Luxempart S A : 2021 ra luxempart digital.pdf

TABLE OF CONTENT

WHAT WE STAND FOR ..................................................................................................... P.3

THE YEAR AT A GLANCE .................................................................................................. P.5

MESSAGE TO THE SHAREHOLDERS .............................................................................. P.7

ACTIVITY REPORT ............................................................................................................. P.9

PORTFOLIO ....................................................................................................................... P.29

STATEMENT OF GOVERNANCE ..................................................................................... P.71

CONSOLIDATED FINANCIAL STATEMENTS ............................................................. P.101

STATUTORY ANNUAL ACCOUNTS .............................................................................. P.157

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WHAT WE STAND FOR

LUXEMPART is a Luxembourg listed investment company with more than 25 years of existence and an estimated net asset value of € 2.2 billion as of end of 2021. The core team of 25 professional and support staff is based in Luxembourg and actively covers the target markets of France, Benelux, DACH region and Northern Italy.

Luxempart's investment strategy is built on two pillars:

FOR OUR SHAREHOLDERS

• • A resilient and diversified portfolio of growing companies

• • A steadily increasing dividend

• • A direct access to private equity investments managed by a seasoned team

• • An access to top-class private equity funds operating worldwide

• • The first-class governance of a listed company

FOR OUR BUSINESS PARTNERS

• • Direct Investments : minority and majority stakes in mid-sized companies in Continental Europe, either privately held (private equity) or listed

• • Investment Funds : indirect investment activity via third-party private equity funds in venture, growth capital and buy-outs, both in Europe and increasingly worldwide

Luxempart has stable and involved family shareholders with industrial background. Together with our family shareholders Luxempart promotes:

• • Tailor-made managerssolutionsforfamilybusinesses

• • An entrepreneurial and industrial mindset

  and

• • An active support on all major strategic decisions and capital to foster growth initiatives or to face hard times

• • A flexible investment horizon with a true long-term approach, aligned on Luxempart management remuneration scheme, based on long-term value creation

• • The ability to help national champions to become truly European and develop worldwide

DIRECT INVESTMENTS ARE REALISED ALONG THE FOLLOWING GUIDELINES

• • Investment amounts from € 25 to € 100 m (in equity)

• • Investment in privately held and listed companies

• • No exit pressure with investment horizons well beyond traditional private equity funds

• • Supportive, hands-on approach

• • No sector focus but affinity for financial services & insurance, telecommunication, security, healthcare and education

Luxempart shareholders and management believe in value creation through patient involvement and a shared vision with our partners. We foster an ambitious team spirit based on a truly European work environment and empowering team members early on.

Our track record over the last twenty-five years has been positive with a group IRR above 15% and with a regular dividend increase.

+27.4%

Increase in

Net Asset Value

+29.3%

Overall performance (dividend included)

New investments

Investment

€29.8m

Investment

FundsInvestment completed 5 add-on investments in 2021

Investment

€11.4m

€98.3m

new commitments to new managers

(82% outside Europe)Increase in our position

Stake >10%

Investment

€86.8m

Investment

€60.8m

Performance + ca. 42.9%Increase in our position

Stake >15%

Key financial indicators of portfolio companies grow in excess of NAV:

EBITDA +31.4% in 2021

Conservative valuation of portfolio at an average

10.3x EBITDA 2021

(Direct investments, excl. listed lines)

Sale of

Sales proceeds €117.6m ca. 2.6x invested capitalSales proceeds € 69.9m ca. 2x invested capital

Sale to Tonies SE

(formerly 468 SPAC) Stake of ca. 4% withheld

(direct and indirect)

Streamlining of portfolio well under way

8 exits in 2021, bringing total exits since December 2019 to 16 Portfolio down from 43 to 33 companies, with higher average valuation

MESSAGE TO OUR SHAREHOLDERS

Dear Shareholders,2021 has been a strong recovery year. Although the Covid-19 pandemic has persisted in 2021 generating several new waves of infection and vaccination rollouts took longer than expected, overall economic activity was strong. Supply chains were under great pressure and we saw inflationary trends driven by rising raw material, energy and logistics costs. The Covid-19 pandemic now seems under control, many governments around the world have lifted restrictions and leisure and business travel should take up again this year.

Luxempart's portfolio has performed very well in 2021. Net Asset Value ("NAV") has crossed for the first time the € 2bn mark reaching € 2,169m which represents an increase of 27.4% compared to 31 December 2020. We have generated an annual performance for our shareholders of 29.3% when reintegrating the dividend we paid in April 2021. This performance compares favourably to the MSCI Europe Mid Cap Net Return Index, which we consider to be our benchmark (+21.0%).

As announced last year, our objectives for the coming years are the streamlining of our Direct Investments portfolio and the concentration around larger lines as well as increasing our commitments in Investment Funds by diversifying our fund stakes outside of Europe and targeting larger exposure on venture capital and growth funds. In 2021, we have realised divestments of € 393m of which € 284m in Direct Investments and € 109m in our Investment Funds portfolios.

In Direct Investments, we took new positions for € 206m, of which a sizeable stake of € 87m in Evariste alongside its founder and € 34m in SNP and Technotrans, two companies in which we play an active role. In Investment Funds, we took new commitments of € 98 m1, of which 50% in venture capital & growth and 82% outside of Europe. We have thus overachieved our annual investments targets of € 150m in Direct Investments and € 75m commitments in Investment Funds.

Due to the sale of two of our largest lines, our listed portfolio has shrunk to € 206m or 9.5% of NAV and our cash position has reached a high of € 344m (including other highly liquid assets) or 15.9% of NAV. The number of portfolio lines has been reduced from 43 to 33 over the last two years and a few more exit processes are still on-going.

Our portfolio has benefitted from the economic recovery in 2021 and has shown strong operational performance. In Direct Investments, our portfolio companies have grown their key financial aggregates2 by 31% over the course of 2021. The average valuation multiple for the Direct Investment portfolio (excluding the listed lines) is about 10.3x EBITDA 2021, which we consider as reasonable given the current private equity market environment.

As announced last year, Jo Santino, member of the Group Executive Committee ("GEC"), will retire at this year's AGM. We would like to use this opportunity to thank him for his commitment and advice over the last 20 years. He was key in the successes of Indufin Capital Partners in Belgium and Bravo Capital Partners in Italy, where he is or has been directly involved. Furthermore, he was key in establishing our fruitful and long-term relationship with the outstanding investment team at Ekkio Capital. Jo has also sourced and managed several successful co-investments and has set the base for our new Investment Funds activity. In 2022, Alain Huberty, current CFO and member of the GEC will take over the leadership of the Investment Funds activity and will fully focus on its development. A new CFO and head of administration is currently being recruited as well as a fifth member of the GEC who will be reinforcing our Direct Investment activity in the DACH markets.

The Luxempart team has continued to grow in 2021 and reached 22 FTEs (compared to 15 at the end of 2020).

1/ Excluding € 67m taken with Armira and Bravo Capital Partners in the past and which were contractually formalised only in 2021. 2/ EBITDA, except for companies in the financial services sector, where the computation is based on operating result

2021 has also been an important year for us in the field of sustainability and ESG. We have conducted a thorough analysis of the existing frameworks and upcoming European legislation and have defined a new ESG strategy for Luxempart. In 2022, we will continue to fine-tune our new ESG framework and we will apply our selected criteria on our existing portfolio companies as well as our new investments. We believe that a solid ESG framework is an opportunity to deepen our involvement in our portfolio companies, to assist them on their path to increase sustainability as well as preserve and create value over the longer term. You will be able to follow this evolution in more detail in the Sustainability Report section which we intend to further enrich over the coming years.

We approach 2022 with caution. European economies recovered well in 2021, but inflationary pressure and geopolitical events as well as further stress in supply chains and rising energy prices lead us to think that there should be increased volatility in the capital markets going forward. Ukraine's recent invasion by Russia has woken up terrible memories of war in Europe and will most probably also have significant impacts on economic activity. Our portfolio companies have little direct exposure to Russia and Ukraine.

Luxempart has always been committed to the continuous development of its portfolio companies and focuses on value creation over the long term. The current environmentmight create opportunities to invest our cash in solid companies with good growth perspectives at reasonable valuations. Our strategy in Direct Investments to focus on fewer but larger lines and play a more active role than in the past will allow us, we believe, to better mitigate risks, to deepen our sector knowledge and take advantage of opportunities.

Based on the positive results of 2021, the Board of Directors proposes to shareholders the payment of a gross dividend of € 1.80 per share (€ 1.53 net) compared to € 1.60 gross per share (€ 1.36 net) in 2021, an increase of 12.5% over prior year. As a reminder, Luxempart has maintained since 1992 a constant dividend policy, targeting an annual growth of about 10%.

We would like to thank all the members of our Board of Directors for their valuable support and the Luxempart team for their immense commitment and team spirit. The good performance is a result of many years of hard work and thoughtful decision making in the past.

We also thank you for your continuing support and loyalty. Our focus will remain on creating value in a sustainable manner for all our stakeholders.

François Tesch	John Penning	Olaf Kordes
Executive Chairman	Managing Director	Managing Director