■ Contribution of portfolio companies, net of finance costs
In 2018, Eurazeo posted robust economic revenue growth at constant Eurazeo scope and exchange rates of +11.0% to €5,809 million. The year-on-year increase is +12.6% after restatement for the five companies sold, with Q4 2018 growth of +5.5% to €1,316 million. This includes +15.6% annual revenue growth for Eurazeo Capital unlisted assets and +8.0% growth in Eurazeo PME.
Adjusted EBITDA of fully-consolidated companies rose by +3.6% to €575.4 million year-on-year, driven by all four fully-consolidated investment strategies (Eurazeo Capital, Eurazeo PME, Eurazeo Patrimoine and Eurazeo Brands). Adjusted EBIT is €396 million, down -3.4% on 2017, due to both higher depreciation and amortization charges following an increase in investment and seasonal factors impacting external growth transactions in several portfolio companies.
The contribution of portfolio companies, net of finance cost is €250.6 million in 2018, down -7.8% on 2017.
■ Contribution of the investment activity
Investment activity net income is €262 million in 2018 compared with €422 million in 2017:
> Revenue from net capital gains or losses, dividends and other investment revenue is high at €548 million in 2018 (€586 million in 2017) and mainly reflects the divestment of all AccorHotels, Asmodee, Desigual, Odealim, Vignal Lighting Group and PeopleDoc shares and the change in the fair value of Moncler shares and Eurazeo Croissance investments.
> Impairment: in accordance with accounting standards, Eurazeo adjusted the cost price of the Europcar shares based on a valuation of €8.0 per share, leading to the recognition of an impairment of -€146 million in the consolidated financial statements. Eurazeo also recognized an impairment loss of -€35 million on MK Direct. Net impairment charges totaled -€177 million in 2018 compared with -€27 million in 2017;
> Operating expenses: these include transaction costs relating to investment activities, Group strategic management and listing costs and opex related to calculated management fees (these fees are revenue for the asset management activity and are therefore neutral in the consolidated income statement). These operating expenses totaled -€109 million in 2018 compared with -€137 million in 2017, mainly due to a decrease in transaction costs. Calculated management fees opex totaled -€69.0 million, compared with -€66.9 million in 2017.
■ Contribution of the asset management activity: twofold increase in 2018 results
Asset management activity net income grew +42% to €70 million in 2018. This excellent performance reflects strong momentum in the management activity and a controlled increase in costs:
> Management fee revenue rose +19.4% to €164.9 million and comprises calculated management fees of €69 million and management activities for investment partners, driven mainly by significant fundraising in the Venture and Private debt sectors.
> Realized performance fee revenue is €22.7 million in 2018 compared with €12.9 million in 2017: it mainly comprises fees calculated on Eurazeo’s balance sheet, corresponding to divestments performed during the year (Asmodee, PeopleDoc, Vignal Lighting Group and Odealim). It is recalled that Eurazeo is entitled to carried interest on (i) Idinvest funds raised from 2018 and (ii) Rhône funds, only for funds currently in the investment phase (V Funds).
> Operating expenses total €126 million in 2018, up +15.8% and include all expenses incurred by Eurazeo SE (excluding Group strategic management and listing costs), Idinvest and iM Global Partner. This increase in costs is mainly attributable to recruitment in the various investment functions through the Group’s various strategies, to support the development of all the businesses.
Other: mainly includes the net income of Rhône, which is equity-accounted.
■ Non-recurring items and depreciation and amortization
Non-recurring items totaled -€184 million in 2018, compared with -€157 million in 2017 and primarily comprise restructuring and transformation project costs in the portfolio companies (€62 million), impairment of the Fintrax / Premier Tax Free brands following rebranding by Planet (€50 million) and expenses in respect of businesses sold in Seqens (€47 million).
Eurazeo recognized consolidated amortization on contracts and other assets relating to goodwill allocation of €178 million in 2018, stable on 2017.
■ Net income attributable to owners of the Company
Net income attributable to owners of the Company is €261 million in 2018, compared with pro forma net income of €426 million in 2017.