ANNUAL REPORT 2007 | 2008 - Gimv

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Venture capital Venture Capital was good for EUR 11.6 billion or 17 percent of total European investments, a fall of one third compared with the previous year (EUR 17.3 billion in 2006). In terms of number of transactions the fall was even more marked, to the lowest level since 2001. This clearly illustrates the shift towards later stage transactions, and away from higher risk early-stage investments. Credit market Buy-outs / buy-ins in Europe (in EUR million) Amount Number 200 000 150 000 100 000 50 000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Until summer 2007 the private equity sector was also underpinned by the ample availability of cheap debt fi nancing, also from non-bank lenders like hedge funds and CLO funds. Figures from Standard & Poors LCD show that the average debt level in 2007 ran up to 6.1x EBITDA, compared with 4.2x EBITDA in 2001-2002. In the summer months this ratio went as high as 7.0x EBITDA. Over the entire year a little more than 50 percent of the fi nanced LBOs had debt levels of over 6.0x EBITDA. At the same time credit quality continued to fall. Whereas in the fi rst half of 2004, 40 percent of buy-out debt had a B rating, this had risen by the fi rst half of 2007 to over 90 percent. When in August the fi rst problems surfaced on the US subprime mortgage market, demand for such debt paper collapsed like a house of cards. According to S&P LCD, European banks still had EUR 70 billion of such credit on their balance sheets at the start of 2008. This is around half of the total volume of debt made available during the past year. In the past year a record amount of buy-out fi nancing was also provided. Until such time as this overhand has disappeared from the market, the credit climate will remain diffi cult and the availability of debt fi nancing will be limited. In such a climate we can expect to see fewer refi nancings and secondary buy-outs. The equity portion of the total acquisition price remained stable during the past year at a comfortable 34 percent of the acquisition price. With the fi nancing problems, this fi gure has increased to 50 percent or more in a quarter of all transactions in the fi rst quarter of 2008. At the end of 2007 the default rate stood at 0.6 percent, compared with 1.9 percent at the end of 2006. Although this may well increase in the course of the year, it remains well under the historical average of 3.8 percent. 12 | Gimv Annual Report 2007-2008 | Operating and fi nancial report Divestments Divestments (at cost price) fell by 30 percent to EUR 23.3 billion. By way of preference, venture capital investments were divested via sales to industrial players, whilst in the case of buy-outs, sales to other private equity players dominated. Given the diffi cult credit climate it is very likely that the number of secondary transactions and refi nancings will decrease this year, which will weigh on the total divestment volume. Write-downs in Europe fell further to 2.0 percent of total divestments, the lowest fi gure ever. This level will probably rise again. IPOs As in recent years the IPO market in the USA remained historically weak with 235 IPOs, which together raised EUR 40.2 billion (2006: EUR 36.1 billion from 217 IPOs). In Europe too the number of IPOs remained stable at 694 (672 in 2006). The total amount raised in these IPOs fell slightly from EUR 65.7 billion to EUR 64.3 billion. Returns 1 500 1 200 900 600 300 Continental Europe: amount Europe (incl. UK): amount Continental Europe: number (right scale) Europe (incl. UK): number (right scale) Source | CMBOR - Barclays - Deloitte In the past year the sector was able to present excellent returns. In recent years the buy-out returns are signifi cantly above the longterm average. This short-term buy-out performance was driven in particular by transactions between 2002 and 2004, when prices were very attractive and fi nancing easy to come by. The long-term returns (over 10 and 20 years) exhibit on the other hand a greater stability, albeit at a very high level (around 16 percent). These buy-out returns are not yet infl uenced by the credit crisis, but certainly will be in future. As well as the negative impact on company results of an economic downturn, falling stock markets will also, thanks to the IFRS rules, also negatively impact portfolio valuations. This means that in the future returns will not only be lower, but will have to come more from operational improvements than from fi nancial engineering. For venture capital there was a slight reduction in short-term returns. Long-term yields for the total private equity sector remain quite stable and very high, which means that private equity remains attractive as a class of assets.
35000 30000 25000 20000 15000 10000 5000 0 Divestments and write-downs in Europe (in EUR million) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 IPOs: Europe versus the USA (investment companies excluded) (in EUR million) Amount Number 8000 7000 6000 5000 4000 3000 2000 1000 0 2001 2002 2003 2004 2005 2006 2007 Net IRR at 31 december 2007* (in EUR million - provisional 2007 fi gures) Source | EVCA | Thomson Financial - provisional fi gures Net IRR at 31/12/2007 3 years 5 years 10 years 20 years Venture capital 4.4% 0.9% 1.8% 4.6% Buy-outs 21.9% 15.9% 16.6% 16.2% All private equity 17.1% 11.5% 11.5% 11.9% * Investment horizon return: IRR calculated using net asset value (NAV) as capital outfl ow at the start of the period, NAV at the end of the period and the actual intervening cash fl ows. 800 700 600 500 400 300 200 100 0 Source | EVCA Divestments Write-downs Europe: amount United States: amount Europe: number (right scale) Source | PwC - IPO Watch Europe United States: number (right scale) | 13
Page 1 and 2: ANNUAL REPORT 2007 | 2008
Page 3 and 4: KEY FIGURES LIMITED CONSOLIDATION 3
Page 5 and 6: GIMV AT A GLANCE AN ACTIVE INVESTOR
Page 7 and 8: Strong performance and expansion in
Page 9 and 10: In 2007-2008 Gimv realised 10 new i
Page 11 and 12: Structure | 08 Strategy | 09 Market
Page 13 and 14: STRATEGY Gimv is an independent, li
Page 15: Fundraising Provisional fi gures fr
Page 19 and 20: (EUR 6.6 million), Gimv realised in
Page 21 and 22: Business units Regions Corporate In
Page 23 and 24: When, in the case of a potential sa
Page 25 and 26: Gimv takes 86 percent holding WALL
Page 27 and 28: Gimv accompanies growth through buy
Page 29 and 30: GIMV OFFERS CREDIBILITY ALFACAM GRO
Page 31 and 32: Joint venture of network and experi
Page 33 and 34: Gimv majority shareholder in TerSta
Page 35 and 36: HVEG - (LowLand Fashion) www.lowlan
Page 37 and 38: Corporate Investment Germany (Halde
Page 39 and 40: Gimv invests in world leader VAG DE
Page 41 and 42: Corporate Investment’s ten larges
Page 43 and 44: Overview of major shareholdings in
Page 45 and 46: Oree develops revolutionary lightin
Page 47 and 48: Liquavista www.liquavista.com Dutch
Page 49 and 50: DIVESTMENTS Business Architects www
Page 51 and 52: Overview of the Gimv ICT portfolio
Page 53 and 54: Gimv continues to support sharehold
Page 55 and 56: GIMV IS A REFERENCE IN THE BIOTECH
Page 57 and 58: PamGene www.pamgene.com PamGene, a
Page 59 and 60: Cleantech Last year Gimv took its f
Page 61 and 62: INVESTMENTS Electrawinds www.electr
Page 63 and 64: Human resources | 60 Responsible co
Page 65 and 66: Policy-wise, Gimv is paying ever gr
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RESPONSIBLE CORPORATE BEHAVIOUR You
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Management | 66 Corporate Governanc
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Zeger Collier has had a varied care
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Eric Spiessens is a member of the e
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Paul De Ridder has been a member of
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1.2 - Evolution of capital The capi
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“Prior to the Board of Directors
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Finally the audit committee analyse
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This includes: - joint fi xed remun
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- Rights and duties of shareholders
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10.4 - Threshold for calling a shar
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Volume 16 000 000 14 000 000 12 000
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6 - Dividend policy The Board of Di
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9 - Financial calendar 22 May 2008
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DURING THE 2007-2008 FINANCIAL YEAR
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INTRODUCTION 1. GENERAL INFORMATION
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2. CONSOLIDATED BALANCE SHEET (IN E
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Issued capital Sharepremium account
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6. DIVIDENDS, INTEREST, MANAGEMENT
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Other operating income and expenses
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The distribution of cash and cash e
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STATUTORY CONSOLIDATION 1. CONSOLID
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2. CONSOLIDATED BALANCE SHEET (IN E
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Attributable to shareholders of the
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4. CONSOLIDATED CASH FLOW STATEMENT
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5.9 Property, plant and equipment P
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more appropriate or whether there i
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6. IMPACT OF NEW OR AMENDED STANDAR
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8. SUBSIDIARIES - CONTINUED Informa
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Assets NON-CURRENT ASSETS 31/03/08
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Buy-outs Infrastructure Overhead St
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Buy-outs Infrastructure Overhead St
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Unrealised gains and losses by acti
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14. TAXES (IN EUR 000) 2007-2008 20
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16. PAID AND PROPOSED DIVIDENDS The
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17. GOODWILL EN ANDERE IMMATERIËLE
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19. GOODWILL IMPAIRMENT The goodwil
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22. INVENTORIES (IN EUR 000) Gimv a
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26. PENSION LIABILITIES (IN EUR 000
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Restructuring provision Environment
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29. RELATED PARTIES (IN EUR 000) Ye
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30. FINANCIAL RISK MANAGEMENT See D
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34. OFF-BALANCE SHEET OBLIGATIONS A
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Current liabilities rose by almost
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37. CONNECTION BETWEEN LIMITED AND
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1. BALANCE SHEET AFTER DISTRIBUTION
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GLOSSARY Blue chip: a company that
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Concept & design Concerto Photograp
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