NAV calculation method

Net asset value publication dates and publication-related verification

The annual schedule of NAV publication dates is available in advance on Wendel’s website on this link.

At each NAV publication date, the Statutory Auditors verify that the methodology used for calculating net asset value complies with the Group’s methodology and confirm consistency with accounting data.

The Audit Committee reviews each published NAV and compares Wendel’s valuation of unlisted investments with one performed by an independent expert.
 

Présentation of Net Asset Value

Presentation format (publication at the level of detail indicated)

Comments

Equity investments valuation date

 

+ Listed investments, including:

 

▪   Bureau Veritas

▪   Saint-Gobain

Average closing price over 20 trading days

+ Unlisted investments and Oranje-Nassau Développement

Unlisted investments are valued using the method described below. exceet is valued on the basis of the average share price of the 20 trading days prior to the NAV calculation date.

+ Other assets and liabilities of Wendel and holding companies

Includes Wendel shares held in treasury

Cash and marketable securities*

Pledged & unpledged cash of Wendel and holding companies

Wendel’s bond debt and syndicated credit line

Face value + accrued interest

Bank debt with margin calls

Face value + accrued interest

Value of Saint-Gobain puts issued (written)

Net market value of puts based on price used to value Saint-Gobain shares

Net Asset Value

 

Number of Wendel shares

 

NAV/share

 

Average of 20 most recent Wendel share prices

 

Premium (discount) on NAV

 

*      Amount of available cash: €[X] million

NAV is a short-term valuation of the Group’s assets. It does not take into account any control premiums or illiquidity discounts.
 

Listed equity investments

Listed investments are valued on the basis of the average closing price of the 20 trading days prior to the valuation date.
 

Valuation of unlisted investments

Valuation at cost for the 12 months following their acquisition

New, unlisted investments are valued at cost for the first 12 months following their acquisition. After this period, the company is valued on the basis outlined below.

Valuation by listed peer-group multiples

The preferred method for valuing unlisted investments is comparison with the multiples of comparable listed companies.

The value of shareholders’ equity of the companies in Wendel’s portfolio is determined as their enterprise value minus net financial debt of investments (gross face value of debt less cash) appearing in the most recent financial statements. To value Parcours, we use the ratio of market capitalization to pre-tax ordinary income. The value of the company’s shareholders’ equity is thus directly determined by multiplying its pre-tax ordinary income by the multiples of comparable listed companies.

If net debt exceeds enterprise value, the value of shareholders’ equity remains at zero if the debt is without recourse to Wendel.

Wendel’s percentage ownership is determined by the features of the equity instruments held by Wendel, non-controlling interests and co-investor managers, if any (see Note 4 “Participation of managers in Group investments” to the consolidated financial statements).

Enterprise value is obtained by multiplying measures of each company’s earnings by stock-market multiples of similar listed companies.

The measures of earnings most often used in the calculation are recurring EBITDA (earnings before interest, taxes, depreciation and amortization) and recurring EBIT (before goodwill). The choice of earnings measures used can be adjusted depending on the sector in which the subsidiary operates or its business model. In this case, Wendel publishes an explanation of the adjustment.

For the first half of the year, the enterprise value corresponds to the average of the values calculated using EBITDA and EBIT of the previous year and the budget (or budget update) for the current year. For the second half of the year, including for the calculation as of December 31, the next year is also taken into account, because there is sufficient visibility on the end of the current year and the following year can be estimated satisfactorily. For the second half, therefore, the enterprise value is the average of the values calculated for three periods: the most recently audited fiscal year, the entire current year and the following year.

Stock-market multiples of comparable companies are obtained by dividing their enterprise value by their EBITDA or EBIT for the reference periods. Multiples of pre-tax ordinary income are obtained by dividing market capitalization by pre-tax ordinary income for the reference periods.

Enterprise value of the comparable companies is obtained by adding market capitalization (the average closing price over the last 20 trading days) and net financial debt (gross face value of debt less cash) at the same (or similar) date as that applied to the net debt of the company being valued.

Comparable listed companies are chosen based on independent data and studies, information available from Wendel’s subsidiaries, and research carried out by Wendel’s investment team. Certain peer-group companies can be more heavily weighted if their characteristics are closer to those of the company being valued than are those of the other companies in the sample.

The peer group remains stable over time. It is adjusted when a company is no longer comparable (in which case it is removed from the peer group) or when a company is newly considered as belonging to the peer group for the investment being valued.

Non-representative multiples are excluded from the peer group, such as occur during takeover offers or any other exceptional circumstance affecting the measures of income or the share price.

The data, analyses, forecasts or consensus values used are based on information available at each date.

Valuation by transaction multiples​

Transaction multiples may also be used when the transaction involves a company whose profile and business are similar to those of the company being valued. In this case, reliable information must be available on the transaction, in sufficient detail. In some cases, the multiple used to value an investment will be an average, either straight or weighted, of the peer-group multiple and the transaction multiple. If used, the transaction multiple is applied for a period of 12 months, in line with the methodology of using the price paid in an acquisition.

Other methods

If a valuation by peer-group comparison is not accurate, other methods may be used, depending on the nature of the business, the characteristics of the asset and market practices. These include expert appraisals, valuation by discounted future cash flows, sum of the parts, and other methods.

Purchase offers

Purchase offers received for unlisted investments are taken into account if they are serious, i.e. relatively firm, and reasonable. In this case, Wendel uses the average, either straight or weighted based on the probability of acceptance, of the internal valuation and the average purchase price offered. Depending on the specific terms of these offers, they might be used as the sole basis for the valuation. The price of a purchase offer is applied for a period of 12 months, in line with the methodology of using the price paid in an acquisition.

Price of dilutive capital transactions

Capital increases that have a significant dilutive or accretive effect on the whole or on certain shareholders are considered as a transaction between shareholders. The price of such a transaction can be used to value the entire related investment, and is maintained for a period of 12 months, just as in the case of the price paid in an acquisition.

The principle of valuation at the price paid is not applied in the event Wendel exercises an option to acquire shares or subscribe to a capital increase at an exercise price set on the basis of a situation that pre-dates the exercise.
 

Cash

Cash of Wendel and its holding companies includes available cash at the valuation date (including liquid financial investments) and pledged cash.
 

Financial debt (non-current portion)

Financial debt (Wendel’s bond debt, syndicated loan outstandings and bank debt with margin calls) is valued at its face value plus accrued interest.

For the purposes of the calculation, financial debt is valued at face value, which is not affected by changes in interest rates or credit quality. Accordingly, interest-rate swaps are not valued at their market value, as the swaps are treated as part of the debt.
 

Puts issued on Saint-Gobain

The value of Saint-Gobain puts issued (written) is calculated on the basis of a mathematical model used to value options. The Saint-Gobain share price used in this calculation is the same as the one used to value Saint-Gobain shares as a listed investment.

As of December 31, 2014, 6,089,778 puts had been issued. This position was completely unwound on March 16, 2015.
 

Other NAV components

Current assets and liabilities are considered at their net book value or their market value, depending on their nature, i.e. at face value, less any impairment, in the case of receivables, and at market value in the case of derivatives, with the exception of interest-rate swaps. Real estate is valued on the basis of appraisals carried out at regular intervals.

Shares held in treasury and earmarked for sale upon the exercise of stock options are valued at the lower of the strike price of the options or the average price of the shares over the last 20 trading days. Shares held to cover performance share plans are valued at zero. Other shares held in treasury are valued at the average price over the last 20 trading days.

As NAV is a short-term valuation of the Group’s assets, Wendel’s future operating expenses do not enter into the calculation. Similarly, future tax effects are not included so long as the sale price of an investment and the form of the sale (in particular the tax consequences) are not both known and certain.

The number of Wendel shares taken into account in the calculation of NAV per share is the total number of shares composing Wendel’s equity at the valuation date.

Some aspects of the method described above may be amended if such a change produces a more faithful valuation. Any such changes would be announced by Wendel.

NAV at August 25, 2017: €165.8 per share

(in millions of euros) 08/25/2017
Listed equity investments Number of shares (millions)

Share price (1)

4,162
Bureau Veritas 177.2 €19.7 3,497
Saint-Gobain 14.2 €46.9 664
Unlisted investments and Oranje-Nassau Développement (2) 4,535
Other assets and liabilities of Wendel and holding companies (3) 146
Cash and marketable securities (4) 1,863
Gross assets, revalued 10,706
Wendel bond debt and accrued interest -2,882
Net Asset Value 7,824
Including net debt -1,019
Number of shares 47,195,153
Net Asset Value per share €165.8
Average of 20 most recent Wendel share prices €129.8
Premium (discount) on NAV -21.7%

(1) Average of 20 most recent closing prices calculated as of August 25, 2017. 
(2) Unlisted equity investments (Cromology, Stahl, IHS, Constantia Flexibles, Allied Universal) and Oranje-Nassau Développement (NOP, Saham, Mecatherm, exceet, CSP Technologies, SGI Africa, Tsebo and indirect investments and debt). IHS's valuation is calculated solely on the basis of EBITDA so as to take into account the fast-growing nature of IHS's business. The Sanlam/Saham transaction was finalized on May 10, 2017 and has been included in the NAV calculation since May 5, 2017. The sale of Constantia Flexibles' Labels division to MCC was taken into account in the August 25 NAV calculation. 
(3) Includes 1,495,057 Wendel shares held in treasury as of August 25, 2017.
(4) Cash and marketable securities of Wendel and holding companies as of August 25, 2017, composed of €1,508 million in available cash and €354 million in liquid financial investments.

Assets and liabilities denominated in currencies other than the euro have been converted at exchange rates prevailing on the date of the NAV calculation.
 
If co-investment conditions are realized, there could be a dilutive effect on Wendel’s percentage ownership. These items have been taken into account in the calculation of NAV. See page 262 of the 2016 Registration Document
 
NET ASSET VALUE 2016
NET ASSET VALUE 2015
Net Asset Value 2014
Net Asset Value 2013
Net Asset Value 2012
Net Asset Value 2011
Net Asset Value 2010
Net asset value 2007-2009