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Paris EUROPLACE 2007

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    The French Government
   Shareholding Agency (APE)

         2007 Highlights

Bruno BEZARD – Managing director

            Stockholm
      Thursday, March 29, 2007
                                          2

     Synopsis

   APE : A professional shareholder

   APE : A broad portfolio with strong
    opportunities

   Focus on :
        EDF
        Aéroports de Paris (ADP)
        France Télécom - Orange
        La Poste
                                                                                 3

1 - APE : a professional shareholder
Since its creation in 2003, APE is exclusively dedicated to supervise
  the companies belonging to the public sector
      Our sole mission : acting as an active shareholder and a vigilant
       member of board of directors. Clarifying responsibilities within French
       State (shareholder – regulator – customer …)
      Our task force acts under the authority of the Minister for Economy
       and Finance, with a team with a wide range of competencies (public and
       private professionals - lawyers, bankers, accountants-)
Our duties :
      « Bringing up companies to market standard » : Developing corporate
       governance, financial culture, and international positioning.
      Acting as a rational investor, in a strongly European Commission
       regulated environment.
      Creating long term value, maximize the value of portfolio assets.
       Working with the companies to faster shareholder value.
                                                                                      4

1 - APE : a professional shareholder


On all IPOs and privatizations, the green light of the French
 Government given, APE is the State’s dedicated task force along all
 the process
      Since 1993 : stable and transparent process for IPO and privatizations
       (legal framework)
      In the process, a K role is played by the Commission des participations
       et des transferts (CPT): This independent body ensures the transfer of
       state-owned assets to private sector is achieved at the fair value through a
       systematic auction process protecting the Government financial interests.
APE analyzes on behalf of French Government opportunities of IPO
 or privatization
      Privatization is not only a cash generating process but also a real
       opportunity allowing companies to continue their own development
      APE is the process driver
                                                                                5

1 - APE : a professional shareholder


APE analyses a large scope of projects :
      Includes both internal projects and external growth
      Covers financial and strategic aspects including a reorganization of a
       business unit (ex : SNCF’s freight activity)
      Works in close cooperation with the management of the company
       through bilateral meetings with the top management and a presence in
       Board of director’s committees
      Several recent examples :
           France Telecom with Amena (mobile operator in Spain), project
            « Fiber to the home » in process
           LFB (Blood & Biotech) in the USA (with GTC bio therapeutics)
           EDF with EPR (European Pressurized Water Reactor) and wind
            energy
                                                                        6
2 - A portfolio with strong opportunities

    Market value of 11 listed shares
                                         Over € 155 bn (’22 march)
                 (combined assets)
                                         State         State share
                                       ownership      Value (in € bn)
    Aéroports de Paris (ADP)            68,39%             4.5
    Air France KLM                      18,57%             1.7
    CNP Assurances                      1,17%              0,1
    EADS                                15,04%             2.7
    EDF                                 87,32%             93.6
    France Télécom - Orange             32,45%             16.7
    Gaz de France                       79,78%             26.7
    Renault                             15,01%             3.7
    Safran                              30,85%             2.2
    Thalès                              27,30%             2.2
    Thomson                             1,90%              0.01
                                                                        7

2 - A portfolio with strong opportunities


                              Services
        Transports
                              La Poste             Medias
          SNCF
          RATP
                                              France Television
                                                    Arte
                                                Radio France
 Infrastructures            Non listed
       RFF                  companies
      ATMB
Ports autonomes                                  Imprimerie Nationale
                                                  Française des jeux
                                                          …
                                    Defense
                   Energy            DCN
                   Areva             DCI
                                     GIAT
                                                                     8

2 - A portfolio with strong opportunities
2005 : 50 major entities (IFRS data, in billions €)


            Total balance sheet size   517 bn


                             Equity    52.4 bn (35.2 bn 2004)


                   Net debt / EBITDA   3.2 x (vs 3.9x 2004 )


                      Total turnover   149 bn ( vs141 bn 2004 )


                        Net income     + 12.4bn (vs + 6.4bn 2004 )


                   Operating margin    12.3%
                                       (vs 11.9 %
                                       2004)
                                                                                                   9
2 - A proven track record
                2003
          Block trade                         Capital increase
  Renault 1.3bn€
                                          France Telecom 15bn€ TOP Plan
  Thomson 1bn€
                                          Alstom
  Dassault systèmes 0.6 bn€

                  2004
          Block trade                        Capital Increase                  Merger
  SNI 0.5 bn€
                                       France Telecom (Wanadoo)
  Snecma 1.3bn€ (IPO+ 2nd Offer)                                          Air France-KLM
                                       Alstom
  France Telecom 5.1bn€
                                       APRR 1.3bn€
  Air France + KLM 0.7bn€

                  2005
           Block trade                       Capital Increase                    Merger
  Bull 0.01 bn€                        EDF 6.4bn€                         Snecma /Sagem (Safran)
  France Telecom 3.4bn€                Sanef 0.9bn€
                                       France Telecom (Amena) 3Bn€

                   Gaz de France 2.6 bn€ (IPO) + 1.9bn€
                                                                                  10



2 - 2006 and forthcoming developments


  Defense

  DCN - Thalès                 Acquisition by Thales of a minority stake in DCN
                               (shipyards activities)

  Alcatel - Thalès             Strengthening of Alcatel interests in Thales’s
                               share capital

  Other sectors

  La Poste (Financial services):   Creation of La Banque Postale in January 06
                                   (after approval by the European Commission)
  Alstom                           Minority stake sold in June 2006
                                                                         11



2 - 2006 and forthcoming developments

   Energy

   Gaz de France          Merger with Suez

   Transports

   3 Freeway companies      Sold at the beginning of 2006

   SNCM (Shipping)        transferred to private investors en 2006

   Paris Airports (ADP)   IPO in june (2006)

   Lyon, Toulouse            Transformation into joint-stock companies
   & Bordeaux Airports       (on track)
                                                                                12

2 – Cash generated by operations : total 63 Bn € between
2003 & 2006 (proceeds = 34 Bn, capital increase = 28 Bn)

       Sales : 34.3 Bn € proceeds for State
          by IPO, block trade, industrial     Capital increase : 28.5 Bn €
                  partnership …


2003     2.9 (Renault 1.3, Thomson 1 …)              15 (France Tél)


2004    7.6 (FT 5.1, Air France-KLM 0,7…)              1.3 (APRR)


2005            6 (FT 3.4, Gaz 2.6)           12.2 (EDF 6.4, FT 3, Gaz 1.9 …)


2006     17.8 (Toll roads 15, Alstom 2 …)                    -
                                                                                  13

3 - Focus on EDF
We have very carefully prepared EDF for its IPO, which took place
 in November 2005
   We passed a law to change the legal structure of EDF to authorize
    the French State to sell part of it
   We changed the financing of its specific mechanism pension scheme
    and clarified its long term nuclear liabilities (which are very specific to
    companies in the nuclear business and represent an important part
    of its balance sheet : as of today, € 28 bn of €180 bn)
   We closed an ambitious acquisition in Italy (Edison) with a local
    partnership and an acceptable level of risk
   We finally defined a precise equity story and explained the relevance
    of the IPO project to the Parliament, mayors, employees, citizens
    and financial markets
   Since 2002, we’ve squared up relationship between EDF and its
    main shareholder as well as internal corporate governance, both now
    based on best practices of the marketplace
                                                                                      14

3 - Focus on EDF
Strategy, investment and dividend policy
 All this enabled EDF to successfully complete its IPO while
  presenting a high-profile equity story :
        Strengthen EDF leading integrated position in electricity and gas in
         Europe, in a fully competitive market in production and supply as of July,
         1st,
        Take a significant part in the current nuclear revival worldwide.
        A €40bn investment plan between 2006 and 2010 aimed at achieving the
         group’s industrial target, alongside a refocusing of operations through a
         divestment of non-core assets
   The Agency and the company have jointly defined a selective
    investment policy. As EDF’s CEO often brings to mind, the group’s
    investment policy obeys 3 main rules : return, full matching with EDF
    industrial strategy, no hostile deals
   Furthermore, the Agency has set operational and financial targets
    and a dividend guidance for the period 2005 through 2008 :
        Average organic EBITDA growth between 3% and 6% per year over the
         period, two-digit organic growth of net earnings (excluding non recurring
         items), and a dividend payout set at 50% of recurring net income
                                                                                15

3 - Focus on EDF
   EDF recent story provides an excellent illustration of the Agency’s
    role, acting as a controlling shareholder of a leading European
    energy utility
   Since its IPO in November 2005, EDF stock has exhibited a 78%
    increase in 15 months, reaching a market capitalization over €100 bn
    2006 sales reached € 58.9 bn or a 11% organic growth. 2006
    dividend paid in 2007 increased 47% compared to last year, reaching
    € 2.1bn or 1,16€/share
   To sum-up, the Agency pays a lot of attention to the achievement of
    the operational and financial targets of EDF and to the consistency of
    its strategy, including through an in-depth review of all the significant
    investments. As a long-term shareholder, we have the objective to
    create sustainable value, taking into account the interest of all
    shareholders, with a balanced risk analysis
                                                                           16

3 - Focus on Aéroports de Paris - ADP

Company


   ADP is a leading airport in Europe
        both in terms of passenger numbers and freight
        It benefits from three highly complementary airports at its
         disposal, Roissy-CDG (medium/long-haul), Orly (short-haul) and
         Le Bourget (business aviation). With 82.5 million passengers in
         2006 (up 4.8% from 2005)
   ADP is Europe’s second largest airport group, and is the first
    airport in Europe for air cargo / mail
   In 2006, it achieved 2.07 bn € consolidated revenues (up 8.1%
    from 2005), with Airport services accounting for 83%
                                                                             17

3 - Focus on Aéroports de Paris - ADP

    IPO


   The June 06 IPO aimed at providing the company with the
    means to implement an ambitious investment program (€ 2.5 bn
    for 2006-2010) so that it could take a significant share of the
    expected traffic growth. In this respect, the capital structure of the
    company was designed for a good rating (AA- rating; S&P), through
    a € 600 m capital increase
   In line with the 2005 law which has transformed ADP into a
    company, the French government has retained a majority stake (now
    68%)
   Pricing was achieved at the middle of the range with strong
    institutional and retail demands, despite difficult market conditions
                                                                            18

3 - Focus on Aéroports de Paris - ADP
Shareholder value
   ADP offers both defensiveness and strong upside in order to
    maximise shareholder value: Since the IPO, ADP shares have
    climbed 58%, outperforming the DJ Stoxx by 26ppts
   the company offers an excellent visibility thanks to a favourable and
    incentive regulatory framework, locked-in tariff increases for the
    period 2006-2010 and no limit on runway capacity with investment
    programs in place to address terminal capacity issues
   the Group has set targets for increasing EBITDA margin …with the
    aim of setting the dividend payout rate at 50%
   ADP has a clear growth strategy that is already underway, with
    significant growth potential emanating from real-estate and
    commercial activities that still have to be fully leveraged
                                                                           19

3 - Focus on France Télécom - Orange


   France Télécom provides a great example of a successful
    transformation. Confronted in 2002 with very important financial
    issues, it has now become a privatized company with strong
    fundamentals
   End of 2002: “Ambition 2005 plan” and €15 bn capital increase
   Privatizing the company Over this period the government has also
    prepared a law (voted at the end of December 2003) in order to allow
    France Télécom to be privatized
        This occurred in September 2004 after a placement under an
         “Accelerated Book Building” procedure through which 10.85% of
         France Télécom equity was sold and generated proceeds of €
         5.1bn.
                                                                                        20

3 - Focus on France Télécom - Orange
Current strategy: NExT 2006-2008 plan
   Under close supervision of its major shareholder, FT is now
    implementing a pro active strategy (New Experience in Telecom or
    NExT plan) and is succeeding in facing all the great challenges the
    company is confronted with, in particular maturing markets in Europe,
    technological changes and difficult regulatory environment
        FT is focusing on promoting convergence and innovative products
         (LiveBox, VoIP, Unik, 3G services, content and services development) as a
         competitive advantage in order to face a tough competition especially in the
         European mature markets (France, UK, Spain) and stop declining growth
        FT is also developing its subsidiaries in emerging markets (Rumania, Egypt,
         etc.) which are great sources of growth and profitability
   Simultaneously FT is rapidly adapting its cost structure to stabilize
    EBITDA margin: internal headcount resizing (17.000 permanent headcount
    net reduction on 2006-2008 out of which 16.000 in France), IT&N opex
    savings (up to 2 point of EBITDA rate in 2008 versus 2005)
                                                                                    21

3 - Focus on France Télécom - Orange
Current strategy: NExT 2006-2008 plan
   As far as M&A is concerned, France Télécom chose a very careful
    approach:
         the group doesn’t intend to implement any significant M&A operation in
         the middle term and keeps focusing on debt reduction (objective of a net
         debt to EBITDA ratio under 2x at the end of 2008)
        The group has recently announced the generation of a €6.8bn organic
         cash flow for 2007, and that it would quasi stabilize its EBITDA margin
         rate
   In other words France Télécom has now fully recovered and shows
    strong fundamentals. The group keeps focusing on its business
    strategic development and internal transformation as well as debt
    reduction
3 - Focus on … La Poste : The French Post Office
                                                                                    22




         Financial services division

   2005, May 20 : European directives relating to postal market’s liberalization
    was transposed into French law (French Postal Sector Regulation Act).
    Enabled the creation of La Banque Postale.
   2005, November 30 : Creation of La Banque Postale : Approval by
    Commission Bancaire, the main regulatory authority in the banking sector.
   2005, December 21 : European Commission has approved, under the EU
    Treaty rules on State aid, the transfer of the banking and financial business
    of the French Post Office (La Poste) to its subsidiary, La Banque Postale.
    Following a deep analysis, the Commission has found that the transaction as
    such will not confer an economic advantage and do not constitute a State
    aid on Banque Postale. The French authorities have entered into
    commitments ensuring this outcome.
   2006, January 1 : Creation of La Banque Postale : La Poste’s financial
    services are able to offer to their customers a new range of products.
3 - Focus on … La Poste : The French Post Office
                                                                                   23




           Other activities


   Mail : in order to improve performance and preserve its competitive edge, La
    Poste’s mail division has launched a huge modernization program of its
    industrial equipments : the “Mail Quality Project”.
   Retail outlet : launched in 2005, the strategic project “Customer Relations
    Project” (770 M€), aims at creating a modern post office network ; La Poste
    Retail Outlet, the nationwide sales network of La Poste, is now a separate
    division.
   Parcels and express : La Poste is the third largest European operator in the
    sector, continuously strengthening its pan European network.
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    The French Government
   Shareholding Agency (APE)

         2007 Highlights

Bruno BEZARD – Managing director

            Stockholm
      Thursday, March 29, 2007

				
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