Wendel (MF) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Wendel's 2020 Half Year Results Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today. I would now like to hand the conference over to your speaker today, Mr. André François-Poncet, Wendel's CEO. Please go ahead, sir.

Thank you very much. Good evening, everyone. Good afternoon, if you're in North America. I'm on the line with David Darmon who is Deputy CEO currently based in New York, but almost about to board the flight back to Paris; Jérôme Michiels, Wendel's CFO; and our IR team, Olivier Allot and Lucile Roch. We hope that you're well and hope your families, your communities, your firms are being preserved as best as possible. I guess this is a traditional comment that most firms make, but we believe it and express it very sincerely. As the operator just said, the call will be recorded, will be available on the website for 1 year. You can download the presentation. You can also follow it on the website in real time. We will systematically try to refer to the page we're speaking from, and we will answer questions at the end. You can also send your questions via a dedicated section on the webcast platform. So now let's review the main features of the half year results we just published and trading update for our portfolio of companies. So I'm on Slide 2, half year results, key figures. Our net asset value as of June 30, 2020, was EUR 6.191 million, up 17.3% since the end of March 2020 and down 16.7% year-to-date. The per share number is EUR 138.6 million. Jérôme will comment on this NAV later in the presentation. But compared with the NAV we published at the end of March when the market was at a very low point, we benefited from a recovery of the market as well as better performance from our companies with regards to our expectations in light of the outbreak of COVID and impact of lockdowns. Our teams, CEOs, our company employees have proven reactive, nimble, smart in these exceptional circumstances, and we're very grateful to them. Consolidated sales were down 10.2%. And remind you that IHS figures are not consolidated in sales, and the company posted good growth in H1. And our consolidated net income was a loss of EUR 203.7 million. This contribution from companies and nonrecurring income, depreciation and impairment charges were directly impacted in the crisis environment. I know I already said this many times in the recent past, but thanks to huge efforts made over the last year, we have tremendously reinforced our corporate balance sheet with a very low net debt, solid double credit rating and long-term maturities. We had at the end of June and before the payment of our dividend, a very solid financial structure with EUR 2 billion of liquidity and a low loan-to-value at 5%. Also highly relevant, most of our companies also enjoy solid balance sheets with the exception of 2, Stable being one, which we marked down to nil in our NAV. Moving to Slide 3 called half year results key highlights. We've been very active in the first half, deploying our best efforts to continue to deliver sustainable value creation auto protected. We finalized the sale of Allied Universal. I'll come back on this. Our financial strength and that of our portfolio allowed us to comfortably pay a stable dividend while showing suitable restraint and support to the community. We primarily focused on health and safety, regular financial stress testing, cost containment and cash preservation. Wendel also accelerated our digitalization in the first half, i.e., automating our processes, being mindful of cyber risks, compliance and other matters, and we tightened our organization by closing 3 offices, allowing our firm to be nimbler going forward. We formalized our CSR strategy, and we're now rolling it out. A quick focus on our portfolio of companies. We feel they performed reasonably well during this crisis under the circumstances, and they continue to do so. David will give you the main highlights in a few seconds. We also recruited a new CEO for Constantia Flexibles, Pim Vervaat, who joined on July 1. Later in July, IHS successfully renegotiated contract terms with MTN Nigeria, its largest customer in the region, enabling, among other things, to better index a large part of its sales in U.S. dollars. Moving to Slide 4, disposal of the entire remaining stake in Allied Universal. So we announced, as I said, on April 30, the disposal of our entire remaining stake in Allied Universal. This generated initial proceeds of $196 million based on the 2019 valuation, which was maintained, subject to price adjustments. And the total net proceeds for the successful investment in the U.S. were 2.5x the equity invested, thus generating an investment IRR of about 30% per annum in dollars. This move further strengthened our financial structure, which was already very solid. And as I said, now, our total liquidity amounts to EUR 2 billion before dividend payment and cash, outgoing dividend for EUR 123 million in July, including a EUR 750 million undrawn revolving credit facility. Slide 5, performance of group companies. David will discuss the bulk of the performance of the group companies, but I will touch on Bureau Veritas. Bureau Veritas, our largest asset, posted a quite resilient first half. Consolidated sales were down 10.2% -- I'm sorry, revenue in the first half of 2020 amounted to EUR 2.2 billion and change, an 11.1% decrease compared with H1 2019. Organic decline was 9%, including an organic decline of 15.6% in the second quarter. Marine & Offshore delivered organic growth of 3.4%. Agri-food commodities, buildings and infrastructure and industry, which, together, account for about 3/4 of the group revenue, showed a good level of resistance, overall, down 6.6% organically on average. Conversely, consumer products and certification declined sharply due to the impact of COVID-19 shutdowns, down 21.2% organically on average. External growth was a negative 0.5%, reflecting the impact of prior year disposals, the contribution of acquisitions with BV made in 2019 and the absence of transactions year-to-date. Currency fluctuations had a negative impact of 1.6%. Consolidated adjusted operating profit decreased by 43.3% to EUR 215.8 million. The half year 2020 adjusted operating margin dropped 555 basis points to 9.8%, including a 12 basis points negative impact from foreign exchange. On an organic basis, it declined by 545 basis points to 9.9%. All businesses, apart from Marine & Offshore, experienced lower margins due to the impact of COVID shutdowns. This was cushioned by a strong cost-containment measures, salary and recruitment freeze, reduction of travel costs, nondiscretionary spend, et cetera, by government aids in some countries, especially the furlough system in France, and restructuring. As usual, Bureau Veritas has been agile and created a new product offer to help its customers in the current environment. Since April, the company has been actively supporting the resumption of business with health, safety and hygiene offerings. The restart your business with BV suite of solutions comes with a comprehensive digital ecosystem, providing for traceability and transparency. We're very pleased to see BV able to deploy digital offerings, design and deploy them extremely quickly. It's a very good sign for the future. Regarding cash flow generation, half year 2020 operating cash flow increased by 56.8%, very significant increase, to EUR 364.3 million versus EUR 232.3 million in half 1 of 2019. Despite the decline in profit before income tax, the improvement came from a strong working capital requirement inflow of 133 -- sorry, EUR 113.7 million compared to EUR 161.6 million outflow the previous year as a result of the deferral of tax payments related to social and charge -- tax charges and other items, and a strong reduction in accounts receivables. The move for cash program continued to demonstrate positive effects on BV's operational working capital and is still ongoing with actions all around the organization. Free cash flow, defined as available cash flow after tax interest expenses and CapEx, was EUR 269.6 million compared to EUR 140.9 million in H1 of last year, up 91.4% year-on-year. On an organic basis, free cash flow reached EUR 277.3 million, up 96.8% year-on-year. I apologize for the mouthful of all these numbers, but you can find a lot of them in the public documents, either ours or those of BV. The Board's decision to cancel the dividend supported by Wendel maintained cash at around EUR 250 million in the group and complies with the fresh regulatory requirement for the suspension of dividend payments in return for government aid, temporary layoffs in France, the deferral of certain employment contributions and tax payments. It also reiterates BV's responsibility towards all its stakeholders who are making considerable efforts or facing major challenges during this unparalleled crisis. At June 30, 2020, BV's adjusted net financial debt-to-EBITDA ratio was further reduced to 2x from 2.25x last year, and its EBITDA to consolidated net financial expense ratio was 8.71x. Lastly, Bureau Veritas obtained a waiver from its banks and U.S. private placement noteholders to relax its financial covenants at June 30, 2020, December 31, 2020, and June 30, 2021, which is, I think, extremely comforting to everyone. So in terms of the outlook for 2020 on BV, given the uncertainty regarding COVID-19 still affecting many countries in which Bureau Veritas operates from North America to Latin America, India, Bangladesh, Middle East, a number of other places, companies considering different scenarios for the full year 2020, we have highlighted these scenarios on our slide. There are 3 of them, and I invite you to refer to BV's own financial communication. That's for my part. I now leave the microphone to David, and I'll be back for conclusions and Q&A. David?

Thank you, André. I'm David Darmon speaking from New York. I'm now on Slide 7. Before going in-depth in each of our unlisted companies, we thought it would be useful to highlight how the COVID outbreak and the lockdowns impacted with various magnitudes our portfolio companies. To do so, we are here comparing our company's monthly phase using a basis of 100 in January 2019. As you can see on this graph, Constantia Flexibles' top line has been extremely resilient even if lockdown measures in emerging countries have been quite more impactful than Europe. Crisis Prevention Institute, CPI, had a good start of the year and had then been strongly impacted by lockdowns. Since the lockdowns in April, we observed consistent month-over-month revenue growth as the U.S. economy is reporting. Cromology has initially been strongly impacted by lockdowns in Europe. But since May, activity has strongly rebounded, with the June activity being very strong, even above last year's level. Stahl was impacted starting late March, delivering a good Q1, but activity went down strongly in April and May and getting smoothly better now as China is reopening. IHS Towers delivered a strong growth, and its sales were not impacted by lockdown, reflecting the critical nature of its activity and this in spite of a challenging Nigerian macro environment. I don't mention Stable here because, as you already know, Wendel and Capital Group are in advanced discussion with Stable's vendor to restructure its capital and find a solution which will enable the business to continue trading. In accordance with IFRS 5, the contribution of Stable to Wendel has been reclassified as net income from discontinued operations and operations held for sale. Let's now go in-depth in our company's health care facts and figures, and I'm moving to Slide 8. As I said, IHS revenues held up well despite the challenging macro environment as evidenced by H1 revenues, which totaled $664.1 million, up 9.7% versus the prior year, with growth across all its markets. IHS sales accelerated in Q2 2020, totaling $336 million, up 11.1% from Q2 2019. Organic growth was at 11.6% over the first half of the year driven by new tenancies, new lease amendments, price escalation mechanisms as well as a positive impact of reset mechanisms related to the devaluation of the Nigeria's CBN rate. The total number of owned and MLL towers over 27,000 as of June 30 is up 14.1% since the start of the year, following the acquisition of towers in Kuwait and in Latin America. In fact, the consolidation of Kuwait towers and CSS in Q1 in Latin America, this contributed 3.6% positively to revenue growth. FX had a negative impact of 5.5% of our total revenues during this period. IHS continued the successful development and rationalization of its installed base of towers. The company also maintained a tight operating cost control policy and lower capital expenditures since the start of the year. Impacted by a depreciation catch-up following a change in battery useful life from 5 to 3 years and other impairment costs, EBIT for the half year decreased by 11% to $160.7 million compared -- to be compared to $180.6 million in 2019 over the same period, representing an EBIT margin of 24.2%, but the EBITDA over the period did continue to grow year-on-year. As of June 30, 2020, IHS net debt was $1,962.2 million, up $620.6 million since end of December 2019, mainly driven by the Kuwait and CSS acquisition. IHS supply chain and operations have proven to be resilient during the lockdown and face limited disruption, if any. The macroeconomic environment in Nigeria, which account for roughly 70% of IHS sales, has been impacted by the drop in oil prices and COVID-19. As a result, the official CBN right was devalued from NGN 306 to NGN 360 for USD 1, and the NAFEX rate moved from NGN 360 to approximately NGN 386. Another key challenge has been the varying access to U.S. dollar over the past few months in the Nigerian market. IHS has been closely monitoring these developments and making sure it has enough liquidity in our currency to meet its obligation and coverage expenses. Late July, IHS expanded and amended some key terms in its tower lease agreement with MTN Nigeria, its largest customer in the region. These include an agreement to change the reference rates, use contract relief for the USD-based indexation of a portion of IHS revenues from the Central Bank of Nigeria's official rate, the CBN rate, to the NAFEX. This amendment will have a positive impact on IHS top line and bottom line. These are not reflected in H1 2020 financials, and it will strengthen IHS revenues by increasing the proportion of hard currency. I am now moving to Slide 9, and let's talk about Stahl. Stahl sales totaled EUR 316.8 million in H1 2020, representing a decrease of minus 24% versus EUR 416.6 million of sales in H1 2019. Organic growth was down minus 22.8%, and foreign exchange rate fluctuations had a negative impact of minus 1.2%. After a challenging 2019 due to headwinds in the automotive end market, Stahl began 2020 with positive volume and sales trends. Nevertheless, the rapid spread of COVID-19 has derailed this early recovery and has shifted the company's focus away from growth towards containing the decline. Over the first quarter, the impact of COVID-19 outbreak was mainly limited to China, and the drop in sales was contained to minus 2.4%. The lockdown measures all over the world during Q2, however, rapidly caused many of Stahl's customers to shut down their own manufacturing facilities or operate at very low level of activities. As a result, sales decreased by 45% in Q2 compared to last year. June, however, showed the first signs of recovery, with customers gradually reopening and China returning to last year's sales levels. Thanks to management's focus and resilient business model, Stahl took swift measures and quickly adjusted its fixed cost base to market conditions and optimized its cash flow generation such that EBITDA for the half year totaled EUR 67.5 million, translating into a margin of 21.3%, only down a moderate 160 bps year-on-year. Stahl remained cash-generative in both quarters, notably thanks to the strict management of its working capital. As of June 30, 2020, Stahl's net debt was EUR 342.1 million, thus a EUR 22.3 million reduction year-to-date, thanks to Stahl's good cash generation. The company is closely monitoring the evolution of its underlying markets, the automotive market, the footwear, leather goods and upholstery market. In light of the virus outbreak and its economic consequences, the automotive market is currently operating at around 50% capacity, with the exception of recovering domestic Chinese markets. And a gradual recovery is expected towards 70% capacity past summer. Most customers are reopening worldwide, but demand and visibility remain low. I am moving now to Slide 10 to talk about Constantia Flexibles. H1 2020 sales totaled EUR 761.4 million, up 0.1% compared with H1 2019 at EUR 760.9 million. Constantia sales declined organically by minus 0.1% over the period, reflecting a robust performance from the pharma end market, up plus 9.9% but a steep decline in the consumer end market, down minus 3.2% due to the lockdowns measure in India, South Africa and Mexico, which partially paralyzed momentarily the local production. The peak in consumption from European consumer business benefiting from an increase in at-home food consumption was not sufficient to offset the difficulties in emerging markets. As a result, total growth in the second quarter was down minus 0.5%. For record, Constantia has posted a total growth of plus 0.7% in Q1, boosted by a very strong demand in March both in consumer and the pharma division due to the essential nature of their respective products within the context of COVID-19 outbreak in Europe. Foreign exchange rate fluctuations had a negative impact of minus 0.4%. And the consolidation of the Russian company, Constantia TT, contributed positively to growth with a scope effect of positive 0.5%. From historic peaks in March and April, the overall order intake is now suffering, with book-to-bill ratio slowing down after having been above the average in Q1. This more normalized ordering and stocking patterns will probably last as a number of markets where Constantia Flexibles operate are gradually exiting lockdowns. Despite the mixed sales trajectory, EBITDA was up plus 3.4% at EUR 97.1 million, representing a 40 bps year-on-year increase in margin to 12.7%. This is mostly driven by the various cost-reduction initiatives conducted over the past 12 months and a positive business and regional mix, inducing higher margins from European and pharma businesses. At the end of June, net debt was at EUR 403 million to be compared to EUR 394.9 million on December 31, 2019, and leverage stood at 2x LTM EBITDA. This leads adequate headroom to its covenant level of 3.75, and the company had ample liquidity as of end of June. The EcoLam sustainable technology with superior recyclability than alternatives was rolled out in India in November 2019. Due to the negative impact of COVID-19 in the region, the ramp-up phase is continuing, and the expected sales will be delivered with delay. We do believe in this technology potential. Since July 1, 2020, Pim Vervaat joined Constantia Flexible as new CEO after a successful career at RPC Group plc. He will focus on further strengthening Constantia's position as a leading flexible packaging player while improving the current business performances. I'm now moving to Slide 11 to talk about Cromology. During the first half of 2020, Cromology sales totaled EUR 290.2 million, down 16.8% compared with H1 2019, impacted by the extreme COVID-19 lockdown measures in Europe. Despite increased activity during the first 2 months of the year to be compared versus 2019, business was virtually paralyzed during the following 2 months, with sales down approximately 70% between mid-March and mid-April. The drastic health regulatory and safety measures forced Cromology to shut down a significant portion of its operations. When the lockdown ended, however, the recovery was much quicker than expected, with a significant rebound in DIY paint sales in particular. Sales gradually improved as the lockdown was lifted, with greater activity in June than last year. Organic sales growth was down 17.2%. Changes in scope had a positive impact of 0.2%, following the acquisition of Districolor in June 2019. Changes in exchange rate had a negative 0.3% impact. Cromology's EBITDA was EUR 40.4 million, up 8%, benefiting from the favorable customer and product mix effects, combined with the rapid implementation of cost-saving measures to address the extraordinary situation. The margin stood at 13.9%, higher than first half 2019, demonstrating the positive trajectory driven by company management. In addition, cost reductions continue with savings achieved in various line items particularly transportation, travel and marketing expenses. Net debt at the end of June totaled EUR 217.7 million, up by only EUR 3.6 million compared to December 31 due to the higher EBITDA and optimization of cash flow generation. Cromology continues to focus its efforts on the sales rebound since emerging from the lockdown, ongoing cost reduction measures, accelerating the shift to e-commerce and managing trade receivables, which deteriorated somewhat during the crisis. I'm now moving to Slide 12 to talk about CPI. CPI is the latest company to join the Wendel family end of last year. Crisis reported revenue for the first half of 2020 of $26.1 million, down 35.7% compared to the same period in 2019. This decline reflects the impact of COVID-19-related lockdowns, which began in mid-March and which persisted throughout the second quarter in most of the company's markets and restricted its ability to hold in-person, on-site training sessions. Prior to the beginning of the lockdown, CPI's revenue grew at double-digit growth rates compared to the same period in 2019. Despite this strong start of the year, the impact of the shutdown resulted in reported year-over-year revenue decline of minus 10.1% in the first quarter and minus 57.4% during the second quarter. The decline in business activity had a similarly negative impact on profitability during the first half. CPI generated an EBITDA of $7.1 million, representing an overall decrease of 60% year-on-year, resulting in a margin of 27.2% over the period. The earnings decline was partially offset by cost management implemented shortly after the lockdown began. The decline of activity reflects the provision of in-person training, which primarily impacted the company's initial certification program. This decline in ICP, the initial certification program, volumes was partially offset by revenue generated from installed base of certified instructors who did continue to renew their certifications and trained their colleagues during this period, in part through the company's e-learning offering. Training was facilitated during the shutdown period by introducing new digital and virtual programs for existing CIs, and more recently, a blended virtual and physical offering for ICP. CPI reported consistent month-over-month revenue growth since the low point in April and has benefited from sustained growth in ICP and renewable registration more recently as the U.S. economy reopened, an early indication of an improved business environment although the pace and timing of continued recovery remains difficult to predict. While many customers continue to face challenging work environment, CPI is helping customers maintain their certification as required by regulation and needed to ensure a safe work environment. The recent introduction of new programs including virtual learning, verbal de-escalation and specialized renewals related to trauma and autism, expands the company's offering to better serve existing customers while simultaneously expanding the addressable market to include customers working in lower acuity settings. As of June 30, 2020, net debt totaled $342.1 million or 10x EBITDA as defined in CPI's credit agreement. Moving now to Slide 13. On this slide, we can have a quick overview on something that is very important to current difficult market conditions, the strong financial resilience of our company. We did work a lot over the last few years to improve the leverage, and therefore, the financial headroom. Furthermore, we paid a particular attention to the cash generation of our companies of the crisis. And they all managed the situation particularly well, taking action to manage costs and payables appropriately. We also asked most of them to draw their available RCF when needed. And some of them also benefited from special facilities from the country they are based in. A few additional comments on this table. Cromology, which could be strongly hit by temporary confinement measures in its 2 main countries, is benefiting from covenant holidays until March 2022. Regarding CPI, its leverage level is expected to remain elevated until the depressed Q2 2020 EBITDA is no longer included in the trailing 12-month EBITDA calculation. While the leverage ratio had increased, the company has continued to generate cash, and net debt has remained largely stable over the past 6 months. As at the end of the second quarter, the company was in compliance with all covenants required under its credit agreement. As of June 30, the company had $16.5 million in cash on hand, an amount that is expected to be sufficient to fund its near-term obligations. I am now moving to Slide 14. Actually, this slide speaks by itself. On Bureau Veritas, to echo the comments from André, it did post resilient first half despite the crisis. Stahl protected its margins and cash, thanks to strong cost management. Constantia Flexibles improved its margin despite the difficult environment in emerging countries and in the consumer division. IHS Towers delivered good organic growth and did successfully amend its contract with MTN Nigeria. Cromology posted a very strong performance since May and June. And CPI developed this distance learning program I just mentioned to adapt to the challenging lockdown situation in the U.S. To summarize, we are very proud of our companies, our teams and all our company's employee's capacity to adapt to this unprecedented situation. Our CEOs and their team did a great job, and we take the opportunity here to congratulate and thank them. I'm now leaving the floor to Jérôme, our CFO, and I will speak to you again at the end of this call for our Q&A session. Thank you.

Good afternoon, ladies and gentlemen. I will spend the next few minutes providing you with some color on our consolidated results for the first half. But before we go into the details, I would like to congratulate my team and the teams at Wendel's portfolio companies who have made it possible to report our earnings today instead of early September as we used to do it until now. This has required a tremendous effort from everyone, especially in the current context, and I am grateful that we have been able to meet our target here. Now back to results, which have been impaired by the impact of the various lockdowns and higher nonrecurring items. First, the recurring contribution from our consolidated subsidiaries has decreased significantly by more than 50%, actually, to EUR 141 million. This mostly results from the decrease in activity brought about by the pandemic on most of our companies. Only Constantia and Cromology have posted an increase in their respective contributions versus the first half of 2019. Divestments carried out since last year, i.e., Allied Universal and Saint-Gobain, have also resulted in less contribution this first half when compared to last year. At the level of Wendel, we have been able to further reduce our financial and operating expenses where we have saved EUR 14.8 million versus last year. As a result of the above, net income from operations came in at EUR 83.4 million, a EUR 170 million decrease versus the first half of 2019. At the same time, nonrecurring items have increased by EUR 108 million to minus EUR 143 million for the first half of 2020. This is mostly driven by the consolidation of one-off expenses booked at the level of portfolio companies related to the pandemic and foreign exchange movements. The rest is of less significance and made of smaller amounts related to the actuarial value of our cross currency swaps, foreign exchange and other items at Wendel's level. Asset impairment and impacts of goodwill allocation have also increased significantly to minus EUR 220 million following the full write-off of the value of our investment in Tsebo and some depreciation of assets at the level of some of our portfolio companies. In a nutshell, the net consolidated loss stands at EUR 279.3 million and EUR 203.7 million group share. Moving to our net asset value as of June 30, which was at EUR 138.6 a share or EUR 6.191 million, within which BV represents EUR 3.1 billion, and unlisted assets, EUR 3.369 million. The amount of cash available was at EUR 1.293 million as of June 30, but bear in mind that the dividend had not yet been paid at this date. The net debt was thus at EUR 323 million. Based on the 20-day average of valid share price as of the end of June, the discount to the NAV was around 38%, a high data point, but not an outlier in the current environment. In terms of performance since the beginning of the year, the net asset value growth has really been a tale of 2 stories. While the end of the first quarter was a low point in terms of multiples and forecasts for the year, the impacts of the de-confinements have erased a portion of the value loss since the beginning of the year. Over the second quarter, Bureau Veritas' share price increased by 6% while the value of our unlisted assets increased by roughly 20%. The latter has been driven by the increase in the multiples of comparable companies used to derive the individual net asset value of our portfolio companies. This effect have been contributed to roughly 80% of the increase. The rest of the increase in the value of our unlisted assets is accounted for by the selective increases of some of our company's outturns for 2020 following a better-than-expected performance over the first half or in the second quarter mostly. Now let me pause here and give you a bit more details on the June 30 net asset value. First, the value of IHS does not yet take into account the positive impact of the renegotiation of the agreements with MTN Nigeria announced last week. We will incorporate that in our next net asset value to be calculated as of the end of September. Second, in compliance with our methodology, our investment in CPI is still held at acquisition costs. As you know, this rule applies to any new investment for the 12-month period that follows the acquisition. And in the case of CPI, this will be valid through the September 30, NAV included. Starting from December 2020, we will then switch to market multiples like for other portfolio companies. Although we have not yet finalized the sample of comparable companies that we will use, nor do we have any idea of where the multiples and forecasts will be at the end of the year, we estimate that under current circumstances, the value attributed to our investment may mechanically reduce very significantly. Lastly, again, this NAV has not been adjusted for the payment of the EUR 2.80 dividend per share, which has taken place after June 30. In terms of liquidity now, I'm happy to report that we are at a very high level with around EUR 2 billion when including our cash balance of EUR 1.3 billion and our EUR 750 million undrawn credit facility. Our next bond maturity is in April 2023 and is of EUR 300 million. The average cost of our gross debt is now close to 2%, and our LTV ratio is at a historical low at 5% resulting in strong rating at Moody's and S&P. Actually, when looking back over the past 10 years, both our gross debt and our LTV ratio have come down dramatically. And despite the market fall of 2020, our LTV still stands at the lowest point on record since 2009 at 5%. Thank you very much. I now hand it over to André, and will be happy to take your questions at the end.

Thank you, Jérôme. I'm now on Slide 23, and I'll make a few final comments before we go -- move to Q&A. I realize that everybody wants to end the day at some point. Wendel and our portfolio companies weathered the first half of COVID relatively well. Some companies proved rather unaffected while others suffered in terms of revenues and profits. Virtually, all our companies maintained a very healthy cash flow and balance sheet while carefully preserving their growth options for the future. COVID is, in our view, unfortunately, not yet under control, not even close. Considerable uncertainties remain, such as the state of economies, the mindset of consumers as we emerge from the crisis, and the likely second wave, if you could call it as such, given that, I'm not sure, COVID ever left, the first wave never ended. Thus, the health, economic and business environments in the fall remain highly uncertain at the present time. We, therefore, intend to continue to primarily look at short and medium-term value-creation initiatives across our companies, of which, there are quite a few, while keeping an open eye for new opportunities which will add growth to our portfolio. So that's really it. And I open the floor to Q&A, either on the phone or by the Web device. Thank you.

[Operator Instructions] Your first question comes from the line of Liz Miliatis.

Liz Miliatis from Bank of America. Firstly on the unlisted portfolio generally. Is there any risk in any of the assets that sales would return to pre COVID levels once COVID sort of gets under control, potentially Stahl or Cromology? And then the second question would be on IHS. Now that you've renegotiated the MTN contracts, is it correct to assume that you will probably go and renegotiate all the other contracts? And then also a follow-on from that. How does the contract renegotiation process impact your view of the asset in the current portfolio and how long you'll hold on to that in the next couple of years?

Okay. Thank you, Liz. On the unlisted portfolio, is there a risk that sales won't return to pre-COVID levels? We don't see that. The question, of course, is when, and that's a difficult one. And I can't really give you any valuable direction. There are some underlying trends in each case, which we think are interesting. I would just highlight that Cromology is actually doing pretty well these days. Seems like -- I don't know if this is anecdotal or not, but a lot of people being in confinement can't tolerate their paint in their house or apartment anymore and are taking advantage of more purchasing power to -- and the risk of having to spend more time there, and maybe not leaving on vacation the same way to repaint and maybe also other factors. So it's actually going pretty well. Regarding your question about IHS. As you know, we can't really comment very much on IHS because we have -- that's just the rule of the game that we have with the company. So I can't comment on other commercial discussions that they may or may not be having. Regarding the asset in the portfolio, it's a large position we have. We have had it for a while, and it's clear that this renegotiation is a positive. And so that's really also all I can say now. We'll be supportive in due course when that is appropriate to initiatives that the company may have to open up its share capital whether it's publicly or otherwise, but there's not -- no comment, particularly on that matter.

Okay. And if I can ask one more question since we have you. On your acquisitions, what's your outlook for new acquisitions at the moment? And has what's happened in the market sort of played through the private markets and sort of helped multiples sort of come down? Or have they been actually quite stable and has COVID provided you with any interesting opportunities?

Yes. Well, I could share the thinking here. I think I was right and wrong on different points. I think I was right in assuming that at some point, this previous cycle was going to break and to be cautious. I'm absolutely convinced that it was the right call. Conversely, I was wrong in thinking that multiples would come down. And as we see it, they're not particularly coming down. Actually, there are less earnings for the same price, so to speak, whether it's because people anticipate a rebound or whether people just want to run away from cash or whether just the dynamics of dry powder in the private markets. But the fact of the matter is, the deals can get done and could be relatively fully priced. So that's one aspect. In terms of looking at new opportunities, we see some through the portfolio. Some of our portfolio companies have accretive, synergistic opportunities in their industries. That's obviously always been an easier one when they come by particularly when there's -- know how to integrate. And regarding new deals, we have, if anything, a stricter list of criteria. We are reviewing this. I think in the fall, we'll be scratching our heads again to sort of really determine further how to navigate. But right now, to add new assets means borrowing and sort of leveraging up. We're comfortable and happy with our level of leverage. So we will be -- we will only be moving if we think something is really particularly -- goes down the alley that we have in mind.

Your next question comes from the line of Pierre Bosset.

Yes. I would like to come back to IHS. 3 questions, if I may, but I'm not sure you will be able to answer it. So first one is on the depreciation period of the battery. You have shortened it from 5 years to 3 years. Is the 3 years in line with the rest of the industry in telecom and [ energy ] market? Or was it the 5 years, which was in line with the peers? The second question is about the point of presence in lease-up rates, which have slightly decreased from last year to the first -- from 1.56 to 1.54 now. Is it because of the consolidation of the 2 acquisitions this year? And the third question is whether or not you can give us a breakdown after the agreement with MTN of the contract which are indexed to the dollar, to the CBN and to the NAFEX?

I'll turn the questions to David.

On your question on the battery life, actually, they are not really like a real peer to IHS because IHS is by far the company using the most -- the solar as -- energy source in its -- and it's ours. And so it's a pretty unique accounting decision. So it's more like what is actually happening in reality, how long -- what is the useful life that they're seeing and benchmarking with historical results. The company felt that 3 years were more in line with what they are seeing as a real usage. So it's not trying to match any other peers on that. So it's matching reality beyond any other thing. On the lease rates, the small change I can investigate, but I guess it's probably the dilution from acquisitions. But I need to check on that and get back to you. And on the breakdown between the dollarized numbers or the hard currency one, I don't think we can communicate that today.

All we can say is that they've always indexed these contracts. We're talking about on the dollar. But now they're indexed on NAFEX instead of CBN.

Okay. So there is nothing left really on CBN?

Yes. There is a small customer. Yes.

There's still some residual contracts, yes.

Yes, yes. But they're working on it. Yes. .

[Operator Instructions]

So I think, David, and for your benefit, Pierre, coming back to your question, it's indeed the acquisition, which have slightly reduced the PoP ratio.

I have 3 questions. The first one relates to Constantia. Can you further explain us what led to the change in CEOs…