Earnings Transcript for MF.PA - Q4 Fiscal Year 2023

Laurent Mignon: Good morning to everybody. Thank you for joining us through visual or being here. In the room for this 2023 Full Year Result of Wendel, very happy to be in front of you with David, we will present to you the earnings of Wendel for the year 2023, an important year for Wendel. Benoît Drillaud, our CFO, will be there also to present to you the numbers. And after the presentation, we'll be happy to answer to any of the questions that you may have. So again, I'm very pleased to be with you. It has been -- it's the first time not I'm presenting the earnings, but the first full year earnings, I'm presenting for Wendel. 2023 -- I think I have to move the slide. 2023 has been an exciting year and a year of a lot of action and transformation for Wendel. As you remember, we had -- when we last met for a live physical presentation like this one, it was in March 2023, where we presented the new strategy of Wendel. Since then, I think we've been very active in making sure that we can implement that strategy and start to transform Wendel. Obviously, everything has not been done. There's much more to be done and you can trust the fact that the full Wendel team is very mobilized in order to achieve the goals and the ambitious goal that we've set to ourselves. What have we done in 2023? So let's look at it as three angles. First on the principal investment, we've presented the dual model where we have on one side investing the capital long term of Wendel. On the other side, as you know, we are developing an asset management business. So let's focus first on the principal investment. We've been pretty active during the year with a significant turnover of our assets. We've made the acquisition of Scalian, which was announced in July last year and since then closed and integrated Scalian throughout our organization. We've sold Constantia Flexibles, which was again, announced during the summer and closed early January this year. And the Wendel Growth team has made four different investments in the year. Assume within our portfolio companies, Stahl has been active in both starting to -- I mean, implementing the new strategy, which is to shift the Stahl from a laser treatment company to a specialty coating company. And I think the acquisition of ISG has been a very successful one, and David will come back on how it has developed in the end and Stahl also had made a special dividend to all the shareholders with -- at the end of last year, which ended up at €85 million dividends to Wendel. Globally, the other point that we have to see in the principal investment is that the growth of our companies has been very solid during the year, 6.5% organic growth. And that is I think a great illustration of the quality of the business we've invested in and the fact that we're -- despite an environment which was not so easy in 2023, we're very happy about the growth trajectory and very optimistic for the future in our ability to deliver value through this investment. Obviously, we will continue deploying capital and having a turnover on that and the objectivity to generate more growth and returns. We've set ambitious targets in terms of returns on that segment, and we will make sure that we do achieve that. Second part of the year and I think probably the most critical one in terms of change has been the development of an asset management strategy and starting to build an asset management platform in private assets. We've said that as a key priority when we met in March. And I think we've been pretty active in looking to different opportunities and end up in the acquisition of IK Partners which is a highly respected team and we view that as really one of the best team in Europe, for the mid-cap private equity business and probably, one of the most active also GP in that sector. As you know, IK is managing €12 billion asset today. The transaction is not yet closed, and it's not because of any issue. I mean, all different issues have been solved. There's -- still a few administrative things to finish and we should be closing it probably, early Q2 of this year. The relationship and our judgment on the acquisition of IK, we're even more happy today than we were when we made the acquisition. I mean, it's great team, the quality of the cultural fit with Wendel team has been great, and their ability to generate value for their customer the LPs I think is still -- is important. They've got a significant DPI, significant divestiture during the year. They made recently a new investment, as we've seen. So, this is really, really very happy. And we're working on now, making additional additions to that. First, helping IK to grow, which would be the number one priority, but also additional to that having new GPs that could complement our strategy, our objective as we've set during the Investor Day, is to have fee-related earnings in 2027 that would be around €150 million and where I think -- well determined to achieve that goal by then. Now, all of that is as one objective, return to shareholders. We want to increase return to shareholders. And our objective as a holding company, is really to make sure that we can return significant value to shareholders. One of the key elements of the return to shareholders of holding companies, obviously it's a dividend policy. We've set out a new dividend policy, which we first -- which was referenced to the NAV in March, and we revised upwards the percentage of NAV that we want to distribute to our shareholders given the way we plan our ability to generate value through principal investment and the general flows of fees that we will generate from asset management. And so this policy is basically to say, we're going to distribute at minimum 2.5% of the NAV and we will grow that percentage progressively, with the growth of the asset management to potentially 2.5% or higher depending on the size of the asset management going forward. But that’s if we go to 2027 probably, 3.5% would be the right target to achieve there when we will have € 150 million of fee-related earnings. So that 2.5% result in €4 per share dividend this year, which is a 25% increase compared to last year, mostly driven not by the growth of NAV. Hopefully, in the future that will be growth of NAV that will drive dividend growth, together with the increase in percentage. But -- but here it's mostly the change of policy and the increase in percentage that is driving the growth of the dividend. But I think it's important, really to set out a clear policy -- that you can have clear visibility of what type of return we can make to our shareholders. In terms of capital management, as you know also announced that we were making a share buyback program. This is ongoing. We've done part of the €100 million that we've announced. And as I mentioned during the Capital Market Day, share buyback is always a tool that we will use whenever we think it's appropriate. If we go into the financial highlights, I think first of all and I've made it very quick comment on the sales of our companies has been very dynamic 5.7% overall, which in fact, as an underlying 6.4% organic growth, which I think again, reflect well the quality of the different companies. We will go into the detail of each of them later. So, I don't spoil this part. It has been also -- we've seen strong margin across the board, which means that this translates into a significant decrease of the contribution of this subsidiary, which is up 4.7% compared to last year. Our situation is to have very strong financial flexibility. We have a huge amount of liquidity with €2.2 billion loan to value with a pro forma of everything, which is the pro forma of the sale of Constantia, pro forma of the purchase of IK, pro forma of the potential investment we're going to make in IK X that is under -- which is raised today by the IK team is below 10%. And across our portfolio, our company still have a low level of leverage. So we have very significant kinds of flexibility, which is important in this period because that give us huge opportunity boost to think about how investing well our assets in principal investment, but also to deliver on our strategy to develop an asset management platform. NAV has been decreasing compared to last year. If we exclude the distribution, it's 2.7% decline at 100 -- and it's set at €160.2 per share. Most of -- well all of the decline is linked to the decline in value of listed assets during the year. Bureau Veritas, for example, which is the one that weighed the most on our net asset value had decreased by 7% over the year 2023, IHS 25, and Tarkett 19. Apart from HIS, the performance of those companies since the beginning of the year has been totally reversed and you've seen that the performance and we'll come to that of Bureau Veritas has been highly regarded by the stock market. And we see a 17% increase in the share price of Bureau Veritas since the beginning of the year, which I think is a good reflection of the quality of the business. And hopefully there will be more ahead after the Capital Market Day of Bureau Veritas, which is on March 20. That's a little bit what we can say but -- that the earnings by themselves and the net result I mean, Benoît will go through the numbers. I'm not saying that the numbers didn't reflect much, but I don't think it is the most important element of these earnings. The most important is the change in NAV, the performance of the underlying companies and our net result is significantly lower than last year. But last year we had the sale of Cromology that was included in our earnings, which generated €590 million of capital gains and capital gain by definition are not recurring. And by the way the fact that Constantia was sold on the 4th of January rather than on the 28th of December, moved the capital gain on Constantia from one year to the other. So we will have the benefit of the capital gain of Constantia. Just an illustration that the net result by itself is highly volatile for holding company as it's not representing the real value creation potential. Here I am. So as you see the trend on dividend policy €4 per share is probably the most visible change of our strategy this year and that will keep on going in the future -- by the way €26 million of share buyback, which is -- we're trying to do that on how I would say organized manner so that it's well done. Our target is to buy at least €100 million. Here for this part maybe we will move now to the performance of the group companies and probably a very more important part. I start with Bureau Veritas and then I hand over to David for the other companies. Bureau Veritas as you may have seen the earnings, which were published a week ago. It's a significant growth of revenues, a 3.8% published. But if you look to the organic revenue growth it is 8.5%. And I think it's a very important element. It shows that the TIC business that has had some slow growth period since two years has recovered significantly. And we think that the -- we're very optimistic with Hinda Gharbi who has taken over the CEO position during the year 2023, on the perspective of growth of this business. This business has grown in most of its underlying business line. You see that the Marine & Offshore has had a very, very big growth industry to certification. The one that has a little bit more suffered has been the Consumer Products -- CPS, but they have well recovered in the fourth quarter which I think is a good sign of where the market is heading. The margin of Bureau Veritas was established is -- the adjusted operating profit is up 3%. And if you take it with a constant exchange rate, it's a higher growth. The margin of AOP is 15.9%. And if you do that on constant margin it will be 16.2%. So it means that compared to last year this is a slight improvement of the margin which I think is again a very encouraging sign, altogether for the year to come. The debt situation of Bureau Veritas is no different from the other portfolio company. It is for the time being a low leverage 0.9 times EBITDA, as of December 31st 2023, a slight decrease compared to last year which gives us significant headroom in order to have an ambitious M&A program in the future. Dividend from Bureau Veritas, stand at €0.83 per share up 7.8% compared to last year in line with the 65% payout ratio that was set last year. I don't go more in the outlook because I think and the team made it very clear, but I think confidence in the future mid-to-high single-digit organic revenue growth which is expected. Another improvement in the adjusted operating margin is expected to and which is very important, a very strong cash flow conversion which is above 90% and I think is one of the key ability to keep on investing in the future. So we're very optimistic on the future and the capacity of Bureau Veritas to deliver strong value going forward. Thank you, Benoît.

David Darmon: Thank you. Good morning everyone. Regarding Stahl 2023 was a solid year in a very tough environment. As you remember high inflation, some supply chain disruption and some muted demand in some end markets. Despite all those external forces the year was solid. Organic growth was minus 8%, but partially offset by external growth. You do remember that, in January, Stahl announced the acquisition of ISG for $205 million. And this acquisition was well integrated during the year. They're moving on a common ERP. And the synergies that we did anticipate are showing up. We are also seeing over the year in 2023 an improvement. H2 was better than H1. And definitely Q4 was better than Q3, which was better than Q2, which was better than Q1. So it gave us some hope for 2024. Regarding the margin, Stahl is showing some good price discipline good fixed cost control as well. So you can see that the margin went up in 2023, despite the tough environment I mentioned. And again, ISG was perfectly integrated as well. In terms of leverage, despite the cash out of €205 million that I mentioned and despite the €85 million of dividend that Wendel received, so €125 million paid by the company. Leverage is still under two times. 1.6 times showing that Stahl continues to produce a massive amount of cash. It's a very cash-generative company with limited CapEx and limited working capital. And we were very pleased this year that Stahl receive again a platinum rating from Ecovadis, which makes Stahl in the top 1% of the companies that Ecovadis is rating. So, quite a performance. Scalian is our -- sorry. Scalian somehow I don't have the right order. So CPI, CPI had again a very good year. This is purely organic as the company has not made an acquisition during the year, so above 15% across the board on almost every product and every geography. The performance has been very strong especially in North America. The margin as we mentioned in 2022 was a sort of uniquely high above 50%. We said it at the time the 49.6% is more where the company used to navigate. We had increased personnel costs as the wages went up in the U.S. and we also had increased costs for venues and travel. On top of that the company did invest quite substantially in terms of IT. We had a number of IT projects internally trying to have better information better data and this had some impact on the margins as well. The leverage continued to go down both because of the cash generation and the increase of the EBITDA. And today it stands at 4 times. So, a very good year for CPI again. ACAMS. ACAMS has a strong EBITDA growth during 2023. The top line went up slightly below 5%. Remember that in 2022 one of ACAMS customers did pass a very strong order and so it was a very high base in terms of computing the growth excluding this very significant and unusual customer the sales growth was more 8%. The bookings are up 10% which gives probably a better view of the trajectory of the company. In terms of margin, you can see that the company has made some significant progress. This is the first year that the company is running as a stand-alone entity. The carve-out is now finished. There is no more TSA and links to the former parent company at Talen. It is a fully stand-alone operating company as of now. In terms of leverage, we are slightly under 6 times today. The net debt was actually a bit up. We had a lot of one-off costs to implement this carve-out. But thanks to the growth in terms of EBITDA the leverage was maintained at below 6 times. A few comments on talent. We have recruited a new CEO. Neil started in early January. He is coming with a very significant experience and background from Thomson Reuters where we did manage a very significant part of their business. And we expect this week our new CFO to join. We've been running with an interim CFO for quite some time now. And so the leadership is completely revamped at ACAMS. Scalian. Scalian the latest to join the family. As Laurent mentioned, we signed this investment pre summer. We closed over the summer. It did continue to show a very strong trajectory and performance in terms of top line. You can see that here it did deliver a 15-plus percent organic growth which is very, very strong. It is to be fair a market which is having some headwinds right now and we can see some slowdown. Customers are trying to delay some of their projects. And so we need to adjust the cost base to this new environment. It takes a bit of time. You see the project being delayed and you have already hired people. So, when there is a change in the pace of growth usually it comes with the compression of margins. So, even if we are showing here an improvement of margin during 2023. Recently we saw a compression of margin due to this slowdown. So, very good performance but as it is slightly slowing it comes with some pressure as well. In terms of leverage, we are slightly under 6 times. That does include the payment of a small acquisition Dulin in Spain, it's a small group of consultants for cybersecurity for the banking industry. But we are very pleased to sign. This is the first acquisition under our ownership and the integration is going very well. In terms of talent again, some changes at Scalian, there is a new CFO who joined. Nathalie is coming from Atos. She used to be the former CFO of Atos and we hope that she will do some significant improvement at Scalian over the coming months. We are working hands to hand with the management to deliver a value creation plan. There is a clear road map to create value with the company. And it's really in the new DNA of the firm to run this plan. And we are very, very pleased the way that both teams at Scalian and Wendel are working together. Wendel growth, as Laurent mentioned, we made over the last 12 months four acquisitions, four investments, it's minority investments in Tadaweb, Brigade, Preligens and AQEMIA, all B2B software companies exactly in the sweet spot that we are looking for high growth between €10 million and €30 million of run rate and a path to profitability for each of them. It's very early innings for those investments, but it's very promising. As you can see we have already €180 million invested in funds which combined with those four investments make a commitment of €235 million in Wendel growth. And now, Benoît for the financial results.

Benoît Drillaud: Good morning everybody. The consolidated sales for 2023 reached -- sorry back next. So the consolidated sales for 2023 reached €7.1 billion. It is 5.7% above last year and 6.4% organically. And the contribution of the portfolio companies to the net income group share is €362.1 million, increasing by 5.9%. Both reflect the very good results that Laurent and David have just presented. After deducting the financing operating expenses and tax of Wendel, that has decreased under the effect of lower net interest expenses deducting some restructuring cost and M&A cost in the portfolio companies and the entry from the goodwill allocation the net income group share is €142.4 million. Last year, we had the disposal of Cromology with a capital gain that was €590 million. So we had a net income group share that was €656 million. The capital gain on Constantia Flexibles will be booked in 2024 because the closing was early January. Concerning the NAV. So we have slightly adjusted our methodology to make it in line with the IPEV guidelines that are the standard -- valuation standard for the private equity industry. We still use the share price for listed companies. We still use multiples of the listed peers for unlisted companies, but we have changed where we consider the acquisition of unlisted company, when there is a significant difference between the acquisition multiples and the listed multiples. The impact is 1.4% positive from this adjustment on the [indiscernible] at the end of 2023. That is €160.2 per share or €7.1 billion. This displays a disappointing discount to our share price. If we look to the change over the year 2023. And if we adjust as a dividend that has been paid in June, the NAV has decreased by 2.7%, despite the good growth of the unlisted assets at the end of 2023. The share price of Bureau Veritas was €22.2 per share. Today it's roughly €27 per share that makes a big difference. For our development, we need a strong financial structure. So you can see here a description of the infrastructure of Wendel we have a low coupon – average coupon of our bond debt that is 2.4%. We have a quite long average maturity that is 4.6 years with maturities between 2026 and 2034. We have ample liquidities – the 2.2 here is net of 1.3 of cash at the end of 2023. So it was before the 1.1 of net proceeds from Constantia. And we also have non-drawn credit line that amounts to €875 million and that matures in 2027. But the main financial indicator for our financial structure is a loan-to-value ratio. It is 9.6% at the end of 2023 pro forma, the disposal of Constantia and the acquisition of IK. It is well below the credit agency ceiling for our current credit rating that is BBB. So we have a very good financial structure to support our development. Moving to ESG. So we are very committed to improve the ESG profile of the group. You can see on this page that everything is improving and we have very good rating and Christine Anglade will be very happy to answer your questions concerning ESG.

Laurent Mignon: Thank you very much, Benoît. So I think to conclude this and before we answer the question that you may have, this is a year a very good performance of the operating companies, which is the long-term very important. And I think you've been seeing that companies by companies. This is also a very important year in developing our private asset management business. And again, 2023 is only the beginning of it. And that gives us the ability to deploy more capital towards more growth in the future. With – and I think it's very important and it's a sign of Wendel, a continuous and manageable progress on our ESG policy and we're very – very specific at it. And I can tell you in our dialogue with – both in our investment policy and the dialogue with our portfolio companies this is a key element of the dialogue and we think it's a very important long-term value drivers. And all of that I think generate opportunity to create more value to shareholders and to sustain double-digit TSR starting by the ability to distribute a significant dividend to our shareholders and giving you the appropriate yield. Thank you very much. This was the end of the presentation itself. And now we can open a Q&A session and the team is here to answer any questions that you may have. Maybe you can present yourself or...

Q - Saima Hussain: Good morning, everyone. Saima Hussain from AlphaValue, and thank you for having us here. So I would like to open this Q&A session with four questions. The first one concerns the net asset value. You recorded a 10% increase in your unlisted assets at constant perimeters. I would like to note the breakdown of what drove the value of unlisted assets up? Was it just ACAMS and the adoption of the IPEV guidelines? Regarding your discount to net asset value, your discount has widened from 47.5% to more than 50%. I would like to know what do you think about this widening of the discount, and how do you intend to reduce it. Now on private equity, could you give us a word on what do you think about the private equity environment? Last year you mentioned that volumes are particularly low and that the market was closed for large transactions. What is the situation today? Is it difficult to find opportunities? Do you think that the expectation of buyers and sellers are finally in line? And how do you see fundraising, and particularly with IK Partners acquisition, how will you manage the fundraising part? And lastly, in light with the previous question, with the market anticipating several rate cuts, do you see a revival of interest regarding private equity? And would possible series of rate cuts lead to an upward revaluation of your listed assets? Thank you.

Benoît Drillaud: I don't have a pen, so I didn't take note, but I'm trying to remember everything. The first question is on a NAV and the value of our asset and where does it come? You've seen that effectively the non-listed asset has increased by 10% over the period. The calibration didn't participate the change in methodology in increasing the value. You know that we had methodology which was going from the purchase value to convergence within non-listed. So the calibration didn't change that much. It has some impact, but it's limited. The real driver is the performance of the company and the improving margin and that's what drives a significant part of the improvement in the -- and Constantia over the year exactly you're right. The improvement of the value of Constantia in the year. That's the three drivers that have drove the value of non-listed assets. We don't give the detail and we will not give the detail more than that. But then, yeah, maybe on that part we can just show the growth in earnings at CPI 62 to 69. Yeah. So you can expect some. And ACAMS in 19 to 25. So whatever happens to the multiple when you have this -- the scale of those growths explains something.

Laurent Mignon: I think it's what you have to take away from this meeting is that the performance of our underlying companies is doing well. Despite an environment that may be tougher in some areas than we expected, the performance of our underlying is doing well. And that's, I think, the number one key takeaway that you should have from today. The rest of it you basically knew the investment in IK and so on. So this is I think the number one. And our confidence in our ability to generate value by those investments. Now the NAV discount. I mean, I've always had a policy as a CEO of listed firm never to comment the share price, because I can drive a lot on the performance or try to drive a lot on the performance or try to drive a lot on the performance of the underlying of the company, the share price is really what shareholders want to do with it. And do they want to buy the stock or not? I think we're giving clear guidelines. We're giving clear objective and ambitious targets. We're changing the profile of the company. We're showing that we're ready to -- we're confident in our ability to deliver the target we've put to ourselves through a dividend policy that has moved and that will be a sustainable one. Now, we're an old company and so we know that there's a discount and we know the discount evolved. If I take -- and I don't know if it's the only reason, but if I take a parallel between our share price and the interest rate there's a very significant line. So potentially you may expect that some part of the discount move away with the rate decrease. But hopefully, it will not be the only driver. Number one driver for us and has to be the performance we're delivering. And we are committing ourselves, and we're committed to deliver significant performance. And that would be, for me, the only long-term driver in term of reducing the discount to the NAV. That's the only thing. Everything else buying back shares and so on may help -- it doesn't change the discount most of the time. So we'll -- but again, we are -- yes, we're very pragmatic in the way we look to that. And the share price is the only thing I cannot do.

Laurent Mignon : So, regarding the PE market. So, yes, we said last year it was a tough market and especially for a large transaction. A couple of data points to illustrate that. First our own Constantia that we sold for slightly above €2.2 billion, which is upper mid cap. So it's -- it is a big transaction, but not a huge transaction. It was among the top five last year. So there are like less than three assets, which were sold for more than that last year, which gives you a sense of the space. Another data is last year 60% of PE transaction process failed. So -- which is a huge number. So the sellers did all the work to prepare a company for sale, went to talk with buyers and did not end up in an agreement on the price. So that was last year definitely a very difficult market, very difficult for buyers and sellers to speak the same language. What we see today is a lot of preparation. Everybody is getting ready to sell their assets. So, all our friends in consulting firms and auditors are working really hard to prepare a lot of books. So there is a sort of queue, which is happening of assets to be sold. There will be a bit of capitulation from sellers. So some people are going to be reasonable, because they have to. They have to return capital to their own. So we expect to see more activity, but there will still be a mismatch between buyers and sellers. So we don't expect at least in H1 to see the same pace of activity that we are used to see. So better for 2024, but probably not what we saw in 2021 or 2022.

David Darmon: Well, maybe to reflect on that is and go to the last question that the environment in terms of raising fund. Today, I think one of the key elements for good fund to raise fund is to show their ability to give back money to their investors. And that's why you see people that there's a little bit of I don't know capitulation, which is basically it's just that private equity firms need to show to the ALP that they are able to have significant higher DPI and ability to give back funds, before they're raising new funds. And that's -- I mean at least I think it's a key element of the -- and that is one of the big strengths of IK. IK has a very high DPI. I have been able to make more sales in 2023 than ever. I can have been very active in managing their portfolio, because they have a very good quality portfolio. And that's why IK is I think a very great term, because they are really having a high-quality assets, very well managed and the performance of what they're delivering to their LPs is very good, which means that they are in a good stance in terms of fundraising and we're pretty as they are. Very confident in their ability to finalize the raise of their fund IK X, which is ongoing so I cannot comment on it but it's we're very, very optimistic on that and very optimistic that the target in terms of fee-related earnings that we had for IK will be there this year. So there's no -- we're not nervous about it. Where as everything we're committing to that making hard work on it, and they're making hard work to do it. It's not something that you do by just clapping your hand, and it's not as easy years. But I think good quality investors receive money from fund -- and from long-term investors. Maybe last word on what I said at the beginning. When I say, I'm not -- I cannot control the share price. I don't mean that I don't care. I do care and I'm a shareholder also, I care about.

Alexandre Gerard : Good morning and thank you for the presentation. Alexandre Gerard, CIC. Three questions on my side. The first one is related to your private assets and we would be extremely happy to maybe have some hints or forecast for 2024 in terms of growth and margin? Are you expecting a better or poorer performance for these four assets? The second question is related to your financial flexibility starting from a pro forma LTV ratio of close to 10%. What's your room to invest further? Is it fair to say that you have maybe some room for one equity investment of, let's say, €300 million to €400 million without having to sell any other assets? And the last question is related to IHS and Tarkett despite the resolution of the government issue at IHS the share price has been falling despite that. What are you doing to help them grow? Same question for Tarkett, are you satisfied with the performance of the company? And what's your implication on a day-to-day basis with those two investments? Thank you.

Laurent Mignon: So as you know we don't give guidance, but I'll try to give you like a flavor of what we see. So on Stahl as I mentioned in terms of top-line we see 2024 being more encouraging than 2023. So 2023 was a flat year even declining in terms of volumes. Would we expect by the end of the year to see some kind of recovery in terms of volumes? And they still have the same cost discipline. So we do not expect margins to change significantly. It's a cash machine. So hopefully leverage should go down exactly if they make some M&A. CPI is like clockwise so expect double-digit I will say I'm just looking at – you must hate me to give some guidance at this stage but...

Benoît Drillaud: You started saying we don't give guidance.

Laurent Mignon: Let's say it's been on a double-digit pace for quite some time and we don't see any reason why it will change. Again there is a new leadership. So maybe let's wait to see Neil and the new CFO to come with a new budget and new plan to give some direction. But we don't see our thesis to be different today than it was two years ago. There is a huge need for training and certification in money laundering. So we still have the same strong tailwinds.

Benoît Drillaud: And the underlying growth you mentioned it but I think we have to underline the -- underlying growth of top-line is better than the one that you can see because of that specific contract that we have. It's not next use by itself but it's important because this is really what is the trend underlying the business of ACAMS.

Laurent Mignon: So Scalian it's a tough macro. You can see that everybody is focusing on costs. You can see that all the peers are seeing that they see quarter-over-quarter a slowdown. It's a company which is more agile and better end markets than its peers. So we expect them to outperform the market, but the market is slowing down. So it will be growing better than market will be 15% plus? Probably not but will be satisfactory and strong probably, yes. And margin as I mentioned with this delay there is probably like a like the utilization rate is probably going to go down. I think we covered them all. Yes.

Benoît Drillaud: Then the other question you had was -- remind me there was...

Alexandre Gerard: Our maximum LTV ratio financial flexibility...

Benoît Drillaud: Yes I think we have -- I mean I'm not going to give -- but with let's say one way of looking at it. We said that we were potentially able to invest €2 billion within two years last year. We've made €1 billion roughly this year when you add up Scalian and IK plus the investment that we can make in IK funds. So having €1 billion available is the right way to look at it without further sale….

Alexandre Gerard: Question related to IHS.

Benoît Drillaud: Yes. So IHS -- well the environment -- well you have two things. We've got the performance and the problem IHS is that it is moving in an environment where you've got a few headwinds. The number one is Nigeria and currency -- the currency of Nigeria the Naira has moved from NGN 750 per dollar to you have NGN 1600 now. So a huge devaluation of the currency. They have contract that can protect them against that but there's always a delay of the quarter between that does that weigh a lot on their activity. And the fact that they are number one market is under pressure is never the good even if you're protected against currency move. So this explained partially or a significant part of the underperformance of the share price of IHS. I think they had good news about -- they've announced a deal with Airtel recently. They have good news on the operating side. And so -- but despite that, the understanding of the market of the risk is so -- such that you have a pretty disappointing share price. It's trading $2.7, $2.8 today per share. So it's very disappointing. Now as you know, we have a little bit -- we close to 20% of shares and limited the rights in terms of governance, which was -- what was agreed when the company was listed. We've been pretty -- having significant discussion with the company on that. And we even argue strongly, let's say -- and we came to an agreement. This agreement will be in force should it be voted during the AGM or not but well, the right in the order board meeting that should be held before end of June, which means that then we will have reinforced rights in order to participate to the governance of this company and make change. But for the time being, we have less active role into the definition of the strategy. Tarkett. Well, I think Tarkett didn't publish an earnings target because they are listed. I don't -- but Tarkett has been doing has -- is it Jerome, do you know they published I cannot say things that is -- I have to make sure that it is public information, nonpublic information. I think it's not yet -- not yet. So I cannot say anything. I'm sorry. No, no, it's not. But it's despite -- despite a difficult environment, I think we're pretty happy about the performance. That's all I can tell you. You'll see -- you get the results from Tarkett soon.

Joren Van Aken: Joren Van Aken from BHF. Two questions on my side. So the first one is, again, on Tarkett, it's not about the results. It's just on your view on the balance of the time it is taking to you and your team and the potential impact on NAV because Tarkett is a very small asset on Wendel portfolio. Second question is on the dialogue you have currently with LPs in order to buy them and potentially with asset managers.

Benoît Drillaud: GPs.

Joren Van Aken: GPs. I'm sorry. How is it evolving? With, let's say, the changing environment. We've seen some funds that are raising again and even big money this time And you have done one deal, not closed yet, but in the coming months. Are there things in your grid on which you think you may be more flexible? And on the other hand, since you absolutely want not to have any compromise on that.

Laurent Mignon: Well, first of all, Tarkett does to take too much time to the team compared to the site. Well, no, we allocate -- we're very strict in the way we do allocate time and teams. We've got a small team that is following Tarkett, but we have a good dialogue and a good discussion with the family in order to manage that. And it's not a huge part of the team. We've got -- it's -- we've got one operating partner that spend 20% much. I'm probably on Tarkett and the other one is one member of the investment team. So it's -- yeah, and I have a direct dialogue with them Tarkett team. So no we -- it's a well-organized structure discussion with the [indiscernible]. Now do we -- are we happy about having a connection of small investment? No, we'd like to have larger -- if that's your question going forward, yes, we'd like to have a larger investment than the collection of small ones, but it's not a reason to neglect the one that we have and I think Tarkett is a great company and we need to invest some time on to it and create value, more value through that. GPs, yeah, we have discussion with GPs. The environment is a very active environment. And you see that the -- what we've said and I think we've been pretty early saying that this was a turning point in this industry. And for many reasons, which was first the fact that the industry was not as easy as it used to be, because fundraising was more difficult because you had this period of transition in terms of generation, which was important. You had the different environment with the increase in rates for valuing companies. I mean all of that has changed a little bit in the landscape and has made that this industry that developed fast and quickly over the last 10 to 15 years was coming to a period where they had to settle down a little bit and reorganize itself. And our view about that I think was pretty clear and I think we have a very good value proposition for GPs. This is -- and we can see that from the discussion we have with most of them. We have one clear value proposition and we don't want to move away from it. So what you're saying, do you want to make compromise and so on. For example there is one element we don't want to compromise. We want to have control of -- we don't want to be a GP stake. We want to have control of the GP when we invest, because we think it's important in order to achieve what we want. We want to create a platform and we don't want to be an investor in GP. We want to create a true platform, which means that we need to have a controlling stake in GP. And should we -- and because we always have to be pragmatic should we don't have one immediately. We need to have absolutely clear path to have control in a very foreseeable future. But we want to create a platform and creating a platform needs to have a good sense of the strategy and leadership on the capital. On the other side, we are very clear about the fact that we want to have teams where we give full autonomy in investing, because we want team that -- and we don't want to interfere into investment committee. And that's very important, because we think that the number one value when we buy -- well number two choosing by GP. We buy a team that is delivering performance and we're buying relationship with LPs. And the relationship with the LP is key, and if the LP is worried about the fact that you will change where they have invested, which is the quality of the team and how they do their process then you will lose the LP. So this one also is for us a key element of our discussion, which is also part of the value proposition because some of the reorganization in this industry may lead to integration of teams within larger organizations where they lose part of their DNA or magic touch in terms of investing. So we are very, very sensitive to that. But I view our value position as being pretty attractive. But we don't want to rush. We just want to make sure that we always get the best in that what we think we had with IK and we'll keep on looking for the very great teams on the market that are sensitive to our value proposition.

Operator: We have a question from the web. Why did you deny the article in challenge about the non-acquisition of Diot-Siaci when usually you keep silent?

Laurent Mignon: Because it was stating something wrong.

Olivier Allot: Thank you. Are you're still interested in building up inorganically is a specialty calling business of Stahl and what is their M&A pipeline now?

Benoît Drillaud: So yes, as Laurent was mentioning, when we did invest initially in starting 2006, it was a pure companies manufacturing chemicals for the laser industry as a finishing the laser wetland. And as you've seen over the recent years, we moved and moved the company to being a more specialty and performance coating business. This is a territory where Martin and his team are leading to. And so we -- as we did for ISG last year, we are continuing this journey. So we are still looking at additional targets to go into that direction. What is the pipeline? We have assets we are looking at. Is there any chance to sign or close one soon? TBD, but it's definitely something we are pursuing.

Olivier Allot: Thank you. In line with the Capital Market Day, your press release reaffirmed willingness to perform a separation of the Principal Investments segment, which assets do you consider as potential candidates for audition?

Laurent Mignon: Do we want to comment or no. It's a good question, but I think we cannot be specific on that. We cannot be specific. I think it's half minutes to -- but as the only thing we can say that we have the ability to do asset rotation.

Olivier Allot: Thank you. Is there a maximum cost of bond debt that you do not want to exceed?

Laurent Mignon: Is it maximum, sorry?

Olivier Allot: Cost. Maximum cost, cost of debt.

Laurent Mignon: No, I think we've got our situation is that we have a huge amount of cash and a low cost of debt. So I don't think -- and I don't think we have to face any renewal of funding before 2026. So, it's a question we have to ask us when we have to anticipate that in 2025 but not today. So our cost of debt would stay low for the next few years.

Olivier Allot: Thank you. And the last question from the web. It's about the NAV methodology. Can you give some more color on the calibration process? What does it mean? Does it mean that you overweight some acquisition multiples, it's unclear to me.

Laurent Mignon: Benoît.

Benoît Drillaud: I'm losing my mic. Okay. So, calibration is something that is recommended by the IPEV guidelines. When we have a significant difference between the acquisition multiples and the average multiples of the listed peer center. Then, if this difference reflects specific features in terms of growth or profitability between the target and the sample then we apply this gap at each measurement debt after the acquisition until the difference in terms of growth or profitability disappears. The difference between the peer center and the target disappear. So it happens that we --we buy a company with a faster growth than the sample, then we pay one-turn, two-turn, above superior sample and then we apply this one or two turn above the pure sample, after the acquisition at each NAV. And we stopped doing this when the growth of our asset is in line with the growth of the sample.

Q –Unidentified Analyst: Three follow-up questions on my side regarding some numbers quickly, there is a negative 2.8 impact on the NAV bridge per share. I mean, can you comment on that? What's included in that number 2.8 other minus there? Second question is related to the OpEx and financial costs in 2024 at Wendel's holding level. Can we expect the stabilization of that amount in 2024? And the last question is related to your FRE target of €150 million in 2027. That's a consolidated amount or that's -- Wendel Group share i.e. do you account for at 100% or... Thank you.

Laurent Mignon: So I will go backwards. Group share for the last question, the OpEx you should expect to reduce compared to this year and the 2.8 Benoît will come back on stage.

Benoît Drillaud: Cost of the structure. Thank you. This is the cost of the structure and some of the stuff like -- when you buyback shares that could increase the NAV per share. So this is kind of a difference.

Laurent Mignon: Okay. If there is no other question no other question from the web, Olivier?

Olivier Allot: We have question about IHS. What is the way forward on IHS for you as one of the main shareholder?

Laurent Mignon: Let's brain-storming with the management and the hope to best create value improving the governance, improving the portfolio composition, improving the financing, so it's fair to say that we have a much better dialogue than we used to.

Benoît Drillaud: Yeah.

Laurent Mignon: And so we are a provider of IDs. And we believe management is active.

Benoît Drillaud: Yeah. We think that the underlying value of the company is much stronger than what the share price reflects. The quality of the EBITDA of the company is good. But it's a little bit like the environment within -- in which the company is moving today, is difficult. So yeah, we've got -- even if we're not an active in the governance of -- we're not active in the governance of IHS which I think have good effectively dialogue with the company and we think that the company is really clearly understanding that they have to act in order to make sure that the real underlying value of the company is better recognized by the top market, but it takes some time to do that.

Olivier Allot: Thank you. No more questions.

Laurent Mignon: Thank you. Well so if no more questions from the audience, thank you very much. And I think we've got a cocktail for the one that are here. That can share together. And we'll be happy to have one-on-one discussion, if needed. Thank you.

Benoît Drillaud: Thank you.