Wendel (MF) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Wendel 20th Investor Day. Obviously, we would have preferred to be with you in person, as we were prepared to, but circumstances have made this impossible again this year. We have done everything we could to ensure that the meeting is the most interactive possible. So what about the process today? On the left, you can see the full agenda. When we get to Q&As, if you would like to ask questions, you can do so, either by writing directly via the web platform or by calling the telephone number in English, the one referred on this slide. Just note that the French translation is only available through the webcast. This phone line is a listening-only in English and specifically designed for Q&As. Presenters along this afternoon session will address your questions at the end of their presentations. We have limited time for Q&As, and we'll do our best to answer all your questions. André, the floor is yours.

Thank you, Olivier. Hello. David, the team and I welcome you all to our 20th Annual Investor Day. I am André François-Poncet, Wendel's Group CEO. And with me on stage for this first part of the afternoon will be David Darmon, Deputy Group CEO; Jerome Michiels, Executive Vice President and Group CFO; and Christine Anglade-Pirzadeh, Head of ESG and Corporate Communication. I hope that you're all doing well. Today, the focus is mostly on our unlisted companies as well as the Wendel Lab. Chris Witherspoon, a recent recruit in the Wendel team, will start off with the Wendel Lab. CEOs and several CFOs of Wendel's portfolio companies will each make a short presentation, and they will be happy to answer questions. Tomorrow is Bureau Veritas' own Investor Day, and I encourage you to participate. Before Chris and our guests take the stand, I will start with a general update on Wendel. Jerome will present current trading and our September 30 NAV. David will update you on portfolio management and our investment activity to deliver our 2024 road map, which we announced to the market earlier this year. As you know, 2021 is only the first year of our 2024 road map, which we unveiled to the market in March. I'm pleased to say that we have taken major steps towards delivering on this strategic plan, as you will see. First, I would like to acknowledge the exceptional performance of Bureau Veritas, which has transformed itself under Didier Michaud-Daniel's leadership by repositioning its business away from cyclical businesses towards sectors which benefit from a number of tailwinds, including, but not limited to, sustainability. Didier and his team's efforts are now paying off and are being better reflected in the company's valuation. Bureau Veritas' share price is up by 29% since the start of this year compared to about 20% for the broader market, and it has narrowed the valuation gap versus its peers. This represents an increase of value of EUR 1.2 billion on Wendel's stake. You will, of course, have noted that the stock was even higher before the cyberattack, which was announced on November 22. Let me simply say that we are particularly pleased with the transformation is paying off because we constantly hear people say, "We should sell more BV shares." Imagine how we would feel if we had done so. We are pleased that our decision to hold on to our entire stake has borne fruit. Two other major developments have occurred this year and represent significant milestones in our own transformation of Wendel by 2024. First, we have contracted for the sale of Cromology. And I am proud to say that we will make a roughly EUR 750 million gain over our contrarian EUR 125 million reinvestment only 2 years ago, i.e., a 7.2x multiple. There were a few believers about this investment in Cromology, this reinvestment in Cromology, and it has paid off in spades. The transaction also successfully closes the long chapter of Wendel's investment in Materis. Second, IHS went public mid October. Although the company's current market valuation sits materially below our expectations, the IPO was a major step forward for IHS in its development story. As a result, Wendel's financial structure is more solid than ever, with virtually no leverage pro forma for the disposal of Cromology. The capital structure of most of our portfolio companies are also strong. Actually, most of them have ample room to invest and to seize M&A opportunities. Finally, CPI's performance has been exceptional, with EBITDA now expected to come in substantially above the level at acquisition. This has been made possible by the repositioning of services offered by CPI since the beginning of the COVID crisis. Beyond these 2 developments which I just mentioned, a lot has been going on at an Wendel. First and foremost, we have been very active this year, chasing new investment opportunities. In addition to closing the Tarkett investment, we have submitted 5 firm and financed offers to date this year, and the year is far from over. All of our current efforts are directed at redeploying capital with multiple active processes going on as we speak. This level of activity may seem modest. But consider the size of our team, the work required, the milestones accomplished, and you will reach a very different conclusion. Our portfolio companies have also been very active. Constantia has acquired Propak in Turkey, a significant move at its scale. And Bureau Veritas has completed 5 bolt-on acquisitions in targeted strategic areas, including digital and cyber. IHS also, of course. There were other buildup projects across the Wendel portfolio, which came close to fruition and may resurface. Let me tell you more about the key enablers to the execution of our road map. Over the past 12 months, we have strengthened our investment team with 6 professionals joining in Paris and New York, enhancing our sourcing, execution and monitoring capabilities. We have also stepped up the Wendel Lab with 2 new and very capable recruits. You will shortly meet Chris Witherspoon, who is in charge of fund investments and who comes from the funds of funds space. We have also hired another experienced professional who will join us in a few weeks to lead direct investments at the Wendel Lab. This individual has been one of the most active investors in the growth space in France over the past few years. As David will explain, we have stepped up deployment in the Wendel Lab, and this will now be accelerated with a solid backbone. In a nutshell, we are really focused on accelerating capital deployment to continue to enhance the growth and value-creation profile of Wendel. This year, to date, we have deployed more than EUR 270 million on new opportunities. We have invested in Tarkett for a total cash outlay of EUR 222 million. We have also increased our exposure to venture growth investments through the increase of our commitment to Wendel Lab by EUR 49 million. Chris will tell you more about it shortly. For the next few years, our road map is very clear. And David and I, as well as our teams, are totally committed to its implementation with support from our Supervisory Board. We intend to significantly redeploy capital towards higher growth companies. We are committed to ESG, which is now embedded within the whole firm and into our portfolio companies. We will dedicate disproportionate attention to finding private companies given our current target exposure to current large exposure -- I'm sorry, to listed companies. Our stated goal is to build a well-diversified portfolio of 7 to 10 companies through initial investments in the EUR 150 million to EUR 250 million range with EUR 300 million being our sweet spot. We intend to grow exposure to the Wendel Lab to 5% to 10% of our net asset value by 2024, both through funds commitments and direct investments, carefully avoiding vintage effects. The market is beginning to recognize Bureau Veritas' value. Before moving on to the next topic of the agenda, I would like to speak and spend a few minutes on this valuation of Bureau Veritas. As I said earlier, BV has outperformed its peers. This has not always been the case, but today, the market has recognized the strength of its business model and the transformation the management team has been effective over the past 5 years. A couple of years ago, some were advocating for the reduction of our exposure to BV. Again, we feel good about the choice we made when looking at market data. Today, BV trades at a premium to Intertek, whereas it historically received a discount. There's also been some catch-up with SGS' multiple, and we believe there is room for more upside. I will now hand the floor to Jerome for an update on 9 months trading. I will come back for concluding remarks after David's presentation. Thank you. Jerome?

Good afternoon, ladies and gentlemen. I'm delighted to have the opportunity to walk you through our 9 months trading update. We've had solid results to report. Year-to-date, net asset value is up 16%. Compared to 2019 year-end, it has increased by around 11%. And that is after having paid EUR 5.7 in cumulative dividends over the past 2 years. If you add these dividends to the September 2021 net asset value, the total increase versus 2019 is actually 14%. This is a good performance considering all the challenges brought by the COVID pandemic. This performance has been driven by the very solid results of our portfolio companies. Consolidated revenues are up 12% on an organic basis over 9 months and up 9% over Q3. Furthermore, our financial situation is very healthy, both at Wendel level and at the level of portfolio companies. Taking into account the upcoming disposal of Cromology, Wendel is looking at a debt-free position on a pro forma basis. With regards to our portfolio companies, cash flow generation and the rebound of their activity have resulted in a general improvement in leverage ratios, which are down to the record low levels for several companies, accepting those that have carried out acquisitions over the recent period. Let me now highlight several data points that I really find interesting when looking at our current trading. And let's start by our net asset value, which is up 16% year-to-date and close to the record high we did hit last June. When you look at this increase, the drivers are actually 60% related to Bureau Veritas. We are very satisfied with the performance of Bureau Veritas, as André said, which has fueled the growth of our net asset value by EUR 21.5 this year, EUR 1.2 billion. Yes, EUR 1.2 billion since January 1, based on spot values. The value of our unlisted companies has also appreciated vastly this year, thanks to the operating performance that they have delivered and to the Cromology selling price, which is close to EUR 1.3 billion in enterprise value, generating proceeds of about EUR 900 million to Wendel. This valuation represents an uplift of more than EUR 7 per share compared to the June 30 net asset value and close to EUR 15, compared to the value as of December '19. This is quite an achievement. Unfortunately, this great performance has been offset by the very disappointing market valuation of IHS. The current share price is much lower than our valuation in the latest net asset value before the IPO. And I would like to give you a little bit more color on this. As you know, our approach for the valuation of IHS was solely based on emerging markets' listed comparables and had been very consistent over the past few years. Our calculation resulted in an implied valuation multiple, which was pretty close to Helios Towers, generally considered as a good comparable. We're sometimes higher, we're sometimes lower, depending on the calculation debt -- date, sorry. It happened that our implied multiple was just a little bit higher than Helios' right before the IPO when we calculated the June 30 NAV. I remind you that our methodology is thoroughly reviewed by our auditors and by our audit committee and is challenged by a third-party appraiser, providing us with great comfort on the outcomes. And we felt good about the valuation of IHS as it was actually in line with the average of the estimates made by the analysts that cover Wendel as well as with other views on valuations expressed by different market participants. Lastly, as you know, our methodology does not include any premium or discount, and the latter materialized in a massive way at IPO and has been widening since then. If the market valuation of IHS would have been in line with our previous valuation, our net asset value would have been higher than EUR 200 today. Let's now have a look at the performance of our group companies in terms of revenue growth over the past 9 months. But before doing so, I would like to emphasize that following IHS' IPO, Wendel no longer has the ability to exercise significant influence over the performance of this company. And as a result, IHS no longer meets the criteria for equity accounting. Consequently, IHS is now a strategic investment recognized as a financial asset at fair value, and we will not report on it anymore nor consolidate IHS' results in our financial statements. Now from an accounting point of view, this loss of significant influence is considered as a divestment. And even if Wendel did not sell any shares, the IHS IPO resulted in an accounting gain of around EUR 900 million to be recorded in the income statement, which corresponds to the difference between the IPO price, $21 per share, and the carrying value that we had in the books. But back to the 9 months trading update now, starting with our largest company, Bureau Veritas, which has posted 11.9% organic growth year-to-date. For the first 9 months, revenues are 3.9% higher than for the same period in 2019 on an organic basis. These are very solid results. And as you know, the group updated its 2021 guidance as part of H1 trading update. Actually, over the 9 months, all of our companies have posted positive organic growth, resulting in 12% on a consolidated basis and at the same trend for Q3 with 9% organic growth overall. For Q3, I will just highlight the most impressive performance within our group of companies, which comes from CPI. Revenues are up 68%, 68%, higher than last year on an organic basis. That is for Q3. And if you look for the first 9 months, it's 63%, a very high number as well that confirms the growth potential of CPI that Tony will tell you more about this afternoon. I'm not going to go through more details on the performance of our other companies, as you will have the opportunity to get a closer overview right after this presentation. So the last highlight I wanted to give you today is on the deleveraging that has taken place at our portfolio companies. The leverage ratio of Bureau Veritas is down to 1.3x. That's the lowest level on record since the company was listed. This result was achieved, thanks to the activity rebound, strict focus on cash flow generation and the decision to pay no dividend as well as a script dividend. A similar leverage reduction can be seen in other portfolio companies, save for those that have completed M&A transactions in the meantime, which has been the case for Constantia with the acquisition of Propak in the first half and for IHS with its acquisitions in Latin America and Kuwait. CPI has returned to a more sustainable level of leverage at 6.5x while Stahl is now below 1x, which is a very low level for such a cash-generative business. Thank you very much for your attention. I will now leave the floor to David.

Thank you, Jerome. Let's first address our portfolio rotation. During the first year of our 2021, '24 road map, we have made some significant structural changes to our portfolio with the IPO of IHS Towers on the New York Stock Exchange and the disposal of Cromology at very favorable terms. Regarding new investments, we have invested in Tarkett alongside the founding family and stepped up the development of the Wendel Lab, with recent hirings and new capital commitments. Now let me tell you a few words on the new status of IHS Towers. IHS ordinary shares are now trading at the New York Stock Exchange since October 14, 2021. Going public was an important step for this company. As a result, Wendel owns today 63 million shares or approximately 19.2% of the capital of the largest independent towerco in Africa and Middle East, listed on the world's largest public market. We did not sell any shares nor any other shareholder in the offering. The current company valuation is disappointing, and it might take some time for the company to be valued appropriately. However, we see a number of encouraging factors that should contribute to the stock appreciation. First, there are 6 research analysts covering the stock today, and all with a buy recommendation, at an average target price of $24.5 versus a share price of roughly $14 today. The current share price is implicitly valuing IHS Towers around 7x 2021 estimated EBITDA by research analysts, while a natural peer, Helios Towers, trades at approximately 12x. I'll let you judge this multiple gap, but in our view, there is a great opportunity for a catch-up here. The current share price is well below the valuation we had in our NAV in June 30, 2021, and well below the analyst consensus on the company computed then by analysts following Wendel. Our stake is worth today around, let's say, EUR 800 million. The company is at the very beginning of its equity story. We are convinced that investors will realize soon that this great company deserves a higher valuation. Moving now to Cromology. As you know, we have received and accepted a firm offer from DuluxGroup to acquire 100% of the equity of Cromology with an enterprise value of around EUR 1.3 billion. This represents a multiple of 13.2 LTM EBITDA as of June 30, 2021. And regarding Wendel, the net proceeds will amount to EUR 900 million. We expect to close the sale in H1 2022. Our investment in Cromology is the result of a long story, which started back in the day in 2006 with the acquisition of the Materis Group. This is a very good example of why being a patient investor can make the difference. We don't have enough time here to tell a 15-year long story, but I will focus on how we've been able to turn a long-standing underwater investment into a success. At the end of 2017, you can see on this graph that the company was not in a great shape. We decided to replace the management and named 2 very talented and skilled managers, Pierre Pouletty and Loic Derrien, who were guests at this Investor Day last year, with a clear mission of operational and industrial improvement. However, market conditions were very challenging, and the company was in financial covenant bridge. That meant the company equity was worth 0 in our NAV early 2019. Therefore, we faced a very challenging choice, either to inject fresh equity again or hand the keys to the lenders. After a thorough analysis and many discussions with the new management team, we decided to reinject EUR 125 million and back this team recovery plan. This new investment turned out to be a very good decision, as we made 7.2x the new equity we invested in 2019. Let's now talk about our recent investment activity. We are in the first innings of our strategic road map. As André reminded, this is the first year of our '21, '24 road map. We have the wheel and the means to deploy capital to acquire attractive opportunities. The first step of our road map took place back in April 2021 with the enhancement of a minority investment in Tarkett. We teamed up with the Deconinck family to form Tarkett Participation, which will support Tarkett's growth. The Deconinck family will maintain a controlling stake in the company, and we will be a managing shareholder of Tarkett Participation. Today, minority shareholders of Tarkett hold less than 10% of share capital and voting rights since the end of October. Tarkett Participation has the ability to do the potential squeeze-out procedure in accordance with the regulation. This is not on the table at this time. Wendel has invested so far a total of EUR 222 million for a total stake of 25.9% of Tarkett Participation's capital. We also accelerated the development of the Wendel Lab with EUR 49 million of new commitments in 2021 to date, taking our cumulative commitments to EUR 108 million. Wendel Lab is a very exciting initiative, both from a personal and financial standpoint. I will say more on this with Chris Witherspoon later today. Looking beyond these important accomplishments, we are anticipating our search for new investments. We want to accelerate on the redeployment of our capital toward companies with higher growth rates with investment size of EUR 150 million to EUR 500 million and with smaller checks via the Wendel Lab through either funds or direct equity investments. We have recently brought in new talented individuals into our investment teams, and we are well equipped to carry out new transactions while remaining disciplined and opportunistic. We also dedicated a lot of resources to help our companies in their search for accretive external growth opportunities. Overall, we've been very active, making a dozen offers to acquire new companies. The companies we looked at are mainly in the education, health care, business services, technology and industrial sectors. We made 1 new investment, Tarkett, but we were very close in many other situations. I now leave the floor to Christine to talk about our ESG latest achievement.

Thank you, David. Good afternoon, ladies and gentlemen. Over the past 3 years, Wendel has been investing significantly in ESG at both at the holding company level and in our portfolio. We have established a 2023 ESG road map with objectives and KPIs that we are tracking closely and disclosing on an annual basis. We are addressing several ESG priorities with a special focus on climate, health and safety, diversity and eco innovation. So where do we stand today in our first years of deploying our ESG road map? Ratings and managing compensation are 2 major topics I will dwell on today. On Slide 24 first, our efforts are being acknowledged in the most prominent indexes and by rating agencies. All of our ratings have improved this year. Have a look at it. For the second year, Wendel has been included in the Dow Jones Sustainability World and Europe indices, and our MSCI and Sustainalytics grades have improved too. This strong result demonstrates that our ESG strategy pays off. I'm moved to say that our collective efforts are recognized, especially when it comes to responsible investment, governance, diversity and climate change. We also have improved our ESG communication with our stakeholders. Just let me give you a few examples. We have created the new ESG sections on the website and have engaged with shareholders and others in dedicated ESG focus and roadshows. Transparency is a key value for both our stakeholders and us. What proves our commitment to that is that Wendel has been ranked the Most Transparent Company in the SBF 120 French Stock Market Index. What are the concrete actions we have to achieve this recognition? ESG considerations are fully embedded at every level in Wendel financial policy. All of our portfolio companies' CEOs have variable compensation objectives linked to ESG, with one specifically linked to climate change efforts. To give us just a few very concrete examples. Stahl has reduced its carbon emission by 25% between 2015 and 2019, and Constantia has also reduced its emission by 70% over that period. And on compensation of our Executive Board, what can we have? What do we have? 19% of André compensation is tied to ESG objectives. For example, in 2020, one of his objectives was to conduct a climate risk analysis in our controlled company based on the TCFD frameworks. And let me draw your attention to the fact that 20% of Wendel employees have their variable compensation based on ESG objectives. Furthermore, our latest employee stock option plan is linked to the achievement of performance criteria related to climate risk. We have also embedded ESG objectives in the financial conditions of the new syndicated loan we put in place earlier this year. To sum up, Wendel is strongly committed to promoting ESG in tangible and comprehensive ways. While ESG is a very long journey, and 2021 is only the first year of deploying our road map, we are proud of our progress, and we are determined to continue to improve our results. Thank you. I will now leave the floor to André.

Thank you, Christine. We'd like you to take away several points from our presentation today. We are strongly committed to redeploying capital, targeting companies with higher growth potential, in line with our road map. In this regard, Tarkett was clearly an exception. Most of our companies have performed well over the past 9 months, with revenues exceeding 2019 levels on an organic basis, healthy margins and deleveraging for most of them. They have firepower for buildups. Bureau Veritas has delivered outstanding operational performance, and the share price rose substantially as the market now better recognizes the company's transformation and potential. We have completed 3 major milestones of our 2024 road map, the listing of IHS, the sale of Cromology and the ramp-up of the Wendel Lab. Through our portfolio, we have significant exposure to companies benefiting from ESG tailwinds, and we have embedded our ESG strategy deeply into our firm. We have a clear policy in terms of shareholder returns. We aim at increasing the dividend year-on-year, and we will continue to execute opportunistic share buyback programs within the limits of regulation, while taking into account our #1 priority, which is to actively redeploy capital. So thank you for your attention, and it's now time for Q&A. I turn it to Olivier. Thank you.

Thank you. So we will turn now to the Q&A session, which will last roughly 10 minutes. Remember that you can submit questions in writing on the webcast platform, and I will read them. We will then handle the questions submitted already by telephone only on the English-speaking line. So I have already a question on the platform. On 29 July 2021, André François-Poncet stated that, "While our dividend and NAV have grown from 2017, we observed that our share price remains significantly below levels prevailing at that time with a very strong discount to underlying value. We have, therefore, continued to take advantage of this discount by opportunistically buying back some Wendel shares on the market, and we intend to continue doing so in the second half of 2021 while focusing on diversifying and repositioning our portfolio towards higher growth." Sorry, it's a bit long. At that time, now the share, we are trading at EUR 116. They are today at EUR 101. Please, could you let us know the status of the share buyback mentioned above? And what the intention of the company in the near future considering that the share price is trading at its lowest level since March 2021 as well as at a 45% discount to the last published NAV of end of September?

Thank you for your question. We announced at the time that we intended to buy back shares. We continue to intend to buy back shares modestly because, as you will have noted, our objective is to redeploy capital, reposition Wendel rather than "liquidate" the firm and shrink. If anything, we need to continue growing, but we do have the intent to do that. We got caught up in various moments by the information we had, which could have led people to think that we would engage potentially in market abuse. First of all, IHS, the IHS IPO was potentially a big mover for Wendel on the one hand because the expectation was it should happen. On the other hand, because value was somewhat unpredictable. Unfortunately, it turned out to be unpredictable on the lower side. So there was a long period of time where that was, for us, an impediment. Then we had the Cromology transaction underway. We knew it was going to be a very good result. We had a very active bidding. So for a period of time, it was very awkward for us to buy back our shares. And more recently, we have the BV cyber incident, where, again, we watch that closely. We have information. So we do not want for -- to be pennywise and pound foolish, go out and give the impression that we're buying shares sort of playing against the market. In any event, the envelope that we had in mind is about EUR 15 million. So it's not a material amount. So that's really, at the end of the day, why we've held back. We have a project which is ready. It's all wrapped up, ready to go. And when we can, we will. Thank you.

Okay. Next question on the web. Have you continued buying Tarkett shares recently?

Now we've reached -- well, we bought shares until we got to the 90% threshold, both in voting rights and in percentage of capital. This gives us the latitude to potentially take the final step, which is to launch a delisting and squeeze-out, but it's not on the table right now as was discussed. So we, in recent times, have not been significantly buying at all.

Okay. Another question. Do you think that IHS underperformance is related to the overhang from the potential sale of existing shareholders or none -- as none have sold any shares so far?

Well, if we were so clever as to know exactly what the IHS trading level truly was or should be, it would not -- we would not be having the current uncertainty and disappointment, which obviously, we feel. So I don't know if it's the overhang. It is a very orchestrated, I would say, or predictable level of lockups, which has been carefully thought through, I would say, relative to most IPOs, actually quite protective to the market in our perception. But is that the factor? I don't know. Is it a factor? Maybe.

Okay. Thank you. Do you have any offers being studied by sellers at the moment?

I'm sorry, I didn't catch that, Olivier.

Do you have deals in the pipe, I think, it's the question.

Do we have deals in the pipe? I'll turn it to David. David, perhaps you want to answer that?

Yes, as we mentioned, we are currently very active. There are a few diligence going on and a few offers being sent as we speak.

Okay. Thank you. So many questions in one single question. So given the current share price of IHS, would you consider buying some additional shares on the market? Does it make sense to keep Tarkett listed? And three, what makes you confident that you can do new investment deals soon?

Okay. Well, we're not the central bank, right? Every time we think a share is undervalued, our own IHS or whomever, we're not there to sort of step up and buy it. It could be opportunistically interesting to do it on one or the other of the various shares in the group that are listed, but we're not always going to buy back everything. The market has to come to its own conclusions. Regarding IHS, the float is pretty limited. As you know, the size of the IPO was small. And today, mopping up part of the float doesn't seem, to us, the way to go. So the answer is there, no, we have no such plans. Regarding Tarkett, I already answered, there is no project on the table. And do we have confidence that there is opportunities of companies to be bought? Yes. Whether we will prevail is always the same question. It was said before, we have a batting rate this year of 1 for 5, which I described is generally in line when you get to the finals of what we see out there. We are very often not -- but not always, not the only party looking at a particular asset. So it's a bit unpredictable, but the law of large numbers should apply. And David, I think we're quite confident we ought to be able to get something more done in the coming months. Famous last words, but yes, we'll get there.

Thank you. A question on ESG. How are you planning to develop on social aspects of ESG across your portfolio? And what is your strategy to push sustainability across your value chain, i.e., suppliers?

Okay. I think maybe on the second point, you should ask the various portfolio companies that will come and appear. So you should ask Pim, you should ask Maarten, you should ask Tony, you should ask Fabrice how they treat the value chain. Maybe Christine, would you like to say a word about...

Yes. Could you repeat the first part of the question, Olivier?

The first part was how are you planning to develop on social aspects of ESG across your portfolio?

We have -- all our portfolio companies have road map on ESG. And one big part of DS is health and safety. We are pushing very strong regarding health and safety. So social is a key aspect of ESG road map within the portfolio. This is a Wendel priorities. And all our company have very ambitious social policies regarding training, regarding diversity. So I assure you that DS is well present in the ESG road maps within the portfolio.

I'd like to add that David and I very much tone at the top. So regarding Wendel, in terms of diversity as an example, you will note that we were listed one of the most diverse companies in the French-listed environment, SBF 120.I think one particular survey, we were #1. And we are looking at our team. We're looking at the role of women. I'm speaking here specifically about women, of women on boards, our boards, internal boards at the various levels and also portfolio company boards. Once we show up with a more diverse Wendel team, we really ask our companies to make it happen as well. And it's going to be done. And you can ask, and you should ask each one of the portfolio companies, CEOs who appear in front of you, and they will confirm to you that this is also very high on their priority list.

Thank you. Why is this discount so high, in your view? Why don't you increase the share buyback to reduce it?

The -- needless to say that the discount is a thorn in our side. When we look at what we're doing day after day, working to grow with the NAV, as Jerome pointed out, when you adjust for the disappointment, which we hope over time will be fixed in the value of IHS, we feel that we're making a lot of progress. Cromology was a huge win. It's a lot of -- it's EUR 750 million in 2 years is a very meaningful amount. We now have CPI doing very well, and we continue to work. So this discount is a real nuisance. It's a trade-off for us. If we go out and massively buy back shares, assuming it could be done, in effect, we're shrinking in a world in which most of our competitors are growing, applying more resources, et cetera. That is not what the long-term investor is about. It is not what our Supervisory Board expects from us. So we are in a mode where to increase this -- to reduce this discount, we need to be more desirable. And to be more desirable, we need to rotate increasingly into faster-growing assets. And to do that, we have to pick them carefully and intelligently. And that is really -- I said it time and time again, and David said it and Jerome said it, that is our focus. We want to get out of the discount not by attrition, but by making the right investments with a desirable and attractive portfolio.

And last question. I translate it. It has been sent in French. The share price performance is quite low compared with the market performance over the last 4, 5 years. Can you explain?

Yes. I think if you take a longer perspective, look, it's very simple. We sank in a lot of capital into relatively low-growing value investments. So just look at them, several have been flat. I would say, generally speaking, certain flank of our strategy have been nice, but no return. So overall, we have not delivered, I would say, on the investment. The investments were paid maybe at too high prices. So we have a legacy situation, which we are dealing with. I'm very optimistic on the possibility of growing NAV. We have grown NAV. We'll continue to grow NAV. So that's the situation. And certainly, we have significantly improved in terms of deal experience, process, activity with portfolio companies. You'll see the CEOs we have today are fantastic. So I think we will certainly do better. But I'm the first one to acknowledge that this performance has been not what I expected. A lot of our assets -- the big IHS asset depreciation is -- really hurts. So I don't know, David, if you'd like to add anything?

I will just add the -- state the obvious that the share price has been impacted by the widening of the discount. So over the last few years, it went up from 30% to over 40% today. And so even if our assets are growing at a reasonable pace, the share price did not follow suit.

Okay. One very last question. We have no question by phone. So the value of the BVA -- BVI stake is equivalent to 100% of the Wendel market cap. This implies that the market values, all of your unlisted business at 0. Have you considered linking management compensation in NAV discount?

Well, our management compensation is tied to the stock price. When the stock price doesn't deliver, our LTIP is not rewarded. And so we have not been rewarded through LTIP. I think that's fine. It's life. But I don't think that the stock price performance is satisfactory at all. And we will make our portfolio deliver returns, and we will continue rotating into growing areas. So I think de facto, it's there, and it's exactly what's happening. Now I don't think it needs to be fixed. I think we work extremely hard. We know exactly where we're going. What we do not want to do -- and by the way, if you see that these nonlisted assets are valued for nil, that's a good reason to buy the shares of -- really clear reason to buy the shares. So just go out and buy them. That's really what I would say.

Yes. Thank you. I think time now is over. If you have additional questions, we will, of course, answer to you by e-mail. We have now to turn to the next presentation. I'm talking about the Wendel Lab, so please launch the jingle of the Wendel Lab. [Presentation]

Thank you, Olivier. Since the industrial revolution, numerous cycles of innovation have taken place. New technologies are developed and catalyzed by significant capital investment before that technology is adopted by society at large. COVID-19 has acted as a rocket fuel for the adoption of such new technologies. In the workplace, forward-thinking organizations have quickly adopted them to enable remote and distributed working. In health care, companies like Pfizer and Moderna harnessed the groundbreaking technology and power of mRNA to develop the first-ever FDA-approved vaccines. The critical question for Wendel is how to invest in and benefit from these trends, whilst remaining true to our long-term-oriented investment philosophy. It's easy to say, let's invest in the next Google before it hits the mainstream. But executing such a plan is fraught with challenges and potential pitfalls. For one, the risk profile of a high-growth technology company is dramatically different relative to the typical Wendel investment. This is where Wendel Lab comes in, our strategic initiative to leverage the power of innovation. We focus on the technology and the health care sectors, investing in funds across venture capital, growth equity and specialist buyout funds and selectively makes equity co-investments and direct equity investments into high-growth companies. This year, we made a strategic decision to accelerate and scale our efforts. So today, we will share our plan to have Wendel Lab reach around EUR 500 million of exposure by 2024. We are in the early innings of our plan for the Lab. However, we are very optimistic that we can build a high-quality investment portfolio that positions us well for the future. And we are building a team to help execute that plan. Chris joined Wendel in May 2021 to lead our fund investments efforts. Previously, it was with a venture capital specialist fund of funds, VenCap, where he invested in some of the most consistently successful venture capital funds in the U.S., Europe and Asia. Chris has spent the last few months working closely with us to fine-tune the Wendel Lab fund investment strategy. He has developed our internal processes and procedures and met with potential fund partners. Welcome, Chris. I will let you expand upon our future plan for the future. Thank you.

Thank you, David. That covers why we are here. I'll focus on the potential benefits of that strategy and what we're doing to bring it to fruition. We see 4 primary potential benefits. The first is performance potential. We believe it is possible to make strong risk-adjusted returns by pursuing the Lab investment strategy. There is a highly compelling set of data to support this thesis. Let's take data from Cambridge Associates on the performance of venture capital funds as a proxy for investing in innovation. Results compare very favorably against mature company stock market indices. The chart illustrates that when using a public market equivalent, or PME measure of performance, an index of venture capital funds outperforms on a 5- and 25-year time horizon. Past performance is no guarantee of future returns. However, we derive a certain level of confidence that investing in early and growth-stage innovation can be very rewarding to the patient investor. The second key driver behind our strategy is the desire to create an ecosystem of partners. This includes our private and listed assets, our funds portfolio and our co-investment and direct growth portfolio through the Wendel Lab. We get to look at early stage technology with the potential to transform and provide a competitive edge to more mature businesses. As well as investing in these businesses, we can also act as an information broker, providing our portfolio companies with curated access to innovation. Wendel's operating partners facilitate this process. They work closely with our companies to make the process as efficient and effective as possible. To give you an example of the kind of technology we're talking about, we have a short video highlighting one of the companies in our funds portfolio, Citrine. Citrine is an early-stage technology company backed by one of our fund partners, Innovation Endeavors. The software, developed by Citrine, has the potential to help companies such as Cromology and Stahl improve and accelerate research and development of new products. [Presentation]

We hope to share many examples of this in the future. The third benefit is building a diversified portfolio of higher-growth companies relative to the core Wendel portfolio. We believe that Wendel Lab's investment performance is likely to be largely uncorrelated with the performance of the core portfolio. Finally, this strategy helps us build intelligence and expertise on disruptive technological trends, informing our investment and operational decision-making. So how does this work in practice? Wendel Lab will make investments into funds, equity co-investments alongside our fund partners, and direct equity investments into high-growth technology and health care businesses. From a fund investment perspective, 4 factors underpin our approach to portfolio construction. Firstly, we will build a funds portfolio diversified by stage, considering VC, growth equity and specialist buyout funds. Secondly, each will have a technology or health care focus. Thirdly, we will focus on a relatively small number of proven, high-quality fund managers. And finally, we will commit capital at a pace that ensures sufficient vintage diversification. There will be challenges. For example, it can be difficult to obtain allocations to the most consistently successful venture capital funds. They are often oversubscribed with few new LPs admitted each vintage. To accelerate our development in this area, we have partnerships with French firm Quadrille and U.S. firm, Accolade. Leveraging their skill set and network provides a solid platform to build on as we scale the portfolio. From a co-investment and direct investment perspective, we will leverage the relationships we're developing on the fund investment side to source co-investment opportunities into high potential growth investments. In the new year, we will have a colleague join us with experience investing directly into high-growth technology companies, and we may add further expertise as the portfolio scales over time. And we will utilize the existing highly skilled Wendel investment team to lead on more mature technology and health care opportunities. Our goal is to have EUR 500 million of exposure in Wendel Lab by the end of 2024. As you may be aware, this is not completely new ground for Wendel. Since 2012, we've committed EUR 115 million to funds, fund of funds and co-investments, largely in venture growth. In practical terms, that means venture-backed companies that have found product market fit and are rapidly scaling. From a sector perspective, our exposure is majority software and software-enabled businesses. And from a geographical perspective, the funds are majority focused on the U.S. These investments will now be integrated into the wider Wendel Lab strategy, developing this as a more meaningful element of our business, as demonstrated by this year's step change in the pace of capital commitments. In 2021, we're pleased to have added exposure to top-tier US VC franchises in the form of Andresen Horwoods, Accel, Bond and Kleiner Perkins. Each of these firms has a team of hugely respected technology investors. And between them, they've backed marquee companies at the early and growth stages, including CrowdStrike, Stripe and UiPath. Across the underlying funds portfolios, we have exposure to approximately 1,600 companies. There are some fantastic innovative companies in here. To mention a few, Vicarious Surgical is a surgical robotics business in the U.S. It's backed by Innovation Endeavors and earlier this year went public in a SPAC transaction and has a market cap of around $1.5 billion. Hinge Health is a digital health care business that Quadrille invested in. It facilitates the treatment of musculoskeletal pain. The company recently raised a $600 million Series A -- Series E round of funding, putting the company's pre-money valuation at $5.6 billion. Finally, on the existing portfolio, we want to showcase our sole co-investment to date, AlphaSense. We were presented with the opportunity to invest in the Series B of AlphaSense via our fund partner, Innovation Endeavors. Recently, the company raised a Series C round of $180 million led by Viking Global. This is a small position for Wendel, but we hope it is reflective of the type of high-growth innovative company that we'll see more of in the portfolio in the years to come. AlphaSense is a financial search engine designed to find critical information. The software leverages cutting-edge, natural language processing techniques to summarize and prioritize global market intelligence. And our data expert, Olivier, can wax lyrical about the quality of the AlphaSense platform.

Well, all I can say about AlphaSense is it's a kind of magic. This research and analytics tool is a fantastic time saver for any analyst, investor or Investor Relations or in fact, anyone who needs financial data. After this presentation, really, I strongly advise you to all of you to ask for a 15 days free trial. And you will never use again Google to find financial data, simply because this market intelligence platform is searching for you in thousands of qualified sources and offers very insightful data analytics tool. Really, believe me, it's a real game changer.

It is, of course, important that our focus and responsibility seeks to create more than investment performance alone. We are committed to supporting companies that are respectful of society and the environment. For us, in the Wendel Lab, that means asking our funds to acknowledge Wendel's investment exclusion list. To date, 100% of our firms have done so. We lean on the expertise of our ESG team to conduct due diligence on potential new fund managers, and we perform systematic analysis to identify any potential controversies. David?

Thank you, Chris. I hope that explains the rationale and the opportunity for the Wendel Lab. I appreciate we have covered a lot of ground, but the 3 key takeaways are simply that Wendel Lab is about building an ecosystem of partners for the long term. We will take a balanced and diversified approach to investing. And three, we are targeting EUR 500 million of exposure to high-growth funds and companies in the medium term. We have high hopes, not only in creating investment performance, but also in our own companies benefiting from our research and insights. Over to you, Olivier.

Thank you. We turn now to the Q&A session, which will last roughly 10 minutes. And remember that you can submit questions in writing on the webcast platform, and I will read them. We will also handle the question by phone only on the English-speaking line. I already have 2 questions on the web. Does the target portfolio of 7 to 10 companies include Wendel Lab? Are you essentially an LP at Wendel Lab? Or do you make investment in GPs?

So the 7 or 10 portfolio companies target does not include the portfolio companies that we are mentioning for the Lab, which will be of a smaller scale and, I will say, are not part of the core 7 or 10 portfolio companies that you mentioned. Regarding the Wendel Lab, no, we are not going to be only LPs in those funds. As Chris was mentioning, we will also be a direct equity investor, which could be co-investment with those funds or could be direct equity investments with other situations. As per your question regarding GPs, it will be on an add-up basis. We might be looking at some situations. But today, it's not on our radar, and we don't have any plan on this. So maybe in an opportunistic way, if we find some great partners, we can find some structural partnership, which makes sense, but it's not part of the plan.

Thank you. Another one. Can you please elaborate on Wendel Lab's capital deployment strategy? What is your target among -- and asset mix among direct investment, fund of funds, investment in early-stage VC funds?

Do you want me to take this one? Or...

I can start, if that helps. So I think in terms of investment style and pace, I think what we need to do is make sure we have a broad and diverse portfolio, both in the funds section of the Lab and of course, in the direct investment portfolio. I think we could broadly think about it in terms of 50-50 in terms of the target we set for ourselves of EUR 500 million by the end of 2024. But I think we need to remain flexible and opportunistic depending on the opportunity set we see, particularly on the direct side. I think the work that I've done in my first 6 months on the funds portfolio side, we have a reasonably good view of the type of funds and the pace at which we'd like to commit capital to those funds over that period to the end of 2024. Now the reality may turn out to be different, but we have a good perspective on that. I think the direct investment side is potentially slightly different.

Okay. Another question. How many direct investments like AlphaSense would you like to make? Do you have a limit?

So at first, let's build this diversified portfolio. So let's start with a handful of potential situations. And then we'll see from there how successful we are, the type of connection we can make with our own portfolio and see if we want to expand that to a higher number. But this strategy doesn't make sense if there is not a portfolio with a large number of companies. So it won't be 1 or 2. It has to be more.

How diversified would be the EUR 500 million allocated to the Wendel Lab? How many funds do you target? And what IRR?

So we have -- just to give you a sense of what's in the portfolio now because I think, as we mentioned, there's EUR 100 million of NAV in the Lab portfolio already. That's across 15 funds and fund of funds plus 1 co-investment in AlphaSense. I think in terms of number of relationships on the funds side, we want to keep it -- we want to keep the quality as high as possible while reaching that level of diversification. So when I think about it in terms of that period to the end of 2024, I'd like us to have something in the region of 12 to 15 core managers that we invest with. I think that will give us -- we'll be able to keep the quality bar exceptionally high with that, but we'll also get a suitable level of diversification at the underlying portfolio company level, which I think is of equal importance.

Yes. And it's diversification in terms of managers and diversification in terms of vintage. So we won't be deploying this amount of capital year 1 or year 2. It has to be spread over time to make sure that we have good diversification.

Okay. And last question. Can you please give us an idea of how fast you are ready to deploy capital every year in the Lab?

Well, I mean, speaking personally, I would like it if we could deploy that capital on a very equal basis over the years that we've outlined. On average, if we've got EUR 100 million of NAV now and we need to reach EUR 500 million, you can do the math at home on that. I would like to deploy that capital, if possible, on a very even and consistent basis. The opportunity set made to take that, that number goes up and down on an annual basis, but we would hope to keep to that average of, what is it, about EUR 130 million per year to get us up to that EUR 500 million of NAV.

Another interesting question. How independent will be the Wendel Lab team in terms of investment decision?

Well, it's one team. It's not like we have different teams and different pool of capital. Everything is coming from the balance sheet of Wendel SE. But it's true, it's a different investment committee. So even if we are sharing resources and we have different type of expertise, the investment committee of the Lab will be of a different nature and composition that the rest of the group because it's a different type of risk to be assessed, so a different type of experience we want to bring in. So it's not a question of being independent and doing a sister company in the company, but we need to have the right expertise to make the right call for this initiative.

I think maybe just to add, David, also on the portfolio synergy side of things, having to work so closely with the operating partners of Wendel is pretty critical to that being a success. We need to do that, and I personally work with our operating partners on an almost daily basis, and I would expect that to continue going forward.

And the last question. Can you share the markup of AlphaSense series C fund raising versus Series B?

The market what, Olivier?

The markup.

So I don't actually think that the AlphaSense valuation of the last round has been publicly disclosed. I think it's reasonable to say that it was a substantial uplift. But I would also point out that when moving from Series B to Series C, it's not the end of the journey here. There's a substantial way to go with any early to mid-venture-backed company growth. Anything could happen between now the final journey for those kinds of companies. So I wouldn't read too much into it as those companies get marked up along the way. Let's see what happens at the end when the capital comes back.

So thank you very much. We must now turn to the next presentation.

We would like to welcome Pim Vervaat, CEO of Constantia Flexibles; and Richard Kelsey, its CFO. After the jingle, there will be a short introduction by David Darmon and then there's the presentation itself. Please launch the jingle. [Presentation]

It's now my pleasure to briefly introduce Constantia Flexibles and its CEO and CFO, Pim Vervaat and Richard Kelsey. Constantia Flexibles, as you know, is a global leader in flexible packaging for both consumer and pharmaceutical industries. Wendel initially invested in 2015 in the company, alongside the founding family. The group refocused itself around flexible packaging with the divestiture of the label division. So today, it's 100% focused on flexible packaging, and it is the #3, both in Europe and worldwide. Constantia activity has been resilient throughout the COVID-19 crisis. Pim will elaborate about all the actions taken to address those exceptional conditions. So with no further do, Pim, Richard?

Thank you, David. Pleasure to be here. The first slide is here to remind you of the business model that Constantia has. We're a flexible packaging player. We're quite uniquely placed in the sense that we use multiple substrates. So we're talking aluminum foil for the majority of it, over 50%; film-based plastics but also paper. We serve the consumer market, food, which is 76% of the turnover; and the pharma markets, 24%. It's reasonable to assume that the consumer market is slightly more competitive than the pharma market. 2/3 of our turnover is in Europe, 1/3 outside of Europe. And just to dimension the business, last year sales were around EUR 1.5 billion with 12.7% EBITDA. Another key factor to take into account when assessing Constantia is the fragmentation you see in our part of the supply chain. It is a fragmented market. The top 5 players have about 18% of the market. And you see on this slide a number of other players. Yes, we're #3 in the world, but it's less than 2% of the global turnover. As a consequence of that, this market has consolidated and will continue to consolidate into the future, similar to what you've seen in some more mature packaging materials as glass, metal and also paper. So that's a feature of our industry. So I joined Constantia 1st of July last year. The company that I found was, what I would call, stuck in the middle, neither effectively centralized nor effectively decentralized. Its globalization strategy was not very successful. And indeed, in the cold day of light, if you look at its financial performance versus the listed peers, it's not good enough, underperforming. So what has happened since then? In November, I put in a new business operating model with a new team sourced from internal, basically a flatter organization, agile decision-making and indeed also taking costs out in the process. With that team, we went to work on what is our strategy, the Vision 2025 strategy, which was approved by the shareholders in the first quarter of this year. In our consumer sales, we have been underperforming vis-a-vis the market growth. So it was in need of a reset, a refocus. We introduced a new organization in May, and that's pleased the report is up and running and more focused perhaps than it previously was. We completed the new management team by 2 external recruitments. One is for the Consumer Sales EVP and the other one is on procurement from one of our major competitors will join us on the 1st of January. So we've got a strong management team in place, which is ready and is executing Vision 2025. So what is Vision 2025? First element, first pillar is to continue to improve our internal performance, our self-help plan. We have also looked at other areas, but on the self-help, continuous improvement is quite ingrained in the company, and we continue to do that every year in order to combat general inflation. But I feel on purchasing, we're not yet best in class. We're okay, but we need to get better. Hence, the recruitment that I mentioned previously. And finally, I also think on capital allocation, we can be better, more disciplined, and that should also help cash generation of the business. So that's the first leg. The second leg is to grow organically through innovation, where we are one of the leaders in the industry and also sustainability. And I'll come back to that a little bit later on. The third element, I already mentioned this, industry will consolidate is to really focus on the European market to play an active role in consolidation. This is where we are strong. This is where we have synergy potential, and the pipeline is growing. The pipeline is there. And Richard will later on talk a little bit more in depth about Propak, which is very much focused on the European market. So that was a first acquisition in that mold. Previously, I said, 1/3 of our sales is outside of Europe internationally. And it's fair to say that the overall financial performance of our non-European assets is below that of Europe. So we're very much focusing that element on making sure that we can improve its financial performance. Very pleased to report that in North America and Africa, we can see a market improvement this year. But I also have to say that the Indian market circumstances have been very challenging, and that will be one of our shorter-term focus point to make sure that we have the best possible performance also in India. Just to dimension it, India is about EUR 100 million of sales. So what are we trying to achieve with the Vision 2025? In terms of growth, we want to grow at least with the market. Europe is low single-digit growth, where we have the majority of our business. So we're targeting at least 2% growth. Of course, if situations permit, we will try to achieve more. And it's pleasing to report that this year, we will be above that hurdle of 2%. And next year, we're targeting mid-single digits. It's volume growth, but it's also an important price component there. We've seen unprecedented raw material price increases, which we need to recover from customers. We have been overall quite successful in that during 2021, holding up the results. In terms of EBITDA, at least 14% of sales. Last year, it was 12.7%. This half year that we've reported on, 13.1%. So steady progress, I would say. First success. It's again an at least. So of course, we want to do better, and we're targeting to be better. Finally, return on capital employed. Our cost of capital is around 10%. The business last year did around 10% return on capital. Pleased to report that this year, we'll be nearing the 12% level. And next year, we target to do better. Sustainability, key in society, key in packaging land as well. Packaging prevents food waste. It's very instrumental in the whole food supply chain and also for safety in the pharma supply chain. But we need to minimize also the packaging waste. It needs to move from a linear to a circular economy. Therefore, we're in initiatives to reduce the weight of packaging, to make sure that our products are recyclable and indeed, to reinvent packaging where necessary. For this, we need the whole supply chain to work. We are engaging with our suppliers. We are engaging with our customers to make sure we reach that goal. On the right-hand side, you see a structure which is in film where we have medium, high barrier films where we want to reach a certain barrier, multi-layers. At this moment in time, most of them are also multi-material. Of course, that makes them nonrecyclable. And we are working very hard, and we got alternatives over time to transform that into monomaterial, multilayer films. And I think we are one of the leaders in the industry in doing that. So our approach is what we call the Ecolutions 360-degree approach. As I said earlier, we've got all substrates. So we've got recyclable alternatives in aluminum, paper and in the various plastic film areas. We are underway. We have some examples where we have some sales in the market, not a lot just yet. It has to be said that because of COVID, introduction has been delayed both in 2020 and in 2021. But the pipeline is very promising, and I see significant sales growth as a consequence of that. It is going to be a key differentiator, the sustainability transformation in packaging. And we are, together with a very selected number of others, we are leaders in that. We have got that capability. As indeed, on the right-hand side, you can see it is recognized by external rating agencies. And indeed, it's part of both official and inofficial customer feedback that we're on a good way. And my prediction is that the more we get towards we need to have recyclable and sustainable high barrier, medium barrier films, the more the focus will be, particularly also in the consumer areas on performance, how quickly can we get there in the recyclable stage and less on price. And that, of course, plays to the advantage of those in our part of the supply chain who have a solution to offer. So I definitely see that as a competitive advantage for us. Now I want to hand over to Richard, who is going to do a bit of a deep dive on the Propak acquisition we did in June this year and indeed on the financial performance. Richard?

Thank you, Pim. So Propak, we acquired in June this year. It's a business that we've spent quite a long time looking at, and it's a business that we've admired from afar for quite a while. We actually made the first attempt to buy the company in 2012. What does it bring us? It brings us a second local site in Turkey to complement our existing sites in Ankara. It brings us an entry and a much bigger presence in the European snacks market, which is an attractive growing market. And it brings us a strong financial profile, both in terms of cash flow and EBITDA margins. The EBITDA margin is above 25%, and we paid a multiple of under 7x EV EBITDA. Trading so far has been as expected, and we're very pleased to welcome them to our family. If I have to sum up the financial performance of Constantia, there's one word that really underlines what it has been over the past 2 years, and that's resilient. Sales wise, we've seen a return to positive organic growth this year. This was 0.7% in the half year, and it's accelerating in the second half of the year. And we reached 1.5% year-to-date at the end of September. The EBITDA is also growing modestly. And as Pim referred to, we've made some progress on the way to that 14% target that we want to get to further the starting point. In terms of leverage, net debt went up to EUR 477 million at the end of the first half. That was due to the acquisition of Propak that I just mentioned. We paid EUR 120 million for Propak. But we still have adequate headroom to make further acquisitions. And our debt set -- net debt-to-EBITDA ratio is 2.2. So there's still plenty of headroom for further acquisitions. The challenge this year has been raw material prices. That represents 52% of our sales as the cost. So it's our biggest input cost. And as you can see from the charts, we've seen an unprecedented situation in 2021. You take some of our main raw materials, they're up nearly 50% in the first 9 months of the year. But it's important to know that we've got pass-through agreements with most of our customers, and we've been working a lot on the pass-through of those raw material prices to adjust prices to the customers. And so far, we've been pretty successful. To give you an idea of the scale of the challenge we've had in 2021, it's something like a EUR 70 million increase. And the challenge is not over because we see a similar level for 2022. But we're still working on that, and we've been successful so far. With that, I'll hand over to Pim to wrap up.

Yes. Thank you, Richard. So what are some of the key takeaways? Richard said it, a very resilient performance in 2020 and 2021, definitely targeting further improvement in 2022. We've responded well to the raw material price increases and other input cost increases, not only in passing through to customers, but also taking the internal cost measures. We are what I would call one of the winners. We expect to be one of the winners in the sustainability sweepstakes. We've got a strategy in place. We've got a strong management team. Propak, just discussed, is the first of the opportunity. It's a growing pipeline. Critical in the acquisitions is, of course, to stay disciplined. You have to kiss many frogs, so to say, to find your prince or princess there, and we really work at that diligently. So overall, with this strategy in place with this management team, with our sustainability profile, the scale that we have and the acquisition pipeline, I think there's a real chance to create more value going forward. Thanks.

So thank you, Pim, and Richard. It's now time for the Q&A session. Remember that you can submit a question in writing on the webcast platform, and I will read them again, then we would end up the question by phone if there are any only on the English-speaking line. So the first question I have for you, Pim and Richard, is the following: what are your main challenges in terms of raw materials, price, availability or both?

Both. And I have to say this is where some of our competitors have difficulty sourcing the raw materials, again, credit to our purchasing team and the relationship having been built up with the suppliers over time. We've been able to keep all our factories running during COVID and during raw material shortages. So very pleasing to see that. Price, unprecedented price increases. Our salespeople have really did a lot of good work explaining to customers why and how we need to do that. So big challenges on both sides. And I think we've met them overall.

Thank you. I have another question. Your business has been extremely resilient during the pandemic. Given the rush on pharma and consumer products, can you explain why it did not generate a strong growth on your top line?

Well, which year, of course, you project against because we've been resilient. So I see some rebounds of other businesses because they took a dip in 2020. Constantia never took a dip. I think that shows the resilience of packaging. If you look at 2021 versus 2020, overall, as I said, we will see more than 2% growth. In consumer, it's going to be around the 5%, 6%. But in the pharma market, which really had a, what I would call a bonanza year last year, the market circumstances changed this year. Two factors. Customers were carrying high stocks. So we had a 6-month destocking period. And because of all the COVID measures, the normal cold and flu season wasn't there. And that meant also our end market growth was not there. Well, the good news is that stocks have been destocked with the customer, so the supply chain is more robust. And indeed, with the more travel, the cold and flu season is back, and we can really see that in our order intake. So we turned the corner. If I look at our performance vis-a-vis some of our competitors, I think we manage both 2020 and 2021 very well, and I think we've gained market share throughout these 2 years.

Next question. Can you be more specific regarding what you mean by optimizing the global presence?

Optima in a global presence is a focus on our core strengths, which is in Europe, which is really turning around some of the performances that we have seen in the businesses outside of Europe. So we have had a significant restructuring plan in our North American or U.S.A. plant, invested money, and that's been turned around. Over time, in Africa, it's been a more focused operation and that's really now giving its dividends. And in India, we have been investing for growth. We invested in the EcoLam factory, but we've really been hampered in 2020 and in 2021 by the COVID situation. So we need to look at the profitability first, acquisition second. So Europe was strong, looking for acquisition opportunities outside of Europe. Before we do that, we need to get to a certain level of performance. We made -- most regions, a good step in 2021. Some others, we still have a challenge.

How have the current Turkish lira movements impacted your Propak acquisition?

I think that's one for you, Richard.

Propak is largely euro denominated. So most of the revenues are in Europe. So there is only a relatively small impact on it because the main cost we've got there is in Turkish lira is employee costs. So if anything, it's a slight positive for us at the moment. So no big impact on the business.

Can you give us concrete examples of Wendel's role as a shareholder in Constantia, when you bought Propak? What kind of interactions did you have with your shareholder?

Very close interaction. And I think this is where the expertise of Wendel comes to the full. So a good challenge. When we were looking at an unnamed larger acquisition, the cooperation was really good also in terms of potential financing implications. So I think we really have come together as a joint team, looking at these acquisitions. We only got very limited resource at Constantia. We got an M&A department of one. Richard, of course, got a lot of experience. I got some experience, so we really value the strength of resource and the balance it gives to our M&A activities.

Thank you. One last question. Plastic packaging is at the center of many environmental concern. Is it threatening your business? What are you doing to tackle these issues?

Yes. I mean plastic packaging has a lot of advantages. But clearly, in the public eye, it's something of a bad thing. What are we doing is what I said in the presentation. We're looking at fully recyclable structures, replacing multi-material structures, lightweighting where we can. Working along the supply chain, giving our customers solutions, whether it's in plastics or if they want to move the paper or aluminum. We've got the 360-degree approach. So I think we're doing that very constructively. And as I said in the presentation, I think we've got a good offering and a good position vis-a-vis most of our competitors.

Thank you, Pim. Thank you, Richard. We now turn to the next presentation. I would like now to welcome Fabrice Barthélemy, Tarkett, CEO. After the jingle, there will be a short introduction by Josselin de Roquemaurel, Wendel's Executive Vice President, and then the presentation itself. The jingle, please. [Presentation]

Good afternoon. My name is Josselin de Roquemaurel. I'm the Executive Vice President at Wendel. I'm extremely pleased to be able to introduce Tarkett, who is really our newcomer this year in the broader Wendel investment portfolio. As you know, we acquired a 23% indirect stake into Tarkett, mostly by launching a tender offer last July, as André mentioned, there is still a sort of 10% free float out of the market. But what's important to notice here is that this is really meant to be a partnership with the Deconinck family. The Deconinck family is an extremely entrepreneurial family. They not only founded the business, but they've also committed time, capital and resources to their company for many, many generations, and we're here to partner with them over the long term. Tarkett is a global leader. It has very strong market positions across different regions, not only in flooring materials, but also in sports surfaces. Its products are applicable in a variety of usage, be it residential or nonresidential and commercial. Right now, the company is battling with an extremely tough global supply chain crisis. But beyond that short-term challenge, and Fabrice will talk about this, we see substantial potential not only to improve the operations and the company's positioning, but also potential for growth and for external development and organic development. It's time for me to bring Fabrice in. I'm sure many of you actually know Fabrice because he's been the CEO of a listed company for many years. Fabrice joined Tarkett target back in 2008. First as Chief Financial Officer of the group. He really quickly moved on to operational roles. He used to head the very large EMEA division at Tarkett. And over the last 3 years, he has been the CEO of the company. So welcome, Fabrice, and over to you now.

Thank you very much, Josselin. Good afternoon or good morning if you're in the U.S. I'll start with a few words about the group. Tarkett is a global company, headquartered in France. We are a pure player in flooring solutions and sports services. Our sales amounted to EUR 2.6 billion in 2020. And during that year, actually, we improved our EBITDA margin to 10.6%. We have one of the broadest product portfolio in the industry with vinyl flooring, both sheet and tile. We make outdoor sport services such as artificial turf and running tracks. We make also commercial carpet, wood parquets and what we call accessories, so this is typically wall-based, for example. We have highly recognized product brands like Tarkett, of course, worldwide, like FieldTurf in the artificial turf field, and like DESSO, for example, for carpet tiles in Europe. If we look at our geographies, 45% of our sales are in North America, 35% in Europe and 20% in the rest of the world. And when we talk about the rest of the world for us, it's primarily a very strong position in Russia and CIS countries. But we are also present in Brazil and Latin America, and we're also present in Australia and China. 2/3 of our business serves professional end users, so that's we call commercial, and 1/3 residential for the home. And finally, across all segments, we estimate that about 80% of demand is driven by renovation as opposed to new construction. And this is a factor of resilience, as historically, renovation demand has been generally less volatile than new construction, and we've seen that during the previous cycle in 2008 and '09. I should also mention that our manufacturing footprint is regional in a sense. So most of the products we sell in the U.S. are made in America. Likewise, in Europe, we are served by regional factories and the setup of regional suppliers as well, which limits our exposure to transportation. Historically, this combination of a balanced portfolio and balanced geographic exposure has allowed us to generate resilient cash flows across economic cycles. So as mentioned -- as Josselin mentioned, we serve a variety of end users, and I wanted to give you a few examples of what we make and the products we serve. Let's start with health care and aged care, where we have solutions that offer the best standards in hygiene and infection control together with very nice designs. You see here an example of a hospital in the Boston area. In education, we have products that enable durable and inspiring environment to all students from kindergarten to universities. This is an example in Croatia. We also are in hospitality where we give to our customers custom designs that allow stylish spaces, and also what we get from our customers is a stronger and stronger focus on cleanliness, ability to maintain easily, not only the rooms, but also public spaces, and we have products very, very good for that. In workplace, the focus, of course, is to contribute to beautiful also to quieter environment and to drive comfort and performance. Our customers demand a lot of acoustic performance recently. Here, you see the example of a new Pernod Ricard headquarter in Paris, not far from here. In sports, we provide artificial turf and running tracks like on this picture. These are durable and sustainable products that give a lot of value to the communities. And the business case for our customers is that our fields can be used more intensely than natural grass for a variety of events and under different weather conditions. And throughout the year, they give the athletes an improved experience of performance and safety with a lot of consistency. And finally, we design and sell products for the home for residential, where we have a full range of affordable and stylish solution in all countries in the world. All these segments, we serve through a variety of routes to markets and channels. We sell to distributors. We sell directly to contractors, but also in the specification process we deal and we address end users or architects. Now what about our current trading this year? After the dip in demand that we saw in 2020, let's say that the recovery has been uneven across segments. Maybe you know that residential globally has been very strong in most geographies, and we've benefited from that. Likewise, health care and education segments have benefited from public investment nearly everywhere. But of course, business has been much softer in workplace as corporates were stopping, pausing on their investments in renovation. And it is still very depressed in hospitality as most hotel chains are really focusing on delivering cash flow and managing investment as tightly as possible. So last year, thanks to a reduction in working capital, we've also significantly deleveraged our balance sheet. So the leverage at the end of June was down to 1.8x EBITDA at Tarkett level. What we are seeing now is that since this year, and since Q3, especially, we have faced a sharp rise of raw materials such as PVC, wood, plasticizers. And this was combined with capacity constraints from our suppliers. This has had a negative impact on our margins, and the margin on -- EBITDA margin is down 200 basis points at the end of September. And like Constantia, actually, what we are seeing is that this trend is not slowing down. So the challenge for us is to offset this with price increases. We anticipate in 2021, a full year impact of raw materials and freight cost of about EUR 170 million. So this is really brutal. Our selling prices are increasing month-after-month in all geographies and routes to market, but we don't have any automatic or contractual pass-through in our contracts. At the end of Q3, we reached on average 3.9% price increase. As you can see, this is not enough to offset more than half of the raw material increases. In Q4 this year, we estimate that our price increases should reach 7%. And this would mean overall over the course of the full year, EUR 100 million of price increases versus 2020. As we see today, the inflation is continuing into 2022. So really, our objective next year is to fully offset that impact with the major price increases early in the year. I wanted also to mention that on the cost side, we've done our homework. 2 years ago, we initiated when -- just after I took office, a large cost saving plan. And this plan included 3 chapter. The first chapter is about productivity with continuous productivity in the plants and in the supply chain and also the turnaround of some low performing or underperforming businesses. The second part of that plan was a thorough footprint review. And as a consequence, it resulted in the closure of 4 manufacturing sites, 2 in the U.S. and 2 in Europe in order to consolidate the production on the best performing sites, and in order to simplify the product flows and reduce our transportation costs. Third axis, SG&A efficiency. We launched that more than 6-month before COVID. So we were prepared for COVID, and we focused more specifically on administrative and marketing costs. On all these programs, we are well in advance and well above our initial goal to deliver EUR 120 million of cost savings in 4 years. So what makes us different to our clients? Of course, innovation, innovation to offer the most desirable, the best design products that are easy to maintain and durable. The quality of design and acoustic performance is very important, as I mentioned it, especially in the workplace segment. Of course, digital has more and more value in the eyes of our customers and their relationship with our customers. And we aim to provide a differentiated experience from product selection to order entry and installation. As you probably understood, since we specify a lot of our projects, our local teams make a difference day in day out, and specifically in those commercial segments. But what really makes us stand out in the long run is our long-term commitment for sustainability. It's our ability to offer solutions to our customers that not only reduce our carbon footprint but reduces their carbon footprint. In this domain, there is a total coherence between our 2 targets, which is reduction of greenhouse gas emission and implementation of circular models through recycling and especially post-use recycling. Our objective is to reduce our greenhouse gas emissions by 30% by 2030 on the whole value chain. This is Scope 1, 2 and 3, and this objective is perfectly in line with the trajectory of the Paris Agreement. So we have started to invest several years ago in recycling. As I mentioned, 80% of our business is renovation. So we can collect installation waste or even better products at the end of their use from the job site. We send those products to our recycling facilities so they can be reinjected into new products. On one hand, this reduces the need for incineration of old material. And on the other hand, we reduced our greenhouse gas emissions by using more recycled material. These new business models exist today. We are the first one to do it with carpet tiles, for example, in Europe. But they are still in their early stages in their infancy. And our goal is to move from 13% of recycled material today to 30% of recycled materials in our products by 2030. Our initiatives in this field have been recognized by numerous agencies. For example, we have a platinum ranking by EcoVadis. We have a B rating awarded by the Carbon Disclosure Project, CDP, and our customers are more and more eager to listen to what we can do for them in this field. To conclude, I'd like to say that Tarkett has demonstrated a very good short-term resilience. Our productivity plans are well underway. Obviously, as you understood, our immediate challenge is to fight cost inflation and to implement a unprecedented level of price increases in our industry. In the long run, Tarkett has very strong brands, good, well-established position throughout the world, a very strong entrepreneurial culture coming from all the small companies that we have acquired along our life, very good well-invested assets. And I'm really convinced that with the support of the Deconinck family, our historical shareholder and the support of Wendel since this year, we will be the company that changes the game of our industry, and that will be with circular economy. Now I'll be pleased, Olivier to take the questions, you might have for us.

Yes. Thank you. So we are back for the Q&A session that will -- or should last around 10 minutes. Remember, you can submit questions on the webcast platform, and I will read them. And then if there are, we will take the questions by phone. So I have a question on the website. Assuming that raw materials prices remains at current levels, when will you be able to reach your previous 12% EBITDA margin guidance?

Well, obviously, the goal right now is to totally offset the raw material price increases and freight cost increases. We will do that next year. And we have a plan, and all our teams are really focused on doing that next year. The 12% objective that we had for 2022 is will be late. There's also a mathematical effect of inflation that dilutes the margin a little bit, but we are working on a new plan, and we will -- this objective remains valid on the midterm. Actually, it's an objective that is valid for the business, but we are not communicating right now on the date when we will reach that 12%.

Thank you. Another question. What sort of value-added contribution would you expect from Wendel?

I believe that the private format for Tarkett eventually, if we get delisted is a very strong setup for a company of our size. What I expect from Wendel is to be a shareholder and a very active board member with serious skin in the game. They will help us to -- of course, maybe to see more widely to look at trends, to look at other sectors, and they would support -- help us to revamp and design a new strategy and to implement it. So I count on Wendel to actually to challenge us as a management team and to support us. They have also a lot of back office. And I know that every time I ask them a question, they are here to help and give contact and support. So that's exactly the type of support that a shareholder, a long-term shareholder like Wendel can give to a company like us.

Next question. If I understand well, your target is to offset inflation by increasing selling prices in 2022. But what about the EUR 70 million gap of 2021? Will you be able to offset it as well next year or later?

Of course, ideally, we would like to offset everything by the end of next year. Right now, we are still in a catch-up mode. So we are not committing to catching up with this year's increases, and next year. First objective is really to be at with a neutral inflation balance going forward from the beginning of 2022. But of course, eventually, I believe that this inflationary environment is an opportunity to actually reset the level of margin and reset the positioning of some products in the market as the world has changed in a way. So products that were extremely cheap and affordable will have to be a bit more expensive. And I believe in the discussions and conversations we have with our customers, it is also an opportunity. As you know, we are in a business where there is specification, there are projects. We have thousands of customers. So this is difficult to make happen overnight. But in the longer-term, I really believe that this new environment here is an opportunity not only to maintain margin and to offset cost inflation, but actually to improve the margin and to have a positive pass-through.

Thank you. Can you please explain, how you think you are positioned in terms of sustainable development? Do you think you have a competitive advantage with your products?

Well, our products are actually very well positioned in terms of sustainability because both are resilient, capitalized. And sports products are recyclable. And it's all about energy. So when you recycle PVC, you can recycle it mechanically with actually a very moderate level of energy. And that -- what is important is that this topic was not even on the table 10 years ago with our customers. 5 years ago, I was pushing the topic with our customers. Now we are being asked by customers to present to them what we can do for them. And it's important, let's take a workplace project, so a corporate office. The companies now want to demonstrate to their stakeholders, to their employees that they've done what is best for the environment. So when we can prove that our carpet tiles have been taken back and recycled, and that the product that we've delivered are made with 30% or 40% of recycled material. This is really a competitive advantage compared to our competitors would, not all of them having actually the size or size in R&D to offer the same service and the same proposition.

Do you face the same raw material price increases in Russia? And then I will have a question for Josselin de Roquemaurel.

So yes, we do face the raw material price increase is a global one. The raw material -- especially PVC markets are different in North America and in Europe. But globally, these price increases are -- have the same order of magnitude, and Russia is not immune to raw material price increases.

So this is a question for Josselin. Josselin, you have known Tarkett from before its acquisition by Wendel. Thanks to your past position at KKR, since you are not a beginner on the company, what do you think should be done with this company, any change, anything to be continued, absolutely? All in all, Wendel did not really describe the investment case on Tarkett. Could you please elaborate on your investment case?

Okay. Good question, a broad question. So I'll try to provide a crisp answer to a very broad question. The optionality and the potential Tarkett is absolutely huge, and that's due to the fact that the company has a very diverse portfolio of products, but also regional positions. Just a few things that Fabrice and ourselves have in mind because we're completely in line. And right now, we're actually redefining a little bit what the strategy should be going forward. We have -- we clearly think that North America, for instance, has been performing up to its profitability potential. And that's why there's been a change in regional management that Fabrice enacted about 1.5 years ago, and we think this just simply put turnaround potential in North America. Europe should continue to leverage on its existing strength. It's a very resilient and strong business. But obviously, there's a lot of work to do in terms of price increases to adapt to the new raw material prices environment. I think we would be looking to allocate capital in the areas where the company makes the more money, and where we see more growth. One example is LVT. Tarkett is a major player in LVT. LVT is a category that is taking share from over flooring categories. And right now, we're actually investing a lot of capital to build it up. Once the storm is behind us -- so the supply chain storm is behind us, we'll be looking as well to grow via M&A. This is still a reasonably fragmented industry. We think that Tarkett can strengthen its positions in a number of geographies and also in a number of products, even potentially other products. So as you can see, there's a lot to do, the challenge here would be to focus and select what we want to do. That's the issue of Tarkett. And that has not changed since my time back in the old days. It is still a very diverse and complex portfolio of businesses, and we have to make the right choices in terms of capital allocation. I know it's a bit of a vague answer, but I hope it still helps.

Thank you very last question because time is running. How much of your business can be covered by the circular economy? Do you see the circular economy as a competitive advantage against low-cost competition?

I see the circular economy, yes, has an advantage against low-cost competition actually. As I just mentioned, our customers in specified business are and will be more and more demanding in that field, and we have actually the products and the solutions that can really benefit to them. And that's, I believe not all the competitors in the flooring space have the same, and especially competitors from Asia, whose solutions are not at all as sustainable as ours.

Thank you, Fabrice. We must now turn to the next presentation. I would like now to welcome Maarten Heijbroek, Stahl's new CEO. After the jingle, there will be a short introduction by Felicie Thion de la Chaume, Wendel Executive Vice President, and then the presentation itself. Jingle please. [Presentation]

Thank you, Olivier. Now moving to Stahl. Stahl is a company we are very proud of. As you know, we have been shareholders of Stahl since 2006. And during all those years, Stahl has grown very nicely as consolidated its market, and always remained a leader. During the difficult times of last year, Stahl has resisted very well, very impressive manner, and rebounded even better. The EBITDA margin has remained stable despite the successive lockdowns. And since the beginning of the year, Stahl has more than recovered the level of activity of 2019 and kept its outstanding cash flow generation profile. So a lot of things happened for Stahl this year, obviously, but the most important being the change in leadership, Huub van Beijeren, who most of you were used to see at our Investor Day, has been the CEO of Stahl, for over 13 years and decided to leave this year to enjoy a well-deserved retirement. So after 13 years of a great CEO, comes another great CEO, and I'm glad to welcome and present you today, Stahl new CEO, Maarten Heijbroek. Maarten has spent the last 19 years at Croda, where he held several successful position in leadership role. President for the Performance Technologies, also President for the Customer Care division, and also 10 years at the executive committee. Needless to say that we are very happy to welcoming him at Stahl and to have him with us today. So Maarten, welcome. The floor is yours.

Good afternoon, everyone. It's a pleasure to present to you for the first time and an honor to lead a great company like Stahl. Let me start with the first quick overview of the Stahl company. Stahl is the world leader in high-performance coatings for flexible materials. As you probably know, these materials are used in everyday products like car seats, steering wheels, shoes, fashion and furniture. Stahl typically provides the final coating layers, which makes these materials look better, last longer, feel nicer and resistant to chemicals like hand sanitizers, sun creams and wine. Stahl was an early adopter of sustainability. And so today, we are leaders. We're largely water-based and increasingly bio-based formulations. Today, approximately 2/3 of our products are used on leather, and the other 1/3 on different types of services like textile. Stahl is a truly global company, with a global manufacturing base and a large and growing presence in Asia, with China, the single largest country in the group. We are selling into various end markets. Half of our products end up on consumer goods, like shoes, bags and accessories. And automotive is also an important end market for us with just over 1/3 of group sales. You're undoubtedly aware that Stahl is a financially very robust business. Due to COVID, 2020 was a challenging year for us, with sales falling back to EUR 670 million for the year. But our business did show its great resilience, though, by maintaining our high profit margin levels. In the second half of 2020, we've seen an excellent recovery of the business, with sales and profits picking up back to the pre-COVID-19 levels. On the next slide, you can see this in a bit more detail. Top left, you see that after the summer last year, the business started to bounce back strongly with supply chains filling back up again. And in 2021, we've been running just ahead of 2019 levels. The growth was across all our end market segments. And geographically, the strongest growth came from China. EBITDA grew from EUR 67 million in the first half of last year to EUR 109 million in the first half of this year, and our 26% profit margin was excellent. Our strong cash conversion enabled us to significantly reduce our net debt from EUR 245 million at the beginning of this year to just under EUR 200 billion, which meant that our debt leverage dropped below 1% at the half year point, which gives us plenty of firepower for acquisitions. Debt almost half over the last 12 months. We're all aware of the disruptions in the global supply chains throughout this year. Our operations team did a truly fantastic job to keep our customers supplied. But as the year progressed, the rising raw material costs has increasingly put pressure on our margins, particularly in the second half, which we expect to continue in the first part of 2022. But we're busy addressing this with further price increases. So let me share my first impressions of Stahl. My predecessor, Huub van Beijeren, has left with the company in a very good state. Stahl is a strong company. It is efficient, and well run. And what I particularly like is the culture. Stahl has a very driven workforce with a can-do spirit. And in both the leather as well as the coatings business, we have market-leading positions. The traditional view of Stahl is that we are a leather chemicals company. But I'd like to encourage you to look at -- to also look at us in a different way. Over half the sales in our leather business is actually coatings, top layers that are applied over leather. This means that more than 2/3 of our group sales is from coatings. So I see Stahl much more as a coatings company than as a chemicals company. We supply mainly fully formulated products and many of them tailored to our customers' needs, which forms the basis of our higher margins. Since our main operation is compounding, so putting together coating formulations. Our sites have much lower capital intensity than chemical companies. And Stahl is a leader in its space on sustainability, and I'll say a bit more about this later. What sets Stahl apart from other companies are 3 things. First and foremost, Stahl has a very deep level of technical customer intimacy. We have more than 400 technical people, many of which spend extended time at our customers' factories to help optimizing their tanning and coating processes using the Stahl products. Secondly, Stahl has a strong technology base, mainly centered around polyurethanes and acrylics. And finally, we have a global manufacturing footprint, producing close to our customers with sites in 11 different countries across the world. In those sites, we have a flexible setup that allows us to make customer-tailored formulations. I'd like to give you a first flavor of how I see Stahl developing further over the next period. In the past decade, Stahl has been very successful by consolidating the leather chemicals market, but this is now largely done. Going forward, we will focus our attention more on our coatings business, which has delivered double-digit organic growth over the last decade. To strengthen the business, we are actively looking for opportunities to put our strong balance sheet to work. In our leather business, we are seeing that some brands are looking to diversify to other substrates. But also for these new materials, they still need the Stahl technology to give handbags and car seats, the performance, the appearance and the haptics that consumers want. So whatever a car seat will be made up in the future, we want to make sure it has the Stahl layers on top. Geographically, we are prioritizing our organizational development in higher-growth countries like China and Mexico. And ESG will be even more of a driving force for our innovation and portfolio development, moving our product mix more and more towards water-based formulations and increased levels of bio-based content. So next to our strategic development, we want to stay fit for the future and further develop and professionalize our company. Digital represents a key opportunity for Stahl. Our initial focus is very much on the front end of our business, where we're currently investing in more professional digital marketing capabilities to enhance our customer reach, and are looking to further improve our customers' digital Stahl experience. The second major opportunity for digital is in innovation where in silico synthesis, i.e., computer assistant chemical synthesis, will increasingly support and potentially replace classical synthesis in test tubes and in labs. And what you've previously heard about the Citrine platform, I think, is an excellent example of this. Innovation is a key strength of Stahl. And we're looking to further accelerate our rate of innovation by expanding our open innovation efforts. So recently onboarded 2 new colleagues with extensive open-innovation experience in other leading companies to help shape and drive our program. As I said before, our technical skill base is a core competence, and we're developing this further by investing in a new state-of-the-art application center at our site in China, our fastest-growing country. And we're also investigating the potential establishment of a new technical center in the U.S. We have a customer-focused, decentralized organization that once more has demonstrated its agility in the recent COVID-19 crisis. In a world that has become ever more unpredictable, it is important that we foster this agile and entrepreneurial model. And ESG is becoming an ever more critical component in the development of our company. And we're aiming to expand our ESG leadership position in our markets. And let me share this in a bit more detail on the next slide. 2021 has been a big year for Stahl in the area of environmental action and social well-being. Building on our company's foundational platform of responsible chemistry, Stahl is very proud to have achieved an EcoVadis Gold rating, which places us within the top 5% of all companies measured on sustainability systems management. The Stahl ESG team attended the recent COP26 Climate Change Conference in Glasgow, and during the event announced our intentions to align our strategy with the 2015 Paris Climate Agreement goals. And Stahl will use a science-based target system. And during 2022, we will formally communicate our commitments to meet the 2030 requirements associated with the Paris Agreement. In addition to reducing our direct and indirect operational greenhouse gas emissions, Stahl will create and communicate a climate change mitigation plan that will include the emission impact in our overall supply chain. And one key element of our emission reduction strategy will be to work closely with supply chain partners to defossilize our current raw materials and replace them with renewable carbon alternatives. To support our plans for climate change mitigation, we have made further investments in life cycle assessment methodology. And recently, we created a department that will be responsible for supply chain transparency. So wrapping it up, let me quickly summarize the key takeaways of this session. Stahl continues to deliver. The business has bounced back, and is running at pre-COVID levels. Stahl is a robust market-leading business, and in a great position to be a winner in a more sustainable world. Our businesses run on a customer intimacy model that delivers world-leading margins. Coatings will be placed more central in the future development of our company. And we're looking to diversify our leather business. We are recognized as the ESG leader in our markets and helping to make our customers more sustainable with more water-based products, with higher bio-based content. And finally, we have once more demonstrated to be an agile company that can handle the challenges of an ever more unpredictable world. Thank you.

So thank you, Maarten. It's time now for the Q&A session. Once again, the webcast platform is available for your question in writing. And if there are questions by phone, please use only the English speaking line. So the first question. You have very low leverage, what are your priorities in terms of external growth?

Thanks for the question. As I said during the presentation, we have been very active with acquisitions in the leather space, in the leather markets. But the consolidation there is largely done. So going forward, we are much looking -- we're much more looking outside of leather and putting the coatings business much more central in our corporate development. And we will definitely look to strengthen that excellent business, which, as you've seen, has grown very strongly organically. We'd like to further boost that growth through acquisitions. You've seen that we have a very low net debt position in the moment, which gives us a very good firepower. And as previous speakers also said, it's great that we're part of the Wendel family, so that we can make use of all the significant resource and experience that Wendel can also bring to the party in this space.

Thank you. You delivered a record margin in H1 2021, is it sustainable and forward-looking, what could be your average EBITDA target?

Yes. The 26% in the first half was truly excellent. But as I said in the presentation, the raw material inflation started to erode that a bit in the second half of the year. And that is, thanks to the cost increases that have hit us. And as I also said, we are busy addressing that with price increases -- recovering our margins with price increases. Stahl is a specialty company. We supply high-tech products, which makes it not so easy for our customers to switch. So we have a good pricing power. Our profit margin has slipped due to the fact that the cost increases that we were confronted with came quite unexpected with extremely short notice. So it is just a matter of time before we go back to our more historic margins that we've seen in the business. And we do not have a specific target to answer the second part of your question, we do not have a specific target as far as our profit margin is concerned.

Thank you. Can you give color on the potential impact of veganism on your leather business?

Yes. That was a question that could be expected. Clearly, we read a lot about that in the press recently. And yes, there is a group of consumers that is questioning the future of leather, which could have an impact on our leather business. But I think we should not forget that Stahl is not just a single substrate company. The Stahl technology can be applied to many different substrates. So whether a handbag will be made from leather, will be made from textile, will be made from some novel more sustainable materials. It will still need the Stahl technology to put the layers on top to make it look good, make it feel good and give it a performance. So undoubtedly, there will be shifts in our business from the type of substrates. But overall, Stahl should still be in a strong position to benefit from any changes in potential substrate.

Performance coating is growing faster than leather chemicals, but is it more sustainable to replace a natural product by performance coatings?

It's a good question. It is not always in the same application that our Performance Coatings are [ solved is not ] that it's a direct replacement in the end application. But also in Performance Coatings, which now typically put over textiles like PVCs, et cetera, to upgrade relatively low-cost textiles into hybrid performance textiles using the Stahl technology. There is also on the textile side, there's a lot of innovation taking place to rather than using PVC, use more sustainable textiles and then putting the sustainable Stahl layers on top of that.

Last question. Could you please be more specific on the balance -- imbalance between raw material price increases and selling prices increasing in H2 '21 and going forward?

Yes. So I think as the year progressed, essentially from January onwards, we've seen raw materials go up. And initially, our expectation was that by Q4 of this year, that would start to plateau, and then maybe go down as some central bankers have promised us. But what we see -- and basically, we have put our pricing strategy around that plan. But we underestimated the effect of the raw material increases and the timing of the raw material increases, so we're now correcting that. We have -- you may have seen that we have published significant price increases to the leather markets, and we're increasing older prices by 15% from January 1 onwards, which should lead to a good rebound in margins going into the New Year.

So thank you very much, Maarten. I think we must now turn to today's last presentation. I would like now to welcome, Tony Jace, CEO of Crisis Prevention Institute, who flew from Milwaukee, Wisconsin to be with us today. After the jingle, there will be a short introduction by David Darmon, our Group Deputy CEO, and then the presentation itself. So please launch the jingle. [Presentation]

Thanks, Olivier. Just to remind everybody of the original transaction. Wendel acquired CPI back in December 2019, including $569 million investment in equity in the company. Over its full year of history, the company played an important role in reducing workplace violence and established a very strong brand and loyal group of highly engaged customers. CPI's mission is to create a safe working environment, and it aligns very well with our values and corporate and social responsibility initiatives. We are proud to work with such a passionate group and equally so by the incredible people that serve who work every day to improve the lives of those around them. With that, I would like to very quickly introduce Tony Jace. During his more than 12 years as CPI's CEO, the company has grown at a double-digit compound annual growth rate, increased its presence in health care and education in the U.S., expanded internationally and developed new products critical to its future growth, all that while maintaining the company's mission-driven culture, which is central to its success, and connection with its customers. We made the same point last year, but I want to repeat it. Having lived through such a difficult environment, it's at that point in time that you learn a lot about who your partner is during these times. And I can confidently say that we are quite fortunate to have had Tony and his team alongside us over the past 2 years. So thank you, Tony. And with that, I will turn it over to you.

Well, thank you, David. Like Olivier said, I traveled from Milwaukee, Wisconsin because I was told there would be a happy hour after this. I now know we're deferring that until next year. And so for those of us joining virtually, I really look forward to meeting you all in person next year. And just a big round of thanks from all of us at CPI. 320 of us around the world to the Wendel family, to the Wendel Group here. It's been just a wonderful relationship and to all of you for putting your time, treasure and talent and to helping us continue this mission, this very important mission that we have at CPI, which is literally to make the world a much better place. I would start these investor presentations by looking at our mission that's been guiding us for the last 15 years. And I just pulled out 3 key topics or statements out of there. One is societal impact. You'll see that in bold. We do -- what brings us to work every day at CPI is that we know that we make a big impact in society to make those that are most vulnerable in our society. So think of those friends and family of yours that now have full-blown depression or some mental illness or substance abuse. Think of our children or grandchildren that are living with autism or with down syndrome. Think of our parents that are living with dementia. We fundamentally play in that space. We are driven to make their lives better by training the care workers around them to be more effective, more safe and more caring as they discharge their duties to those wonderful people. So we've been doing this social impacting for 42 years, and we're going to continue that for the next 42. That's a theme that you're going to see sort of weave through the next 10 minutes. Second thing is unparalleled quality. So if anything, the great performance of this year by the team, and really it's driven by our customers that are really now performing again and getting out there. We do not short cut quality and we never will. What we train is so impactful and so important to their safety and the safety of those that they serve that we will never push back on quality and what you're seeing right now is that the customers have responded appropriately, and they're flying to us. They're flying to this entity that provides us incredible quality in terms of training and strategies that they can use to manage life's daily crisis moments. And the last thing is really the reciprocal loyalty that we have to you and to the employees at CPI into the Wendel family and also to our customers. I think if you step back and take a look at the last 18 months, you can see that there is sort of a reset in terms of resilience of staff working remotely and now having to come back, the level of aggressive moments that are occurring out in the workplace. That sort of resets the relationship that our customers have with their companies that they work for. And so you'll see another theme as we talk later in terms of the deck here, because what we're doing to help our group of 37,000 very committed certified instructors who are nurses and teachers sort of belong -- feel good about this community that they belong to and derive a new community for them to actually be excellent in. So just a quick snapshot on our business model. We have trained the trainer organization. So it's a beautiful way to quickly scale the impact that we need to have in society. So there's only 320 of us. And of those, 70 of us are full-time trainers that go out and work with our 37,000 active certified instructors. That middle group there, that 37,000, again, they're teachers and they're nurses and they're corrections and they're counselors. They work with the most vulnerable in our society. And our goal is to make them as carrying as safe as possible wherever they work. We train them. We certify them. We spent a couple of days with them, and then they go back to their workplace and they actually train their staff on our strategies and techniques. So they're training their coworkers. Every time they train a coworker, they buy either a workbook from us or an e-learn seat, and that's where you get this nice recurring revenue flow to the business, this nice model. The most popular programs, you'll see that list continue to grow because one of the key operating levers that we have at CPI is our program -- new program introduction capabilities. And one thing we've proven over the past 12 months that you've seen in the results is that not is there just a flight to quality, but there's a flight to our new products that are very relevant to the populations that they're serving. End market and geographic spread, diversity is a beautiful thing and not just your workforce or not just in society, but it's also great for business like CPI. When we have diverse revenue streams being end market or through the international geographies where we work and sell and train, that helps us then get sort of buffer our way through some of these more volatile times, build up a nice balance of cash that we can then deploy and continue to grow and innovate in what we do. ESG, like I said earlier, is core to who we are. 3 bullets are around really our mission and the type of external impact that we're making in society. Our customers do work with the most fragile populations in the world. And if anything, we've seen an increase in that. The fact that a lot of children missed the year of school and now they are coming back. They're still -- they're dealing with things that they never had to before. Not just the academic but also the social things that they are working with. That plays out in terms of our customers and what they're seeing. In addition, from our dementia care specialist division, you see this groundswell now of more and more seniors, parents of ours are living with dementia as they age. And we're seeing a bigger uptake in terms of what we can do to make their lives much better and keep them at their best abilities as long as possible. When we work with those companies and when we work with those therapists, it highly minimizes the use of pharmacological drugs, which improves everybody's lives and actually have -- allows our parents to live longer. Finally, from an ESG standpoint, we're also working internally. So those are very external. But internally, we are a people business, we travel quite a bit. And so we -- and we sell a lot of workbooks. And so we're constantly looking at innovating and digitizing what we have to offer so that we can be available to our customers anytime, anywhere, when they need it. And we are also working with our suppliers in terms of renewable resources and minimizing page counts. So all this has translated into just a wonderful 9- and 12-month performance. What I'd like to tell people on this slide, on the sales slide, on the upper left, is that blue line, that 2021 line does not happen unless we made very bold decisions and have strategic patience back in 2020. And our focus on serving these beautiful customers that worked in these hospital settings that dealt with this pandemic and the schools that had such volatility in terms of how they're going to work with these children, being patient, presenting ourselves and being ready -- when they're ready to respond has paid off dividends, as you can see here. It's also impacted obviously our leverage. You will see that we're now much past even what we -- the original acquisition leverage was. And as recent as September 30, we were at 6.5, and we continue to have nice months. So we should see some improvement there going forward. At the end of the day though, this is really a story about our society, about our customers and how by lifting them up, they choose us, and then we're able to do great business and great revenue. So looking at growth going forward, it's okay that these children and our friends and family that are in mental health settings or whatever, could get great care in those workplaces, but they go home at night. These children go home at night, our friends and family go home at night. And so one critical goal of ours is to extend our strategies and our training to the home setting. And so you'll continue to see us talk about this over the next few years as we test out and really leverage this group of 37,000 really amazing certified instructors to get into their community broader. In addition, we talked over the international growth as well. Here, in particular, a lot of you are from France listening and watching this right now, challenge yourself, let us know, let Wendel know, do your schools have some type of training here? Take a personal interest in what's happening to your parents who are living with dementia. It's not okay that these care workers go home at night, bruised or having their hair pulled or scratched. We offer a much better way for them to execute their care in the workplace. Again, the bold decisions that we made in 2020 really led us to where we are today. Every day, every business day like right now today, there are 4,000 professionals consuming our training. They're going to go back and they're going to serve these very fragile and vulnerable populations in a much better way and they're going to be supremely confident that they're able to build their career and be safe at work and more caring, which is exactly why they chose these professions of giving back to society. As it pertains to 2022, we talked over a little bit, our 37,000 instructors came to us and said, we really want to belong closer. We want to cleave closer to CPI. And we want to know all these other 37,000 amazing people out there and work with them because what they do on a daily basis is not something that they can take and talk about our cocktail parties or talk to their [indiscernible] but they love talking to each other. They love learning from each other. We're just facilitating that in a much more meaningful way in 2022. Yes, we are also going to have amazing content and keynotes for them to be better sort of find instructors and better people as well. But that is something that we're focusing on. In addition, in 2022, you'll see that we're -- also the new program introduction like operating lever that we've built out, that's going to continue to deliver new programs that we can sell. When we do that, our customers love it. They pay more for it, which is great. We invested a lot in it, and they're getting amazing content and they're better workers at the end of the day. In addition, the digitization and the virtualization of our assets, how we use technology enablers to really move the society forward in terms of a caring society for all is something near and dear to us, and we're going to continue to accelerate the adoption of that as we work forward. Finally, these end markets that we serve right now have been experiencing a lot of turnover, a lot of staff retention issues, a lot of staff resiliency issues. We play core in that space. So our customers are running to us saying, please help us through this. We've built out a broader suite a more comprehensive solution for them. And we're articulating it properly to the marketplace, and large systems are opting in with us to actually take that on and have their staff drive up the retention rates and drive down the incidences, both the number of crisis moments and the severity of those crisis moments on a daily basis. So the key takeaway is that I really want you to have is, first of all, just a real deep gratitude from all of us at CPI for your interest in us and giving us an opportunity to talk about our business and our social impact that we make. We've positioned ourselves much stronger than ever before. We are, by far, the global leader. And we've created through technology enablement in the past 18 months, really sort of a protected position in the world in terms of what we provide our customers. And the defensible moats are broader than ever. We've added a few around technology enablement. There is still a wide underserved market that we still need to do. So our work is still just beginning, and we look forward to working with you to continue to make a difference in the lives of our customers that we serve and more importantly, those vulnerable populations that they serve. So with that, it's time for questions and answers. So Olivier?

Thank you so much, Tony. So indeed, we turn to the last Q&A session. You can continue to submit your question in writing on the webcast platform, and for the phone question if there are some, you can use the English speaking line only. So first question, can you give us an idea of your competition landscape? And where you are positioned in this landscape?

So we have competition of wonderful competitors. They have the same social mission. They're driven to change the world. We are fundamentally different from who they are. We're a totally different animal. We're much larger than our competition. We actually -- I mean our technology group alone or our customer care group alone is larger than the top 2 competitors added together. So what we provide to the marketplace and what our competitors do, there's a huge gap. In fact, that moat has even driven further over the past year. Our use of technology enablement is actually delivering exactly what our customers are really asking for. So over the past 12 months -- 18 months, really, the competitors, the people that I work with and talk to frequently have not made the same bold decisions that we did combined, Wendel and CPI. And they relax some of their quality standards. They were not as aggressive in serving their customers and be there when they needed them most. And so we're picking up more than our share -- more than usual -- average, more than average, our share of new logos flowing our way that had been using a competitor.

Thank you. It seems that the pandemic and lockdowns generated more pressure of violence in workplaces. Do you confirm this impression? And does it create new business for CPI?

Yes. I mean it creates business in the sense that our goal is actually to have our skills and strategies in every workplace worldwide and eventually every home. So yes, it does -- we have -- the difference that we're seeing is these aggressive moments or these challenging behaviors, not just manifesting in hospitals or schools or some of these usual places that we usually play in. We're seeing that in the retail environment. We're seeing it on the sidewalks. We're seeing at family dinners, whatever it is. So the market has just broadened. And so the responsibility that we've taken on and the challenge, frankly, is to -- we have a sense of urgency to get our content out to as many people as possible. It's not good. I have a thought about media driving us apart. We're trying to pull everybody together and sort of help everybody just relax and be the authentic selves that they are. So it is an opportunity, but one that we're up for.

Can you explain more in detail what plans you have in terms of geographic expansion?

Yes. So we just we've been in France now, I'd say, 3 or 4 years. And just this past year, we've made a large commitment to double our revenue over the next few years here. So that's one great example of where we're going to invest nicely, focus, make sure that our customers in France are getting the value that they deserve and that the people in France that have some of these conditions, get the best care that they can as well. So France is a great example. We continue to invest in Australia and New Zealand. We have -- obviously, in the U.K. and Northern Ireland, we do a lot of good work over there. UAE is picking up now again. So we're building these larger partnerships and these larger profiles in these countries that we know are ready for our skills and techniques. In addition, we are actually amplifying through our new professional relationship, our advocacy work, our voice. We're amplifying our voice in the world that there is a better option that our friends and family don't have to go home hurt. And so that is something else that we're leveraging that will pay off dividends as we grow internationally as well.

Okay. Did you identify potential M&A opportunities?

I can't identify right now. We talked to our competitors a little bit. I don't disclose all these great connections that I have with these wonderful firms. Again, it's a highly fragmented market. We're by far like this 800-pound gorilla in the room. But really, competition is one thing, but we -- our responsibility at CPI is to scan the globe. We're the only true global leader in this. It's our responsibility to find the best practices wherever they lie. I mean it could be in Britain where we've had a couple of acquisitions, could be in the U.S., could be in Singapore. We don't care. We are searching and sourcing best practices for our customers, and it's our responsibility to find them, bring them in and deliver that. So actually, one of the new programs that we just hit the market in 2021, Classroom Culture is a recent acquisition that we did, and now we're bringing those really critical skills worldwide to all education settings in the world.

Are there laws or regulation in your main country that help your activities?

Sorry, I didn't catch that.

Are there law or regulations in your main countries that can help your activity?

Yes. So I just touched on the advocacy bit a little bit. It depends certainly by country and by end market. So some countries have a very strong mental health legislation, some countries like the U.K. Some countries have very strong education, either legislation or governmental rules that govern -- I mean you can imagine, if you're a teacher, if you're going to put hands on a child or if you're a long-term care worker and you're going to put hands on a senior that has dementia, you have to need to have the highest quality training and be willing to prove that you've done the training and that you've passed. That's exactly what we do with that blue card that was on an earlier slide. So we do link very closely and work very closely with governments and policymaking industry associations to make sure that these workers around the world have the best training and the right training so that again, the goal is to get rid of restraints, get rid of seclusions, get rid of these interactions try to drive almost to nothing these challenging moments, these crisis moments that occur and in those rare instances that they do occur mitigate the severity.

Okay. The next question concern CPI and Wendel. So maybe, David, you can join Tony. Should we expect full year '21 revenue and EBITDA to exceed the full year 2019 figures? If it is the case, would you align the value of your stake in CPI to your investment in NAV?

So the first one I can handle, which is yes. The second one you can handle in terms of the valuation.

So we -- it's not the way it works. We don't adjust valuation. It's not because we see result that we changed the valuation in our NAV. This is a very mechanical approach that we apply in a very rigorous manner. And then we'll see on December 31, where CPI peers are trading and then we play the same methodology. Hopefully, if at that point in time, we use better aggregates, and especially because the 2020 numbers are going to be excluded from the sample. We should expect a change in valuation. But it's not us applying a different methodology and changing our valuation. It's the same and similar consistent valuation methodology, which is going to be applied to higher aggregates, leading probably to higher valuation, yes.

And very last question. What is the average annual growth rate you are targeting?

Great question. We have a range that we target, typically. If you look at the past performance of CPI over the past 10, 15 years, we always are in that mid- double digits. So I mean we're not in the teens. So we'd like to be anywhere between 14% to 16% to 18% to 19%. But really, things are a little bit different. One, they're more volatile, and we get that, and we learned how to manage that, and we're working very closely with our customers, and our performance shows that. But 2, like I touched on a little bit, we're seeing sort of a reset in the marketplace. And we fundamentally believe that the closer we can get to our certified instructors and publish even at a greater rate, the amazing outcomes that they're achieving by utilizing our training not just being more caring and confident in their work, but driving down staff turnover or increasing staff resiliency. That will be a nice uplift and tailwind to the business. So that's the best I can answer for that.

I have, again, a very, very last question. How easy to find an individual who can be a global professional instructor? Have you recorded turnover in this tough category? They are key in your business model. Is there any salary inflation?

So wages -- I mean -- so we talked about that reciprocal loyalty, which is great for loyalty to Wendel, and you all also to our customers. But we're a people business. Our employees are really the business. And so we are always fair in terms of how we compensate our employees, not just the GPIs but the wonderful group of CPI people that support those GPIs delivering the training. Slight wage inflation. I mean, we're actually looking at that, and we are addressing both with some bonuses that we have in place and also some usual lifts that we do. We have not had a challenge adding more global professional instructors to our business. We always have a nice, I call it, farm system, but a nice pipeline of instructors that do want to now train or join CPI full time. So we have a nice base that we can draw upon, and they're very high skillful people. And so we don't have any headwind at all in terms of adding great new staff that can do great work for our customers. So was that the last, last? Or is there another last?

It's the last one.

Okay.

It's the last one. So thank you all for your questions. It's time to conclude this 20th Investor Day. I will now leave the floor to André and David for the conclusion. Please launch the jingle.

Well, thank you, Tony. Thank you again, Fabrice, Pim, Maarten. Thank you, Olivier. Thank you all for your attention. We hope you enjoyed this virtual event. I think we can say it worked well. As you've seen, we are fortunate to have a very dynamic bunch of carefully picked CEOs. We enjoy working together. We're aiming to take all these businesses to the next level. The Wendel team and I -- David and I look forward to seeing you in person next time at the Investor Day or during road shows. Of course, our Investor Relations team is available to answer your questions in the interval, and so are Jerome, David and myself. Have a safe end to the year, and thank you very much.

Thank you.