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 at the following address: http://www.wendelgroup.com.

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. 

+ 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

Net Asset Value

 

Number of Wendel shares

 

NAV/share

 

Average of 20 most recent Wendel share prices

 

Premium (discount) on NAV

 

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.

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. The enterprise value corresponds to the average of the values calculated using EBITDA and EBIT of two reference periods: the previous year and the budget (or budget update) for the current year. For NAV as of December 31, the budget for the new year being available, the calculation is based on the latest estimate for the year just ended (or the actual if available) and the budget for the new year.

Stock-market multiples of comparable companies are obtained by dividing their enterprise value by their realized or expected EBITDA or EBIT for the reference periods, or in the case of fiscal years that are different from the calendar year, the closest fiscal year.  

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 as of the date of the NAV calculation. If actual data are available when the calculation is performed, they are given priority. For portfolio companies as for comparables, EBITDA, EBIT and net debt figures used are adjusted for significant acquisitions or asset sales.

Significant non-controlling interests in portfolio companies are excluded from the portion of equity value attributed to the Group.

For small portfolio companies whose average revenue (over the reference periods used for the NAV calculation) is less than €500 million, the enterprise value is the smaller of (i) the value based on peer-group multiples, calculated according to the usual method (discounted in the event of disappointing financial performance, as explained below) and (ii) the value based on the acquisition multiple applied to the EBITDA or EBIT of the current year.

In the event the financial performance of a portfolio company is disappointing, a discount of 10% is applied to peer-group multiples. This discount is applied when the EBITDA or EBIT for the current year is more than 10% less than that of the previous year, unless the decline is due to currency fluctuations or an operational decision. The discount is cancelled only when the EBITDA or EBIT for the full year is at least equal to that of the year that preceded the date the discount was activated. Nevertheless, no discount is applied if an identical trend is observed in the sample of peer-group companies.

 

Valuation by transaction multiples​

Transaction multiples may 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. A purchase offer is taken into account if it was received prior to the date of the NAV.

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. These transactions are taken into account in the NAV if a firm commitment was signed prior to the date of the NAV calculation.

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.

 

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. 

Assets and liabilities denominated in a foreign currency are converted at the exchange rate prevailing on the date of the NAV calculation. If several exchange rates exist, the rate used for the preparation of the consolidated financial statements is applied.

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.

 

NET ASSET VALUE 2017
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