Groupe Bruxelles Lambert

4 November 2011 – After 17:45

Regulated information
Interim statement

 

 

The Board of Directors at his meeting of 4 November 2011, decided to appoint Ian Gallienne and Gérard Lamarche as Managing Director as from 1 January 2012, date on which Gérald Frère and Thierry de Rudder will be stepping down from their executive duties. Ian Gallienne and Gérard Lamarche, together with Albert Frère, who remains as CEO, will make up the Executive Management.

Gérald Frère will as from that date take the chair of the Board of Directors. Simultaneously, Thierry de Rudder will become the chairman of the Standing Committee and will be called, together with Paul Desmarais Jr, to join Paul Desmarais as Vice-Chairman of the Board.

At the occasion of this transfer of powers, Patrick De Vos, Financial Director, will be leaving the group after an exemplary career of 26 years. He will be replaced by Olivier Pirotte, who is Manager of Investments today. The board thanks Gérald Frère, Thierry de Rudder and Patrick De Vos for their devotion and their important contribution to the development of the Group. He wishes to the arrivors and the leavers lots of success for their new activities.

GBL's Board of Directors also approved the Group's IFRS consolidated non-audited financial statement for the period ended 30 September 2011, based on the financial information provided by Lafarge, Imerys and its private equity business.

 

Consolidated net result, group's share, on 30 September 2011 stood at EUR - 12 million, compared with earnings of EUR 596 million in 2010. This result includes an impairment of EUR 650 million on the stockholding in Lafarge, as required by IFRS rules. This impairment, purely accounting driven, has no impact on GBL's cash earnings or adjusted net assets. Excluding earnings on disposals and impairments, net result would total EUR 593 million, compared with EUR 614 million for the same period in 2010.

 

Cash earnings for the first nine months of the year totalled EUR 464 million, compared with EUR 552 million for the same period in 2010. This decrease primarily reflects a variation of EUR 78 million in dividends. The additional dividends collected on the 25.6 % stake in Imerys acquired in 2011 only partially offset the decline in the Lafarge dividend and the postponement to the fourth quarter of part of Total's pay-out.

 

Portfolio: over the first nine months of the year, GBL invested more than EUR 1.2 billion in its portfolio, acquiring a 25.6 % share in Imerys in April. It also increased its interest in Arkema to 10 %, financing this transaction through the sale of part of its Iberdrola shares. In private equity, GBL invested EUR 66 million in Ergon Capital Partners to finance two acquisitions and collected EUR 56 million from PAI and Sagard following the disposal of various investments. During the first nine months of the year, GBL also bought an additional EUR 88 million worth of its own exchangeable bonds maturing in 2012, leaving a net balance of EUR 188 million on the market.

 

GBL's adjusted net assets and share price at the end of September 2011 stood at EUR 66.04 and EUR 52.96 respectively, reflecting the tough stock market context.

 

1.                GBL's portfolio and adjusted net assets on 28 October 2011

 

The number of GBL outstanding shares currently stands at 161,358,287.

At the end of October, GBL had cash and near-cash of more than EUR 582 million, an amount that includes the valuation of its 3.8 % cross-shareholding. Debt is made up of bonds for EUR 538 million and amounts outstanding under bank credit lines (EUR 850 million). These different elements add up to a net liquidity position of EUR – 805 million. This figure does not include the GDF SUEZ and Total interim dividends already approved by the boards but that will be paid before the end of the year.

 

2.                Consolidated results for 9 months (economic presentation)

 

2.1.           Cash earnings (EUR 464 million compared with EUR 552 million)

 

Net dividends collected as of 30 September showed a decrease of EUR 78 million compared with 2010.

This results primarily from:

-          Total's new policy of distributing a quarterly dividend. The result is that half the interim dividend is paid in December rather than in September, as in 2010. It is therefore no longer entered under "Cash earnings" but under the "Mark to market and other non-cash" heading;

-          the stable or slightly higher contribution to cash earnings (EUR 216 million) from GDF SUEZ, Suez Environnement and Pernod Ricard;

-          the lower half of the Lafarge dividend, which represents some EUR 60 million for GBL; and

-          the additional dividend resulting from the acquisition in early April of a 25.6 % stake in Imerys (EUR 28 million).

 

Interest expenses rose by EUR 9 million compared with 2010. This variation resulted mainly from the financing of investments of more than EUR 1.2 billion by GBL in its portfolio.

 

Other financial income and expenses amounted to EUR 3 million. They are made up mainly of costs related to the settlement of the interest rate swap offset by dividends collected on cross-shareholding.

 

Other operational income and expenses remained stable at around EUR - 14 million.

2.2.           Mark to Market and other non-cash (EUR 18 million compared with EUR - 20 million)

On 30 September 2011, this heading mainly comprised:

-        Total's second interim dividend for 2011 (EUR 48 million), payable in December and which will be entered under "Cash earnings" during the fourth quarter of 2011;

-        the elimination of the dividend on treasury shares (EUR - 16 million); and

-        the result on financial instruments (EUR - 11 million).

2.3.           Operational companies (associated or consolidated) and private equity (EUR 266 million compared with EUR 228 million)

The net result of consolidated and associated companies amounted to EUR 226 million, compared with EUR 228 million for the same period in 2010:

 

 

Lafarge (EUR 125 million compared with EUR 161 million)

The first nine months of 2011 featured strong markets in most emerging countries and rising volumes in the northern European countries, although the still uncertain recovery of the construction sector in North America and the continuing economic gloom in southern Europe dragged sales down.

In these circumstances, consolidated turnover for the first nine months of 2011, at EUR 11,471 million, expanded by 2 % (4 % at comparable group structure and exchange rates).

Current operating result, at EUR 1,641 million, declined by 12 % (also - 12 % at comparable group structure and exchange rates), as higher volumes and cost-cutting measures only partially offset the impact of strong cost inflation.

 

The group's turnover and current operating result are restated over 2010 and 2011 to take account of the reclassification of the Gypsum business into "discontinued activities" in accordance with IFRS 5.

The group's share of net result for the period amounted to EUR 596 million compared with EUR 765 million for the first nine months of 2010. In 2011, the group registered EUR 48 million in extraordinary income from activities being disposed of (Gypsum), while an extraordinary capital gain of EUR 161 million on the disposal of Cimpor shares was registered the previous year.

Lafarge is also actively implementing its plan to reduce its net debt by at least EUR 2 billion by the end of 2011 and to reinforce its financial structure. It has announced disinvestments, including some assets in the United States and its Gypsum activities in Europe, Latin America, Australia and Asia, representing EUR 2.1 billion to be collected by the end of the year as well as a new program of cost reduction of EUR 500 million.

Based on a stable level of holding of 21.0 %, Lafarge contributed EUR 125 million to GBL's 2011 result, compared with EUR 161 million in September 2010.

Imerys (EUR 112 million compared with EUR 57 million)

After strong growth on its end markets during the first six months of the year, Imerys registered sustained activity during the third quarter. Demand in most of the emerging countries remained steady and signs of economic slowdown that had emerged during the summer have not had any impact on the group's principal markets at this stage.

 

Strong currency volatility was coupled with by higher costs of certain raw materials and, to a lesser extent, of energy.

 

The acquisition of Luzenac Group was finalised as planned on 1 August. Imerys also announced in September the inauguration in the United States of a production unit for ceramic proppants earmarked for the expanding market of non-conventional oil and gas production.

 

For the first nine months of 2011, Imerys' turnover expanded by 9 % to EUR 2,750 million. This increase takes into account a positive group structure impact of EUR 58 million and a negative exchange impact of EUR 54 million due to the euro's rise against certain currencies.

 

Current operating result amounted to EUR 382 million, a 17 % increase over the first nine months of 2010. Operating margin rose by 1 point to 13.9 %.

 

The group's share of net result amounted to EUR 230.5 million, bringing Imerys' contribution to GBL's result to EUR 112 million in 2011 compared with EUR 57 million in 2010. Imerys was still placed at equity at the level of 30.7 % during the first quarter of 2011 (EUR 22 million). However, since 1 April, it has been fully consolidated and its contribution amounted to EUR 90 million (56.3 % of Imerys' net result) on the period April-September 2011.

 

Ergon Capital Partners / Ergon Capital Partners II / Operational subsidiaries of Ergon Capital Partners III (ECP) (EUR - 11 million compared with EUR 10 million)

ECP's contribution to GBL's net result as of 30 September 2011 amounted to EUR - 11 million, compared with EUR 10 million a year earlier. This variation results mainly from the evolution of the book values of its portfolio.

Earnings on disposals, markdowns and reinstatements of non-current assets basically include capital gains realized (EUR 42 million) on the disposal of various assets of PAI Europe III and Sagard.

2.4.           Eliminations, capital gains, impairments and reversals

(EUR - 760 million compared with EUR - 164 million)

 

Impairments on associated companies

In accordance with IAS 28 (Investments in associates) and IAS 36 (Impairment of assets), the prolonged or pronounced decline of the share price of a holding consolidated using the equity method makes it necessary to conduct an impairment test on the consolidated book value of the investment. In this context, GBL compared the value of the holding in Lafarge in the consolidated accounts with the value in use and the closing stock market value. The value in use is defined as the future estimated discounted cash flow value (Discounted Cash Flow).

This method has been applied consistently since 2008 and resulted in an impairment of EUR 1,092 million in 2008, reversed in the amount of EUR 650 million in 2009.

Reiteration of this impairment test on 30 September 2011, based on the information available as of that date and taking into account the deteriorated economic environment, results in a consolidated book value in excess of the value in use. GBL was therefore obliged to enter an impairment that has the effect of lowering the value of the investment in Lafarge in the consolidated accounts (EUR 65.2 per share) to the share in Lafarge's IFRS equity capital at the end of September 2011 (EUR 54.4 per share), which falls within the range of estimated values in use. This impairment, which amounts to EUR 10.8 per share, represents a charge of EUR 650 million for the third quarter of 2011.

Elimination of dividends

Net dividends on operational investments (associated or consolidated companies) are eliminated and represent EUR - 112 million from Lafarge and Imerys.

3.                Consolidated result over 9 months (IFRS presentation)

 

The following table presents GBL's IFRS profit and loss accounts broken down into three sectors:

 

-        Holding: comprising the parent company GBL and its subsidiaries, the main aim of which is the management of investments, and non-consolidated or associated operational companies.

-        Imerys: comprising Imerys group, a French group listed on NYSE-Euronext Paris, which holds leading positions in each of its four businesses: Minerals for Ceramics, Refractories, Abrasives & Foundry; Performance and Filtration Minerals; Pigments for Paper & Packaging; and Materials & Monolithics.

-        Private equity: comprising, under investing activities, ECP, ECP II and ECP III, PAI Europe III and Sagard & Sagard II companies and, under consolidated operating activities, the operational subsidiaries of ECP III (sub-groups ELITech, De Boeck and Benito).

 

 

Due to the acquisition of a 25.6 % stake in Imerys in early April 2011, the "Result from investment activities" heading corresponds to the placing of Imerys at equity during the first quarter of 2011. The rest of the column represents Imerys' contribution through full consolidation from the second quarter.

4.                Consolidated result for the third quarter (economic presentation)

 

 

The third quarter result amounts to EUR - 428 million. This mainly includes interim dividends from GDF SUEZ and Total (EUR 151 million), results of associated and consolidated operational companies (EUR 106 million) and the impairment of EUR 650 million on Lafarge.

 

5.                Outlook for 2011

 

The greater part of net dividends on investments are already included in the consolidated results at end September 2011, including the GDF SUEZ and Total interim dividends, although they will not be collected until the fourth quarter. GBL still expects to account by the end of the year the third Total dividend and the balance of the Pernod Ricard dividend.

The consolidated result will also take into account the evolution of contributions from operational companies (associated and consolidated) (Lafarge, Imerys and the private equity pole), which is linked to the economic cycle, as well as adjustments to the fair value of financial instruments and any impairments/reversals of impairments on the portfolio.

The annual results for 2011 will be published on 6 March 2012.