Semi-annual report and interim report for Q2 2014

2014-07-16

High investment pace with a total investment of SEK 287 million, of which SEK 200 million was invested in five new companies

Significant events in the first half of the year and the second quarter

  • In the first half of the year Fouriertransform invested a total of SEK 200.2 million in five new companies: ÅAC Microtec AB in Uppsala, Pelly AB in Hillerstorp, Ostell AB in Gothenburg, APR Automation AB in Arvika and SMP Parts AB in Ilsbo, as well as SEK 86.6 million in the existing portfolio companies
  • Since the start Fouriertransform has invested a total of SEK 1,253 million in 25 companies, and with syndication partners, a total of SEK 3.7 billion has been invested in the Swedish auto-motive and manufacturing industries 
  • The assessed fair value of the existing portfolio, including re-paid capital from the portfolio companies, is equivalent to an increase in value of around 9 percent of the total capital invest-ed since Fouriertransform commenced operations 
  • In April Fouriertransform and Volvo Group Venture Capital were awarded the Swedish Private Equity & Venture Capital Associa-tion (SVCA) award for “The Most Socially Beneficial Investment 2013” for their investment in PowerCell 
  • The net result after tax for the first half of the year was SEK -6.4 million (37.8) including unrealized results from portfolio com-panies of SEK -21.1 million (38.3) and from investments in se-curities of SEK 0.5 million (27.3). The net result after tax for the quarter was SEK -14.4 million (27.3) including unrealized prof-it/loss from portfolio companies of SEK -21.1 million (19.1) and from investments in securities of SEK -23.8 million (27.3)  
  • The total cash flow for the first half of the year was SEK -0.5 million (-5.8) of which investments in new and existing portfolio companies accounted for SEK -282.5 million (-272.9) 
  • Cash and bank balances and investments in securities at the end of the first half amounted to 1,952 SEK million (2,207)

CEO’s comments – significant interest in minority investments in growth companies

Economic development in the first six months of the year was fairly weak both in Sweden and internationally, and a proper recovery will probably take some time. Still, the forecasts for Sweden, Europe and the world indicate that there will be growth for the year as a whole, albeit at a moderate level. There is still a risk of a setback if, for example, the instability on the finance markets grows or as a consequence of the crisis in Ukraine and the civil war that flared up in Iraq during the spring.

     At Fouriertransform, due to the uncertain market situation, we have noticed a significant interest in minority investments in growth companies. Here we can work in a way that complements the market by helping to secure financing for projects with growth potential. During the second quarter we made our fourth investment this year when we invested in APR Automation in Arvika, a company offering complete automation solutions to Swedish and international customers. At the end of June we invested in SMP Parts as a minority owner with MVI and the company’s management. SMP Parts is located in Ilsbo in the province of Hälsingland and manufactures high-quality specialist equipment for construction machinery. Altogether we have invested SEK 200 million in five new companies so far this year. In addition to the two most recent ones, we invested in Osstell in Gothenburg, Pelly Intressenter in Hillerstorp and ÅAC Microtec in Uppsala. We now have a total of 22 companies in our investment portfolio with combined net sales of SEK 2.5 billion and 1,600 employees.

     As Fouriertransform is applying the International Financial Reporting Standards (IFRS), the portfolio as a whole has been measured at fair value in the accounts. In connection with this, a downward adjustment of 1.5 percent of the value of the portfolio as a whole has been made. This is equivalent to SEK 21 million and is a combination of valuation increases and decreases. The remeasurement is insignificant and the potential for future growth is good. One example is ArcCore which is forming a subsidiary in Munich to be closer to its customers in the Central European automotive market. Earlier in the year ArcCore was ranked in Affärsvärlden magazine’s list of “Sweden’s 33 hottest start-ups.”

     Other portfolio companies have also attracted attention this year; for example Applied Nano Surfaces which was named Nano Company of the Year at the annual NanoForum conference, and medical technology company SciBase which has a method for early detection of cancer, enjoyed some media coverage. The significant interest in Fouriertransform as a partner was evident in the numerous proposals received from both large and small companies seeking capital for future development. All in all we have had meetings with around 70 companies so far this year, many of which may be of interest based on our criteria of a high level of innovation and production complexity.

     Our future activities will be in line with our strategy of making the most of our strong deal flow, where numerous interesting growth companies are seeking minority investors. We also intend to complete our work assisting the portfolio companies’ with their sustainability work and business plans.

     I am also happy to report that we have now strengthened our investment team with the addition of two new employees, Erik Sterner (formerly with EQT) and Mattias Silfverstolpe (formerly with Layline Partners). Both have many years of business transaction experience within the manufacturing industry in Sweden and abroad. 

Per Nordberg