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Holding Franz Haniel & Cie.

As a family-equity company, the Haniel Holding Company* pursues the goal of developing a diversified portfolio of well-positioned companies, each with leading market positions. Haniel came a step closer to this goal with the acquisition of the new Bekaert Textiles division in 2015. At almost the same time, the portfolio weighting of the Metro investment was further lessened by a reduction of the interest.

 

Portfolio restructuring successfully continued
The Haniel Holding Company acquired Bekaert Textiles in the 2015 financial year. The company operates as an independent division within Haniel’s portfolio. In addition to this expansion of the portfolio, the reduction of the Metro investment from 30.01 per cent to 25.00 per cent took an additional important step towards balancing the investment portfolio. At the same time, Haniel placed an exchangeable bond linked to Metro shares with a term until 2020 so that an additional reduction of the proportional interest held is possible.

Following the portfolio measures in 2015, Haniel intends to invest more than EUR 1 billion in the acquisition of additional new divisions in the coming years. As a family-equity company, Haniel pursues a long-term investment approach. The focus is on well-positioned companies in attractive niche sectors that, together with Haniel, can expand their leading market position and make a contribution to the diversification of the overall portfolio. In addition, Haniel gives preference to the acquisition of controlling interests in non-listed companies. In line with Haniel’s objective of being “enkelfähig”, the only candidates for acquisition are companies which already make a positive contribution to the environment and society through their sustainable actions, or which will be able to do so in the future.

Financial assets higher than net financial liabilities
The reduction of the shares in the METRO GROUP financial investment and the placement of the exchangeable bond linked to Metro shares brought in EUR 1.0 billion for Haniel in 2015. The exchangeable bond secures for the Company the outstanding financing terms in the capital market environment at the issue date for the next five years. The Holding Company used EUR 266 million of the proceeds generated to acquire the shares in Bekaert Textiles. Haniel invested the remaining cash in a financial asset portfolio that was established with the sale of the Celesio investment in 2014. The financial assets held in this portfolio will be utilised in coming years to acquire additional divisions as well as to redeem outstanding bonds. As at 31 December 2015, taking into account current and non-current receivables from affiliated companies, there were financial assets valued at EUR 1,158 million versus net financial liabilities amounting to EUR 849 million. The Haniel Holding Company thus remains de facto debt-free and has a solid financial buffer.

Over the mid- to long-term, after acquiring new divisions, Haniel is expecting net financial liabilities to be about EUR 1 billion. In addition to financing through the capital markets, these liabilities will be covered by existing, currently unused credit facilities at banks. However, the major part of financing is and remains the equity made permanently available by the family shareholders.

Market value of the portfolio increased
The value of the Haniel investment portfolio – including financial assets and minus the remaining net financial liabilities at the Holding Company level – amounted to EUR 4,887 million at the end of financial year just ended. It was therefore higher than the EUR 4,428 million reported at the end of 2014 due in particular to the share prices of the listed portfolio companies being higher. The value of the investment portfolio is calculated as the sum of the valuations of the divisions, the METRO GROUP financial investment, financial assets and other assets, less net financial liabilities. Listed divisions and the financial investment are valued on the basis of three-month average share prices, while the remainder of the divisions are valued on the basis of market multipliers, and for the financial assets, on the basis of fair values as at the reporting date.

Rating opinions expanded  
Haniel submits itself to external rating assessments voluntarily, thus ensuring broad access to capital markets. Standard & Poor’s and Moody’s had already raised their ratings to BB+ and Ba1, respectively, in 2013. In 2014, Standard & Poor’s added a positive outlook to its opinion and confirmed it in the first half of 2015. In order to offer its investors an additional external rating opinion, Haniel obtained a rating by the European rating agency, Scope. The BBB- rating was published in February 2016 and hence given an investment grade rating. This estimate is based on the consistent portfolio restructuring, the search for suitable divisions based on clear criteria as well as Haniel’s conservative financial policy. These important qualitative rating drivers are supplemented by the solid development of the material quantitative factors influencing the Holding Company’s ratings, market value gearing and cash cover, which are generally in the range required for an investment grade rating. Market value gearing is the ratio of net financial debt to the value of Haniel’s investment portfolio. Cash cover indicators give the ratio of cash inflows to cash outflows at the level of the Haniel Holding Company. For example, the total cash cover is calculated as the ratio between cash inflows from dividends and profit transfers and the outflows for ongoing Holding Company costs, interest and dividends to the Haniel family.

Earnings contribution of the Holding Company slightly better
The Haniel Holding Company’s contribution to operating profit improved in 2015 due to income from the reversal of provisions no longer needed.

* Incl. the Holding Company’s financing and service companies. You can find the financial statements of the Franz Haniel & Cie. subgroup at www.haniel.de/de/creditor-relations/.