Orchard Finance Monitor
Presentation December 2011

Index
 Introduction
 Financial performance
 Balance sheet and capital structure development
 Trends in equity / share capital
 Interest-bearing debt composition

 Financing and dividend policy
 Outlook
 About Orchard Finance and Carnegie Consult
 Contact details

2

Introduction
 Last year Orchard Finance Consultants (OFC) developed a
database to monitor the financing and financing policies of the major
Dutch publicly listed firms (excluding financial institutions and real
estate investment trusts) on the basis of the annual reports
 Available databases are normally based on public financing
transactions (e.g. listed bonds) or data from financial statements. In
our database, we have included relevant statements from the
executive board and disclosures on the financial statements
 This enables us to follow not only the trends and developments of
capital structures and corporate funding, but also the transparency of
disclosure and the stated financing policies
 This year we expanded our database by including the top 20 nonlisted firms based on their sales performance of 2010 (for so far
2010 figures are available). This presentation discusses the
financing and financing policies of 37 publicly-traded non-financial
firms of the AEX* (17 firms) and AMX (20 firms) indices compared to
non-listed (top 20)1 firms over the period 2007 – 2010

AEX*

AMX

Top 20 non-listed

Ahold

Aalberts Industries

Blokker

AirFrance-KLM

AMG

Cosun

AkzoNobel

Arcadis

Damen Shipyards

ASML

ASMI

De Vierschaar (De Heus Voeders)

Boskalis

BAM

Delta

DSM

Brunel

Dura Vermeer Groep

Fugro

CSM

Eneco

Heineken

Heijmans

FrieslandCampina

KPN

Imtech

Handelsveem Beheer (Steinw eg)

Philips

Logica

Luchthaven Schiphol

Randstad

Mediq

Nederlandse Gasunie

Reed Elsevier

Nutreco

Nederlandse Spoorw egen

SBM Offshore

Ordina

Pon Holdings

TNT

Pharming

Sperw er

TomTom

Ten Cate

TBI Beheer

Unilever

UNIT4

The Greenery

WoltersKluw er

USG People

Van Oord

Vopak

VDL Groep

Wavin

VION Holding

Wessanen

VolkerWessels

20 companies

20 companies

17 companies

*: excl. ArcelorMittal and Shell
Note: average sales for these groups in 2010 was EUR 12.9bn (AEX*), EUR 2.6bn (AMX) and EUR
3.5bn (Top 20 non-listed)

 We end with an outlook
1: Excluding pure (commodity) traders and PE owned firms

3

Index
 Introduction
 Financial performance
 Balance sheet and capital structure development
 Trends in equity / share capital
 Interest-bearing debt composition

 Financing and dividend policy
 Outlook
 About Orchard Finance and Carnegie Consult
 Contact details

4

Revenues fueled by economic recovery and favorable currency
effects, organic growth limited for both listed and non-listed firms
AEX*

AMX

Top 20 non-listed

(x EUR bn)

700

70

70

600

60

60

500

50

50

40

40

30

30

413.8

400

336.6

313.0

239.5

300
200
100

20
204.6

215.6

203.8

218.5

2007

2008

2009

2010

0

44.5

46.5

42.3

44.0

10

Sales ArcelorMittal & Shell

61.2

58.1

59.4

2008

2009

2010

20
10

0
Sales AEX*

56.8

0
2007

2008

2009

2010

Sales AMX

2007

Sales Non-listed

 Sales growth of 7.2% in 2010

 Sales growth of 4.2% in 2010

 Sales growth of 2.4% in 2010

 Economic recovery one of key drivers for
growth in sales (e.g. ASML +182%)

 Cyclical industries strongly benefited from
economic recovery (e.g. Aalberts , ASMI)

 Netherlands primary market of non-listed
firms, no impact of positive currency effects

 Favorable currency effects increased
revenues of AEX* firms (e.g. Philips)

 Difference in growth with AEX caused by late
cyclical companies (e.g. BAM, Heijmans)

 Overall organic growth of non-listed firms
also limited like AEX* and AMX firms

5

Operating profit at near record levels due to heavy cost cutting
during the crisis
AEX*

AMX

Top 20 non-listed

(x EUR bn)

50

15.9%
14.8%

8

30
20

6.1%

8.9%
6

4

4

26.4

0

3.5

3.4

2007

2008

3.5

2.6

0
EBITDA

9.6%

9.4%

8

6

2

2008

10.2%

34.8

10

2007

10

7.3%
12.9%

31.0

8.0%

8.0%

14.4%

40

30.3

10

2009

2010

EBITDA margin

5.8

5.7

5.2

5.7

2007

2008

2009

2010

2
0

EBITDA

2009

2010

EBITDA margin

EBITDA

EBITDA margin

 EBITDA of AEX* increased by 31.9%

 EBITDA of AMX increased by 37.5%

 EBITDA of non-listed increased by 10.9%

 EBITDA margins at record levels

 EBITDA margin back to 2007 pre-crisis
levels

 EBITDA margin almost back to 2007 precrisis levels

6

Index
 Introduction
 Financial performance
 Balance sheet and capital structure development
 Trends in equity / share capital
 Interest-bearing debt composition

 Financing and dividend policy
 Outlook
 About Orchard Finance and Carnegie Consult
 Contact details

7

Growth in assets regained momentum through large acquisitions
(Inv. cap x EUR bn)

AEX*

AMX

200

Top 20 non-listed

25
21.1

160

38.0

25.3

25.2
25.6

28.7

120

57.4
80

56.7

50
2.7

25.6
25.3

20

2.3

2.4

59.8

10

54.1

5.6

5.7

3.5

3.4

15

2.2

2.8
2.3
2.4

2.0
5.2

2.7

7.0

3.3
1.0
6.8

26.9

28.2

30.1

2.3

3.4

3.4

3.2

2007

2008

2009

2010

IC

38.4

45.0

43.4

44.3

BS

Intangible fixed assets
50.2fixed assets58.2
Other

2.9

30
6.4

2.4
5.3
5.7

20
22.6

40

52.7

76.9

76.5

81.7

0

5

9.0

8.6

9.0

10

10.0

0
-0.3

-5.5

-8.1

-4.0

2007

2008

2009

2010

Intangible fixed assets
175.3fixed assets 175.8
Tangible
Other fixed assets
NWC
(excl. cash)
232.3
230.4

188.4

-40

0

-5

IC

173.1

BS

224.3

251.8

IC
BS

3.1
4.5

3.7
1.1
7.1

40

-10
2007

2008

2009

2010

21.6

Intangible fixed assets
22.6 fixed assets22.2
Tangible
Other fixed assets
NWC
(excl. cash) 33.5
34.5
Cash and cash equivalents

24.7

33.1

36.7

Tangible fixed assets
NWC56.7
(excl. cash)

58.3

 Several companies used their strong balance sheet for further expansion in wake of the economic recovery, which resulted
in a large number of acquisitions in 2010 (e.g. Boskalis, CSM, Heineken, Imtech and Unilever)
 Net working capital increased for AEX* and AMX after record lows in 2009, slight decrease for non-listed in 2010
 Cash and cash equivalents fairly stable, except for small decrease for non-listed firms
Intangible fixed assets

NWC (excl. cash)

Tangible fixed assets

Cash and cash equivalents

*: Net working capital increase for AEX* companies largely attributable to TNT,
Other fixed assets

which re-classed all their Express assets (EUR 2.0 bn), including fixed assets, as
other current assets in anticipation of the demerger plan.

8

Equity at record levels in 2010
(Inv. cap x EUR bn)

AEX*

AMX

200

Top 20 non-listed

25
17.6

160

37.8

120
27.2
2.0

80

88.6

40

14.3
58.9

10.0
59.1

1.6

11.3
57.2

20

1.5

1.5

1.8
6.8

5.9

7.7

6.3

2.1
1.2

2.3
0.8

2.2
0.7

10.9

10.4

11.2

15

30.8
1.9

29.1
2.5

69.3

75.2

27.4
2.5
90.0

0

10
5

2.4
0.6

13.2

IC

173.1

BS

224.3

2008

2009

2010

Group equity
175.3
175.8
Mezzanine
Other non-current liabilities
Long
term
debt
232.3
230.4
Short term debt

188.4
251.8

2.0

3.1

3.1
7.2
2.9
0.9

11.1

12.4

10.9

30

3.8
0.9

4.1
0.7

4.2
0.7

10

24.2

25.3

24.2

25.4

2007

2007

2009

2010

38.4

45.0

43.4

44.3

50.2

58.2

56.7

58.3

0

-5
2007

3.8

40

20

0

-40

50

-10
2007

2007

2009

2010

IC

21.6

24.7

BS

33.1

Group equity
22.6
22.2
Mezzanine
Other non-current liabilities
Long
term
debt
34.5
33.5
Short term debt

36.7

IC
BS

Group equity
Other non-current liabilities

Mezzanine
Long term debt

 No significant changes in the amounts of interest-bearing debt outstanding, slight reduction for non-listed firms
 Mezzanine (or hybrid capital) remains limited in size, slight decrease for AMX firms, fairly stable for AEX* and non-listed
 Growth in assets, particularly fixed assets, is mainly financed by equity

Group equity

Long-term debt

Mezzanine

Short-term debt

Other non-current liabilities

9

Further improvement in capital structure
Net debt / EBITDA

Solvency

3.0

50%

2.5

2.0

2.26x

2.21x

2.35x

43.6%

45%
2.00x

2.19x

40%

1.74x

42.7%

1.76x

36.1%
35%

1.52x

33.5%

32.9%
30.1%

1.31x
1.0

43.6%

39.5%

1.81x
1.74x

1.5

48.2%

30%

35.7%

32.6%

29.8%
0.64x
0.5

25%
2007

2008
AEX*

AMX

2009

2010

Non-listed

 Strong growth in EBITDA and fairly stable net debt
resulted in a strong decrease in leverage for AEX*
(1.31x) and AMX (1.81x) in 2010

 Leverage of non-listed firms slightly improved to 2.00x

2007
AEX*

2008
AMX

2009

2010

Non-listed

 Listed firms: since 2008 continued improvements in
solvency due to strong increase in equity
 Non-listed firms have significant higher solvency levels
than listed firms, due to the presence of utilities

10

Index
 Introduction
 Financial performance
 Balance sheet and capital structure development
 Trends in equity / share capital
 Interest-bearing debt composition

 Financing and dividend policy
 Outlook
 About Orchard Finance and Carnegie Consult
 Contact details

11

Strong financial performance reflected in retained earnings and
cash dividend
AEX*

AMX

Top 20 non-listed

(x EUR bn)

31.0

3.1
2.5

2.4

2.0

2.0
1.7

15.2

1.5
1.2

6.0

2007

7.7 8.5

8.4

0.8
6.0

5.8

2008
Net income

1.2

1.2

2009

2010

Cash dividend

0.6

2007

0.6
0.4

2008
Net income

0.3

0.3

2009

2010

Cash dividend

NS

2007

2008
Net income

2009

2010

Cash dividend

 Net income increased by 80.7%

 Net income increased by 203.8%

 Net income increased by 35.9%

 Cash dividend slightly increased by 2.6%

 Cash dividend increased by 21.8%

 Proposed dividend per share increased by
16.1%, Randstad (re-)started proposing
dividend

 Proposed dividend per share increased by
9.8%, ASMI, Heijmans, USG people and
Wessanen (re-)started proposing dividend
for 2011

 Cash dividend decreased by 53.1%
(impacted by super dividend of NS in 2009
(EUR 1.4bn), otherwise increase of 7%)
 Dividend (per share) for 2011 expected to
remain stable for non-listed firms

12

Share capital
AEX*

AMX

Top 20 non-listed

(x EUR bn)

9.7

0.4
6.7

0.6
0.6
4.1

1.9

1.9

1.8

1.8

0.4
0.2
0.1 0.1

1.0

2007
Share issues

2008

2009

2010

Share repurchases / buy-backs

2007
Share issues

2008

0.1

0.1

2009

2010

Share repurchases / buy-backs

0.0
0.0 0.0
2007
Share issues

2008

0.0 0.0

0.0 0.0

2009

2010

Share repurchases / buy-backs

 Increase in share issues in 2010 to finance
mergers and acquisitions: Heineken (Femsa)
and Boskalis (Smit)

 Rights issues for BAM Group and USG
People, Imtech raised capital for growth
strategy (9 takeovers in 2010)

 Changes in share capital fractional for non-

 Share repurchases almost doubled as KPN
(EUR 1.0bn), Ahold (EUR 0.4bn) and
Heineken (EUR 0.5bn) bought back shares
in line with their buy-back programs

 Share repurchases amounted to EUR 81m
and were primarily for equity-based
incentives purposes

 Notable is the issue in 2008 which is entirely

listed firms

attributable to Schiphol who issued EUR
370m shares to acquire 8% in Aéroports de
Paris SA

13

Index
 Introduction
 Financial performance
 Balance sheet and capital structure development
 Trends in equity / share capital
 Interest-bearing debt composition

 Financing and dividend policy
 Outlook
 About Orchard Finance and Carnegie Consult
 Contact details

14

Interest-bearing debt stabilized in 2010. Importance of debt
capital markets significantly increased since 2008
AEX*

(x EUR bn)

AMX

80

16

10
1.9
6.6

70
60

1.6
6.9

1.8
6.9

1.1
6.5

50

44.4

40
30

Top 20 non-listed

46.6

45.4

0.2

9

1.6
8

0.2

6

1.6

20
20.2
9.4

14.0

14.4

2009

2010

0

1.4

2.1

4.8

4.7

4.3

Bank

2008

Capital market

Asset financing

Other debt

1.1
1.1

8

2.0
0.8

1.9
0.9

7.4

7.3

4.2

3.9

2009

2010

6.8

3.3

4
4.9

5.6

2007

2008

2

1

0

0
2007

12

6

6.5

3

10

1.8

1.9

1.2
1.3

14

10

0.9

5
4

38.3

0.9

0.2

0.1

2007
Bank

2008

Capital market

2009
Asset financing

2010
Other debt

Bank

Capital market

Asset financing

Other debt

 Fairly stable level of interest-bearing debt
(marginal decrease by 0.7%)

 Increase in interest-bearing debt in 2010
(+2.9%)

 Stable debt level (marginal decrease by
2.4% in 2010)

 Total funding mix remains unchanged as
debt capital market is still main funding
source

 More pronounced shift towards debt capital
market instruments in 2010, as more
companies use private placements to reduce
their dependency on bank financing

 Main funding source is capital markets
 Significant portions of other debt types (e.g.
EIB debt and green funds)*.

*: Eneco has ‘green funds’ loans of EUR 225m in 2010 to finance specific sustainable energy infrastructure investments. Investors enjoy tax advantage on
green funds and so the interest charges are below the market interest rate. Gasunie (EUR 500m) and Schiphol (EUR 16m) have EIB loans outstanding
year-end 2010.

15

More companies are entering the debt capital markets, overall
volume growth of 3% to EUR 54.8 billion
(x EUR bn)

General

Debt capital market instruments

Development

notes

private
placements

12.2

-

-

-

12.2

13.2

-1.0

4.8

1.9

-

0.4

7.2

7.0

0.1

2%

AEX

-

4.6

-

0.4

5.0

5.2

-0.2

-4%

Company

index

bonds

KPN

AEX

Unilever

AEX

Reed Elsevier

commercial
paper

2010

2009

delta

%
-7%

AEX

1.0

1.9

1.9

-

4.8

3.4

1.5

44%

Non-listed

3.6

-

-

-

3.6

3.6

0.0

0%

Philips

AEX

3.4

-

-

-

3.4

3.2

0.2

6%

AkzoNobel

AEX

3.2

-

-

-

3.2

3.4

-0.2

-5%

DSM

AEX

1.7

-

0.3

0.1

2.1

2.2

-0.1

-5%

WoltersKluwer

AEX

1.5

-

0.4

-

1.9

1.6

0.3

17%

Eneco

Non-listed

-

-

1.7

-

1.7

1.7

0.1

4%

Luchthaven Schiphol

Non-listed

-

1.6

-

-

1.6

1.7

-0.1

-9%

TNT

AEX

1.5

-

-

-

1.5

1.5

0.0

1%

Ahold

AEX

-

1.5

-

-

1.5

1.7

-0.3

-15%

Vopak

AMX

-

-

1.5

-

1.5

1.1

0.4

34%

Air France-KLM

AEX

1.5

-

-

-

1.5

1.5

0.0

0%

ASML

AEX

0.7

-

-

-

0.7

0.7

0.0

2%

Boskalis

AEX

-

-

0.4

-

0.4

0.0

0.4

-

Non-listed

-

-

0.3

-

0.3

0.1

0.2

207%

Nutreco

AMX

-

-

0.2

-

0.2

0.2

0.0

9%

CSM

AMX

-

-

0.2

-

0.2

0.0

0.2

-

Cosun

Non-listed

-

-

0.1

-

0.1

0.1

0.0

4%

Fugro

AMX

-

-

0.1

-

0.1

0.1

0.0

7%

Logica

AMX

-

-

0.1

-

0.1

0.0

0.1

-

Mediq

AMX

-

-

0.1

-

0.1

0.1

0.0

6%

Randstad

AEX

0.0

-

-

-

0.0

0.0

0.0

-

USG People

AMX

-

-

-

0.0

0.0

0.0

0.0

-68%

AEX

14

31.6

9.8

3.0

0.9

45.3

44.6

0.8

2%

AMX

7

-

-

2.2

0.0

2.2

1.5

0.7

49%

Heineken
Nederlandse Gasunie

FrieslandCampina

Non-listed

5

3.6

1.6

2.1

-

7.3

7.2

0.1

1%

Total

26

35.2

11.4

7.3

0.9

54.8

53.2

1.6

3%

Note: FrieslandCampina completed a new private placement with institutional investors (USD
196m in US and EUR 25m in Europe), but already had DCM instruments outstanding in 2009.
Other major issuances completed by Heineken, Vopak and WoltersKluwer.

New issuers enter the debt
capital markets (primarily private
placements) in order to diversify
their funding base:
 Boskalis issued a EUR 354
million private placement loan
in the United States and the
United Kingdom
 CSM issued a USD 300 million
private placement
 Logica also issued private
placements for a combined
total of EUR 104 million, but
this amount is divided over two
issues. A EUR 56.2 million
(GBP 48.0 million) private
placement was signed on 21
April 2010 followed by a GBP
40 million private placement
on 25 November 2010

16

Bank debt: significant refinancing activity in 2010 and HY1 2011
General
Company

Deal characteristics
Index

Refinancing m otives

Size

Maturity

(in EUR mn)

(year)

Increase

Decrease

Extension

Renegotiation

2010
AMG

AMX

1

208

2012

ASMI

AMX

1

90

2012

ASML

AEX

1

500

2015

BAM

AEX

1

1,035

2013

Boskalis

AEX

1

Fugro

AEX

1

100

2012

Imtech

AMX

1

700

2015

Mediq

AMX

1

107

-

Nutreco

AMX

1

500

2014

Philips

AEX

1

1,800

2015

Reed Elsevier

AEX

1

1,500

2013

SBM Offshore

AEX

1

563

2015

AMX

1

450

2015

Ten Cate
VION

Non-listed

Wavin

AMX

Wolters Kluw er

Refinancing motives

400 - 350 - 300 2010 - 2013 - 2015

1,100

2015

1

500 - 475

2011 - 2013

AEX

1

600

2015

AirFrance-KLM

AEX

1

1,060

2016

AMG

AMX

1

225

2016

Heineken

AEX

1

2,000

2016

Philips

AEX

1

1,800

2016

TNT

AEX

1

570 - 570

2016

TomTom

AEX

1

250 - 150

2016

Vopak

AMX

1

1,200

2016

Total

20

18,378

-

Significant refinancing activity took
place in 2010 in anticipation of the
so-called ‘wall-of-debt’ and this
trend continues in HY1 2011

 Majority of companies extended
the maturity dates of their
financing for up to five years
(18)
 Majority of companies increased
the size of available credit
facilities in line with growth
ambitions (14)
 Reduction in available credit
facilities mostly due to lower
financing needs and issuance of
alternative debt instruments (3)

2011

 Benefit from improved market
conditions in order to achieve
more favorable terms and
conditions (16)
14

3

18

16

So urce: A nnual repo rts, A FM , FD, P ress releases

Note: Van Oord and Cosun also completed refinancing transactions, but these are not publicly disclosed

17

Significant headroom under credit facilities at year-end 2010
2009
AEX*

AMX

2010
AScX

Non-listed

AEX*

100%

100%

90%

90%

80%

AMX

AScX

80%
4.7

70%

1.2

1.5

70%
5.8

60%

Non-listed

15.2

60%

50%

50%

40%

40%

30%

30%

6.3

20.6

Amounts x EUR bn

% Utilization of credit facilities
Undrawn portion of available

2.6

Drawn portion under committed

1.0
20%

3.4
10%

10%
1.2

0.7

0.1

Credit facilitiesUncommitted
19.8 facilities 8.0
2.3
Committed facilities

credit facilities

1.1

20%

0%

credit facilities

0%
Available facilities

Drawn portion under

2.3

2.1

3.3
1.9

0.4

0.1

Credit facilities
25.8 facilities
Uncommitted

8.4
2.7
Committed facilities

uncommitted credit facilities

0.5
8.9
Available facilities

Utilization

4.6

3.4

1.1

-

Utilization

5.2

2.6

1.2

2.6

Loans

9.4

1.4

0.3

-

Loans

9.2

1.6

0.3

1.4

 The difference in utilization rates reflects the difference in diversification of funding sources
 (Investment grade) AEX companies have taken advantage of market circumstances to increase the size of their credit facilities

18

Number and type of financial covenants remained unaltered for
listed firms. Disclosure non-listed firms very limited
Number of financial covenants

Frequency of financial covenants
24

Financial covenants

AEX*

AMX

non-listed

20
20

No covenants mentioned

9

2

13

1 financial covenant

5

4

1

2 financial covenants

2

8

2

3 financial covenants

1

4

3

4 financial covenants

0

0

0

>4 financial covenants

2

2

1

Total number of companies

19

20

20

No. of companies w ith covenants

10

18

7

16
13
12
8
7

8

7
6

6

5
Number of covenants

22

41

18

Average per company

2.2

2.3

2.6

4

5
2
1

1

0

 Firms, on average, have 2.3 financial ratios*

AEX

AMX

Net Debt / EBITDA

Interest cover

Non-listed
Solvency

Other

 Leverage ratio is by far the most common
financial ratio**

*: No of companies that do not mention the use of financial covenants can be partly explained by companies with a strong investment grade credit
rating, e.g.: Ahold, AkzoNobel, Delta, DSM, Eneco, KPN, Gasunie, NS, Philips, Reed Elsevier, Schiphol, TNT, Unilever and Wolters Kluwer
**: Several companies disclosed two different leverage ratios. These companies are AMG, Ordina, FrieslandCampina, SBM Offschore and Vopak

19

Index
 Introduction
 Financial performance
 Balance sheet and capital structure development
 Trends in equity / share capital
 Interest-bearing debt composition

 Financing and dividend policy
 Outlook
 About Orchard Finance and Carnegie Consult
 Contact details

20

Financing policy disclosure in terms of explicit quantitative
targets higher for listed than non-listed firms
AEX*

7

AMX
Non-listed

9

11
2

AEX*

4

2

Non-listed

20

2



11

3

20

2

6

9

AMX 1

19

Non-listed 1

19

Only relevant for companies with a credit
rating; AEX (10), AMX (0), non-listed (5)

Target funding mix


17

Most frequently reported target financing
ratios were net debt / EBITDA, Interest cover
and solvency in 2010.

Target credit rating


6

Non-listed

AEX*

Heijmans: “An optimum financing structure is based on (1) net
interest-bearing debt divided by equity not exceeding 100% and
(2) net interest-bearing debt, after deduction of cumulative
financing preference shares and non-recourse PPP financing,
divided by EBITDA of not more than 3.0 and an interest
coverage ratio of not less than 4.0.”

11
20

AMX

Target capital structure

15

AMX

AEX*

Best practice examples

1

7

3

Financing policy element

Information about funding, in terms of
access to funding markets and/or the usage
of specific financing instruments is limited.

Target maturity profile


Majority of the companies disclose qualitative
statements stating they aim for a well-spread
maturity profile.

4

13

Target liquidity / headroom

AMX 1 2

17



Non-listed 1 2

17

AEX*

DSM: “Aim of maintaining its Single A long-term credit rating.
Under certain circumstances the gearing could be raised to a
level of between 30% and 40%, provided that the boundaries at
the desired Single A credit rating remain attainable.”

Vopak: “…The focus of our strategic finance funding policy is to
ensure flexible access to various capital markets and funding
sources to support Vopak’s Growth Strategy…The group works
actively to maintain and further develop the diversified funding
base it already has, with regard to the number of markets and
the number of investors. “
Reed Elsevier: ”…no more than $1.5 billion of term debt issues
should mature in any 12-month period In addition, minimum
levels of borrowings with maturities over three and five years are
specified, depending on the level of net debt.”

DELTA’s policy is to have access to at least a minimum level of
funding equal to EUR 100 million.

Targets on liquidity position and/or available
headroom are hardly reported.

Quantitative statement
Qualitative statement
No statement disclosed

21

Dividend policy improved, more companies pay stock dividend
Key elements

Example

Measure of dividend
disclosed

Imtech: “The aim of the dividend policy is to
distribute to shareholders 40% of Imtech’s net profit,
excluding exceptional items.”

Target payout of range
disclosed

Wessanen: “As a policy, Wessanen aims to pay out
a dividend of between 35-45% of its net result,
excluding major non-recurring effects.”

Dividend policy linked to
capital structure and other
financing requirements
Dividend policy subject to
credit agreements

Measure

Preconditions

Distribution
method

2009

2010

26

28

24

22

Ahold: “The policy states that Ahold intends to
increase future annual dividends while meeting the
capital needs of the business and maintaining an
efficient investment grade capital structure.”

8

8

Wavin: “Wavin will be subject to restrictions on the
distribution of cash dividends as a result of the
amendment and extension of our syndicated credit
facilities.”

1

2

14

17

19 annual
7 semi-annual
1 quarterly

19 annual
8 semi-annual
1 quarterly

Offered option for
distribution in stock or
cash dividend

DSM: “The dividend will be payable in cash or in the
form of ordinary shares at the option of the
shareholder.”

Frequency of dividend
distribution

AkzoNobel: “We have announced a simplified
dividend policy and intend to pay a stable to rising
dividend, whereby a cash interim and final dividend
will be paid.”

Change

*: Because of their limited disclosure on dividend policy, the non-listed firms have been excluded from the table that is shown above. Only 5 companies
made explicit statements on their dividend policy in the annual reports of 2010. These companies were Delta, FrieslandCampina, KVWS, Gasunie en
Schiphol

22

Index
 Introduction
 Financial performance
 Balance sheet and capital structure development
 Trends in equity / share capital
 Interest-bearing debt composition

 Financing and dividend policy
 Outlook
 About Orchard Finance and Carnegie Consult
 Contact details

23

Outlook for the coming years
Extensive refinancing is in
2011 slowing down,
outlook is uncertain

 Until August 2011 market circumstances were very favorable, allowing companies to increase headroom, extent
maturities and improve conditions
 Renewed worries over the Eurozone have put the spotlight again on inherent weaknesses in the banking system
worldwide.
 The acquisition of C1000 by Jumbo illustrates that there is still liquidity for companies with a strong credit profile in
non cyclical industries. This transaction also marks the segmentation in the credit market as banks seem more and
reluctant to lend to companies with moderate credit profiles

Further increase in

 Banking market under (further) pressure due to new regulations (Basel III)

demand for alternative

 Reduction dependency on bank debt remains high priority

funding sources

 Increased activity in debt capital markets, including new issuers:
-

US private placements in 2011 (Van Oord, Arcadis and Fugro)

-

Vitens issued a EUR 20m private placements in Germany

-

High-Yield issues by UPC (USD 1.0bn in January and EUR 750m in March) and Refresco (EUR 660m)

Managing strong balance

 Potential slowdown in M&A activity compared to 2010 and 2011

sheet efficiently

 Shareholders demand higher capital distributions (Teslin: “dividends up to 100% of earnings “should be starting point
for dialogue between the firm and its shareholders)
 New share buyback programs announced in 2011 by Ahold (EUR 1.0bn), ASML (EUR 1.0bn) and Wolters Kluwer
(EUR 100m). KPN continued to buy back shares for an amount of EUR 1.0bn in 2011. After Q2 releases, more
companies announced buy-backs, for example Philips (EUR 2.0bn) and TMG (5% of outstanding shares)

24

Index
 Introduction
 Financial performance
 Balance sheet and capital structure development
 Trends in equity / share capital
 Interest-bearing debt composition

 Financing and dividend policy
 Outlook
 About Orchard Finance and Carnegie Consult
 Contact details

25

Who is Orchard Finance Consultants?
 Orchard Finance offers consultancy services to senior management in the fields of Treasury
and Finance

 Orchard Finance is fully independent

 Orchard Finance seeks an active partnership with her clients

 Orchard Finance has established a proven track record with corporates, privately-owned
companies and (semi-) governmental institutions

 Orchard Finance has an enthusiastic and ambitious team of (associated) consultants

26

Who is Carnegie Consult?
 Carnegie Consult is fully independent

 Carnegie Consult uses a coroporate finance approach

 Carnegie Consult is located at the intersection of public / private and financial sector

 Carnegie Consult emphasizes the integrated assessment of the feasibility and capacity of
finance of investments and projects

 Carnegie Consult has sustainability as a key to its advisory

27

Index
 Introduction
 Financial performance
 Balance sheet and capital structure development
 Trends in equity / share capital
 Interest-bearing debt composition

 Financing and dividend policy
 Outlook
 About Orchard Finance and Carnegie Consult
 Contact details

28

Contact details
Orchard Finance Consultants
Planetenbaan 28
3606 AK Maarssen

+31 (0) 346 29 07 40
http://www.orchardfinance.com
http://www.carnegieconsult.nl

Rolf Michon

Hans Slegtenhorst

rolf.michon@orchardfinance.com

hans.slegtenhorst@carnegieconsult.nl

29