BUREAU VERITAS : Solid H1 2022 Operating And Financial Perfo...| MENAFN.COM

Tuesday, 27 September 2022 10:27 GMT

BUREAU VERITAS : Solid H1 2022 Operating And Financial Performance 2022 Full Year Outlook Confirmed


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PRESS RELEASE

Neuilly-sur-Seine, France – July 28, 2022

Solid H1 2022 operating and financial performance ;
2022 Full Year outlook confirmed

H 1 2022 Key figures 1

  • Revenue of EUR 2,693.4 million in the first half of 2022, up 6.5% organically (of which 5.2% in the second quarter) and up 11.4% on a reported basis
  • Adjusted operating profit of EUR 410.9 million, up 8.7% versus EUR 378.2 million in H1 2021, representing an adjusted operating margin of 15.3%, despite the lockdowns which occurred across China in the second quarter
  • Operating profit of EUR 375.2 million, up 8.4% versus EUR 346.1 million in H1 2021
  • Attributable net profit of EUR 225.2 million, up 14.4% versus EUR 196.9 million in H1 2021
  • Adjusted net profit of EUR 248.6 million (EUR 0.55 per share) up 15.8% versus EUR 214.7 million in H1 2021
  • Free cash flow of EUR 129.9 million, with continued disciplined capex policy (1.9% of Group revenue), hampered by working capital requirement increase (9.8% of Group revenue) mostly attributed to the delays in invoice settlement triggered by the Chinese lockdowns
  • Adjusted net debt/EBITDA ratio reduced to 1.10x as of June 30, 2022 versus 1.30x last year

H1 2022 Highlights

  • Growth driven by the whole portfolio and most geographies
  • Underlying momentum on Sustainability and ESG related solutions remained strong
  • 58% of Group sales related to Sustainability through the BV Green Line of services & solutions
  • Diversified portfolio drives delivery of 5.2% organic revenue growth in the second quarter despite the lockdown measures which negatively impacted the activity in China
  • Limited impact from Russia/Ukraine war
  • Acquisitions of two new bolt-on companies in strategic areas (Consumer and Sustainability assurance) for total annualized revenue of circa EUR 34 million (and EUR 58 million including PreScience announced in January): Advanced Testing Laboratory (US) and AMSfashion (Spain)

2022 Outlook Confirmed

Based on a solid sales pipeline around the Group's diversified portfolio and the significant growth opportunities related to its sustainability range of services and solutions, and assuming there are no new Covid-19 lockdowns in its main countries of operation, Bureau Veritas still expects for the full year 2022 to:

  • Achieve mid-single-digit organic revenue growth;
  • Improve the adjusted operating margin;
  • Generate sustained strong cash flow, with a cash conversion above 90%.

Didier Michaud-Daniel, Chief Executive Officer, commented:

“The Group's half year results demonstrate the strength of our diversified business portfolio and geographical footprint. We delivered a very sound 6.5% organic revenue growth in the semester, despite the consequences of the Ukraine war and the lockdowns in many cities in China in Q2. We continue to seize numerous growth opportunities, notably regarding Sustainability related solutions, illustrated by a solid level of our sales pipeline at the end of June 2022. We remain uniquely positioned to support our clients in their commitment towards resilient and sustainable business models. This underlines the relevance of our ambition to be a Business to Business to Society company aiming at leading the industry in terms of ESG by 2025. Looking ahead, despite the uncertain environment we are facing, we confirm our 2022 outlook.”

  • H1 2022 KEY FIGURES

The Board of Directors of Bureau Veritas met on July 27, 2022 and approved the financial statements for the first half of 2022 (H1 2022). The main consolidated financial items are:

IN EUR MILLIONS H1 2022 H1 2021 CHANGE CONSTANT CURRENCY
Revenue 2,693.4 2,418.4 +11.4% +6.9%
Adjusted operating profit (a) 410.9 378.2 +8.7% +4.0%
Adjusted operating margin (a) 15.3% 15.6% ( 38)bps ( 42)bps
Operating profit 375.2 346.1 +8.4% +3.8%
Adjusted net profit(a) 248.6 214.7 +15.8% +10.5%
Attributable net profit (loss) 225.2 196.9 +14.4% +9.2%
Adjusted EPS (a) 0.55 0.48 +15.2% +9 . 9%
EPS 0.50 0.44 +13.8% +8.6%
Operating cash-flow 213.0 328.9 (35.2)% (36.4)%
Free cash flow (a) 129.9 228.9 ( 43.2)% ( 44.7)%
Adjusted net financial debt(a) 1,088.8 1,165.4 (6.6)%
(a) Alternative performance indicators are presented, defined and reconciled with IFRS in appendices 6 and 8 of this press release
  • H1 2022 HIGHLIGHTS

Steady organic revenue growth in the first half, driven by Sustainability overall

Group revenue in the first half of 2022 increased by 6.5% organically, of which 5.2% in the second quarter, benefiting from solid underlying trends across most businesses, and despite the volatile environment.

This is reflected as follows by business:

  • a fifth of the portfolio (Industry) delivered double digit organic revenue growth, up 10.8% in the first semester (including 9.8% growth in Q2) benefiting from both strong business activity for the Power & Utilities segment (fueled by renewables) and for the Oil & Gas markets which were supported by the rise in oil prices.
  • another fifth of the portfolio (with Agri-Food & Commodities) delivered high single-digit organic revenue growth (up 8.6%). The growth was led by continued buoyant market conditions in Metals & Minerals (up 15.2% organically) as well as improving trends in the Oil & Petrochemicals segment.
  • more than half of the portfolio (Marine & Offshore, Buildings & Infrastructure, Certification and Consumer Products Services) grew at 4.3% organically on average. Marine & Offshore (up 6.0%) was fueled by solid activity levels in both in-service activity and the new-build activity which continued to benefit from decarbonization trends. Buildings & Infrastructure recorded an increase of 3.8% in the first half of the year as it benefited notably from strong momentum across its Americas platform while the second quarter was impacted by the lockdown measures implemented across many cities in China. Certification grew 4.1% fueled by the rising demand for Sustainability and ESG-driven services. Lastly, Consumer Products Services delivered very healthy revenue growth (up 4.3% organically in H1, with a 4.0% increase maintained in Q2) driven by its South East and Southern Asian operations which offset the disruption caused by the lockdown in China in the second quarter of the year.

Disciplined and selective bolt-on M&A in the first half of 2022

During the first half of 2022, Bureau Veritas continued to pursue its bolt-on M&A, completing two transactions in strategic areas, representing circa EUR 34 million in annualized revenue (or 0.7% of 2021 Group revenue). This complements the acquisition of PreScience completed on December 29, 2021.

Consumer Products Services

  • Advanced Testing Laboratory (ATL)

Headquartered in Cincinnati, Ohio, Advanced Testing Laboratory (ATL) is a leader in scientific sourcing services for the North American Consumer Healthcare Products, Cosmetics & Personal Care and Medical Device markets. Its services span the entire product life cycle, from research and development to substance and product qualification to manufacturing. Services include Analytical Chemistry, Engineering, Life Science, Product Performance, Product Safety & Regulatory, Quality Assurance and Regulatory Compliance. With the acquisition of ATL, Bureau Veritas is accelerating the diversification of the Consumer Products Services division into new markets and services models by expanding its footprint in North America. This major step enables the Group to enter the fast-growing Consumer Healthcare market.

  • AMSfashion

AMSfashion is an expert in sustainability, quality and conformity services for the fashion industry. It offers advanced analytical solutions for the textile and footwear sectors, and extensive experience in cosmetics analysis. It supports brands and suppliers of all sizes in verifying the quality and conformity of products and materials against customer and regulatory requirements. This contributes to a reduction in claims, penalties, product recalls, customs blockages and shipment delays. The acquisition strengthens Bureau Veritas' presence in Iberia, a key hub for the expansion of its Consumer Products Services business, supporting the continuing growth in near shoring from South Europe and Africa. This also enables the Group to support European Retailers and Brands looking to improve their supply chain reliability and resilience.

ANNUALIZED REVENUE COUNTRY DATE FIELD OF EXPERTISE
Buildings & Infrastructure
PreScience c. EUR 22m USA
(California)
Dec. 2021
(booked in Jan. 2022)
Project management/Construction management services for Transportation Infrastructure projects
Consumer Products Services
Advanced Testing Laboratory (ATL) c. EUR 31m USA
(Ohio)
June 2022 Leader in scientific sourcing services for the North American Consumer Healthcare Products, Cosmetics & Personal Care and Medical Device markets
AMSfashion c. EUR 3m Spain June 2022 Sustainability, quality and conformity services for the fashion industry, including organic/vegan content verification and durability testing

As a reminder, Bureau Veritas announced on January 4, 2022 the acquisition of PreScience, a US-based leader in Project Management/Construction management services for Transportation Infrastructure projects - highly recognized for its expertise on highways, bridges and rail/transit. PreScience has been consolidated in Bureau Veritas books since January 1, 2022.

The pipeline of opportunities is healthy, and the Group will continue to deploy a very selective bolt-on acquisitions strategy, in targeted areas (notably Buildings & Infrastructure, Consumer Products Services, Sustainability Assurance, renewable energy and cybersecurity) and geographies (North America notably).

  • IMPACT OF THE CHINESE LOCKDOWNS IN THE SECOND QUARTER

Following the Chinese government's“zero covid policy”, the Group has been facing selective lockdowns in several cities across the country since the end of March 2022.

Given its strong exposure to China (c.15% of total revenue in H1 2022), the lockdown measures had a material impact on performance in the second quarter of 2022. The impact varied however by business:

  • in Consumer Products Services, which makes up half of the Group's Chinese revenues, Bureau Veritas was proactive and adapted to the constraints. The impact in Q2 was thereby contained as the teams were able to divert samples from one location to another across the country or outside of China to the Group's South Asia testing capabilities (Vietnam, Bangladesh, India and Sri Lanka). All the Group's labs reopened and were fully back to normal by the end of June 2022.
  • in Buildings & Infrastructure (representing roughly 30% of China's revenue, solely focused on infrastructure assets in the transportation field and energy), construction sites were shut down for a few weeks (up to eight weeks) in areas where mobility restrictions were imposed (Shanghai and Shenzhen notably). Once the mobility restrictions had been removed, the Group operated in a stop & go situation with sites required to shut down as soon as the slightest suspicion of Covid arose. Since mid-June, the construction sites have gradually restarted, and the Group expects to recover from Q3 2022 onwards.
  • LIMITED EXPOSURE TO THE RUSSIA/UKRAINE AR

The Group generated c.1% of its Group consolidated revenue in 2021 with Russia and Ukraine together, mainly related to commodities markets.

In Ukraine (0.3% of Group revenue), the Group has put its people's safety at the heart of crisis management. Since the start of the war, Bureau Veritas has stopped operating while ensuring the payment of its employees' salaries.

In Russia (0.8% of Group revenue), the Group has reduced its activities to essential services in quality, health & safety, environmental protection and social responsibility to domestic and international companies. Since the beginning of the ongoing war between Russia and Ukraine, Bureau Veritas has regularly assessed and monitored its position in Russia. As of this date, the Group has downsized its business in this country in the sectors where the company was previously operating i.e., Marine, Aeronautics and Commodities. The Group will continue to downsize its operations and presence as the situation evolves.

Overall, the Group considers that most of its activities are not materially impacted by the current war in Ukraine.

  • A SOLID PRICE DISCIPLINE

In the current inflationary environment, as a service company, Bureau Veritas is mainly impacted by wage inflation. The Group has overall good traction on pricing with variations across sectors and geographies: price realization is more favorable in the mass market and in highly regulated activities but more complex with a delayed impact for multi-year and large contracts.

  • SOLID FINANCIAL POSITION

At the end of June 2022, the Group's adjusted net financial debt increased compared with the level at December 31, 2021. The Group has a solid financial structure with the bulk of its maturities beyond 2024.

At the end of the first half of 2022, Bureau Veritas had EUR 1.4 billion in available cash and cash equivalents and EUR 600 million in undrawn committed credit lines.

At June 30, 2022, the adjusted net financial debt/EBITDA ratio was further reduced to 1.10x (from 1.30x last year) and the EBITDA/consolidated net financial expense ratio was 16.67x.

The average maturity of the Group's financial debt was 3.8 years with a blended average cost of funds over the half year of 2.5% excluding IFRS 16 impact (compared with 2.4% in the first half of 2021 excluding the impact of IFRS 16).

In July 2022, Bureau Veritas decided to cancel 1,915,000 shares (0.4% of the capital) which had been bought back between April and June 2022 under the share buyback program authorized by the AGM of June 25, 2021.

Bureau Veritas shareholders approved the distribution of a dividend for the 2021 financial year

At the Bureau Veritas Ordinary Shareholders' Meeting, shareholders approved the distribution of a dividend of EUR0.53 per share for the 2021 financial year (3rd resolution, approved at 99.98%), paid in cash on July 7, 2022

  • BUREAU VERITAS IS COMMITTED TO ITS EXTRA-FINANCIAL PERFORMANCE

Corporate Social Responsibility (CSR) k ey indicators

UNITED NATIONS'
SDGS
H1 2022 FY 2021 2025 target
SOCIAL & HUMAN CAPITAL
Total Accident Rate (TAR) 2 #3 0.24 0.27 0.26
Proportion of women in leadership positions3 #5 29.2% 26.5% 35.0%
Number of learning hours per employee (per year) 4 #8 14.2 29.9 35.0
ENVIRONMENT
CO2 emissions per employee (tons per year) 5 #13 2.38 2.49 2.00
GOVERNANCE
Proportion of employees trained to the Code of Ethics #16 95.9% 95.8% 99.0%

CSR key initiatives and awards in first half 2022

Over the first half 2022, several CSR-related actions and initiatives were implemented:

  • Environ m ent :
    • Eco-efficiency assessments have been conducted in some of Bureau Veritas' buildings and offices in Africa and solar panels were installed on the roofs of several laboratories (Nigeria, South Africa, Ivory Coast) within the framework of direct Power Purchase Agreement's (PPA);
    • Initiatives have been implemented to reduce and offset CO2 emissions as part of the deployment of Earth Day (compensation programs through afforestation and reforestation);
    • Some contracts were renegotiated to enable access to renewable energy for some of Bureau Veritas' large labs across the World;
  • Safety :
    • Dedicated campaigns and training sessions were rolled out (e.g.“2 minutes for my Safety” training) as part of the World Day for Safety & Health at Work celebrations;
    • Bureau Veritas provided support to its employees and their family members in Ukraine through the supply of transport, accommodation, and access to essential goods and services, as well as through donations given by the Group and by its employees;
    • Support was also provided to the employees and families facing Covid-19 lockdown measures in China and Hong Kong in Q2 2022 (access to goods, assistance programs);
  • Social :
    • Improvements and implementation of leadership development programs dedicated to high potential women across all Operating Groups;
    • Development and implementation of an employee on-boarding and off-boarding survey as part of the Group's overall employee engagement assessment;
    • Bureau Veritas became a signatory of the United Nations Women's Empowerment Principles;

Awards:

Bureau Veritas received several CSR-related awards in the first-half of 2022:

  • The Economic Times has recognized Bureau Veritas as one of the best Organizations for Women for 2022. Bureau Veritas South Asia Region received an award for this recognition;
  • Bureau Veritas UK Ltd received two Gold Medal awards (Occupational Health & Safety and Fleet Safety) in the RoSPA Health and Safety Awards for the ninth consecutive year.

CSR commitment recognized by non-financial rating agencies

Bureau Veritas supports companies, governments and public authorities in reducing their risks in terms of health, quality, safety, environmental protection and social responsibility. These challenges are central to societal aspirations. Being a Business to Business to Society company comes with a duty: to be exemplary in terms of Sustainability internally, and to be a role model for industry in terms of positive impact on people and the planet.

The Group's commitment is to act responsibly in order to Shape a Better World.

This commitment was again recognized by non-financial rating agencies during the first half of 2022. This is a testament to Bureau Veritas' constant efforts regarding Sustainability.

On June 16, 2022, Bureau Veritas entered the 'Vérité 40' index produced by Axylia with an 'A' rating. Vérité 40 index lists the 40 CAC 40 and SBF 120 companies, with the highest value in the stock market, after deducting the cost of their carbon emissions.

On February 28, 2022, Bureau Veritas was awarded Gold Class in the latest Global Sustainability Assessment by S&P. By being included in this selection, Bureau Veritas is still recognized among the world's highest performing sustainable companies in 2022.

  • HINDA GHARBI APPOINTED CHIEF OPERATING OFFICER OF BUREAU VERITAS

On February 24, 2022, the Board of Directors of Bureau Veritas announced the renewal of the term of office of the Chief Executive Officer, Didier Michaud-Daniel, until the Annual General Meeting in June 2023, which will be called to approve the financial statements for the year 2022.

As of May 1, 2022, Hinda Gharbi joined Bureau Veritas as Chief Operating Officer and became a member of the Group's Executive Committee. The Board of Directors' decision is the result of a rigorous selection and recruitment process, as part of succession planning for the Chief Executive Officer, led jointly by the Nomination & Compensation Committee and Didier Michaud-Daniel.

On January 1, 2023, Hinda Gharbi will assume the position of Deputy CEO of Bureau Veritas. The Board of Directors will appoint her as Chief Executive Officer at the end of the 2023 Annual General Meeting.

With a degree in Electrical Engineering from the Ecole Nationale Supérieure d'Ingénieurs Electriciens de Grenoble, and a Master of Science in signal processing from the Institut Polytechnique de Grenoble, in 1996, Hinda joined Schlumberger, a global technology leader in the energy sector.

During her 26 years with the Group, Hinda held a variety of general management positions in operations for Schlumberger's core business activities at a global and regional level. She has also assumed cross-functional responsibilities including Human Resources, Technology Development, and Health, Safety and Environment. From July 2020, she was Executive Vice President, Services and Equipment. In this role, she oversaw products and services for the Group as well as digital topics.

  • KATHRYN DOLAN APPOINTED EXECUTIVE VICE-PRESIDENT HUMAN RESOURCES & QHSE OF BUREAU VERITAS

On May 9, 2022, Bureau Veritas announced the appointment of Kathryn Dolan, effective June 1, 2022, as Executive Vice-President Human Resources & QHSE (Quality, Health, Safety & Environment )

Kathryn Dolan reports to Didier Michaud-Daniel, Chief Executive Officer of Bureau Veritas and has joined the Group Executive Committee. She replaces Helen Bradley, who has decided to leave the company to pursue personal projects.

Kathryn Dolan joined Bureau Veritas in 2017 as Director of HR – North West Europe. In 2018, she was promoted to VP HR for the South and West Europe Operating Group. Prior to joining Bureau Veritas, Kathryn's career spanned various global multinational organizations across different market sectors, including Fujitsu and Deloitte. She holds an MSc in Organization and Business Psychology from the University of Liverpool (UK) and a Degree in Economics.

  • ANALYSIS OF THE GROUP'S RESULTS AND FINANCIAL POSITION

Revenue up 11.4% year on year (up 6.5% on an organic basis)

Revenue in the first half of 2022 amounted to EUR 2,693.4 million, a 11.4% increase compared with H1 2021.

The organic increase was 6.5%, of which 5.2% in the second quarter of 2022, benefiting from solid market trends across most businesses despite facing the external disruption from the Russia/Ukraine war and the wave of lockdown measures across many cities in China since mid-March 2022.

Two businesses delivered very strong organic growth, Industry, up 10.8%, and Agri-Food & Commodities, up 8.6%. The rest of the portfolio grew steadily, with Marine & Offshore, Buildings & Infrastructure (B&I) Certification and Consumer Products Services, up from 3.8% to 6.0% organically.

By geography, Americas was the best performing region (27% of revenue; up 16.4% organically), led by a 9.8% increase in North America (driven by Buildings & Infrastructure) and by a 28.4% increase in Latin America (led by Brazil notably). Europe (34% of revenue; up 2.9% organically) was primarily led by strong growth in Italy and the Netherlands. Business in Asia Pacific (30% of revenue; up 1.9% organically) was impacted by the lockdown measures in China (concentrated in Q2) while double digit growth was delivered in Southern Asia (led by India) and high single digit growth in Australia. Finally, Africa and the Middle East (9% of revenue), strongly outperformed the rest of the Group with organic revenue growth of 12.3%, essentially driven by Buildings & Infrastructure and energy projects in the Middle East.

The scope effect was a positive 0.4%, reflecting bolt-on acquisitions realized in the past few quarters.

Currency fluctuations had a positive impact of 4.5% (of which 5.6% in Q2), mainly due to the appreciation of the USD and pegged currencies against the euro, which was partly offset by the depreciation of some emerging countries' currencies.

Adjusted operating profit up 8.7% to EUR 410.9 million

Adjusted operating profit increased by 8.7% to EUR 410.9 million; the half-year 2022 adjusted operating margin decreased by 38 basis points to 15.3%, including a 4-basis-point positive impact from foreign exchange and a 2-basis-point positive impact from scope. It was mainly attributed to the impact from the lockdowns occurred in China in the second quarter.

CHANGE IN ADJUSTED OPERATING MARGIN
IN PERCENTAGE AND BASIS POINTS
H1 2021 adjusted operating margin 15.6%
Organic change (44)bps
Organic adjusted operating margin 15.2%
Scope +2bps
Constant currency adjusted operating margin 15.2%
Currency +4bps
H1 2022 adjusted operating margin 15.3%

The revenue improvement and operating leverage drove organic margins higher in Marine & Offshore and in Agri Food & Commodities.

The businesses that saw the biggest margin decline came from Buildings & Infrastructure and to some extent Consumer Products services, having suffered the most from the lockdowns in China in Q2. Together, they represented the bulk of the organic decrease in the Group's margin in the first half of 2022.

Other operating expenses slightly increased to EUR 35.7 million versus EUR 32.1 million in the first half of 2021. These include:

  • EUR 22.0 million in amortization of intangible assets resulting from acquisitions (down from EUR 28.9 million in H1 2021);
  • EUR 3.7 million in write-offs of non-current assets related to the Agri Food & Commodities and Industry businesses;
  • EUR 8.9 million in restructuring costs, relating chiefly to Industry and
    commodities-related activities (EUR 4.4 million in H1 2021);
  • EUR 1.1 million in net losses on disposals and acquisitions (net gain of EUR 4.1 million in H1 2021).

Operating profit totaled EUR 375.2 million, up 8.4% from EUR 346.1 million in the first half of 2021.

Adjusted EPS of EUR 0.55 , up 15.2 % year on year

Net financial expense amounted to EUR 29.5 million in the first half of 2022, compared with EUR 36.9 million in the same period one year earlier.

The slight increase in net finance costs to EUR 38.9 million in H1 2022 (compared with EUR 37.6 million in H1 2021) is mainly attributable to the impact of the appreciation of the US dollar on the interest on the US Private Placements denominated in US dollars.

The Group posted foreign exchange gains of EUR 14.2 million in H1 2022 owing to the appreciation of the US dollar and the euro against most emerging market currencies (foreign exchange gains of EUR 2.4 million in H1 2021). The interest cost on pension plans remained nearly stable at EUR 0.8 million in H1 2022 compared with EUR 0.7 million in H1 2021.

Income tax expense totaled EUR 111.1 million in H1 2022, compared with EUR 97.1 million in H1 2021.

This represents an effective tax rate (ETR) of 32.1% for the period, compared with a 31.4% in H1 2021.

The adjusted effective tax rate was 31.3%, down 0.9 percentage points compared to the first half of 2021. It corresponds to the effective tax rate adjusted for the tax effect of adjustment items. The decline is mainly due to the lower tax rate in France and the increase in pre-tax income compared with taxes not calculated on taxable income, notably withholding taxes and value-added taxes in France and Italy.

Attributable net profit for the period was EUR 225.2 million, versus a EUR 196.9 million in H1 2021.

Earnings per share (EPS) stood at EUR 0.50 versus EUR 0.44 in H1 2021.

Adjusted attributable net profit totaled EUR 248.6 million, up 15.8% versus EUR 214.7 million in H1 2021.

Adjusted EPS stood at EUR 0.55, a 15.2% increase versus H1 2021 (EUR 0.48 per share).

Solid Free cash flow at EUR 129.9 million despite the Chinese situation

Half-year 2022 operating cash flow decreased by 35.2% to EUR 213.0 million versus EUR 328.9 million in H1 2021. The increase in profit before tax was largely offset by a strong working capital requirement outflow of EUR 176.7 million, compared to a EUR 68.5 million outflow the previous year. The change is due to the strong growth delivered in the second quarter (+11.0% overall) and the temporary impact of the invoice settlement delays triggered by the Chinese lockdowns.

Working capital requirement (WCR) stood at EUR 517.2 million at June 30, 2022, compared with
EUR 367.2 million at June 30, 2021. As a percentage of revenue, WCR increased by 220 basis points to 9.8%, compared to 7.6% in H1 2021.

Purchases of property, plant and equipment and intangible assets, net of disposals (Net Capex), amounted to EUR 52.0 million in the first half of 2022, on a par with the H1 2021 figure of EUR 52.6 million. This showed disciplined control over the Group's net capex-to-revenue ratio at 1.9% (focusing on maintenance essentially), down slightly on H1 2021 (2.2%).

Free cash flow (operating cash flow after tax, interest expenses and capex) was
EUR 129.9 million, compared to EUR 228.9 million in H1 2021, down 43.2% year on year. On an organic basis, free cash flow reached EUR 124.7 million.

CHANGE IN FREE CASH FLOW
IN EUR MILLIONS
Free cash flow at June 30, 2021 228.9
Organic change (104.2)
Organic free cash flow 124.7
Scope 2.0
Free cash flow at constant currency 126.7
Currency 3.2
Free cash flow at June 30, 2022 129.9

At June 30, 2022, adjusted net financial debt was EUR 1,088.8 million, i.e. 1.10 trailing
twelve-month EBITDA as defined in the calculation of the bank covenant, compared with 1.30x at December 31, 2021. The increase in adjusted net financial debt of EUR 37.4 million versus
December 31, 2021 (EUR 1,051.4 million) reflects:

  • Free cash flow of EUR 129.9 million;
  • Dividend payments totaling EUR 9.8 million corresponding mainly to dividends paid to
    non-controlling interests and withholding taxes on intra-group dividends;
  • Acquisitions (net) and repayment of amounts owed to shareholders, accounting for EUR 45.7 million;
  • Lease payments (related to the application of IFRS 16), accounting for EUR 61.1 million;
  • Share buyback, accounting for EUR50.8 million;
  • Other items that decreased the Group's debt by EUR 1.3 million.
  • 2022 OUTLOOK CONFIRMED

Based on a solid sales pipeline around the Group's diversified portfolio and the significant growth opportunities related to its sustainability range of services and solutions, and assuming there are no new Covid-19 lockdowns in its main countries of operation, Bureau Veritas still expects for the full year 2022 to:

  • Achieve mid-single-digit organic revenue growth;
  • Improve the adjusted operating margin;
  • Generate sustained strong cash flow, with a cash conversion above 90%.

H1 2022 BUSINESS REVIEW

MARINE & OFFSHORE

IN EUR MILLIONS H1 2022 H1 2021 CHANGE ORGANIC SCOPE CURRENCY
Revenue 204.5 189.2 +8.1% +6.0% - +2.1%
Adjusted Operating Profit 50.1 44.4 +12.9%
Adjusted Operating Margin 24.5% 23.5% +106 +83 - +23

The Marine & Offshore business recorded solid 6.0% organic revenue growth in the first half of 2022.
In the second quarter, organic revenue was up 5.6%.

The half-year organic performance results mainly from:

  • Mid-single-digit organic revenue growth in New Construction (40% of divisional revenue), primarily fueled by North Asia, Europe (primarily Greece) and Africa. This was cushioned by the lockdowns in China during the second quarter.
  • Mid-single-digit organic revenue growth in the Core In-service activity (45% of divisional revenue), which benefited from the favorable timing of inspections by ship owners, an increased level of occasional surveys, combined with some price increases. At end-June, the fleet classified by Bureau Veritas comprised 11,533 ships, representing 140.1 million of Gross Register Tonnage (GRT), stable year on year (based on the number of ships).
  • High single-digit organic revenue growth for Services (15% of divisional revenue, including Offshore), was driven by a combination of strong commercial development for non-classification services (including consulting services related to energy efficiency stimulated by a context of high oil prices) and increased demand for risk assessment services in the Offshore Oil & Gas market. [The first half of 2022 was marked by an increase in projects in the wind energy sector, both for onshore and offshore wind turbines].

The new build market remained well oriented in the first half of the year. Bureau Veritas new orders reached 4.8 million gross tons in June 2022, a stable level compared to the prior-year period. As a result, the order book stood at 18 million gross tons at the end of the quarter, up 17.9% year on year compared to 16.3 million gross tons in December 2021. It is composed of LNG fueled ships, container ships and specialized vessels.

Marine & Offshore continued to focus on efficiency levers through digitalization and high added-value services (including digital twin, mobility surveyor at yard, machinery maintenance portal). In Q2, the Group introduced the use of an Artificial Intelligence (AI) model for corrosion detection, which will be deployed for augmented surveys in the second half of the year.

Adjusted operating margin for the half year improved by 106 basis points to 24.5% on a reported basis compared to H1 2021, positively impacted by foreign exchange effects (23 basis points). Organically, it rose by 83 basis points, benefiting from operating leverage, a positive mix and operational excellence.

Sustainability achievements

The Group continued to address the challenges of sustainability and the energy transition by providing rules and guidelines on the safety, risk and performance requirements for innovation in future fuels and propulsion systems. The Group supported its customers in complying with environmental regulations, implementing sustainable solutions on board, and measuring progress in decarbonization.

In the second quarter of 2022, the Group carried out a study aiming at de-risking the use of ammonia as a marine fuel, with a specific focus on leak mitigation and treatment, in collaboration with TotalEnergies. Ammonia is one of the main zero-carbon fuel options currently envisioned by shipping as the industry seeks to decarbonise. 

AGRI-FOOD & COMMODITIES

IN EUR MILLIONS H1 2022 H1 2021 CHANGE ORGANIC SCOPE CURRENCY
Revenue 588.0 517.6 +13.6% +8.6% (0.3)% +5.3%
Adjusted Operating Profit 76.2 66.1 +15.3%
Adjusted Operating Margin 13.0% 12.8% +20 +20 +2 (2)

The Agri-Food & Commodities business recorded 8.6% organic revenue growth in the first half of 2022, led by strong markets for Metal & Minerals and Government services, alongside an improvement in the Oil & Petrochemicals segment. In Q2, Group organic revenue increased by 7.9%.

The Oil & Petrochemicals segment (O&P, 30% of divisional revenue) delivered mid-single-digit organic growth overall. The O&P Trade market benefited from increased activity in a context of higher fuel consumption, notably for aviation fuel/gasoline. All regions grew apart from Europe, which remained penalized by weak market conditions and the impact of the Russia/Ukraine war, which triggered changes in the routes for trade. Strong growth was achieved in the Middle East and Africa alongside robust growth in both the Americas and Asia. Throughout the first half, Bureau Veritas continued to further reposition its portfolio towards new services (such as laboratory outsourcing) and value-added segments across many geographies. These include sustainability-driven solutions such as Oil Condition Monitoring (OCM), Carbon 14 traceability for Biofuels, Sustainable Aviation Fuel or a fuel marking program.

The Metals & Minerals segment (M&M, 33% of divisional revenue) achieved double-digit organic growth overall, across the entire value chain. Upstream (two-thirds of M&M) continued to record strong growth (up 16.7% organically), across most geographies, led by the Group's key hubs (Australia, Canada and Latin America). It benefited from a sustained high level of exploration drilling activity across all the major commodities (with gold, copper, coal and iron ore leading the way), a growing backlog of samples and the continuing success of the Group's on-site laboratories strategy with several important wins in the period (including copper mines in Chile and Peru, an iron ore mine in Chile and a gold mine in Australia). Trade activities recorded double digit organic revenue growth. It was fueled by the main metals, with strong trade volumes for copper, iron ore and coal across all geographies. Copper demand remained strong, notably driven by electrification trends in several economies, while coal was in high demand as an energy source.

Agri-Food (22% of divisional revenue) reported positive organic revenue growth in the first half, led by Agricultural products. The agricultural inspection activities grew strongly, led by Latin America and Brazil notably, which benefited from a very early harvest campaign for soybeans and corn as well as an extension of services (transgenic testing). In Europe, business was impacted by the Russia/Ukraine war on Black Sea exports. The Food business saw better resilience of testing activities versus inspection; it reflected a contrasted situation by geography: strong growth in the Middle East and Africa alongside the US (driven by new greenfield labs opening), but weak growth in Canada (slow restart following the cyber-attack in Q4 2021) and in Asia Pacific (mobility restriction measures). In Australia, which mainly relies on dairy products, business was hampered by reduced Chinese demand for infant milk formula as well as the closure of Food producers' plants in Victoria during the summer break.

Government services (15% of divisional revenue) achieved double-digit organic growth in the first half (of which an 11% increase in the second quarter). Strong growth was delivered in Africa led by the strong development of VOC (Verification of Conformity) in Democratic Republic of the Congo (DRC), Nigeria, Zimbabwe, Tanzania, Ghana, and Single Window (DRC) contracts. This segment also benefited from the increased value of inspected goods on existing contracts, supported by high commodities prices.

The adjusted operating margin for the Agri-Food & Commodities business increased to 13.0%, up 20 basis points compared to last year. This was led by a topline recovery and a positive business mix.

Sustainability achievements

Companies and organizations are stepping up their efforts to meet ambitious decarbonization targets set by the Paris Agreements. In Q2, Bureau Veritas and Climate Neutral Commodity (CNC) joined forces to support their clients as they took action to accelerate the energy and ecological transitions. To do this, CNC defined the first ever certification standard for carbon-neutral transactions and services in the raw materials industry and BV will be the preferred verification body to validate these commodities.

INDUSTRY

IN EUR MILLIONS H1 2022 H1 2021 CHANGE ORGANIC SCOPE CURRENCY
Revenue 564.3 487.2 +15.8% +10.8% (0.5)% +5.5%
Adjusted Operating Profit 62.2 53.7 +15.8%
Adjusted Operating Margin 11.0% 11.0% (1) (22) +13 +8

Industry was the best performing business within the Group's portfolio in the first half of 2022 with organic growth of 10.8%, including 9.8% growth in the second quarter.

By geography, most regions delivered strong growth in H1 with Latin America and the Middle East leading the way alongside Asia Pacific. Growth was more moderate in both the US and in Europe.

By market, Power & Utilities (14% of divisional revenue) continued to be a key driver of growth for the portfolio with a double-digit organic performance during the half year (including Q2). Growth was driven mainly by Latin America (Chile and Colombia) thanks to the ramp-up of large contract wins with various Power Distribution clients, volume increases on existing contracts and price renegotiation. Europe also contributed to the growth led by France, the UK and Spain (power generation). Similarly, France and the UK benefited from high activity levels in nuclear power plants (the EPR project at Flamanville 3 for France).

In renewable power generation (solar, wind, hydrogen), the opportunities remained significant, backed by a strong sales pipeline. Several contracts were awarded during the first half, including Broad Reach Power which owns a 21-gigawatt portfolio of utility scale solar, wind and energy storage projects in the Western part of the United States. Bureau Veritas will provide Project Management services during the design and construction phases of six Battery Energy Storage System (BESS) Projects in Texas. Since the beginning of the year, the Group's renewable energy services now exceed Oil & Gas capex projects in terms of revenues.

The Oil & Gas segment (33% of divisional revenue) experienced double-digit organic revenue growth benefiting from the combination of strong sales development, the restart of many projects triggered by rising oil prices and favorable comparables. Opex-related activities (representing two-thirds of the Oil & Gas business) maintained a double-digit pace and were essentially driven by Latin America (with Brazil and Argentina leading the way for both onshore and offshore services), and the Middle East and Europe (led by Spain). Capex-related activities, including Procurement Services, grew mid-single digit organically, essentially attributable to the US (with drilling activity in full speed), Asia and the Middle East (with projects resuming in the UEA). As of today, the share of Oil & Gas Capex in Group revenue totaled 2%.

Elsewhere, the aerospace business in relation to Russia was stopped and thus impacted the revenue stream while the Automotive business (5% of divisional revenue) delivered a stable performance still impacted by supply chain disruption.

Adjusted operating margin for the half year was 11.0%, broadly stable year on year (with the slight margin decline offset by a positive scope effect). It is attributable to mobilization costs on large Opex contracts.

Sustainability achievements

Through the BV Green Line of services and solutions dedicated to Sustainability, the Group is supporting its clients notably in the transition towards a better use of natural resources, the reduction of their carbon footprint, and the promotion of more sustainable practices. In the second quarter of 2022, Bureau Veritas developed a voluntary certification framework for assessing the carbon footprint of Hydrogen production facilities. In the absence of internationally recognized statutory certification schemes, this scheme applies as an independent framework to assist stakeholders in the Hydrogen value chain to assess the environmental impact of different Hydrogen production pathways.

Bureau Veritas also assisted ORLEN Group, the largest oil & gas company in Central Europe, to calculate its carbon footprint in accordance with the latest recommendations and internationally recognized standards. Carbon footprint inventory will make it possible to quantify key sources of GHG emissions of the company and its entire value chain. It will support the development of effective decarbonization strategies.

BUILDINGS & INFRASTRUCTURE

IN EUR MILLIONS H1 2022 H1 2021 CHANGE ORGANIC SCOPE CURRENCY
Revenue 775.9 709.2 +9.4% +3.8% +1.6% +4.0%
Adjusted Operating Profit 103.9 104.1 (0.2)%
Adjusted Operating Margin 13.4% 14.7% (130) (135) (2) +7

The Buildings & Infrastructure (B&I) business achieved solid organic growth of 3.8% in the first half of 2022, primarily fueled by the Americas and by the Middle East. In Q2, revenue grew 0.7% on an organic basis as it reflects the impact from the Covid-19 related shutdowns across several cities in China.

By service, Construction-related activities (54% of divisional revenue) grew faster than Buildings In-service activities benefiting from strong dynamics for new projects in the Americas and the Middle East.

The Americas (26% of divisional revenue) was the best performing region, led by a 15.2% increase in the United States and by a stellar performance in Latin America (led by Brazil notably). In the US, where the Group has built its platform over the past few years, the growth drivers are numerous and include i) large project management assistance and transactional activity for Opex-related services across most sectors (Retail essentially); ii) sustained strong dynamics for data center commissioning services to support the increase in remote workforces; iii) increasing revenue for the business related to Electrical Vehicle Charging stations (EVCS). Through the acquisition of PreScience, the Group has positioned itself on the very attractive transportation infrastructure market. In Latin America, business benefited from the very strong recovery of Brazil (fueled by commercial development for both Opex and Capex services) alongside strong trends in both Argentina and Colombia.

In Europe (52% of divisional revenue), growth was moderate overall. A strong performance was delivered in both Italy (ramp-up of large contract wins on the motorway network) and the Netherlands (Opex led) alongside good growth in Spain. France, the region's largest contributor (41% of divisional revenue) delivered organic revenue growth. This was driven by the In-service activity (around three quarters of the French business) with the delivery of a solid backlog as well as by the continuing strong performance of Bureau Veritas Solutions (technical assistance; consulting services) led by the increase in headcount. The growth of capex-related works remained muted in a declining new build market. The pipeline of sales related to the EU Green Deal (including the one in France and the upcoming 2024 Olympic Games in France) continued to grow with opportunities mainly focused on energy efficiency programs.

The Asia Pacific region (19% of divisional revenue) recorded a high-single digit organic revenue decrease (including a double digit decrease in Q2) with a contrasted situation by country. In China, business was severely impacted by the Covid-19 situation (down c. 30% organically in Q2), with construction sites fully stopped for up to eight weeks, in areas where lockdowns had been imposed (Shanghai, Shenzhen notably). Once the mobility restrictions had been lifted, the Group operated in a stop & go situation with sites required to shut down as soon as the slightest suspicion of Covid arose. This created inefficiencies, which materially impacted operations. Since mid-June, the construction sites have gradually restarted, and a recovery is expected from Q3 2022 onwards. Elsewhere, business recovered strongly in India as lockdown measures were lifted, while Japan improved, led by code compliance services.

Lastly, in the Middle East & Africa region (3% of divisional revenue), the Group experienced very strong growth primarily led by Saudi Arabia, and by the United Arab Emirates (UAE) which continued to benefit from the development of numerous projects supported by the rebound in oil prices. In Saudi Arabia, for instance, the Group is involved in the NEOM project, a smart city that will be powered by renewable energy.

Adjusted operating margin for the half year declined by 135 basis points to 13.4% from 14.7% in the prior year. This was primarily attributed to the impact of the lockdowns in China and a mix effect.

Sustainability achievements
In the second quarter of 2022, the Group continued to accompany owners/concessionaires of buildings and infrastructure with services for energy efficiency and carbon footprint monitoring. it supports notably asset managers towards the achievements of their Net Zero commitments.

CERTIFICATION

IN EUR MILLIONS H1 2022 H1 2021 CHANGE ORGANIC SCOPE CURRENCY
Revenue 209.2 196.9 +6.2% +4.1% +0.2% +1.9%
Adjusted Operating Profit 40.0 38.1 +4.9%
Adjusted Operating Margin 19.1% 19.3% (26) (27) (6) +7

The Certification business delivered solid organic growth of 4.1% in the first half of 2022 (including 4.0% in the second quarter), against challenging comparables (year of recertification for several schemes related to QHSE and Transportation). This was supported by strong sales development, notably as regards Sustainability and robust price increases.

Most geographies experienced solid organic growth. The Americas, Africa and the Middle East performed above the divisional average, fueled notably by stellar growth in Latin America (and Brazil in particular), Asia was at a par (led by South & Southern Asian countries) while Europe grew below the average (primarily led by the UK and Italy). The countries that grew the most are those where the mix has been diversified in recent years (shift from traditional schemes towards new services), as illustrated by Brazil, Australia, Thailand and some Eastern countries, which all saw high double-digit organic growth in the period.

Within the Group's portfolio, strong growth was achieved in Corporate Responsibility & Sustainability, Enterprise Risks (led by Cybersecurity and IT management systems solutions), Food certification (fueled by food product certification, food safety and food sustainability) as well as in Training & Personnel services; conversely, business declined for QHSE and Transportation (reflecting fewer man days) due to tough comparables against the prior year linked to the year of recertification.

During H1, Bureau Veritas Sustainability services grew by more than 16%, driven notably by buoyant demand for Greenhouse gas emission verification services related to Carbon footprint assessments, Offsetting & removals projects and Neutrality or net zero goals.

Business continued to benefit from the overall rising client demand for more brand protection, traceability, and social responsibility commitments all along the supply chain. While a major part of the demand for ESG is on a voluntary basis, the regulatory framework is expected to be a growth driver in the medium-term. The EU corporate sustainability reporting directive (CSRD) currently sets the rules for European non-financial data reporting in a more standardized way and opens the sustainability assurance market to independent assurance service providers (IASP), including TIC players. This will support growth from 2025 onwards.

In the first half, the Group accelerated the commercial deployment of its new offering Clarity, from both a geographic and a business point of view. Clarity was launched in December 2021, and supports companies in managing their ESG strategy, measuring their performance and tracking their implementation. The commercial pipeline is well oriented and contract wins are now capturing a large range of sectors, including Food & Beverage, industry, Retail and Hospitality.

The adjusted operating margin for the half year was a very healthy 19.1%, compared to 19.4% in the prior year. This reflects a 26-basis-point decrease against the record level, driven by strong operational leverage, price increases and tight cost management.

Sustainability achievements

During the first half of 2022, Bureau Veritas was awarded numerous contracts in the Sustainability field. This ranged from a carbon footprint assessment for a Chinese ecommerce platform to a Clarity program with PepsiCo to review CSR metrics for a number of their internal sites. The Group also signed a long-term contract with a battery producer for electric vehicles to perform the Sustainability assessment of its supply chain and ensure full traceability along the value chain. This project will be conducted in collaboration with Bureau Veritas' partner, Optel, to track and trace products along the entire chain through the use of digital tools.


CONSUMER PRODUCTS SERVICES

IN EUR MILLIONS H1 2022 H1 2021 CHANGE ORGANIC SCOPE CURRENCY
Revenue 351.5 318.3 +10.4% +4.3% +0.3% +5.8%
Adjusted Operating Profit 78.5 71.8 +9.4%
Adjusted Operating Margin 22.3% 22.6% (21) (19) (3) +1

The Consumer Products Services business achieved organic revenue growth of 4.3% in the first half of 2022 including a Q2 organic growth of 4.0%, despite the various lockdowns implemented in China. This demonstrated the Group's strong resilience and agility to operate in a complicated environment.

By geography, all regions apart from China grew with a particularly strong organic revenue performance in the countries and regions where the Group has focused on diversification, namely in the Middle East & Africa (led by Turkey) alongside South Asia which delivered double digit growth (including India and Bangladesh) as well as South America. Europe grew above the divisional average, mainly fueled by Italy. Conversely business levels were impacted by lockdown measures in China and by capacity and logistics issues in Vietnam.

Softlines (36% of divisional revenue) performed better than the divisional average, with similar growth in both quarters, and contrasted performances by country. In its largest Chinese operations, the Group has shown strong proactivity in adapting to the lockdowns. By leveraging its unique platform composed of a network of integrated laboratories across the country, the Group's teams have been able to divert samples from locations under lockdown to others across the country or outside of China to the Group's South Asia testing capabilities. All the laboratories in China reopened and were fully back to normal by end of June. In South Asia (India, Bangladesh and Sri Lanka essentially), the Group delivered double digit growth. These countries benefited from both the short-term transfer of activity outside of China due to the regional Covid-19 shutdowns and from the continuing structural sourcing shift outside of China. Similarly, Turkey strongly benefited from nearshoring patterns from European retailers and saw a sharp increase in testing volumes. This underlines the importance of the Group's geographic diversification strategy towards new production countries that are closer to the countries of consumption. The acquisition of AMSfashion reinforces the Group's exposure in Iberia and strengthens its offering in Sustainability.

Hardlines /Toys/Health & Beauty (31% of divisional revenue) performed below the divisional average. Small appliances and do-it-yourself products were impacted by the China lockdowns in the second quarter. South Korea benefited from its ongoing diversification into Cosmetics, Health & Beauty while Italy remained fueled by luxury products. Inspection and Audit services reported high single digit organic growth, as they continued to benefit from strong demand for Social & CSR audits across all geographies (including China where the audits were performed remotely). In Q2, the acquisition of US company ATL focusing on scientific sourcing services for the Consumer Healthcare Products, Cosmetics & Personal Care and Medical Device markets will enable the Group to accelerate its geographic diversification and move towards new services.

Lastly, Technology 6 (33% of divisional revenue) performed below the divisional average, with a double-digit organic performance in both electrical and electronics products and in Automotive (reliability testing and homologation services). The growth in Wireless Testing was impacted by the China's Covid-19 shutdowns and by project delays in Korea. In Asia, 5G-related products/infrastructure continued to show good momentum with the Group's test platforms (Taiwan, South Korea) running at full capacity.

Adjusted operating margin for the half year reached a very healthy 22.3% level (down 21 basis points, year-on-year), as the negative impact from the lockdowns in China was mostly offset by the benefit of several cost actions, government subsidies and overall strong agility.

Sustainability achievements

In the first half of 2022, the Group was awarded a contract with a large European sportswear company to perform energy audits of its suppliers across many geographies; through these services, Bureau Veritas supports its clients in managing their ESG strategy and providing the proof of their commitments.

  • PRESENTATION
    • H1 2022 results will be presented on Thursday, July 28, 2022, at 3:00 p.m. (Paris time)
    • A video conference will be webcast live. Please connect to: Link to video conference
    • The presentation slides will be available on:
    • All supporting documents will be available on the website
    • Live dial-in numbers:

- France: +33 (0)1 70 37 71 66

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- Password: Bureau Veritas

  • 2022 FINANCIAL CALENDAR
    • Q3 2022 revenue: October 26, 2022
    • Full Year 2022 Results: February 23, 2023
    • Q1 2023 revenue: April 20, 2023
    • Half Year 2023 Results: July 26, 2023
    • Q3 2023 revenue: October 25, 2023

About Bureau Veritas
Bureau Veritas is a world leader in laboratory testing, inspection and certification services. Created in 1828, the Group has more than to 80,000 employees located in nearly 1,600 offices and laboratories around the globe. Bureau Veritas helps its 400,000 clients improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility.
Bureau Veritas is listed on Euronext Paris and belongs to the CAC 40 ESG, CAC Next 20 and SBF 120 indices.
Compartment A, ISIN code FR 0006174348, stock symbol: BVI.
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ANALYST/INVESTOR CONTACTS MEDIA CONTACTS
Laurent Brunelle Caroline Ponsi Khider
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Etienne Linquier

This press release (including the appendices) contains forward-looking statements, which are based on current plans and forecasts of Bureau Veritas' management. Such forward-looking statements are by their nature subject to a number of important risk and uncertainty factors such as those described in the Universal Registration Document (“Document d'enregistrement universel”) filed by Bureau Veritas with the French Financial Markets Authority (“AMF”) that could cause actual results to differ from the plans, objectives and expectations expressed in such forward-looking statements. These forward-looking statements speak only as of the date on which they are made, and Bureau Veritas undertakes no obligation to update or revise any of them, whether as a result of new information, future events or otherwise, according to applicable regulations.

  • APPENDIX 1: Q2 AND HALF-YEAR 2022 REVENUE BY BUSINESS
IN EUR MILLIONS Q2/H1
2022
Q2/H1
2021(a)
CHANGE ORGANIC SCOPE CURRENCY
Marine & Offshore 103.1 95.1 +8.4% +5.6% - +2.8%
Agri-Food & Commodities 307.3 268.4 +14.5% +7.9% (0.3)% +6.9%
Industry 294.8 254.7 +15.7% +9.8% (1.1)% +7.0%
Buildings & Infrastructure 387.7 362.0 +7.1% +0.7% +1.7% +4.7%
Certification 111.9 104.6 +6.6% +4.0% - +2.6%
Consumer Products 198.5 178.5 +11.2% +4.0% +0.3% +6.9%
Total Q2 revenue 1,403.3 1,263.7 +11.0% +5.2% +0.2% +5.6%
Marine & Offshore 204.5 189.2 +8.1% +6.0% - +2.1%
Agri-Food & Commodities 588.0 517.6 +13.6% +8.6% (0.3)% +5.3%
Industry 564.3 487.2 +15.8% +10.8% (0.5)% +5.5%
Buildings & Infrastructure 775.9 709.2 +9.4% +3.8% +1.6% +4.0%
Certification 209.2 196.9 +6.2% +4.1% +0.2% +1.9%
Consumer Products 351.5 318.3 +10.4% +4.3% +0.3% +5.8%
Total H1 revenue 2,693.4 2,418.4 +11.4% +6.5% +0.4% +4.5%
  • APPENDIX 2: HALF-YEAR 2022 REVENUE BY QUARTER
2022 REVENUE BY QUARTER
IN EUR MILLIONS Q1 Q2
Marine & Offshore 101.4 103.1
Agri-Food & Commodities 280.7 307.3
Industry 269.5 294.8
Buildings & Infrastructure 388.2 387.7
Certification 97.3 111.9
Consumer Products 153.0 198.5
Total revenue 1,290.1 1,403.3
  • APPENDIX 3: ADJUSTED OPERATING PROFIT AND MARGIN BY BUSINESS

IN EUR MILLIONS
 
ADJUSTED OPERATING PROFIT ADJUSTED OPERATING MARGIN
H1 2022
H1 2021
CHANGE
(%)
H1 2022
H1 2021
CHANGE
(BASIS POINTS)
Marine & Offshore 50.1 44.4 +12.9% 24.5% 23.5% +106
Agri-Food & Commodities 76.2 66.1 +15.3% 13.0% 12.8% +20
Industry 62.2 53.7 +15.8% 11.0% 11.0% (1)
Buildings & Infrastructure 103.9 104.1 (0.2)% 13.4% 14.7% (130)
Certification 40.0 38.1 +4.9% 19.1% 19.3% (26)
Consumer Products 78.5 71.8 +9.4% 22.3% 22.6% (21)
Total Group 410.9 378.2 +8.7% +15.3% +15.6% (38)
  • APPENDIX 4: EXTRACTS FROM THE HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS

Extracts from the half-year consolidated financial statements audited and approved on July 27, 2022
by the Board of Directors. The audit procedures for the half-year financial statements have been undertaken and the Statutory Auditors' report has been published.

CONSOLIDATED INCOME STATEMENT
IN EUR MILLIONS H1 2022 H1 2021
Revenue 2,693.4 2,418.4
Purchases and external charges (767.6) (674.0)
Personnel costs (1,414.1) (1,249.2)
Taxes other than on income (28.1) (23.0)
Net (additions to)/reversals of provisions 4.8 (13.2)
Depreciation and amortization (128.7) (129.0)
Other operating income and expense, net 15.5 16.1
Operating profit 375.2 346.1
Share of profit of equity-accounted companies 0.1 -
Operating profit after share of profit of equity-accounted companies 375.3 346.1
Income from cash and cash equivalents 1.4 2.1
Finance costs, gross (40.3) (39.7)
Finance costs, net (38.9) (37.6)
Other financial income and expense, net 9.4 0.7
Net financial expense (29.5) (36.9)
Profit/(loss) before income tax 345.8 309.2
Income tax expense (111.1) (97.1)
Net income/(loss) from continuing operations 234.7 212.1
Net income/(loss) from discontinued operations - -
Net profit 234.7 212.1
Non-controlling interests (9.5) (15.2)
Attributable net profit 225.2 196.9
Earnings per share (in euros):
Basic earnings per share 0.50 0.44
Diluted earnings per share 0.49 0.43


CONSOLIDATED STATEMENT OF FINANCIAL POSITION
IN EUR MILLIONS JUNE 30, 2022 DEC. 31 2021
Goodwill 2,227.7 2,079.1
Intangible assets 425.6 402.5
Property, plant and equipment 373.1 364.3
Right-of-use assets 369.8 376.3
Non-current financial assets 108.6 107.4
Deferred income tax assets 118.1 128.5
Total non- current assets 3,622.9 3,458.1
Trade and other receivables 1,653.5 1,504.3
Contract assets 325.1 308.0
Current income tax assets 56.3 33.3
Derivative financial instruments 7.7 4.7
Other current financial assets 18.6 23.6
Cash and cash equivalents 1,449.0 1,420.7
Total current assets 3,510.2 3,294.6
Assets held for sale - -
TOTAL ASSETS 7,133.1 6,752.7
Share capital 54.4 54.3
Retained earnings and other reserves 1,687.7 1,584.2
Equity attributable to owners of the Company 1,742.1 1,638.5
Non-controlling interests 72.4 68.6
Total equity 1,814.5 1,707.1
Non-current borrowings and financial debt 2,420.2 2,362.0
Non-current lease liabilities 295.9 307.5
Derivative financial instruments - -
Other non-current financial liabilities 94.0 126.3
Deferred income tax liabilities 95.4 87.8
Pension plans and other long-term employee benefits 148.7 185.8
Provisions for other liabilities and charges 74.5 80.2
Total non- current liabilities 3,1 28 .7 3,149.6
Trade and other payables 1,205.7 1,275.0
Contract liabilities 255.8 223.9
Current income tax liabilities 112.9 101.8
Current borrowings and financial debt 120.3 112.1
Current lease liabilities 110.0 107.6
Derivative financial instruments 4.9 2.7
Other current financial liabilities 380.3 72.9
Total current liabilities 2,189.9 1,896.0
Liabilities held for sale - -
TOTAL EQUITY AND LIABILITIES 7,133.1 6,752.7


CONSOLIDATED STATEMENT OF CASH FLOWS
IN EUR MILLIONS H1 2022 H1 2021
Profit/(loss) before income tax 345.8 309.2
Elimination of cash flows from financing and investing activities (4.0) 19.0
Provisions and other non-cash items 26.1 23.7
Depreciation, amortization and impairment 129.0 129.0
Movements in working capital requirement attributable to operations (176.7) (68.5)
Income tax paid (107.2) (83.5)
Net cash generated from operating activities 213.0 328.9
Acquisitions of subsidiaries (45.7) (35.9)
Proceeds from sales of subsidiaries and businesses (1.2) 0.6
Purchases of property, plant and equipment and intangible assets (53.7) (56.4)
Proceeds from sales of property, plant and equipment and intangible assets 1.7 3.8
Purchases of non-current financial assets (6.4) (8.6)
Proceeds from sales of non-current financial assets 11.3 7.7
Change in loans and advances granted 2.4 (0.8)
Dividends received from equity-accounted companies - -
Net cash used in investing activities (91.6) (89.6)
Capital increase 3.2 6.1
Purchases/sales of treasury shares (50.8) 13.7
Dividends paid (9.8) (8.4)
Increase in borrowings and other debt 42.3 5.7
Repayment of borrowings and other debt (2.9) (484.7)
Repayment of amounts owed to shareholders - -
Repayment of lease liabilities and interest (61.1) (55.3)
Interest paid (31.1) (47.4)
Net cash generated from / ( used in) financing activities (110.2) (570.3)
Impact of currency translation differences 12.5 5.2
Impact of changes in accounting method - -
Net increase / (decrease) in cash and cash equivalents 23.7 (325.8)
Net cash and cash equivalents at beginning of the period 1,410.4 1,587.0
Net cash and cash equivalents at end of the period 1,434.1 1,261.2
o/w cash and cash equivalents 1,449.0 1,267.6
o/w bank overdrafts (14.9) (6.4)
  • APPENDIX 5: DETAILED NET FINANCIAL EXPENSE
NET FINANCIAL EXPENSE
IN EUR MILLIONS H1 2022 H1 2021
Finance costs , net (38.9) (37.6)
Foreign exchange gains/(losses) 14.2 2.4
Interest cost on pension plans 0.8 0.7
Other (5.6) (2.4)
Net financial expense (29.5) (36.9)
  • APPENDIX 6: ALTERNATIVE PERFORMANCE INDICATORS
ADJUSTED OPERATING PROFIT
IN EUR MILLIONS H1 2022 H1 2021
Operating profit 375.2 346.1
Amortization of intangible assets resulting from acquisitions 21.9 28.9
Impairment and retirement of non-current assets 3.7 2.9
Restructuring costs 8.9 4.4
Acquisitions and disposals 1.1 (4.1)
Impairment of goodwill - -
Total adjustment items 35.7 32.1
Adjusted operating profit 410.9 378.2


CHANGE IN ADJUSTED OPERATING PROFIT
IN EUR MILLIONS
H1 2021 adjusted operating profit 378.2
Organic change 13.3
Organic adjusted operating profit 391.5
Scope 1.8
Constant currency adjusted operating profit 393.3
Currency 17.6
H1 2022 adjusted operating profit 410.9


ADJUSTED EFFECTIVE TAX RATE
IN EUR MILLIONS H1 2022 H1 2021
Profit/(loss) before income tax 345.8 309.2
Income tax expense (111.1) (97.1)
ETR(a) 32.1% 31.4%
Adjusted ETR (b) 31.3% 32.2%
(a) Effective tax rate (ETR) = Income tax expense / Profit before income tax
(b) Adjusted ETR = Income tax expense adjusted for tax effect on adjustment items / Profit before tax and before taking into account adjustment items


ATTRIBUTABLE NET PROFIT
IN EUR MILLIONS H1 2022 H1 2021
Attributable net profit/(loss) 225.2 196.9
EPS(a) (€ per share) 0.50 0.44
Adjustment items 35.7 32.1
Net profit/(loss) from operations to be sold - -
Tax impact on adjustment items (8.4) (12.8)
Non-controlling interest on adjustment items (3.9) (1.5)
Adjusted attributable net profit 248.6 214.7
Adjusted EPS(a) (€ per share) 0.55 0.48
(a) Calculated using the weighted average number of shares: 452,052,884 in H1 2022 and 449,836,389 in H1 2021


CHANGE IN ADJUSTED ATTRIBUTABLE NET PROFIT
IN EUR MILLIONS
H1 2021 adjusted attributable net profit 214.7
Organic change and scope 22.4
A djusted attributable net profit at constant currency 237.1
Currency 11.5
H1 202 1 adjusted attributable net profit 248.6


FREE CASH FLOW
IN EUR MILLIONS H1 2022 H1 2021
Net cash generated from operating activities
(operating cash flow)
213.0 328.9
Net purchases of property, plant and equipment and intangible assets (52.0) (52.6)
Interest paid (31.1) (47.4)
Free cash flow 129.9 228.9
CHANGE IN NET CASH GENERATED FROM OPERATING ACTIVITIES
IN EUR MILLIONS
Net cash generated from operating activities at June 30, 2022 328.9
Organic change (121.7)
Organic n et cash generated from operating activities 207.2
Scope 2.0
Net cash generated from operating activities at constant currency 209.2
Currency 3.8
Net cash generated from operating activities at June 30, 2022 213.0


ADJUSTED NET FINANCIAL DEBT
IN EUR MILLIONS JUNE 30, 2022 DEC. 31 2021
Gross financial debt 2,540.5 2,474.1
Cash and cash equivalents 1,449.0 1,420.7
Consolidated net financial debt 1,091.5 1,053.4
Currency hedging instruments (2.7) (2.0)
Adjusted net financial debt 1,088.8 1,051.4
  • APPENDIX 7: CORPORATE SOCIAL RESPONSIBILITY (CSR) KEY INDICATORS
UNITED NATIONS'
SDGS
H1 2022 FY 2021 2025 target
SOCIAL & HUMAN CAPITAL
Total Accident Rate (TAR) 7 #3 0.24 0.27 0.26
Proportion of women in leadership positions8 #5 29.2% 26.5% 35.0%
Number of learning hours per employee (per year) 9 #8 14.2 29.9 35.0
ENVIRONMENT
CO2 emissions per employee (tons per year) 10 #13 2.38 2.49 2.00
GOVERNANCE
Proportion of employees trained to the Code of Ethics #16 95.9% 95.8% 99.0%


  • APPENDIX 8: DEFINITION OF ALTERNATIVE PERFORMANCE INDICATORS AND RECONCILIATION WITH IFRS

The management process used by Bureau Veritas is based on a series of alternative performance indicators, as presented below. These indicators were defined for the purposes of preparing the Group's budgets and internal and external reporting. Bureau Veritas considers that these indicators provide additional useful information to financial statement users, enabling them to better understand the Group's performance, especially its operating performance. Some of these indicators represent benchmarks in the testing, inspection and certification (“TIC”) business and are commonly used and tracked by the financial community. These alternative performance indicators should be seen as a complement to IFRS-compliant indicators and the resulting changes.

GROWTH

Total revenue growth

The total revenue growth percentage measures changes in consolidated revenue between the previous year and the current year. Total revenue growth has three components:

  • organic growth;
  • impact of changes in the scope of consolidation (scope effect);
  • impact of changes in exchange rates (currency effect).

Organic growth

The Group internally monitors and publishes“organic” revenue growth, which it considers to be more representative of the Group's operating performance in each of its business sectors.

The main measure used to manage and track consolidated revenue growth is like-for-like, or organic growth. Determining organic growth enables the Group to monitor trends in its business excluding the impact of currency fluctuations, which are outside of Bureau Veritas' control, as well as scope effects, which concern new businesses or businesses that no longer form part of the business portfolio. Organic growth is used to monitor the Group's performance internally.

Bureau Veritas considers that organic growth provides management and investors with a more comprehensive understanding of its underlying operating performance and current business trends, excluding the impact of acquisitions, divestments (outright divestments as well as the unplanned suspension of operations – in the event of international sanctions, for example) and changes in exchange rates for businesses exposed to foreign exchange volatility, which can mask underlying trends.

The Group also considers that separately presenting organic revenue generated by its businesses provides management and investors with useful information on trends in its industrial businesses, and enables a more direct comparison with other companies in its industry.

Organic revenue growth represents the percentage of revenue growth, presented at Group level and for each business, based on constant scope of consolidation and exchange rates over comparable periods:

  • constant scope of consolidation: data are restated for the impact of changes in the scope of consolidation over a 12-month period;
  • constant exchange rates: data for the current year are restated using exchange rates for the previous year.

Scope effect

To establish a meaningful comparison between reporting periods, the impact of changes in the scope of consolidation is determined:

  • for acquisitions carried out in the current year: by deducting from revenue for the current year revenue generated by the acquired businesses in the current year;
  • for acquisitions carried out in the previous year: by deducting from revenue for the current year revenue generated by the acquired businesses in the months in the previous year in which they were not consolidated;
  • for disposals and divestments carried out in the current year: by deducting from revenue for the previous year revenue generated by the disposed and divested businesses in the previous year in the months of the current year in which they were not part of the Group;
  • for disposals and divestments carried out in the previous year: by deducting from revenue for the previous year revenue generated by the disposed and divested businesses in the previous year prior to their disposal/divestment.

Currency effect

The currency effect is calculated by translating revenue for the current year at the exchange rates for the previous year.

ADJUSTED OPERATING PROFIT AND ADJUSTED OPERATING MARGIN

Adjusted operating profit and adjusted operating margin are key indicators used to measure the performance of the business, excluding material items that cannot be considered inherent to the Group's underlying intrinsic performance owing to their nature. Bureau Veritas considers that these indicators, presented at Group level and for each business, are more representative of the operating performance in its industry.

Adjusted operating profit

Adjusted operating profit represents operating profit prior to adjustments for the following:

  • amortization of intangible assets resulting from acquisitions;
  • impairment of goodwill;
  • impairment and retirement of non-current assets;
  • gains and losses on disposals of businesses and other income and expenses relating to acquisitions (fees and costs on acquisitions of businesses, contingent consideration on acquisitions of businesses);
  • restructuring costs.

When an acquisition is carried out during the financial year, the amortization of the related intangible assets is calculated on a time proportion basis.

Since a measurement period of 12 months is allowed for determining the fair value of acquired assets and liabilities, amortization of intangible assets in the year of acquisition may, in some cases, be based on a temporary measurement and be subject to minor adjustments in the subsequent reporting period, once the definitive value of the intangible assets is known.

Organic adjusted operating profit represents operating profit adjusted for scope and currency effects over comparable periods:

  • at constant scope of consolidation: data are restated based on a 12-month period;
  • at constant exchange rates: data for the current year are restated using exchange rates for the previous year.

The scope and currency effects are calculated using a similar approach to that used for revenue for each component of operating profit and adjusted operating profit.

Adjusted operating margin

Adjusted operating margin expressed as a percentage represents adjusted operating profit divided by revenue. Adjusted operating margin can be presented on an organic basis or at constant exchange rates, thereby, in the latter case, providing a view of the Group's performance excluding the impact of currency fluctuations, which are outside of Bureau Veritas' control.

ADJUSTED EFFECTIVE TAX RATE

The effective tax rate (ETR) represents income tax expense divided by the amount of pre-tax profit.

The adjusted effective tax rate (adjusted ETR) represents income tax expense adjusted for the tax effect on adjustment items divided by pre-tax profit before taking into account the adjustment items (see adjusted operating profit definition).

ADJUSTED NET PROFIT

Adjusted attributable net profit

Adjusted attributable net profit is defined as attributable net profit adjusted for adjustment items (see adjusted operating profit definition) and for the tax effect on adjustment items. Adjusted attributable net profit excludes non-controlling interests in adjustment items and only concerns continuing operations.

Adjusted attributable net profit can be presented at constant exchange rates, thereby providing a view of the Group's performance excluding the impact of currency fluctuations, which are outside of Bureau Veritas' control. The currency effect is calculated by translating the various income statement items for the current year at the exchange rates for the previous year.

Adjusted attributable net profit per share

Adjusted attributable net profit per share (adjusted EPS or earnings per share) is defined as adjusted attributable net profit divided by the weighted average number of shares in the period.

FREE CASH FLOW

Free cash flow represents net cash generated from operating activities (operating cash flow), adjusted for the following items:

  • purchases of property, plant and equipment and intangible assets;
  • proceeds from disposals of property, plant and equipment and intangible assets;
  • interest paid.

Net cash generated from operating activities is shown after income tax paid.

Organic free cash flow represents free cash flow at constant scope and exchange rates over comparable periods:

  • at constant scope of consolidation: data are restated based on a 12-month period;
  • at constant exchange rates: data for the current year are restated using exchange rates for the previous year.

The scope and currency effects are calculated using a similar approach to that used for revenue for each component of net cash generated from operating activities and free cash flow.

FINANCIAL DEBT

Gross debt

Gross debt (or gross finance costs/financial debt) represents bank loans and borrowings plus bank overdrafts.

Net debt

Net debt (or net finance costs/financial debt) as defined and used by the Group represents gross debt less cash and cash equivalents. Cash and cash equivalents comprise marketable securities and similar receivables as well as cash at bank and on hand.

Adjusted net debt

Adjusted net debt (or adjusted net finance costs/financial debt) as defined and used by the Group represents net debt taking into account currency and interest rate hedging instruments.

CONSOLIDATED EBITDA

Consolidated EBITDA represents net profit before interest, tax, depreciation, amortization and provisions, adjusted for any entities acquired over the last 12 months. Consolidated EBITDA is used by the Group to track its bank covenants.

1 Alternative performance indicators are presented, defined and reconciled with IFRS in appendices 6 and 8 of this press release.

2 TAR: Total Accident Rate (number of accidents with and without lost time x 200,000/number of hours worked).

3 Proportion of women on the Executive Committee in Band II (internal grade corresponding to an executive management position) in the Group (number of women on a full-time equivalent basis in a leadership position/total number of full-time equivalents in leadership positions).

4 Indicator calculated over a 6-month period compared to a 12-month period for FY 2021 and 2025 target values.

5 Greenhouse gas emissions from offices and laboratories, tons of CO2 equivalent per employee and per year for Scopes 1, 2 and 3 (emissions related to business travel).

6 The Technology segment comprises Electrical & Electronics, Wireless testing activities and Automotive connectivity testing activities.

7 TAR: Total Accident Rate (number of accidents with and without lost time x 200,000/number of hours worked).

8 Proportion of women on the Executive Committee in Band II (internal grade corresponding to an executive management position) in the Group (number of women on a full-time equivalent basis in a leadership position/total number of full-time equivalents in leadership positions).

9 Indicator calculated over a 6-month period compared to a 12-month period for FY 2021 and 2025 target values.

10 Greenhouse gas emissions from offices and laboratories, tons of CO equivalent net emissions per employee and per year corresponding to Scopes 1, 2 and 3 (emissions related to business travel).

Attachment

  • 2022 07 28_Press Release H1 2022 Results



Attachments 2022 07 28_Press Release H1 2022 Results ...

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