Interim Report January – June, 2016

2016-07-21

  • In June, the Swedish government decided to restructure government venture capital, which means that Fouriertransform will become part of a government-owned venture capital group
  • Portfolio company Alelion Batteries was listed on Nasdaq First North in June and implemented a new share issue that was heavily oversubscribed, raising approximately SEK 101 million from institutional investors and the public
  • Fouriertransform invested a total of SEK 78.9 million in ten existing portfolio companies in the first half-year
  • Since inception, Fouriertransform has invested a total of SEK 1,666 million in 28 companies in Sweden’s automotive and manufacturing industries
  • The estimated fair value of the existing portfolio of 23 companies including accumulated realized value from sales and repaid capital from portfolio companies since start-up, equates to a value decrease of approximately 12% of total invested capital since Fouriertransform’s inception
  • Profit/loss for the first half-year amounted to SEK -275.4 million (-139.7), including the revaluation of portfolio companies of SEK -257.8 million (-140.7), of which listed companies were SEK -186.0 million (8.7).
  • Cash flow for January – June amounted to SEK -16.4 million (45.2), of which investments in existing portfolio companies amounted to SEK -77.1 million (-115.5)
  • Cash and cash equivalents and investments in securities amounted to SEK 1,691 million (1,853) at the midpoint of the year

Tabell

CEO’s comments - Brexit means an uncertain future, but underlying growth in our portfolio companies  

The global economy remained weak in the first six months of the year. Brexit has accentuated these concerns, despite the fact that the UK remains a member of the EU until the structure of its exit has been agreed. The initial reactions to Brexit were major currency fluctuations, with sterling and the Swedish krona depreciating heavily, in tandem with major price losses across a number of stock exchanges. For Sweden, which is in an economic upturn, the outlook remains bright, largely  thanks  to low interest rates, but it is too early to predict  how much  Brexit will affect Sweden’s economy. The UK is Sweden’s fourth largest export market, providing some 13% of foreign direct investment into Sweden.

In the first half-year, Swedish manufacturers reported good order growth from the domestic market, while export order intake progressed somewhat more slowly.

The European and US recovery is still sluggish, and even if China appears to be making somewhat more positive progress than previously forecast, it still has a lot of work do to realign its economy. China’s lower infrastructure investments are still affecting progress in the rest of the world, and Swedish exporters have encountered difficulty on the Chinese market for several years.

Uncertain conditions on several of Sweden’s export markets are placing substantial demands on the renewal of Sweden’s manufacturing industry, where innovation and a better balance between the supply of products and associated services will be critical success factors. We have to be able to compete with rapid technological progress and create more stability in companies by being able to sell products and associated services.

There is great interest in Fouriertransform’s competence and equity capital, and we are continuing to screen projects and companies continuously, not just in early phases but also during their important growth phase, where a lot of promising ideas enterprises would otherwise remain, without their international expansion succeeding. 

The results of our long-term efforts are now clearly apparent. Several Fouriertransform portfolio companies have reached commercializable phases, manufacturing and selling their products on international markets. Arccore, Smart Eye, Max Truck and Pelagicore are a few examples of companies when we entered in early development phases, and that are now capturing international attention for their technology-leading products. We are maintaining our original plan, and focusing increasingly on accelerating our companies’ value growth now that they start to reach mature phases. In the second quarter, we made follow-on investments in 10 portfolio companies to support their continued expansion in Sweden and internationally.

Alelion Batteries’ new share issue for its June 21 IPO on Nasdaq First North was heavily oversubscribed. This company develops, manufactures and markets complete energy storage systems. This is our third IPO, and demonstrates that several of our portfolio companies have matured. Powercell was floated in December 2014 and SciBase in June 2015, both on Nasdaq First North.

On 15 June, the Swedish parliament approved a restructuring of government venture capital. In practice this means Fouriertransform and Inlandsinnovation will become part of a government owned venture capital group with a nationwide development enterprise as its parent company. Fouriertransform and Inlandsinnovation have been proposed to keep managing their existing investments for the present. The restructuring process is expected to be complete at around year-end 2017.