Gimv NV — Earnings Release 2022

Nov 17, 2022

Antwerp, 17 November 2022, 7:00 CET

Sustained growth in difficult times

• After an intensive half year of investments (6 new companies and 15 bolt-on acquisitions), the Gimv portfolio reached a record value of more than EUR 1.5 billion, invested in 61 mid-market growth companies.
• Equity shows a limited decrease of -5.7% compared to March 2022, representing a net asset value per share at the end of September 2022 of EUR 47.6.
• The Gimv portfolio companies displayed again solid growth in the first half of 2022: total revenue increased by 24%, including 10% organic growth.
• This strong growth ensured that negative economic headwinds (energy costs, raw material prices and wage indexations) were mitigated in profitability: overall portfolio profitability in the first half of 2022 stabilised compared with the same period in 2021.

CEO Koen Dejonckheere:

"The teams at Gimv and our businesses each remain focused on their long-term strategy and are ready to make the right choices in the event of an economic downturn. Despite current challenges, we are confident that our investments remain well focused on key social, industrial and technological evolutions such as energy management, health, digitalisation and automation. Our companies make a conscious and positive contribution to a society that puts sustainability first.

In this period of adversity, our companies can continue to rely on the support of our teams so that their growth strategy can be sustained. Gimv continues to invest further in its position as a sector-oriented builder of leading mid-market growth companies that together innovate and strengthen our economy."

The results for the first half of the 2022-2023 financial year relate to consolidated figures for the period from 1 April 2022 to 30 September 2022.

Key points

Results

• Strong revenue growth at our companies continues (+24.4% compared with the first half of 2021, including 10% organic growth). In a context of sharply rising raw material and energy prices and inflationary pressure on salary costs, this growth allowed our companies to keep their profitability stable (+0.5% compared with the first half of 2021).
• This strong growth performance of our portfolio limited the impact of the tough economic challenges on Gimv's portfolio result: portfolio result of -EUR 51 million, or a portfolio return of -3.5% (non-annualised) in a semester with a limited number of exits.
• In addition to a realized result of EUR 21.4 million (including dividends and interest), the unrealized valuation result amounts to EUR -72.5 million and is mainly driven by an increase in the debt ratio. This was predominantly explained by increasing working capital needs at our companies as a result of strong sales growth combined with more expensive raw materials and higher inventories.
• Net result (group share): -EUR 75 million (or -EUR 2.8 per share)

Equity

• As a result of the portfolio performance, the decrease in equity (group share) was limited to -5.7% (non-annualised) compared with the end of March 2022 (excluding dividends). At the end of September, equity amounted to EUR 1,294.7 million or EUR 47.6 per share compared to EUR 50.4 per share at the end of March 2022 (excluding dividends).

Investments / Divestments

• The first half of the 2022-23 financial year was a period of intensive investment activity: we invested EUR 172.5 million in 6 new companies and in 15 strategic add-on investments.
• Total cash proceeds from divestments: EUR 33.1 million

Balance sheet and portfolio

• The investment portfolio continued to grow, with a 6% increase in the first half of the 2022-23 financial year to a record level of more than EUR 1.5 billion (EUR 1,535 million; invested in 61 companies).
• At the end of September 2022, the liquidity position was EUR 160 million. In addition, Gimv has EUR 200 million of undrawn credit lines with banks.

Dividend

• Gimv seeks to maintain its current dividend policy.

Notes to figures (consolidated figures)

At the start of the 2022-23 financial year, a further increase in revenue figures was estimated to be more realistic than a further increase in profit margins. The figures for the first half of this financial year confirm this: Gimv portfolio companies were able to achieve continued significant revenue growth in the first half of 2022 (+24% compared with the first half of 2021). This increase in revenue manifested itself within the portfolio of all platforms.

During the same period, our companies faced many several cost challenges, ranging from significant raw material and energy prices, high prices for international logistics and inflationary pressure on labour costs. Thanks to solid revenue growth, our companies managed to keep their profitability broadly stable in relation to the first half of 2021. A good number of companies managed to maintain their margins well, in part by successfully passing on higher cost pressures in the prices of their products and services. Only in the Consumer platform did it prove harder to pass on these costs, hence it was more difficult to maintain stable margins.

Stable profitability helped to contain the impact of the difficult economic conditions. For the first half of the 2022-23 financial year, the portfolio result was -EUR 51 million, translating into a portfolio return of -3.5% (non-annualised).

Exit activity in the first half of 2022-23 was more limited than last year. The sale of Eurocept was completed. Net realised capital gains on exits amounted to EUR 5.7 million (compared with EUR 44.4 million in the first half of the 2021-2022 financial year). In addition, EUR 15.7 million of dividends and interest were received on the portfolio (EUR 19.9 million in the first half of the 2021-2022 financial year).

The unrealized valuation result amounts to EUR -72.5 million and is mainly driven by an increase in the debt ratio (negative impact of EUR -62.9 million). This was mainly caused by increasing working capital needs at our companies due to strong sales growth combined with more expensive raw materials and higher inventories. Buy-and-build activities were also financed with additional debt at some companies. The impact of listed shareholdings (both directly and indirectly through some funds) amounted to EUR -22.2 million (or nearly one third of the negative valuation result).

The impact of some other valuation parameters (such as the evolution of our companies' results as well as market multiples) was rather limited. For just over half of our companies, the market multiple declined over the first half of the current fiscal year. Solely as a result of a change in the composition of the underlying portfolio, the applied average EBITDA multiple at which the portfolio companies are valued evolved from 8.1x at the end of March 2022 to 8.7x at the end of September 2022.

Gimv realised a net loss (group share) for the first half of the 2022-2023 financial year of EUR -75 million, or EUR -2.8 per share. The impact on the evolution of equity compared with the end of March 2022 was therefore limited to -5.7%.

Economic conditions remain tough

With the ongoing war in Ukraine and its impact on the stability of the global economy, current geopolitical and economic conditions remain very challenging. While energy prices in Europe over the past few months have seen a reduction versus the peak levels of August 2022, energy costs remain a significant increased cost factor for many of our businesses, and persistently high energy prices may affect the evolution of margins. In addition, continued high inflation is putting pressure on our companies' payroll costs. It is not clear to what extent our companies can continue to reflect this in their prices.

In terms of the international supply chain and availability of technological components, we have seen some normalisation over the past few months. But at the same time, the biggest future challenge for many companies is the historically low consumer confidence and its potential impact on demand for their products and services. In that context, it is rather likely that the strong revenue growth rate will not be able to be sustained for the second half of the current financial year and for the start of 2023.

Since we are targeting a growth strategy in our businesses, we seek to keep intact the companies' financing strength for both internal and external growth. As a result, the overall use of debt leverage remains fairly limited: on average, net financial debt was 2 times the EBITDA at the end of September 2022.

Active first half of the financial year with six new investments and several add-on investments

Gimv experienced intensive investment activity in the first half of the current financial year, which translated into a total investment amount of EUR 172.5 million (versus EUR 62.3 million in the first half of the previous financial year). On the one hand, there were investments totalling EUR 130.7 million in 6 new portfolio companies. In addition, Gimv invested around EUR 20 million in the existing portfolio to finance strategic add-on investments. With 15 investments within the portfolio, this once again demonstrates that growth and strategic value creation through buy-and-build is a core part of Gimv's investment strategy. For instance, additional acquisitions were done by Cegeka, Televic, Kind Technologies, rehaneo, GPNZ, Acceo and Köberl. Other follow-on investments (EUR 21.1 million) consisted mainly of capital rounds at the Life Sciences portfolio companies iStar, Anjarium, Kinaset Therapeutics, Imcheck Therapeutics, Jenavalve, and Synox Therapeutics.

Investments	H1 2022-2023			H1 2021-2022
	mio EUR	%	mio EUR	%
Consumer	3,2	2%	2,2	3%
Healthcare	51,4	30%	14,4	23%
Life Sciences	24,3	14%	9,8	16%
Smart Industries	80,8	47%	14,2	23%
Sustainable Cities	9,4	5%	20,5	33%
Infra and other	3,4	2%	1,3	2%
Total investments	172,5	100%	62,3	100%

Exit activity was fairly limited. Gimv received a total of EUR 33.1 million. The main part of these proceeds came from the completion of the sale of Eurocept.

Divestments	H1 2022-2023		H1 2021-2022
	mio EUR	%	mio EUR	%
Consumer	0,0	0%	2,6	3%
Healthcare	30,6	92%	0,8	1%
Life Sciences	0,2	1%	0,0	0%
Smart Industries	0,0	0%	75,6	86%
Sustainable Cities	0,1	0%	0,5	1%
Infra and other	2,2	7%	7,8	9%
Total divestments	33,1	100%	87,4	100%

Substantial growth of total investment portfolio to new record level of more than EUR 1.5 billion

Gimv was able to continue the sustained growth of its investment portfolio. Thus, Gimv's total portfolio experienced a further 6% growth in the first half of the current financial year to a record level of over EUR 1.5 billion (EUR 1,535 million compared with EUR 1,449 million at the end of the 2021-22 financial year). Over the past 18 months, Gimv's portfolio grew by almost one quarter.

Solid portfolio growth (in millions of EUR)

The investment portfolio at the end of September 2022 consists of 61 companies, balanced across the 5 platforms and the 4 countries. 68% of the platform portfolio has been invested since 2018, resulting in a young portfolio with promising growth potential.

Composition of the portfolio (in millions of EUR)

Liquidity position

Gimv's total available cash was EUR 160.3 million at the end of September 2022 compared with EUR 377.8 million at 31 March 2022. In addition, Gimv has EUR 200 million of undrawn credit lines with the banks.

Equity amounts to EUR 47.6 per share

Our shareholders' choice for re-investment following the optional dividend for the 2021-2022 financial year resulted in a capital increase of EUR 25.9 million Excluding the dividend (EUR 2.60 per share) and taking into account the impact of the net result (-EUR 2.8 per share), the net equity value at the end of September 2022 was EUR 1,294.6 million, or EUR 47.6 per share.

Unchanged dividend policy

Gimv seeks to maintain its current dividend policy.

Other significant events in the first half of the 2022-2023 financial year

• Result of the optional dividend for the 2021-2022 financial year: a total of 53.3% of dividend rights were contributed against the issue of 568,189 new ordinary shares for a total amount of EUR 25.9 million. On 29 July 2022, the new shares were issued and also admitted to trading on Euronext Brussels. The balance of the dividend was also paid in cash on 29 July 2022, for a total gross amount of EUR 43.4 million.

Key events after 30 September 2022

• The valuation of our portfolio is based on market multiples at the end of September 2022. Since then, we have closely followed the evolutions of the stock markets. To date, we have not noticed any evolution in market multiples that suggests to us that our valuation should be adjusted.
• On 18 October 2022, Groupe Claire, which specialises in solutions for drinking water networks, expanded its traditional product range with the acquisition of Equipement Industriel Européen ("E.I.E.") from Sade, a subsidiary of the Veolia Group. With this new move, Groupe Claire, which has been growing steadily for several years, strengthened its position as the market leader in France.
• On 28 October, Projective Group, the international consulting firm, announced the acquisition of Charco & Dique, the Dutch specialists in legal, risk & compliance. With this acquisition, Projective Group is expanding its team to around 700 experts across Europe.
• On 7 November 2022, Gimv portfolio company E.GRUPPE, which already includes Klotter Elektrotechnik GmbH, announced the acquisition of Control Mechatronics GmbH. With this acquisition, E.GRUPPE is continuing its growth trajectory by expanding its product offering in the field of electrical measurement and control technology and project planning and handling for the automation of industrial processes.

Statement regarding risk

• The future performance of our businesses and the value development of our portfolio depend on a number of external factors, such as: (i) the impact of the current inflationary environment on the growth and margins of our companies and how they are able to cope with its impact, (ii) further developments in the war in Ukraine and its impact on the stability of the international economic fabric, (iii) the way in which current inflation may weigh on economic growth prospects and potentially lead to a (technical) recession or stagflation, (iv) the extent to which consumer confidence will be affected by rising prices, (v) the extent to which the social and economic impact of the COVID pandemic will permanently diminish or be rekindled, (vi) the evolution in the labour market and mainly the availability of sufficiently qualified personnel for our companies, (vii) the liquidity in the banking system to support the companies, including in case of possible further financing needs, (viii) the geopolitical climate in various regions of the world, (ix) the stability of the regulatory and fiscal environment in the markets in which both Gimv and our companies operate, (x) the extent to which the market for investments and acquisitions remains active, accompanied by a sufficient level of liquidity and (xi) the extent to which the financial markets can maintain their stability. Estimating the impact of all these factors for the coming period is extremely difficult.
• You can find more information regarding the risks Gimv faces, as well as risk management, in our annual report, which is available at www.gimv.com

Financial calendar

• Annual results for FY 2022-2023 (period 01/04/2022-31/03/2023) 17 May 2023
• General Assembly for FY 2022-2023 28 June 2023
• Half-yearly results for FY 2023-2024 23 November 2023

Declaration of those responsible in accordance with Royal Decree of 14 November 2007

In accordance with Article 13 §2 3° of the Royal Decree of 14 November 2007, CEO Koen Dejonckheere and CFO Kristof Vande Capelle declare, in the name and for the account of Gimv, that to the best of their knowledge,

a) the half-yearly financial statements on 30 September 2022 have been prepared in accordance with IFRS and with IAS 34 "Interim Financial Reporting" as accepted by the European Union and give a true and fair view of the assets, financial position and results of Gimv and the companies included in the consolidation.

b) the half-yearly report gives a fair review of the main events of the first half of the financial year, their impact on the financial statements, the main risk factors and uncertainties for the remaining months of the financial year, as well as the main related-party transactions and their impact, if any, on the condensed financial statements.

Auditor's report on the accounting data mentioned in the annual press release of Gimv NV.

We have compared the accounting data contained in the half-yearly press release of Gimv NV with the interim consolidated financial statements for the six-month period ended 30 September 2022, which show a balance sheet total of 1.707.640 kEUR and a net loss of the period (share of the group) of 75.050 kEUR. We confirm that these accounting data do not contain any apparent discrepancies with the interim consolidated financial statements.

We have provided a review report on this interim consolidated financial statements per 30 September 2022 in which we conclude that based on our review, nothing has come to our attention that causes us to believe that the accompanying interim consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 "Interim Financial Reporting", as adopted by the European Union.

Antwerp, 16 November 2022

BDO Bedrijfsrevisoren BV

Statutory auditor

Represented by David Lenaerts

ABOUT GIMV

Gimv is a European investment company, listed on Euronext Brussels. With 40 years' experience in private equity, Gimv currently has EUR 2 billion of assets under management. The portfolio contains around 60 portfolio companies, with combined turnover of EUR 3.1 billion and more than 19,000 employees.

As a recognized market leader in selected investment platforms, Gimv identifies entrepreneurial, innovative companies with high growth potential and supports them in their transformation into market leaders. Gimv's five investment platforms are Consumer, Healthcare, Life Sciences, Smart Industries and Sustainable Cities. Each platform works with an experienced team across Gimv's home markets of Benelux, France and DACH, supported by an extended international network of experts.

Further information on Gimv can be found on www.gimv.com.

For further information, please contact:

Kristof Vande Capelle, Chief Financial Officer

T +32 3 290 22 17 – kristof.vandecapelle@gimv.com

Annexes

• 1. Gimv Group Interim Consolidated Balance Sheet as at 30 September 2022
• 1. Gimv Group Interim Consolidated Income Statement for the first 6 months of the 2022-23 financial year ended 30 September 2022
• 1. Gimv Group Interim Consolidated Statement of Changes in Equity for the first 6 months of the 2022-23 financial year ended 30 September 2022
• 1. Gimv Group Interim Consolidated Statement of Cash Flows for the first 6 months of the 2022-23 financial year ended 30 September 2022

Annex 1: Gimv Group – Interim condensed consolidated balance sheet at 30 September 2022

Assets (in 1,000 EUR)	30-09-2022	31-03-2022
Non-current assets	1.544.689	1.458.853
Intangible assets	168	232
Property, plant and equipment	9.415	10.074
Financial assets at fair value through P&L (FVPL)	1.126.871	1.096.135
Financial receivables from investee companies	408.235	352.412
Current assets	162.951	381.740
Trade and other receivables	2.069	3.545
Cash, deposits and cash equivalents	160.308	377.828
Other current assets	574	367
Total assets	1.707.640	1.840.594
Liabilities (in 1,000 EUR)	30-09-2022	31-03-2022
Equity	1.305.964	1.424.765
Equity - group share	1.294.653	1.413.034
Issued capital	258.414	253.020
Share premium	117.362	96.903
Reserves	918.877	1.063.111
Minority interests	11.311	11.730
Liabilities	401.676	415.829
Non-current liabilities	380.947	392.563
Financial debts - bonds	350.000	350.000
Financial debts - lease liabilities	1.867	2.021
Provisions	29.080	40.541
Current liabilities	20.729	23.266
Financial debts - lease liabilities	1.078	1.015
Trade and other payables	4.661	9.556
Income tax payables	1.729	2.947
Other liabilities	13.262	9.747
Total equity and liabilities	1.707.640	1.840.594

Annex 2: Gimv group – Interim condensed consolidated income statement for the first six months to 30 September 2022

in EUR 1,000	30-09-2022	30-09-2021
Operating income	112.444	208.921
Dividend income	963	7.349
Interest income	14.775	12.516
Realised gain on disposal of investments	5.673	44.439
Unrealised gains on financial assets at fair value trough P&L	87.488	143.830
Management fees	307	272
Turnover	114	114
Other operating income	3.124	402
Operating expenses	-180.067	-60.410
Realised losses on disposal of investments	-	-22
Unrealised losses on financial assets at fair value through P&L	-142.579	-16.956
Impairment losses on debt assets investment portfolio	-17.362	-15.208
Selling, general and administrative expenses	-8.236	-7.045
Personnel expenses	-9.320	-9.278
Depreciation of intangible assets	-64	-70
Depreciation of property, plant and equipment	-1.225	-970
Other operating expenses	-1.281	-10.861
Operating result: loss (profit)	-67.623	148.511
Finance income	30	89
Finance costs	-5.968	-5.991
Result before tax: loss (profit)	-73.561	142.609
Tax expenses	-1.852	-591
Net result of the period: loss (profit)	-75.413	142.019
Minority interests	-363	5.037
Share of the group	-75.050	136.982
Earnings per share (in EUR)	30-09-2022	30-09-2021
Basic earnings per share: loss (profit)	-2,80	5,22
Diluted earnings per share: loss (profit)	-2,80	5,22
Total comprehensive income (in EUR 1,000)	30-09-2022	30-09-2021
Net result of the period: loss (profit)	-75.413	142.019
Other comprehensive income
Actuarial gains (losses) DB pension plans	-	-
Items that cannot be reclassified to profit or loss in subsequent periods	-	-
Items that can be reclassified to profit or loss in subsequent periods (ii)	-	-
Total other elements of the comprehensive income (i + ii)	-	-
Total comprehensive income: loss (profit)	-75.413	142.019
Minority interests	-363	5.037
Share of the group	-75.050	136.982

Annex 3: Gimv group – Interim condensed statement of changes in consolidated equity for the first six months to 30 September 2022

First six months ended 30-09-2022 (in 1,000 EUR)	Issued capital	Share premium	Retained earnings	Actuarial gains (losses) DB pension plans	Treasury Shares	Equity - Group share	Minority interests	Total equity
01-04-2022	253.020	96.903	1.063.953	-605	-238	1.413.034	11.730	1.424.765
Net Result for the period: loss	-	-	-75.050	-	-	-75.050	-363	-75.413
Other comprehensive income	-	-	-	-	-	-	-	-
Total comprehensive income	-	-	-75.050	-	-	-75.050	-363	-75.413
Capital increase / decrease	5.394	20.459	-	-	-	25.853	-	25.853
Acquisition / disposal of subsidiaries	-	-	-	-	-	-	-	-
Dividends to shareholders	-	-	-69.290	-	-	-69.290	-	-69.290
Net purchase / sale own shares	-	-	-9	-	53	44	-	44
Other changes	-	-	63	-	-	63	-57	6
30-09-2022	258.414	117.362	919.666	-605	-185	1.294.653	11.311	1.305.964

First six months ended 30-09-2021 (in 1,000 EUR)	Issued capital	Share premium	Retained earnings	gains (losses) DB pension plans	Treasury Shares	Equity - Group share	Minority interests	Total equity
01-04-2021	247.254	73.971	955.078	-933	-1.090	1.274.280	29.427	1.303.707
Net Result for the period: gain	-	-	136.982	-	-	136.982	5.037	142.019
Other comprehensive income	-	-	-	-	-	-	-	-
Total comprehensive income	-	-	136.982	-	-	136.982	5.037	142.019
Capital increase / decrease	5.766	22.933	-	-	-	28.698	-865	27.833
Acquisition / disposal of subsidiaries	-	-	-	-	-	-	-8.784	-8.784
Dividends to shareholders	-	-	-65.118	-	-	-65.118	-	-65.118
Other changes	-	-	424	-	-	424	-15.954	-15.530
30-09-2021	253.020	96.903	1.027.366	-933	-1.090	1.375.267	8.860	1.384.127

Annex 4: Gimv group – Interim condensed consolidated cash flow statement for the first six months to 30 September 2022

Cash flow statement (direct method) in 1,000 EUR	30-09-2022	30-09-2021
Cash flow from operating activities	-24.075	-22.051
Management fees from managed funds	235	208
Payments to employees and directors	-13.288	-12.597
Other operating expenses	-7.406	-9.445
Paid/recovered CIT and other taxes	-3.616	-217
Cash flows from investing activities	-141.445	-56.328
Investments in investee companies	-173.261	-142.278
Proceeds from divested investee companies	40.657	87.402
Interest received	426	209
Dividend received	814	7.332
LTIP payments	-8.770	-9.167
Other cash flows from investment activities	-1.312	175
Cash flows from financing activities	-52.000	-45.130
Interest received on cash deposits	1	49
Paid interest and fees on cash deposits and credit lines	-8.735	-8.802
Dividends to shareholders	-43.440	-36.378
Sale Own Shares	174	-
Change in cash during period	-217.520	-123.508
Cash at beginning of period	377.828	517.480
Cash at end of period	160.308	393.972