Eurazeo’s performance in 2010 was marked by a return to growth in the first half of the year, which strengthened in the second half, according to the company’s latest quarterly financial information.
Growth was particularly sustained during the 3rd Quarter, resulting mainly from Europcar’s strong contribution to Eurazeo’s revenues reflecting the seasonal effect on its business.
2010 consolidated revenues for Industry and Services was 3,835.5 million euros, an increase of 3.5% on a reported basis and 4.0% on a comparable basis. Despite the exit of B&B Hotels from the scope as of July 1, 2010, the pace of growth accelerated in the 2nd Half to +4.3% compared with +3.6% in the 1st Half, reflecting improved market conditions and the beneficial effects of adaptation measures.
Revenue for the Real Estate business was 52.9 million euros, an increase of 7.3% on a comparable basis, confirming a solid trend. Growth of 57.3%, as reported, results from taking into account rents collected from B&B Hotels in the 2nd Half of 2010. With the sale of this company, these rents are no longer considered intra-group activity and are therefore included in Eurazeo’s consolidated revenues.
Patrick Sayer, Chairman of the Executive Board, says: "Eurazeo’s growth continued in the 2nd Half as we have previously announced. For the year, NAV increased 22.4%, reflecting the appreciation of all of our assets. The market has recognized the merits of the Accor/Edenred demerger which has enabled the creation of two world leaders each refocused on its own specialty under new management teams. Accor, Edenred, Europcar and Rexel demonstrated their strong potential to rebound, returning to organic growth; Elis and Rexel continued their development through bolt-on acquisitions, particularly internationally and, for Rexel, in emerging markets. Finally, ANF Immobilier benefited from strong growth in rents. Our projections for growth and improved margins in 2011 should translate into a further increase in the value of our investments. With available cash of 909 million euros, Eurazeo possesses significant investment capacity and is working actively on company projects in which it can support development that will lead to the realisation of full potential value."
APCOA achieved 2010 revenues of 699.7 million euros, up 9.4% on a reported basis and +5.9% on a comparable basis. The trend seen at the beginning of the year continued in the 4th Quarter with revenues of 190.2 million euros, an increase of 9.6% on a reported basis and +6.7% on a comparable basis. This return to growth is mainly due to the contribution of new contracts won during the year and a rebound in passenger traffic at airports. In the other main segments (city centres and shopping centres), the resumption in frequentation has been more moderate, resulting in particular from adverse weather at the beginning and end of the year.
By geographic region, Scandinavia, the United Kingdom, Belgium, the Netherlands and Italy showed strong growth, while Germany and Eastern Europe fell short of their sales objectives. The arrival in early January 2011 of a Group Sales Director, whose first priority will be Germany, should help reinvigorate APCOA’s growth in this country.
The company’s good revenue performance has not, however, translated into results, due in particular to the exceptional costs related to poor weather and the deterioration in the performance of certain unprofitable historical contracts in the UK. The renegotiation of a large portion of these contracts was implemented in late 2010 and will benefit the company in 2011.
The contribution of Elis to Eurazeo’s 2010 revenues was EUR1,064.1 million, an increase of +2.6% as reported and +0.6% on a comparable basis.
Stable 4th Quarter performance (-0.2% on a comparable basis) reflects the effects of an unfavourable comparison basis, the production company Molinel having benefited in the 4th Quarter 2009 from exceptional clothing sales to large B2B accounts. Excluding the production company Molinel, Elis’ 4th Quarter revenues would have increased 0.6%.
In France, revenue for the year rose 1.4% (+0.3% on a comparable basis). The gradual recovery of the Hotel and Restaurant market (+1.3% at constant scope) is characterised by a growing hotel market and a slack restaurant market while the Industry, Trade and Services market, (-0.1% at constant scope) affected by rising unemployment, also remains flat. Finally, the Healthcare market continues to grow (+0.9% at constant scope). Elis also made four small acquisitions in France in 2010 representing full-year revenues of nearly EUR3 million.
Internationally, growth for the year was 10.8% (+2.7% on a comparable basis). In the Iberian Peninsula, despite the very poor economic environment, revenues continue to grow (+2.8% at constant scope) as a result of robust sales activity that led to the signing of several new contracts. In addition, work wear rental services are growing strongly in Italy.
2010 was a year of accelerating international development with four acquisitions representing annual revenues of 45 million euros (including two acquisitions in Spain in September 2010 generating 17 million euros in revenues on a full year basis and Lavotel, a leader in Swiss Romande in December 2010, which generates annual revenues of CHF33 million). Overall, international activity represents annual revenues of nearly 200 million euros or almost 18% of Group revenues, compared with 13% in 2007 when Elis was acquired by Eurazeo.
This revenue growth, coupled with effective cost control and a favourable tax impact, contributes to a further improvement in EBITDA margin in 2010.
In a difficult environment marked by a succession of unfavourable factors, including adverse weather at the beginning and end of the year and the ash cloud in April, Europcar’s revenue grew steadily in 2010 to EUR1,973.1 million, an increase of 6.6% on a reported basis and +4.6% on a comparable basis. Revenues for 4th Quarter 2010 totalled 450.2 million euros, up 6.6% on a reported basis and +4.2% on a comparable basis. Revenue growth remained strong in the 4th Quarter, although it was affected by bad weather in December.
Revenue growth in 2010 was primarily due to sustained price increases as well as a recovery in volumes, which rose for the first time since 2008. The number of rental days increased by 0.9% for the full year, while remaining well below the 2008 level. Growth continues to be driven by improving revenue per day (RPD), which rose 3.7%, at constant exchange rates, for the full year. The rate of fleet utilisation remained at a high level during 2010, 73.6%, in line with 2009.
For the full year 2010, Europcar should achieve an increase in adjusted EBIT above 13%.
Rents for ANF Immobilier continued to grow during 2010 with revenues increasing 6.3% to 69.1 million euros, or +7.9% at constant scope (after restatement of property acquisitions and divestitures). For Lyons and Marseilles alone, the strong 12.5% increase, at constant scope, reflects growth from retail and office rents in Marseilles and delivery of the Trinquet, Fauchier and Forbin projects in Marseilles. This increase in rents at constant scope of Haussmann city center properties exceeds the objectives set by ANF Immobilier and demonstrates the attractiveness of the company’s assets.
The value of ANF property holdings as of December 31, 2010, established by two independent experts, was 1,573 million euros, an increase of 6.7% at constant scope, compared to the December 2009 appraised value (1,504 million euros).
The Loan-to-Value ratio was 29.2% as of December 31, 2010.
The estimated and unaudited Net Asset Value as of December 31, 2010, excluding rights and the fair value of financial instruments, was 40.3 euros per share, compared with 38.9 euros as of December 31, 2009.
Following the divestiture of B&B Hotels (effective September 28, 2010), the cash position stood at EUR909 million, as of December 31, 2010.
The collateral for Accor (EUR24 million as of October 31, 2010) was fully recovered following implementation in November 2010 of two new financings secured by the value of Accor and Edenred shares to replace the original loan used to acquire Accor shares.
The company also still has its undrawn syndicated credit line of 1 billion euros and uncalled subscriptions of 110 million euros in Eurazeo Partners.
Eurazeo’s Net Asset Value as of December 31, 2010 was EUR74.8 per share, an increase of 22.4% compared with December 31, 2009 (EUR61.1). NAV as of December 31, 2010 would have been EUR76.5 per share if ANF were valued at its Net Asset Value instead of its share price.
Accor, Edenred and Rexel grew 75.0%2 since December 31, 2009. This performance reflects the success of the strategic decisions implemented, the positioning of each company as a leader in its sector and their operational efficiency.
In spite of a decrease in retained multiples and the impact of unfavourable weather on the performance of certain companies, Eurazeo’s other primary investments increased 10.6% over one year, representing 158 million euros – including 57 million euros of value creation related to the divestiture of B&B Hotels. This transaction enabled the full value of the company to be realised, increasing from 121 million euros in the NAV as of December 31, 2009 to 184 million euros, its divestiture value six months later, an increase of 52%, reflecting the successful transformation.
The valuation methodology conforms to the recommendations of the International Private Equity Valuation Board (IPEV). The valuations of non-listed investments are based primarily on multiples of comparables or of transactions. For listed investments, the retained value is the average over a 20-day period of the volume-weighted share price. The values retained for non-listed companies were the subject of a detailed review by an independent professional appraiser, Accuracy, as specified in the signed engagement letter. This review supports the retained values and states that the evaluation methodology conforms to IPEV recommendations.
