Bolloré SA is probably the most complicated company we track, accounting-wise.

Under family control through a chain of holding companies (see Worth Knowing section in the full research note), Bolloré is an industrial conglomerate which owns controlling stakes in listed and non-listed companies in a wide range of economic sectors: transportation and logistics (particularly in Africa), fuel distribution, media activities (such as advertising agencies with Havas before its transfer to another media company, Vivendi, CSA Institute, newspapers, TV channels, music, Wimax technology, etc.), industry (such as plastic films, electrical batteries, specialised systems, etc.), real estate investments and agro-industry (e.g. vineyards for Côtes de Provence wine, plantations in the Cameroons, Nigeria, Indonesia, Ivory Coast, Liberia, USA)

From 2017, the full consolidation of Vivendi has led the media activities to become the most important in terms of revenues and profit, well ahead of the transportation and logistics activity.

This is a fallacy though, as none of the cash flows or assets of Vivendi are under financial control of Bolloré. The weak minorities, however, have been repeatedly manipulated to serve Bolloré’s cause.

Bolloré SA or Vincent Bolloré?

The uncertainty around the business model(s) of Bolloré SA (that we definitively regard as a holding company) is that it is a legal box designed to service the dynastic requirements of a family and run by a brilliant and instinctive boss, Vincent Bolloré.

There are at least two lines of thinking when trying to make sense of the group. The first is that the hideously complex corporate structure (see Worth Knowing in the full research note) is designed to retain family control through a combination of control leverage and auto control internal loops.

We are of the view that these loops are here to stay as unwinding them would mean a loss of control and expose an overall weak balance sheet

Cash flow deeper questions

Bolloré SA’s financials from 2017 on are useless and force upon any questioning observer the hard work of delayering the businesses while being none the wiser.

Homing in on genuine FCF is an issue not only because the Vivendi addition creates confusion (the group is actually quite transparent about the impacts of this consolidation) but because the cash-flow mechanics of the one business that matters (Transport & Logistics) are beyond anyone’s grasp, dispersed as they are between sub businesses and geographies.

By contrast, the loss-making battery-related activities, although through convoluted business models and legal structures, are nearly straightforward.

Utterly complex

The full allowance for the 2017 accounts and the rejigging of financial models to allow for the full consolidation of Vivendi, itself a moving target, have proved unusually difficult to master.

The limited changes to the target price are due to the fact that we regard Bolloré as a holding company and assess it primarily on its NAV. This brings stability. Underlying cash generation ex Vivendi may be challenged though by a more competitive outlook in Africa. This is very hard to track though.

The full analysis is available : click here