Groupe Bruxelles Lambert

30 July 2010 – After 17:45

Regulated information
Half-yearly Report

 

GBL's Board of Directors approved on 30 July 2010 the group's IFRS consolidated financial statements for the first six months of 2010.  These accounts were prepared in accordance with IAS 34 (interim financial reporting) and were put through a limited review by Deloitte.

 

Consolidated net earnings on 30 June 2010 stood at EUR 297 million, compared with EUR 98 million for the same period in 2009.  This evolution results from the group's steady cash earnings and the larger contribution by the companies consolidated using the equity method (EUR 50 million). Impairments in the first half of 2010 amounted to EUR 20 million on Iberdrola, compared with a total charge of EUR 235 million on Pernod Ricard and Iberdrola during the previous financial year. On cumulated bases the consolidated net result increases by EUR 199 million.

 

Cash earnings were stable at EUR 361 million (EUR 371 million in 2009). The exceptional dividend received from GDF SUEZ in 2009 was partially offset by the higher dividends paid by Lafarge, Imerys and Pernod Ricard as a result of GBL's total investments of EUR 642 million in these companies since June 2009.

 

GBL's adjusted net assets amounted to EUR 78.53 per share on 30 June 2010 (EUR 94.40 in December 2009), reflecting the stock market evolution of its portfolio since the start of the year during a period of extremely volatile prices. GBL's share price (EUR 57.14 on 30 June 2010) is 13.4% lower than at the end of 2009, in line with the Cac 40 and Eurostoxx 50 indexes.  Part of this change, i.e. -3.7%, is related to removal of the GBL coupon paid in 2010.

 

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For the sake of keeping control over its medium-term financing, GBL took advantage of favourable market conditions to issue 7.5-year bonds in the amount of EUR 350 million. This bond issue, targeting individual investors in Belgium and Luxembourg, bears interest of 4.0%.

 

GBL had also bought back on 30 June a total of EUR 98 million in its exchangeable bonds payable in 2012, securing a consolidated yield of 3.7%.

 

GBL's long-term debt is consequently composed of:

·         EUR 337 million in GBL exchangeable bonds payable in April 2012;

·         EUR 350 million in bonds payable in December 2017.

 

During the first half of 2010, GBL increased its stake in Pernod Ricard from 9.1% to 9.8% at a cost of some EUR 110 million, or EUR 61.4 per share.

 

At the end of June, GBL held cash/cash equivalent of around EUR 570 million including the proceeds from the 2017 bond issue. Taking into account its treasury shares of 3.8% valued at EUR 346 million and debt of EUR 687 million, the group's net cash position amounted to EUR 230 million on 30 June 2010.

 

 

 

1.      GBL’s portfolio and adjusted net assets at 23 July 2010

 

The number of outstanding shares currently stands at 161,358,287. The cash position on 23 July includes the collection in early July of dividends from Lafarge, Pernod Ricard and Iberdrola (EUR 143 million).

2.         Half-yearly IFRS consolidated results

 

The weighted average number of shares used to calculate earnings per share basic is 155,186,234 (155,792,046 on 30 June 2009); for earnings per share diluted, the number is 159,398,376 (155,792,046 on 30 June 2009).

 

2.1.           Cash earnings (EUR 361 million compared to EUR 371 million)

 

 

 

Net dividends on shareholdings in the first half of the year increased by EUR 59 million excluding the exceptional GDF SUEZ dividend of EUR 94 million in 2009. This increase reflects the combined effect of: 

·                 the additional contribution of EUR 42 million from the investments in Lafarge and Imerys on the occasion of their capital increases in 2009, at an unchanged dividend per share;

·                 the collection of a stable dividend from Total and Suez Environnement;

 

·          the EUR 14 million increase in the GDF SUEZ and Pernod Ricard dividends: on the one hand, GDF SUEZ and Pernod Ricard paid a dividend increased by 12% and 22% respectively; on the other, GBL has invested some EUR 150 million in Pernod Ricard since June 2009. 

Interest expenses amounted to EUR -5 million and are in line with this heading for 2009. The bond issue launched in June 2010 will not impact the 2010 result until the latter half of the year.

Other financial income and expenses amounted to EUR 6 million compared with EUR -22 million in 2009, when the outcome of trading for the first half of 2009 had resulted in a loss of EUR 40 million.

Other operating income and expenses remained steady at around EUR 11 million.

 

2.2.           Mark to market and other non-cash (EUR -25 million compared to EUR 8 million)

On 30 June 2010, this heading primarily included actuarial depreciation on exchangeable bonds (EUR -2 million), changes in the fair value of options (EUR -7 million) and elimination of the dividend on treasury shares (EUR -15 million). In 2009, this section also included a reversal of EUR 34 million on the above-mentioned trading.

 

2.3.           Associated companies (EUR 125 million compared to EUR 76 million)

Associated companies made a net contribution of EUR 125 million, compared with EUR 76 million for the same period in 2009:              

 

Lafarge (EUR 83 million compared to EUR 78 million)

The first quarter of 2010 featured a difficult economic environment in Europe and in the United States and particularly unfavourable weather conditions for the construction market in the developed countries and certain emerging countries. However, the context improved in the second quarter. Volumes rose in North America and there were signs of stabilisation in the Northern European countries, although trends were mixed in the emerging countries.

In this context, at EUR 7,712 million, turnover for the half-year declined by 3% (4% at comparable group structure and exchange rates) while current operating income, at EUR 1,072 million, declined by 5% (-9% at comparable group structure and exchange rates). The overall solidity of the cement price, a lower energy bill and the group's major cost-cutting efforts sustained its operating margin at 13.9% and at more than 20% for the Cement business in spite of the decline in volume during the first half of the year. For the second quarter, gross operating income (EBITDA) of the Cement business increased by 110 basis points to 32.7%.

Net result for the period amounted to EUR 393 million compared with EUR 370 million for the first half of 2009.  Excluding adjustments to provisions for the Cement litigation in Germany in 2009 and the capital gain on the disposal of Cimpor shares in 2010, net result group's share declined by 29%.

The sharp appreciation in the dollar and the pound sterling against the euro as at 30 June 2010 resulted in an unfavourable exchange rate effect of EUR 1 billion on the debt compared with 31 December 2009.  The group also continued to implement actions to improve its cash position and financial structure. The group arranged disinvestments of EUR 350 million for the end of July 2010 as part of its disposal plan of EUR 300 to 500 million announced in February 2010.  It has also refinanced for that date all 2010 due dates on Lafarge's long-term debt and extended in both amount and duration its confirmed and unused credit lines, bringing them to EUR 3.8 billion with an average maturity of more than three years.

Imerys (EUR 37 million compared to EUR 4 million)

During the first half of 2010, Imerys registered turnover of EUR 1,623 million, an 18% increase over the same period in 2009. This performance takes account of a favourable exchange rate impact of EUR 35 million, stemming from the weakening of the average exchange rate of the euro compared with other currencies apart from the US dollar, and an impact of changes in group structure of EUR -6 million. Imerys benefited from the upturn in global economic activity driven by a strong inventory rebuilding trend, especially in industrial equipment activities. Growth continued in the emerging countries, which account for 26% of the group's sales.

Current operating income rose by 88% to EUR 207 million due to the strong increase in volumes and sustained control over fixed and variable costs.

Net result, group's share, amounted to EUR 119 million, compared with EUR 12 million in the first half of 2009.

Imerys continued its industrial development in the second quarter of 2010 with its commissioning of a new calcium carbonate plant for paper in China and, on 26 July 2010, with the acquisition of Para Pigmentos S.A., a Brazilian producer of kaolin for paper.

Ergon Capital Partners / Ergon Capital Partners II (ECP) (EUR 6 million compared to EUR -6 million)

ECP contributed EUR 6 million to GBL's result compared with EUR -6 million on 30 June 2009. This difference stems mainly from changes in the book valuations of its portfolio.

2.4.           Eliminations and capital gains (EUR -164 million compared to EUR -357 million)

 

 

In the context of the slump on financial markets, GBL recorded, in compliance with IFRS requirements,
EUR 637 million in cumulative impairments on its investments in Pernod Ricard and Iberdrola, of which
EUR 402 million in 2008 and EUR 235 million in 2009.

 

Iberdrola's closing share price on 30 June 2010 was EUR 4.63. Pursuant to IFRS requirements, GBL therefore had to record an additional impairment of EUR 20 million on Iberdrola. The total impairment on this investment amounts to EUR 144 million.

 

GBL recorded EUR -513 million in impairments on Pernod Ricard. The net consolidated value of this investment therefore amounts to EUR 41.2 per share. Based on a share price of EUR 63.98 on 30 June 2010, there is an unrealized gain of EUR 76 million, above the impairment, which no longer appears to be justified. However, in accordance with IFRS requirements, this reversal may not be recorded in the income statement.

 

As a result of the decline in the Lafarge share price, an impairment test had to be performed. Its result showed that no impairment on the consolidated value (EUR 69.0 per share) was justified at the end of the period on 30 June based on the available information at that time.

 

Net dividends on shareholdings consolidated using the equity method are eliminated and represent EUR 144 million from Lafarge and Imerys.

3.                Comprehensive income

 

 

In accordance with IAS 1, GBL publishes a consolidated comprehensive income, which is an integral part of the consolidated financial statements. It amounted to EUR -823 million at end June 2010 compared with EUR -863 million in 2009.  This evolution resulted primarily from the change in the share price of investments held in the portfolio.

 

This comprehensive income represents the change in equity during the first half of 2010, excluding distribution of the GBL dividend. It is calculated on the consolidated earnings for the period (EUR 297 million) to which is added the market impact on available-for-sale investments (Total, GDF SUEZ, Pernod Ricard, etc.) (EUR -1,586 million) and changes in equity of associated companies (EUR 466 million).

 

4.                Risk factors

 

Each of the main headings of the portfolio held by GBL is exposed to specific risks that are detailed in the GBL annual financial report for the period ended 31 December 2009 (p. 110), which refers readers seeking further information to the sites of the different companies in which interests are held.

 

The risks specific to GBL on 31 December 2009 are detailed in the GBL's annual financial report (p. 110-111). GBL is subject to the same risks for the second half of 2010.

 

5.                Outlook for 2010

 

Most net dividends on investments, which make up GBL's cash earnings, are collected during the first half of the year. For the remainder of the year, GBL expects to receive interim dividends essentially from Total, GDF SUEZ and Pernod Ricard, to be approved by their respective management bodies.

 

The consolidated result will also take account of the evolution of the contribution of the associated companies (Lafarge, Imerys and ECP), which are themselves dependent on economic developments, as well as adjustments to the fair value of financial instruments and any impairments/reversals of impairments on the portfolio.

 

Results on the third quarter (30 September) will be published on 5 November 2010.

6.      Auditor's report on the half-yearly information

 

We have performed a limited review of the accompanying consolidated condensed bamance sheet, condensed statement of comprehensive income, condensed statement of changes in equity and selective notes 1 to 6 (jointly the “interim financial information”) of Groupe Bruxelles Lambert SA (“the company”) and its subsidiaries (jointly “the group”) for the six month ended 30 June 2010. The board of directors of the company is responsible for the preparation and fair presentation of this interim financial information. Our responsibility is to express a conclusion on this interim financial information based on our review.

The interim financial information has been prepared in accordance with IAS 34, ‘Interim Financial Reporting” as adopted by the EU.

Our limited review of the interim financial information was conducted in accordance with the recommended auditing standards on limited reviews applicable in Belgium, as issued by the “Institut des Réviseurs d’Entreprises/Intituut van de Bedrijfsrevisoren”. A limited review consists of making inquiries of group management and applying analytical and other review procedures to the interim financial information and underlying financial data. A limited review is substantially less in scope than an audit performed in accordance with the auditing standards on consolidated annual accounts as issued bu the “Institut des Réviseurs d’Entreprises/Instituut van de Bedrijfsrevisoren”. Accordingly, we do not express an audit opinion.

Based on our limited review, nothing has come to our attention that causes us to believe that the interim financial information for the six-month period ended 30 June 2010 is not prepared, in a ll material aspects, in accordance with IAS 34 “Interim Financial Reporting” as adopted by the E.U.

30 July 2010

The Statutory Auditor

______________________________________________

DELOITTE Bedrijfsrevisoren / Reviseurs d’Entreprises

SC s.f.d. SCRL

Represented by Michel Denayer

 

7.      Declaration by Management

 

Baron Albert Frère, Gérald Frère and Thierry de Rudder, making up the Executive Management, and Chief Financial Officer Patrick De Vos certify in the name and on behalf of GBL, that to the best of their knowledge:

 

-                      the condensed consolidated financial statements for the half-year ended 30 June 2010 were prepared in accordance with IFRS rules and gives a fair and true view of the assets, financial position and results of GBL and of its consolidated companies (1);

-                      the half-yearly financial report contains a true picture of the evolution of GBL's activities, results and position, and of its consolidated companies, as well as a description of the main risks and uncertainties with which they are confronted.

 

 

(1) "Consolidated companies" are GBL's subsidiaries within the meaning of Article 6 of the Company Code.

 

 

 

Consolidated statement of comprehensive income

 

 

Consolidated balance sheet

 

 

 

Consolidated statement of changes in shareholders’ equity

 

On 20 April 2010, GBL shareholders collected a gross dividend of EUR 2.42 per share (EUR 2.30 in 2009).

On 30 June 2010, GBL held 6,099,444 treasury shares (compared with 6,054,739 on 31 December 2009).

Consolidated cash flow statement