Wendel

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Vanduul's Half-Year 2024 Results Conference Call. At this time, all participants are in listening-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask questions, you will need to press star 11 on your telephone and wait for your name to be announced. You can also ask questions on the webcast, Olivia Aloh, Director of Financial Communications and Data Intelligence, will read them out. I must advise you that this conference is being recorded today. I would now like to hand you over to the conference, over to Mr. Laurent Mignon, Group CEO. Please go ahead, sir.

Thank you very much. Afternoon to everybody. Thank you to be there on 1st of August for our first half result analysis conference. So I'm very pleased. I will be making this presentation together with David Darmon, who is there. So we will be, both of us, doing the presentation. And Jérôme Michel and Benoît Riau will also be there in case needed to answer the question you may have. So let's start on the key highlights of this first half 2024. I think if we go, Vandel Group is a permanent capital structure that now have a dual strategy with principal investment on one side and developing the asset management on the other one. while both activities generate some links between each other. In the first half, the contribution from portfolio companies has been up 9.4%, the contribution to net earning, at $365 million. This is the 9.4% growth is restated from Consolta Flexible that has been sold, as you know, at the very beginning of this year. So, restating from that is up 9.4%. which shows good resilience in an environment which is difficult. On the asset management, this is first-time consolidation of IK Partner, but still the fee-related earnings of IK during the first half is 29.5 million, very much in line with what we were expecting with the growth of the fee-paying IOM. of 16% since the beginning of the year, showing a very good development of the activity supported by close to 2 billion, 1.7 billion of fundraisers and very good perspective for the rest of the year. So we're very happy to be able, thanks to the quality of the performance of IKEA, being able to raise significant amount of capital and be in line with the growth we're expecting from that activity. All together, if we take principal investment and asset management today, Vandel Group is managing 20.4 billion of assets, but we will come back on the way it is split. Our fully diluted NAV, which is a new metric we're giving, which takes into account the Shared buyback, we've been going, is established at 175 euro, 175.2 euro per share at the end of June, which is up 7.9% year to date compared to the same aggregate, a fully diluted NAV as 31st December 23, which was 162.3 euro per share. Our loan-to-value pro forma of all the acquisitions and operations that we've announced, even if they are not realized at 30th of June, is 5.9%. If we take the loan-to-value at its 10 as of 30th of June, it is minus 6.2%. But, you know, we have announced Global Decades and so on. Net of that, it's 5.9%, which leave the company investment capacity of 1.4 billion to be able to work on our strategy and implement our strategy. Today, we finished the first share buyback that we've announced a few months ago, and we're announcing a new share buyback program, 100 million, that will go on starting today. If we go next slide, this is really to show you the links between the different assets and how it develops. And you see how our, I mean, the very important thing for us is how does our business model create value. On the principal investment, obviously, this is the value of the underlying asset. That will be the number one element. And the listed asset during the first half has increased in value by 9%. The unlisted asset has been slightly down to 1%, which is a pretty good performance when we look to the environment in which the assets are evolving. But we will come back with more detail on that. We've been very active on the principal investment part during this half year. We've had 2.3 billion of disposal and value crystallization thanks to both the sale of Constantia Flexible on one side at the beginning of the year and the divestment of 9% of Bureau Veritas during the first half too. We've been investing or committing close to 700 million euros during this period also. So a very active management of the portfolio. And as you've seen, the contribution to the net earnings is up at 388 million. And the net income group share is at 388 million with contributed sales, which are up 13%. during the period. Part of the profit is linked to the disposal of Constantia, which was realized at the beginning of January. On the other side, the asset management is developing itself uh gp the first time the gp value growth today is not significant because it's first consolidation of ik sponsor money invested is not yet invested not yet called so we cannot give you how it has evolved but it will we've committed as you see uh up to 400 million on ik10 and potentially the partnership fund three we've bought 51 of ik for um 383 million Euros, out of it 128 will be paid in 27 pending some conditions. We had some growth in fee-related earnings in the first half compared to last year. This is very much in line with what we expected, and I mentioned a good momentum in terms of fundraising that is continuing, and we are very optimistic for the end of the year. So all of that is giving an improved gross profile for the company with increased recurring cash flow generation thanks to the asset management development that is starting, and again, it's just the start. We've got a very strong cash position to fuel execution, and we have set a higher dividend yield profile. Four euros have been paid during the first half, and we are developing an opportunistic share buyback program, as you see with this renewed 100 million commitment to buy back shares. If we look to what all what we've done was perfectly aligned with our strategy, most of what you see on the slide here has been commented, like the sale of Consencia. We've sold 9% of Bureau Veritas for $1.1 billion. The internal rate of return for the investment in Bureau Veritas is 24.8% per year since investment, which is a pretty impressive one. We've made the investment on Global Decade, and we'll come back on this one. 625 million in equity to co-control the company and this company has a very good growth profile and hence the quality of our portfolio going forward. We've supported Scania in its M&A strategy, Bolton strategy by injecting an addition 44 million of equity into Scania to support the, not specifically the Maranino investment. CPI made a refinancing project during the year, and within this refinancing made a small dividend recap of $93 million that was distributed to Vandel, and Vandel Groups made the sale of Prelegent, which has been signed, will be realized, not yet, and we've invested $15 million on a very promising company called ESWEAC. Asset management, I don't come back on what has been said. We have made the acquisition with access to 20% of the SHIB future carried interest also from starting from IK10 fund, 1.7 billion of fundraisers, which is very favorably comparing to other and sponsor money will be not called yet, but will have been committed. Globe Educates, we mentioned increased recurring cash flow generation and supporting dividend yield growth, and dividend yield growth will continue to grow in the coming years thanks to the development of the asset management business. We have strong investment capability with 1.4 billion of sort of, I would call it some sort of dry powder of the principal, I mean, of not only the principal investment of Vandel per se, and we announced the new 100 million share buyback program. All of that is geared to value creation and increase our TSR and dividend profile and hopefully long term to reduce our discount to NAV. If I move to the next slide, I think it's the first time we present that because we have the consolidation of IK Partners. Vandell managed $20.4 billion of assets. $7.3 billion is in principal investment with 9% of the total $20 billion. but a significant portion of that being in the education with ACAM, CPI, and Global Educates. Now, a significant portion in the business services, which is the highest portion with Bureau Veritas and Scalion, a bit in industrial with Target and Stahl, and a very small portion in Vandelgrosse and in Telcos through IHS. On the other side, you have the 13.1 billion of IUM of IK. That includes close to 2 billion of dry powder, 15% of the total. of the total 15 billion. So it's even more. It's 3 billion, sorry, dry powder for IK, which is a significant amount to be invested and show the capacity of IK to both invest and divest, but we'll see that when we talk about IK platform during the first half. Maybe a little bit of a highlight on Global Decade, and I will share that with David. We've made the investment on this very great platform of K-12 education through a network of 65 premium bilingual and international schools. This is present in 11 countries, mostly in Europe, and it is a very attractive market, we think. We have 40,000 students in the schools with a world-class education, predominantly taught in English. Sales are 440 million in year 25 expected with 120 million of EBITDA. And we think it's a great business because it's a very stable, predictable, and strong double-digit growth expected together with potentially both organic and M&A. Strong cash flow generation, mostly invested in organic and external growth. David, you want to say? more on Global Educate.

Yes, thank you Laurent. Good afternoon everyone. So we announced on June 1st this acquisition of 50% alongside Providence. Providence is a global PE firm with a long track record in education. They've been successful in Galileo and obviously in Global Educate and they have other education companies in their portfolio. So we thought it was a great partner. We do intend to invest 625 million euros of equity upon closing. We expect this closing by the end of the year. And as Laurent was saying, we were very excited about this because one, there is a great mix of gross avenues, both organic with increased numbers of students, what we call semi-organic, which is basically opening new campuses, and M&A. It's a highly fragmented industry, and this is a great platform to buy rooms and pubs. We're also very excited because there is strong predictability of cash flows. At the beginning of the year, you have a good view on volumes and fee, which in LVO is very helpful. We look forward for the closing by the end of the year of this very interesting investment opportunity.