The 2016 financial statement released by the Belgian company s.a. D’Ieteren n.v., (D’Ieteren) on Monday provides a fascinating look at its diverse holdings, including its vehicle glass division, known as Belron. Belron also owns Safelite AutoGlass in the United States. According to the report, Belron serves 33 countries worldwide through its 2400 branches and 10,000 mobile vans. It trades under more than 10 major brand names including Carglass® and Autoglass®, as well as Safelite AutoGlass.
The financial statements, consolidated as of December 31, 2016, provide a detailed report of each of D’Ieteren’s three activity centers, one of which is Belron. The report also notes that the company uses alternative performance measures in their accounting. Alternative performance measures are non-GAAP (non-Generally Accepted Accounting Procedures) measures. Their use, the statement says, better reflects underlying performance and better assists investors in gaining an understanding of D’Ieteren’s financial performance.
The report also notes that buildings are depreciated in a period between 40 to 50 years: plant equipment is depreciated in a period between 3 to 15 years: IT equipment depreciates between two and seven years: and lease assets depreciate dependent on the length of the lease.
The report notes that Belron had income of $3,485.5 million USD (€3,305.4 EU) in 2016, up from $3,333.5 million USD (€3,161.2 million EU) in 2015. The amount of goodwill carried decreased from $1 billion USD (€980.7 million EU) in 2015 to $956.6 million USD (€907 million EU) in 2016. Goodwill carried in the United States increased from $289.6 million USD (€274.6 million) in 2015 to $305.7 USD (€289.9 million) in 2016.
An impairment charge of $140.4 million USD (€133.2 million) was recognized on goodwill and on intangible commercial and administrative expenses, as well as tangible assets. D’Ieteren reported that these impairments related to: Italy $64.3 million USD (€61 million); the United Kingdom $33.4 million USD (€31.7 million); the Netherlands $34.6 million USD (€32.8 million); Russia $5.1 million USD (€4.9 million); Greece $2.3 million USD (€2.2 million); and Ireland $633,000 USD (€.6 million). The company said that the impairment charges “were primarily driven by lower cash flows reflecting the challenging market condition in these countries, combined with the impact that some of the movements and assumptions for the United Kingdom and the expected impact of Brexit and the weakening of the British pound versus the euro on future income streams…”
Belron was also very much in international acquisition mode throughout 2016. It purchased AAA Mid-Atlantic Auto Glass LLC, AAA Carolina and Nebraskaland Glass in the United States. It bought 100 percent of the shares of Cabot Auto Glass and Upholstery, as well as 30000122 Nova Scotia Limited, Speedy Bumpers Inc., and 1581240 Alberta Inc., all glass- related businesses in Canada.
The company also purchased five glass installation companies with multiple locations in Spain, one in Greece, one in Italy, a Finnish installation company, as well as the Swedish glass installation companies Haglofs Glas and Byhlins Glas.
The report also provides a look into how Belron expects to use some of the names it owns in the future. It anticipates a continued and long usefulness to the brand names Carglass, Autoglass and Safelite AutoGlass. It reports that the names Giant Glass, Dr. Glass, Royal Glass and Michigan Mobile are not considered to have indefinite useful lives.
The report also notes how Belron uses a combination of options, collars and swaps to hedge the price of its fuel purchases. It also uses foreign-exchange swap contracts to swap foreign currency cash balances to “reduce borrowings and minimize interest expense.”
Belron also booked approximately $36.6 million USD (€34.7 million) in expenses related to the reorganization, employee termination costs, and the U.S. Enfield plant closure.
Belron also refinanced its revolving credit facility in June of last year. It then entered into a new syndicated five-year record involving credit facility of $474.6 million USD (€450 million) at a price lower than the previous one.
“The group is committed to acquiring the non-controlling interest owned by third parties in Belron, should these third parties wish to exercise their put options,” says the report. These non-controlling interests are believed to own approximately 5.15 percent of Belron.
Belron is by far the largest activity that D’Ieteren owns, in terms of numbers of employees. The vehicle glass division employ 26,340 full-time employee equivalents, versus 26,390 in 2015.
|2016 Profit or Loss-Vehicle Glass (Belron)||Millions of US Dollars|
|Net Finance Costs:||-37.28||-36.855||-0.42|
|Share of results of entities accounted for using the equity method, net of income tax||-0.84||0||-0.84|
|Result before tax||5.57||146.265||-140.70|
|Income tax expense||-22.68||-25.41||2.73|
|Result from continuing operations||-17.12||120.855||-137.97|
|Result for the period||-43.26||78.435||-121.70|
|Equity holders of the parent||-41.90||74.445||-116.34|
|Result for the period||-43.26||78.435||-121.70|
|Property, plant and equipment||385.46||353.745||31.71|
|Deferred tax assets||50.51||46.725||3.78|
|Non-current assets classified as held for sale||0.00||8.61||-8.61|
|Derivative hedging instruments||1.05||4.515||-3.47|
|Derivatives held for trading||1.26||0.945||0.32|
|Current tax assets||5.25||3.99||1.26|
|Trade and other receivables||274.47||255.045||19.43|
|Cash and cash equivalents||48.20||23.1||25.10|
|Non controlling interests||0.53||1.89||-1.37|
|Loans and borrowings||636.51||740.04||-103.53|
|Deferred tax liabilities||5.46||17.85||-12.39|
|Non current liabilities||706.13||807.66||-101.54|
|Liabilities associated with non-current assets held for sale||0.00||7.035||-7.04|
|Loans and borrowings||200.87||51.45||149.42|
|Derivative hedging instruments||0.95||0.21||0.74|
|Derivatives held for trading||0.00||5.775||-5.78|
|Current tax liabilities||24.15||16.695||7.46|
|Trade and other payables||513.45||508.515||4.94|
|Total equity and liabiliites||1526.07||1431.675||94.40|