Interim Report July - September, 2014

2014-10-28

Big interest in minority investment in growth companies 

Significant events in the third quarter

  • Portfolio company ÅAC Microtec in Uppsala has, as part of a consortium, won a major framework agreement with NASA  
  • Fouriertransform approved investments during the quarter of SEK 55.3 million in five existing portfolio companies
  • Since the start Fouriertransform has invested a total of SEK 1,310 million in 25 companies, and with syndication partners, a total of SEK 3.9 billion in the Swedish automotive and manufac-turing industries
  • The fair value of the existing portfolio, including repaid capital from the portfolio companies, represents an increase in value of around 9 percent of the total capital invested since Fou-riertransform was formed
  • The net result after tax for the quarter was SEK -2.9 million (47.2) including revaluation of investments in securities of SEK 4.9 million (35.7)
  • The total cash flow for January – September was SEK -13.5 million (27.1) of which investments in new and existing portfolio companies accounted for SEK -342.5 million ( 321.8)
  • Cash and bank balances and investments in securities amounted to SEK 1,895 million (2,238) at the end of the quarter

Fouriertransform highlights, SEK m

Q3
2014

 

Q3
2013

 

%

Q1–3
2014

 

Q1–3
2013

 

%

Net result for the period

-2.9

 

47.2

 

-94

-9.3

 

85.0

 

-

Investments in portfolio companies

55,3

 

50.3

 

1

337.4

 

325.2

 

4

Cash flow for the period

-

 

-

 

-

-13.5

 

27.1

 

-

Cash and bank balances and investments in securities

1,895.5

 

2 238.5

 

-15

1 895.5

 

2 238.5

 

-15

Equity

3,273.6

 

3,236.5

 

1

3 273.6

 

3 236.5

 

1

Equity/assets ratio

99%

 

99%

 

-

99%

 

99%

 

-

Important events after the third quarter

The Government’s budget bill, which was presented on October 23, 2014, proposes a new mandate for Fouriertransform. Based on an amendment to an earlier decision, the mandate for Fouriertransform Aktiebolag will be to go in where there is a shortage of private capital and invest, directly or indirectly, in early-stage small and medium enterprises (SMEs) operating in the area of environmental technology that is helping to meet the climate challenges, and in early-stage SMEs operating in the life sciences field. The Swedish Riksdag (parliament) will vote on the bill at the end of the year.

CEO’s comments - Shaky period for industry with serious geopolitical risks

The global economy continues to show signs of improvement with the USA in the lead. But there are still significant factors of uncertainty, as evidenced by central banks pumping liquidity into the system at low interest rates. This can be interpreted as a sign of inflated economies, and the possibility of new financial bubbles cannot be excluded. 

 For the Swedish manufacturing industry and its suppliers, the main issue is what is happen-ing in Europe, one of its most important markets. There is great anxiety in Europe about what will happen if European sanctions against Russia, and Russia’s counter-sanctions, are intensi-fied and what effects this will have on the economy. Growth in the euro zone is practically at a standstill, and recently there have been some alarming signs regarding the situation for Ger-man industry. If it gets worse, the possibility of a recession in Europe cannot be excluded. This would be a hard blow for Swedish industry which is heavily dependent on Europe. 

Fouriertransform experienced a high level of activity during the summer and we have seen no decline in interest in new investments. Since July we have met with around 40 new compa-nies with concrete applications. We are also continuing to build a strong deal-flow and we now have investment decisions pending for around 15 companies. Our continued investment focus is on the niche engineering industry and several companies in this sector have shown an inter-est. We now have a total of 22 companies in our investment portfolio with total net sales of SEK 2.5 billion and 1,600 employees. The value of our portfolio has thus far developed in a positive direction and there is good potential for future growth.

During the summer Fouriertransform arranged seminars attended by more than 300 business leaders in Smögen, Lysekil and Båstad. The seminars were greatly appreciated and we now have around 40 potential new companies of interest to review. In this context, I would also like to draw attention to our great collaboration with business owner associations Företagarna, Företagarna in Västra Götaland, ALMI and Omställningskontoret in Västra Götaland. At the beginning of October we participated in a seminar on the topic of “Capital for Growth” at Näringslivsdagen (Industry Day) in the Gnosjö region. The seminar was arranged by the Forum Finnveden foundation and attracted around 400 business leaders and senior executives who gathered to discuss enterprise, supply of capital and how to grow outside Sweden.

 At the end of August our new employees Erik Sterner (formerly with EQT) and Mattias Silfversparre (formerly with Layline Partners) took up their positions. They will strengthen our investment department as we meet with more companies that will face challenges in the fu-ture.

The Government’s budget bill, which was presented on October 23, 2014, proposes a new mandate for Fouriertransform. Based on an amendment to an earlier decision, the mandate for Fouriertransform Aktiebolag will be to go in where there is a shortage of private capital and invest, directly or indirectly, in early-stage small and medium enterprises (SMEs) operating in the area of environmental technology that is helping to meet the climate challenges, and in early-stage SMEs operating in the life sciences field. The Swedish Riksdag (parliament) will vote on the bill at the end of the year. I have confidence that we will be able to execute this new mandate at the end of the year in a responsible way.

Per Nordberg