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BUREAU VERITAS EMBARKS ON A NEW PHASE OF HIGH-POTENTIAL, GLOBAL EXPANSION
BUREAU VERITAS in brief
Why did we invest in Bureau Veritas?
Bureau Veritas is ideally positioned in markets driven by structural long-term trends such as the proliferation and toughening of QHSE regulations and standards, the outsourcing of certification and inspection activities, increasingly stringent health and environmental protection standards, and the globalization of trade. Since it was founded in 1828, Bureau Veritas has gradually built up its globally renowned expertise. The market that Bureau Veritas addresses has numerous barriers to entry, including mandatory operating certification and approval in each country, as well as the need to offer dense geographical coverage both locally and internationally, a comprehensive range of inspection services (in particular for major clients), high-value solutions through firstrate technical expertise and a reputation of independence and integrity.
What were the highlights of 2011
Amid an economic environment buffeted by sovereign debt crises, Bureau Veritas continued to demonstrate its operational quality and ability to pursue growth. Over the full year, Bureau Veritas performed well in a mixed regional backdrop, which was particularly difficult in Spain and extremely dynamic in fast growing countries. At the end of 2011, it had achieved all of the 2007-2011 objectives it had presented at the time of its initial public offering. The integration of Inspectorate within the Bureau Veritas group is virtually complete and is already a success. Since January 1, 2011, all of the Commodities Inspection and Testing activities have been merged into a new Commodities division. The new business is set to be a pillar of the Group's future growth. During 2011, the group continued its acquisitions policy, acquiring a dozen companies in fast growing countries and in high potential markets. These companies represent combined full-year revenue of approximately 50 million. In an extremely deteriorated backdrop in Spain, especially in the construction market, Bureau Veritas implemented serious measures to ensure a recovery. The impact of this rightsizing of operations resulted in an exceptional expense of 25.5 million in 2011.
In 2011, Bureau Veritas undertook a strategic review of its markets, reexamined its growth opportunities and defined a plan and targets for 2015. The full project, named “BV 2015: Moving forward with confidence”, was presented in September.
Over the full year 2011, Bureau Veritas generated revenue of 3,359 million. The 14.6% increase compared with 2010 broke down as follows:
• organic growth of 6.2%, calculated on the pro-forma scope, including the organic contribution from Inspectorate in 2011;
• a 9.5% positive impact from changes in the scope of consolidation, primarily owing to the acquisition of Inspectorate;
• a 1.1% negative impact from currency fluctuations prompted by weakness in the US and Hong Kong dollars against the euro.
The highest growth rates were achieved in the Industry, Commodities, Certification and International Trade businesses. Revenue generated in fast-growing regions (Latin America, Asia-Pacific excluding Japan, Eastern Europe, Middle-East and Africa) firmed further to 50% of 2011 revenue. Adjusted operating income increased 11% to 544 million in 2011, vs. 490 million in 2010. Adjusted operating margin stood at 16.2% of sales, compared with 16.7% in 2010. As expected, this 50-basis point narrowing was primarily due to dilution caused by the full-year consolidation of Inspectorate.
After taking account of other operating expenses, operating profit totaled 480.3 million, up 5.3% relative to 2010. Other operating expense increased to 64.0 million vs. 34.2 million in 2010. These mainly included 36.4 million in amortization of intangibles and 25.5 million in exceptional expense related to Spain (restructuring costs and provisions and impairment of goodwill). Attributable net profit adjusted for other operating expense net of tax rose by 10.4% to 348.1 million. Attributable net profit stood at 298 million, up 2.5%.
On December 31, 2011, adjusted net financial debt (net financial debt after hedging instruments) totaled 983.9 million, or 1.60x EBITDA adjusted for all new entities acquired over the past 12 months, compared with 1.94x on June 30, 2011, and had declined by 67.9 million compared with December 31, 2010 ( 1,051.8 million).
What is the outlook for development
In 2012, barring further deterioration in the economy compared with current forecasts, Bureau Veritas should deliver strong growth in revenues (in both organic terms and via. acquisitions) and adjusted operating profit, in line with the targets set out in the “BV 2015” strategic plan.
Bureau Veritas’s governance was strengthened in early 2012 with the arrival of Didier Michaud-
Daniel as Chief Executive Officer.
WENDEL’S IN VOLVEMENT
Board of Directors
Frédéric Lemoine (vice-Président)
Frédéric Lemoine (Président)
Appointments and Compensation Committee
Audit and Risk Committee