A year of financial returns and strategic achievements
CHANGÉ, France–(BUSINESS WIRE)–Regulatory News:
Séché Environnement (Paris:SCHP):
Continued growth: Contributed revenue1
of €511.9 million, up +11.3%
- Good level of activity in historical scope despite strong 2016 base
- Scope effect related to acquisitions from early in the year (€44.4m)
Growth in current operating income: COI at €39.7m, up
+15.6% (7.8% of contributed revenue)
- Solid operating income within the historical scope
- Positive contribution from external growth (€3.7m)
Net profit up markedly: Net income (Group share) at €15.4m,
up +293% (3.0% of contributed revenue)
Solid financial structure, improved in H2
Annual trend in net financial debt in relation with acquisition
H2 characterized by strong generation of free cash flow: Financial
leverage limited to 3.3x
2017 dividend kept at 0.95 euro per share
2018 outlook: Priority given to selective growth
- Modest growth in consolidated contributed revenue at constant scope
- EBITDA topping €100 million
- Generating cash to target financial leverage of about 3x
1 See page 12: Definitions
At the Board of Directors’ meeting held on February 28, 2018 to approve
the consolidated financial statements at December 31, 2017, Chairman &
CEO Joël Séché declared:
“The year 2017 confirmed the internal and external growth dynamic of
Séché Environnement in the waste recovery and treatment markets in
France and abroad.
The scale and quality of our acquisitions, as well as their
contribution to the year’s activity and net income, have strengthened
the Group’s profitable growth strategy and its core business in France
as well as abroad, where Séché Environnement doubled its revenue in 2017.
In its historical scope, Séché Environnement benefited from the
increase in new recovery and treatment capacity, which enabled it to
respond with the volume and value added needed to meet the increasing
demand of its clients, especially industrial ones.
Furthermore, Séché Environnement substantially expanded its permits
to operate its Changé site, and finalized its landmark project to
provide energy from Solid Recovered Fuel (SRF) to the district heating
system of the city of Laval. These achievements, combined with the
acquisition of Séché Environnement Ouest, will help it remain a leader
in the non-hazardous waste recovery markets in Western France.
For the first time in its history, Séché Environnement exceeded a
half-billion in revenue in 2017. Net income, which is up sharply, shows
that the profitable growth strategy, founded on targeted investments to
address changes in customer needs with value-added, is bearing fruit.
Our solid financial structure made particularly large industrial and
financial investments in the first half, and the second half saw early
returns on investment that led the Group to begin deleveraging.
In 2018, Séché Environnement will continue its profitable growth
strategy, founded on increases in its capacities, a development
investment policy with greater selectivity, and generating positive cash
flows. To do so, the Group will work to optimize all of its operational
and financial tools to accelerate its deleveraging.
These goals make it possible to predict that 2018 will bring a
further increase in our net income and solid generation of free cash
flow, while maintaining our business’ pace of growth.
They are part of the strategy that I have defined and which will be
detailed during the year: It seeks to strengthen Séché Environnement’s
long-term position as a key player in world’s hazardous waste recovery
and treatment markets.”
Commentary on the consolidated financial statements at December 31,
During fiscal year 2017, Séché Environnement confirmed its internal and
external growth strategy in hazardous and non-hazardous waste markets,
both in France and abroad.
In terms of external growth, the Group proved particularly
dynamic by making more than €70 million in financial investments:
In France, Séché Environnement acquired a series of three
companies positioned in the non-hazardous waste recovery and treatment
markets of the “Grand Ouest” region of France.
Internationally, Séché Environnement made strategic
acquisitions in hazardous waste treatment activities (storage) through
the purchase of SAN in Chile and Taris in Peru, and in Industrial
service activities, with the purchase of the Spanish company Solarca,
which is present in many regions of the world.
Within its historical scope, the Group confirmed the strong
performance of its primary activities of recovery and treatment, in
markets that benefited from the effects of increased industrial
production and supported by repeated business with local governments.
In this generally favorable climate, the division’s contributed
revenue2 stood at €511.9m, marking an increase
of +11.3% over December 31, 2016. At constant scope, the contributed
revenue was €467.5m, for growth relative to 2016 in line with
the +1.6% expected.
EBITDA was €98.1m (vs. €89.1m one year earlier). This
10.1% growth is primarily being driven by the contribution of the new
scope (€9.4m), while in the historical scope, the increase in EBITDA is
being hampered by the growth in the structure charges generated by
assisting with the change in scope.
Current operating income (COI) stood at €39.7m, up by
15.6% gross (+4,9% at constant scope), for a current operating
margin of 7.8% of contributed revenue (vs. 7.7% of contributed
revenue at constant scope vs. 7.5% one year earlier).
Net income Group share is up sharply, to €15.4m, equal to
3.0% of contributed revenue (vs. €3.9m one year ago, or 0.8% of
The financial situation is solid, and its trend largely reflects
the financing of the Group’s acquisitions, partially offset by strong
cash generation in the second half:
Gross cash flow2 has grown
substantially due to an optimized management of WCR, standing at €64.4m
vs. €11.1m in 2016.
Net financial debt stood at €325.8m (vs. €279.0m) Its
trend over the period benefits from the acceleration of cash
generation in the second half of the year.
Thus, the debt
ratios (leverage at 3.3x and gearing at 1.3x) are
favorable in light of the covenants in place at December 31, 2017
(respectively 3.7x and 1.6x).
2 See page 12: Definitions
Outlook for 2018
In 2018, Séché Environnement will strengthen its profitable growth
approach founded on increasing its capabilities and on a selective
policy of investment and development.
In France, Séché Environnement will maintain its moderate growth
pace, relying on the solidity of its industrial contracts (64% of its
contributed revenue) and the renewal of its contracts with Local
Authorities. It will also benefit from the increase in its recovery and
treatment capabilities (bromine, LEN contract, platforms, etc.).
Internationally, (11% of contributed revenue), the Group will
continue to integrate the subsidiaries acquired early in the year and to
develop its operations in Latin America (development of SAN in Chile and
Taris in Peru) while synergies will be generated with Solarca in the
rest of the world.
Furthermore, the Group works to improve operational levers by optimizing
the availability of its tools, keeping costs low, and reviewing the
efficiency of its industrial processes.
For 2018, these goals presage modest growth in its business at
constant scope and another increase in net income with EBITDA
expected to top €100m.
Given the finalization of major development projects (boiler oven in
Changé, energy recovery tools in La Gabarre, etc.), Séché Environnement
projects a reduction in its industrial investment plan over the
existing scope in 2018 relative to 2017 levels.
The Group therefore expects to generate positive cash flow, which
will help it continue deleveraging and fund its development. Thus, Séché
Environnement is targeting a financial leverage (NFD/EBITDA) of
around 3x by the end of 2018.
At the Annual General Meeting to be held on April 27, 2018, the Board of
Directors will propose an unchanged dividend of 0.95 euro per
share for fiscal year 2017.
Presentation of consolidated results as at
December 31, 2017
The consolidated results presentation on Tuesday, March 6, 2018
will be live-streamed in English starting at exactly 8:30 a.m.on
the Séché Environnement website.
To watch it, please click on the following link:
About Séché Environnement
Séché Environnement is one of France’s leading players in the
recovery and treatment of all types of waste, from both industry and
Séché Environnement is the leading independent operator in
France. It is uniquely positioned as a specialist in technical risk, at
the center of the regulated waste treatment and recovery markets, which
have high barriers to entry.
Its facilities and expertise enable it to provide high value-added
solutions to its industrial and public authority clients, targeting the
challenges of the circular economy and sustainable development
requirements, such as:
the material and energy recovery of hazardous and non-hazardous
all types of treatments for solid, liquid or gaseous waste
(thermal, physical-chemical or radiation treatment);
- the storage of final hazardous and non-hazardous waste;
eco-services such as decontamination, decommissioning, asbestos
removal and rehabilitation.
Leveraging its extensive expertise, Séché Environnement has
successfully developed its environmental services business lines in
waste management outsourcing markets for its clientele of large
communities and major industrial companies both in France and abroad.
Séché Environnement has been listed on Eurolist by Euronext
since November 27, 1997.
It is eligible for equity savings funds dedicated to investing in
SMEs and is listed in the CAC Mid&Small and Enternext PEA-PME 150
This press release may contain information of a provisional nature.
This information represents either trends or targets at the date of the
press release’s publication and may not be considered as results
forecasts or as any other type of performance indicators. This
information is by nature subject to risks and uncertainties which are
difficult to foresee and are usually beyond the Company’s control, which
may imply that expected results and developments differ significantly
from announced trends and targets. These risks notably include those
described in the Company’s Registration Document, which is available on
its website (www.groupe-seche.com).
This information therefore does not reflect the Company’s future
performance, which may differ considerably, and no guarantee can be
given as to the achievement of these forward-looking figures. The
Company makes no commitment on the updating of this information. More
detailed information on the Company can be obtained on its website (www.groupe-seche.com),
in the Regulated Information section. This press release does not
constitute an offer of shares or a solicitation in view of an offer of
shares in any country, including the United States. Distribution of this
press release may be subject to the laws and regulations in force in
France or other countries. Persons in possession of this press release
must be aware of these restrictions and observe them.
Analysis of the consolidated financial statements at December 31, 2017
At December 31
|2016||As a %||2017||As a %||
|Share in net income of affiliates||4.9||1.1%||16.1||3.1%||+227%||+226%|
|Net income (Group)||3.9||0.8%||15.4||3.0%||+295%||+297%|
Solid growth for all businesses
- Solid business activity at the divisions
- Appreciable contribution of newly-integrated business
At December 31, 2017, Séché Environnement reported consolidated
revenue of €534.5m, up +11.8% relative to revenue
reported at December 31, 2016 (€478.3m).
This revenue includes IFRIC 12 revenue representing €3.1m in investments
made on disposed assets (vs. €4.2m one year earlier).
It also recognizes €19.4m (vs. €13.9m at December 31, 2016) in damages
and compensation paid to Sénerval, net of savings on variable charges,
to cover the costs incurred to ensure the continuity of the public
service during asbestos removal at the Strasbourg-Sénerval incinerator.
Net of IFRIC 12 revenue and damages paid to Sénerval, contributed
revenue stood at €511.9m, vs. €460.1m at December 31, 2016, up
11.3% over the period.
This revenue includes €44.4m in contributions from companies acquired
during the first half of 2017 and consolidated starting January 1, 2017. At
constant scope, contributed revenue was €467.5m,
reflecting organic growth of +1.6% for the period.
Analysis of activity by business line
|At December 31||2016||2017|
o/w scope effect
o/w scope effect
|Total contributed revenue||460.1||100.0%||511.9||100.0%||+11.3%||+1.6%|
At constant exchange rates, contributed revenue at December 31, 2016
would be €460.0m, illustrating the lack of a significant foreign
exchange effect for the period.
During fiscal 2017, the waste recovery and treatment divisions showed
strong growth, primarily resulting from the contribution of the scopes
consolidated over the period.
In their historical scope, the divisions experienced different trends.
For instance, the Hazardous Waste (HW) division benefited from good
performance in industrial markets, but it’s performance over the full
year was compared to a 2016 that had been particularly strong at the end
of the year.
For its own part, the Non-Hazardous Waste (NHW) division confirmed the
renewal of its contracts and had a particularly dynamic year’s end,
particularly in the Decontamination business lines.
The HW division achieved revenue of €325.9m at December
31, 2017, showing growth of 9.9% relative to 2016.
revenue incorporates a scope effect of €29.2m related to the
contribution of the acquisitions made within the division in 2017 (SAN
in Chile, Taris in Peru, Solarca in the rest the world). Excluding
this scope effect, the division’s revenue grew slightly at constant
scope (+0.1%) to €296.7m vs. €296.5m in 2016.
In France, the division drew €272.2m in revenue, a slight
decrease (1.2%) compared to 2016 revenue (€275.4m). The slight
decline posted by the division over the period reflects the lower
contribution of service activities (notably Decontamination) and
final waste storage, compared to the strong level of activity
posted in 2016, due to significant spot contracts for polluted
soil, and the integration, in the fourth quarter of 2016, of the
Over the fiscal year, discounting this
base effect, the division substantially grew its recovery
operations (regenerating solvents, bromine, etc.), its
incineration business lines, and its platforms supported by the
recovery of industrial production.
Internationally, revenue totaled €53.7m at December
31, 2017 (vs. €21.1m one year earlier). This strong growth
primarily reflects the contribution of the scopes acquired in
2017, equal to €29.2m.
At constant scope, the
division’s revenue totaled €24.6m, up +17.4% from 2016. This
strong growth particularly results from good performance of its
regeneration activities in Spain (Valls Quimica) and the strength
of PCB contracts in Argentina (Trédi Argentina).
- In France, the division drew €272.2m in revenue, a slight
The NHW division recorded contributed revenue of €186.0m, up
13.7% from its 2016 revenue (€163.6m) The division’s activity at
December 31, 2017 incorporates a scope effect of €15.2m,
representative of the companies in the Séché Environnement Ouest (SEO)
scope – formerly Charrier – and the NHW activities of SAN in Chile.
In France, the division recorded contributed revenue of
€184.1m, up 12.6% from its 2016 revenue (€163.6m)
of the scope effect (€13.4m), the division’s growth was up +4.4%
in 2017, with contributed revenue of €170.8m.
its historical scope, the division experienced a solid level of
activity in all of its business lines. Although the start of the
year was characterized by a slight reduction in volumes
incinerated, due to the deliberate arbitrage in favor of hazardous
waste within the Salaise 3 incinerator, service activities,
particularly Decontamination, performed particularly well at
Internationally, the division posted revenue of €1.9m,
resulting from the integration of the NHW activities of the SAN
division in Chile.
- In France, the division recorded contributed revenue of
Analysis of activity by geographical scope
|At December 31||2016||2017|
|In €m||As a %||In €m||As a %|
Subsidiaries in France
o/w scope effect
o/w scope effect
|Total contributed revenue||460.1||100.0%||511.9||100.0%|
At December 31, 2017, the revenue of the International subsidiaries was
€55.6m, compared to €21.1m one year earlier.
This revenue includes €31.0m representing revenue from international
subsidiaries that entered the scope in 2017:
- Taris (Peru): €5.8m
- SAN (Chile): €4.3m
- Solarca (rest of the world): €20.9m
At constant scope, revenue from international activities was up 17.4% to
€24.6m. This trend is detailed above (see analysis of activity by
The foreign exchange effect is non-material over the period.
- Solid operating income at constant scope
- Substantially positive contribution from external growth
EBITDA stands at €98.1m, equal to 19.2% of contributed
revenue, (vs. €89.1m one year earlier, an increase of +10.1%
The increase in EBITDA reflects:
€1.6m higher operating income in the historical scope, broken down as:
an increase in operating margin driven by growth in activity:
changes in maintenance and repair expenses, as well as employee
expenses related to the organization of operational sites: €(2.2)m
one-time income recognized following the Authorities’ decision to
not recover the notified amounts in the tax audit related to the
property ownership tax: +€0.8m
- an increase in operating margin driven by growth in activity:
growth in the personnel expenses of support functions accompanying
- the €9.4m contribution of companies that newly entered the scope.
The scope effect reflects a contribution of +€3.4m from companies
acquired in France and +€6.0m from companies acquired internationally.
The gross operating income of the new scope starting at the first
fiscal year of consolidation is therefore high, equal to 21.2% of its
Good current operating income
- Increased current operating income within the historical scope
- Scope effect offers large contribution
The Group generated €39.7m in current operating income (7.8%
of contributed revenue) vs. €34.4m at December 31, 2016 (7.5% of
The growth in COI (+15.6% on a reported basis and +5.0% at
constant scope), primarily explained by:
- higher operating income in the historical scope: +€1.6m
increased structural expenses (support function employee expenses) to
accompany development: €(1.9)m
improved balance in allocations, amortization and provisions, stemming
from the decline in amortization of landfill cells (calculated in
volumes buried) and improvement of risks (clients and others): +€2.0m
- contribution of newly-consolidated business: +€3.7m
The scope effect reflects a contribution of +€1.0m from companies
acquired in France and +€2.7m from companies acquired internationally.
The current operating income of the new scope therefore stands at 8.4%
of its revenue, or a level higher than that of the historical scope.
Strong improvement in Operating Income
- Favorable resolution to tax case (property ownership tax)
- Contribution of newly-integrated business
Operating Income at December 31, 2017 stands at €37.3m (7.3%
of contributed revenue), vs. €26.2m (5.7% of contributed revenue) a
year earlier, an increase of +42.5% on a reported basis (+30.6%
at constant scope).
Its level reflects:
- the COI generated by activities in the historical scope: €36.1m
costs incurred in organizing the oversight functions and sites, aimed
at ensuring the Group’s development: €(0.9)m
- costs incurred directly by business combination transactions: €(1.0)m
- the contribution of new companies that entered the scope: +€3.1m
Burdened financial income
- Stable cost of debt
- Effect of the increase in average net debt
Financial income was €(13.6)m at December 31, 2017, vs. €(10.7)m
in 2016. This worsening situation is primarily due to the increase in
average debt over the period, with the annualized debt rate
staying virtually stable, at 3.26% in 2017 (vs. 3.23% in 2016):
Furthermore, this income is supported, in the amount of €(0.8)m, by the
foreign exchange income of the newly integrated companies.
Sharp increase in Consolidated net income (Group share)
- Decrease in the tax expense
- Improvement in the share of net income of affiliates
Tax liability was high in 2017, equal to €(7.7)m vs. €(10.5)m one year
earlier. In 2016, the tax liability was impacted by the reduction in the
net active position of deferred taxes, equal to €(5.0)m.
The share of net income of affiliates was primarily composed of the
income of the companies Sogad, Gerep, and Kanay. This figure is not
significant in 2017, due to the improved profitability of Gerep and
Net income from discontinued operations was €(0.5)m and came from the
inactive company Hungaropec (Hungary). Note that this company was sold
at the end of the fiscal year with no effect on the accounts.
In view of these items, at December 31, 2017, Séché Environnement took
in €3.7m in net income (Group share) equal to 3.0% of
contributed revenue (vs. €3.9m in 2016 i.e. 0.8% of contributed
Solid financial situation, improved in H2
- Strong increase in available cash flow
- Bank covenants satisfied
Recognized industrial investments stood at €60.8m in 2017.
Excluding concession investments, own investments totaled €57.7m (vs.
€52.3m one year ago), €20.3m of which was for investments related to
expanding permits for the Changé site and to development projects for
recovery tools (material or energy) or treatment tools (platforms).
Financial investments primarily involved external growth
operations, with €70.9m in net cash disbursed for acquisitions.
Gross cash flow grew substantially to €64.4m (vs. €11.1m in 2016)
particularly due to the combined effect of EBITDA growth (+€10.0m),
change in WCR (+€30.2m), and to a lesser extent (-€1.4m) the drop in tax
expense. It covers net industrial development investment expenses,
including those related to the new scope, equal to €21.3m. Available
cash was €52.3m at December 31, 2017 vs. €15.2m a year
earlier and €25.6m at June 30, 2017, reflecting an acceleration in cash
flow generation in the second half of 2017.
Net financial debt3 stood at €325.8m
(vs. €279.0m at December 31, 2016): this trend mainly reflects the
effect of external growth operations for the period, net of the
generation of cash flow in the second half. Gearing (NFD/equity)
came out to 1.3x (vs. 1.2x at December 31, 2016) and leverage
(NFD/EBITDA) to 3.3x (vs. 3.1x at December 31, 2016), for
covenants brought to 1.6x and 3.7x at December 31, 2017. Note that these
ratios compare favorably to the covenant levels required at June 30,
2018, respectively 1.
Manuel Andersen, +33 (0)1 53 21 53 60
of Investor Relations