Luxempart

222100WPYK3JKB5F4D19-2021-12-31-en.xhtml 222100WPYK3JKB5F4D19 2021-01-01 2021-12-31 222100WPYK3JKB5F4D19 2020-01-01 2020-12-31 222100WPYK3JKB5F4D19 2021-12-31 222100WPYK3JKB5F4D19 2020-12-31 222100WPYK3JKB5F4D19 2019-12-31 222100WPYK3JKB5F4D19 2019-12-31 lxmp:CapitalAndSharePremiumMember 222100WPYK3JKB5F4D19 2020-01-01 2020-12-31 lxmp:CapitalAndSharePremiumMember 222100WPYK3JKB5F4D19 2020-12-31 lxmp:CapitalAndSharePremiumMember 222100WPYK3JKB5F4D19 2021-01-01 2021-12-31 lxmp:CapitalAndSharePremiumMember 222100WPYK3JKB5F4D19 2021-12-31 lxmp:CapitalAndSharePremiumMember 222100WPYK3JKB5F4D19 2019-12-31 ifrs-full:TreasurySharesMember 222100WPYK3JKB5F4D19 2020-01-01 2020-12-31 ifrs-full:TreasurySharesMember 222100WPYK3JKB5F4D19 2020-12-31 ifrs-full:TreasurySharesMember 222100WPYK3JKB5F4D19 2021-01-01 2021-12-31 ifrs-full:TreasurySharesMember 222100WPYK3JKB5F4D19 2021-12-31 ifrs-full:TreasurySharesMember 222100WPYK3JKB5F4D19 2019-12-31 ifrs-full:StatutoryReserveMember 222100WPYK3JKB5F4D19 2020-01-01 2020-12-31 ifrs-full:StatutoryReserveMember 222100WPYK3JKB5F4D19 2020-12-31 ifrs-full:StatutoryReserveMember 222100WPYK3JKB5F4D19 2021-01-01 2021-12-31 ifrs-full:StatutoryReserveMember 222100WPYK3JKB5F4D19 2021-12-31 ifrs-full:StatutoryReserveMember 222100WPYK3JKB5F4D19 2019-12-31 lxmp:ProfitForPeriodMember 222100WPYK3JKB5F4D19 2020-01-01 2020-12-31 lxmp:ProfitForPeriodMember 222100WPYK3JKB5F4D19 2020-12-31 lxmp:ProfitForPeriodMember 222100WPYK3JKB5F4D19 2021-01-01 2021-12-31 lxmp:ProfitForPeriodMember 222100WPYK3JKB5F4D19 2021-12-31 lxmp:ProfitForPeriodMember 222100WPYK3JKB5F4D19 2019-12-31 lxmp:OtherReservesIncludingRetainedEarningsButExcludingProfitLossForReportingPeriodMember 222100WPYK3JKB5F4D19 2020-01-01 2020-12-31 lxmp:OtherReservesIncludingRetainedEarningsButExcludingProfitLossForReportingPeriodMember 222100WPYK3JKB5F4D19 2020-12-31 lxmp:OtherReservesIncludingRetainedEarningsButExcludingProfitLossForReportingPeriodMember 222100WPYK3JKB5F4D19 2021-01-01 2021-12-31 lxmp:OtherReservesIncludingRetainedEarningsButExcludingProfitLossForReportingPeriodMember 222100WPYK3JKB5F4D19 2021-12-31 lxmp:OtherReservesIncludingRetainedEarningsButExcludingProfitLossForReportingPeriodMember xbrli:shares iso4217:EUR iso4217:EUR xbrli:shares ANNUAL REPORT 2019 ANNUAL REPORT ACTIVITY REPORT François Tesch Executive Chairman I am pleased to comment on excellent 2021 results and to congratulate the whole team of Luxempart for its outstanding performance. ese good results also had a very favorable impact on the share price by reducing the discount versus net asset value, thanks to improved communication to the outside. Great aention was rther given to strengthening Luxempart's investment team. ree young talents of dierent nationalities were recruited over the year to develop inhouse investment expertise, and a CFO and a senior executive with extensive experience on the German private equi market should join Luxempart shortly to complete the new executive team at Group level. ese successl new recruitments also show that Luxempart oers interesting career opportunities based on its long-term investment strategy, with headquarters in Luxembourg, but with a strong presence in its three neighbouring countries, which represent its core markets for direct investments. I would also like to thank Jo Santino, member of the executive commiee, for his outstanding contribution to our Group for over 20 years. Jo has been instrumental in developing Luxempart’s activities in France, Belgium and Italy, as well as in seing up our strategy for nd investments. ACTIVITY REPORT PORTFOLIO STATEMENT OF GOVERNANCE FINANCIAL STATEMENTS STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT ACTIVITY REPORT OUR INVESTMENT STRATEGY In accordance with what we stand for, we thrive to deploy our investment activity based on a two-pillar strategy. Our core business is the Direct Investment activity, which focuses on deploying an average € 50m per transaction in growing, profitable companies located in our core markets. Such investments target continuous growth for the companies we invest in and long-term returns for our shareholders. That is why we consider investments over longer terms with no predefined exits. This is the main differentiating factor to classic private equity funds operating in our space. Such investment projects can be realized in both public and private companies under the form of leveraged buyouts or growth capital investments (with no external debt) and can grant Luxempart either minority or controlling stakes in the company. The strategy in the Direct Investment activity has been developed many years ago, but has evolved as follows since 2020. Given the size of our net asset value, it was decided to increase the average investment ticket to € 50m, with a lower limit at € 25m (but with a view to increase investment over time), in order to have a meaningful impact on our net asset value. Also, in order to be able to actively create value, it was decided that all portfolio companies, whatever capital stake Luxempart holds in them, should grant us adequate governance rights. Such rights should enable us to contribute to shaping our portfolio companies’ strategy and to assess its implementation in a timely and professional manner. We are able to give active and hands-on support. Over the year 2020, we have reviewed our portfolio under the light of this revised strategy and have taken a number of arbitrage decisions that will lead to a streamlining of the portfolio. Hence, our objective is to manage by the end of 2023 a more concentrated portfolio, composed of ca. 20 companies that all fit the above-mentioned criteria and present recurring profitability, significant growth prospects and good visibility. This portfolio will continue to contain both public and private companies. The second pillar of our strategy is the Investment Funds activity. Historically, this indirect investment activity was centered on four long term relationships where Luxempart has been among the cornerstone investors of these funds in Belgium, Germany, France and Italy. Their investment activity was to a large extent complementary to our Direct Investment activity, which even resulted in Luxempart sometimes co-investing alongside these partners. For three of these funds, our intense and long-lasting relationship, their performance, track-record and their development perspectives have led us to continue to actively support them in the future and possibly support them with co-investments fitting our Direct Investment strategy. It was also decided to dedicate additional means to the Investment Funds activity in order to allow it to double its size by 2025, by re-investing proceeds received and by tapping into existing cash reserves of Luxempart. The target is to commit between € 75m and € 100m per annum to 5-8 new funds. However, the overall objective of the Investment Funds activity was set to become a means of diversification, and not anymore to rely exclusively on these historic relationships. Thus, Investment Funds has started since late 2020 to internationalize its new commitments by focusing essentially on North America and (more marginally) on Asia. It not only commits investments to mid-cap buy- out and secondary funds, but also diversifies to seek investment opportunities in compelling earlier stage venture and growth funds, sometimes complemented by smaller, more passive co-investments. SÉBASTIEN AARON Senior Associate PHILIPPE OBERSON Associate ALFONSO PALLAVACINI Senior Investment Advisor ALAIN HUBERTY Investment funds team Member of the Group Executive Committee CHRISTOPHER HEINRICH Senior Associate JEAN-PHILIPPE KAMM Senior Investment Manager JOHN PENNING Managing Director JO SANTINO Investment funds team Member of the Group Executive Committee LOUIS DE KERGOS Senior Investment Manager KEVIN LE FLOC'H Investment funds team Senior Associate LAURENT ZANDONA Investment funds team Investment Director NINA MAY Senior Associate SEBASTIAN REPPEGATHER Head of listed Investments OLAF KORDES Managing Director PHILIPPE THEISEN Senior Investment Manager OUR INVESTMENT TEAM / 12/ 11 PORTFOLIO STATEMENT OF GOVERNANCE FINANCIAL STATEMENTS STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT ACTIVITY REPORT Finally, it should be noted that at Luxempart level, a significant portion of the NAV increase has translated into cash. Indeed, the various exits from portfolio companies have allowed us to register capital gains over NAV as of December 31, 2020 in excess of € 122m. This means that more than 26% of our increase in NAV is related to realized transactions, and not only to portfolio revaluations. The Investment Funds activity has also enjoyed very strong growth in its NAV. On the one hand, the portfolio is in a build-up phase, with total investments in 2021 amounting to € 60.8m. It has furthermore benefitted from a strong revaluation of its portfolio lines that translate the overall improvement in the economic environment. In Investment Funds as well, 2021 was a year that has seen a number of exits. In our Belgium-focused fund ICP, the run-off has been pursued with two landmark exits (Baobab and NMC) generating significant capital gains and distributions. Within Armira, the sale of our portfolio company Boxine to a listed SPAC renamed Tonies SE, has contributed to a strong re-rating of the Armira funds value, since Armira still holds a significant stake in Tonies. Other funds have also had significant capital redemptions contributing to the NAV growth of Investment Funds. +42.9% Performance Investment Funds +27% Performance Direct Investments INVESTMENT ACTIVITY In Direct Investments, we have deployed € 205.6m in 2021, mainly across 4 investments. One, Sogetrel, had already been committed to in late 2020, but was completed in January 2021. We have also invested in iM Global Partner in late April, Pflegebutler just before the summer, and Evariste in November 2021. Furthermore, we have also reinforced our position in two listed companies, that are part of our cornerstone lines and to be held for the long term: SNP and Technotrans. All these investments fit our investment strategy as described here before. They enjoy significant growth perspectives, execute an active strategy to accelerate such organic growth perspectives by an active acquisition policy, and are well-managed, translating into recurring profitability. These investments were made with a view to commit to the long term, in sectors that show growth perspectives based on secular trends that shape European economies. You will find hereafter a short description of each of these new investments. FIRST RESULTS OF THIS REVISED STRATEGY DIRECT INVESTMENT ACTIVITY In Direct Investments, the streamlining of the portfolio is well underway. Alongside our growing investment activity, we have initiated since 2020 not less than 16 sales processes. All these disposals were realized with capital gains in line with our long-term IRR objective, and the vast majority achieved valuations in excess of their last known book value. As of December 31, 2019, our Direct Investment portfolio contained 43 lines 3 . As of December 31, 2021, this number has been reduced to 33 4 , therein 6 new companies that have been acquired in line with the above-mentioned strategy (Enoflex and SNP in 2020, Sogetrel, iMGP, Pflegebutler and Evariste in 2021). There is still some streamlining to be performed to reach our stated target of ca. 20 lines of Direct Investments by the end of 2023, but a number of sale processes currently under preparation, as well as one signed sale in February 2022 lead us to believe that this target is achievable. The average value of our investments is increasing as well. While at the end of 2019, only 8 portfolio companies were valued above € 30m, this number has increased to 12 in late 2021. Besides performing well in terms of financial results, our portfolio is well balanced in terms of exposure to industrial sectors, and is increasingly balanced between our core markets (Belux, DACH and France). INVESTMENT FUNDS ACTIVITY The Investment Funds activity also applies its revised strategy. In 2021, Luxempart has taken € 98.3m 5 of commitments to new relationships. Only 18% of such new commitments are to be deployed in Europe, the rest being mainly in North America, Asia, or on a global scale. Furthermore, the new commitments relate to 50% buy-outs, 42% target growth equity investments while 8% are dedicated to venture funds. Thus, at the end of 2021, our cumulated commitments (both invested and un-called) in Europe only represented 78% of total commitments (down from 89% in late 2019). In terms of strategy, venture and growth funds now represent 15.6% of cumulated commitments, up from 10.7% in late 2019. MAIN EVENTS IN 2021 PORTFOLIO PERFORMANCE Our NAV has shown a significant increase in 2021, by 27.4% over 2020. Both activities contribute to this increase. In Direct Investments, the significant increase is mostly attributed to the strong operational performance of our portfolio companies. In 2021, our portfolio companies have grown their key financial aggregates 6 by a strong 31.4%. This growth rate is higher than the overall growth in our NAV, and shows that the increase stems mainly from operating performance. Indeed, the average valuation multiple for the Direct Investment portfolio stands at 10.3x EBITDA 2021, a multiple that can be considered as reasonable, given the prevailing market environment. It should be noted that this multiple does not include the listed lines within this portfolio. Besides the significant growth in profitability from our portfolio, such increase has also led to a significant cashflow generation in the portfolio. Even though some portfolio companies increase their indebtedness, most instances can be explained by acquisition opportunities seized in 2021. A significant majority of our portfolio companies have reduced their net debt or affected their cashflow in projects that should allow to seize future opportunities. 3/ Including 7 companies managed in the Investment Fund activity, but within funds over which Luxempart exercises at least co-control: Bravo Capital Partners I and ICP 4/ Not counting 2 lines, Marlink and Vivalto, where closing of transaction will only occur in 2022 5/ excluding € 67m taken with Armira and Bravo Capital Partners in the past and which were contractually formalised in 2021 6/ EBITDA, except for companies in the financial services sector, where the computation is based on operating result / 14/ 13 PORTFOLIO STATEMENT OF GOVERNANCE FINANCIAL STATEMENTS STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT ACTIVITY REPORT HELPING AN OUTSTANDING MANAGEMENT TEAM GAIN STABILITY AND SUPPORT INTERNATIONAL EXPANSION • Sogetrel is a leading French player in the design, building and maintenance of telecom networks • In addition to this activity, and based on its core competencies, it has diversified in fast-growing service segments centred on electronic security and “smart city” initiatives JOIN TWO OUTSTANDING INVESTORS IN A GLOBAL, FAST-GROWING FINANCIAL SERVICES COMPANY • iMGP is a global distribution platform for top-performing asset management products. It selects entrepreneurial asset managers and invests in them through minority stakes • Then it distributes them on its own platform and increases their revenues by adding Assets Under Management SUPPORT AN ENTREPRENEURIAL FAMILY OWNED COMPANY IN ACHIEVING NATIONAL COVERAGE AND PREPARE FOR INTERNATIONALISATION Evariste is a French multi-solutions construction Group organised as a federation of SMEs. It provides services related to: • infrastructure works • green spaces management • specialised interim for the construction industry and • hygiene and cleaning services INVESTING IN THE NATIONWIDE ROLL-OUT OF A LEADING REGIONAL CARE OPERATOR IN GERMANY • PflegeButler is a leading regional ambulatory care operator offering an innovative alternative care-model consisting of serviced living and ambulatory day-care, all under the same roof • The model combines high-quality service preserving self-determined life and highest quality of care normally offered only in nursing homes INVESTMENT THESIS • Strong past growth due to roll-out of fibre optic networks. Future growth to come from 5G mobile networks • Significant growth perspectives in diversifications with important commercial synergies • Potential for internationalisation through buy-and-build • Unlock “entrepreneurial motivation” of the management team that is now majority shareholder in the business INVESTMENT THESIS • Asset Management follows secular growth trends (ageing population, financing of retirement models) • iMGP has a strongly differentiating business model, fostered by Eurazeo and Amundi • Allows to enter into symbiotic relationship: iMGP increases Assets Under Management of Partner through distribution capacities and Partner increases iMGP’s top performing product range • Target to attract 6-10 Partners over the coming 5 years and deploy additional capital INVESTMENT THESIS • Cyclical business but with strong development prospects due to large infrastructure projects in France 2024 Olympics, Grand Paris... • Luxempart’s long term approach particularly suits such cyclicality • The group has based its development on federating SMEs, by offering an alternative to large corporations if an entrepreneur wants to sell. Long and successful track record in acquisitions • Luxempart is to support such strategy and will help internationalisation through its network INVESTMENT THESIS • Grow organically by opening new homes • Acquire and integrate another competitor and roll-out PflegeButler business model • Succeed a roll-out in several German regions • Luxempart stake: 10.9% • Luxempart investment: initially € 25m + up to € 15m additional investment agreed • Sales 2021: ca. € 850m • Luxempart stake: 7.2% • Luxempart investment: initially ca. € 25m + additional investment for add-ons (ca. € 4m already deployed) • AuM December 2021: ca. € 34.3 bn • Luxempart stake : 40.0% • Luxempart investment : € 86.8m • Sales 2021 in excess of € 500m • Luxempart stake: < 10 % (direct and indirect) • Investment (direct and indirect): € 22m • Sales 2021: ca. € 69.4m / 16/ 15 PORTFOLIO STATEMENT OF GOVERNANCE FINANCIAL STATEMENTS STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT ACTIVITY REPORT Luxempart has sold 11 companies in 2021, therein 8 totally. All of these exits have generated capital gains in line if not above with our long-term IRR targets (12-15%). Furthermore, all companies except one were sold at a positive mark-up towards the NAV recognised in our ﬁnancial statements as of December 2020. The only company sold at a lower valuation was done so at a discount of less than € 0.5m Company Activity Proceeds (€m) Comment ESG Mobility Division Mobility Division of ESG Elektroniksystem und Logistik GmbH, designing and integrating electronic and IT systems in vehicles 19.5 Sale of a division resulting in a distribution to Luxempart Tonies Designer and manufacturer of Toniebox, a screenless mobile audio system for children 9.9 8 Partial exit following sale to Tonies SE (formerly 468 SPAC). Luxempart remains shareholder in the listed entity, both directly and via the Armira funds. Cash proceeds equivalent to cost. Stoll German manufacturer of front-loaders for construction and agricultural equipment conﬁdentiality restrictions Total sale to Agrostroj, a Czech competitor. Additional potential proceeds of € 2.0m after end of representations and warranty period (in principle within 12 months) SES Leading worldwide operator of satellite broadcasting infrastructure 3.5 Sale of our remaining position as part of the portfolio streamlining process. Zooplus Leading European distributor of pet food and accessories 117.6 Take-over by Hellman & Friedman and EQT Kaufman & Broad Leading French real estate developer focusing primarily on residential housing 20.1 Total exit as part of the portfolio streamlining process. RTL RTL European media group 11.8 Total exit as part of the portfolio streamlining process. Schaltbau Leading supplier of technology for rolling stock, rail infrastructure, automotive and other industrial applications 69.9 Take-over by Carlyle Investment Funds have taken on new commitments for € 98.3m across 9 new relationships 7 , and have deployed € 60.8m in 2021 in both existing and new relationships. These investments were made across 12 funds and one co-investment alongside a fund with which Luxempart has a long-standing relationship. As indicated in our strategy section, such deployments are still predominantly in Europe, given the legacy commitments that were solely focusing on Europe, but over time, investments, and hence NAV will be more balanced between geographies and investment strategies. DIVESTMENT ACTIVITY Both Direct Investments and Investment Funds have contributed significantly to overall exit proceeds in 2021. Total revenues from sales of companies in our Direct Investment portfolio amount to € 284.3m. Investment Funds is also progressing in the run-off of the ICP portfolio, which has sold two companies in 2021, generating proceeds of € 54.9m, and has enjoyed redemptions from its other portfolio funds amounting to € 54.1m. Most of the exits summarized in the table below are related to processes at our own initiative, in the context of the streamlining of our portfolio detailed hereabove. However, the two biggest proceeds of the year are the result of unsolicited offers made on listed companies in our portfolio: • In August, Zooplus was the target of a take-over bid by funds advised by Hellman & Friedman, and subsequently of a competing bid launched by EQT. In the end, both bidders combined their efforts. Zooplus did not fit our strategy anymore, but we felt that the group still had significant development potential which was not translated in the share price and were hence prepared to keep the asset for a longer period. The combined bid, valuing the company at € 3.8bn, crystallizes such potential in our view and we thus decided to tender our shares. • At approximately the same time, funds advised by the Carlyle Group approached us about a take-over bid they wanted to launch on Schaltbau AG. Luxempart was the largest anchor shareholder in the Group and headed an acting in concert with two like-minded shareholder groups. After having negotiated improved terms of the financial conditions, we decided to tender our shares. 8/ Proceeds related only to our direct co-investment 7/ Excluding € 67m taken with Armira and Bravo Capital Partners in the past and which were contractually formalised only in 2021. / 18/ 17 PORTFOLIO STATEMENT OF GOVERNANCE FINANCIAL STATEMENTS STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT ACTIVITY REPORT Company Activity Proceeds (€m) Comment TCM Leading Nordic kitchen manufacturer and distributor 9.2 Partial exit as part of the portfolio streamlining process. NMC European-wide manufacturer of industrial goods (building materials, packaging, consumer goods) based on synthetic foams Combined ICP proceeds 54,9 Sale of Luxempart stake to the majority shareholder as part of our run-off of Indufin Capital Partners (ICP) Baobab Belgian manufacturer of luxury scented candles and home perfumes, at the crossroads of interior design and luxury fragrances Sale of the company to a Belgian family office as part of our run-off of Indufin Capital Partners. Additional potential proceeds of € 2.0m after end of representations and warranty period (within 18 months) In addition to these exits, Luxempart has signed or agreed two sales in the last quarter of 2021, which were, or will be completed in 2022: Company Activity Proceeds (€m) Comment Marlink Service provider in the global satellite communication industry conﬁdentiality restrictions Sale of this co-investment (alongside Apax Partners) to Providence Equity. Closing expected during first half of 2022. Vivalto Home Belgian nursing home operator with more than 30 facilities conﬁdentiality restrictions Sale of the company following the exercise of a right of first offer by one of our co-shareholders after all shareholders had taken the decision to put the company up for sale. Closing completed in January 2022. The valuation of these two companies has been aligned in our accounts on the proposed valuation of the buying entities. Please note that contrary to our initial publication regarding the sale of Marlink, we have taken the decision to not re- invest in the new transaction led by Providence Equity. Luxempart was approached by one of its co-shareholders eager to increase its exposure to Marlink. Since our re-investment would have been below our target investment volume, we have decided to accommodate this entity. Hence, Luxempart will totally exit from Marlink upon closing of the transaction. / 20/ 19 PORTFOLIO STATEMENT OF GOVERNANCE FINANCIAL STATEMENTS STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT ACTIVITY REPORT ANNUAL REPORT 2019 GLOBAL PERFORMANCE Luxempart’s global performance is best measured by the evolution per share of the total equity position and the dividend paid to our shareholders. The total equity position encompasses the accumulated value creation of our portfolio over the past. The performance per share includes the dividend of € 1.60 paid in 2021. In order to compare its performance to the market, Luxempart refers to the MSCI Europe Mid Cap Net Return € index. In order to flatten volatile market behaviour, it is reasonable to compare the performance over a longer period, e.g. 4 years. Such performance benchmark is also applied to define the level of the long-term performance bonus paid to Luxempart staff. The MSCI Europe Mid Cap Net Return has been selected in line with the strategy to invest in mid-cap in Europe with a focus on Continental Europe. The current Investment Funds portfolio is also mostly invested in Europe with an expected evolution towards the US and Asia over the coming years. 13.5% Annualized net asset value per share increase 2011-2021 8.9% Annualized Dividend increase 2011-2021 15.8% Annualized share price increase 2011-2021 3.9% Outperformance of the 2018-2021 MSCI index 10% Performance 2020 29.3% Performance 2021 13.3% Annualized Performance 2018-2021 / 22/ 21 PORTFOLIO STATEMENT OF GOVERNANCE FINANCIAL STATEMENTS STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT ACTIVITY REPORT MAIN IFRS FINANCIAL INDICATORS The financial statements of Luxempart have been prepared in compliance with the International Financial Reporting Standards for the year ending 31 December 2021. Main IFRS indicators (in € million) 31/12/2021 31/12/2020 Variation Equity/NAV (group share) €2,169m €1,702m 27.4% Net result €499m €157m 218.3% Equity per share (€) €107.78 €84.72 27.2% The Group equity of Luxempart increased due to the consolidated result of the year ending 31 December 2021 of € 499 m mainly composed of € 513 m from investment activities (dividends received and capital gains/losses realised from sales and unrealised increase of the fair value of the portfolio lines) and € -12 m expenses on ordinary activities (operating expenses, staff cost…). In the statutory accounts of Luxempart (established under Lux GAAP) the equity increased from € 1,131 m as at 31 December 2020 to € 1,259 m as at 31 December 2021 and the net result increases over the same period from € 68m to € 159m. For more details, please refer to the IFRS Financial Statements and the Statutory annual accounts. DIVIDEND The Board of Directors will propose to the Annual General Meeting on 25 April 2022 to approve the payment of a gross dividend of € 1.80 per share, compared to a dividend of € 1.60 in 2020. This increase of dividends of 12.5 % is in line with the dividend policy applied since 1993. Assuming the approval of this proposal, the dividend will be payable May 2022. Dividend increase 2022: 12.5% OWN SHARES As at 31 December 2021, Luxempart holds a total of 574,735 own shares which corresponds to 2.8% of the issued share capital for a book value of € 17m. During the year, Luxempart sold 56,486 own shares for € 1.6m, mainly in the context of stock options exercised. The General Meeting of Shareholders of 26 April 2021 has authorized to buy back up to 30% of its own shares for a price up to €100 per share. It expires at the General Meeting of 25 April 2022 where it will be proposed to extend the authorization. STOCK PERFORMANCE Luxempart’s shares are traded on the Luxembourg stock exchange. In order to improve liquidity, KBC intervenes as liquidity provider on an independent but remunerated basis. It buys and sells Luxempart's shares on the market in line with the market movements. During 2021, the stock price increased by 52%. SUSTAINABILITY As stated in the Message to our shareholders, Management and the Board of Directors have laid the foundations for a clear sustainability policy and action plan. It will be a journey requiring an assessment phase, an engagement phase and an action phase. ESG is becoming a core component of Luxempart’s operations. Our ambition is not only to monitor and mitigate the risks linked to climate change and social injustice but also to enhance value creation through responsible sustainable and societal behaviour. Our Sustainability framework has been defined with the help of a consultant and in a collaborative approach with our stakeholders. The outcome results in 16 indicators which encompass the most common and relevant environmental, social, and governance standards. These indicators define our priorities in corporate and portfolio ESG actions around major themes such as planet, people and governance. The sustainability framework also encompasses a code of good conduct and an investment exclusion list. It is being completed with procedures and reporting dashboards. For more details please refer to the sustainability report of this annual report. In order to efficiently accompany this strategic challenge for our Group, its governance has been adapted through the creation of a Sustainability Committee. This Committee gives guidance in terms of ESG strategy, follows ESG regulatory evolutions and their impact on Luxempart, follows private equity market adaptations to ESG, validates the corporate and portfolio ESG action plan and tracks achievements, reviews the yearly sustainability report and finally validates all sustainability related recommendations to the Board of Directors. Moreover, our organisation has been adapted with resources allocated to ESG monitoring. / 24/ 23 PORTFOLIO STATEMENT OF GOVERNANCE FINANCIAL STATEMENTS STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT ACTIVITY REPORT RECENT POST CLOSING EVENTS During the first months of 2022, Luxempart increased its holdings in several lines and sold two portfolio companies. The operations are the following: • In January 2022 Luxempart sold its 12% stake in Vivalto Home, a Belgian operator of senior care homes, to Vivalto Vie, a French operator of senior care homes and realized an IRR close to 20%. • On February 28, Luxempart signed an agreement with funds advised by Quadriga Capital Partners to sell its 43.8% stake in Novotergum GmbH. The transaction is expected to be closed before May 2022 but is still subject to approval by German anti-trust authorities. Total proceeds should amount to 22.5m, in line with Novotergum’s contribution to our NAV as of December 31, 2021. There have been no other significant events since 31 December 2021 that would impact the financial position and performance of the Group. IMPACT OF THE RUSSIAN INVASION OF UKRAINE The invasion of Ukraine is an unbearable tragedy on our continent and generates misery for millions of people. The war and the economic sanctions it causes are not expected to have a direct impact neither on our Company nor on our portfolio companies as none are significantly active in that region. Nevertheless, energy and raw material prices are expected to increase further. Current levels of inflation might increase for a longer period. The business climate might deteriorate and slow down growth. It is for the time being difficult to measure precisely the effect on our portfolio companies but it is probable that this deteriorated environment will impact most businesses. It has appeared that our companies turned out to be resilient and well prepared for difficult situations. Indeed, not all sectors will be impacted similarly by geopolitical events and the diversity of our portfolio as well as the strength of our main lines should allow us to resist to the economic headwind. OUTLOOK Recent geopolitical tensions in Europe affecting the rhythm and intensity of the economic recovery make a reliable outlook challenging. It is therefore hazardous to predict how the valuation of our portfolio - and therefore indirectly our net result - will evolve in the future. Luxempart’s significant cash position, its diversified and long-term oriented portfolio of Direct Investments and Investment Funds as well as its committed team and stable shareholder base reinforce resilience in difficult times. Our Board of Directors and our Shareholders are attached to a stable dividend policy with prudent but constant increase perspectives. Capital proceeds will be reinvested to generate returns aiming at 15% p.a. over the mid term reflected in steady increase of our total equity per share and our share price. MAIN RISKS AND UNCERTAINTIES Luxempart faces specific risks due to the nature of its activities. Each of its investments is exposed to particular risks, mainly due to the business, location, regulation, customer’s base and strategy decisions. Luxempart implements governance rules and closely liaises with the management of the major portfolio investments to mitigate the risk factors. A major risk of Luxempart on all levels of the group is the market risk. All our assets are impacted by the evolution of financial markets and macroeconomic indicators (stock markets, comparable transactions of peer companies, valuation multiples, interest rates…). The liquidity risk is limited for Luxempart, as the Company is not an investment fund submitted to exit constraints. Our Group is a patient investor who is not driven by the financial markets and its volatility cycles. Our investment teams and our Audit, Risk, and Compliance Committee closely follow the evaluation of the portfolio investments. Investment and divestment decisions depend more on specific company analysis than financial market or fund investment cycles. The financial risks (market, interest rate, foreign exchange, credit and liquidity risk) are disclosed in the note 25 to the Financial Statements. The Group management risk system is described in more detail in the Statement of governance section of this annual report. RESEARCH AND DEVELOPMENT Luxempart does not pursue any research and development activities. BRANCHES Luxempart does not have any branch. TRANSPARENCY RESPONSIBILITY OF THE BOARD OF DIRECTORS The Board of Directors’ responsibilities are determined by law. In that regard, it is responsible for the true and fair preparation and presentation of the annual financial statements in accordance with Luxembourg law. The Board of Directors considers that it has fully complied with these obligations. STATEMENT BY THE RESPONSIBLE PERSONS Pursuant to the Law of 11 January 2008 regarding transparency obligations relating to information on issuers whose transferable securities are admitted for trading on a regulated market, John Penning and Olaf Kordes, Managing Directors, hereby certify in the name and on behalf of the Board of Directors, that, to the best of their knowledge: • the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or losss of Luxempart and the companies included in the consolidation; • the present management report contains a fair review of the development of the business, the results and the position of Luxempart and the companies included in the consolidation, together with a description of the principal risks and undertainties that they face. LAW OF 19 DECEMBER 2002 The corporate governance statement required by the Law of 19 December 2002 concerning the trade and company register as well as the accounting and annual accounts of companies (Article 68ter) is included in the dedicated section of the present report. / 26/ 25 PORTFOLIO STATEMENT OF GOVERNANCE FINANCIAL STATEMENTS STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT ACTIVITY REPORT INFORMATION REGARDING PUBLIC TAKEOVER OFFERS PURSUANT TO THE LAW OF 19 MAY 2006 Luxempart share capital amounts to € 51,750,000 represented by 20,700,000 fully paid-up ordinary shares with no determined par value. There are no other categories of shares, or options, or preferential rights granting entitlement to the issue of shares in another category that may have a dilutive effect on the number of shares issued. The shares issued all enjoy the same rights, in terms of their voting rights at Ordinary and Extraordinary General Meetings, as well as of the dividend voted by the shareholders at General Meetings. There are no restrictions on the transfer of securities, or any special rights of control granted to some holders of the securities. No shareholders’ agreement that may entail restrictions on the transfer of securities or on voting rights has been entered into. The Company’s shares are listed on the Luxembourg Stock Exchange. Foyer Finance S.A., an unlisted financial investment company, which represents the largest group of companies of which the Company is a member, is the beneficial owner of 10,434,240 shares in the Company, or 50.4% out of a total of 20,700,000 shares issued. Luxempart has arranged for a “Stock Option Plan” for the members of the Management Committee and different staff members. The Company freely decides whether there are grounds to allot option rights every year. The allotment of options is subject to a flat-rate tax model when the options are granted. Where applicable, the option rights are allotted annually depending on each individual’s years of service and achievement of performance targets. The option rights are subject to a lock-up period of four years and must be exercised within a period of ten years as from their allotment. The “Stock Option Plan” for the members of the Management Committee is based on the treasury shares held in the portfolio, in such a way that no shares that would dilute shareholders’ interests are issued. The members of the Board of Directors are appointed by the General Meeting of Shareholders, on the recommendation of the Board of Directors, and once the Board of Directors has gathered the opinion of the Nomination and Remuneration Committee. They are appointed for a maximum term of six years. The term of office for Luxempart Directors is usually three years and the expiry periods are staggered, in such a way that roughly one third of the offices are renewed every year. The Directors’ offices are renewable. In principle, a Director’s office ends following the Annual General Meeting of Shareholders that appoints their replacement. The General Meeting of Shareholders may dismiss the Directors at any time. In the event that a Director’s office falls vacant, the Board of Directors may arrange for their replacement, while nonetheless complying with the rules governing the appointment of Directors. The shareholders decide on the definitive appointment, in principle for the remaining term of office of the Director who has been replaced, at the next General Meeting of shareholders. The Board of Directors, which is the body responsible for the management of Luxempart, has the powers to take any decisions and perform any measures that are necessary or useful for the achievement of the Company’s corporate purpose, except for the powers exclusively reserved for the General Meeting of Shareholders by the law or the Articles of Association. The Board of Directors’ task is to ensure the long-term success of the Company and of its business activities in the interests of the shareholders, while considering the interests of other stakeholders in the community in which the Company operates. The Board of Directors is first and foremost responsible for the strategic management of the Company and for monitoring the conduct of its business affairs. An Extraordinary General Meeting must be convened in order to vote on any amendment to the Articles of Association, as well as on any increase or decrease in the share capital, except if the shareholders have previously authorised the Board of Directors to increase the share capital under determined conditions, which is the case for Luxempart, where the authorised share capital amounts to € 90 million. As at 31 December 2021, the authorised capital amounts € 90 million. This authorisation will expire on 24 April 2022.It is proposed to be renewed at that date. There is no agreement to which Luxempart may be party that would be substantially amended, or even terminated in the event that a public takeover offer occurs. Likewise, no agreement has been entered into by the Company and members of its Board of Directors or its staff providing for compensation in the event of resignation or dismissal without valid grounds, or in the event that their job is terminated as the result of a public takeover offer. ANNUAL REPORT 2019 / 28/ 27 PORTFOLIO STATEMENT OF GOVERNANCE FINANCIAL STATEMENTS STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS Alain Huberty "e overall good business evolution of our portfolio lines and investment nds as well as several successl exits in our listed portfolio during 2021 allow us to present an exceptional performance of 29% for our shareholders. e nancial statements show the strong evolution of all our key nancial indicators such as the consolidated equi now exceeding the € 2bn mark" CONSOLIDATED FINANCIAL STATEMENTS at 31 December 2021 / 102/ 101 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2021 in thousands of € Notes 31/12/2021 31/12/2020 Dividends income 6 50,179 47,364 Net gains / (losses) on financial assets 10 462,780 120,490 Proﬁt on investments activities 512,959 167,854 Services / recovery of services 2,148 2,433 Staff costs 5 -7,528 -6,311 Operating expenses 4 -6,569 -6,362 Depreciation and amortisation of non-current assets 9 -99 -923 Impairment of current assets - -544 Proﬁt from operating activities 500,910 156,146 Financial income 7 471 1,207 Financial expenses 7 -1,667 -635 Proﬁt before tax 499,715 156,718 Tax expenses 8 -988 -24 Proﬁt for the year 498,727 156,695 Attributable to the owners of the Company 498,727 156,695 Earnings per share attributable to the owners of the Company Basic weighted average number of shares 15 20,100,894 20,084,332 Diluted number of shares 20,587,857 20,609,400 Earnings per share - attributable to the owners of the Company (in €) Basic 24.81 7.80 Diluted 24.22 7.60 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021 in thousands of € Notes 31/12/2021 31/12/2020 Consolidated proﬁt for the year 498,727 156,695 Items that could be reclassified subsequently to profit or loss : - - Total comprehensive income 498,727 156,695 Attributable to the owners of the Company 498,727 156,695 Comprehensive income attributable to the owners of the Company Basic weighted average number of shares 15 20,100,894 20,084,332 Diluted number of shares 20,587,857 20,609,400 Comprehensive income per share attributable to the owners of the Company (in €) Basic 24.81 7.80 Diluted 24.22 7.60 The accompanying notes are an integral part of these consolidated financial statements. The accompanying notes are an integral part of these consolidated financial statements. / 112/ 111 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2021 ASSETS in thousands of € Notes 31/12/2021 31/12/2020 Non-current assets Financial assets at fair value through profit and loss 10 2,015,795 1,599,666 Loans and receivables 11 62 62 Bank deposits 13 35,000 55,000 Intangible and tangible assets 9 368 382 Total non-current assets 2,051,224 1,655,110 Current assets Loans and receivables 12 19,356 5,212 Bank deposits 13 - 30,000 Cash and cash equivalents 13 107,599 38,978 Total current assets 126,955 74,190 Total assets 2,178,179 1,729,299 EQUITY AND LIABILITIES in thousands of € Notes 31/12/2021 31/12/2020 Equity attributable to the owners of the Company Capital and share premium 14 66,860 66,860 Reserves 15 1,603,533 1,478,509 Profit for the year attributable to the owners of the Company 498,727 156,695 Total equity attributable to the owners of the Company 2,169,120 1,702,064 Total equity 2,169,120 1,702,064 Non-current liabilities Non-current provisions 18 4,193 3,308 Bank borrowings 17 - 19,169 Total non-current liabilities 4,193 22,477 Current liabilities Trade and other payables 19 4,866 4,758 Total current liabilities 4,866 4,758 Total liabilities 9,059 27,235 Total equity and liabilities 2,178,179 1,729,299 The accompanying notes are an integral part of these consolidated financial statements. The accompanying notes are an integral part of these consolidated financial statements. / 114/ 113 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 DECEMBER 2021 in thousands of € Notes 31/12/2021 31/12/2020 Proﬁt for the year 498,727 156,695 Adjustments for : Depreciation and amortisation of non-current assets 99 124 Net gains / (losses) on financial assets 10 -462,780 -120,490 36,046 36,328 Acquisition of financial assets 10 -257,447 -169,154 Disposal of financial assets 10 304,099 148,603 Net change in loans and receivables -14,144 -2,301 Net change in borrowings and debts 993 -497 Bank borrowing 17 -19,169 8,990 Other changes 686 - Net cash ﬂows from operating activities 51,064 21,969 Including : Taxes paid -143 -27 Interest paid -300 -344 Interest received 10 13 Acquisitions / disposals of tangible and intangible assets 9 -85 -46 Net cash ﬂows from investing activities -85 -46 Transfer from / (to) deposits accounts 13 50,000 -5,000 Disposals / acquisitions of own shares 15 -190 414 Dividends paid 16 -32,168 -29,725 Net cash ﬂows from ﬁnancing activities 17,642 -34,311 Net increase/ (decrease) in cash 68,621 -12,388 Cash at the beginning of the year 13 38,978 51,366 Cash at the end of the year 13 107,599 38,978 Net increase / (decrease) in cash 68,621 -12,388 The accompanying notes are an integral part of these consolidated financial statements. / 116/ 115 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2021 in thousands of € Notes Capital and Share premium Own shares Legal Reserve Other reserves Proﬁt for the year Total equity attributable to owners of the Company Equity at 31/12/2019 66,860 -17,218 5,989 1,311,600 207,449 1,574,680 Dividends paid by the Company 16 - - - -29,725 - -29,725 Allocation of profit - - - 207,449 -207,449 - Legal reserve reduction - - -814 814 - - Operations on own shares 15 - 380 - 34 - 414 Comprehensive income for the year - - - - 156,695 156,695 Equity at 31/12/2020 66,860 -16,838 5,175 1,490,172 156,695 1,702,064 Dividends paid by the Company 16 - - - -32,168 - -32,168 Allocation of profit - - - 156,695 -156,695 - Operations on own shares 15 - 306 - 190 - 497 Comprehensive income for the year - - - - 498,727 498,727 Equity at 31/12/2021 66,860 -16,531 5,175 1,614,889 498,727 2,169,120 The accompanying notes are an integral part of these consolidated financial statements. / 118/ 117 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2021 NOTE 1 - GENERAL INFORMATION Luxempart S.A. ("the Company" or "Luxempart") is an investment company whose registered office is located at 12, rue Léon Laval, L-3372 in Leudelange. The Company was founded on 25 April 1988 in Luxembourg, under the name BIL Participations. The Annual General Meeting held on 15 September 1992 decided to change the Company's name to Luxempart S.A. The consolidated financial statements for the financial years ending on 31 December 2020 and 31 December 2021 incorporate the financial statements of the Company and its subsidiaries ("the Group") and the Group's share in associates. The Company is listed on the Luxembourg Stock Exchange and registered on the trade register under no. B27846. Luxempart is primarily active in Benelux, DACH Region, France and Italy; it actively manages a portfolio of listed and non-listed companies. On 23 March 2022, the Board of Directors approved the consolidated financial statements as at 31 December 2021. The consolidated financial statements will be submitted for approval and publication authorisation during the Annual General Meeting to be held on 25 April 2022. NOTE 2 - CONSOLIDATION PRINCIPLES, VALUATION RULES, AND ACCOUNTING STANDARDS DECLARATION OF CONFORMITY The consolidated annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. FRAMEWORK FOR PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS The consolidated financial statements are presented in thousands of euros (€). The functional currency is the euro (€). The consolidated financial statements are prepared based on the historical cost, with the exception of financial assets at fair value through profit and loss and financial assets held for trading, which are measured at fair value. The valuation principles, methods and techniques are applied consistently within the Group. The consolidated financial statements have been prepared for the accounting periods ended 31 December 2020 and 31 December 2021 and are presented before allocation of the Company’s profit. The allocation of profit for the year 2021 will be proposed at the Annual General Meeting on 25 April 2022. SIGNIFICANT MANAGEMENT JUDGMENTS Qualiﬁcation as an "investment entity" Luxempart’s management has made significant judgments when determining that Luxempart qualifies as an investment entity. Luxempart has the following characteristics of an investment entity: • It has more than one investment; • It has more than one investor; • Being listed, Luxempart has investors that are not related parties; • It has ownership in form of equity or similar interests, mostly shares in the portfolio companies. Luxempart’s purpose is to invest its capital solely for returns from capital appreciation and investment income. To meet this objective, Luxempart has built a strategy on two pillars: the direct investments and the investment funds. The direct investments are made with a medium to long-term perspective to ensure to our portfolio companies to enjoy sufficient time to implement their strategy, execute their business plan and develop their potential. Each of our pillars has an exit strategy designed by the Board of directors, who is composed by a majority of independent members and who will take the decision in the best interest of Luxempart. Valuation of Investments In preparing the financial statements, the application of the accounting principles and methods described hereafter requires Luxempart’s management to make assumptions and estimates that may have an impact on the amounts recognised in the statement of profit or loss, on the valuation of assets and liabilities, on the statement of financial position, and on the information presented in the accompanying notes. Management makes these estimates and assumptions based on the information available on the date on which the consolidated financial statements are drawn up and may be required to exercise its judgment. By nature, valuations based on these estimates are subject to a number of risks and uncertainties before their future realisation. Consequently, the actual results of the operations in question may differ from these estimates and therefore have a material impact on the consolidated financial statements. CONSOLIDATION PRINCIPLES Qualifying as an investment entity, Luxempart does not consolidate its subsidiaries and does not apply IFRS 3 when it acquires control over another entity. There is one exception to this treatment for subsidiaries providing services that relate to Luxempart’s investment activities. These subsidiaries are fully consolidated. Investments in subsidiaries not providing services that relate to Luxempart’s investment activities and investments where Luxempart has significant influence or joint control are classified as Financial assets at fair value through profit and loss, in accordance with IFRS 9. A list of non-consolidated subsidiaries is set out in note 20. / 120/ 119 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS SUBSIDIARIES THAT PROVIDE INVESTMENT-RELATED SERVICES (FULLY CONSOLIDATED) A subsidiary providing investment-related services is a company over which Luxempart has control. The Company has control when it: • has power over the entity, • is exposed, or has rights, to variable returns from its involvement with the entity, • has the ability to use its power over the entity to affect the amount of its returns. These companies are fully consolidated as from the date the Group obtains the control and ceases when this control is lost. Non-controlling interests are presented in equity on the consolidated statement of financial position, separately from "Equity attributable to the owners of the Company", and classified under "Non-controlling interests". Non-controlling interests in the Group's profit are also indicated separately on the consolidated statement of profit or loss and classified under "Non-controlling interests". Expenses, income, assets, and liabilities of subsidiaries are fully incorporated into the consolidated financial statements. Transactions between companies of the Group, intercompany accounts, and unrealised profits on intragroup transactions are fully eliminated. A list of the Group’s subsidiaries is presented in note 20. TRANSACTIONS IN FOREIGN CURRENCIES Transactions carried out in foreign currencies are converted into the functional currency at the exchange rate in force as at the transaction date. At the end of each reporting period, the monetary items in foreign currencies are converted at the rate of the last day of the financial year. Losses or profits from the realisation or conversion of monetary elements denominated in foreign currencies are recognised in the statement of profit or loss. The following exchange rates were used for conversion of the consolidated financial statements. As at 31 December 2021, one euro is equal to: US Dollar 1.13727 USD Pound Sterling 0.84079 GBP Swiss Franc 1.03616 CHF Danish Crown 7.43757 DKK INTANGIBLE ASSETS WITH A FINITE USEFUL LIFE Intangible assets with a finite useful life are valued at cost less accumulated amortisation and accumulated impairment losses. Amortisation is applied according to the straight-line method based on an estimate of the fixed asset's useful life and its possible residual value. Intangible assets are not subject to revaluations. The useful life is as follows: Acquired software 3 years TANGIBLE ASSETS Tangible assets are measured at cost (including transaction costs) less accumulated amortisation and accumulated impairment losses. Depreciation is applied according to the straight-line method based on an estimate of the useful life of the said asset. Costs related to maintenance are recognised in the statement of profit or loss. Tangible assets are not subject to revaluations. The estimated useful lives are as follows: Facilities and transport equipment 3 - 5 years Other tangible assets, furnishings 10 years PRINCIPLE OF IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS At the end of each reporting period, the Group reviews the carrying amount of tangible and intangible assets in order to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount is the higher value between the asset's fair value less costs to sell and its value in use. The value in use is the discounted value of estimated future cash flows expected from continued use of the asset. FINANCIAL ASSETS Financial assets at fair value through proﬁt and loss Financial assets at fair value through profit and loss (“AFVPL”) are initially measured at their acquisition cost. They are stated at fair value and measured at the end of each reporting period. Unrealised capital gains and losses are recognised in the consolidated statement of profit or loss. In the event of sale of an AFVPL, the difference between the net proceeds from the sale and the carrying amount is recognised in the consolidated statement of profit or loss under “Net gains/(losses) on financial assets”. The transaction is recognised as at the settlement date. Financial assets held for trading Financial assets held for trading classified in current assets are assets acquired mainly with a view to be sold in the short term. They are stated at fair value and measured at the end of each reporting period. Changes in fair value are recognised in the consolidated statement of profit or loss under “Net gains/(losses) on financial assets” In the event of disposal of a financial asset held for trading, the difference between the net proceeds from the sale and the carrying amount is recognised in the consolidated statement of profit or loss under “Net gains/(losses) on financial assets”. The transaction is recognised as at the settlement date. / 122/ 121 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS Loans and receivables Loans and receivables are assets not listed on the stock exchange and repayable with fixed maturity. They originate when the Group either makes funds, assets, or services available. They are part of current assets insofar as their maturity does not exceed twelve months after the end of the reporting period (short term). Otherwise, they are part of non-current assets (long-term). Loans and receivables are measured at amortised cost according to the effective interest rate method. In the event of a significant loss in value, loans and receivables are impaired through the consolidated statement of profit or loss. Loans and receivables are considered to be held within a held-to-collect business model consistent with the Group's continuing recognition of the receivables. Loans and receivables have contractual terms that give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. Any gain or loss on derecognition is recognized in profit or loss. Cash and cash equivalents, Bank deposits Cash and cash equivalents include liquidities, sight deposits, and short-term deposits of less than three months, as well as highly liquid, easily convertible investments. Cash deposits having a term above three months are presented under “Bank deposits” in the consolidated statement of financial position. Cash and cash equivalents and Bank deposits are measured at fair value. FAIR VALUE OF FINANCIAL ASSETS Fair value measurements IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, on the principal or most advantageous market, at the measurement date. Financial assets are measured at their fair value at the end of each reporting period. Listed shares are measured based on their market price on the closing date. Non-listed financial assets are measured based on valuation methods in line with the requirements of the International Private Equity and Venture Capital Valuation (IPEV). During the measurement of the fair value of the financial assets in non-listed companies, Luxempart adopts a multi-criteria approach and applies one or several of the methods described in the table hereafter. Discounts may be applied to the values obtained by using each of these methods (discounts for illiquidity, for small company, etc.). Assets categorised as level 3 assets are valued by Luxempart’s investment managers. The valuations are based on information received from the portfolio companies’ management or by external evaluators and on IFRS compliant market data (mainly market multiples) that are provided by Capital IQ. The investment managers perform a calibration exercise at entry date to determine the valuation models used to assess the fair value of the portfolio companies. The unaudited information used in the valuations are back tested at each reporting date, when audited information is available. After being reviewed in detail by the business controller and /or CFO, these valuations are submitted to the Group Executive Committee for approval. Finally, they are submitted to the Audit, Compliance and Risks Committee, which conducts a detailed analysis of the methods and assumptions used. The Management and Audit, Compliance and Risks Committee review and analyse the changes in fair value measurement at each period end. The Board of Directors ultimately approves the fair value measurement of the financial assets when it approves the financial statements. Fair value hierarchy The Group uses a fair value hierarchy that reflects the significance of the data allowing valuations to be established. •Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; •Level 2: Data other than quoted market prices included within level 1 that are observable for the asset or liability, either directly (for example, prices) or indirectly (for example, elements derived from prices); •Level 3: Data about the asset or liability not based directly on observable market data. When a level 1 asset is no longer listed, it is reclassified as a level 3 asset as soon as it is delisted. When data on a level 2 asset is no longer observable on a market, that asset is reclassified as a level 3 asset at the period-end. CAPITAL Issued shares are considered to be representative of the share capital. Issued equity is recognised at the proceed net of direct issue costs. When a company of the Group acquires shares of the parent company, the price paid and the related incurred costs are recognised and deducted directly in equity at the moment when these shares are cancelled or transferred. When shares are transferred, the transfer price net of expenses incurred during this transaction and net of taxes is added to the equity. BANK BORROWINGS Bank borrowings bearing interest are recognised at the amount of the cash obtained after deducting any direct expenses. Transaction expenses (if they are material) are amortised over the remaining life of the debt. SHARE-BASED PAYMENT ARRANGEMENTS The stock option plan has been granted to the Management and some employees. Each option entitles at exercise either to receive one Luxempart’s share (equity-settlement) or to a cash settlement, corresponding to the difference between the stock price and the strike price. The fair value of the amount payable to employees in respect of the stock-option plan, is recognised as an expense with the corresponding increase in liabilities, over the period during which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value, with the Black and Scholes model. Any changes in the liability are recognised in the consolidated statement of profit or loss. / 124/ 123 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS CURRENT AND DEFERRED TAXES Income taxes are calculated according to the legal requirements. Advances paid are recognised as receivable and income tax expense (corporate income tax and municipal business tax) is estimated and recognised as provision. Deferred taxes originate when a temporary difference appears between the taxable base of an asset or liability and the value at which it appears on the consolidated statement of financial position. Deferred tax is calculated by applying the tax rate as well as the provisions of the law in force at the time of the calculation. Deferred tax assets are recognised for all deductible temporary differences (on tax loss carry forwards or other temporary differences) to the extent that it is probable that taxable profits will be available, against which those deductible temporary differences can be utilised, or when compensation is possible with existing deferred tax liabilities. PROVISIONS AND OTHER LIABILITIES Provisions are recognised once the Group has an actual obligation (legal or implied) resulting from past events that will probably generate an outflow of resources representative of economic benefits at an amount that can be reasonably estimated. Other liabilities are recognised at their nominal value. SEGMENT INFORMATION Operating segments are the components of the Group whose results are regularly reviewed by the Group Executive Committee to make decisions about resources to be allocated to the segment and assess its performance. The segmental information follows Luxempart’s investment strategy built on two pillars: • The “direct investments” that consists in taking direct participations in companies in the target geographical regions, which primarily consist of the Benelux Region (Belgium, Luxembourg), France, DACH Region (German, Austria, Swiss) and Italy. • The “investment funds” that consists in the acquisition of shares in investment funds mainly active in private equity and venture capital. The Group Executive Committee monitors the performance of the Group based on reportings disclosing these segments. A geographical segmentation is considered not relevant for Luxempart but presented in note 3 in application of IFRS 8.33. INCOME FROM ORDINARY ACTIVITIES Luxempart and some of its subsidiaries provide services to other entities within the Group. These services are defined in a service agreement between the entities involved and are recognised based on the degree of progress. DIVIDENDS INCOME The Group recognises dividends when they are received or when the right to receive payment is established. They result from the distribution of profits to holders of equity instruments in proportion to the rights that they hold in a category of securities making up the capital. CONSOLIDATED STATEMENT OF CASH FLOWS Luxempart is a company whose purpose is the acquisition, holding and sale of shareholdings. The cash flows associated with this activity are classified as net cash flows from operating activities. Dividends received are included in the net income. Net cash flows from investing activities are composed of flows related to tangible and intangible assets. Net cash flows from financing activities are composed of transactions on equity ( e.g., dividends paid to the shareholders, transactions on own shares, capital increase and decrease...) and flows from and to bank deposits. CHANGES IN ACCOUNTING METHODS The new IAS/IFRS and their interpretations listed below, which entered into force in 2021, had no impact on the Group’s financial statements. • Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform, Phase II • Amendments to IFRS 16 Leases: Covid-19 Related Rent Concessions beyond 30 June 2021 Some standards, interpretations and amendments to standards published by the International Accounting Standards Board (IASB) but have not yet been applied within the European Union as at 31 December 2021. The Group has not early adopted these new or amended standards in preparing these consolidated financial statements. These standards are: • Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current • Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies • Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates • Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction. • Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information • IFRS 17 Insurance Contracts including Amendments to IFRS 17 The Group doesn’t anticipate a significant impact on the financial statements. / 126/ 125 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS NOTE 3 - SEGMENT INFORMATION Strategy segmentation The segmental information follows Luxempart’s investment strategy built on two pillars: • The “direct investments” that consists in taking direct participations in companies in the target geographical regions, which primarily consist of the Beneluxregion (Belgium, Luxembourg), France, DACH region (Germany, Austria, Swiss) and Italy. • The “investment funds” that consists in the acquisition of shares in investment funds mainly active in private equity and venture capital. A description of the activities, including returns generated by these investment activities and the allocation of resources, is given in the Management report under Investment Strategy. CONSOLIDATED STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 Proﬁt or loss in thousands of € Direct investments Investment funds Others() 31/12/2021 Dividends income 48,483 1,696 - 50,179 Net gains / (losses) on financial assets 298,818 159,039 4,924 462,780 Proﬁt on investments activities 347,301 160,734 4,924 512,959 Services / recovery of services - - 2,148 2,148 Staff costs - - -7,528 -7,528 Operating expenses - - -6,569 -6,569 Depreciation and amortisation of non-current assets - - -99 -99 Proﬁt from operating activities 347,301 160,734 -7,125 500,910 Financial income - - 471 471 Financial expenses - - -1,667 -1,667 Proﬁt before tax 347,301 160,734 -8,320 499,715 Tax expense - - -988 -988 Proﬁt for the year 347,301 160,734 -9,308 498,727 () All assets, liabilities, income and expenses that are not directly allocated to a segment are presented in “Others” The investment in Foyer represents an important part of the section “Dividends income” and “Net gains / (losses) on financial assets”. The investment in Foyer represents more than 10% of the total of profit on investments activities. Assets in thousands of € Direct investments Investment funds Others() 31/12/2021 Financial assets at fair value through profit and loss 1,434,191 384,008 197,597 2,015,795 Bank deposits, loans and receivables 62 - 35,000 35,062 Intangible and tangible assets - - 368 368 Total non-current assets 1,434,253 384,008 232,965 2,051,224 Total current assets - - 126,955 126,955 Total assets 1,434,253 384,008 359,920 2,178,179 Equity and liabilities in thousands of € Direct investments Investment funds Others() 31/12/2021 Total equity - - 2,169,121 2,169,121 Total liabilities - - 9,059 9,059 Total equity and liabilities - - 2,178,179 2,178,179 / 128/ 127 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS Assets in thousands of € Direct investments Investment funds Others() 31/12/2020 Financial assets at fair value through profit and loss 1,187,615 377,668 34,383 1,599,666 Bank deposits, loans and receivables 62 - 55,000 55,062 Intangible and tangible assets - - 382 382 Total non-current assets 1,187,677 377,668 89,765 1,655,110 Total current assets - - 74,190 74,190 Total assets 1,187,677 377,668 163,955 1,729,299 Equity and liabilities in thousands of € Direct investments Investment funds Others() 31/12/2020 Total equity - - 1,702,064 1,702,064 Total liabilities 19,169 - 8,066 27,235 Total equity and liabilities 19,169 - 1,710,130 1,729,299 CONSOLIDATED STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 Proﬁt or loss in thousands of € Direct investments Investment funds Others() 31/12/2020 Dividends income 47,308 55 - 47,364 Net gains / (losses) on financial assets 101,779 21,200 -2,489 120,490 Proﬁt on investments activities 149,088 21,255 -2,489 167,854 Services / recovery of services - - 2,433 2,433 Staff costs - - -6,311 -6,311 Operating expenses - - -6,362 -6,362 Depreciation and amortisation of non-current assets - - -923 -923 Impairment of current assets - - -544 -544 Proﬁt from operating activities 149,088 21,255 -14,196 156,146 Financial income - - 1,207 1,207 Financial expenses - - -635 -635 Proﬁt before tax 149,088 21,255 -13,625 156,718 Tax expenses - - -24 -24 Proﬁt for the year 149,088 21,255 -13,648 156,695 () All assets, liabilities, income and expenses that are not directly allocated to a segment are presented in “Others” The investment in Foyer represents an important part of the section “Dividends income” and “Net gains / (losses) on financial assets”. The investment in Foyer represents more than 10% of the total of profit on investments activities. / 130/ 129 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS Geographic segmentation The following table provides details on segmentation information based on country incorporation. CONSOLIDATED STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 Proﬁt or loss in thousands of € Benelux DACH France Italy Others 31/12/2021 Dividends income 23,694 23,289 553 929 1,714 50,179 Net gains / (losses) on financial assets 157,304 215,326 70,030 31,328 -11,209 462,780 Proﬁt on investments activities 180,998 238,615 70,583 32,257 -9,494 512,959 Services / recovery of services 1,968 180 - - - 2,148 Staff costs -7,528 - - - - -7,528 Operating expenses -6,569 - - - - -6,569 Depreciation and amortisation of non-current assets -99 - - - - -99 Proﬁt from operating activities 168,770 238,795 70,583 32,257 -9,494 500,910 Financial income 471 - - - - 471 Financial expenses -1,667 - - - - -1,667 Proﬁt before tax 167,574 238,795 70,583 32,257 -9,494 499,715 Tax expense -988 - - - - -988 Proﬁt for the year 166,587 238,795 70,583 32,257 -9,494 498,727 Assets in thousands of € Benelux DACH France Italy Others 31/12/2021 Financial assets at fair value through profit and loss 917,147 483,151 384,896 170,218 60,383 2,015,795 Bank deposits, loans and receivables 35,000 - - - 62 35,062 Intangible and tangible assets 368 - - - - 368 Total non-current assets 952,515 483,151 384,896 170,218 60,445 2,051,224 Total current assets 121,699 4,807 - 23 426 126,955 Total assets 1,074,214 487,959 384,896 170,241 60,871 2,178,179 Equity and liabilities in thousands of € Benelux DACH France Italy Others 31/12/2021 Total equity 2,169,121 - - - - 2,169,121 Total liabilities 8,716 311 20 - 13 9,059 Total equity and liabilities 2,177,837 311 20 - 13 2,178,179 / 132/ 131 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 Proﬁt or loss in thousands of € Benelux DACH France Italy Others 31/12/2020 Dividends income 7,801 38,530 1,033 - - 47,364 Net gains / (losses) on financial assets 30,355 47,181 24,093 10,539 8,322 120,490 Proﬁt on investments activities 38,155 85,711 25,126 10,539 8,322 167,854 Services / recovery of services 2,237 196 - - - 2,433 Staff costs -6,311 - - - - -6,311 Operating expenses -6,362 - - - - -6,362 Depreciation and amortisation of non-current assets -923 - - - - -923 Impairment of current assets - -544 - - - -544 Proﬁt from operating activities 26,796 85,363 25,126 10,539 8,322 156,146 Financial income 1,207 - - - - 1,207 Financial expenses -635 - - - - -635 Proﬁt before tax 27,368 85,363 25,126 10,539 8,322 156,718 Tax expense -24 - - - - -24 Proﬁt for the year 27,344 85,363 25,126 10,539 8,322 156,695 Assets in thousands of € Benelux DACH France Italy Others 31/12/2020 Financial assets at fair value through profit and loss 761,664 431,338 209,459 134,370 62,835 1,599,666 Bank deposits, loans and receivables 55,000 - - - 62 55,062 Intangible and tangible assets 382 - - - - 382 Total non-current assets 817,046 431,338 209,459 134,370 62,897 1,655,110 Total current assets 70,397 3,549 - 23 222 74,190 Total assets 887,443 434,887 209,459 134,393 63,118 1,729,299 Equity and liabilities in thousands of € Benelux DACH France Italy Others 31/12/2020 Total equity 1,702,064 - - - - 1,702,064 Total liabilities 27,090 - 53 - 93 27,235 Total equity and liabilities 1,729,154 - 53 - 93 1,729,299 / 134/ 133 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS NOTE 4 - OPERATING EXPENSES The following table provides details on operating expenses: in thousands of € 2021 2020 External advisors and other similar fees 3,611 3,151 Taxes other than income tax 848 583 Directors allowances 859 808 Administrative expenses and other operating expenses 719 1,261 Rental expenses 453 471 Insurance premiums 79 88 Total 6,569 6,362 All expenses are recognised in the consolidated statement of profit or loss at the time of the transaction. NOTE 5 - STAFF COSTS The following table provides details of staff costs and benefits: in thousands of € 2021 2020 Remuneration, wages and bonuses 6,908 5,793 Social security contributions 306 308 Supplementary pension plan 314 210 Total 7,528 6,311 Pension plan The Group has opted for a defined-contribution pension plan and pays annual contributions to a separate entity (Foyer Vie). The Group will have no legal or implied obligation to pay additional contributions if said entity does not have enough assets to cover the benefits corresponding to the services rendered by staff members during the current and prior periods. Premiums are paid annually and recognised directly in the consolidated statement of profit or loss. The Group offers defined-contribution pension plans to its employees. Luxempart pays contributions corresponding to a percentage of the payroll expenses into the retirement scheme in order to fund these benefits. The only obligation with regard to the retirement scheme involves paying these contributions which are recognised in staff costs. Number of employees The following table indicates the average number of employees over the year: Category 2021 2020 Managers 5 6 Staff 19 13 Total 24 19 NOTE 6 - DIVIDENDS INCOME The following table breaks down the dividends received during the year: in thousands of € 2021 2020 Foyer 21,585 5,648 Kaufman & Broad - 1,033 Atenor 1,816 1,387 ESG/Enoflex/Stoll 21,276 38,530 SES 175 593 Others 5,327 173 Total 50,179 47,364 / 136/ 135 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS B. RECONCILIATION OF INCOME TAX EXPENSES TO THE ACCOUNTING PROFIT in thousands of € 2021 2020 Profit before tax 499,715 156,718 Company’s average tax rate 25.69% 26.76% Theoretical tax expense 128,377 41,938 Effect of non-taxable capital gains -117,799 -32,131 Effect of non-taxable dividends -12,891 -12,674 Other tax adjustments 2,323 2,868 Total tax expense 10 0 NOTE 7 - FINANCIAL INCOME AND EXPENSES A. FINANCIAL INCOME Interest and similar income are mainly composed of interests received on deposit accounts with credit institutions (€ 9 thousand) and on coupons received (€ 462 thousand). As at 31 December 2021, they amount to € 471 thousand (2020: € 1,207 thousand). B. FINANCIAL EXPENSES in thousands of € 2021 2020 Bank expenses and interest expenses 664 478 Other expenses 1,003 157 Total 1,667 635 Bank expenses and interest expenses primarily include interests paid on short-term cash advances and negative interests paid on cash at bank. The other expenses primarily include foreign exchange losses on current assets. NOTE 8 - CURRENT TAX EXPENSES The Group recognises the current tax expenses on the corporate profits as follows: A. DETAIL OF TAXES in thousands of € 2021 2020 Corporate income tax (IRC) 10 - Subtotal income tax expenses (b) 10 0 Wealth tax 978 24 Total 988 24 / 138/ 137 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS NOTE 9 - INTANGIBLE AND TANGIBLE ASSETS The movements in intangible and tangible assets that occurred during financial years 2020 and 2021 are as follows: Cost in thousands of € Software Ofﬁce and computer equipment Vehicles Total as at 31/12/2019 49 519 244 812 Acquisitions 12 33 - 46 as at 31/12/2020 61 552 244 857 Acquisitions - 85 - 85 Disposals - -17 -115 -131 as at 31/12/2021 61 620 129 810 Depreciation in thousands of € Software Ofﬁce and computer equipment Vehicles Total as at 31/12/2019 26 161 166 353 Depreciation 5 63 56 124 as at 31/12/2020 31 224 222 477 Depreciation 7 69 22 98 Disposals - -17 -115 -131 as at 31/12/2021 38 276 129 443 Carrying amount in thousands of € Software Ofﬁce and computer equipment Vehicles Total as at 31/12/2020 31 328 22 382 as at 31/12/2021 23 345 0 368 NOTE 10 - FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS The following tables provide details of changes in financial assets at fair value through profit and loss in 2020 and 2021. in thousands of € Financial assets at fair value through proﬁt and loss Fair value as at 31/12/2019 1,458,625 Acquisitions 249,388 Disposals -228,838 Net gains/(losses) on financial assets 120,490 Fair value as at 31/12/2020 1,599,666 Acquisitions 257,447 Disposals -304,099 Net gains/(losses) on financial assets 462,780 Fair value as at 31/12/2021 2,015,794 Financial assets at fair value through profit and loss (“AFVPL”) are classified into two segments, direct investments and investment funds. During the 2021 financial year, the Group invested: • € 124,146 thousand in the direct investments mainly in Evariste, IMGP, Sogetrel, Pflegebutler and including € 46,320 thousand in listed assets. • € 133,301 thousand in the investment funds activity, Capital at Work and new bonds portfolio. The Group sold: • its shares in listed companies for € 232,109 thousand mainly in Zooplus, Schaltbau, TCM and Kaufman and Broad generating a realised gain of € 108,123 thousand. • its bonds portfolio for € 28,183 thousand generating a realised gain of € 3,081 thousand. These net capital gains realised in 2021 correspond to the value increase since 31 December 2020. Assets at fair value through profit and loss are categorised as level 1 and level 3 assets / 140/ 139 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS FAIR VALUE HIERARCHY OF FINANCIAL ASSETS in thousands of € Level1 Level2 Level3 Total Fair value as at 31/12/2019 235,223 109,592 1,113,810 1,458,625 Level transfer - 6,493 -6,493 - Acquisitions 155,090 - 94,298 249,388 Disposals -105,132 -83,715 -39,990 -228,838 Net gains/(losses) on financial assets 67,221 -27,810 81,079 120,490 Fair value as at 31/12/2020 352,402 4,560 1,242,704 1,599,666 Acquisitions 78,126 - 179,322 257,447 Disposals -260,292 -4,150 -39,656 -304,099 Net gains/(losses) on financial assets 109,653 -410 353,537 462,780 Fair value as at 31/12/2021 279,889 - 1,735,906 2,015,795 There was one transfer between levels of fair value in 2020. Level 1: Financial assets consist of listed investments, mainly in Atenor, Technotrans, SNP, Ascom and Capital at Work, totalling € 279,889 thousand. Level 2: Financial assets consist of holding companies holding listed investments. The position was sold in 2021. Level 3: Financial assets consist of private-equity investments, mainly in Foyer, Armira Holding, Mehler, ESG and Luxempart Capital Partners SICAR SA. LEVEL 3 FINANCIAL ASSETS RISK ANALYSIS The following table sets out the impacts of changes in non-observable data on the fair value of financial assets. The information on the methods used to determine the fair value of these assets (including the valuation techniques and input data used) is provided in note 2. in thousands of € Level 3 for ﬁnancial assets Valuation techniques Signiﬁcant unobservable inputs Fair value Impact -10% Impact +10% Market multiple Discount for illiquidity and/or minority 795,442 -40,667 40,667 Revalued net asset The net asset value communicated to the Group 940,464 -93,749 93,749 Total 1,735,906 -134,415 134,415 At 31 December 2021, the valuation methods have not significantly changed since 2020. Level 3 fair value valuation techniques used The following table provides information on the methods used according to IFRS 13 to determine the fair value of financial assets in private equity, as well as the valuation techniques and inputs used. Valuation techniques Use of the technique Signiﬁcant unobservable inputs Relationship of unobservable inputs to fair value Market multiple Primary valuation technique used by Luxempart (in absence of recent transactions involving an identical or similar asset) Discount for illiquidity and/or minority between 0% and 41% The higher the discount, the lower the fair value Revalued net asset For private equity funds and any similar struc- tures as well as mature companies with assets recognised at fair value The net asset value communicated to the Group The higher the net asset value, the higher the fair value / 142/ 141 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS in thousands of € 2021 2020 CURRENT ASSETS Bank deposits - 30,000 Cash and cash equivalents 107,599 38,978 Total 107,599 68,978 Bank deposits of the Group are placed on accounts with a maturity less than three months. Deposits bear interest at variable rates in force on the market. An analysis of the liquidity risk is provided in note 25. NOTE 14 - CAPITAL AND SHARE PREMIUM A. CAPITAL AND SHARE PREMIUM in thousands of € 2021 2020 Subscribed capital 51,750 51,750 Share premium 15,110 15,110 Total 66,860 66,860 The authorised capital amounts to € 90,000 thousand. B. CAPITAL MANAGEMENT As at 31 December 2021, subscribed capital amounts to € 51,750,000 and is represented by 20,700,000 fully paid-up shares without designation of nominal value. Each share entitles the holder to a dividend and a vote during General Meetings. There are no other share classes or options or pre-emptive rights entitling holders to the issuance of shares of another class that could have a dilutive effect on the number of shares issued. The Company's share capital may be increased from its current amount to € 90,000,000 through the creation and issuance of new shares without designation of nominal value, with the same rights and benefits as existing shares. The Board of Directors has the authorisation, until the 2022 Annual General Meeting, to buy back own shares. The accounting par value of the shares bought back, including own shares already previously acquired, may not exceed 30% of the subscribed capital. This own share buyback policy is intended to improve the security's liquidity on the stock exchange, grant shares to managers, cancel the own shares through a decision of the Extraordinary General Meeting, or transfer these shares to a new shareholder. In view of the Group's liquidity, all new investments are funded only from the Company's equity. For investments in private equity, external debt may be used at the level of the investment. NOTE 11 - NON-CURRENT LOANS AND RECEIVABLES The non-current loans and receivables consist of a loan receivable of a maturity of in more than one year granted to a portfolio company. As at 31 December 2021, it amounts to € 62 thousand (2020: € 62 thousand). The fair value of the non-current loans and receivables does not differ significantly from their carrying amount. NOTE 12 - CURRENT LOANS AND RECEIVABLES The following table provides details of the current loans and receivables: in thousands of € 2021 2020 Receivable from subsidiary 12,730 50 Tax receivables 5,222 3,816 Trade receivables 1,136 1,092 Accrued interest not yet due 242 237 Other receivables 27 18 Total 19,356 5,212 As at 31 December 2021, Luxempart has a claim of € 4,687 thousand against the German tax authorities. The fair value of short-term receivables does not differ significantly from their carrying amount. The maturity of current loans and receivables is less than one year. NOTE 13 - BANK DEPOSITS, CASH AND CASH EQUIVALENTS The following table provides details of the bank deposits, cash and cash equivalents: in thousands of € 2021 2020 NON-CURRENT ASSETS Bank deposits 35,000 55,000 Total 35,000 55,000 Bank deposits of the Group are placed on accounts with a maturity between 3 to 36 months. Deposits bear interest at variable rates in force on the market. An analysis of the liquidity risk is provided in Note 25. / 144/ 143 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS NOTE 15 - RESERVES AND OWN SHARES A. LEGAL RESERVE From the net profit of the statutory accounts under Luxembourg GAAP, 5% must be deducted annually to build up the reserve fund required by Luxembourg law. This deduction will no longer be mandatory when the reserve fund reaches one-tenth of the share capital. The legal reserve may not be distributed to the shareholders except in case of dissolution of the Company. As at 31 December 2021, the legal reserve amounts to € 5,175 thousand (2020: € 5,175 thousand). B. OTHER RESERVES in thousands of € 2021 2020 Consolidated reserves 1,605,443 1,480,726 Special reserve 9,446 9,446 Total 1,614,889 1,490,172 Consolidated reserves The consolidated reserves are composed of the income accumulated by the subsidiaries since their first consolidation, as well as some movements related to consolidation entries. These reserves also include the IFRS adjustments of companies within the consolidation scope. Special reserve As at 31 December 2021, the special reserve includes the untaxed capital gains from disposal on participations. These capital gains, recognised in the equity, result from application of Article 54 of the income tax law and are to be reinvested within two years following the financial year of the disposal. If these gains are not reinvested within this two-year period, they will be reversed through the consolidated statement of profit or loss and subject to tax. C. OWN SHARES AND RESERVE FOR OWN SHARES Number of shares issued Number of own shares Number of outstanding shares As at 31/12/2019 20,700,000 623,428 20,076,572 Acquisitions and disposals - -13,750 13,750 As at 31/12/2020 20,700,000 609,678 20,090,322 Acquisitions and disposals - -34,943 34,943 As at 31/12/2021 20,700,000 574,735 20,125,265 As at 31 December 2021, Luxempart holds 574,735 own shares (2020: 609,678 own shares), with the reserve for own shares amounting to € -16,531 thousand (2020: € -16,838 thousand). They were excluded from the diluted weighted-average number of ordinary shares calculation because their effect would have been anti-dilutive. The weighted average number of shares outstanding as at 31 December 2021 is 20,100,894 (2020: 20,084,332). NOTE 16 - DIVIDENDS PAID A dividend of € 1.60 gross per share was paid during the first half of 2021 in respect of the 2020 financial year, giving a total dividend of € 32,168,065 (2020: € 1.48 gross per share, giving a total dividend of € 29,725,167). The consolidated financial statements as at 31 December 2021 do not include the dividend that will be proposed to the Annual General Meeting of 25 April 2022. It was not recognised as a liability in the 2021 consolidated financial statements. The Board of Directors proposes an ordinary dividend of € 1.80 gross per share. The payment terms of the dividend will be communicated during the Annual General Meeting of 25 April 2022. NOTE 17 - BANK BORROWINGS As at 31 December 2021, the bank borrowings have been repaid (2020: € 19,169 thousand). Borrowings resulted from the acquisition of shares in an investment company in CHF and were contracted to hedge currency fluctuations. NOTE 18 - NON-CURRENT PROVISIONS The following table provides details of the non-current provisions: in thousands of € 2021 2020 Tax provisions 3,045 2,221 Other provisions 1,148 1,087 Total 4,193 3,308 The tax provisions relate to income taxes, municipal business taxes and wealth tax for 2021 and previous years. The “Other provisions” item includes the € 1,061 thousand provision for stock options (2020: € 1,061 thousand). The characteristics of the stock option plan are detailed below. / 146/ 145 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS NOTE 19 - CURRENT LIABILITIES in thousands of € 2021 2020 Tax and social debts 473 588 Trade liabilities 4,000 3,982 Other debts 393 188 Total 4,866 4,758 Tax and social debts include amounts owed to the tax authorities for social security contributions. Trade liabilities and other debts are mainly composed of amounts due to the Group's suppliers and service providers, as part of its activities. They also include a debt for bonus. The fair value of current liabilities does not differ significantly from their carrying amount. NOTE 20 - LIST OF SUBSIDIARIES A. SUBSIDIARIES PROVIDING INVESTMENT RELATED SERVICES, FULLY CONSOLIDATED The following table lists all subsidiaries providing fully consolidated investment related services to the Company: Subsidiary Place of incorporation Percentage held in 31/12/2021 Percentage held in 31/12/2020 Luxempart Invest S.à r.l. Luxembourg 100.00% 100.00% Luxempart Ireland Limited Dublin liquidation liquidation Luxempart Management S.à r.l. Luxembourg 100.00% 100.00% Bravo Capital S.A. Luxembourg 80.00% 80.00% Given that Luxempart meets the criteria laid down in Article 70 of the Luxembourg Law of 19 December 2002, its Luxembourgish subsidiaries are exempt from the requirements relating to the publication of statutory annual accounts. Stock option plan for management In 2009, Luxempart established a stock option plan for members of management and some employees. No new options have been granted during financial year 2021. The fair value of the options is calculated according to the Black and Scholes model. The Monte-Carlo model was used previously. It has been replaced by the Black and Scholes because the Monte-Carlo model is not accepted by the tax administration. No expense has been recognised in the consolidated statement of profit or loss for 2021. The table below summarises the movements of the year: Total Number of options issued as at 01/01/2021 519,078 Options exercised in 2021 -56,486 Options issued in 2021 - Number of options issued as at 31/12/2021 462,592 The average exercise price of options exercised in 2021 is € 27.61. The table below provides the plan's characteristics: Tranche Year Exercise price Exercise period Share price when allotted Tranche 1 2009 21.20 May 2012 - May 2019 22.00 Tranche 2 2010 23.99 May 2013 - May 2020 22.51 Tranche 3 2011 23.64 May 2014 - May 2021 22.84 Tranche 4 2012 22.50 May 2015 - May 2022 24.94 Tranche 5 2013 27.40 Sept 2017 - Sept 2021 27.80 Tranche 6 2014 31.20 Dec 2018 - Dec 2022 31.51 Tranche 7 2015 34.51 Jul 2019 - Jul 2023 33.79 Tranche 8 2016 33.99 Oct 2020 - Oct 2024 39.78 Tranche 9 2017 52.61 Aug 2021 - Aug 2025 50.00 Tranche 10 2018 56.50 June 2022 - June 2026 47.80 Tranche 11 2019 52.50 May 2023 - May 2027 53.00 Tranche 12 2020 47.73 April 2024 - April 2028 49.00 Tranche 13 2020 46.00 January 2025 - January 2029 49.00 Dividend growth 8.00% Historical volatility of share price 24.20% Discount rate -0.33% As at 31 December 2021, 116,792 options can be exercised. / 148/ 147 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS Subsidiary Place of incorporation Percentage held in 31/12/2021 Percentage held in 31/12/2020 Luxempart Capital Partners SICAR S.A. ** Luxembourg 100.00% 100.00% Quip Holding GmbH Germany 51.00% 51.00% Bravo Microfiber Luxembourg 61.97% - Bravo Capital Partners SCA RAIF Luxembourg 100.00% 100.00% Arbo S.p.a Italy 40.00% 40.00% Metalworks S.p.a Italy 53.30% 60.00% Bravo Luxury S.à.r.l (Vesta) Italy 100.00% 70.00% Luxempart German Investments S.A. Luxembourg 100.00% 100.00% EduPRO GmbH Austria 60.00% 60.00% Arwe Mobility Holding Germany 50.00% 50.00% Rimed AG Switzerland 27.77% 29.30% Rattay Group GmbH Germany 39.90% 39.90% WDS GmbH Germany 44.00% 44.00% Luxempart German Investments II S.à r.l. Luxembourg 100.00% 100.00% Novotergum GmbH Germany 43.80% 43.80% Luxempart French Investment S.à r.l. ** Luxembourg 100.00% 100.00% D’Alba Invest S.à.r.l ** Luxembourg 99.22% 99.22% Indufin Capital Partners S.A. SICAR ** Belgium 50.00% 50.00% Decoscent S.A. (Baobab) Belgium - 61.50% Axithon S.A. (Axi) Belgium 51.40% 51.59% This table lists all entities under the Company’s control or significant influence which are measured at fair value through profit or loss (note 10), as well as their own controlled or under influence subsidiaries. Luxempart neither provided nor committed to provide financial or other support to any of its non-consolidated subsidiaries. B. NON-CONSOLIDATED ENTITIES Subsidiary Place of incorporation Percentage held in 31/12/2021 Percentage held in 31/12/2020 Indufin NV Belgium 40.00% 40.00% M-Sicherheitsholding GmbH (Mehler) Germany 30.00% 30.00% Pescahold S.A. Luxembourg 100.00% 100.00% Pryco GmbH (Prym) Germany 55.60% 55.60% Foyer S.A. Luxembourg 31.03% 27.94% E-Sicherheitsholding GmbH (ESG) Germany 27.60% 27.60% ForAtenoR S.A. Belgium - 25.00% DMB2 GmbH & Co (Stoll) Germany 32.80% 32.80% Assmann Holding GmbH Germany 49.01% 50.00% Evariste Holding SAS France 40.00% - LuxCo Invest S.à r.l.** Luxembourg 80.53% 83.33% * The percentages indicated are the percentages of ownership by Indufin Capital Partners, which is held at 50% by Luxempart Capital Partners SICAR. ** These entities are investments entities, such as defined by IFRS 10. / 150/ 149 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS NOTE 21 - MAIN OFF-BALANCE SHEET RIGHTS AND COMMITMENTS As at 31 December 2021, Luxempart has a total remaining commitment of € 249,336 thousand (2020: € 167,705 thousand): • The Group has invested in investment funds through its subsidiary Luxempart Capital Partners SICAR. As at 31 December 2021, € 145,081 thousand remain uncalled. These funds are mainly Ekkio funds (€ 21,898 thousand), Quadrille Technologies funds (€ 10,035 thousand), FASO (€ 9,070 thousand), Apax (€ 13,875 thousand), Committed Advisors (€ 6,525 thousand), General Atlantic (€ 18,313 thousand), Blackstone Asia (€ 17,586 thousand)... • Bravo Capital Partners RAIF I and II have recognised an uncalled capital amounting to € 59,801 thousand to be paid by Luxempart Capital Partners SICAR. • The remaining commitment for Armira I and Armira II is € 44,454 thousand. NOTE 22 – DIRECTORS’ ALLOWANCES AND EXECUTIVE MANAGEMENT REMUNERATION in thousands of € 2021 2020 Directors allowances and attendance fees 1,049 986 Management remuneration 5,157 3,743 Total 6,207 4,729 Directors’ allowances and attendance fees as well as executive management remuneration for 2021 is recognised in "Operating expenses" (note 4) and in “Staff costs” (note 5). The remuneration of executive officers includes a provision for bonus payable in 2022, relating to 2021. NOTE 23 - REMUNERATION OF THE RÉVISEUR D’ENTREPRISES AGRÉÉ The following table shows fees paid to the Réviseur d’entreprises agréé. Audit fees cover the review of the interim consolidated financial statements as at 30 June and the audits of the statutory and consolidated financial statements as at 31 December. They do not cover work on subsidiaries’ financial statements, which, where applicable, are audited by other auditors. The audit fees are recognised in “Operating expenses” (note 4). in thousands of € 2021 2020 Audit services 87 82 Audit-related services 29 28 Tax services 9 5 Total 125 115 The Réviseur d’entreprises agréé of the Company is also the Réviseur d’entreprises agréé of some subsidiaries (Luxempart Capital Partners, Indufin Capital Partners, and Bravo Capital Partners. The remuneration of the Réviseur d'entreprises agréé for these subsidiaries is € 78 thousand (2020: € 92 thousand). NOTE 24 - RELATED PARTIES Income resulting from services provided recognised in the statement of profit or loss exclusively comes from services provided by Luxempart and billed to its subsidiaries and investments. The Foyer Assurances group invoices, on a quarterly basis, office rental expenses and other related expenses, insurance expenses, and miscellaneous services for a total of € 631 thousand (2020: € 614 thousand). One member of Luxempart’s Group Executive Committee invoiced consulting fees to Luxempart and Luxempart Capital Partners until March 2021, date at which he transformed his consultancy contract into an employment contract. Moreover, a former Group Executive Committee member was entitled to a bonus payment relating to 2020. The total fees amount to € 250 thousand for 2021 (2020: 550 thousand). Transaction fees paid to Capital at Work, a subsidiary of Foyer Group, amount to € 27 thousand (2020: € 20 thousand) and are included in “Interest and similar expenses” (note 7). / 152/ 151 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS NOTE 25 - FINANCIAL RISKS MANAGEMENT OF MARKET RISK The Group's major risk is the exposure of its financial assets to market risk. The risk management policy is established and controlled by the Group Executive Committee, the Board of Directors, and the Audit, Compliance and Risks Committee. Market risk is the risk of loss in value of financial assets. The main risks and uncertainties to which the Group is exposed relate to the performance of the financial markets (stock markets, comparable transactions, market multiples, etc.). Luxempart does not systematically sell its participations based on financial market volatility. In principle, the Group does not use market risk hedging instruments. It nevertheless regularly monitors changes in the value of its investments. The investments in companies listed on the stock exchange (mainly stock exchange of Luxembourg, Brussels, and Frankfurt) represent 12.9% as at 31 December 2021 of the Net Asset Value (2020: 20.7%). MANAGEMENT OF INTEREST RATE RISK Interest risk is the risk that the interest flow on the financial debt and the gross cash may be affected by an unfavourable change in interest rates. As at 31 December 2021, the risk is limited due to the small account of receivables and payables and by the absence of financial debt. MANAGEMENT OF FOREIGN EXCHANGE RISK The Group invests mainly in positions in the Group's functional currency (EUR). The portfolio of Luxempart is composed of 2 investments that are designated in foreign currency for € 2,016 thousand. No reasonable change in currency would have an impact on the accounts of Luxempart, as these investments represent 1.4% of the financial assets at fair value through profit or loss. The portfolio of Luxempart Capital Partners is composed of investments in USD which represent 3.2% of the value of its total financial assets. No reasonable change in currency would have an impact on the accounts of Luxempart. Therefore, these investments are not hedged against foreign exchange risk because it is not significant. MANAGEMENT OF CREDIT RISK Luxempart granted loans to companies of the Group totalling € 62 thousand as at 31 December 2021 (2020: € 62 thousand). Luxempart has also receivables from its subsidiaries for an amount of € 12,730 thousand (2020 : € 50 thousand). Credit risk is the risk that contracted third parties to not meet their commitments towards the Group during transactions with it. Credit risk lies not at Luxempart level but at the level of the investments, which are responsible for managing their credit risk according to the specific terms appropriate for their situation. If necessary, Luxempart may grant guarantees to companies in which it has invested. Luxempart minimises its risk exposure by entering into commitments with financial institutions with a high rating between Aa2 and A-. In order to minimise any concentration risk, Luxempart diversifies its exposure by several banking institutions, with a maximum to 5% of equity In 2021, there was no significant change in relation to the credit risk management. MANAGEMENT OF LIQUIDITY RISK Luxempart has € 249,336 thousand open commitments resulting from its investments in the funds (note 21). The Management follows the commitments and capital calls on a quaterly basis in order to make further cash available if necessary. As at 31 December 2021, Luxempart has a high level of cash at bank and bank deposits (€ 142,599 thousand) and liquid security portfolios (€ 106,404 thousand) that are available to face its commitments. Given this high level of liquidity, the risk of Luxempart is low. CLIMATE-RELATED AND OTHER ESG RISK The Group is not directly exposed to significant climate-related or other environmental risks. Luxempart acknowledges that ESG factors are having an increasing impact on its business environment. The Management is working on a Sustainability policy that will enable the Group to assess, monitor, and manage the ESG risk in general and the climate-related risks in particular. Luxempart is currently developing a framework as well as a risk management system in order to limit the ESG risk and to seize ESG opportunities to create value. Until the full implementation of this risk management system, the Management continues to closely monitor the portfolio companies and to support their sustainability initiatives. The Board of Directors will create a Substainability Committee that will follow sustainability laws and regulations and their impact on Luxempart, to validate corporate and portfolio sustainability action plans and to review the sustainability report, including the assessment of ESG risks. The Audit, Compliance and Risk Committee together with the Management ensures that the Group is compliant with all the applicable ESG laws and regulations. / 154/ 153 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS NOTE 26 - POST CLOSING EVENTS During the first months of 2022, Luxempart increased its holdings in several lines and sold two portfolio companies. The operations are the following: • In January 2022 Luxempart sold its 12% stake in VivaltoHome, a Belgian operator of senior care homes, to Vivalto Vie, a French operator of senior care homes and realized an IRR close to 20%. • On February 28, Luxempart signed an agreement with funds advised by Quadriga Capital Partners to sell its 43.8% stake in Novotergum GmbH. The transaction is expected to be closed in before May 2022 but is still subject to approval by German anti-trust authorities. Total proceeds should amount to € 22.5m, in line with Novotergum’s contribution to our NAV as of December 31, 2021. There were no other significant events since 31 December 2021 that would impact the financial position and performance of the Group. ANNUAL REPORT 2019 / 156/ 155 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT ANNUAL REPORT 2019 Address 12 Rue Léon Laval L-3372 Leudelange Contact Phone: +352 437 43 51 01 Fax: +352 42 54 62 [email protected] luxempart.lu Pictures lcgdp.lu Patrik Osterblad FINANCIAL STATEMENTS KPMG Luxembourg, Société anonyme 39, Avenue John F. Kennedy L-1855 Luxembourg REPORT OF THE RÉVISEUR D’ENTREPRISES AGRÉÉ Report on the audit of the consolidated nancial statements Opinion We have audited the consolidated financial statements of Luxempart S.A. and its subsidiaries (the "Group"), which comprise the consolidated statement of financial position as at 31 December 2021, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2021 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Basis for opinion We conducted our audit in accordance with the EU Regulation N° 537/2014, the Law of 23 July 2016 on the audit profession (“Law of 23 July 2016”) and with International Standards on Auditing (“ISAs”) as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier ("CSSF"). Our responsibilities under the EU Regulation N° 537/2014, the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the "Responsibilities of "réviseur d'entreprises agréé" for the audit of the consolidated financial statements" section of our report. We are also independent of the Group in accordance with the International Code of Ethics for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants ("IESBA Code") as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Valuation of nancial assets a) Why the matter was considered to be one of most significance in our audit of the consolidated financial statements for the year ended 31 December 2021 Refer to Note 2 Consolidation principles, valuation rules, and accounting standards, Note 10 Financial assets at fair value through profit or loss and Note 25 Financial risks to the consolidated financial statements. The Group holds financial assets which are measured at fair value in accordance with IFRS. Those financial assets represent 93% of total assets, and 86% of financial assets are investments for which the fair value is not determined by reference to a quoted price ("non-quoted investments"). For non-quoted investments, the fair value is determined through the application of valuation techniques in accordance with International Private Equity and Venture Capital Valuation Guidelines, and relevant IFRS. The application of valuation techniques involves the exercise of significant judgment by Management in relation to the choice of valuation technique employed and assumptions used for the respective models. The judgment involved and the significance of the amount relative to other captions in the consolidated financial statements led us to identify the fair value of non-quoted investments, as key audit matter. b) How the matter was addressed in our audit Our procedures over the valuation of financial assets include, but are not limited to: -Gaining an understanding of the Management's process and controls related to valuation of financial assets. -Assessing compliance of valuation techniques with the International Private Equity and Venture Capital Valuation Guidelines, and relevant IFRS. -Verifying key inputs of the valuation models used by Management and checking the accuracy of the computation of the valuation models. -Obtaining the external expert valuation report used by Management to assess the fair value of a sample of investments as at 31 December 2021. -For a sample of instruments, involving our valuation specialists to inspect valuation models and challenge key assumptions applied by Management. -Verifying the completeness, relevance and accuracy of the disclosures in relation to the impairment of financial fixed assets. Other matter relating to comparative information The consolidated financial statements of the Group for the year ended 31 December 2020 were audited by another auditor who expressed an unmodified opinion on those consolidated financial statements on 25 March 2021. To the Shareholders of Luxempart S.A. 12, rue Léon Laval L-3372 Leudelange Luxembourg / 107/ 106 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS Other information The Board of Directors is responsible for the other information. The other information comprises the information stated in the consolidated report including the consolidated management report and the Corporate Governance Statement but does not include the consolidated financial statements and our report of the “réviseur d'entreprises agréé” thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regard. Responsibilities of the Board of Directors for the consolidated nancial statements The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs as adopted by the European Union, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is responsible for presenting and marking up the consolidated financial statements in compliance with the requirements set out in the Delegated Regulation 2019/815 on European Single Electronic Format (“ESEF Regulation”). In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group's financial reporting process. Responsibilities of the réviseur d'entreprises agréé for the audit of the consolidated nancial statements The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report of the “réviseur d'entreprises agréé” that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the EU Regulation N° 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. Our responsibility is to assess whether the consolidated financial statements have been prepared in all material respects with the requirements laid down in the ESEF Regulation. As part of an audit in accordance with the EU Regulation N° 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors. • Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of the “réviseur d'entreprises agréé” to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report of the “réviseur d'entreprises agréé”. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our report unless law or regulation precludes public disclosure about the matter. / 109/ 108 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT FINANCIAL STATEMENTS Report on other legal and regulatory requirements We have been appointed as “réviseur d'entreprises agréé” by the Board of Directors on 26 April 2021 and the duration of our uninterrupted engagement, including previous renewals and reappointments, is one year. The consolidated management report is consistent with the consolidated financial statements and has been prepared in accordance with applicable legal requirements. The Corporate Governance Statement is included in the management report. The information required by Article 68ter paragraph (1) letter c) and d) of the law of 19 December 2002 on the commercial and companies register and on the accounting records and annual accounts of undertakings, as amended, is consistent with the consolidated financial statements and has been prepared in accordance with applicable legal requirements. We confirm that the audit opinion is consistent with the additional report to the audit committee or equivalent. We confirm that the prohibited non-audit services referred to in the EU Regulation N° 537/2014 were not provided and that we remained independent of the Group in conducting the audit. We have checked the compliance of the consolidated financial statements of the Group as at 31 December 2021 with relevant statutory requirements set out in the ESEF Regulation that are applicable to consolidated financial statements. For the Group it relates to: • Consolidated financial statements prepared in a valid xHTML format; • The XBRL markup of the consolidated financial statements using the core taxonomy and the common rules on markups specified in the ESEF Regulation. In our opinion, the consolidated financial statements of Luxempart S.A. as at 31 December 2021, identified as luxempart-2021-12-31.zip, have been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation. Our audit report only refers to the consolidated financial statements of Luxempart S.A. as at 31 December 2021, identified as luxempart-2021-12-31.zip, prepared and presented in accordance with the requirements laid down in the ESEF Regulation, which is the only authoritative version. L uxembourg, 24 March 2022 KPMG Luxembourg Société anonyme Cabinet de révision agréé Thierry Ravasio Partner / 111/ 110 MANAGEMENT REPORT PORTFOLIO STATEMENT OF GOVERNANCE STATUTORY ANNUAL ACCOUNTS MESSAGE TO OUR SHAREHOLDERS THE YEAR AT A GLANCE TABLE OF CONTENT MISSION STATEMENT

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