Bekaert's share price lost approximately 40% of its value in 2018. Increased economic and political uncertainty driven by international trade tensions and the lack of clarity about the eventual form and implications of Brexit started to affect market developments and forecasts in our relevant sectors and regions. The share price dropped about 20% on 20 July 2018, when Bekaert issued a press release revising its outlook down. The share price remained under stress for the remainder of the year, amid a long series of profit warnings by sector players in our industries.
Bekaert is committed to providing transparent financial information to its shareholders. It is Bekaert’s intention to engage constantly in an open dialogue with its shareholders.
The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS), which have been adopted by the European Union. Both private and institutional investors can count on our sustained commitment to transparent reporting, be it at shareholders’ or analyst meetings.
The Bekaert share is listed on NYSE Euronext Brussels as ISIN BE0974258874 (BEKB) and was first listed in December 1972. The ICB sector code is 2727 Diversified Industrials.
|Price as at 31 December||25.720||26.345||28.385||38.485||36.445
|Price average closing
|Daily volume||126 923||82 813||120 991||123 268||121 686
|Daily turnover (in millions of €)||3.1||2.1||3.1||4.5||5.0
|Annual turnover (in millions of €)||796||527||804||1 147||1 279||1 121
|Velocity (% annual)||54||35||52||53||51
|Velocity (% adjusted free float)||90||59||86||88||86
|Free float (%)||59.9||55.7||56.7||59.2||59.6
The average daily trading volume was about 155 000 shares in 2018. The volume peaked on 20 July, when 2 060 725 shares were traded.
On 20 February 2019, Bekaert had a market capitalization of € 1.5 billion and a free ﬂoat market capitalization of € 0.9 billion. The free ﬂoat was 59.33% and the free ﬂoat band 60%.
After having been an established value in the Euronext Brussels Star Index since its start in 1991, Bekaert was excluded from BEL20 as from 19 March 2018 and included in the BEL Mid Index of Euronext Brussels.
In connection with the entry into force of the Act of 2 May 2007 on the disclosure of significant participations (the Transparency Act) Bekaert has, in its Articles of Association, set the thresholds of 3% and 7.50% in addition to the legal thresholds of 5% and each multiple of 5%. An overview of the notifications of participations of 3% or more can be found in the Parent Company Information section (Interests in share capital).
Stichting Administratiekantoor Bekaert (principal shareholder) owns 34.21% of the shares, while institutional shareholders are estimated to hold 36.42% of the shares. Retail represents 12.12% while Private Banking 10.79% and treasury shares 6.46%.
As of 31 December 2018 the registered capital of the Company amounts to € 177 793 000, and is represented by 60 408 441 shares without par value. The shares are in registered or dematerialized form.
The Board of Directors has been authorized by the General Meeting of Shareholders of 11 May 2016 to increase the Company’s registered capital in one or more times by an aggregate maximum amount of € 176 000 000 (before any issue premium). The authority is valid for five years from 20 June 2016 and can be renewed in accordance with the applicable statutory provisions. Pursuant to this authorization, the Board of Directors may, among others, effect a capital increase under the authorized capital by means of issuing ordinary shares, subscription rights or convertible bonds and may limit or disapply the preferential subscription right of the Company’s shareholders in accordance with Article 596 and following of the Companies Code.
Furthermore, the Board of Directors has been authorized, for a period of three years from 14 June 2018, to make use of the authorized capital upon receipt by the Company of a notice from the FSMA of a public takeover bid for the Company’s securities.
The Board of Directors has made use of its powers under the authorized capital when it resolved on 18 May 2016 to issue senior unsecured convertible bonds due June 2021 for an aggregate amount of € 380 000 000 (the “Convertible Bonds”). These convertible bonds carry a zero-coupon and their conversion price amounts to € 50.71 per share.
In connection with the issuance of the Convertible Bonds, the Board of Directors resolved to disapply the preference subscription right of existing shareholders set forth in Articles 596 and following of the Companies Code. The terms of the convertible bonds allow the Company, upon the conversion of the bonds, to either deliver new shares or existing shares or pay a cash alternative amount.
In order to mitigate dilution for existing shareholders upon conversion of the Convertible Bonds, the Board of Directors intends where possible, to repay the principal amount of the convertible bonds in cash and, if the then prevailing share price is above the conversion price, pay the upside in existing shares of the Company. The conversion of the Convertible Bonds would then have no dilutive effect for existing shareholders.
Furthermore, the terms of the Convertible Bonds allow the Company to redeem the bonds at their principal amount together with accrued and unpaid interest in certain circumstances, for example on or after 30 June 2019, if the Company’s shares trade at a price higher than 130% of the conversion price during a certain period.
The total number of outstanding subscription rights under the Stock Option Plan 2005-2009 and convertible into Bekaert shares is 173 570. A total of 34 600 subscription rights were exercised in 2018 under the Stock Option Plan 2005-2009, resulting in the issue of 34 600 new Company shares, and an increase of the registered capital by € 103 000 and of the share premium by € 473 436.
In addition to the 3 636 280 treasury shares held by it as of 31 December 2017, the Company purchased 352 000 own shares in the course of 2018. In 2018 a total of 37 200 stock options were exercised under the Stock Option Plan 2010-2014 and 14 000 under the Stock Option Plan 2. A total of 51 200 treasury shares were used for that purpose. 15 251 treasury shares were sold to members of the Executive Management in the context of the Personal Shareholding Requirement Plan (at a price equal to the closing price at Euronext on the day of the transfer) and 19 797 treasury shares were transferred to members of the Executive Management pursuant to the Company matching mechanism under the Personal Shareholding Requirement Plan. No treasury shares were cancelled in 2018. As a result, the Company held an aggregate 3 902 032 treasury shares as of 31 December 2018.
A third grant of options under the Stock Option Plan 2015-2017 took place on 20 February 2018, when 225 475 options were granted. Each such option will be convertible into one existing Company share at an exercise price of € 34.60.
The Stock Option Plan 2015-2017 and its predecessor stock option plans comply with the relevant provisions of the Act of 26 March 1999 and with Articles 520ter and 525, last paragraph, of the Companies Code. Detailed information about capital, shares and stock option plans is given in the Financial Review (Note 6.12 to the consolidated financial statements).
The Board of Directors will propose that the Annual General Meeting to be held on 8 May 2019 approve the distribution of a gross dividend of € 0.70 per share.
The temporary dividend cut is reflecting the lower earnings and high debt leverage of the Company. The Board reconfirms the Dividend Policy which foresees, insofar as the profit permits, a stable or growing dividend while maintaining an adequate level of cash flow in the Company for investment and self-financing in support of growth. Over the longer term, the Company strives for a pay-out ratio of 40% of the result for the period attributable to the equity holders of Bekaert.
|Total gross dividend||0.850||0.900||1.100||1.100||0.700|
(1) The dividend is subject to approval by the General Meeting of Shareholders 2019.
(2) Subject to the applicable tax legislation
The Annual General Meeting was held on 9 May 2018. An Extraordinary General Meeting was held on the same day. The resolutions of the meetings are available at www.bekaert.com.
The Articles of Association contain no restrictions on the transfer of Company shares, except in case of a change of control, for which the prior approval of the Board of Directors has to be requested in accordance with Article 11 of the Articles of Association.
Subject to the foregoing, the shares are freely transferable. The Board is not aware of any restrictions imposed by law on the transfer of shares by any shareholder.
Each share entitles the holder to one vote. The Articles of Association contain no restrictions on the voting rights, and each shareholder can exercise his voting rights provided he was validly admitted to the General Meeting and his rights had not been suspended. The admission rules to the General Meeting are laid down in the Companies Code and in Articles 31 and 32 of the Articles of Association. Pursuant to Article 10 the Company is entitled to suspend the exercise of rights attaching to securities belonging to several owners.
No person can vote at General Meetings of Shareholders using voting rights attaching to securities that had not been timely reported in accordance with the law.
The Board is not aware of any other restrictions imposed by law on the exercise of voting rights.
The Board of Directors is not aware of any agreements among shareholders that may result in restrictions on the transfer of securities or the exercise of voting rights, except those disclosed in the notifications referred to in the Parent Company Information section (Interests in share capital).
The Articles of Association (Articles 15 and following) and the Bekaert Charter contain specific rules concerning the (re)appointment, induction and evaluation of Directors.
Directors are appointed for a term not exceeding four years by the General Meeting of Shareholders, which can also dismiss them at any time. An appointment or dismissal requires a simple majority of votes. The candidates for the office of Director who have not previously held that position in the Company must inform the Board of Directors of their candidacy at least two months before the Annual General Meeting.
Only if and when a position of Director prematurely becomes vacant can the remaining Directors appoint (co-opt) a new Director. In such a case, the next General Meeting will make the definitive appointment.
The appointment process for Directors is led by the Chairman of the Board. The Nomination and Remuneration Committee submits a reasoned recommendation to the full Board, which, on that basis, decides which candidates will be nominated to the General Meeting for appointment. Directors can, as a rule, be reappointed for an indefinite number of terms, provided they are at least 30 and at most 66 years of age at the moment of their initial appointment and they have to resign in the year in which they reach the age of 69.
The Articles of Association can be amended by an Extraordinary General Meeting in accordance with the Companies Code. Each amendment to the Articles requires a qualified majority of votes.
The Board of Directors is authorized by Article 44 of the Articles of Association to increase the registered capital in one or more times by a maximum amount of € 176 000 000. The authority is valid for five years from 20 June 2016, but can be extended by the General Meeting.
Within the framework of that authority the Board can also, during a period of three years from 14 June 2018, increase the registered capital, upon receipt by the Company of a notice from the FSMA of a public takeover bid, and provided that:
This authority can also be extended by the General Meeting.
The Board of Directors is authorized by Article 12 of the Articles of Association to acquire a maximum number of own shares that, in the aggregate, represent no more than 20% of the issued capital, during a period of five years from 20 June 2016 (that can be extended by the General Meeting), at a price ranging between minimum € 1.00 and maximum 30% above the arithmetic average of the closing price of the Bekaert share during the last thirty trading days preceding the Board’s resolution to acquire. The Board is authorized to cancel all or part of the purchased shares during such five-year period.
Articles 12bis and 12ter of the Articles of Association provide rules for the disposal of purchased shares and for the acquisition and disposal of Company shares by subsidiaries.
The powers of the Board of Directors are more fully described in the applicable legal provisions, the Articles of Association and the Bekaert Charter.
The Company is a party to a number of significant agreements that take effect, alter or terminate upon a change of control of the Company following a public takeover bid or otherwise.
To the extent that those agreements grant rights to third parties that affect the assets of the Company or that give rise to a debt or an obligation of the Company, those rights were granted by the Special General Meetings held on 13 April 2006, 16 April 2008, 15 April 2009, 14 April 2010 and 7 April 2011 and by the Annual General Meetings held on 9 May 2012, 8 May 2013, 14 May 2014, 13 May 2015, 11 May 2016, 10 May 2017 and 9 May 2018 in accordance with Article 556 of the Companies Code; the minutes of those meetings were filed with the Registry of the Commercial Court of Gent, division Kortrijk on 14 April 2006, 18 April 2008, 17 April 2009, 16 April 2010, 15 April 2011, 30 May 2012, 23 May 2013, 20 June 2014, 19 May 2015, 18 May 2016, 2 June 2017 and 7 February 2019 respectively and are available at www.bekaert.com.
Most agreements are joint venture contracts (describing the relationship between the parties in the context of a joint venture company), contracts whereby financial institutions, retail investors or other investors commit funds to the Company or one of its subsidiaries, and contracts for the supply of products or services by or to the Company. Each of those contracts contains clauses that, in the case of a change of control of the Company, entitle the other party, in certain cases and under certain conditions, to terminate the contract prematurely and, in the case of financial contracts, also to demand early repayment of the loan funds. The joint venture contracts provide that, in the case of a change of control of the Company, the other party can acquire the Company’s shareholding in the joint venture (except for the Chinese joint ventures, where the parties have to agree whether one of them will continue the joint venture on its own, whereupon that party has to purchase the other party’s shareholding), whereby the value for the transfer of the shareholding is determined in accordance with contractual formulas that aim to ensure a transfer at an arm’s length price.