders
Under Article 120.1 of the Swiss Federal Financial Market Infrastructure Act (FMIA), anyone who directly or indirectly or acting in concert with third parties acquires or disposes of shares or acquisition or sale rights relating to shares of a company with its registered office in 1 2 Switzerland and thereby reaches, falls below or exceeds the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 33 /3%, 50% or 66 /3% of the voting rights, whether exercisable or not, must notify this to the company and to the stock exchanges on which the equity securities are listed.
% of voting rights conferred on Significant shareholders at 31.12.2016 (1) % of capital (2) exchange rights (3) Stichting AK Frère-Bourgeois / Trust Desmarais 55.5 75.4
First Eagle Investment Management LLC (USA) 9.0 4.9
(1) 3% or more of the voting rights. (2) Capital percentages are calculated based on the total number of issued shares recorded in the commercial register (bearer equivalent) making up the capital, less treasury shares, i.e. a denominator of 84’659’190 at 31 December 2016. (3) Percentages of voting rights are calculated based on the total number of voting rights attached to the shares issued, i.e. a denominator of 154’429’400 at 31 December 2016.
Announcements concerning holdings were published during the financial year. Following the entry into force of the FMIA, a simplified shareholder structure, which is provided on the next page, was published on 2 August 2016. Further details are available on the SIX Swiss Exchange website : www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html
50 Pargesa Holding SA Annual Report 2016 Corporate Governance
Shareholder structure of Pargesa Holding SA on 1st August 2016