PMV 'Race Report' 2016

RACE REPORT Tracking PMV’s trail in 2016

INTERVIEWS

6

PROLOGUE

8

CORPORATE GOVERNANCE

14

Fortino 20 Noordvlees Van Gool 28 Biobest 36 LF Brands 67 FNG 87 Boekenhuis Theoria 104 PlayPass 109 SLIM Turnhout 115 Indigo Diabetes 120 eTheRNA immunotherapies 124

RACE SUMMARY 2

42

INSTRUMENTS

››Capital ››Guarantees ››Loans

FIGURES & CHARTS

60

COMPANY PROFILES

››Start-ups ››Growth ››Internationalisation ››Takeovers

92

SECTORS

››Sustainable chemicals ››Energy ››Heritage ››FinTech ››Regional development ››Life sciences and health care ››Property and infrastructure

132

FINANCIAL REPORT FOR PMV NV

138

REPORT FROM THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING

EDITORIALS Serge de Gheldere 31 Marion Debruyne 40 Gunther Broucke 69 Caroline Ven 78 Chris Dauw 89 Jos Delbeke 100 Bart De Smet 130

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THE FLANDRIEN Flandriens push hard to reach the finish line. They are an example to entrepreneurs in Flanders, who achieve their goals through seriously hard work. However, neither racing cyclists nor entrepreneurs can win all on their own. Even the fastest among them still need companions to shelter them from the wind and start off the sprint. If new, promising individuals want to head up a strong formation, they will find new strength alongside the PMV team. Entrepreneurs with a good plan and a talented team can bring their financing up to the next level.

PROLOGUE In 2016 PMV has provided investment totalling around 238.1 million euros for the Flemish economy. So 2016 has been an excellent year for the PMV team, and when you look at the net profit as well, it is in fact the best ever.

Total capital under management increased to 1.181 billion euros. Operating income rose to 82.2 million euros and the PMV group achieved capital gains of 29.3 million euros, while capital losses fell from 5.3 million euros in 2015 to 1.5 million euros. All this has resulted in a very respectable net profit. The net profit of 37.7 million euros means that 2016 has been a great success.

Remarkable results like these can only be achieved when our one hundred and twenty-six financing experts push themselves hard every day and give their very best. In 2017 our team will once again be ready to help entrepreneurs with a good plan and a talented team to bring their financing up to the next level.

Even the best racers need companions to shelter them from the wind and start off the sprint, and they will find PMV to be the team mate of their dreams, offering capital, loans and guarantees. New, promising figures who want to head

up a strong formation will find new strength alongside the PMV/z team. With the support of PMV they will be able to get other providers of finance across the finish line as well.

PMV offers the right support even for more experienced professional racers. That is because PMV does not replace the market, aiming instead to boost the whole peloton of entrepreneurs and prepare them for professional racing.

When their moment of glory finally comes, we are proud to help them make the transition so that they can compete at the highest level. We have done this in the past year with our exits from eSaturnus, Multiplicom, Punch Powertrain and VAC De Meander.

Life has not always been easy for new entrants in the race.

There used to be more financing products at PMV than available jerseys in the Tour de France. In the end entrepreneurs were unable to work out which kit was going to be right for them. In 2016 we therefore made a strong start on the process of streamlining the financing we provide.

We all race as a team, with a new, streamlined, individually tailored approach and a single point of contact. The focus is on our customers, and we aim to support them as efficiently

Prologue

6

as possible in ways that actually meet their needs. In 2017 we are aiming to keep up this momentum as we continue to focus on customer friendliness and transparency.

A large part of the race is already behind us. So we are itching to get back on the road with the same enthusiasm in 2017.

This is clear from the new contract that PMV signed with the Flemish Region in May 2017. This collaboration agreement is intended to lead to a simplified, more efficient service for entrepreneurs in Flanders, improvements in corporate governance and a clear division of roles between the Flemish Government, the Board of Directors of the PMV group and its management.

PMV will be focusing particularly on the economic sectors and clusters that are important for the Flemish economy and have major potential for the future. It is also looking carefully at the financing problems that are specific to individual stages in the life cycle of a business, and the areas where major financing needs are not yet being met.

Throughout history, Flanders has often taken a leading role thanks to hard work and entrepreneurship. We are continuing with this trend. I want to ask you all to help communicate this enthusiasm as ambassadors of PMV.

PMV never rides solo – on the road we are always shoulder to shoulder with people like you. I want to thank you very sincerely for working as a team. My hope is that you will breeze across the finish line and sprint from one triumph to the next!

KOEN KENNIS

We all race as a team, with our new, streamlined, individually tailored approach and a single point of contact.

Chairman 30 June 2017

Prologue

7

CORPORATE GOVERNANCE In 2016 PMV launched the PMV/z brand to bring together its standard financing solutions for start-ups and self-employed entrepreneurs. PMV/z offers them four instruments that can be combined in many different ways to facilitate the financing of promising projects. Specifically, these are SME cofinancing, the Startup Loan plus, the Guarantee Scheme and the Win-Win loan. PMV/z now also has its own website: www.pmvz.eu.

When the need for financing increases, PMV delivers a custom solution. It consults with the entrepreneur to put together a mixed financing solution comprising capital, loans and guarantees or a combination of these.

PMV will always investigate whether collaboration with other private parties is possible.

BOARD OF DIRECTORS

GROUP MANAGEMENT COMMITTEE

››Koen Kennis,

››Michel Casselman,

››Christine Claus

››Werner Decrem,

General Manager

Chairman

Group Manager Real Estate and Infrastructure

››Greta D’hondt

››Chris De Jonghe,

››Jannie Haek

Group Manager Venture Capital

››Geert Diericx,

››Jeroen Overmeer

Group Manager Finance

››Rosette S’Jegers

››Filip Lacquet,

››Raf Suys

Group Manager Corporate Financing

››Sas van Rouveroij van Nieuwaal ››Patrick Verjans

Corporate governance

8

››Elke Van de Walle,

Group Manager Legal Affairs

The principles of good governance are very important to PMV. The company describes these in its Corporate Governance Charter. It aims to establish the transparency and objectivity of the governance structure and decision-making processes within the business. It demonstrates how PMV puts the principles of good governance into practice.

ATTENDANCE AND REMUNERATION IN RELATION TO THE APPOINTMENTS AND REMUNERATION COMMITTEE IN 2016

The members of the Appointments and Remuneration Committee receive no fixed remuneration but they do receive 620 euros gross for the members of the Board of Directors and 750 euros gross for the external members.

PMV also seeks to act in accordance with the highest ethical standards in all its activities.

In this context it has found it necessary to draw up a code not only for its employees but also for its Directors, to guide their conduct and the specific transactions that are made.

Director

Including compensation for Directors’ attendance at the Appointments and Remuneration Committee, total Directors’ remuneration in 2016 amounted to 145,510 euros. The average dossier produced in preparation for a Board of Directors meeting comprises ten agenda items and runs to one hundred and sixty-three pages. The Directors of PMV nv also sit on the Board of Directors of PMV re Vinci, and no additional remuneration is provided for this.

ATTENDANCE AND REMUNERATION RELATING TO THE BOARD OF DIRECTORS IN 2016

Attendance

Fixed remuneration

Attendance fee

Koen Kennis (vz)

10/11

12,396 euros

12,400 euros

Christine Claus

10/11

6,198 euros

6,200 euros

Greta D’hondt

11/11

6,198 euros

0 euros

2,250 euros

Greta D’hondt

5/5

0 euros

3,100 euros

Rosette S’Jegers

5/5

0 euros

3,100 euros

Luc Vandewalle

5/5

0 euros

3,750 euros

Clair Ysebaert, Honorary Chairman PMV

5/5

0 euros

3,750 euros

The members of the Audit Committee receive no fixed remuneration but they do receive 620 euros gross per meeting in variable remuneration.

Christine Claus

4/4

0 euros

2,480 euros

6,820 euros

Greta D’hondt

4/4

0 euros

2,480 euros

Rosette S’Jegers

3/4

0 euros

1,860 euros

Jeroen Overmeer

10/11

6,198 euros

6,200 euros

Raf Suys

10/11

6,198 euros

6,200 euros

9/11

6,198 euros

5,580 euros

Patrick Verjans

3/5

Attendance fee

4,340 euros

Sas Van Rouveroij

Herman De Bode

Fixed remuneration

6,198 euros

Rosette S’Jegers

Attendance fee

Attendance

7/11

Jannie Haek

Fixed remuneration

ATTENDANCE AND REMUNERATION IN RELATION TO THE AUDIT COMMITTEE IN 2016

The Directors of PMV nv receive a fixed remuneration of 6,198 euros gross per annum (double for the Chairman) and 620 euros gross per meeting in variable remuneration (double for the Chairman).

Director

Attendance

11/11

6,198 euros

6,820 euros

10/11

6,198 euros

6,200 euros

Director

Corporate governance

9

on offer

FINANCING FOR ENTREPRENEURS

CAPITAL

LOANS

GUARANTEES

Whether capital is needed for growth or to strengthen the balance sheet, it is vitally important to entrepreneurs. Your choice will be made not only based on your need for funds, but also on the phase in the life cycle of your business. New start-ups and young growth companies often have little cashflow so the obvious solution is to seek additional share capital. An additional injection of capital may, however, also be needed at a later stage. One example is in the case of a takeover.

PMV business loans are tailored financing solutions for SMEs and large companies. They may be subordinated (‘mezzanine financing’) or non-subordinated. PMV is always able to adopt an approach that complements what is provided by other financiers and it can form the cornerstone of the financing solution.

Guarantees are useful financial instruments and PMV often uses them for companies of various types and of all sizes.

Certainly when it comes to start-up companies, which are often unable to offer any security themselves, a guarantee can offer the ultimate boost towards getting them the bank financing they so badly need. Large companies can also benefit from this powerful lever effect. For these larger applications PMV can also provide help in putting a case together and consulting with the banks.

PMV/z also offers a number of solutions for start-ups and growth companies requiring up to 350,000 euros.

PMV is different from many other capital providers. It is an active but patient investor, has no predetermined exit date and can therefore work with a company over a number of years to build the future.

On offer

10

on offer

FINANCING FOR INFRASTRUCTURE, PROPERTY AND ENERGY

ENERGY

INFRASTRUCTURE

HERITAGE BUILDINGS

REGIONAL DEVELOPMENT

PMV cofinances the responses to our major energy challenges, thereby making Flanders more energy independent. This is done through more alternative power generation and through energy efficiency and innovation.

PMV collaborates with public and private partners on infrastructure projects which are important for the well-being and welfare of people in Flanders. These include road infrastructure, school buildings, sports infrastructure and public buildings. Optimising the design and structure of projects and correctly allocating risks are often a challenge for those involved, in both public and private sectors.

The Vlaamse Erfgoedkluis (Flemish Heritage Vault) – a collaboration between PMV and Herita vzw – plays an active role in safeguarding architectural heritage in Flanders for future generations and provides support to others with similar aims.

Our demographics, the transition taking place in our economy, our mobility and the high social costs of greenfield developments mean that Flanders has to take an integrated, regionally-oriented approach to complex projects.

PMV starts from the needs that exist in the market and arrives at a regionally oriented approach that integrates multiple different residential and mobility solutions.

On offer

11

PMV PMV is a do-and-dare company which is shaping the future of the Flemish economy: PMV “does” as an adviser and “dares” as an investor. PMV finances promising businesses from start-up and through their growth and internationalisation and carries out projects alongside and on behalf of the government that make important contributions towards the welfare and well-being of people in Flanders.

126 Employees

37

MILLIONS OF EUROS Consolidated net profit

Key figures

12

2016

KEY FIGURES Consolidated key figures for the PMV group on 31/12/2016

594

165

1.2

MILLIONS OF EUROS

MILLIONS OF EUROS

BILLIONS OF EUROS

Invested capital

Total investment in 2016 (loans, capital and funds)

Assets under management

Key figures

13

INSTRUMENTS 14

Entrepreneurship is vital for the future of Flanders.

PMV is helping to shape it with financing formulas to suit every promising entrepreneurial project, from the very beginning up to and including the growth and internationalisation stages.

Financing for entrepreneurs can, however, take different forms. For example, if you are a start-up facing a long development process during which you will not immediately be generating income, the most beneficial approach for you would be for PMV to acquire a share in your capital.

If you are looking to take over your small family business with an established customer base, a loan will probably be a better solution for you. A loan, a capital investment or a combination of these – we can help you to determine the best approach, based on your specific project.

PMV is also able to bring other financiers on board by offering guarantees for the financing they provide.

That reduces the risk for them and increases the financial opportunities for you. Finally, PMV also takes up minority interests in private funds which in turn invest in promising SMEs.

RACE SUMMARY Instruments

14

INSTRUMENTS

››Capital ››Guarantees ››Loans

Instruments

15

CAPITAL DIRECT INVESTMENTS

Whether the aim is to grow your capital or strengthen your balance sheet, capital is vitally important for you as an entrepreneur. Your choice will be made not only based on your need for funds, but also on the phase in the life cycle of your business. As a start-up or new growth company you will usually not yet have enough cashflow. At that point attracting additional share capital is the obvious solution. An additional injection of capital may, however, also be needed at a later stage. One example is in the case of a takeover.

PMV is different from other capital providers. It is an active but patient investor, has no predetermined exit date and can therefore work with you over a number of years to build the future. It will ensure that your financing round is structured correctly to take into account both your own needs and those of the other investors.

Instruments • Capital

16

In every investment decision, the impact of your business on the Flemish economy, the strength of the business plan, and the quality, vision and dedication of the management team are the most important criteria for PMV. That is because strong teams are what make your business a success.

We want to see a realistic business plan built on a sound rationale and we will evaluate and test it comprehensively to ascertain its feasibility. We are looking at factors, including market potential, where you are standing out from the competition, the commercial plan, a realistic estimate of costs, financial needs and exit potential.

Like all capital providers, PMV invests in order to create added value by selling its participation at some point in the future. The added value for PMV could be a financial capital gain or added value for society. In that way PMV contributes to the prosperity and well-being of people in Flanders.

LUXEXCEL

NEWTEC

Luxexcel, which produces 3D printed lenses and optical components, obtained ten million dollars in 2017 through a second round of capital raising to support its continuing growth. Luxexcel lenses are not built up in layers as is usually done in 3D printing.

Newtec was founded in 1985 by two engineers with a vision: Dirk Breynaert and Jean-Marie Maes. Their vision has led to the creation of a pioneering business in the field of satellite communications. Its specialisation in research and development has led to an impressive range of innovations, partnerships and to standardisation and recognition from the industry.

Luxexcel has developed an alternative method in which the plastic is applied drop by drop and then hardened by irradiation with ultraviolet. The added advantage of this procedure is that additional processing is no longer required. PMV was involved in the company’s first capital raising round in 2015, and it is now participating again, together with the existing shareholders and the Californian company KLA-Tenor Corporation.

Newtec plays a crucial role in the global satellite communications sector. Thanks to Newtec technology more than two billion people all over the world are able to watch television every day. Broadcasters, satellite operators and telecommunications companies all over the world use

Newtec hardware to operate their television broadcasting chains. Technological innovation is the driving force behind Newtec’s rapid growth.

With more than three hundred employees worldwide and its own sites in Belgium, Germany, France, the United States, Brazil, Singapore, Dubai and China, Newtec is an example of a Flemish international success.

PMV has contributed towards Newtec’s growth and development since 2012 through a risk-bearing investment loan for 16 million euros which was part of a research and development project totalling more than 50 million euros, a major investment which is now clearly beginning to bear fruit.

During the period from 2014 to 2016 Newtec grew very rapidly, with 62 % growth in turnover to 72 million euros.

Together with Smartfin Capital, PMV is now taking the next step to support Newtec’s continuing growth. The expected worldwide growth of the satellite communications industry and the introduction of new products and applications means that Newtec has some ambitious growth expectations for the next few years.

SmartFin Capital and PMV hold participations of 26 % each in Newtec.

Instruments • Capital

17

INDIRECT INVESTMENTS

QBIC

There is a lot involved in starting up a business. This is because new start-ups and fast-growing companies do not generate enough cashflow to finance their own creation and growth. Therefore, one option is to attract outside capital from risk capital providers.

In 2012, to promote entrepreneurship within the academic world, PMV formed Qbic under the ARKimedes scheme together with the Flemish knowledge institutions and a number of private investors. This inter-university seed capital and risk capital fund invests in spin-offs from Antwerp, Brussels and Ghent Universities, their associated colleges, university hospitals and also from VITO. The first Qbic fund has capital under management totalling 40.7 million euros and it has financed eighteen high-quality university spin-offs.

The experts at PMV are therefore very keen to guide start-ups wanting to develop and/or market a high-impact technology to help them find the right mix of financing together with other private partners. Partly for this reason it has set up ARKimedes, with an arrangement that for every euro PMV invests in a private venture capital fund through the ARKimedes scheme, at least one euro also has to be raised in private funding. It is these risk capital funds that ultimately invest in start-ups and SMEs. They are managed by private managers. This allows PMV to make use of the risk capital available in Flanders to bridge the so-called ‘first equity gap’. However, PMV is not only interested in financing start-ups in high-technology sectors but it also has an interest in financing at a later stage in the life cycle of an SME, including scale-ups.

After less than five years they had already created nearly three hundred jobs in all, while building an international presence and reputation. The quality of this portfolio has also led to interest among international players, resulting in significant foreign investment. On 17 May 2016 the Japanese market leader in drone management and system integration Terra Drone, together with PMV and Qbic, initiated the second round of financing for the VITO start-up Unifly. As a direct result of this investment, Unifly will have grown to more than forty employees by the end of 2018. The successful sale of Multiplicom, a spin-off from Antwerp University and the VIB, to American company Agilent Technologies, also indicates the quality of the Qbic portfolio.

A study carried out by Professor Sophie Manigart at Vlerick Management School has already shown that the ARKimedes scheme is acting as a powerful lever in bringing in additional private financing for start-ups and SMEs. Every euro provided by ARKimedes resulted in no less than 7.3 euros in total external financing, including 4.4 euros in share capital. The ARKimedes scheme also has a positive impact on the creation of new economic activities in Flanders and is consequently driving future employment opportunities.

Thanks to this success, those behind the original initiative, now joined by a number of new private investors, set up a second fund, Qbic II, in late 2016. Its initial capital was 40.4 million euros. PMV and its federal counterpart FPIM were again the key investors in this second Qbic fund, providing 10 million euros each. BNP Paribas Fortis, KBC and ING also once again confirmed their confidence in Qbic’s

Instruments • Capital

18

inter-university spin-off model. A large number of private investors are also supporting this initiative, both financially and with their business know-how.

VECTIS Vectis, which is based in Aalter, is one example of a fund that invests in SMEs at a later stage in their life cycle, using ARKimedes resources and other funding. It is an independent investment group that takes up participations in promising Flemish businesses with a strong, ambitious management.

Vectis has already achieved some very successful sales. In early 2016 the ARKimedes Fund II received exit payments from the sale of Drukkerij Bulckens in Herenthout to its own management and Fin.co. Drukkerij Bulckens is one of the key players in the online printing market in Belgium, with turnover in 2016 of about 15.2 million euros. By using software it has developed itself, the company is able to use its online platform ‘ZwartopWit.be’ to process a large number of small print orders efficiently, maintaining low prices and short delivery times. Vectis had owned a participation in Drukkerij Bulckens since 2011, and thanks to its support in the printer’s ongoing expansion, it has created a lot of added value. For example, Vectis collaborated actively in the development of the management structure and refinement of the reporting systems. Using the extra capital the printer also made some large investments in its machine fleet and enlarged its storage and production areas. This also had a positive effect on jobs. By the end of 2016 Drukkerij Bulckens was already employing seventy-seven people.

These are just a selection of the many investment funds and businesses that have been and still are able to realise their ambitious plans thanks to capital investments from PMV, both under the ARKimedes scheme and through other arrangements.

According to Professor Manigart the ARKimedes scheme has made a major contribution to entrepreneurship in Flanders. Ambitious, serial entrepreneurs have set up and developed new and promising companies such as Cartagenia, Clear2Pay, CMOSIS and NG Data. A number of successful entrepreneurs have now also become active financiers or coaches themselves and they are in turn supporting new young entrepreneurs or investing in risk capital funds. Good examples are Clear2Pay – with its founders Michel Akkermans (Volta Ventures) and Jürgen Ingels (SmartFin Capital) – or Davy Kestens (Spark Central), while Pieterjan Bouten and Louis Jonckheere (Showpad) are now helping ambitious Flemish start-ups to find their way around Silicon Valley.

To be able to make risk capital investments not only in Flemish start-ups but also in scale-ups (the so-called ‘second equity gap’), the Flemish Government decided in July 2016 to increase the capital allocated to the second ARKimedes fund by a further 50 million euros to 210 million euros. That means that these scale-ups can be financed and developed internationally over a longer period of time, which will be beneficial in terms of both financial returns and impacts on society. PMV has invested a proportion of these new resources in Fortino Capital, which finances scale-ups and supports them as they scale up their activities internationally.

Instruments • Capital

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interview

ON THE SOFA WITH DUCO SICKINGHE “A man who knows his mind” is an apt phrase to describe Duco Sickinghe from venture capital provider Fortino. Friendly, even amiable, modest and measured in his choice of words, with a carefully nuanced approach. It suits him. After a long career as a top manager working for a number of companies including Telenet, he is now willing to share his insights with young and not so young entrepreneurs who knock at Fortino’s door looking for capital.

No matter how gently Duco Sickinghe expresses his opinion, however, it still comes with authority. His views are worthy of careful consideration, since it is obvious that they have been carefully thought through, are born of experience and have been tried and tested against the realities of business in Belgium, the Netherlands and beyond.

We talked about PMV, smart money, the wheat and the chaff and how much the ideal investor should be like your mother-in-law.

THE ROLE OF PMV

Like other venture capitalists, Fortino plays an important role in the economy of Flanders and Belgium as a whole.

It works in close collaboration with PMV, which provided extra capital for Fortino when the company was looking to find extra resources for its investment fund in 2016. Thanks to PMV Fortino has increased its investable capital to just under 77 million euros.

Duco Sickinghe is full of praise for his investment partners at PMV. “PMV has a wide-ranging team of investment professionals and also experts in many different industries and fields. They lend money to companies and provide guarantees, working not only directly but also indirectly, through collaboration with private funds like Fortino in a kind of dual approach. This creates a useful reinforcement effect and ends up multiplying the resources that are made available to Flemish entrepreneurs. If these players can help to take the billions in savings accounts and pension and other funds and put them to work – turn them into ‘smart money’ – we can get our economy growing and achieve success throughout the world.”

MORE THAN MONEY

DUCO SICKINGHE Managing Partner Fortino

Flemish entrepreneurs are certainly benefiting from the work of PMV and partners like Fortino. They need

Instruments • Capital

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resources to let their businesses grow, often in an international context. “But entrepreneurs need more than just money”, says Duco Sickinghe. “They are looking for people to stand alongside them and offer advice. Particularly those who really inspire a business, the CEO and his most trusted team, find it very useful to have a sounding-board now and again. Looking for the right partner for this process is one of the most important decisions. The question ‘who am I going to work with’ should actually be seen as more important than ‘where can I find money’. Entrepreneurs should ask themselves about the expertise they could receive along with the money that is invested. Investors like Fortino will come and sit on the sofa with you and enter into a real dialogue. We do have a presence, not at the practical or everyday level, but at the top level in the business where the future is being mapped out and crucial decisions are being taken. We don’t make the decisions, but we do hold up a mirror for the business leaders. It is a real human relationship, and it needs to click. I have to admit that it is always at the times when things are difficult at home that your mother-in-law comes to visit. Who do you want your mother-in-law to be? Think carefully about that before you agree to work with an investor.”

NOT AN AMERICAN MODEL

Duco Sickinghe and his investment managers describe their role in terms of involvement. “You have to help the CEO to get a complete picture of his world, without distortion and with no blind spots. That is our most important task. Searching for the right information together will very probably result in the right strategic choices.” On the basis of that vision Fortino has a presence with its businesses.

“When it helps. Ideally not on the traditional Board of Directors, but preferably for a good, open chat. Our approach is intensive and personal, completely different from that of many of our American colleagues, who come

from a large fund, find a hundred businesses or more and throw 2 to 3 million at each one, thinking that a few of them will do extremely well. At Fortino many of the team members have been managers themselves, and as a result we are now very well placed to support other managers.

You could see it like a football team. The strength of your players and the team effect are very important aspects. It is just the same in a business. Anyone can buy a football, but it is all about how the team plays the ball. What is your commitment and your personal motivation? Personal drive is one thing I do always look for in a business. Who is the owner of a specific challenge or opportunity? Who is really going to get behind something to make it happen?

That is why things like leadership are so important. That is one strength you definitely need to have in a team if you are going to make a business grow. Perhaps a business does not need to be able to sell things and make products all that well; it just has to recruit good people to truly succeed.”

INTUITION

The leading figure at Fortino has no doubt that adequate seed capital can be found to help good businesses – or promising entrepreneurs – on their way. People who cannot get start-up capital should be brave enough to ask themselves some hard questions. “I think money will always be available for the right people and the right projects. The question is, when projects are less good, whether you are really doing them a service by giving them financing too easily. The chaff has to be separated from the wheat at the beginning; that is in everybody’s best interests. Although a single refusal, for example from Fortino, does not by itself mean that a project is doomed to failure. First of all our capacity to make investments is definitely not unlimited, so we are forced to be selective. What is more, entrepreneurs can often forget too easily that there is a good deal of subjectivity about it on our side. Perhaps we missed

Instruments • Capital

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something. It does happen. We have chosen not to invest in some companies that have later turned out to be successful.

So we are cautious when it comes to rejecting candidates.”

In any case, every entrepreneur should see an encounter with potential shareholders primarily as a valuable invitation to take a good look at himself or herself. “Giving feedback is absolutely key to the relationship between Fortino and its businesses. How do I do it in practice? For example, if a business wants to stand out from the competition through a differentiated offering, I say: we are going to take this business plan, present it to the competition and see whether they can easily copy your offering. That forces the entrepreneur to face a crucial question: do we have something unique in our business, something that we can maintain?”

Does a person with Duco Sickinghe’s track record intuitively feel whether or not a team of entrepreneurs has that uniqueness? “Often I don’t have to dig around for it. It usually becomes clear very quickly. The simpler an idea is, the more strongly it comes across. Jeroen De Wit, the man behind Teamleader, came to see us and he could summarise in about thirty seconds what made his business so special.

At that time he had not completely worked it out and put it down on paper. But we were able to help with that. So the decision to invest was made quickly – it was very obvious that this was a win-win situation.”

FASCINATING

Fortino’s focus is on follow-up investments. “As an investor we look for players who are already beginning to gain traction and now want to grow to the next level – people often talk about upscaling, to use the jargon. These organisations usually need around 1 to 2 million, with outliers in some cases up to 5 million euros. In Flanders and Belgium, just

as in the Netherlands, that is a difficult stage which I call the traditional venture capital stage. Fortino specialises in precisely that.”

EXITS

Even if you have no plans to wind up your business, it is advisable to have an exit strategy ready just in case. That does not mean you should be anticipating the failure of all your dreams, but it does mean that you need to make robust plans so that you are ready for a time when the circumstances are right or when you want to go and do something else yourself.

There are more changes ahead for Fortino in the near future. “In addition to our first fund focusing on early growth, we now want to start a second one that will emphasise the continuing growth phase for larger businesses. We have more and more businesses in the Benelux region needing larger investments in the 5 to 25 million euros range. That is a great segment for us, because the expertise of the Fortino team becomes even more relevant here.

With smaller businesses, their success is still mostly about whether or not a product or service will catch on. For larger companies it is more about knowledge and skill in the area of management.”

In an exit situation like this the shareholders in a business sell their investment in order to make a financial return.

This type of exit strategy could involve a market flotation, the private sale of a participation to another party, or recapitalisation of the business.

Even risk capital funds taking up an interest in a business will only usually do so if the business plan includes a clear exit strategy. This is of course also true for an investment company like PMV, even though it does not aim for quick profits but prefers a longer term investment horizon with an impact on the Flemish economy.

DIGITAL REVOLUTION: THE CLOUD

Fortino focuses on two types of companies: technology companies that provide services from the cloud and traditional companies that are ready to renew their processes.

Duco Sickinghe is a huge fan of the opportunities that software in the cloud can offer for the latter group. “It is simply amazing, the new opportunities that are emerging for organisations that are willing to renew their systems. If you buy software from the cloud, for example to digitalise your sales processes, you are immediately importing the knowledge and skills of a very large customer base, and you can do it much more cheaply than you could in the past, when businesses had software tailored for them. You also get updates automatically, the inherent level of innovation is high and it remains constant. I see this as a major revolution: even traditional companies that make tangible products are now getting access to software that is teaching them to operate in a different way.”

The more successful our companies are, the more attractive the financial and societal added value for PMV and Flanders.

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ESATURNUS We do not often think about it, but surgeons (and nurses) often make decisions in the operating theatre that can make the difference between life and death. It is therefore absolutely vital for medical staff to be able to act on the basis of the most accurate information.

The technology offered by eSATURNUS provides a solution by bringing together video images and other medical information on a single network platform, allowing medical staff to manage this information in real time. That brings the smart digital operating theatre within reach.

The company came into being in 2007 as a collaboration between engineers and surgeons from the universities of Leuven and Oxford. Partly thanks to an investment

by PMV, it has made breakthroughs abroad and is now working in more than ten countries, both within and outside Europe.

In August 2016 Sony Europe Ltd. took over eSATURNUS. eSATURNUS became part of the Medical Solutions department within Sony and as a result the company is now completely ready to make a breakthrough worldwide, with high-technology applications that make a difference for patients.

MULTIPLICOM In late December 2016, quoted company Agilent Technologies Inc. announced that it had concluded a final agreement for the takeover of Multiplicom. Agilent finally took over Multiplicom in January 2017 for about 68 million euros in cash.

Multiplicom was founded in 2011 as a spin-off from the University of Antwerp and VIB. The first investors were Gimv, PMV, Qbic, RMM, the University of Antwerp and VIB. From its headquarters in Niel, Multiplicom develops, produces and markets diagnostic tests in kit form that make personalised medicine possible. Clinical laboratories can use these tests to screen for the DNA variants associated with a genetic predisposition or disorder. The tests also make it possible to guide cancer treatments and screen for congenital abnormalities at an early stage in pregnancy.

The American buyer Agilent, is also a leader in the areas of life sciences, diagnostics and chemical applications. The company works with customers in more than a hundred countries and provides instruments, software, services and consumables covering the entire laboratory workflow.

During the 2016 financial year Agilent achieved turnover of 4.2 billion dollars and it employs about twelve thousand five hundred people worldwide. Multiplicom was employing about ninety people, and all of them have also been offered jobs at Agilent.

PUNCH POWERTRAIN In March 2016 the shareholders of Punch Powertrain, including PMV, concluded an exclusive agreement with the Chinese YinYi group to acquire all the shares in the Limburg company, valuing the business at a huge 1 billion euros.

Punch Powertrain is a manufacturer of transmission systems and hybrid systems for cars, with its headquarters in Sint-Truiden. Since Gimv, LRM, Capricorn Venture

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Partners and the Flemish investment company PMV invested in Punch Powertrain in 2009/2010, its turnover has grown fivefold to more than 500 million euros. At the same time the number of employees has increased from one hundred and eighty to more than one thousand two hundred full-time equivalents, of which six hundred in Sint-Truiden (and three hundred in R&D). The customer base has also been hugely expanded and the product range has been extended.

Today the company’s full order book is a sign of the huge number of vehicles that will be built with Punch Powertrain transmission systems in the coming years, ensuring this company’s even greater success in the future.

Punch Powertrain now wants to innovate further and it is currently expanding its production capacity, both in China and in Sint-Truiden.

The YinYi Group, with annual turnover of 7.6 billion euros in 2014, is a conglomerate of businesses working in a wide range of sectors, including mining, manufacturing car parts and real estate development. This makes YinYi one of China’s top 500 companies.

The sale did not affect the company’s strong bond with the Limburg region or the employees in Sint-Truiden. On the contrary, Punch is recruiting. In 2016 two hundred and fifty more employees were recruited to absorb the company’s growth. There are four hundred and fifty new vacancies for 2017.

VAC DE MEANDER In 2016 PMV made a successful exit from the De Meander real estate project – which has since been renamed the Herman Teirlinck Building, at a ceremony in the presence of his descendants.

This new development is intended to accommodate Flemish civil servants on the Thurn & Taxis site, and two years earlier PMV had awarded the contract to build it to the Extensa Group. The 2,600 Flemish civil servants who are still housed in the Boudewijn and Phoenix buildings will be moving to this new, sustainable building, which is better suited to the current needs of the Flemish administration. What is more, the rent will be lower than it is at present, saving no less than 4 million euros.

As early as April 2015 PMV and Extensa concluded an agreement on this co-investment. Extensa formed the limited company nv VAC De Meander in order to do this.

The company acquired the rights to the land on which the Herman Teirlinck building was finally to be erected, with floor area of around 48,000 m2. PMV co-financed the purchase of the land and in September of the same year it also took up a participation in the nv VAC De Meander. As a result PMV acquired 49 % of the shares. The construction work itself is being financed by a syndicate of banks.

Extensa and PMV therefore decided not to wait for final delivery of the building and instead appointed international real estate broker Cushman & Wakefield to sell it before the building work was completed. More than a hundred potential investors both in Belgium and abroad were considered and exclusive talks took place with a Korean fund for several months. When the transaction was 99 % complete, the terrorist attacks in Brussels and Zaventem put a permanent spanner in the works. The deal collapsed.

Extensa and PMV were therefore forced to restart the procedure, this time with a well-known European party, Basler Versicherung (Baloise Belgium, Basler Leben, Basler Lebensversicherung AG and Baloise Luxembourg). This Swiss insurer was already well established in Belgium. The deal was done by the end of 2016 and a double transaction was completed. In 2017, after the building is delivered, Baloise will take over the project company VAC De Meander. Meanwhile PMV has transferred its 49 % share holding to fellow shareholder Extensa in 2016.

This fruitful collaboration ultimately resulted in excellent gains for both parties. PMV is therefore very grateful to Extensa and Baloise for maintaining a constructive attitude at all times during the negotiations.

Due to the low interest rates and the scarcity of real estate property in good locations with long-term leases, there was considerable interest from investors both in Belgium and abroad in taking over VAC De Meander. Some steep prices were quoted.

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GUARANTEES As an entrepreneur, when you need financing for your business you usually approach the bank. You may submit a strong business case but it can still happen that the bank does not offer you a loan. This is because although it may believe in your project, it may feel that there is a lack of security.

In that case PMV can provide a suitable solution. Making a guarantee available lowers the risk for your bank and improves your creditworthiness.

A guarantee for up to 1.5 million euros can cover up to 75 % of the underlying credit for a very attractive guarantee premium. Ask your bank or leasing company about this, because the application will be made through them.

PMV collaborates with eighteen financial institutions. This gives you access to more than a thousand bank branches in Flanders.

Guarantees in excess of 1.5 million euros can cover up to 80 % of the underlying loan, with a premium in accordance with market rates. All forms of credit are eligible. Instead of contacting your bank, you can also contact PMV directly.

For these large loans PMV can also provide support in structuring your case and consulting with the banks.

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BALLS & GLORY Seeing the future by understanding the past, and integrating this in a clear food concept that you think will conquer the world? That may sound ambitious, but it is almost self-evident when it comes from Wim Ballieu. Like most things that appear self-evident, Balls & Glory is the fruit of falling down and struggling back up again a number of times. Above all, it is the result of Wim returning to his roots. We talked to him about it.

In 2012 Balls & Glory started up as a pop-up lunch restaurant in Ghent with hand-rolled large meatballs containing the best seasonal ingredients. Today there are already six restaurants, with locations including Antwerp, Leuven, Eindhoven and two in Brussels. In 2025 the aim is to reach the fifty mark, including one in the Big Apple.

Within the Balls & Glory concept of ‘slow food, fast served’ everything is linked to this one vision, as Wim Ballieu calls it: “If one of my partners comes to me with a proposal or a new idea, I always ask myself: will this help us to achieve our goal by 2025?” This statement is typical of him: firmly focused on his goal but always well thought through. He is also brave enough to take a public stand, even for example when it means talking about a subject that is sensitive in the hotel, restaurant and catering industry like the reluctance to introduce registered sales.

It was his parents who sowed the seed for what has now become rather a sizeable plant. They are also the golden thread running right through his career, even though he was not always conscious of it: “When I was about 19 I thought they were very old-fashioned, but when I look back at them now, I have to admit that they were actually very Balls & Glory: “We have the balls, you make the glory”

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progressive. His father, for example, went to Switzerland to attend courses on ‘charcuterie’. That was actually unique at the time.”

B.A. BARACUS

I love it when a plan comes together. The association with the motto from one of the best known series from the 1980s is easy to make when you see B.A. on display at the Balls & Glory website. Perhaps by chance, it summarises his tale of glory rather well. The time spent working in his parents’ butcher’s shop, learning the hard way at Latem Golf Club, starting out on his own with his catering company Alfin or later on spending time with caterers like Horeto and Gourmet Invent – these were all layers that ultimately fed into the concept.

In other words, he has drawn something from each period that is now useful for Balls & Glory: thinking about figures – because a cook makes a dangerous entrepreneur if he always chooses the best – and learning to think in concepts and develop successful formats (with congratulations from top chef Peter Goossens), while always building on the broad base of his ‘roots’. “The things that people have always made in the home represent such a wealth of knowledge and skill! So why couldn’t we scale that up?

Why not combine the Alfin lifestyle, the operational scale of Gourmet Invent and the authenticity of my parents?

That is what I am mostly about.” As he writes himself in his blog: a format imbued with the heritage of Belgian slow food, the strong will of a West Flanders entrepreneur and the beauty of a contemporary lifestyle.

CLEAR FORMAT

He was advised at one point to take a course at Vlerick Management School, and this experience has taught him to put everything into a clear format, even contractually, so that his growth can be rolled out further: “We actually enter into local joint ventures in a fifty-fifty agreement linked to a single service centre. It is a bit like a franchising agreement, but just a little more transparent, because that is where many of those models tend to fail, in the area of transparency. In the end the customer has to feel at home.

There has to be a sense of hospitality, and the best way to create that feeling is still to have a person working as if it were his own business. That is why we say to our partners “we have the Balls, you make the Glory.” For the expansion in Brussels and Leuven, Balls & Glory was offered bank financing and also guarantees from PMV/z.

INTERNATIONALISATION

There are plans on the table for one new restaurant in Amsterdam in 2017. As to the best route to 2025 after that, Wim is currently thinking hard about it: “If I were to make a prediction, although that is always dangerous, I would say the Balls & Glory brand will always be 100 % owned by me in the future. I would like to keep it that way because my concept is very precious to me. It is almost like my child.”

Due to the rapid growth he has also ‘been through the mill’, and he has learned how important it is to inspire people and ‘share’ his roots with his colleagues. “That is what I was talking about as we grew: how is it that nobody understands my roots? Well, probably because nobody has ever seen them.” Since then his grandparents’ farm has been the annual backdrop for an opportunity to immerse every member of the team in the Balls & Glory spirit.

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No doubt there will be more hurdles to overcome before New Yorkers can enjoy hand-rolled large Belgian meatballs.

That does not dampen his enthusiasm or confidence in the future at all, as Wim says, quoting a friend: “If you can make it in Belgium, you can make it anywhere.”

interview

SUS CAMPINIAE Noordvlees Van Gool is a family business from Kalmthout which was founded in 1955 and is active in the pork sector. Over the years, several waves of investment have allowed the company to renew itself and become a modern pork specialist. A hard-won licence to export to China created the need to invest in extra slaughtering capacity. Noordvlees Van Gool obtained a mezzanine loan from PMV, as well as guarantees to help finance its growth and ongoing ambitions.

Noordvlees Van Gool buys pigs, slaughters them in its own abattoirs in Kalmthout and Oevel and then markets the meat. The company is able to slaughter more than three million pigs a year, which is about 35 % of Belgium’s total slaughtering capacity. “We are not one of the very largest on a European level, but we are certainly a leader among the pack of medium-sized companies within our sector”, explains CEO Dirk Nelen. “In Belgium we are definitely one of the top players.” Noordvlees Van Gool has been doing well in recent years, and the company is continuing to work steadily on its expansion. The loan from PMV forms an important part of its growth plan up to 2020 which – thanks to the confidence shown by its various investors – is very much on course today.

THE FIFTH QUARTER

At the beginning of 2016 Noordvlees Van Gool managed to obtain a licence to export its pork to China. In Belgium there are precisely two players who have such licences. This has led to a considerable expansion of the export territory for the meat specialist. “We market the bulk of our pork within Europe: some 30 % remains in Belgium, 30 % goes to Germany, 30 % to the former Eastern bloc and the remaining 10 % to a few other countries. The by-products, however, the fifth quarter as it is called in the sector, are exported to Asia, mainly China.” Dirk Nelen talks about the so-called principle of carcass value optimisation. “This is the art of marketing the right part of the pig in the right place in the world, where you can get the best price for it.

The fresh meat stays in Europe. The intestines and stomach should go to Asia. Heads and hooves are most popular in China.”

Although carcass optimisation yields the best margins, exporting throughout the world is no easy task. “Pig abattoirs need a licence to be allowed to export to some countries. These are not easy to get. The application is always linked to very strict inspections by the relevant food agencies. The Chinese food agency CNCA, for example, sends a large inspection team to inspect the company inside and out, visiting the shop floor and reviewing the company’s documentation. The likelihood of success is not very

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DIRK NELEN CEO Noordvlees Van Gool

high. The company has to be technologically very advanced and impeccable in terms of hygiene. Its documentation has to be up to the very highest standards.”

The CNCA licence very quickly led to demonstrable positive results for Noordvlees Van Gool. “The profitability of our business has improved considerably on what it was in the past. We had a very profitable year in 2016 because we were actually able to start using this new export segment. It represents a very important building block in our long-term vision: we can focus our investments and our growth path on that.”

THE KEMPEN PIG

As early as 2013 the prospect of working in the Chinese market encouraged Noordvlees Van Gool to start up a joint venture with the Vanden Avenne group. “We used the name Sus Campiniae, which is Latin for Kempen Pig. We built the new abattoir in Oevel together, which was brought into service in February 2017. That gives us additional capacity for 2 million pigs per year.” This project required 30 million euros in investment. So immediately you have one of the reasons why PMV appeared on the scene as an investor: it was difficult to finance an effort like this solely with money from banks and credit guarantee companies. For them, the risk was a bit too high for comfort. “So we went and spoke to PMV”, says Dirk Nelen.

COLLABORATION WITH PMV AS A STARTING POINT

Noordvlees Van Gool is planning a growth process, which they call the Plan 2020, and they wanted to talk to PMV about this. “The collaboration with PMV is a starting point for us. To implement our Plan 2020, including our building plans in Oevel, we needed extra operating capital.

We persuaded PMV that we stand out in our sector on the basis of two important advantages. First of all we have state-of-the-art abattoirs, allowing us to deliver top quality extremely efficiently. Secondly we stand out because of our worldwide exports.”

together, we are talking about 80 % of Belgium’s slaughtering capacity. The two groups now clearly stand out from the rest in terms of profitability and return on investment. Life has already become more difficult for companies that did not participate in the consolidation process.”

Dirk Nelen provides some background about the financial details: “The loan is for 3 million euros over a seven year term. Originally I asked for less than this, but after an internal audit PMV advised me to take a reserve. Without the investment from PMV and the loan duration that they were willing to provide, I probably would have been forced to make some unhelpful changes to our Plan 2020”, admits the CEO. In the past Noordvlees Van Gool has easily obtained capital from commercial banks, but to continue along the current ambitious growth trajectory, they needed PMV as well. “The collaboration with PMV is something complementary, over and above what the commercial banks are doing. The banks have always found it easy to maintain confidence in our business, but with the additional investments in the new abattoir we needed to persuade PMV. Thanks to PMV’s guarantee and investment capacity combined with that of the banks, we now have a great combination.”

As well as having ultra-modern abattoirs and the carcass value optimisation that they make possible, the larger slaughtering volume itself plays an important part in the globalised pork sector. “In some markets in the world, particularly in Asian countries, you are only taken seriously if you can offer sufficient capacity. You can only do that if you have invested enough. The food agencies in those countries prefer to issue licences to two large companies than to ten small ones.”

CONSOLIDATIONS IN A SECTOR WHERE WARNING LIGHTS ARE FLASHING

Despite the good progress Noordvlees Van Gool has made, the leader of the business says the pork industry is a place where warning lights are flashing. “I observe that many pig abattoirs have been consolidated in Belgium in recent years. We have responded to this in a very timely way. There are now two leading groups in Belgium: the Belgian Pork Group, which is a merger between the Farmers’ Union and Westvlees, and us – a merger between Vanden Avenne and Noordvlees. If you put these two consolidated groups

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DOING BUSINESS FOR THE FUTURE

Noordvlees Van Gool is also a progressive company. Animal welfare, food safety and hygiene are all factors that they care a lot about. “We want to be a profitable business and keep our shareholders happy. Nevertheless it is just as important for us to do business in a sustainable way and to have happy employees too. A few years ago we were honorary winners of the ‘SME for Kyoto’ award.”

“In the area of animal welfare, the measures that have just been introduced have been in place at Noordvlees for years – specifically since 2011. The people from Thomas More College who now inspect animal welfare in abattoirs, came to Noordvlees as early as 2013 to see how we manage this. I think we can claim to be pioneers in a large number of areas.”

CEO Nelen thinks the Kempen abattoir operator has a bright future ahead. “We want to continue doing business with enthusiasm and sustainability, in a way that is good for society. It is sustainable in the interests of future generations and it is good for society because it is good for our employees. Of course we still run our business with a view to profitability and we seek to make our plans a reality.” What plans? “Just a taster: in the near future I can see Noordvlees Van Gool growing even more by continuing to work on consolidation within our sector...”

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editorial

Serge de Gheldere climate ambassador

Jim Hansen, the ‘godfather’ of climate science, wrote in Rolling Stone Magazine in January 2017 that the temperatures we are experiencing today are the same as those seen about 120,000 years ago. At that time the sea level was six to nine metres higher than it is now.

Doing nothing will take us back towards the climate situation last seen in the Pleistocene period, which would mean losing all our coastal cities and displacing tens of millions of climate refugees. The European Union estimates that there could easily be 150 million in the coming decades. That is a lot of people.

TO GUARANTEE A SAFE AND ATTRACTIVE FUTURE, WE MUST MAKE A RAPID AND COMPLETE TRANSITION TO A FOSSIL FREE, CIRCULAR ECONOMY To avoid this situation, Johan Rockstrom and a group of European climate scientists put forward a new carbon law in the scientific journal Science. By analogy with Moore’s law for computers, this law proposes that carbon dioxide emissions should be cut in half every year and the quantity of green energy generated should double every five years. We also have to move quickly to remove five gigatonnes of carbon dioxide from the atmosphere every year by 2050, through massive reafforestation and improved agriculture.

Two years ago Mark Carney, the Governor of the Bank of England, commented in a remarkable speech on the financial risks facing investors if we simply carry on as we are and let things take their course.

CARBON BUDGET

In reality the upper limit for safe climate change is even lower than that. One hundred and ninety-five world leaders meeting in Paris agreed to make every effort to keep the global rise in temperature below one and a half degrees Celsius. To meet this stricter target, the available carbon budget is limited to just 350 gigatonnes of CO2. According

A definitive move away from fossil fuels certainly does not mean the end of industrialisation, on the contrary: it will lead to the next phase in the modernisation of our industry.

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That is because scientists have calculated that we can only add a maximum of 800 gigatonnes of CO2 to the atmosphere if we want to keep the temperature rise below two degrees by 2050. That is our so-called carbon budget.

to Norwegian energy consultants Rystad, however, the coal mines and oil and gas fields that are currently in operation have potential totalling 940 gigatonnes of CO2.

The lion’s share of our oil, gas and coal reserves is therefore becoming unusable. If we are going to meet our climate targets, no new coal mines, gas fields or oil fields can be exploited. Less than a third of what is currently in operation can be marketed.

THE BIG (FOSSIL) SHORT

If we cannot extract any more fossil fuels, they are also not worth much anymore. The difference between the current valuation (perception) and the true value of assets (real estate, businesses, fossil energy reserves etc.) will result in a bubble which will burst once the profits coming from the fossil industry are no longer perceived to be reliable.

A number of parallels can be drawn with the situation described so colourfully by Michael Lewis in ‘The Big Short’. In his book he was talking about so-called ‘mortgage-backed securities’, i.e. sliced, diced and repackaged subprime loans, but major players in the fossil fuels market are also sitting on a gigantic carbon bubble.

STRANDED ASSETS AND CAPITAL DESTRUCTION

The ‘Rethinking Transport 2020-2030’ report by Stanford economist Tony Seba has sent spasms of anxiety through established industries. He describes how within eight years hardly any more diesel and petrol cars will be sold at all.

Our transport systems will switch entirely to electricity. As a result many industries as we now know them will collapse.

By continuing to invest in so-called high carbon, high risk, high cost projects, the risk of capital destruction and stranded assets is real and it is everywhere. Examples include pipelines, refineries, drilling platforms and assets such as company cars, petrol stations, gas distribution networks, heating installations, inappropriate production processes and so on.

According to the Sustainability Accounting Standards Board, a non-profit organisation chaired by Michael Bloomberg that raises awareness among investors of risks of this kind, virtually all the companies that they follow – with a collective market valuation of 27,000 billion dollars or 93 % of the valuation of the United States stock market – are facing these significant climate risks.

It is therefore not only the fossil fuels industry that is genuinely at risk of being left with a pile of worthless, stranded assets. The capital that is destroyed as a result could, however, be put to use in financing the energy transition and doing this would also generate beneficial added value.

ESTABLISHED BUSINESSES AND THEIR CHALLENGERS

Nevertheless, many businesses think they are keeping up with the energy transition just by releasing a few ecoproducts, organising a few inspiring events, including some hybrid vehicles in their fleets and publicising all this with a lot of hype in an expensive sustainability report.

All this is just scrabbling around the edges. It reminds me of the CEO of Baldwin Locomotive, who declared in 1930 that the progress of steam technology would guarantee the dominance of the steam engine until at least 1980. That was

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his response to the arrival of two new tech start-ups: Ford and General Motors. Another example is a company like Kodak, which also managed to spectacularly miss the boat when faced with digital disruption, even though it was the first to hold patents for digital photography in 1972.

The world has undergone a lot of disruptive transitions of this kind. They are often decisive in defining our progress and the established players rarely win out over the challengers. There are no longer many people working in the DVD industry, developing photographs, selling typewriters or cleaning up horse manure in cities.

AIMING FOR FULL DECARBONISATION To follow Rockstrom’s carbon law and have a chance of limiting global warming to under two degrees Celsius, we have to embark on a transition in which all energy and industry related CO2 emissions drop to zero between 2025 and 2035.

Flexible, visionary businesses and regions are already fully engaged with this process. China has stopped building work on twenty-nine coal-fired power stations. The country now owns a third of all renewable energy capacity and last year it sold more electric vehicles than the rest of the world put together. If Texas were a country, it would be sixth in the world in terms of installed wind energy capacity. In Copenhagen, to use another example, there is now more bicycle traffic than car traffic on the roads, and Manhattan has more Tesla charging stations than petrol stations.

In Germany the proportion of renewable energy has risen from 9 % in 2004 to 32 % in 2016. Just under half of this is owned by citizens and cooperatives.

IT’S BETTER TO SHAPE THE FUTURE THAN TO BE SHAPED BY THE FUTURE

Business leaders with a vision understand the importance of a carbon-free world all too well. In early January more than six hundred of them wrote to Donald Trump to point out that withdrawal from the Paris climate accord would jeopardise American prosperity. The signatories included companies such as eBay, IKEA, Monsanto, Levi’s, the New York Retirement Fund, Campbell Soup and Johnson & Johnson. They all understood that climate change also presents opportunities.

The transition to a fossil-free, circular economy will boost sustainability, save costs, create greater prosperity and well-being and generate jobs over decades that cannot be simply outsourced or replaced by machines and robots.

Investors and businesses that are not pursuing an active two degree policy are at risk of falling out of step with economic activity and being left with stranded assets that will make them irrelevant. The question is therefore not whether we are going to move away from fossil fuels, but how quickly we will do so. We know the winner, but how can we bring the finish line closer?

It describes concrete steps and milestones to comply with Rockstrom’s carbon law and it also explains how management compensation is linked to the achievement of these milestones. It provides insight into the direct and related risks of rising costs, the legitimacy of activities, stranded assets, destroyed capital and any relevant job losses. In short, the two degree stress test describes how the business can avoid the Kodak scenario and how new products and services can be developed that will make use of the opportunities presented by the energy transition.

HEROES OR ZEROES

In this game there is no room for spectators. We will either be the zeroes who just allow the tragedy to unfold, or the heroes who shape an attractive, fossil-free, circular society.

The transition to a low-carbon economy is not about social responsibility and it is not about idealism or philanthropy.

It is about a new way of achieving economic success. A two degree stress test can act as a useful filter to distinguish future winners from losers.

Even in Flanders, politicians, entrepreneurs and investors can take concrete steps to embrace these opportunities and become a leading region in the coming industrial revolution.

TWO DEGREE STRESS TEST

One tool that can be useful in this process is the two degree stress test, which managers and investors can use to publicise the carbon strategy pursued by their business (or government body). A report of this kind clearly states the company’s strategy and objectives aimed at cutting carbon.

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LOANS Do you need money to start, grow or take over a business? A loan from PMV could make the difference. We mean that literally. We can supplement your range of financial products, help you to find financing to get you started or encourage other financiers to get involved too. We use a number of different instruments to do this.

Business loans from PMV are tailored financing solutions for SMEs and large companies. They may be subordinated (‘mezzanine financing’) or non-subordinated.

PMV also offers a number of solutions for start-ups and growing companies requiring up to 350,000 euros. These are available from PMV/z, which provides financing for self-employed entrepreneurs, start-ups and SMEs.

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SWITCH At the end of 2016 Switch, a reseller of Apple products, took over its competitor Easy-M. Switch has been selling and repairing Apple devices and related products since 1992.

It has ten stores in Flanders and three service centres: in Antwerp, Ghent and Hasselt.

With the takeover of Easy-m, Switch has instantly extended its network of stores to twenty-two: nine in Flanders, nine in Wallonia and four in Brussels. Since these are distributed across three regions, the takeover of Easy-m therefore means not only that the business is now better established in northern Belgium but Switch has obtained a foothold in the south as well.

The takeover makes it possible to further develop its online sales channels, the rapidly growing B2B market and the secondhand business. The Switch group as a whole now has more than three hundred employees.

To help to finance this transaction, Switch used a subordinated loan from Mezzanine Partners 1, the mezzanine fund managed by PMV and Capital@rent.

Subordinated loans, also known as mezzanine financing, rank behind bank or other financing. Subordinated business loans therefore combine elements of a loan, such as a fixed duration and a fixed interest payment, and elements of a capital augmentation, since they represent permanent funding that reinforces the capital and solvency of the business.

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interview

AFRICAN EXPANSION THANKS TO PMV At Biobest in Westerlo you will find a huge number of hives full of bumble bees and insects. The bumble bees are bred in small plastic boxes.

A queen ultimately produces about eighty bumble bees before they go to the customer and continue growing to become a nest of about two hundred. “Bumble bees are fantastic creatures”, explains CEO Jean-Marc Vandoorne proudly.

Biobest was founded in 1987 by Roland De Jonghe, a veterinary surgeon with a passion for bumble bees. He came up with the idea of using them to pollinate plants.

It was a pioneering business and the company is still the leader in bumble bee pollination. As well as bumble bees, the business also breeds other useful insects that help to combat plant diseases and pests. Biobest now has fifteen sites throughout the world.

BUMBLE BEES AND TOMATOES

JEAN-MARC VANDOORNE CEO Biobest

The bumble bees are used for soft fruit such as strawberries and blackcurrants, but also for apples and pears. They distribute pollen to the plants, thereby fertilising them.

Tomato growers are the biggest users of bumble bee nests.

“Tomatoes grow all the year round. A bumble bee nest lasts for about eight weeks on average and it takes about thirty nests a year to grow a hectare of tomatoes. In the past this was done manually; someone walked around touching

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36

each flower with a vibrating stick, and it had to be done every day because new flowers open every day. Tomatoes are therefore a very useful area for us, because the average grower can save a lot on personnel costs in the course of a year by using bumble bees.”

Biobest also breeds useful insects and mites that attack diseases and pests. This completely natural pest control method is an alternative to chemical agents. The animals can be broadcast or hung in bags among the plants, where they continue to breed. They leave the bag through a small hole, allowing them to move around the plants.

BIOLOGICAL PROTECTION

In a similar way, Biobest is also involved in biopesticides, biological crop protection agents that can replace chemical pesticides. These are viruses, fungi and bacteria that are applied in a powder form. “In many cases they look a lot like chemical agents, but biological pesticides are sustainable. We base our work on what we call the three Rs: resistance, regulation and residue free. Insects are becoming more and more resistant to chemical agents, which means that larger and larger quantities have to be used, the effects are reduced and you end up with a vicious circle. At the same time, the regulations are also becoming tighter and fewer chemical agents are permitted. Consumers are also looking for food that is residue-free: fruit and vegetables

which are grown without the use of pesticides and which are good for the environment. We have a response to this with our natural products.”

FLYING DOCTORS

Bumble bees can also be combined with biopesticides.

Biobest is already doing this with their Flying Doctors, a concept that combines pollination with pest control. “With Flying Doctors, our bumble bees walk through biopesticides before flying out. Every time they leave their nest, the biopesticides stick to their legs and body. During the pollination process they deliver the product directly to each flower they visit, so that all plants are not only fertilised, they are also healed from any diseases. Hence the name ‘Flying Doctors’”, explains Jean-Marc Vandoorne.

BUSINESS IN BLOOM

Biobest is a rapidly expanding business. “We are in a young sector, where the first generation of people who started out thirty years ago are now retiring. That creates opportunities in this fast-moving new market. We are growing organically at a rate of about 15 % per year. We also want to grow through takeovers. We can finance our organic growth from our own working capital. When it comes to takeovers, however, we needed a long-term investment loan”, the CEO tells us. That is where PMV came in. The Flemish investment company PMV contacted Biobest itself following an article in De Standaard newspaper, which reported that the business was looking for funding. “The traditional banks were not willing to offer us a long-term loan; five years was the maximum. However, that is the time it takes for our investments to begin yielding a return so that we can make repayments.”

PMV was willing to give Biobest a loan as long as there was also a private investor participating. That investor was Federale Verzekeringen. The two parties provided a budget of 7 million euros each. In the case of PMV this was a traditional ten year investment loan, with repayments beginning after seven years.

EXPANSION IN KENYA

Using this money Biobest was able to make a major takeover at the beginning of 2017: the insect and biopesticide company Real IPM in Kenya. Real IPM is the market leader in biological pest control in East Africa. Jean-Marc Vandoorne: “The takeover in Kenya offers us a lot of advantages. First of all, geographically. We are active everywhere in the world except in the Southeast Africa region.

Nevertheless, there are a large number of flower growers and horticultural producers there. Secondly, extra capacity was useful to us because we are growing very rapidly. It is also an attractive region in which to produce, thanks to the favourable climate and lower energy and labour costs.

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A third reason for the takeover is that the company in Kenya has a product line in biopesticides, which is something we did not have.”

Through the takeover in Kenya Biobest is aiming to continue its growth in East Africa while also making progress in the biopesticides market. Within seven years Biobest has to start repaying the loan, and by that time Jean-Marc Vandoorne wants to be selling biopesticides in the European market too. “It will take a few years because those products have to be registered and that is a long and expensive procedure. Biopesticides are often confused with chemicals: they have to comply with a lot of regulations. In America, for example, the requirements are much less stringent. There you only have to demonstrate that your product is not hazardous. They assume that the market is able to determine whether you have an effective product or not.

In Europe the authorities are much stricter and you have to demonstrate that it works as well. Europe was originally a pioneer in the biopesticides market, and now it is being overtaken by other continents because it is so difficult to break through with your product here.” Biobest’s turnover was 58 million euros in 2016. Partly thanks to the takeover of Real IPM, it wants this figure to be 20 % higher at the end of 2017. “Our subsidiary in Kenya has the potential to become a large and significant supplier for our group”, concludes Jean-Marc Vandoorne.

LUNCHTIME CHAT PMV/Z

On Friday 5 May 2017 PMV set out the results of its sub-brand PMV/z in the superb setting of the Faculty Club in Leuven. It was clear to the large audience attending the event that the formula: ‘standard financing solutions, made to measure’ has been generating some highly acceptable results for self-employed entrepreneurs. Record results have been achieved in 2016 on every level.

editorial

THE PERPETUAL MOTION OF THE ECONOMY These are the words of Andre Vlerick, the founder of the Vlerick School, speaking in 1983. For me these words have stood the test of time and they are just as relevant today as they were almost thirty-five years ago. There can be no doubt that innovation is one of the most powerful ways to bring about growth, and it is equally clear that growth is absolutely essential for our prosperity.

Marion Debruyne Dean of Vlerick Business School You can never become perfect at running a business. Adaptation is a constant requirement for every business leader. Today, with a climate which is unfortunately not favourable to entrepreneurship, business leaders have to continually adapt and innovate. Our free enterprise sector is willing to engage with this requirement. I hope our society will realise – before it is too late – that freedom to become an entrepreneur gives people the opportunity to express their natural urge to create and it is also the driving force behind our economy, the source of our jobs and the guarantee of continuing progress.

ing power in your wristwatch today as there used to be in a supercomputer. If we place this computing power alongside increasingly smart algorithms and improved data storage and transmission capabilities, the resulting combination has unprecedented power. This is interesting technologically, but even more so in terms of the impact on our economy.

as a minimum of 20 % growth and an increase in employment or added value over three consecutive years).

It is these strong growers that create jobs. In fact these companies are responsible for all the net growth in employment in Belgium.

The period of strong growth also goes hand in hand with rapid growth in profitability.

Digital, data and disruption offer opportunities for innovation that have never been seen before. And digitalisation is synonymous with globalisation. It is about the opportunity for every individual or business to compete, connect and collaborate across national borders. Today we can digitalise so many things, and those digital flows can come from everywhere and be distributed everywhere. Information, ideas and innovation have never moved around the world so fast. For Thomas Friedman, digital flows have become “so rich and powerful that they have the same significance for the 21st century as the importance of rivers to settlements in the ancient world.”

Innovation, entrepreneurship and growth are the pillars supporting a healthy economy. This was true thirty-five years ago and it is still true today. Nevertheless, times have changed. We are now living in a 3D world, characterised

by Digitalisation, Data and Disruption. That is the result of Moore’s law. Gordon Moore predicted in 1964 that the power of microchips would continue to double every two years. His prediction came true. There is as much comput-

Today, data is the most important raw material of all.

During the past ten years this has become most obvious in the changing rankings of the world’s biggest businesses.

Taking market capitalisation as the measure, Shell, Exxon Mobil, General Electric and Citigroup would be among the top five largest companies. Today they have been replaced

by Apple, Alphabet (the parent company of Google), Amazon and Facebook. All these are companies that have

The growth monitor, the study by the Vlerick School on growth businesses, is clear in its conclusions1:

››Only 3 % of Belgian businesses are strong growers (defined ›› ››

Crijns, H. and Y. Dillen (2016), Belgian High Growth Monitor

1

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not built their business model on what we traditionally view as the means of production (raw materials, production machinery, buildings). For them, knowledge and data are the most important tools. These raw materials are what the new giants have used to build disruptive business models.

DOING BUSINESS MEANS ADAPTING

Today, every business leader has a choice: to see our 3D world as a threat or an opportunity. A sheep that is being sheared needs to stand still. With this saying in mind, it is attractive to hide in your shell when times are changing.

When competitors are popping up everywhere, customers are becoming more demanding and it is becoming harder and harder to stand out, many businesses just retrench.

They focus on their core activities, tighten their belts, cut nonessential investments and just focus on efficiency. This may offer solace in the short term, but it is not a fundamental solution to the problem of increasingly globalised competition in a 3D world. In the business world there are only two directions: forwards and backwards. The only option that is not really an option is standing still, because that really means going backwards. Nobel prize winner Joseph Schumpeter made this quite clear: “the process of creative destruction is the essential fact about capitalism.

Innovation reflects the perpetuum mobile of the economy, always in motion.”

MICRO-INNOVATION IN A 3D WORLD

Netflix is now one of the best known of all digital companies. When the company was started up twenty years ago, however, it was not the leader in video on demand at first.

The company simply started sending DVDs by post to subscribers. Driven by the idea that anyone who does not innovate goes under, companies have elevated innovation to one of their key strategic priorities. Nevertheless, although they

may talk about it a lot, they still find it difficult to implement innovation. One of the reasons for this gap between talk and action is that the term ‘innovation’ is all too often identified with major revolutions and radical changes.

Looking only for radical innovation is harmful and has a paralysing effect. Jeff Bezos from Amazon said a few years ago: “Seventy percent of the value we create comes from everyday, incremental innovation.” All this talk about innovation overshadows the fact that it does not only mean disruptive changes and radical breakthroughs. Innovation is just as much about everyday improvements and changes.

While we are looking for major revolutions, we can forget how valuable taking small steps every day can be.

In the world of innovation there needs to be room for both radical and micro-innovation. Research has shown that micro-innovations have a major influence on a company’s market share, its financial results and, indirectly, on its chances of survival. Indirectly micro-innovations protect the business from attacks by new players in the market. If you are a moving target, you are much more difficult to hit.

Always staying one step ahead of the competition means you can assure your own continued existence. That should really be the essence of entrepreneurship: always seeing new opportunities and always taking new steps forward.

Although the path to the future is unclear, you definitely won’t get there by standing still.

ENTERPRISE IS THE DRIVING FORCE BEHIND THE ECONOMY

“The most difficult thing about starting a business is actually starting”, was the message of Louis Jonckheere of Showpad to students starting their studies at Vlerick.

People want to run businesses. The most recent Global Entrepreneurship Monitor shows that 9 % of Flemings want

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to start a business in the next three years. That is a lot of people. Nevertheless, there is a major fear of failure and people have a low level of confidence in their own abilities.

Only three out of ten Flemings are confident that they have the knowledge and skills to start a business, the lowest score for many years.

The danger is that we will stare blindly at the 3D world like a deer in the headlights. Changes are moving more and more quickly and it is becoming more difficult to predict what you should do to be in the right starting position for the future. Nobody has a crystal ball. Gambling on a single prospect is risky. Rather than working out a single strategic blueprint, we need to take into account different scenarios, including the script we are not even thinking about. Today, being agile enough to change course is more important than being committed to a single action plan. That is why we now need a model for innovation in which new entrepreneurs and businesses are able to engage in strategic experimentation. That requires financing, infrastructure and access to talent. These will create the fertile soil. We must also dare to plant small seeds, in the knowledge that not all of them will come into bloom and that only the ones that adapt to their environment best will survive. Or, as André Vlerick said: “adaptation is a permanent task for every business leader.”

FIGURES & CHARTS

CONSOLIDATED KEY FIGURES FOR THE 1 PMV GROUP ON 31/12/2016 42

Pro forma consolidated accounts

1

RACE SUMMARY Figures & charts

42

FIGURES & CHARTS

Figures & charts

43

overview

KEY FIGURES in millions of euros

2016

2015

Operating income

82.2 (VEB1 68.5)

31.8 (VEB1 18.1)

Financial income

22.4

22.2

Realised capital gains

29.3

17.1

1.5

5.3

Net capital losses

Investments2 Disinvestments2

Capital

Loans

Total

Capital

Loans

Total

79.8

85.2

165

123.1

12.2

135.3

103

23.3

126.3

110.4

71.4

181.7

Net result

36.7 (VEB1 -1.8)

17.7 (VEB1 -1.2)

Assets under management

1,181

1,054

Number of employees

126

122

Vlaams Energiebedrijf (Flemish Energy Company) including funds under management: 238.1 million euros in investments and 132.7 million euros in disinvestments in 2016

1 2

Figures & charts

44

overview

ANALYSIS OF PORTFOLIO 8.5 %

Real estate property

1.8 %

Agriculture, chemicals and materials

15.4 %

Business and industrial products and services

17.9 %

Life sciences and health care

14.8 %

Consumer goods, services and retail

9.8 %

1.5 %

Infrastructure

Creative industry

9.8 % ICT

20.6 %

Energy and environment

Figures & charts

45

overview

INVESTMENTS TOTAL Number of companies in portfolio

158.0

593.0

751.0

Number of projects in portfolio

38.0

-

38.0

Number of funds in portfolio

33.0

-

33.0

Capital investments in companies (in millions of euros)

236.8

38.0

274.8

Capital investments in projects (in millions of euros)

156.7

-

156.7

Capital investments in funds (in millions of euros)

163.0

-

163.0

TOTAL capital investments (in millions of euros)

556.4

38.0

594.4

140.5

24.5

165.0

Of which: follow-up investments

62.7

-

62.7

Of which: new investments

77.8

24.5

102.3

124.4

1.9

126.3

New investments in the past year (in millions of euros)

Disinvestment income 2016 (in millions of euros)

Figures & charts

46

CAPITAL INVESTMENTS

BY TYPE

CAPITAL INVESTMENTS

BY TARGET GROUP

6%

PMV/z

28 % Funds

46 %

Companies

26 %

94 %

Projects

PMV

INVESTMENTS

BY TARGET GROUP

ADDITIONAL INVESTMENTS

15 % PMV/z

38 %

Follow-up investments

62 %

New investments

85 % Figures & charts

47

PMV

investing in

CAPITAL INVESTMENTS

BY SECTOR

COMPANIES

BY PMV

14 % Other

3%

Financial service provision

17 %

Business and industrial services

4%

Creative industry

5%

Number of companies in portfolio

158

Capital investments (in millions of euros)

236.8

Additional investments in the past year (in millions of euros)

90.6

Of which: follow-up investments

29.8

Of which: new investments in new companies

60.8

Disinvestment income in the past year (in millions of euros)

39.7

Figures & charts

48

16 %

Chemicals and materials

Life sciences and health care - diagnostics

8%

Communications

9%

Consumer goods and retail

11 %

13 %

Business and industrial products

Life sciences and health care - red biotech

CAPITAL INVESTMENTS

BY TYPE OF INVESTMENT

CAPITAL INVESTMENTS

BY INVESTMENT INSTRUMENT

15 % Seed

39 % Growth

51 % Capital

25 %

Early stage

21 %

Late stage

Figures & charts

49

49 % Loans

INVESTED

BY SECTOR

4%

Wholesale

6%

AMOUNT INVESTED

BY TYPE OF INSTRUMENT

3%

Body care

27 %

Construction

28 %

Services

10 %

Startup Loan plus

Production

14 %

Hotel, restaurant and catering

72 %

19 % 17 %

SME cofinancing

ICT

Retail

Figures & charts

50

investing in

COMPANIES

BY PMV/Z Number of companies in portfolio

593

Capital investments (in millions of euros)

38.0

New investments in the past year

24.5

Number of new projects

259

Disinvestment income in the past year (in millions of euros)

Figures & charts

51

1.9

provision of

GUARANTEES TOTAL Number of outstanding guarantees

25

6,090

6,115

-

11,281

11,281

7.7 million.

97,734

Amount of guarantees outstanding (in millions of euros)

192.3

595.2

788

Corresponding amount of financing (in millions of euros)

349.4

960.9

1,310

-

297.1

297

42.5

232.5

275

10

1,769

1,779

-

50.5

51

-

2,128

2,128

Number of registered Win-Win loans Average amount per guarantee (in euros)

Total amount of financing through Win-Win loans (in millions of euros)

Amount of new guarantees in the past year (in millions of euros) number of new projects in the past year Total of new Win-Win loans in the past year (in millions of euros) number of new projects in the past year

Figures & charts

52

TOTAL PMV GUARANTEES OUTSTANDING

BY SECTOR

4%

Chemicals and materials

3%

3%

TOTAL PMV/Z GUARANTEES OUTSTANDING

BY SECTOR

4%

1%

Administrative and supporting services

Creative Construction Financial service industry provision

4%

4%

Automobile sector

15 %

4%

Consumer goods and retail

3%

Art, entertainment and recreation

Banking and insurance

Transport & storage

6%

7%

Information and communications

Life sciences

14 %

6%

8%

Retail

Construction industry

Business and industrial products

8%

Hotel, restaurant and catering

70 %

Business and industrial services

10 % Industry

14 %

12 %

Wholesale

Figures & charts

53

Liberal professions

WIN-WIN LOAN

BY SECTOR

20 %

16 %

Wholesale and retail; car and motorcycle repair

Other

5%

Administrative and supporting services

5%

13 %

Information and communications

5%

Liberal professions and scientific and technical activities

Other services

7%

Financial activities and insurance

7%

Human health care and social services

Figures & charts

54

11 %

10 %

Construction industry

Providing accommodation and meals

providing

WIN-WIN LOANS WIN-WIN LOAN

Number of registered Win-Win loans1

11,281

Total amount of financing (in millions of euros)

297.1

Average amount (in euros)

26,337

New Win-Win loans in the past year (in millions of euros)

50.5

Number of new projects in the past year

2,128

In terms of financing techniques, a Win-Win loan is a guarantee given to the lender by the government.

For the recipient, of course, it means a loan.

1

Figures & charts

55

CAPITAL INVESTMENTS

BY SECTOR

CAPITAL INVESTMENTS

BY TYPE OF FUND

7%

8%

9%

2%

Infrastructure Chemicals and materials

Growth and exits

8%

Spin-offs

Infrastructure

34 % General

24 %

Life sciences

83 %

25 %

Operating capital

Technology and ICT

Figures & charts

56

investing in

FUNDS Number of funds in portfolio

33

Capital investments (in millions of euros)

163.0

New investments in the past year (in millions of euros)

36.7

Of which: follow-up investments

23.5

Of which: new investments in new funds

13.2

Disinvestment income during the last quarter (in millions of euros)

Figures & charts

57

30.6

investing in

PROJECTS Number of projects in portfolio

38

Capital investments (in millions of euros) New investments in the past year (in millions of euros)

156.7 13.3

Of which: follow-up investments

9.4

Of which: new investments in new projects

3.9

Disinvestment income in the past year (in millions of euros)

Figures & charts

58

54.1

CAPITAL INVESTMENTS

BY SECTOR

CAPITAL INVESTMENTS

BY INVESTMENT INSTRUMENT

4%

Communications

23 %

Construction

49 %

45 %

Energy and environment

Loans

24 %

Real estate property

Figures & charts

59

55 % Capital

COMPANY PROFILES

RACE SUMMARY Company profiles

60

60

COMPANY PROFILES

››Start-ups ››Growth ››Internationalisation ››Takeovers

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COMPANY PROFILES PMV invests at every stage in a company’s development and in the various financing rounds that generally accompany them.

For start-ups, for example, it is customary for there to be a seed capital round of maximum 1 million euros, supplied chiefly by business angels, friends, family, fans, or specific seed capital funds associated with a university or research centre. The funds collected in this stage are used primarily to support research and development, to allow an initial concept to be developed before the business is actually launched.

In the next phase, it becomes a question of early-stage risk capital. Risk capitalists refer to this as a series A round, in which sums of up to maximum 5 million euros are raised, preferably already in a consortium of investors.

By this point, the company in question has already been founded as well. The funds are used for the further product development and initial marketing. The product itself is not yet fully available on the market, but there is growing momentum for its commercialisation.

With risk capital at a later stage, known as B rounds, the amounts invested range from 5 to 10 million euros, generally raised by the existing shareholders, who may or may not be acting in consortium with other venture capital funds.

Traditionally, this is used to establish an initial portfolio of customers. Funding rounds of this type are generally used by companies that are already receiving support from venture capital funds. They may not yet have reached breakeven, but the prospects are looking good.

We speak of growth companies or scale-ups when private investors and venture capital funds organise a series C or D round of funding. In such cases, the amounts involved are usually over 10 million euros. This is intended to fund the further growth of companies that have reached the breakeven point or are already generating a positive cashflow. In this phase, the focus is on ensuring a significant expansion of the customer base and production and new (international) markets can be tapped into.

Finally, mature companies generally obtain their funding from banks or traditional capital providers focused on special situations such as buy-outs, turnarounds or repositioning. In such cases, larger sums will be involved, up to 100 million euros or more. At this stage, the banking component is very important.

This is usually the case with what is known as the ‘first equity gap’ (the lack of venture capital), the shortage of funding in the seed phase or in the early stage. At this point, the investment risks are still high and private investors often need a nudge of encouragement. Fortunately, with the help of PMV, this gap has been significantly reduced in recent years, thanks to initiatives such as the ARKimedes scheme, which has enabled the available venture capital for young companies to grow significantly in Flanders. Moreover, in recent years, we have also seen the advent of quite a few business angels. These are often entrepreneurs who have successfully sold their businesses and are now in a position to help like-minded risk takers. In recent years as well, our universities and strategic research centres have focused on funding their spin-offs, whether in collaboration with PMV or otherwise. Particularly in the life sciences and in the ICT sector, there is therefore a lot of seed and venture capital available, in the later phases, especially. But because the number of start-ups in Flanders is growing rapidly, it remains necessary to provide additional funding. Other measures, such as the Win-Win loan and the Tax Shelter help to convince friends, family and fans to come on board.

However, PMV does not take the place of the private market, but invests in those fields where the market has yet to take sufficient risk.

The ‘second equity gap’, meanwhile, refers to the difficulty of raising large amounts, meaning over 15 million euros, in Flanders for funding a scale-up. This has meant that in the past, Flemish companies often had to move abroad – to the USA or the UK, usually – to find funding. It was with the aim of filling this gap that the ARKimedes scheme received major capital increases, of 50 million euros respectively, in 2015 and 2016. This extra capital has allowed ARKimedes

However, the term scale-up can have various meanings. For some, it is the shift from proof of concept to a company with a clientele, but PMV applies a different definition.

For PMV, scale-ups are companies that are ready to break out of their home market and boost their turnover to over 50 million euros.

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62

to participate in larger funds of over 100 million euros, who bring an experienced, internationally-minded team to the job of supporting Flemish companies with their (often international) expansion plans.

Moreover, PMV is also investing in scale-up funds abroad, such as the Dutch Life Sciences Partners, for example. In so doing, they hope to encourage interest in potential deals in Flanders. By channelling foreign funding into Flanders, and enabling larger funding rounds for Flemish companies, these funds, too, are bringing a significant added value to our economy.

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START-UPS

SCHOOL FOR BUTLERS Creative and innovative entrepreneurs can take their SME to the next level thanks to the funding solutions offered

by PMV/z. In 2016, they also provided SME cofinancing to the School for Butlers and Hospitality run by Vincent Vermeulen. At the school, students spend eight weeks taking 650 hours of training and cover more than three hundred subjects in order to be able to graduate as fully-fledged professional butlers.

Following the downturn in recent years, in 2015, for the first time we saw more starters than in the record year 2011. In 2015, 82,571 Belgians started their own business, or 18 % more than in 20141.

That is encouraging news because the number of start-ups is an important barometer for our economy and our society. After all, if more people are starting businesses, that means there is greater confidence in the future. And everyone stands to gain from new, financially stable companies.

These days, butlers may not have the most trendy reputation, which may have something to do with popular TV series such as Downton Abbey and Upstairs, Downstairs. But anyone who’s picturing Anthony Hopkins in Remains of the Day has got it all wrong, according to Vincent: “Just like other sectors, we also have to adapt to a rapidly changing world. The profession is nothing like what it was, say, thirty years ago.”

And that shows in the content of the training. On one hand, you have the timeless matters that are essential for any butler to properly do the job. Managing the wine cellar, the art of table setting, or managing a property remain key elements of the butler DNA. That’s why Vincent decided to move the training from a hotel room on Louizalaan in Brussels to villa Canteclaer in Hertsberge. There, the real life of a butler is reproduced as realistically as possible during the eight-week training, offering students a clear added value over butler schools unable to give this type of experience. On the other hand, there is a considerable focus on technology and digitisation, in order to stay up-to-date with the latest techniques and the use of apps for managing the house(keeping).

Graydon, UNIZO and UCM, Startersatlas 2015

1

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64

The skills and talents of a fully trained butler are therefore highly sought after, especially by affluent individuals worldwide, but also by premium brands and companies, diplomats and governments. As a result of globalisation, butlers are making a comeback: “The number of billionaires is growing much faster than in the past, and that segment of the newly wealthy is clearly looking for a person who can offer more than the traditional butler. Someone who can take over a number of tasks from them. That is why it’s necessary for us to integrate various components in the training, and that’s also what makes us unique”, says Vincent.

That hospitality is what he also strives to offer the various companies who come and follow training sessions at his school. The awareness that this type of differentiation was possible grew only gradually, but in the meantime, various sectors have already discovered the butler world. “It still amazes me how applicable our material is, even within a business setting”, says Vincent. “It’s often about the basics, like the way people speak or adjusting the body language to a specific context.” In the meantime, he has even written a book about it, aptly named Wat we kunnen leren van butlers (What We Can Learn from Butlers) (Borgerhoff & Lamberigts, 2016).

The SME cofinancing from PMV/z was an important stimulus for the growth of the butler school. It also brought in additional expertise, thanks to the input from business angel Johan Castelein, who was able to share his vision and network for the further development of the school. And that’s an area in which Vincent also has ambitious international plans. To be continued, no doubt.

And anyone in need of a butler is welcome to contact Vincent, and give him the regards of PMV/z.

Are you being served?

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SCRIPTBOOK Do you sometimes find yourself astonished by the outrageous amounts that Hollywood studios spend on films, considering that 87 % of them lose money at the box office? What’s more, you would expect that such expensive investment decisions would be made with the utmost care, but in reality, it’s often a small circle of movie moguls who are just following a hunch. It’s not exactly what you would call an efficient system.

The Flemish economics student Nadira Azermai experienced it personally when she had the chance to do an internship behind-the-scenes on the set of Gigli (2003), starring Jennifer Lopez and Ben Affleck, a.k.a. ‘Bennifer’ for friends. The film cost 75 million dollars and ultimately earned a mere 7.2 million. That made Gigli one of the biggest financial flops in movie history and after three weeks, Columbia Pictures pulled the disaster out of cinemas.

It could have gone better, thought Azermai, and she devoted her master’s thesis to the use of artificial intelligence and creating an algorithm that could predict the success of movies. This is possible through a large-scale analysis of movie scripts and by comparing them with a database of over three thousand scripts and ten thousand films. On that basis, the algorithm can analyse stories and grasp complex emotions such as humour and sarcasm.

By using the analysis, the algorithm can then predict the success ratio of the film before it goes into production.

“Everything that we like to think of as exclusively human and subjective can in fact be scientifically objectified”, says Azermai.

And that’s how the idea behind the start-up Scriptbook was born. In 2014, the young company set up shop in the Boerentoren in Antwerp and several years later, Nadira even had the chance to tell her promising story live on CNN. The high expectations that fellow Belgians had for this young entrepreneur were also demonstrated in 2016, in a first capital round, in which Scriptbook raised 1 million euros from Michel Akkermans (ex-Clear2Pay) and PMV. This will enable Scriptbook to reinforce its team, further develop the algorithm and implement the international commercial rollout.

In a movie market worth 120 billion dollars, Azermai’s intelligent algorithm can make a big difference. Various American studios were quick to show interest in testing out the fully automatic script analysis from Scriptbook and the results showed that the system was able to correctly predict no less than 82 % of the successful movies. What’s more, Scriptbook accurately predicted the poor results of Point Break, the 2015 remake of the hit film from 1991. With a budget of 100 million dollars, the remake version ultimately only earned 29 million at the American box office.

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interview

LF BRANDS IS CONQUERING EUROPE FROM LIMBURG

RUBEN CLIJSTERS Managing director LF Brands

LF Brands is a young Limburg based company that distributes American fashion brands.

The best-known among them is Kenneth Cole. The brand has existed for over 35 years in the United States and has a complete fashion range: from clothing and shoes to sunglasses and perfume. LF Brands has the exclusive licence for the sale of shoes in the Benelux region, Germany, France, Austria and Switzerland.

For the start-up, Ruben and Evi were looking for money to cover the operating costs. PMV was a partner from the beginning. “If you want to get anywhere in the fashion sector as a distributor, you need start-up capital. You have to present yourself to the market at major trade fairs, and of course you have to have money to lay in sufficient stock. We knocked on a lot of doors. We could hardly expect support from the banks, but with a Startlening+ (Startup Loan plus) in combination with a Win-Win loan from PMV/z and a partner, we were able to get started.”

Ruben Clijsters and Evi Wilboorts run the business together. In late 2015, they signed the sales licence for Kenneth Cole. In the spring of 2016, they sold their first collection, that year’s winter collection. “We are currently doing four major collections per year”, explains Ruben Clijsters. “Two in the summer and two in the winter.”

Selling an American brand on the European market is not self-evident. “The fashion seasons have a slightly different timing in the US. When the collections are being presented to the retailers in the US, Europeans are already buying those shoes in the stores. Europeans buy their winter or summer shoes much earlier in the year. Which means that we also have to be able to offer them earlier.”

FASHION TRADE FAIR IN PARIS

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The first trade fair wasn’t exactly a success, admits Ruben.

“There we were, at a leading fashion trade fair in Paris and there wasn’t a soul to be seen. The trade fair happened directly after the terrorist attacks in Paris. The attendance levels were extremely low. All the appointments we had arranged were cancelled. The trade fair generated exactly one order for us.

Fortunately, shortly afterwards, we had another trade fair in Dusseldorf, where we were able to make up for everything.”

“One of our first customers was Zalando. At their request, I became a distributor for Kenneth Cole. I had already done a similar introduction of an American brand on the European market for a previous employer. They knew me and they were looking for someone to act as their intermediary.”

already had some talks about that, but the biggest challenge for a smaller brand is to be able to keep up with the production. We sell internationally. If there is suddenly a big order from Germany or France, then their brand also has to be able to produce enough.”

THOUSANDS OF PAIRS OF SHOES

PMV believed in LF Brands from the start. “In order to be a relevant brand in Europe, we have to offer lots of shoes. And therefore, we have to work with large volumes and make the accompanying investments. We would not have been able to do that without the support of PMV”, explains Ruben. He sees PMV as a partner in the future as

The shoes are ordered by LF Brands and stored in a large warehouse. There, they are re-packaged per customer and per order. “We arrange the transport from the factories in Italy and China. We store them briefly and then forward them on as quickly as possible to the customer. The faster the shoes get to the customer, the more chance you have of extra sales.” Per collection, LF Brands orders several thousand pairs of shoes. Of these, 95 % has already been sold in advance.

For each customer, the company has an insurance against potential bankruptcy.

According to Ruben and Evi, those customers are retailers who are a good fit with the brand. “Kenneth Cole is a quality brand. We make a conscious choice to work with certain shoe and lifestyle stores, both physical and online. In Flanders, our shoes are sold on the major shopping streets at chain stores such as Paris Londres, but also in a number of boutiques and the big online players in Europe. We usually offer our customers some 120 different shoes. Together with them, we look at which shoes we think are most promising and that’s how we put together the European collection. Most of the time, that corresponds for 80 % to the American collection.”

IN SEARCH OF A FLEMISH BRAND

In the future, LF Brands would like to distribute other brands as well. And they don’t necessarily have to be American ones. Ruben Clijsters hopes to one day find a Flemish brand that will make it internationally. “We have

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well. “PMV is still helping us. Its investment experts make good sounding boards when we want to explore our options for growth.”

editorial

LEADERSHIP LESSONS FROM A MAJOR CULTURAL INSTITUTION be greater, because I’m gradually realising that it is in fact precisely in those cultural institutions that real management and leadership takes place, and that it’s high time that we, in the cultural sector dare to send a few signals about ‘lessons learned’. Okay then…

Gunther Broucke Director of the Brussels Philharmonic and Vlaams Radio Koor (Flemish Radio Choir) and Government Manager of the Year 2016 I am in charge of a large cultural organisation – by Flemish standards at least – with 120 fulltime employees, an annual budget of over 10 million euros, a board of directors and a general assembly, government commissioners and company auditors, a works council, customers, suppliers, political authorities, national projects as well as more and more activities abroad, so in short, the whole extravaganza.

But it still happens that people act surprised when they suddenly discover that a cultural institution is also a company that has to be managed and structured, has to attract customers, has to sort out or maintain its budget, and has to find the right personnel and hold onto them.

And, moreover: my own surprise at their surprise couldn’t

There are a lot of ways that I could explain my position and I will have to select just a couple of them. Let’s take a look at the mantra ‘knowledge is power’, let’s have a think about the democratic process and let’s end with another hot topic: living and working in a diverse, global environment, which is also supposed to be a problem these days.

THE CIRCULATORY SYSTEM OF AN ORGANISATION

For as long as I can remember, I have heard people talking about ‘knowledge is power’. Even in the cultural sector, professors are quantifying the economic output and impact of culture and cultural institutions. This way, it should be possible to demonstrate that the Bruges Concertgebouw was a good investment because restaurant ‘t Putje (slightly diagonally across the way, near ‘t Zand) has sold more rolled sole fillets since it opened. Really, now!

I would like to make a serious plea to embrace that other wise old Bruges saying as fundamental principle: Lodewijk van Gruuthuuse’s ‘Plus est en vous’, (there is more in you/

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you can do better), where that ‘plus’ in French means a lot more than a simple arithmetical symbol. Of course, we always need to strive to do better, but is it really necessary to express that only in measurable data? That has its place, but should it really be the be-all and end-all? Whatever happened to our values? Europe’s very foundations are trembling. Well, speaking as an insider in the culture biz, I predict that the answer is not going to be found strictly by crunching numbers. The potential collapse, on the other hand, might be. I can’t help but think of the quote from Oscar Wilde: “They know the price of everything but the value of nothing.” Numbers can polarise or – if they come out positive – can lull us to sleep.

In ‘my’ company, numbers are important, too, but they are nothing more than the circulatory system of the organisation. They are one of many parts, albeit a vital one, but they are absolutely secondary to goals of another order, that have to do with the symbolic capital of our humanity, our culture and identity.

The pursuit of these elusive, difficult to define overtones that are nevertheless clearly felt by anyone with an open mind, takes leadership. Sometimes – in sombre moments – I wish I could make it easier and have everything judged on the basis of figures, because... they don’t lie. Well, if you’ll permit me: It’s true, they don’t lie, because ultimately, they don’t say anything at all. And something that says nothing, cannot lie. Simple Western Flanders logic.

That is why I am calling for a reorientation of the debate on our values, on what connects us and distinguishes us, and about the hopeful pursuit of improvement. Plus est en vous.

L’ENFER, C’EST PAS LES AUTRES

Of course, in order to achieve that, there are many necessary elements. The most important of these is the human capital – to use that ridiculous term, for once. It is crucial to involve people in the story. Who hasn’t experienced that?

Here, too, I consider myself lucky to inhabit the cultural realm. I think it would be useful to allow society to discover this. Because look: in an orchestra, you’ve got nearly 100 highly educated people all together. Each one has a vision and opinion that they will passionately defend. They work as part of a small or large group (and again, each with a vision, opinion, sound structure, identity, etc.), which in turn forms part of a larger group (the strings, the woodwinds, etc.). Ultimately, the orchestra as a whole is controlled – or, preferably, led – by the conductor.

Essentially, we have a democratic organisation, but I have so far never seen a performance of a symphony by Mahler – or by anyone else – come to a halt because there was a dissident opinion within the group.

And yet, we don’t avoid arguments. There is an intense exchange of opinions. The feedback is often harsh and blunt, and the opinions sometimes really are divided. But we also know what democracy means: listening, discussing, considering, debating, and then taking a decision and standing together, wholeheartedly behind that decision and defending it passionately. And then the miracle occurs: if something is defended passionately, then the audience sits up and takes notice.

Of course, it’s important to listen, to consider and reconsider. And of course, you need procedures, and rules. Yet, just like numbers, rules govern our lives. You won’t find a single case in which someone doesn’t find a rule that can block it, which leads to someone else having to find another rule that can ‘overrule’ the first one… It would be comical, if it didn’t increasingly take on such dramatic proportions.

Mankind is becoming a slave to rules. Our society is becoming unresolved. The symphony is falling silent.

Leadership means daring to take decisions and taking full responsibility for them. It presumes an environment that allows that, and even encourages it. But here, too, there is something strange going on, because after all, that ‘environment’, is that not simply ourselves? L’enfer, c’est pas les Autres, to rephrase Sartre. We are society. Each one of us.

And together we shape it.

To use the somewhat stale slogan: You can never become a member of the Brussels Philharmonic – you are the Brussels Philharmonic. Or, for ordinary mortals, who never get to take part in that orchestral magic: Don’t let anyone tell you that you’re stuck in a traffic jam – you are the traffic jam. Solving the problem of traffic jams is therefore impossible, because it is not the traffic jam that is the problem.

It’s our behaviour, stupid! Simple Western Flanders logic.

I’m calling for leadership and decisiveness, whereby, after a respectful debate, a decision is taken that is passionately defended by all.

NOWADAYS, PEOPLE COME FROM EVERYWHERE, AND THERE ARE HARDLY ANY STUBBLE FIELDS LEFT

Nothing is self-evident when so many different colours and origins come together. When I was a little boy, deep in the heart of Western Flanders, and I saw a boy from another village approaching our territory, the signal was raised for a fight on the stubble field. Nowadays, people come from everywhere and there are hardly any stubble fields left.

And there we go again: in a symphony orchestra, you’ll easily have 10 to 20 different nationalities all together (in the case of the Brussels Philharmonic, there are 19): Russians with Georgians and musicians from Ukraine, Japanese, Chinese and Koreans, virtually all Europeans, yes, even Dutch people, South Americans, Canadians and Yes-We-Can-Americans. The cultural differences are often huge, in terms of national identity as well as to background and manners. But they do share one or more passions and support a well-defined project. And together, in the service of this project, they give the best of their professional selves.

But getting everyone on the same page once again requires leadership that connects people, that searches for shared goals and dreams, that draws from a common source, with fertile common ground in which a well-chosen plant can thrive. Finding differences and blowing them up to unmanageable proportions is very easy. So is polarisation.

Connecting people is more difficult, but if it works, the result is an added value that is difficult to describe.

And, unlike in other areas, here, too, it’s also about choices and clarity. For example, in our orchestra, you won’t find a Berber with typical native instruments. That is for the very simple and clear reason that the symphony orchestra is a typically Western instrument, with a clearly defined,

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fixed array of instruments. Desperately trying to integrate foreign elements into that displays exactly the opposite of what people sometimes claim to be doing: it is showing disrespect and not mutual openness and understanding.

Don’t get me wrong. I would like to live in a world in which I can sample different cultures, preferably in the purest possible form. Encounters and mixing are fascinating and enriching, but relentless attempts to make everyone look the same usually lead to rigidity and incomprehension.

Well, understanding and respect are in fact crucial in constructing the orchestra project, just like in society. It is clear that this respect needs to go in all directions and come from all directions. Dissidents have to be unambiguously corrected, without a lot of discussion. After all, you’re on the playing field and either you play the game, or you stand on the sidelines.

I am therefore also calling for an honest openness, in which mutual respect is clearly expressed in our society. This brings us back to our values, to our symbolic capital, that has been built up through centuries of hard work and aspiration. But it also reminds us that no evolution ever stops. What ceases to move, is dead.

I’m calling for an honest openness, in which mutual respect is clearly expressed in our society.

Enough. I need to roll up my sleeves and get to work. I lead a large cultural organisation.

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GROWTH

ESSENTIEL The Antwerp fashion label Essentiel was created in 1999 when husband and wife Esfan Eghtessadi and Inge Onsea decided to launch a simple T-shirt collection, with four models in 20 different colours. They used their apartment as showroom and the shirts sold like hotcakes.

The number of fast growers, or what are known in the business world as ‘scale-ups’ offers an important barometer for an economy’s health.

This concerns companies with a minimum of ten employees that have expanded by more than 20 % for three consecutive years.

After a year, they opened the first boutique in Antwerp and just four seasons later, they had a complete, colourful prêt-à-porter collection in the window display. The label was an unexpected success in Paris, and more shops were opened in rapid succession: Knokke, Brussels, Leuven, Hasselt and Bruges. In 2004, Essentiel also launched a menswear collection.

That growth can refer to turnover, workforce or both. Scale-ups also produce a lot of extra added value and they are a motor for job creation. All the more reason to provide maximum support to our Flemish growers.

The brand made great strides abroad as well, specifically in France, Spain, the United Arab Emirates, Switzerland and … South Korea. Boutiques in Paris (Le Marais and rue Saint-Honoré) and Lille soon followed, and the brand was also sold in prestigious department stores such as Le Printemps, Galeries Lafayette and Harvey Nichols in the UK. Today, Essentiel is supported by 42 shops, a workforce of 180 employees, and 15 designers. The brand is sold in 40 countries, at over 800 points of sale.

What is striking about it, is that the dynamic management team of Essentiel places great importance on creativity and professionalism.

In order to allow the brand to grow further, in 2016, the Eghtessadi-Onsea couple sought the help of a financial director, who promptly found the way to PMV, to give further substance to the company’s growth plans. Via

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Essentiel: Handsome Havanna - summer collection 2017

Gigarant, the guarantee fund for sums over 1.5 million euros, the investment experts at PMV acted as guarantors for a loan from the house banker, BNP Paribas Fortis.

The funds were allocated for the further expansion abroad and for funding the new collection. New shops were soon opened in Spain (Mallorca and Marbella), the Netherlands (Amsterdam) and Belgium.

PIANO’S MAENE Although Piano’s Maene (for now) can still be safely considered a medium-sized enterprise, the company has an outstanding reputation in the international music world.

Since 1938, the Maene family has been selling and renting pianos and building replicas of historical instruments. The workshop in Ruiselede therefore holds a pre-eminent place in the world of piano building and is (inter)nationally appreciated for the quality and craftsmanship of its 37 employees.

For example, Piano’s Maene made a splash in 2006 with a historically significant replica of the very first Steinway from 1836. Four years later, the workshop also built a copy of the Ignace Pleyel concert grand piano from 1843.

Both instruments premiered to rapturous applause at the Bruges Concertgebouw.

In 2016, a new, modern concert grand piano also drew the attention of the international press and music world. It was a straight-strung piano, which represented a milestone for the company in the history of piano building and demonstrated that, even in times when pianos come from large Chinese factories, it is still possible to develop a new, superior-quality product that generates interest and support.

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In order to understand the innovation, it is important to realise that in the early years, the sound and construction method of pianos were continuously evolving. Each instrument was unique, but that all changed starting in 1860.

That is when the famous American manufacturer Steinway began crossing the bass strings over a part of the middle strings in order to achieve greater homogeneity across all the registers. From then on, a powerful, homogenous sound was the goal and straight-strung grand pianos became a thing of the past.

In the 1950s, Japanese piano companies began copying the concert grand pianos by Steinway on an industrial scale.

Standardisation completely eclipsed diversity. In reaction to this monotony, a small group of musicians developed an interest in historical instruments, such as the harpsichord and the pianoforte. However, those instruments are not very practical. What’s more, they require constant maintenance by specialised technicians and the musician has to retrain in order to be able to play it. That’s why quite a few artists are open to alternatives.

With impeccable timing, the Maene family, who have been involved in the trade for three generations, intuited that the time was ripe for a new type of concert grand piano. After all, if Steinway had not crossed the strings in 1860, then the straight-strung grand piano could easily have evolved into a powerful, modern instrument that could fill a large concert hall.

The famous Argentinian-Israeli pianist and conductor Daniel Barenboim played a major role in this creation process. When he asked Steinway to build him a straightstrung concert grand piano, they referred him to Chris Maene, who promptly delivered the bespoke instrument in March 2015 to the maestro in Berlin.

and put them into historical perspective. The accumulated expertise, combined with the flexibility and teamwork in our workshop, is the key to our success. I am the second generation in a family of builders. I now want to pass on my knowledge to my team and share it with the world.

And the successors are solidly in place: my sons work in the workshop.”

He also takes an upbeat view of the future of piano building. The piano is here to stay, and the classical repertoire still has a loyal following. In the pop world, the acoustic piano has assumed a stable position, while jazz musicians have the most exacting demands for the quality of their pianos.

Chris Maene, second-generation piano builder After a number of enthusiastically received recitals before unprejudiced audiences in Vienna and Paris, the new instrument was officially unveiled in May 2016, to great international media interest, in London. Since then, Barenboim’s piano has travelled with him everywhere, and he has purchased a second one.

When asked about the success factor for his SME, Chris Maene answers that the large factories are lacking knowhow and vision: “New approaches are still possible, based on experience and research. Most people who work exclusively with historical instruments don’t know very much about modern instruments, and vice versa. I try to truly understand the evolutions that have occurred in piano building

In order to be able to shift to production of their own, Piano’s Maene turned to the funding experts at PMV. Together with the entrepreneurs, house bank ING and the IWT, they put together a financing mix that would support the ambitious growth plans for this new instrument. Thanks to an SME cofinancing of 250,000 euros, they were willing to back the project.

RAILTRAXX The European railway landscape has changed profoundly since the early 2000s. After all, the clear vision expressed by the European Commission in the 1990s for pursuing greater sustainability and efficiency in the transport system led to privatisation of rail transport. The aim of this privatisation was to separate, on one hand, the infrastructure managers and, on the other hand, the operators who use the rails, throughout the entire European network. In Belgium, this led to the creation of Infrabel, which is the operator and owner of the railway infrastructure, as well as various private railway companies. Railtraxx is one of

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these independent railway companies for freight transport on the Belgian network. It is the only operator that is fully in Belgian-Flemish hands.

An efficient approach to freight transport offers sustainable solutions for the issue of traffic jams around our major cities and therefore, its prospects for growth are good. After all, the planning office expects volume to increase by some 3 % annually until 2030.

Railtraxx was founded in 2009 by Pieter Vanovermeire and Ronny Dillen, one of the founders of Dillen & Le Jeune Cargo, which is now better known as Crossrail. In 2016 the company had a turnover of 18.4 million euros, with a workforce of some 50 employees. Railtraxx was nominated for the Trends Gazelle prize because of the exceptionally impressive and sustainable growth it has shown since its creation.

In order to connect remote parts of the country, the company develops local activities within a radius of 250 kilometres around the port of Antwerp. But together with diverse partners, Railtraxx is also developing daily connections to Basel, the transalpine gateway to Italy, and to Passau, the entry to Eastern Europe.

In 2016, PMV provided a subordinated loan to a sister company of Railtraxx for the purchase of four additional diesel locomotives. This will enable the company to work flexibly and to focus further on high-quality service on the rails, guaranteeing its continued growth.

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NEW YEAR’S RECEPTION In 2016, PMV made a special effort to become more customer-friendly. After all, in the past, the financing products they were offering were even more numerous than the various jerseys in the Tour de France. To help make everything clearer, at their New Year’s reception at Tour & Taxis on 11 January 2017, PMV announced that it would be paring down its products and structures. Outdated companies would disappear and brands would be merged. The result has been a simpler service for entrepreneurs and an appropriate solution for any funding problem. PMV possesses the resources, the expertise and the ambition to make this a reality.

editorial

PROFITS AND ENTREPRENEURSHIP: THE CHICKEN OR THE EGG?

Caroline Ven Economist and CEO of Ticket 2 the Future Companies are absolutely essential. Countries or regions where entrepreneurship activity is scarce, unquestionably lag behind in terms of prosperity, innovation and general standard of living for the population. That is why it is important to nourish the forces that drive entrepreneurship. Ability to generate enough profit plays an important role in this process.

And not only for the sake of the shareholders’ greed. After all, profits are an important source of funding for companies. Certainly for SMEs. The pursuit of profit is often seen as the most important goal for a company. For private companies, turning a profit is certainly essential. Public companies or social projects can

survive through subsidies or contributions from volunteers or sponsors. By contrast, private companies have to make profits in order to survive. If there is no prospect of a certain level of returns, no one is going to start up a company or invest in it. But aside from the returns for investors and shareholders, profits are also necessary to enable a company to grow and invest.

However, there is much more to entrepreneurship than that.

Professor Charles Handy1, an international authority on organisational management, describes the entrepreneurial drive as a certain mission that a person wants to fulfil, a problem one wants to solve, a need one wants to meet.

Finding a successful way to bring that to the market will result in profits. The value to society of entrepreneurship is therefore much greater than can be expressed strictly through the income it generates for the shareholders or, by extension, for the people employed by the company.

In other words, a positive entrepreneurship culture can have numerous benefits for a society. And therefore, it deserves to be sufficiently encouraged. The culture of entrepreneurship is expressed in the number of start-ups, or the respect for entrepreneurs among the general public, for example. But

See, a.o.: Harvard Business Review, December 2002 ‘What’s a business for’

1

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also, the way in which companies (are able to) find funding can be a sign of the degree to which entrepreneurship is widely supported.

Unfortunately, the rate of entrepreneurship activity in Belgium is traditionally very low. With fewer than 4 % new companies founded each year, we are in fact in the very last place in terms of creating entrepreneurship in the European Union. But in order to create a sustainable basis for generating prosperity, it’s even more important to know whether companies – new or existing ones – are successfully able to grow. In that sense, it is interesting to note that the rate of shutting down businesses is very low in Belgium, so that in the final balance, there is a positive growth rate of entrepreneurship. But the low rate of start-ups and shutdowns demonstrates that we do have to contend with a structurally inhibited entrepreneurship dynamic. The process described by Schumpeter of creative destruction, whereby less successful or obsolete solutions are replaced by new players, is held back. That lack of innovation and dynamic energy is also evident in the development of business investments. They are a good barometer for tracking whether enough is being invested in order to be prepared for the future, to innovate, but also to expand what is successful. Following the sharp downturn in 2008-2009 as a result of the financial crisis, the investment ratio remained

low. Clearly, the investments in tangible fixed assets are at a significantly lower level than prior to the crisis. This has certainly had an inhibiting effect on the long-term growth potential of the economy. After all, investments are the most important driver for future economic growth.

Fortunately, along with the better business results in 2016, business investments have also gained momentum and it is to be hoped that this continues. But it’s best not to read too much into such signs, prematurely. In order to allow our economy and our society to fully enjoy the benefits of innovations and the introduction of new technologies, it will take more than simply investment in expansion driven by the economic climate. It will take entrepreneurship, with room for more high-risk investments and projects. And since this will inevitably involve money, it’s important to investigate whether the way in which companies are being funded is appropriate.

Just like in the rest of the Eurozone, Belgian companies rely much more heavily on bank loans than their American counterparts. In a period in which companies in the US generally turned to capital markets, in the Eurozone, this accounted for only 20 % of external funding. However, the tide appears to be turning in the relative preponderance of bank loans in European corporate finance. Alternatives are on the rise. In the past decade, the importance of bank financing for companies has dropped to just 50 %. The tighter access to bank financing since the financial crisis in a period of fairly lacklustre economic growth may help to explain this development. Direct financing through the capital markets has been making great strides in Europe since then. In addition, companies have been helped by the interest-rate conditions which have made it highly attractive to issue their own bonds. However, it is primarily the large corporations that are making the shift. These companies are often part of an international group and gain easier access to the capital market. Small and medium-sized

companies are relatively more inclined to still use bank financing, but they mostly opt for self-financing, certainly for riskier projects. Most start-ups in fact, have to rely on the contributions of their own partners (35 %) or loans from friends and family (18 %). Without this group known as “fools, friends and family”, a start-up would appear difficult. Also for small, existing companies, friends and family remain the most important form of financing, along with internal financing through profit reserves. One advantage of this approach is that the generally family run businesses can more easily maintain control and continue to have a say. But the underuse of non-bank finance is also a consequence of the appetite for risk of the savers. In Belgium, families still prefer to put their savings in the bank, even with the current low interest rates, than to invest in the capital markets. The credit institutions are therefore attracting the bulk of the available capital resources, which in turn is translated into their relatively greater capacity to award loans. But financial institutions have to keep the risk factor as low as possible.

This makes it not so self-evident to provide long-term financing or start-up capital. We therefore also see that, after the initial growth phase, in which they have to rely on their own partners and friends, SMEs are providing their own financing as much as possible. Earning profit in order to be able to invest, in other words. That becomes possible once the company has reached a certain maturity. But in a start-up, growth or expansion phase, it can represent an obstacle. Because the costs often come before the benefits.

Or outstrip the resources of the founders.

In that regard, greater use of direct financing through the capital markets would be a way to reinforce the economic dynamics in the long-term. That is also shown by a recent analysis by the European Commission, which launched an initiative to strengthen the capital markets in Europe.

Stricter regulations are also putting pressure on the credit provided by financial institutions, which is increasing the

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need for alternatives. For SMEs, it is all the more important to tap into resources for financing that have a higher tolerance for risk. But of course, savings holders would have to go along with it. It is not enough to call for more entrepreneurship and more stimuli for start-ups if the largest suppliers of the financial surpluses, in this case the families, continue to swear by the protected savings account.

Aside from the innate aversion to risk, the tax system also plays a role in investment choices. While the interest on savings accounts remains untaxed, up to a certain level, the withholding tax on movable property has gradually been raised to as much as 30 %. The now defunct speculation tax also did not encourage an appetite to invest in shares. It is therefore no surprise that in the past four years, there has been a sharp drop in the activity of households in the shares markets. And as long as the introduction of a possible new capital gains tax is still under consideration, long-term investors will also be reluctant to come on board.

In other words, the appetite for entrepreneurship will have to be increased among savers, investors and the tax authorities, so that all the good ideas from start-ups and entrepreneurs will be able to receive sufficient funding. As long as this does not change, it will be a hard and slow road towards gradual growth using the companies’ own resources.

INTERNATIONALISATION Belgium holds the fourth place on the EY list of the world’s most open economies, after Hong Kong, Singapore and Ireland. That should come as no surprise, because a small country like Belgium has plenty of abroad. In our globalised economy, it is therefore very important for our companies to look beyond our borders and for foreign companies to find their way to the economic opportunities in Flanders.

For Flemish companies who want to grow rapidly, international expansion is essential. After all, the home market is often much too small to be able to generate a substantial turnover. But on foreign sales markets, they are able to achieve enough critical mass. Moreover, some sectors, particularly technology related ones, are by nature ‘global’ from the start. Thinking internationally is built into their business model. Think, for example, of the sector of the life sciences, for which the Flemish market is not even relevant.

And because, in an open economy, the competition also often comes from outside the borders, certainly in a European free market, Flemish entrepreneurs also have to be extra competitive if they want to claim their place in the (international) market. Apparently, this is something they are successfully able to do. Based on figures that the federation of technology companies, Agoria, filtered out of the Customs statistics, it turns out that, in 2016, the export by Flemish technology companies reached an absolute record of 61.7 billion euros – 5 % more than the previous year.

In fact, many Flemish companies are being taken over or financed by international investment groups. That helps when there are larger sums involved, but in order to prevent foreign investors from running away with all the profits, it is extremely important to create a healthy and innovative climate for entrepreneurs that will allow Flemish companies to continue to develop in their home country. A strong local ecosystem with successful companies, ground-breaking learning institutions, incubators and support services are therefore also crucial for attracting foreign investment and keeping Flemish companies rooted locally.

Based on the above, it is clear that internationalisation – including attracting foreign companies and investors to Flanders, as well as Flemish entrepreneurs looking to grow abroad – is a part of the DNA of a healthy Flemish economy. It is the mission of PMV to continue to support this.

Which is why PMV provides financing solutions to companies that are active in Flanders. These are not only Flemish companies, but also foreign companies that see attractive prospects in our region. Think, for example, of the biotechnology company arGEN-X, an originally Dutch company that initially did all of its research and development only in Flanders, and in the meantime, has housed all of its activities in our region. The American FRX Polymers also has an important production site in our region.

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C-MEC GROUP: A GUARANTEE FOR INTERNATIONAL GROWTH Sometimes you just need that extra little push. This is how the Kortrijk based C-Mec Group was able to receive a bank guarantee from PMV in 2016 in order to convince their house banker Belfius. Thanks to the intervention of Gigarant, the guarantee fund for amounts over one and a half million euros, C-Mec received enough leeway to grow further internationally through the takeover of the production facility and customer portfolio of a Romanian friendly competitor. With this expansion, C-Mec will also be able to profitably bring more labour-intensive products to the market. And in Flanders, it will be able to concentrate on activities with high added value.

C-Mec is a metalworking company and a supplier of metal components and assemblies. The company was created after Barco Special Components was sold to the BMTech group.

However, in 2011, the divisions in Kortrijk and in Kladno in the Czech Republic were split off from the BMTech group and under the leadership of Yves Dhont, the new C-Mec (Creative Mechanical Solutions) group was founded. Already at the time, the company was able to rely on a guarantee from PMV to give shape to its ambitious vision for the future, this time through the Guarantee Scheme for amounts under one and a half million euros.

C-Mec is also keen to acquire the very latest technology and has always continued to invest in an ultra-modern machine fleet, that can easily be considered cutting-edge.

For example, the fully automatic combination punch press-laser machine was the first of its kind in Flanders.

Also, the bending bench with automatic tool switch was a first in our region. What’s more, C-Mec is very proud of two advanced, automatic loading milling machines.

The owner of C-Mec, Yves Dhont, concludes: “The wealth of the country and a good future for the next generations depend to a large extent on anchoring our manufacturing locally. Thanks to the excellent ‘tripartite’ of PMV/Belfius/ C-Mec, we are successfully making this a reality. Plus, that has been combined with the further development of our presence in Europe. And it is precisely this combination that boosts our international competitiveness.”

Initially, C-Mec worked almost exclusively for Barco, but in order to attract other customers as well, it was necessary in 2012 to significantly increase the scale of its activities and its customer portfolio through a number of targeted takeovers. It thus acquired the company Steelandt nv from Westkerke and Deprez metaalwerken nv from Koekelare.

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factory borders the chemical concern LANXESS and is part of the ‘Scheldt Chemical and Industrial Park’ (ScCIP), which will provide utilities and various services to its new neighbour through the co-siting concept.

KEBONY: A SUSTAINABLE ALTERNATIVE FOR TROPICAL HARDWOOD In February 2017, in the Waasland Port, ground was broken for the second European Kebony factory. The ceremony took place one year after the Norwegian Kebony announced that it had raised 19.05 million euros (177.5 million Norwegian kroner), via PMV among others, to build the new facility. It opened a new chapter for Kebony, accompanied by expansion to meet the growing demand.

Construction has begun in the meantime on the new factory in Flanders. With the creation of 25 local jobs and an investment of 20 million euros, it is giving a considerable boost to the Belgian economy. The factory, which covers two hectares, will initially produce 20,000 m3 of Kebony wood per year. If necessary, two more hectares of extra land can also be developed, which could lead to a doubling of the workforce and a production increase to 40,000 m3. The

Kebony is a high-quality wood product that is being used by leading architects worldwide. Kebony is sustainable and maintenance free, apart from regular cleaning, and can be used in various applications, such as flooring and wall panelling. The company has seen its turnover grow each year, with international sales increasing in the past six years by an average of 35 % per year. The demand for this material is therefore exceeding the current production capacity of the existing Kebony factory in Vold, Norway. As a world player, with distributors in Europe, Scandinavia, Asia and America, Kebony is now in a position to increase its capacity, bring its growth into line with the increasing demand and tap into new market opportunities for sustainable wood.

The patented Kebony technology that was developed in Norway after years of research and development, improves the characteristics of sustainable softwood by means of a bio-based liquid. The process permanently alters the wood’s cell walls and gives Kebony the high-quality characteristics of hardwood, with much better durability and structural stability as a result. Kebony was recognised by the World Economic Forum as a technology pioneer and has been featured five times in the Global Cleantech 100. What’s more, Kebony is being embraced by international architects, designers and project developers.

The new factory is located close to Kebony’s partner, the wood processing company Rudy De Keyser in Kruibeke.

Kebony has already established contracts with various wood dealers through its main importer Martens Hout in Antwerp and Limburg, such as: Vandenbroucke in

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Beernem, Biemar bois in Soumagne, Carlier bois in Namur, Huart bois in Houdeng-Goegnies, and Hoffman Freres in Luxembourg.

Kebony is a beautiful example of how PMV can use its investments to successfully attract foreign companies to Flanders. The new factory is no doubt a welcome arrival in the region and, in addition to the major investment, the creation of jobs and opportunities for the local population will make a significant contribution to a flourishing economy.

NEWTEC: THE SKY IS THE LIMIT Since as far back as 2012, PMV has been contributing to the growth and development of the satellite communication company Newtec from Sint-Niklaas. This was done by means of a risk bearing investment loan of 16 million euros that was part of an R&D project of over 50 million euros, a major investment that is now clearly beginning to bear fruit.

During the period from 2014 to 2016 Newtec grew very rapidly, with 62 % growth in turnover to 72 million euros.

Together with Smartfin Capital, the investment fund of Jurgen Ingels, in 2016, PMV took the next step in order to support the success and further international growth of Newtec. This involved a stake of 26 % for each of them.

The expected worldwide growth of the satellite communication industry and the introduction of new products and applications will put Newtec in the position to realise an ambitious growth plan in the coming years. This ambitious Flemish innovator is thus proving that it is possible to grow

into a world player in a key sector. Newtec is actually a scale-up company that has the potential to grow into an absolute leader worldwide.

The company was created in 1985 when two engineers with a vision, Dirk Breynaert and Jean-Marie Maes, became pioneers in the field of satellite communications. Their specialisation in research and development soon cleared the way for an impressive track record in innovations, partnerships, standardisation and industry recognition.

Today, Newtec plays a crucial role in the worldwide sector of satellite communications. Thanks to Newtec technology more than two billion people all over the world are able to watch television every day. Broadcasters, satellite operators and telecommunications companies all over the world use Newtec hardware to operate their television broadcasting chains.

With a workforce of more than 300 employees worldwide and offices in Belgium, Germany, France, the USA, Brazil, Singapore, Dubai and China, Newtec is a fine example of the type of growth through internationalisation that PMV and its partners strive to support.

UNIFLY: THE AIRBORNE REVOLUTION According to the technology consultancy agency ABI Research, the market for small, unmanned aircraft could increase in the next decade by an average annual rate of 32 % to no less than 30 billion dollars.

Drones continue to find applications in a wide range of areas. For example, the police in the United Kingdom uses drones to search for missing persons. Engineers at the University of Catalonia have developed a drone with thermal imaging technology, so that Park Rangers in Africa can spot rhinoceros poachers. Researchers at Harvard have developed drones for delivering medical supplies to remote places. DHL and Amazon use them to deliver products.

Meal services are exploring the concept of flying waiters and drones are being used for every purpose imaginable.

The possibilities are virtually endless.

But that also means that it soon might get very crowded in the airspace, with all of the ensuing consequences. Imagine that such a drone collides with a commercial plane or a helicopter, or crashes on a children’s playground.

That is why governments are hard at work on regulating the sector, but in order to keep the airspace safe, technological support is also important. That is why PMV and Qbic Arkiv invested 1.2 million euros in the first capital round of Unifly, a spin-off of the Vlaams Instituut voor Technologisch Onderzoek (Flemish Institute for Technological Research or VITO).

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Unifly used the capital to create a software platform that serves as a drone management system. It uses the existing aviation standards to visualise the location of drones. All the important information can then easily be shared and coordinated with interested parties, such as the drone company itself, the pilot, the air traffic controllers and the emergency services.

In November 2016, there was a second financing round of five million euros. The Japanese company Terra Drone Corporation was responsible for 80 % of that. And PMV and Qbic were also involved in the investment once again.

This will allow Unifly to bring its platform to market sooner and to adapt it to the rapidly changing customer needs.

The company quickly received a number of awards, including for the ‘Most Promising Company’ and ‘Scale-up of the year’, and there has been no shortage of contracts. For example, contracts have already been concluded with Thales, the largest supplier of systems for manned aviation. Unifly also works with complimentary service providers from the sector, such as the German airspace manager, Deutsche Flugsicherung, and insurance company Vivium.

In other words, Unifly is a high-flier internationally as well, and by the end of 2017 it plans to double its workforce and bring the number of employees to 40 by the end of 2018.

It’s going to get busy up there in the airspace.

TAKEOVERS Management buy-outs and buy-ins are seeing a strong increase in Flanders. The success of this type of transfer can be explained on the one hand by the ageing population, with older company managers beginning to think about their successors, and on the other hand by the fact that entrepreneurship itself is becoming sexy again. At the moment, there is interest in taking over companies from both the young and old generation.

In a buy-out, it is an employee who purchases the shares of a company. In a buy-in, it is an external party. Statistically speaking, buy-outs tend to have a greater chance of success.

After all, the employee is familiar with the company and understands the corporate culture. An outsider has the disadvantage that he or she only has external information and does not know about what happens internally. It’s often only when the transfer is made that, as an external party, you get the chance to poke around and see what kind of skeletons are in the closet. Whatever the outcome, in both a buy-out and a buy-in, you are suddenly no longer a manager, but an entrepreneur.

customers of the old management are often personal relations, who do not necessarily feel such close ties to the new management.

Deals, therefore, not only need to be financially, technically and legally sound. The psychological and emotional side also has to feel right. After all, it wouldn’t be the first time that the deal falls through because the seller can’t bear to part with his or her ‘child’. Ideally, the transfer should be a win-win situation for all parties concerned and, as purchaser, it’s best if you understand your partner and his or her motivation.

The financial aspect of a transfer or takeover also should not be underestimated. In the best case, you have a partner who knows the craft and who will help look for the necessary funds. Financing with your own resources and/or the bank is usually not enough, however. That is why PMV can cover the discrepancy between your own assets and the bank financing by means of a subordinated loan. This may be more expensive than bank financing, but it also offers a high degree of flexibility. What’s more, this does not lead to a dilution of the shareholders’ interests.

What’s more, with a takeover, there are certainly going to be some extra costs, on top of the purchase price. For example, it may happen that suppliers suddenly shorten their payment deadlines because they don’t quite trust the new management yet. That causes the need for increased financing and operating capital. Not only that, but the

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DECOPRINT Mezzanine Partners 1, the joint venture between PMV and the investment company Capital@Rent of the Claeys family, also facilitated the takeover of a share package in Decoprint nv, in 2016. This was done through a subordinated loan that gave the necessary leverage to a group of private investors. This mezzanine loan gave Decoprints’ house bank the necessary comfort to provide the takeover financing as well.

Decoprint develops, decorates and delivers promotional items made from glass, ceramics, porcelain, plastic and metal. Further options also include premiums, deluxe packaging, original displays and other visual communication and media.

Therefore, chances are you have already come into contact with one of the products – perhaps without realising it – of the Decoprint Group. It may have been a glass, gin bottle, mug, cup or other promotional item. And anyone who enjoys Duvel beer has surely spotted the engraved ‘D’ at the bottom of the glass from which the unique bubbles swirl upwards.

Decoprint nv was founded in 1994 and started out simply with manually affixing and heat transferring stickers on drinking glasses. Nowadays, the company has four production lines in Hoogstraten with an annual output of 45 to 50 million pieces. The group offers clients a full-service model, from design to shipment, and can also deliver on request and just-in-time.

In 2000, Decoprint established the company GPC in Romania. Since then, the Belgian operation has been focused exclusively on the fully automatic printing of bottles and drinking glasses. The machines that were no longer needed in Hoogstraten were transferred to Romania. In the meantime, the site there has set up a semi-automated four-colour production line. In 2016 a fully automated eight-colour line was added. This will enable Decoprint to more easily serve its markets in Central and Eastern Europe.

Q-BIOLOGICALS In January 2016, the French Amatsigroup took over the PMV portfolio company, Q-Biologicals. This French services company focuses entirely on development of pharmaceutical products for human and veterinary use and it has been active in the area of ‘contract manufacturing’ for about twenty-five years already. Its activities therefore strongly complement those of Q-Biologicals in East Flanders, which – working under strictly controlled conditions – produces medicinal products and vaccines from natural proteins for third parties.

Q-Biologicals was created in 2011 as a spin-off of the VIB and Ghent University. In that year, when Innogenetics stopped its production of biological molecules for thirdparty clients, following its takeover by Fujirebio, professor Anny Van Broeckhoven and several colleagues decided to set up a new company as a base for this Flemish expertise.

That was done thanks to an investment of approximately two million euros coming from PMV, Life Sciences Research Partners and the VIB. The company has grown rapidly and become an established player

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in the Flemish biotech landscape. Its highly qualified staff have over 20 years of experience in developing biopharmaceutical products.

In January 2016, the company was purchased by the French Amatsigroup, a leading service provider focused on developing pharmaceutical products for human and veterinary use. This enabled the Amatsigroup to complete its range of services in the development of new biological molecules.

For PMV, the takeover by Amatsigroup not only meant a successful exit, but also offers the guarantee that the solid research team at Q-Biologicals will be able to further develop its activities in Flanders. The activities of Q-Biologicals at the Ghent site have in fact sharply increased since the takeover.

THE JUICY GROUP In 1989, entrepreneur Yves Devos founded The Juicy Group in Erpe-Mere. The company makes fresh juices, smoothies and fruit salads, under its own name (Pure, Charlie’s Salads, etc.) as well as under private label. The group is the market leader in Belgium in the segment of ultra-fresh fruit products. It has a workforce of some 25 employees.

Because Yves Devos did not have a successor, in 2016 the need arose for a partner for external growth. This turned out to be the serial entrepreneur Guy Vanhauteghem, who, along with other partners, took over 100 % of the shares.

Guy is a former banker at Dexia, who, together with several co-investors has already advised around 15 SMEs. For the financing of this transaction, and to fuel a new growth spurt for the company, his actions included a mezzanine loan from PMV.

In the years to come, the new owner aims to grow the company rapidly, through both organic and external growth. Together with his predecessor, who supports the new business plan and will also remain involved fulltime, the goal is to develop a convenience food group with a wide assortment of fruit and vegetable products and diverse distribution channels.

In late 2016, Juicy acquired a majority stake in a complementary German player. In addition, The Juicy Group will also be implementing new technologies to give super fresh products a longer shelf life.

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interview

FASHION DOESN’T STOP AT THE ANKLES It’s not something you see every day: three engineers who go into the fashion sector and approach the creative process from a rational perspective. But this approach has made FNG a success story in a sector that is under severe pressure. With the takeovers of Miss Etam, Brantano, Suitcase and Concept Fashion, the Mechelen based group has been all over the media in the past year.

FNG, originally known as Fred & Ginger, was born in 2003 when three engineer-architects decided to take their careers in a new direction. Dieter Penninckx, CEO: “After a couple years, my business partners Manu, Anja and I were ready for something new. We wanted to sell a product, to be involved in something tangible. So, we took over a company that imported children’s clothing and gave it a spin of our own. Anja especially took on that creative role. The early years of Fred & Ginger were not always easy.”

REVERSE ENGINEERING

Today, FNG is made up of ten brands. Dieter Penninckx: “We work with different concepts, but try to keep our approach consistent. From our headquarters, we standardise the working method for the various brands. In designing a new collection, we determine what elements to include based on trends and recent sales figures. For trousers, for

example, we’ll decide in advance on the quantity, design and retail price. It’s a type of reverse engineering in which we create our collections according to the wishes of the customer. We do this based on data from our own sales, among other aspects.”

In the fashion sector, the success of a brand often depends on that one upcoming collection that is in the hands of a single designer. At FNG, this is different: “We try to spread the risks. Not only are we a multibrand company, but per brand, we create up to 15 collections each year. That way, we’re spreading the risk twice. Plus, we have a whole team of designers on board.”

QUANTUM LEAP

The buy & build strategy of the FNG Group has already borne fruit. In 2009, the group took over CKS and in 2012, Emiel Lathouwers, CEO of AS Adventure, became a shareholder. But the quantum leap came in 2016.

Dieter Penninckx: “Last year, we took two giant steps forward, with the takeover of Miss Etam in the Netherlands and Brantano in Belgium. Our turnover suddenly jumped from 250 to 460 million euros. In order to be able to handle the takeover financially, we received support from Mezzanine Partners I, a fund managed by PMV and

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DIETER PENNINCKX Managing director FNG

Capital@Rent, the mezzanine fund of the Claeys family.

Thanks to a subordinated loan, we were able to reinforce our capital structure, enabling us to take over Suitcase and Concept Fashion this year.”

BARCELONA

Beyond all this, Dieter Penninckx also sees potential in e-commerce and in other countries: “In the Netherlands, 25 % of the turnover of Miss Etam comes from online sales.

We are going to apply that platform and the associated logistics throughout the entire Benelux region. Belgium and the Netherlands will remain our principal sales markets.

But that does not diminish the fact that we are also active in Germany, France and Spain. CKS is currently doing very well in Spain. We recently opened an office there with a sales team. In Barcelona, we will soon be opening a CKS shop and our CKS clothing is also being sold at El Corte Inglés. Of the ten brands that we own, there are three with international potential. So, who knows what the future will bring?”

A POLICY OF PRESENCE

The takeover of Brantano was a conscious choice. Dieter Penninckx: “Fashion doesn’t stop at the ankles. Now, we don’t just sell clothing, but the shoes to go with it, too. So we’ve broadened our scope. So far, we have renovated 40 of the over 100 Brantano shops and their sales have increased by 20 %. What’s more, this has been a permanent increase in turnover. It has been sustained, month after month, so we can safely say the new formula is a success.

We are also working towards a policy of presence: we want to have more square footage in shops on commercial strips.

That’s important, because not everyone is willing to drive to the city centre for brand-name fashions. And of course, we want strong brand recognition in the premium segment.”

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editorial

TWO FORGOTTEN GROUPS IN THE SME LANDSCAPE

Chris Dauw Flemish Credit Mediator

In Flanders, there are tens of thousands of SMEs and the statistics regularly chart how well or poorly this group of businesses is doing. Policy statements about stimulating their development always go over well.

There’s nothing wrong with that.

But those SMEs are a heterogenous group, even if they are lumped together in the statistics. The similarities end there. They are not an ant colony full of identical drones. It’s more like a giant Noah’s ark. That means that if you really want to understand SME issues, you need to look at specific problems.

I have spent over twenty years studying the difficulties as well as the potential of smaller companies, from many different angles: From their conception, to birth, their at times tumultuous life, to their death and sometimes even resurrection. But based on my experience as Federal and Flemish Credit Intermediary, I have a particular focus on two under-recognised aspects, which are probably important for thousands of SME entrepreneurs.

We therefore first need to look at the question of how SMEs communicate with their banks. My construction contractor, for example, is skilled and reliable when it comes to erecting buildings of all sizes, from conservative rustic styles to the most audacious architectural statements. But don’t ask the man how it’s going with his equity or his latest results. He’ll refer you to his bookkeeper. So I am not going to put him on the spot by asking about his cash flow or his repayment capacity.

What applies for my contractor applies equally for so many friendly cafe owners, handy mechanics, dedicated pharmacists, hard-working farmers and cheerful cheesemongers.

They are outstanding in their craft, but not exactly suited to join a credit committee at a bank. Anything strange about this?

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When these people started out, they probably had to turn to their bank. Perhaps they would currently like to renovate their business or expand, with a bank loan. But quite a few of them go about it awkwardly. They don’t know their way.

They don’t know how to ‘sell’ themselves.

As a result, those potential credit applicants all too often communicate ineffectively with their bank about a need for credit that may involve many specific requirements and in which risk is a crucial factor.

For that matter, the financial sector also doesn’t communicate optimally, there is little overview and it sometimes sells overly sophisticated products.

Let me illustrate this with the following figures taken from real life cases. In 2016, the Flemish Credit Intermediary received 200 applications. In a quarter of the cases, we were able to help the applicant by referring him or her to an alternative form of financing. In another quarter, there was effective mediation between the bank and the entrepreneur, with a positive result in two thirds of the cases. In 20 %, the problem resolved itself, at the entrepreneur’s own initiative.

In 10 % of the cases, the Credit Intermediary decided that the case was unsound, and it was quickly closed. It is striking that we were forced to classify the remaining 20 % as unresolved because we did not receive any response to relevant questions, such as a substantiated prognosis, for example.

This is a peculiar situation. But there are several possible explanations: Perhaps the entrepreneur had turned to the Credit Intermediary in an initial panic reaction and only later gained an accurate insight into the profitability or uncertainties inherent to his or her project; or he or she thought that the intermediary should be able to work with hastily compiled information; or the entrepreneur could not supply the required information because his or her bookkeeper did not provide sufficient support; or… There are so many possibilities, but clearly, there is something amiss with the impact of the communication.

This brings me to my second point.

Four years ago, my previous construction contractor was confronted with the bankruptcy of two customers. Shortly thereafter, his wife left him and no longer took care of his invoicing. In the meantime, his bookkeeping has simply been stuffed into a few shoeboxes because his bookkeeper dropped him. He is in arrears with his VAT payments and Social Security, so that he is facing very significant fines. His banker did not hesitate to convert his mortgage mandate into a registered mortgage and is deducting payments from his account. He’s getting visits from the bailiffs.

He’s getting hit with all kinds of extra costs. The interest is suddenly skyrocketing, with rates of up to 15 %. It is hard to imagine in this age of negative interest.

Just like this contractor, others are trapped in the same situation: a vicious circle of self-generating costs, on top of the shaky situation from the beginning. How significant is this phenomenon? And what is the way out?

It can happen to the most dedicated craftsmen. And then, imagine how eager you’re going to feel as a candidate start-up when you hear what happened to your uncle, who has gone bankrupt in the meantime. I would not be surprised if that young niece/candidate start-up decides she would rather continue to work as a mail carrier, with all due respect for my mail carrier.

Everything that I have presented here as a somewhat casual anecdote is grimly serious reality for quite a few, and for far too many, entrepreneurs. Could we not, therefore, take some initiatives to effectively support those Flemish entrepreneurs, as well as the Flemish economy in general?

There is this, at least. As professional lenders, let us always take the opportunity to remind (small-scale) entrepreneurs that taking out a loan is a serious matter. That’s why it requires a solid application file. Anyone who believes in his or her investment project has got to first invest in a complete and credible loan application. Moreover, the predicament of companies in financial trouble urgently needs recognition.

I am therefore making a dual appeal. I’m asking the financial sector to put a stop to the outrageous interest rates that can so suddenly appear. I’m asking the government to put a stop to the hidden, completely counter-productive taxes, such as the costs for converting a mandate into a mortgage registration, and the excessive fines charged for VAT and Social Security arrears. A healthy business climate deserves it.

Unfortunately, I do not have any meaningful figures on this. And I also don’t think that they exist. After all, it is a difficult problem to quantify, but that does not make it any less real. I speak from experience.

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SECTORS PMV focuses especially on the economic sectors and clusters that are important for the Flemish economy or have major growth potential for the future. This does not mean that specific sectors are excluded: PMV is willing to invest in any entrepreneur with a good business plan and a strong team. This is how PMV keeps its finger on the pulse of business in Flanders, particularly in terms of the existing players, the stages in the company life cycle they are addressing and the sectors they are or are not serving.

This allows PMV to detect any gaps and use its own instruments in a very focused way when the financing market in Flanders falls short.

RACE SUMMARY Sectors

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SECTORS

››Sustainable chemicals ››Energy ››Heritage ››FinTech ››Regional development ››Life sciences and health care ››Property and infrastructure

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SUSTAINABLE CHEMICALS As the largest petrochemicals cluster in Europe, the port of Antwerp offers tremendous opportunities for the sustainable chemicals sector. Antwerp comes fourth in the world after the ports of Houston (Texas), Jubail (Saudi Arabia) and Singapore. Furthermore, as a direct provider of more than 61,000 jobs (in FTEs) with more than 88,000 (in FTEs) employed indirectly, the port is responsible for almost 150,000 jobs.

The sustainable chemicals industry comprises the design, production and use of efficient, effective, safe and environmentally friendly products and processes. It also encourages innovation in all sectors by creating new chemicals and making improvements to production and control processes.

This ultimately leads to improved performance and greater added value. At the same time the sustainable chemicals industry helps to protect and improve human health and the environment.

Antwerp is working hard to build a chemical industry that is sustainable in nature. Such a sustainable chemicals industry has an incredible impact on our surroundings and on the society in which we live. PMV is therefore strongly committed to supporting businesses and funds offering innovation, sustainability, a strong business plan and a great team.

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AVANTIUM The company Avantium, which is based in the Netherlands and was founded in 2000 as a spin-off from oil giant Shell, raised no less than 20 million euros in capital in April 2016 in a financing round led by PMV. The company was following in the footsteps of other companies in PMV’s portfolio such as Kebony and FRX Polymers.

For six years Avantium featured on the Global Cleantech List, which highlights the top one hundred companies working in the area of clean technology for private use.

Together with its partners throughout the world, the company develops efficient processes and manufactures sustainable products from materials of biological origin.

Avantium therefore serves as a breeding-ground for revolutionary renewable chemical solutions.

One of Avantium’s many success stories is its YXY technology for the production of PEF (polyethylene furanoate).

This is a completely new, high-quality plastic made from industrial sugars of plant origin. PEF is 100 % recyclable and therefore offers a cost-effective solution for use in manufacturing anything from a wide range of plastic bottles and packages to fibres.

YXY is the most advanced technology, but Avantium is also working on a series of other pioneering projects.

The company offers advanced services and systems for research into catalysis, intended for leading chemical and petrochemical companies.

The funding for this capital round has been used for commercialisation of YXY technology for use in manufacturing packaging materials which are 100 % biological in origin.

Avantium’s implementation plan also includes construction of a flagship factory, with capacity for 50,000 tonnes per year, in the port of Antwerp: this will be the first commercial factory in the world producing FDCA (furandicarboxylic acid).

On 15 March 2016 Avantium and BASF signed a declaration of intent to create a joint venture called Synvina, for the production and marketing of the renewable chemical building block FDCA and also for the marketing of PEF. The joint venture aims to use YXY process technology to strengthen its leading global positions in FDCA and PEF and then to issue licenses for YXY technology for industrial-scale applications.

CEO Tom van Aken therefore takes the view that Avantium is entering an exciting period as the various aspects of the strategy come together and important milestones are reached.

PEF BASED ON FDCA OFFERS NUMEROUS POSSIBLE APPLICATIONS AND BETTER RESULTS

Industry experts see bio-based plastic as a promising product that could serve as a building block for a number of derived products. It is particularly useful for production of PEF, a polyester suitable for food and drinks packaging, and for producing fibres for use in carpets and textiles. PEF offers better properties than conventional types of plastic, such as an improved barrier to gases such as carbon dioxide and oxygen, which means that the packaged goods have a longer shelf life. PEF also has greater mechanical strength, making the packaging thinner and consequently requiring a reduced quantity of raw materials. PEF is suitable for foil pouches, bottles for carbonated or non-carbonated soft drinks, water, milk and care products. In addition to PEF, Avantium is also able to make polyamides for plastics and

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fibres or polyurethane for foam, coatings and adhesives. The range also includes esters for personal hygiene products and lubricants.

SYNVINA WILL CONTINUE TO WORK ON AVANTIUM’S PARTNERSHIPS WITH LEADING COMPANIES

The Synvina joint venture will continue to work on Avantium’s partnerships with leading brands throughout the world. The aim is to develop a complete supply chain for PEF as a sustainable, bio-based packaging material.

Together with Toyobo the two companies will promote PEF polymerisation and continue development of PEF films for food packaging, industrial and medical packaging and electronic applications such as screens and solar panels.

Synvina will work with Mitsui on the development of thin PEF films and PEF bottles in Japan. Synvina also wants to strengthen its partnerships with customer-shareholders such as The Coca-Cola Company, Danone and ALPLA and also to set up a joint development platform for PEF bottles.

BASF AND AVANTIUM IN AN EXCELLENT STARTING POSITION

“With Synvina we are moving into a promising business and helping our customers in a number of different industries to create value. We strongly believe that these renewable products will be the future. That is because they combine excellent properties with a production process that is based on renewable materials”, comments Dr. Stefan Blank, President of the Intermediates division of BASF. “Our base product (FDCA) is a sleeping giant with tremendous potential. It was first developed in the 1950s, but it has never yet been used and marketed successfully”,

comments Avantium’s CEO Tom van Aken. He continues: “I strongly believe that Synvina will wake this sleeping giant and make it available for industrial use.” By developing a proven production process and building a strong network of partners, Avantium has given Synvina every chance of success. The company will also benefit from BASF’s expertise in market development, large-scale production and as a reliable chemicals company within the oil and gas industry.

THE STOCK MARKET BECKONS

In early 2017 Avantium announced that it wanted to raise a further 100 million euros through market flotations in Amsterdam and Brussels. Some 65 to 75 million euros of the proceeds are intended for the new production plant in Antwerp. The remainder is intended for projects that are under development.

On the first day of trading the shares got off to a strong start and rose 7 % above the offer price of 11 euros per share. The operation therefore raised 103 million euros. As a result of this strong interest, small Belgian and Dutch investors were allocated only 18 % of the shares that were sold.

Avantium expects the project to be fully operational in Antwerp from 2021 onwards.

CAPRICORN SUSTAINABLE CHEMISTRY FUND In December 2016 the Capricorn Sustainable Chemistry Fund (CSCF) raised 50 million euros in a first round of capital raising. PMV subscribed for shares worth 10 million euros via ARKimedes Fund II. The ultimate aim is to create a fund of 100 to 150 million euros to invest in sustainable chemicals.

The fund will of course be seeking financial returns, but it also aims to make a ground-breaking contribution towards the development of new, sustainable animal feeds, chemicals and advanced materials, processes and products. To achieve this, the CSCF is mainly focusing on investment opportunities in Europe and North America, but other continents are not excluded.

The target companies are businesses that are or will be generating income from disruptive technologies and products that have the potential to transform global markets.

To bring this about, CSCF is investing in all stages of the sustainable chemicals value chain: from raw materials and food products to new working methods for the production of functional chemicals and materials offering sustainable solutions for everyday products in the food, animal feed, fibre and fuel industries.

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ENERGY PMV is helping to come up with answers to major energy challenges and making Flanders more independent of carbon. This is done through more alternative power generation and through energy efficiency and innovation.

The energy sector is moving fast. We are evolving from a centralized generation and distribution model to a decentralised model. The transition is resulting in new regulations and different business models. That poses a lot of challenges for us in terms of investment, governance and risk management. It also requires a proactive approach, with appropriate financing for the projects and businesses that are driving the sustainable economy.

PMV is working towards this through major participations in sustainable energy companies.

The Vlaams Energiebedrijf (Flemish Energy Company or VEB), which has been a fully owned subsidiary of PMV since 2015, also has a key part to play in reducing energy costs for the government. It achieves this by purchasing energy centrally at lower prices, by centralising energy data and by offering guidance to government institutions, local administrations and the health care and education sectors on more efficient energy use.

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The VEB therefore acts as a central purchaser of energy and takes responsibility for all aspects of the purchasing process.

The VEB also delivers added value by operating a digital portal which is tailored to meet the needs of its government customers. It supports the budget estimates for the coming year and provides detailed information about consumption.

Together with other government partners, VEB has built a data warehouse that combines energy data with legacy data and makes it available to government bodies in Flanders. This has been done by linking a number of existing databases.

The turnover of Vlaams Energiebedrijf was 68.8 million euros in 2016, as compared to 54 million euros in 2015.

The net result was a loss of 1.8 million euros. This is still a negative figure but PMV expects it to improve in the course of 2017 and 2018.

ENERGY EFFICIENCY Nevertheless, it is not only government bodies that benefit from incentives in the area of energy saving. There are also too few businesses currently investing in energy efficiency.

Lowering energy bills through energy saving measures creates more scope for other types of investment and makes companies more competitive. A study by Unizo, an organisation for the self-employed, found for example that SMEs could save an average of 20 % on their energy bills.

PMV is keen to help them with this.

This is because it is not always easy for small self-employed businesses to make such investments themselves. There is often a lack of knowledge or familiarity with complex energy situations, which stops entrepreneurs from making investments of this type. In addition, borrowing money is not always an ideal solution. There is a risk that credit lines needed for the core business could run dry and additional borrowing also increases the burden of debt for the business.

To encourage SMEs to invest in energy efficiency, PMV will be investing 20 million euros during the next five years in so-called “Energy Saving Companies� (ESCOs).

These are companies that can take on the entire investment in energy efficiency as a third party. They provide measures such as replacing light fittings, adjusting settings for lighting and heating and installing solar panels. This intervention also spans the whole cycle of design, financing, implementation and maintenance after installation.

The money saved by SMEs on their energy bills generates immediate savings and is used to pay for the services that have been provided.

Imagine your company needs 250,000 euros to install a new and economical lighting system. The bank is reticent because it does not have the necessary technical know-how.

You are not very keen on taking on any further debt either.

A supplier of LED light fittings acts as an ESCO company and provides the necessary capital. The new light fittings immediately yield a 30 % saving on your total electricity bill.

Out of a total saving of 30 %, 20 % is used to pay off the ESCO investment. The remaining 10 % is an immediate discount on your energy bill. So you do not have to make any further investment, but you receive the benefits right from the start. The installer also guarantees that the light fittings are maintained. After three years the investment has been paid for and it is owned outright by your company.

The funding for this investment programme comes from the integration of the Vlaams Energiebedrijf in PMV. Calculations have shown that the available 20 million euros can trigger additional financing from banks and private companies, increasing the total amount invested in energy efficiency to as much as 150 million euros.

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editorial

CLIMATE INNOVATION AS A DRIVING FORCE BEHIND THE GLOBAL ENERGY TRANSITION

Jos Delbeke Director-General for Climate Policy, European Commission Six months after the Paris Accord on combating climate change came into force, the global transition to sustainable energy and a low-carbon economy is well underway, whatever Donald Trump may think about it. With its extensive experience in the area of climate policy, Europe is ideally placed to play a part in this transition and exploit the resulting opportunities.

In December 2015 all the countries in the world – including the emerging industrialised countries – agreed in Paris that a global approach is needed to limit global warming to significantly less than two degrees in comparison with the temperature in the pre-industrial era. The next step is that countries throughout the world are now converting the

commitments they made in Paris into concrete measures.

This is a major challenge, requiring active engagement on the part of businesses, investors and civil society. By delivering on its commitment under the Kyoto Protocol, Europe has demonstrated that this transition can offer considerable economic opportunities, and it is well placed to continue to play a leading role now that emerging growth countries will also be wanting to take their place in the global roll-out of low-carbon technologies.

The statistics make it clear that the global energy landscape is changing fast. Last year was the fifth year in a row when there was more investment in renewable energy than in fossil fuels. More importantly still, new records have been set in terms of the production capacity created. Thanks to falling prices of renewable technology, this has been done at a cost that was 23 % lower than in the previous year. This trend towards a spectacular decline in costs is expected to continue in the coming years.

THE GLOBAL ENERGY TRANSITION

So we have started out on the right path, but our journey has only just begun. All countries will have to create the right climate for investment to make this transition possible, bring about structural change in energy systems and encourage the upscaling and the shift in private investment that are needed to make this happen.

The International Energy Agency (IEA) has calculated that full implementation of the national climate plans would result in 13.5 trillion US dollars of investment in energy infrastructure and renewable energy over the next fifteen years. This spectacular amount represents a huge, worldwide market for new low-carbon energy technologies, with information and communications technology playing a rapidly growing part.

Rapid scaling up of private investment will be needed to support this transition to clean energy and prevent a situation where we are left with CO2-intensive infrastructure.

Many of these investments, particularly where they result in energy savings, can also pay for themselves over time.

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FROM TARGETS TO POLICY PROPOSALS

Experience in the European Union has shown that setting ambitious energy and climate targets pays dividends, and that achieving those targets can go hand in hand with economic growth. Between 1990 and 2015 greenhouse gas emissions in the European Union fell by 22 %, while the combined gross domestic product of the member states increased by more than half. Research has shown that technological changes made the largest contribution towards cutting emissions, far more than shifts between economic sectors. The number of

so-called green jobs in the member states of the Union also increased continuously during the same period, even during years of economic recession.

ing stricter emissions standards for cars and lorries and a coordinated campaign to achieve European leadership in battery technology.

The target for the next ten years is building further on the results that have already been achieved. As part of the 2030 Climate and Energy Package and in connection with our obligations as part of the Paris Accord, the European Union has committed to cut our emissions by at least 40 % in comparison with the level in 1990, to increase the proportion of renewable energy to 27 % of our energy use and to increase energy savings by 27 %. The key legislative proposals intended to achieve these targets are already being prepared.

SUPPORT FOR SUSTAINABLE INNOVATION

Even before the global climate conference in Paris, the European Commission had presented a proposal to strengthen the European Union Emissions Trading System (EU ETS). The EU ETS is the world’s largest market in emissions rights and it is the key European tool in cutting greenhouse gas emissions. The proposed changes will strengthen this system to cut emissions further and will encourage investment that will help us to meet our long-term climate goals. Last year an additional proposal was introduced, setting targets for the member states for sectors not covered by emissions trading, such as buildings, transportation and a proposal to integrate agriculture and forestry within our wider energy and climate policy.

These climate targets together form part of a wider series of policy proposals which are intended to make clean, affordable energy available to EU citizens and companies, partly by improving the way the European electricity market works and through improved harmonisation between the energy plans of the member states. Proposals to improve mobility with low CO2 emissions will soon be presented, includ-

Europe has to make efforts to bring about an innovative transition to a clean and sustainable economy. Our climate and energy policy is therefore focused on supporting the process of reducing CO2 emissions and supporting low carbon innovation in the EU. For example, the Commission is proposing to set up an Innovation Fund as part of the process of revising the emissions trading system. In this way the Commission is seeking to support activities in the area of innovative renewable energy and low-carbon innovation in energy-intensive industries. That fund will continue to build on the existing NER 300 programme, thereby becoming one of the largest financing programmes in the world for investments in companies in low CO2 showcase projects. This fund is already offering 2.1 billion euros in financing for projects, for example converting straw into biofuels in Italy, producing biogas from agricultural waste in Germany and generating wind power under Arctic weather conditions in northern Sweden.

Another example is the European Fund for Strategic Investments (EFSI), which forms the basis of the Investment Plan for Europe. By providing guarantees for projects, this fund helps to lower the risks of climate-related investments. The fund was set up for an initial term of three years but, in view of its success, the Commission has proposed doubling both its duration and its size. By 2020 the fund should therefore be able to support investments in Europe amounting to at least five hundred billion euro, with sustainability as an important priority.

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The common thread throughout the European approach to these financing instruments is that public funds are used as a lever to mobilise additional private financing, thereby getting innovative investments off the ground. The same also applies to programmes like InnovFin Energy Demo Projects, part of the Horizon 2020 research programme, which offers loans and guarantees for demonstrations in the area of energy, or Private Finance for Energy Efficiency, which focuses on financing projects in the area of energy efficiency. The implementation of both of these is being supported by the European Investment Bank (EIB).

The EU has also committed to spend at least 20 % of its budget on climate-related measures by 2020 so that its climate policy is integrated in all areas of European policy and programmes. One example of this is Horizon 2020, the EU financing programme for research and innovation. More than a third of the almost eighty billion euros reserved for the 2014 to 2020 period is aimed at supporting research and innovation related to climate policy.

SOLUTIONS TO GLOBAL CHALLENGES

The EU is in the perfect initial position to address the challenges that exist in the areas of climate and energy.

European (and Flemish) businesses are pioneers in many areas of sustainable technology. Approximately 40 % of patents for sustainable energy worldwide are owned by European companies. The clean energy transition, spearheaded by renewable energy, ICT and batteries, represents a rapidly growing global market presenting innumerable opportunities for companies that are ready to seize them.

The time has now come to stay on course and make even greater efforts to build a flourishing, climate-friendly economy in Europe and throughout the world.

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HERITAGE The Vlaamse Erfgoedkluis (Flemish Heritage Vault) – a collaboration between PMV and Herita vzw – actively contributes towards safeguarding protected or listed architectural heritage in Flanders for future generations, and supports others with similar aims.

Whenever a heritage property is redeveloped it aims to optimise its economic function in a way that respects its heritage value and the capacity of the surrounding area.

So the Vlaamse Erfgoedkluis is an (alternative) financing instrument that supports heritage sites that can be profitably exploited. It does this by providing risk capital, loans and by acquiring rights in rem. Finally, it is set up as a rolling fund, investing its own income to help start up new projects.

With targeted investments and an integrated approach, the Heritage Vault aims to get potentially profitable heritage sites back in use and provide public access to them where possible.

The Vlaamse Erfgoedkluis offers (alternative) financing and guidance with architectural heritage projects, with a view to optimising the change of use, management and running of the properties. It does this in a way that respects the heritage value of the properties and the capacity of the area to support them, while aiming to improve public access and interpretation of their heritage value.

This results in a financial return, maximising public access to the property and optimising the way it is experienced, always within the parameters of its change of use and financial profitability.

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interview

KORTRIJK CASINO BUILDING BECOMES A HOUSE OF BOOKS Boekenhuis Theoria (Theoria House of Books) is a well-known feature in Kortrijk. After forty-seven years on Onze-Lieve-Vrouwestraat, the store has moved to Casinoplein. The adjacent Komma in de Lucht café bar has moved along with the store. Theoria received support for the renovation of the nineteenth century building from the Vlaamse Erfgoedkluis, a collaboration between PMV and Herita vzw.

PASCAL VANDENHENDE & ANNEMIE BERNAERTS Business Managers of Boekenhuis Theoria

bookstore. When they read in the newspaper that Theoria was for sale, they jumped at the chance. A month and a half later they were running the business.

In November 2011 Pascal Vandenhende and Annemie Bernaerts took over the Theoria bookstore in Kortrijk. Pascal came from the financial world and Annemie was working in the events sector. They decided it was time to move their career in a different direction. As an independent bookstore, Theoria is one of a dying breed: there are only thirty such stores remaining in Flanders.

Pascal Vandenhende: “We freshened up the whole store: paintwork, laying parquet floors, getting rid of the dust.

That was quite a transformation in itself. We also adapted and refined the offering. The only thing we were afraid of beforehand was that thirty to forty thousand titles are published in the Dutch language each year. How do you make a choice? The answer turned out to be simple: you follow your gut feeling. Our starting point was always that we wanted a bookstore that we would enjoy visiting ourselves. We have achieved that.” After two years the property next door to the bookstore became available and Pascal and Annemie started the Komma in de Lucht café bar, which became an extension of the store.

CAREER SWITCH

CASINO FOR SALE

Pascal was working in a CFO role but had had enough of the financial world. He resigned from his job with no specific plans. Annemie had reached a similar point and was also looking for something different. As keen readers they started looking for a property in which to start their own

In late 2015 they heard that their premises would be sold.

They were not willing to pay the asking price themselves, so they went looking for an alternative. The former casino building was right at the top of the list from the beginning. The building was owned by the city of Kortrijk and

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was being sold at auction. Applicants wishing to buy the property had to submit an application that met specific conditions. “Our application scored one hundred percent.

The building had to remain open to the public and needed to have a cultural aspect. The city council is very pleased with the way we are using it. We are becoming a tourist attraction.”

Thanks to his experience in the banking world, Pascal put together some strong applications and persuaded the company’s own bankers. The property was sold and the initial necessary adaptations were carried out. “It actually went quite smoothly in terms of the purchase and setting it up. Nevertheless, we were also looking for alternative opportunities because we did not want to be completely dependent on a bank.” That is because after the purchase of the property they had a number of other projects on their list: restoring the facade, new windows, restoring the old theatre auditorium, installing creative areas in the loft and setting up a logistics centre in the basement. There was no shortage of ideas.

SOUNDING-BOARD

This brought them to the Vlaamse Erfgoedkluis: “Thanks to a seven year subordinated loan from the Vlaamse Erfgoedkluis we were able to do several of the things that were on our timetable at once. Otherwise it could have taken us fifteen or twenty years. The loan does have to be repaid of course, but it still gives us the opportunity to implement a unique project in a short space of time.”

The Vlaamse Erfgoedkluis also acts as a sounding-board for Pascal, in terms of both the development and running of the business: “They ask for reports and we have to provide information on a regular basis. Many people might see that as a disadvantage, but I actually view it as an advantage.

It means you have a strong partner sharing your ideas, someone who sees it as very much in their interests to make the project a success.”

One thing that Pascal and Annemie have already achieved is the creation of a large book kitchen, with two cooking islands: “We provide cooking workshops and authors come here to present their cookbooks and offer a little demonstration.”

OPEN HOUSE

Boekenhuis Theoria is much more than just a bookstore.

Pascal and Annemie want to make it a cultural meeting point too. You can have a good cup of coffee, there are book presentations and workshops, we have activities for children, or you can just go there to work at one of the many little tables available. “We do have a wide range of books. We are

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specifically focusing on travel guides, cookbooks and children’s books. We are not dependent on bestsellers. We are also a meeting point. People can sit in every corner and at every table. We are also a co-working space, and that service is free of charge. This keeps our store lively. We want to be an open house.”

Independent booksellers are a dying breed. Pascal and Annemie do not let that discourage them. “This is not easy; it is hard work. It is virtually impossible to see very far ahead.

But you must always have an entrepreneurial approach, whether you are running a bookstore or a butcher’s shop.

We have to work on the basis of our strengths. We cannot compete with bol.com or Amazon. We are focusing on our supply, offering good titles, and we do specialise in a number of niches. Knowing in a very focused way where you want to go, that is the future.”

FINTECH FinTech is a term that is becoming more and more popular in the financial world. The concept comprises all the innovative financial products and services that can simplify and speed up the way we handle money. A large proportion of revolutionary financial concepts come from technology-driven start-ups.

These start-ups are changing the traditional ecosystem and traditional banks are therefore having to rapidly adapt their business culture.

Recently the technology sector has also been growing in smaller countries, including Belgium. Just as in Sweden, the technology industry in Belgium is disproportionately large in comparison with the country’s size. Even though Belgium only has a population of eleven million, in 2016 it had twenty-two companies on Deloitte’s Fast 500 list.

Ever since the Industrial Revolution Belgium has had leading financial infrastructure. Today, Swift, Mastercard Europe and Euroclear all operate from Belgium. Our financial ecosystem also has no less than one hundred and thirty companies, research centres, incubators and accelerators. All this is within an area of only 30,528 km2. So there is a lot of pioneering expertise available.

The presence of the European Commission in our capital city, together with the majority of the government bodies and regulators, offers another important advantage for our financial ecosystem. When you add in the central location

of Belgium between the major powers in the FinTech sector in western Europe and that it offers a beneficial tax regime for the sector, it quickly becomes clear that this small country is the ideal test site for ambitious FinTech companies. At the same time Brexit is sending shockwaves through the City of London, and British FinTech start-ups and established financial players are all more tempted to have a look across the Channel. Clearly they like what they see, because on 30 March 2017 insurer Lloyd’s of London announced that it was choosing Brussels to safeguard its presence on the continent.

In 2016 the fund raised 10 million euros for UnifiedPost, a company providing solutions for management of financial supply chains. The financial technology sector is bubbling with life in Belgium.

We are already proud of our world class payments infrastructure and the number of FinTech deals that are signed in Belgium. In 2015 Belgian FinTech companies raised 150 million euros for forty-one deals. That is quite modest in comparison with the major centres, but in 2016 the total was much larger. Almost 200 million euros went into some sixty deals.

Xpenditure, which provides efficient software for submitting expense forms, is active in more than sixty countries and raised almost ten million dollars before it was sold to Sodexo.

So the future is looking bright for the FinTech sector in Flanders. Major banks such as BNP Paribas Fortis, ING and KBC are investing heavily in the start-up ecosystem and recruitment of digital talent, to support their digital evolution.

We also have a number of risk capitalists in Belgium, including PMV, Fortino, SmartFin Capital, Gimv, Volta Ventures and Capricorn Ventures Partners, which all make an active contribution towards the FinTech ecosystem.

SmartFin Capital, for example, specialises in mid-stage and late stage investments involving larger tickets.

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One example is payment systems provider Clear2Pay, which is probably the largest FinTech player within our ecosystem. This company, which was set up by Jürgen Ingels and Michel Akkermans, has raised 127 million dollars in the course of sixteen years, with revenues totalling no less than 600 million dollars.

In March 2017 the company Silverfin in Ghent, an accounting platform, raised 4.5 million dollars from British investor Index Ventures. Other investors were SmartFin Capital – founded by Jurgen Ingels and others – and Louis Jonckheere and Pieterjan Bouten, the co-founders of Showpad.

One example of a smaller scale success story is Intix, in Mechelen. Their software platform offers financial institutions a single window providing a uniquely clear view of all their financial messaging data, regardless of the format or standard in which the data are generated. In 2016 they successfully raised 1 million euros.

Belgium is an outstanding technological centre in Europe because two-thirds of our start-ups are focused on B2B. It seems that the same trend is also becoming established in FinTech, with companies like Xpenditure and Clear2Pay. Another area of growth for FinTech in Belgium is the insurance sector, particularly a company like Qover, which helps businesses with digital insurance projects.

Qover has also recently concluded a successful round of series A financing, which mostly came from Anthemis, a Luxembourg-based investment company that focuses on new financial technology. Having raised 5.5 million euros in capital Qover is now one of the largest players in this emerging niche.

The Belgian home market is of course small. This means that start-ups look beyond the country’s borders right from the start to attract the capital they require and build sufficient commercial traction. They set high standards and think on a global scale from the beginning.

Nevertheless, the future is looking bright for the FinTech sector in Flanders. Major banks such as BNP Paribas Fortis, ING and KBC are investing heavily in the start-up ecosystem and recruitment of digital talent, to support their digital evolution.

B-Hive, the Belgian FinTech innovation platform, has also raised millions of euros from investors like AXA, BNP Paribas Fortis, ING, KBC, SWIFT, Mastercard and others.

In this way the platform aims to improve the competitiveness of Belgian financial service providers, to attract foreign start-ups looking to be based in Belgium, and to upscale the whole ecosystem within Europe. B-Hive also offers a strong platform for channelling government resources to early start-ups.

So PMV expects a lot from this promising sector. It does understand that the financial world is right in the midst of a process of innovation and disruption and that Flanders must not be left behind. PMV is therefore investing in a targeted way in these FinTech players of the future.

Investments are also usually made at a very early stage. In 2016 more than 60 % of the fifty-six financing rounds in the sector involved amounts of less than 5 million euros.

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TWIKEY Twikey was founded in April 2013 by Domique Adriansens, after sixteen years’ experience in the electronic payments sector. The company automates direct debit payments and aims to create a vital link between businesses, private individuals and banks for digital signature of contracts and SEPA (Single Euro Payments Area) mandates.

This system allows payments to be made in euros in a uniform way in more than thirty countries.

Twikey’s platform allows improved, faster payment of your bills. It has low transaction costs, can be integrated with your accounting software and prevents fraud. An additional advantage is that a lot of the paperwork becomes unnecessary.

After a year of research and development, Twikey approached the market in 2014 with an operational solution permitting recurring payments via more than three thousand seven hundred European banks. It immediately became obvious that there is considerable market potential for businesses using direct debit or automatic collection as a mechanism for collecting payments.

The platform is also ideal for businesses that operate on a subscription basis, such as gyms, telecoms companies and utilities. De Standaard Boekhandel, De Persgroep and Weight Watchers are already Twikey customers.

Partnerships are also being concluded with BNP Paribas Fortis, KBC, Bank J. Van Breda, ING, Rabobank and ABN-Amro to widen the use of Twikey among their customers.

The Ark Angels Activator Fund (AAAF) quickly realised that Twikey’s technology would probably develop into the market standard, and it acquired a participation in the company in 2015. To consolidate its position further, however, Twikey needed an additional capital injection. It found this in 2016 through SME cofinancing from PMV/z.

VIRTEO In 2016 PMV also acquired a participation in the start-up Virteo in Mechelen. This is an online administration and allocation platform for debt collection, and could be described as a kind of digital bailiff. Through this platform Virteo’s customers can have their unpaid bills followed up quickly and efficiently by the linked service providers. In fact these are usually bailiffs or lawyers. A whole ecosystem has already emerged around Virteo’s open business model.

This is not an unnecessary luxury, as CEO Karel Verheyden explains: “In Belgium half of all bills are paid late. Up to 3 % are never paid at all. For companies that issue a lot of invoices it takes a huge amount of effort to monitor and collect them all. Sometimes other players have to be brought in such as collection agencies, lawyers and bailiffs.”

Virteo makes this whole process simpler and more transparent by automating collections and centralising all communications. This means that creditors have direct insight into the status of a reminder, amicable recovery, repayment plan or judicial recovery. Virteo is good news for debtors too. The system prevents unnecessary costs.

It is clear that Virteo is responding well to the spirit of our times, with the general European trend towards more integration and fewer intermediaries involved in collecting

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debts. The proportion of collections through traditional collection agencies fell by 20 % in 2015 in comparison with other, more technologically advanced methods.

In order to market the platform more quickly in the domestic market and expand the options that it provides while also looking beyond Belgium’s borders, Virteo raised 2.2 million euros at the end of 2016, half of which came from PMV. The other private investors Sherpa Invest 2 and the Ark Angels Activator Fund (AAAF) each acquired a participation of 25 % of the total amount raised.

Virteo immediately expanded its team to seventeen employees and expects to have ten more vacancies in 2017, mainly for software developers. Those who wish to participate in the financial revolution may apply.

interview

PLAYPASS MAKES CASH MONEY SUPERFLUOUS Visiting a festival now has a new dimension: there is no cash on the festival ground, because it has been replaced by PlayPass smart technology. By scanning your wristband you are able to gain entry on the basis of your ticket and you can also pay for all your purchases: a drink, a hot dog or even a souvenir. You can link it to a credit card account so that money is automatically loaded onto your wristband.

If you wish, you can also let your friends know via social media which performance you are watching. Goodbye to your purse or wallet.

FROM A FIELD TO A CITY

RON SCHUERMANS & DAVID DE WEVER CFO & CEO PlayPass

PlayPass was founded by CEO David De Wever in 2013. The early days no longer bear any relation to how it is working now. David De Wever: “We started with four developers and myself. Our first customers were the Sportpaleis and Rock Werchter – two big names. Flanders was the ideal place for us to launch, with three hundred festivals in Flanders alone. At the beginning there were five of us at a festival site day and night, keeping our system up and running. Now we have a number of teams providing support. Starting with the major festivals also meant that we immediately had some good references. Belgium has global significance in the world of festivals. We can make good use of that.”

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At the same time the world of festivals is highly specific: starting from a field where cows are grazing for most of the year, a whole city comes into being and then tens of thousands of people arrive. All the network and power supplies are temporary. So PlayPass has to be able to cope with that too. David: “The organisers made it clear to us that they had no time to think about us or our system. We are just one cog in the machine. We have to lighten the load for our customers as much as possible.”

NEW YORK AND SINGAPORE

PlayPass’s headquarters are located in Antwerp, but David wants to conquer the rest of the world too. The company already has offices in New York and Singapore. “Despite the fact that we and our system are relatively new, we are already able to stand up to our two major competitors globally, one of which is Canadian and the other from New Zealand. We are active in sixteen countries and we have a very strong position in Europe. We are currently planning to expand in the United States. One of our competitors is already working there. So we will need a good strategy to break through. Having an office is certainly a first step.

Singapore is our starting point for moving into Southeast Asia. We are already at a number of festivals in Singapore and Hong Kong, and we want to expand from there.”

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In 2016 PlayPass mainly focused on Latin America. A number of companies there have been asking to use the technology. PlayPass has therefore opened up its platform so that local providers can use it under a white label. David explains: “We supply hardware such as payment terminals and scanners. We provide training and we get paid per user.

This way our customers continue to receive support and they always receive our latest updates. For us it is a way of exporting our system without having to provide all the support for it ourselves.”

CONSTANT SEARCH

The company has been in existence for more than four years, but it is constantly facing the challenge of being able to grow. That is because this requires resources, employees and, in the case of PlayPass, the right hardware too. PMV/z has been a partner and funding provider since the very beginning. “PMV/z gave us a BA+ loan and SME cofinancing. The Guarantee Scheme also provides permanent backup for all the bank loans we take out. Without PMV/z we would not exist”, says David.

They are also constantly searching for the right people.

“Good people are the driving force behind every business.

We are looking for very specific profiles and that means it is not always easy. Certainly when it comes to technical people, we need a whole range of different profiles. What the programmers do at the back end is completely different than at the front end (for example the till systems).

Nevertheless, we all have to be able to communicate with each other. We currently have thirty people working for us in all, but during the festival period that number rises to more than a hundred, and we supplement our teams with freelancers.”

PRIVACY

Another challenge for PlayPass is the changing privacy legislation. Technology means you can link your wristband to your social media profiles. For example you can post a message on Facebook by scanning your wristband somewhere. Businesses find this attractive, but the legislation has become increasingly strict in recent years. Now it has to be possible to amend messages before they are posted.

PlayPass is therefore mostly focusing on access control and contactless payments, and less on immediately sharing experiences via social networks. “Even without those social media, however, we can offer opportunities for brands and festival organisers to use data, for example by recognising patterns in consumption. If we can persuade visitors to load the wristband with money beforehand, they spend more.

We are also discovering correlations between specific products. If we see that people who drink wine at a festival are mostly eating slow food, the organiser can respond to this by positioning the relevant stands close together.”

That allows the organiser to get more out of his festival.

“That is certainly also the way we are selling it”, explains David. “We cannot promise that turnover will increase immediately, but through the information we provide they can get to know the pattern of consumption at their festival better, and in time they will be able to improve their turnover and profitability.”

A strong team of developers are ensuring that PlayPass is able to respond directly to new technology or legislation in the area of privacy. “PlayPass focuses on achieving the best possible user experience for visitors. We know a lot about our users and we need to be able to guarantee the confidentiality of that information at all times. At the same

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time we have to be able to use that data to provide added value for our customers. This data processing aspect will continue to be our focus in the future”, David concludes.

FLANDERS’ INFORMAL SUMMIT

The relationship between the Netherlands and Flanders is particularly strong, and the two regions share a large number of common interests. Exports are the crucial driving force behind growth in our small, open economies and they are vital to the prosperity of the Low Countries. To continue to encourage this collaboration, some sophisticated perspectives were set out at a friendly high-level meeting during the Flanders’ Informal Summit at De Bijloke in Ghent on 21 September 2016.

PMV was there too.

REGIONAL DEVELOPMENT Our demographics, the transition taking place in our economy, our mobility and the high social costs of greenfield developments mean that Flanders has to take an integrated, regionally-oriented approach to complex projects.

This type of regional development ranges from urban development to sustainable development of business parks and expansion districts. These are often complex challenges, requiring a comprehensive approach and also necessitating a delicate balance between public and private funding, with interests that cross administrative, sectoral and geographical borders.

PMV starts from the needs that exist in the market and arrives at a regionally oriented approach that integrates multiple different residential and mobility solutions.

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interview

PROJECT DEVELOPMENT 2.0 AT SLIM TURNHOUT A completely new neighbourhood is coming into being in Turnhout, right next to the station. It is a combination of housing and work space, created in a modern, sustainable way and including a lot of greenery and open space. SLIM Turnhout (Smart Turnhout) is a joint venture between project developer ION, PMV and the City of Turnhout.

ION is one of the initiators of SLIM Turnhout. “As the project developer we are building the whole project”, explains Davy Demuynck, Managing Partner at ION, a young company from Waregem. “We are building every house and every apartment and laying out every public square.” ION specialises in large, complex projects involving both residential housing and commercial property. It collaborates with architects, surveyors and contractors, and takes care of all the coordination between the partners.

MODERNISATION OF AN UNDER-DEVELOPED ZONE

DAVY DEMUYNCK Managing Partner ION

The project in Turnhout involves redeveloping the derelict industrial areas of Foresco and Atelfond. “SLIM Turnhout is creating approximately two hectares of new public space.

There will be a new, low traffic neighbourhood consisting

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of homes, public squares, parks, streets and underground car parks. The site was a former industrial site with empty, derelict buildings. It provides approximately 88,000 m² of above ground floor area in all, with a combination of housing and work space, including apartments, assisted housing, social housing and 20,000 m² of office space. We also want to include a hotel. The unique thing about it is that we are able to significantly enhance the quality of life and the housing stock for the people of Turnhout by creating this new public space.” The project is also focusing on social innovation and is aiming at a concept in which residents provide care for each other. This allows people to remain in their own homes for longer. The Flemish Government has provided 2.6 million euros in subsidies from the urban renewal fund for this.

The project is fully underway and the first phase of the public area has already been laid out. “This is a paved square with a lot of greenery and benches. Around fifty apartments and twenty houses have also been completed. In each case we finish work on the public space first, because there is no point laying out a square if you still have to drive cranes across it. We have also been thinking about how to make sure residents do not experience any nuisance from such a large-scale development”, explains Davy Demuynck.

“Realistically I think the whole project will last about another eight to ten years, until about 2025.”

INNOVATIVE HEAT NETWORK

Another innovative aspect of SLIM Turnhout is its heat network. “A heat network is a network of pipes carrying hot water throughout the whole neighbourhood, with a single central heating point. Everyone can heat their own water using a heat exchanger. The advantage of having a single heating point is that it only needs to be maintained once, rather than having maintenance for each building with its own technical services area. We heat using wood pellets and supplement this with gas on very cold days.”

“There are eight phases in our trajectory, and each of the three partners is able to decide on their participation in each one. PMV has been involved as a financial partner since day one. It is providing the funding for the redevelopment and it is also keen to continue to participate in subsequent phases. That collaboration is going very well and I am very pleased with it.”

There is also a two-sided interaction between the residential housing and offices: Eighty percent of the energy requirement in office buildings is for air conditioning, so the excess heat is used to warm up the water for the homes.

The cooled water then goes back to the offices. “We are very proud of this heat network. It is environmentally friendly and sustainable.”

SLIM Turnhout is based on a two-way interaction between private and public sectors which Davy Demuynck sees as quite innovative. “At first there is usually a degree of suspicion. People in the public sector often think the private sector party is only interested in making a profit. The fact that PMV took the role of an independent umpire and defended the city’s interests, reassured the City of Turnhout.

That also allowed us to have more confidence in the city authorities. Another advantage is that PMV has extensive knowledge of the property world, which speeded up the whole process.”

AN INNOVATIVE COLLABORATION

NIEFHOUT

The collaboration between ION, the City of Turnhout and PMV has gone smoothly. The city council and the OCMW (public social welfare centre) owned a large site and ION had also purchased a considerable proportion of the land.

PMV came up with the idea of linking it all together. “We calculated a land value, and that is what was allocated to all the owners. So it makes no difference whether on your land there’s a public square or an apartment, everyone gets the same value for their land. Depending on the number of square metres of land, the owner also has specific participation rights and is able to decide on which phases of development he wishes to participate in. Working together allows you to have a much bigger impact with an eight hectare site than you could with eight separate one hectare sites. That system is the great advantage of PMV.”

‘SLIM Turnhout’ is the legal name, but the commercial name of this project is ‘Niefhout’. “Nief is the word for new in the Kempen dialect and ‘New Turnhout’ sums up our vision well. We want to breathe life into the project.

Every summer we have a beach bar run by some young people, which has been set up with our support and which creates a fun, pleasant atmosphere. These summer bars are maximising the number of people in Turnhout who are getting to know the new area. As a result people are starting to understand that the former industrial estate is being developed and then they become interested in living there.”

Neighbourhood meetings are organised to create a forum for citizens to express their views and wishes. “I believe that should be the new way of working. We don’t do old-style

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project development, where a plan was simply put on the table without any debate or consultation. We are going for project development 2.0.”

LIFE SCIENCES AND HEALTH CARE It is difficult to overestimate the importance of the life sciences for Flanders. Our region, including Brussels, has one hundred and forty-six companies specialising in this promising sector. Seventy-five thousand people work either directly or indirectly in this area.

Flanders also has a large number of smart cookies working at its five universities and at the Flemish Institute for Biotechnology (VIB), a world class research centre. The presence of this knowledge and expertise has already led to internationally recognised scientific breakthroughs and there is now a concentration of companies around the existing knowledge centres. They are working on development of new medications, diagnostics and biotechnology processes. R&D companies also benefit from the flexible infrastructure in the thirteen research parks and fourteen specialist incubators that are located in our region.

Life sciences, however, are the ultimate international discipline. Even small and medium-sized companies in this sector are active internationally from the beginning. The market in which they are selling is a global one. We may therefore be proud of our prominent position on the world market in this sector. Belgium is the absolute number one in the world in terms of the number of clinical studies per capita. We have attained this leading position thanks to the

presence of one hundred and seventy-six hospitals, seven of which are university hospitals, and one of the fastest approval procedures for clinical studies in the world.

The life sciences sector has grown in recent decades to become a flourishing ecosystem. It includes both small SMEs and major pharmaceutical companies. We have a number of reputable knowledge institutions such as the VIB. The training provided by our universities and colleges is top class. We can afford to be proud of our highly specialised infrastructure. A number of well supported subsidy mechanisms are available through the Innovation & Enterprise Agency (Dutch: VLAIO) and there are attractive tax benefits for research companies. This, along with a very favourable tax regime for patent income, helps to make Flanders a highly attractive region, for example for foreign companies wishing to set up biotech activities. The presence of specialist investment funds is of course also a significant advantage.

PMV has been active since 2009 as a direct and indirect investor in the life sciences, and it has a specialist team of five with the required expertise. Over the years it has built a balanced, diversified portfolio of twenty-two life sciences companies, as well as invested indirectly in life sciences via the ARKimedes scheme (KMOFIN, Qbic, Vesalius Biocapital) and through participations in larger funds such as Aescap, Capricorn Healthtech Fund, Vesalius Biocapital I and II and LSP V, some of which are based abroad.

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The total amount of historic direct investment was 57 million euros as on 31 December 2016. This has allowed PMV to mobilise no less than 630 million euros in additional capital funding, which represents a multiplier effect of no less than ten. The companies in the PMV portfolio also directly employ four hundred full-time employees.

Research has shown that for each of these highly qualified jobs, twice as many more jobs were created in other sectors dependent on biotech. This means that direct and indirect employment in the sector is equivalent to 1,200 full-time jobs.

PMV invests in companies right from the start. It was there at the foundation of start-ups like eTheRNA, Complix, Indigo, ViroVet and AgroSavfe. Through the Spin-off Financing Instrument (SOFI) it has also invested in Biogazelle, ConfoTherapeutics, GlobalYeast, Ontoforce, Pepric and Pharmafluidics. It is certainly characteristic of PMV to acquire a participation at an early stage, earlier than purely private venture capital funds. That is because this is the stage at which financing shortfalls exist and where the leverage effect on private investors has the maximum effect.

Companies in the growth or internationalisation phase can also count on PMV. Finally, PMV focuses on attracting businesses to come to Flanders. It has played a crucial role in attracting research and development activities such as Apitope and Biocartis, and in the successful market flotations of arGen-X and Celyad.

It is precisely because the life sciences sector is so capital intensive that PMV has the ambition of creating large, specialized investment funds. That is one reason why Biotech Fonds Vlaanderen (BFV), which was previously administered by Gimv, has been transferred to PMV in 2016. Thanks to this transfer PMV is now able to further consolidate the available government funding and benefit from major scale effects.

PMV wants to be certain that adequate capital is and continues to be available to stimulate this flourishing sector.

Newer start-ups now find it easier to obtain financing and they also have improved access to local capital providers.

The sector is, however, still particularly capital-intensive.

It costs tens or even hundreds of millions of euros to get a biotech company to the point where it can function in its own strength. To make follow-up investments possible at a later stage, there is a need for funds with a sufficiently large critical mass, say more than 100 million euros. PMV has the resources that are needed for this.

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VIROVET In January 2016 Virovet nv proudly announced that it had successfully concluded the first part of a series A financing round and had raised 5 million euros. Virovet is a leading Belgian biopharmaceuticals company which is active in the development of innovative vaccines and antiviral medications for farm animals. The funding will be used to develop and launch the veterinary portfolio.

This early investment was backed by a syndicate of risk capitalists, led by PMV (for the first time from the Flanders Biotech Fund) and the Agri Investment Fund. The other members of the consortium were Gemma Frisius Fonds KU Leuven, Vives II and Aratana Therapeutics.

Virovet is a pioneer in the development of innovative vaccines. The company uses a unique patented technology platform developed by the Rega Institute for Medical Research of KU Leuven. This technology platform has the potential to produce vaccines more quickly and cost-effectively. The vaccines are designed to maximise efficacy and minimise safety risks. They are also thermostable, which means that the standard cold chain is no longer required for their distribution and storage. ViroVet will use this technology for both endemic and epidemic viral diseases affecting animals.

This is important because a growing global population is demanding more and more animal protein. The growth in stock farming, the intensification of markets and climate change are all increasing the risks of viral diseases, which are able to spread quickly throughout the world. These conditions not only have an impact on animal welfare and on the economy, but they carry risks in terms of food availability and safety. Some of these viral diseases, such as bird flu, can also be transmitted to humans.

Erwin Blomsma, PhD, co-founder and CEO of ViroVet adds: “With the first closing of our series A financing round we are able to speed up our research and development efforts and bring innovation to a sector that urgently needs it. Together with our research partners at the universities of Leuven and Louvain-La-Neuve and the experienced team at Virovet we now have all the ingredients we need to get off to a flying start.�

In addition to vaccines, the company is also developing fast-acting antiviral agents that can play an essential role in effective control and treatment of upper respiratory tract infections in cattle and pigs. This reduces the number of common secondary bacterial infections and consequently also the use of antibiotics.

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interview

TREATING DIABETES WITHOUT BLOODSHED Diabetes patients have a lot of blood tests involving needles, and that can be difficult.

What if there were a more effective solution to this problem? Indigo, a spin-off from Ghent University, is working on this. It is looking for a method of measuring glucose levels accurately and without physical discomfort.

DANAË DELBEKE CEO Indigo Diabetes

General manager Danaë Delbeke wants to give diabetes patients their lives back and let them forget that they have the disease. The name Indi-go is actually derived from the word independence. “People with diabetes have to stick needles in their fingers several times a day to measure their glucose levels. These only provide a snapshot. To get the dose of insulin right, however, it is important to know whether the values are rising or falling. Since diabetes patients who test their blood using a needle are unaware of these changes, they have a tendency to keep their glucose levels rather high. That is because they are afraid of having an episode of hypoglycaemia if the values fall too low. That can result in them ending up in a coma or can even cause death. In the longer term, however, their high glucose levels put them at risk of side-effects such as heart and eye problems.”

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SUBCUTANEOUS NEEDLE

To monitor the glucose level continuously, three major companies have developed a percutaneous continuous glucose monitor (CGM). In 2016 this was a 950 million euro market, and that figure is growing by 20 % to 30 % a year. Danaë explains the disadvantages: “The sensors with a subcutaneous needle mean that you have something hanging outside your body. Teenagers, for example, see that as having a horrible effect on their image. What is more, you sometimes get stuck with it; you have to change the sensor every seven days; people sometimes forget to take the replacement part when they go away on holiday so they still need to do a needle test to calibrate the device. All these problems mean that many people no longer want to use these sensors, even though it is the best solution from a clinical point of view.”

Danaë is convinced that things can be different: “A number of methods have already been investigated for measuring glucose signals. These include electrotechnical, biochemical and phototechnical systems. This is very difficult because the glucose concentration is extremely low and you have to measure very small variations. None of the attempts that have been made up to now have so far come up with

anything. There are still about twelve players working in this field, from small companies to large businesses like Apple or Google. All those who are still working on this are using the same method, and that is what makes Indigo different. We are using light technology and this involves a completely new method. So we still have the benefit of the doubt: there have not yet been any failures using our approach. Nevertheless, it is still a big risk. We will only be 100 % sure of the technology when it comes to clinical trials.”

MIRROR

For Danaë, Indigo is not her first major piece of work.

One of her previous projects was Caliopa, another spinoff from Ghent University, which focused specifically on light technology in chips. This was purchased in 2013 by Chinese ICT giant Huawei.

The foundations for Indigo were laid as early as 2004 at Ghent University. Danaë joined the team in 2007 as its business development manager: “It was my job to look at applications that would benefit from light technology in chips. As an engineer I know what technologies exist, how they differ from one another, their advantages and disadvantages. At the same time I also like to study the market and look for any gaps. So you come across points of contact: you see a need in society and you see how technology can meet the need. When you add in my fascination with healthcare, the result is Indigo.”

she also comes from the pharmceutical sector. She knows what the trajectory usually looks like in our sector and she is aware of the risks relating to clinical trials, regulation and reimbursement. She regularly holds up a mirror for us, and I find that way of working helpful. PMV was not unfamilar to me, because some time ago it also acquired a participation in Caliopa.”

HOLY GRAIL

The search for investors took place while the Indigo team was still being assembled. Danaë Delbeke: “I like to recruit people and attract capital in parallel. There is an undeniable interaction between the two: a competent person creates enthusiasm among potential investors. The converse is also true: if someone is ready to invest, it becomes easier to attract the best people. I now have a team of fourteen. It is very international, with no less than seven nationalities from all over the world. They feel drawn to this unique technology and they want to be there right at the start of something completely new. We are all striving to improve the lives of millions of people. This team is very important for me, because we are also in a race against the clock together. Whoever is first to come up with a ground-breaking solution will have found the holy grail, because this is a business worth billions. I think Indigo certainly has a chance of becoming that world player.”

During the past decade Indigo has received support from the Industrial Research Fund (Dutch: IOF) and the IWT. PMV recently also acquired a participation in the company: “In addition to capital, PMV also offers advice.

Our case manager Diane Lejeune has a seat on our Board of Directors. She has a strong financial background and

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TEAM BUILDING

With its effective combinations of loans, capital and guarantees, PMV ensures that entrepreneurs are able to take their business up to the next gear. PMV employees were very much involved in the team-building exercise in the heart of the Flemish Ardennes on 16 September 2016.

interview

ETHERNA STIMULATES THE IMMUNE SYSTEM TO FIGHT CANCER A drug to beat cancer is something people have been looking for in oncology for many years. With the new success of immunotherapy, a solution appears to be closer than ever. eTheRNA Immunotherapies uses its own revolutionary technology to beat the dreaded disease.

What eTheRNA Immunotherapies does is clear from its name. “We develop technology that stimulates the patient’s immune system to beat cancer, and in future perhaps serious infectious diseases as well”, says Dirk Reyn. The technology uses mRNA. “This is a messenger that reads codes from genetic material (DNA) and converts them into proteins. We produce this mRNA and bring three pieces of mRNA together in our TriMix technology. The proteins that are then produced, stimulate the immune system. This is a very new branch of drug development. We are trying to get the body to make products itself that will restore a natural function or give it a boost.”

DIRK REYN CEO eTheRNA immunotherapies

eTheRNA Immunotherapies is a spinoff from Vrije Universiteit Brussel. It was founded in 2013 by Professor Kris Thielemans, who developed the new technology, with

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support from CEO Dirk Reyn. Converting the research into an effective medication to beat cancer required a very large number of clinical studies. Investors were of course needed too, and PMV was one of them.

BREAKING THE LOOP

The company is now aiming to create a brake that will slow down cancer. “Cancer is a very devious disease, because it also affects the immune system that is normally able to fight it. A healthy body can correct mutated cells by itself.

But sometimes that process goes wrong, the system loses control and the cancer has a chance to grow. We are trying to break the loop and help the body’s defences to get to the point where it can play its part again.”

In principle the mRNA technology should be effective in various different cancers. Nevertheless eTheRNA is initially focusing on breast and skin cancer. “Both are useful starting points for us. Breast cancer is a live issue. Skin cancer usually responds very well to immunotherapies. We have used the TriMix technology on cells of a patient with skin cancer, which were put back in the body, and it worked very well. In future we are going to evaluate whether

TriMix can be injected into the lymph nodes, where the immune reaction begins, or directly into the tumour. This will probably mean four to five injections over two months.

In patients who are at risk or whose cancer is discovered early, it will probably be possible to use the product alone.

In more advanced forms of cancer the injections will have to be combined with another class of products that turn off specific brakes in our immune system, while our product also stimulates the system.”

“Professor Thielemans achieved good results in his clinical studies with TriMix and was convinced that he had to get this product to patients. He contacted investors, but they asked for a more robust business plan. I had just completed the sale of Movetis and I was looking for a new challenge.

We met via Flanders.bio. That got the ball rolling”, explains Dirk Reyn. Kris Thielemans is now the company’s Chief Scientific Officer.

REVOLUTION IN ONCOLOGY

The drug seems to be a revolution in medicine. “You have a group of people with cancer that you could stabilise so that no further metastases occur. What is more, the malignant tumours could disappear completely.”

“This was successful in one in five patients with an advanced form of cancer in our first study, and after almost three years the cancer still has not come back. It is dangerous to talk about a cure for cancer, but it is enabling us to get the disease under control for a number of patients.”

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Prof. Thielemans is the creator of the TriMix technology.

The company currently cannot yet estimate which patients the product will work for. “Computer programmes are currently being developed to look for correlations in a mass of data. This is being done to identify the parameter that could predict a response in a particular cancer, which would represent huge added value for us and other companies. The advantage of our technology is also that it is tremendously safe. We give the cells genetic information and let them make something that the body recognises as normal, only in larger quantities. Sometimes the patients get a fever or some shivering, but not the serious side-effects that you get

with chemotherapy. Even though we are not able to predict exactly who will benefit from our product, it certainly will not harm patients.”

on investment, because we are talking about a drug to treat cancer that will stabilise or cure patients and not just extend their lives.”

A LONG WAY TO GO

ONE OF THE LEAD INVESTORS

Despite the successes that have been achieved, eTheRNA still has a long way to go before TriMix comes onto the market. “How long that road will be does depend on the results of our studies. If you get very good results, governments are quicker to approve the product. In that case we could be able to bring the product onto the market after one more major study with very good results. In that case we are probably talking about a five year period. That would be the ideal scenario. It is more likely that it will take about eight years.”

eTheRNA received support from PMV in 2016 for its first investment round which raised 24 million euros. “PMV was there from the very beginning. It was one of our lead investors, it is very interested in the project and it is working very closely with us to look for other investors. I consider that PMV is mostly helpful for us because they think in the longer term as an investor, so they do not force the company to generate financial returns in the short term. The collaboration with PMV is going very well. I am very often in touch with them and they are very responsive.”

“Our advantage is that we are a platform company. Our technology can be used in various different conditions. For now we are continuing to focus on skin and breast cancer.

Our aim is to get some good clinical data so that by the third quarter of 2019 we can prove that the direct injection hinders the growth of the tumour. After that we are hoping that large pharmaceutical companies may be interested in collaborating.”

PMV is only one of the shareholders in eTheRNA. “The shareholders are the original founders, additional investors including Progress Pharma, which I founded together with a number of former colleagues from Movetis, the VUB, and venture capital funds”, explains Dirk Reyn. The other investors he mentions include Fund+, Life Sciences Partners, Boehringer Ingelheim Venture Fund and Omega Funds, which have all come from the network that he built during his eight years as CEO of Movetis and Progress Pharma.

“Investors really need to believe in the product and the team before they will be willing to invest. Developing a drug can easily take ten to thirteen years. If it works, however, the rewards are usually very attractive. The return on investment is considerable, sometimes ten to twenty times over a period of seven or eight years.”

Dirk Reyn sounds promising. But what will the drug cost the patient? “At the moment we don’t yet know. It will always depend on the effect that our agent ultimately has, because then you can look at similar products. I think a tipping point will come in the price of medications, a change in favour of the patient, specifically in the case of cancer products which sometimes cost more than 100,000 euros. I suspect that the levels at which new products are priced will come down, but there will still be a huge return

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And what about the future? “I hope PMV will continue to be a faithful part of our story as an investor. With the 24 million euros we have raised, we can carry on until the third quarter of 2019. We will then have a further investment round and I am hoping for a continuing collaboration with PMV, both as an investor and also in searching for other funding providers or possibly for a market flotation.”

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PROPERTY AND INFRASTRUCTURE Investments in infrastructure are essential to the prosperity and well-being of Flanders.

Road infrastructure, school buildings, sports infrastructure and public buildings are all good examples. If we take a look around us, however, there is clearly still a lot of work to be done and consequently a considerable ongoing need for money.

Traditionally, funding for investments in infrastructure comes primarily from the government, which invests about 9.6 billion euros a year. About 27 % of this is spent on infrastructure and about 14 % on hospitals and schools.

Nevertheless, the level of government investment has been shrinking steadily in recent decades. In the 1970s the level of investment was about 5 % of GDP per year, and in the early 1980s Belgium’s infrastructure had an excellent reputation worldwide. Now the government only invests 2.4 % of GDP. For comparison, the equivalent figure for the Netherlands and France is around 4 %.

You can feel the difference. In comparison with our neighbouring countries, the World Economic Forum (WEF) assesses the quality of our infrastructure now as rather low.

In a worldwide ranking Belgium only comes twenty-second, seven places lower than ten years ago. The current level of government funding is therefore clearly not enough to keep our infrastructure up to standard.

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Private investors represent part of the solution to this funding question. To meet the need for infrastructure, the government will inevitably have to call on the private sector. Especially in times of budget cuts, a contribution from private financing is necessary in order to implement major projects.

EPICO PMV and Dutch consultant/investor RebelGroup therefore joined forces in 2016 to create a new investment fund for infrastructure, the ‘European Projects Investment Company’ (EPICo). EPICo is a unique collaboration between Belgium and the Netherlands, based on a longterm relationship between PMV and Rebel. EPICo will be focusing on public-private partnership projects (PPS), renewable energy and other infrastructure projects in the Benelux region or elsewhere in Europe.

and PMV can offer, together with an entrepreneurial approach, will allow EPICo to be effective for these smaller projects too.

The intended size of the fund is 100 to 150 million euros, with 90 million euros already allocated. There will also be a second closing before the end of 2017. The initial group of investors comprises Pensioenfonds Metaal OFP, Pensio B OFP, Crelan nv and Argenta Groep nv.

EPICo invests in the construction and operational phase of projects. The company is independent but its day-to-day management is provided by PMV Fund Management nv and Rebel Infra Developers BV. The rationale behind the fund is relatively simple: lack of know-how holds back many investors such as insurers and pension funds from investing in this sector. Ten years ago access to capital was vital in the world of infrastructure investment. Now it is access to know-how that matters.

It is precisely the available expertise and access to knowhow that makes the combination of PMV and Rebel so powerful.

EPICo definitely does have the requisite knowledge and access to projects. PMV expects that a large proportion of the future pipeline will consist of small to medium-sized infrastructure projects. Access to the knowledge that Rebel

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editorial

TOWARDS A BETTER MODEL OF PUBLIC-PRIVATE COLLABORATION ON INFRASTRUCTURE INVESTMENT Financing infrastructure projects used to be mainly the domain of banks. The Basel III international banking regulations, however, do not tend to encourage this type of lending, since by its nature the loans are concluded on a long-term basis and represent a commitment spanning twenty to thirty years. Insurers, on the other hand, are interested in these longterm commitments since they allow them to meet their long-term obligations. Infrastructure loans offer this opportunity, and they also offer what could potentially be attractive returns. This creates interesting opportunities for a more extensive and fruitful collaboration between the public and private sectors, particularly the insurance sector, in the area of infrastructure projects and investments.

INSURERS ARE LOOKING FOR LONG-TERM INVESTMENTS

Insurers often have long-term obligations towards their insureds, particularly in the area of pensions. To meet these obligations, they invest in a wide range of assets that are safe and still generate a return. After a long period of low interest rates, investment portfolios are being reviewed to find new long-term asset classes alongside standard investments such as equities and bonds. One answer is financing infrastructure projects.

MORE AND MORE INVESTMENTS IN REAL ESTATE

Infrastructure investments are investments in the real economy. Investments of this type are not new for insurers, although historically they mostly involved real estate. In addition to traditional investments in equities and bonds, Ageas also invests more than 6 % of its total investment portfolio in real estate. Through AG Real Estate, Ageas is Belgium’s leading real estate asset manager. The company is also involved in a number of public-private collaborations, such as Scholen van Morgen (Tomorrow’s Schools). In

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Bart De Smet CEO Ageas

recent years other insurers have also increased the proportion of their assets invested in real estate. This is no surprise, since investment in real estate is attractive to insurers for more than one reason.

WHAT MAKES INVESTMENTS IN REAL ESTATE AND INFRASTRUCTURE SO ATTRACTIVE FOR INSURERS?

First of all, an insurer who invests in real estate and infrastructure can diversify his portfolio. These investments have a low correlation with bonds and equities and they are not subject to the volatility of financial markets. A second factor is yield. Investments in real estate and infrastructure have an attractive risk/yield ratio. Although yields have fallen in this area too, the decline has been less severe than in

the case of government bonds. Thirdly, both real estate and infrastructure projects generate stable cash flows that grow in line with inflation. Finally, real estate and infrastructure investments are tangible, physical assets. Like all investments, however, there are of course also disadvantages with investments of this type, namely the high transaction costs and low liquidity.

TOWARDS A FRUITFUL MODEL OF PUBLIC-PRIVATE COLLABORATION

Europe has a tremendous need for infrastructure investments in areas including transport, energy and digital networks. A collaboration between the public and private sectors focusing on these investments in infrastructure creates a win-win situation: for the government, for citizens and for insurers. The government is able to improve the services it provides to citizens, it can benefit from the professional experience of project development that some insurers have, and by working with an insurer the cost of an investment can be spread over a number of years and across multiple budgets. These infrastructure investments allow insurers to spread their investment portfolios. An improved road network and more efficient water management systems also reduce the number of insurance claims.

Citizens in turn benefit from improved services, they do not have as many of the distressing accidents that lead to claims, and their insurance premiums also go down.

Let us look at transport in more detail. In Belgium, 30 % of the cost of car insurance is the result of the six hundred most serious accidents, which are also associated with exceptionally serious personal and physical suffering for those involved, their family members and friends. Out of a total population of five million car drivers, this means that at least one and a half million drivers are paying for the six hundred most serious accidents. Better infrastructure

should mean fewer accidents. Fewer accidents mean less suffering for those affected and lower payouts by insurers.

This will allow them to reduce their premiums, so the cost of insurance premiums to consumers will also come down.

If better infrastructure leads to two hundred accidents being avoided, car insurance premiums can be reduced by 10 %.

Better road infrastructure therefore means improvements for everyone: for citizens, the government and insurers. Up to now we have only been talking about the most serious accidents. The past has also shown that the burden of claims due to glass breakage often increases by 30 % after a severe winter, due to the poor state of our roads.

Another example is the consequences of climate change. If the storms and floods of recent years have taught us anything, it is that we must continue to expect the unexpected.

This means that government investments in projects relating to climate change are a good thing. Projects that help us to deal with the inevitable consequences of climate change could be one area in which governments and insurers can play a significant role together. One good example of this is the Keersluis lock in Limmel. This lock protects the area close to the river Maas from flooding, and it is being financed by AG Insurance. If we invest now, we can help to prevent future disasters or manage them better when they do occur. The result will be fewer problems for our citizens, fewer claims resulting from damage and ultimately lower insurance premiums.

YES, IF THE RISK IS ACCEPTABLE FOR THE INSURER

So governments and insurers should work together much more. When it comes to the financing and management of real estate and infrastructure projects, insurers can play a significant part without putting a burden on budgets. Better and closer collaboration will result in improvements for all

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three parties involved: the government, insurers and citizens. But – and it is an important but – insurers have a duty to both their policyholders and their shareholders to behave responsibly. This means that the yield on the investment must be adequate to justify the investment. So insurers are certainly open to infrastructure projects, as long as the risk is acceptable and the yield is adequate.

FINANCIAL REPORT FOR PMV NV NON-CONSOLIDATED FIGURES (26 APRIL 2017)

RACE SUMMARY Financial report for PMV nv

132

132

Financial report for PMV nv

133

FINANCIAL REPORT PMV NV

BALANCE SHEET ON 31/12/2016 (IN EUROS)

assets Fixed assets Intangible fixed assets Tangible fixed assets Furniture and vehicles

Codes

Financial year 2016

Financial year 2015

20/28

634,755,503

618,815,522

21

711,700

789,787

22/27

93,352

128,284

24

93,352

128,284

28

633,950,451

617,897,452

280/1

406,360,079

373,592,954

280

404,724,628

371,183,445

281

1,635,451

2,409,509

282/3

146,408,129

138,446,895

Participations

282

109,357,987

112,628,407

Amounts receivable

283

37,050,142

25,818,488

284/8

81,182,242

105,857,602

Financial fixed assets Affiliated companies Participations Amounts receivable Companies linked by participating interests

Other financial assets Shares

284

20,887,170

18,001,065

285/8

60,295,072

87,856,537

29/58

256,023,435

179,230,517

Long-term receivables

29

96,028,167

54,075,312

Other amounts receivable

291

96,028,167

54,075,312

Amounts receivable and guarantees in cash

Current assets

Stock and orders in progress Stock Goods for resale

3

220,803

444,092

30/36

220,803

444,092

34

220,803

444,092

40/41

8,782,604

13,139,929

Trade accounts receivable

40

3,801,672

3,922,489

Other amounts receivable

41

4,980,932

9,217,441

50/53

30,323,583

57,297,820

51/53

30,323,583

57,297,820

Amounts receivable within one year

Cash investments Other investments

Financial report for PMV nv • Balance sheet

134

Codes

Financial year 2016

Financial year 2015

116,643,864

51,045,000

Liquid assets

54/58

Accruals and deferred income

490/1

4,024,413

3,228,364

Total assets

20/58

890,778,938

798,046,039

Codes

Financial year 2016

Financial year 2015

liabilities Equity

10/15

877,465,778

790,171,340

Capital

10

764,378,378

719,262,363

100

1,112,428,378

1,029,812,363

101

348,050,000

310,550,000

Issued capital Uncalled capital

Share premiums

11

23,964

23,964

Reserves

13

7,857,272

5,748,350

130

7,857,272

5,748,350

Profit brought forward

Statutory reserve

14

105,206,164

65,136,662

Provisions and deferred tax

16

1,330,635

160/5

1,330,635

164/5

1,330,635

Provisions for liabilities and charges Other liabilities and charges

Liabilities

42/48

11,982,524

7,874,699

Amounts payable within one year

42/48

11,701,484

7,571,774

44

1,428,889

1,052,961

440/4

1,428,889

1,052,961

45

1,677,178

1,570,506

Taxes

450/3

186,915

92,497

Salaries and social security

454/9

1,490,263

1,478,009

47/48

8,595,417

4,948,308

Trade accounts payable Suppliers Liabilities for taxes, salaries and social security

Other amounts payable

Accruals and deferred income Total liabilities

Financial report for PMV nv • Balance sheet

135

492/3

281,040

302,924

10/49

890,778,938

798,046,039

PROFIT AND LOSS ACCOUNT (IN EUROS) Operating income

Codes

Financial year 2016

Financial year 2015

70/76A

8,663,399

7,022,075

Turnover

70

7,969,269

6,538,946

Other operating income

74

694,130

483,129

60/66A

16,406,433

15,591,698

Operating costs

60

Raw materials, consumables and goods for resale Purchases

600/8

476,166

716,951

609

-476,166

-716,951

61

5,018,664

4,168,043

Stock: decrease

Services and other goods

62

8,382,808

9,282,463

630

389,170

273,715

631/4

699,455

1,503,238

Provisions for liabilities and charges: additions (expenditures and reversals)

635/8

1,330,635

Other operating costs

640/8

585,701

364,239

9901

-7,743,035

-8,569,623

Salaries, social security costs and pensions Depreciation and amounts written off formation expenses, intangible and tangible fixed assets Amounts written off stocks, orders and trade accounts receivable: additions (reversals)

Operating loss Financial income

75/76B

56,098,121

19,576,345

75

17,672,608

14,231,400

750

11,333,802

8,125,543

751

6,338,041

6,068,321

752/9

765

37,536

76B

38,425,513

5,344,945

65/66B

6,036,873

3,618,540

65

-516,923

861,873

Recurring financial income Income from financial fixed assets Income from current assets Other financial income

Non-recurring financial income Financial costs Recurring financial costs

650

Interest expense

Financial report for PMV nv • Profit and loss account

136

Codes

Financial year 2016

Financial year 2015

651

-582,200

753,766

652/9

65,276

108,106

66B

6,553,796

2,756,667

Profit (loss) for the financial year before tax

9903

42,318,213

7,388,182

Tax on the result

67/77

139,790

7,266

670/3

139,790

7,266

Profit (loss) for the financial year

9904

42,178,423

7,380,916

Profit (loss) for the financial year for appropriation

9905

42,178,423

7,380,916

Codes

Financial year 2016

Financial year 2015

9906

107,315,086

65,505,708

Amounts written off current assets other than stock, orders in progress and trade accounts receivable Other financial costs Non-recurring financial costs

Taxes

APPROPRIATION ACCOUNT (IN EURO)

Profit for appropriation

(9905)

42,178,423

7,380,916

14P

65,136,662

58,124,792

Addition to equity

691/2

2,108,921

369,046

To the statutory reserve

6920

2,108,921

369,046

(14)

105,206,164

65,136,662

Profit (loss) for the financial year for appropriation Profit brought forward from the previous financial year

Profit to be carried forward

Financial report for PMV nv • Appropriation account

137

DIRECTORS’ REPORT NON-CONSOLIDATED FIGURES (26 APRIL 2017)

RACE SUMMARY Directors’ Report

138

138

Directors’ Report

139

REPORT FROM THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING

To the General Meeting of Shareholders ParticipatieMaatschappij Vlaanderen

Board of Directors’ Meeting – 26 April 2017 In accordance with current legislation and the Articles of Association, we hereby present our report on the activities of ParticipatieMaatschappij Vlaanderen nv (PMV) during the 2016 financial year.

1.

100 %

ARKimedes Management 100 %

ARKimedesFonds II

NOTES TO THE FINANCIAL STATEMENTS

100 %

Waarborgbeheer

100 %

PMV-TINA 100 %

Vinnof 100 %

Biotech Fonds Vlaanderen

100 %

PMV Fund Management

100 %

Vlaams EnergieBedrijf

Zakencentrum Vilvoorde

51 %

99.87 %

Via-Invest Vlaanderen

Vlaamse Erfgoedkluis 100 %

LAK Invest

ParticipatiefondsVlaanderen

ASSETS

PMV re Vinci

100 %

100 %

1.1.

100 %

100 %

PMV Beheer

1.1.1. Financial fixed assets

Situation on 31 December 2016

Financial fixed assets amount to 633,950,451 euros as compared to 617,897,452 euros in the previous financial year. This represents an increase of 2.6 % or net growth of 16.1 million euros. The notes from the Board of Directors on the main transactions that have taken place during the past financial year are set out below.

ARKimedes Management nv manages ARKimedes-Fonds nv and ARKimedes-Fonds II nv (see below). ARKimedes Management receives a fixed management fee for management of both of these funds. ARKimedes Management owns a 1.68 % participation in ARKimedes-Fonds. ARKimedes Management also holds one share in ARKimedes-Fonds II. The result after tax for the financial year is a profit of 277,160 euros. The partial write-off of the participation in ARKimedes-Fonds was partly written back. As in previous years, ARKimedes Management is paying a dividend.

For affiliated companies, the net purchase value has risen from 373,592,954 euros to 406,360,079 euros. This represents an increase of 8.8 %. The participations are discussed below.

The graph below shows the subsidiaries controlled by PMV which are included in the affiliated companies heading (the percentages indicate the participations in the company that are owned by the PMV group).

The ARKimedes scheme was introduced in 2005 with the launch of the first ARKimedes fund, under the name of ARKimedes-Fonds nv. The public sale of shares raised 110 million euros for the fund and in January 2006 it began investing in funds to which other investors have also contributed (referred to as ARKIVs – Activating Risk Capital in Flanders). The amount committed to the ten ARKIVs in which the fund is still participating is 87.7 million euros on 31 December 2016. Of that total, 85.3 million euros is fully paid up. Due to the leverage effect within the ARKimedes Fund, 232.2 million euros have been mobilised, of which 161.6 million euros were invested in 126 different target companies.

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The ARKIVs are operating in a difficult market. Consequently, a number of ARKIVs have suffered write-downs and capital losses. ARKimedes-Fonds is obliged to book some of these in its own accounts. This affects both shareholders’ equity and consequently also the intrinsic value per share. A recovery can, however, now be seen in the risk capital market and there have been successful exits from some ARKIVs.

All activities relating to the Guarantee Scheme are off Waarborgbeheer’s balance sheet and are recorded in separate accounts, financial reports for which are submitted to the relevant departments of the Flemish Region. Waarborgbeheer recorded a profit of 219,906 euros compared to last year’s 113,514 euros. Its equity amounts to 2,455,492 euros.

In the context of the sixth State Reform, the activities of Federale Participatiefonds (the Federal Participation Fund) were transferred in 2014 to the Regions and, for the Flemish Region, are being continued by Participatiefonds-Vlaanderen nv. The existing portfolio of loans relating to Flanders that had been granted by the Federal Participation Fund was not transferred to the company.

ARKimedes-Fonds II nv was established on 4 June 2010. On 7 July 2016 PMV nv subscribed to a capital increase of 50 million euros, raising its issued capital to 210 million euros. At the end of the financial year, 80 million euros of this had been fully paid up.

PMV is the sole shareholder of ARKimedes-Fonds II, with the exception of one share. The remaining share is owned by ARKimedes Management.

In 2015 the product range of Participatiefonds-Vlaanderen was renewed and simplified.

Two more products are being offered, namely the Startlening+ (Startup Loan plus) which is intended for new start-ups and SME cofinancing in which a private investor finances a minimal percentage of the project. A total of 33.3 million euros in loans were approved in the 2016 financial year, which represents a 67 % increase on the 2015 total. Financing was provided for 320 companies, including 272 start-ups. The capital that was deployed led to 128.7 million euros of investment, resulting in the creation of 1,126 jobs.

As in the case of the first ARKimedes fund, the aim of ARKimedes-Fonds II is to buy shares in companies qualifying as ARKIVs. There are 15 recognised ARKIVs operating at the end of 2016. The total amount committed within the ARKIVs is 151.4 million euros.

During the 2016 financial year, thirteen ARKIVs have received full payment on capital amounting to 25.8 million euros. In 2016 there were also 6.2 million euros in capital reductions and 3.5 million euros in dividends received as a result of exits by the ARKIVs. The ARKIVs’ net purchase value entered on the balance sheet amounts to 62 million euros compared to 42.3 million euros in the previous financial year. The recognised ARKIVs invested a total of 164.2 million euros in 113 different target companies.

At the end of December 2016 loans totalling 59 million euros had been approved, of which 37 million euros had been taken up.

In implementation of the special law of 6 January 2014 regarding the sixth State Reform, the capital of Participatiefonds-Vlaanderen has been further paid up in the amount of 13.25 million euros from the Federal Participation Fund. As a result the issued share capital is now 116 million euros, of which 49.75 million euros have been fully paid up.

The profit for the financial year is 2,500,532 euros, compared to a profit of 2,783,605 euros in the previous financial year. The result was strongly influenced by dividends received amounting to 3.5 million euros.

At Waarborgbeheer nv, a 100 % subsidiary of PMV, use of the Guarantee Scheme has risen from 193.5 million euros (for 1,571 commitments) to 232.5 million euros (for 1,769 commitments). The corporation itself provides no guarantees, acting instead as administrator on behalf of and for the account of the Flemish Region. It receives a fee for this management.

The company made a loss of 1,547,019 euros in the 2016 financial year. This is almost exclusively due to the creation of a statistical amount written off for possible future losses on the loans portfolio of 2,229,958 euros. The loss carried forward amounts to 2,623,356 euros.

The shareholding in PMV Beheer nv remained unchanged in comparison to the previous financial year. PMV Beheer acts as business manager of Mezzanine Partners Management bvba, which is in turn the business manager of the mezzanine fund Mezzanine Partners 1 Comm. VA. This fund was formed during the course of 2014 together with Capital@Rent nv. A number of private investors have acquired participating interests in the fund and also

Waarborgbeheer (Guarantee Management) is also responsible for registering Win-win loans. In 2016, registrations were requested for 2,128 Win-win loans totalling 50.5 million euros. These figures represent increases of 11.5 % and 5 % respectively in comparison to 2015.

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provide shareholder loans. The aim of the mezzanine fund is to provide subordinated loans in growth, acquisition and refinancing situations. PMV Beheer closed the financial year with a profit of 15,671 euros.

euros. After realised capital gains and amounts written off, the profit for the financial year was 397,508 euros compared to a profit of 2,840,422 euros at the close of the previous financial year.

The valuation change for Vinnof is usually calculated by PMV as the operating result plus realised capital losses minus realised capital gains. Every year PMV evaluates possible discrepancies between the historic purchase cost in the accounts of PMV and the capital and reserves of Vinnof. In 2016, with a view to the integration of Vinnof within PMV, and contrary to previous years, the value of the participation in Vinnof was brought into line with the value of Vinnof ’s capital reserves by entering a write-down in the accounts.

PMV-TINA Comm.VA provides risk capital and growth financing to (consortia of ) companies with the aim of speeding up innovations and bringing them to the market.

During 2016 follow-up investments were made in Midiagnostics, Borit, LUXeXcel, Kebony, Highwind, Xant, FRX Polymers and Biocartis. A new loan was granted to Avantium. The loans to Borit, LUXeXcel and FRX Polymers were converted during the financial year. A total of 33.3 million euros in additional financing was provided.

Biotech Fonds Vlaanderen nv became part of PMV on 18 July 2016 by a capital contribution in kind. During the 2016 financial year a further 2.5 million euros were invested.

A capital gain was also realised on the sale of the participation in Actogenix. The company ended the financial year with a profit of 793,364 euros.

Further payments on the company’s capital amounting to 30 million euros were received in 2016. The subscribed capital is 125 million euros, of which 7.5 million euros remains uncalled. Total participations and loans outstanding amount to 97.7 million euros.

PMV-TINA ended the 2016 financial year with a loss of 5,102,649 euros compared to a profit of 3,757,257 euros in the previous financial year. This result was primarily driven by the write-downs of 6.3 million euros that were booked against certain investment projects.

PMV Fund Management nv acts as a service provider to investment funds. In this context PMV Fund Management manages the day-to-day business of the PMF Infrastructure Fund nv which was established in 2011. Remuneration for these services varies according to the investment volume and the size of the portfolio managed by PMF Infrastructure Fund.

PMV Fund Management is involved in setting up a new infrastructure fund, which should generate new income in 2017. PMV Fund Management closed the financial year with a loss of 163,273 euros compared to a profit of 625,763 euros in the previous financial year.

Vlaams Innovatiefonds Comm. VA (abbreviated to “Vinnof ”) provides risk capital to innovative start-ups and young businesses during their initial growth phase. Vinnof does lose a certain number of projects due to the early phase at which it invests and the high risk profile of its investments. This is a typical feature of the early-phase risk capital investment sector. Vinnof ’s investments have a higher risk profile and offer no guarantee of future success.

The company Vlaams Energiebedrijf nv (VEB) was brought into the capital of PMV on 18 September 2015. The VEB wishes to unburden the public sector through more sustainable and efficient energy management. The VEB acts as a central purchaser of energy for delivery to public bodies, facilitates energy efficiency projects and is involved in data analysis.

The company’s financial fixed assets amount to 7.5 million euros compared to 8.6 million euros in the last financial year. Vinnof granted follow-up loans amounting to 1.9 million euros during the financial year.

In 2016 the VEB supplied 422 GWh of electricity and 630 GWh of natural gas. Due to more efficient purchasing and digital billing the VEB saved the government approximately 9.6 million euros.

Vinnof booked write-downs totalling 1.8 million euros but these were not necessarily realised (e.g. due to business failures or liquidations). During the 2016 financial year there were exits due to the sale of participations in Q-Biologicals, arGen-X and a partial release of escrow relating to the sale of Cartagenia. The capital gains on these totalled 2.3 million

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The VEB was involved from the start in the Energy Efficiency Action Plan, which was approved in early July 2016. Under this scheme, the Flemish government undertakes to consume 2.09 % less energy every year. The VEB is able to help specific bodies to achieve these targets. In addition to the existing energy performance contracts (EPCs), the VEB has been working on further expanding its range of services in 2016: potential scans, relighting, building management optimisation etc. At OPZC Rekem the first savings were made in September. The VEB initiated similar EPC projects at Antwerp University and GO! Scholengroep 16.

Until the end of September 2016, PMV nv owned 50.02 % of Nautinvest Vlaanderen nv which in turn owned a participation of 25 % plus 1 share in Wandelaar Invest nv. This project partnership is responsible for making available to the Flemish Region pilotage equipment consisting of three tenders and one carrier. On 30 September 2016 the Flemish Region sold its 49.98 % participation in Nautinvest Vlaanderen to PMV, also transferring the loan that it had granted. On the same day Nautinvest Vlaanderen transferred its participation in Wandelaar Invest and the loan granted to the company to PMV. On 15 December 2016 Nautinvest Vlaanderen was liquidated. Consequently PMV has a participation of 25 % + 1 share in Wandelaar Invest and also a loan granted to the company on its books at the year end.

Construction work began in the autumn on Terra, the data warehouse that links authentic sources of energy data and legacy data. The result was a first energy report at the end of December.

Wandelaar Invest has invested 102.5 million euros in its projects and has been fully operational since the 2012 financial year. Its main item of expenditure is depreciation and debt servicing. The projects generate sufficient income, and as a result the financial year ended with a profit of 1,077,654 euros, compared to a profit of 468,573 euros in the previous financial year.

The VEB ended the financial year with a loss of 1,799,313 euros. This is due to formation expenses and the transition to a new customer management system.

The business operations of Via-Invest Vlaanderen nv (abbreviated to “Via-Invest”) which are 51 % owned by PMV, continued during the past financial year. Via-Invest conducts its activities through development companies established specifically for that purpose and holds minority interests in those companies. Via-Invest has a participation in Via R4-Gent nv, which was established with the aim of implementing the R4-Zuid project in Ghent (financing, construction and maintenance). Via-Invest owns 25 % and the other partner, DG INFRA+, subscribed to the remaining 75 % of the shares. A total of 86 million euros, primarily long-term outside capital, have been invested in this project. Via-Invest owns 39.3 % of VIA A11 nv. The company is building the new regional road between Knokke and Bruges. Delivery is scheduled for late 2017. The total value of the project is 657 million euros.

School Invest nv has as its sole activity the management of its participation in the company DBFM Scholen van Morgen nv (Tomorrow’s Schools). This company is responsible for work on approximately 164 school buildings, including both new build and renovation projects. The buildings will be made available to the education authorities based on DBFM (Design, Build, Finance and Maintain) contracts. At the end of the 2016 financial year 115 schools had already been delivered.

School Invest’s financial commitment to the DBFM company involves both support through a participation in its share capital and also the provision of a subordinated loan and a bridging credit. The capital participation amounts to 5.9 million euros. At the end of the year there were 25.6 million euros in loans outstanding.

Via-Invest’s financial fixed assets amount to 33.9 million euros. Via-Invest closed its financial year with a profit of 1,949,554 euros compared to a profit of 8,982,840 euros in the previous financial year.

BNP Paribas Fortis took care of the Guaranteed Facility provided to DBFM from the beginning of the project. This loan is covered by a guarantee from the Flemish Region. On 15 April 2016 this Guaranteed Facility was taken over by School Invest. From that date School Invest is therefore responsible for monitoring the loans granted to DBFM. The total amount of the loans granted under the Guaranteed Facility on 31 December 2016 was 692.8 million euros. To finance the loans to DBFM Scholen van Morgen, School Invest borrowed 436.6 million euros from the Flemish Region under a commercial paper programme. A capital increase for 250 million euros was also carried out at School Invest

On 1 January 2017 Via-Invest sold its participations and the loans granted to Via-R4 Gent nv and Via A11 nv to PMV nv. On 27 January 2017 PMV sold its stake in Via-Invest. The participation was sold to the Flemish Region. Since then the Flemish Region has been the 100 % owner of Via-Invest Vlaanderen nv.

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in the form of issue premiums. On 28 October 2016 the participation in School Invest was transferred by PMV to the Flemish Region by means of a capital reduction carried out in kind. On 1 December 2016 the Flemish Region took over the service that PMV was providing to School Invest.

Vlaamse Erfgoedkluis nv has been a subsidiary of PMV (formerly of PMV re Vinci) since early 2016, and one share in the company is owned by Herita vzw. The Vlaamse Erfgoedkluis (Flemish Heritage Vault) has an extensive role in building an investment portfolio of properties representing cultural heritage in Flanders and making them accessible to the general public. The capital was fully paid up during the 2016 financial year.

School Invest derives its income mainly from granting loans and closed its financial year with a profit after tax of 3,384,183 euros compared to a profit of 1,889,902 euros in 2015.

In addition to the further extension of the company’s activities, in the course of 2016 a loan was granted to Arts Gebroeders Immobilière and Park Neerdorp, as well as further investment in the Handelsbeurs project. An agreement in principle was also concluded with ION for the redevelopment of the Panquin barracks in Tervuren.

PMV re Vinci nv, a 100 % subsidiary of PMV, seeks to finance economically feasible property-related initiatives, or initiatives with a property component. PMV re Vinci also owns the Kartuizershof building on the Oude Graanmarkt in Brussels. During the course of 2015, as part of the simplification of the group structure of the PMV group and the administrative simplification, it was decided to finance new property projects from PMV nv.

The company closed the financial year with a profit of 82,954 euros compared to a loss of 120,709 euros in the previous extended financial year.

LAK Invest nv has been a subsidiary of PMV since the beginning of 2016 (formerly of PMV re Vinci) and leases an office and laboratory building to Vlaamse Milieumaatschappij (Flemish Environmental Company or VMM). In 2012, the building was the object of a private issue of real estate certificates. LAK Invest is the legal owner of the VMM building, but for economic purposes it is owned by the holders of the certificates. This is expressed on the balance sheet as a debt of 31.5 million euros owed to the holders of these real estate certificates. Any income and expenditure associated with the lease and operation of the building accrue to the certificate holders. Depreciation of this revaluation surplus has, however, resulted in an accounting loss of 360,553 euros.

In that context, the participations and associated shareholder loans were transferred in early 2016 from PMV re Vinci nv to PMV nv. Its financial fixed assets therefore fell from 22.4 million euros to 2,984 euros. A capital gain of 6.6 million euros was booked on this transfer.

The capital of PMV re Vinci was reduced from 61.7 million euros to 700,000 euros. PMV re Vinci provided additional financing to Syntra Antwerpen-Vlaams Brabant.

The company closed the financial year with a profit of 7,077,978 euros compared to a profit of 2,515,587 euros in the previous financial year.

Novovil nv, a 100 % subsidiary of PMV, one share of which is owned by POM Vlaams Brabant, transferred its participations in Zakencentrum Vilvoorde nv and Bedrijvencentrum Vilvoorde nv to PMV on 30 September 2016. Novovil nv was liquidated on 15 December 2016 and the liquidation balance was then transferred to the shareholders.

The equity interest in affiliated companies is equivalent to 109,357,987 euros. Total amounts receivable amount to 37,050,142 euros. This heading has risen by 5.8 % overall compared to the previous financial year.

Zakencentrum Vilvoorde nv owns and leases the former GOM building located at Toekomststraat, Vilvoorde, and renovation work on this building was completely finished in 2012. Full occupancy was reached in 2016. The company ended the financial year with a profit of 12,234 euros compared to a profit of 2,115 euros in the previous financial year.

New participations were acquired in eTheRNA, Scriptbook, Zoefff !, NeoScores, Pharmafluidics and Waylay. Follow-up investments were made in Storm Holding 2, Feops, VAC De Meander, Inclusie Invest and Amakem. Additional capital was fully paid up in the funds Capricorn Health-Tech Fund, LSP V and Mezzanine Partners 1.

A capital payment was made at the Capricorn Cleantech Fund. The shares in VAC De Meander were sold in 2016, resulting in a capital gain.

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The shares owned by PMV re Vinci in Blue Gate Antwerp, I-cubes, Eiland Zwijnaarde, Inclusie Invest and SLIM Turnhout were sold to PMV on 1 January 2016. The shares in Zakencentrum Vilvoorde owned by Novovil and the shares in Wandelaar Invest owned by Nautinvest Vlaanderen were sold to PMV.

1.1.3. Stock Only the acquisitions by the Future Carbon Fund (FCF) are booked as stock. Additional investments have been made totalling 476,166 euros during the 2016 financial year. A total of 0.7 million euros was written off to bring the value of emissions rights into line with the market price.

New loans were granted to PMF Infrastructure Fund, Mezzanine Partners I, Blue Gate Antwerp, Storm Holding 2, Deme Blue Energy, Agrafresh and Amakem. A number of loans were repaid.

1.1.4. Amounts receivable within one year The ‘trade accounts receivable’ heading relates to amounts receivable from customers and invoices still to be issued totalling 3,801,672 euros. Other amounts receivable amounted to 4,980,932 euro. The ‘other amounts receivable’ heading consists mainly of principal sums due and interest from loans and ledger transfers for principal sums that will fall due in 2017.

The remaining financial fixed assets decreased from 105,857,602 euros to 81,182,242 euros.

This is a 23.3 % decrease compared to the previous financial year.

New participations were acquired and there were additional capital increases in Exact Imaging, Indigo Diabetes, CoScale, Unifly, NeoScores, Biocartis Group, Itineris and Aescap. A capital payment was made at Aescap, and repayments were also made at Punch Powertrain and eSaturnus.

1.1.5. Cash investments and liquid assets

As regards amounts receivable from other financial fixed assets, an additional tranche of 20 million euros was taken up by LRM from the loan that had been granted. LRM also made an early repayment of 40 million euros. The loan that had been granted to eSaturnus was repaid in full.

The company’s total cash position amounted to 147 million euros compared to 108.3 million euros in the last financial year. In the course of the 2016 financial year, in accordance with the general and special investment rules, this has mainly been invested in savings accounts and fixed-term accounts. In view of the investments planned for the coming years, the investment horizon has been reduced further. A total of 16.1 million euros was repaid in relation to CDOs during the financial year. Cumulative amounts written off securities in portfolio reached 1.1 million euros.

1.1.2. Long-term receivables

1.1.6. Accruals and deferred income (asset account)

Outstanding long-term receivables rose from 54,075,312 euros to 96,028,167 euros. Part of PMV’s investment activities, i.e. granting loans within the various target segments, are included under this balance sheet heading. The loan to Vitrufin nv is also included in this total, for an amount of 27.3 million euros.

Accruals and deferred income amounted to 4,024,413 euros and consisted of prepaid costs and interest receivable.

Loans totalling 45.4 million euros were granted to Juice Holding, WPEF VI Holdco III, Bene Holding, MC Connect One, The Searchers, Three Hammer Auctions, Flemish Holdco I, Holding Noordvlees, and to various CultuurInvest, KidsInvest and real estate projects.

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1.2. LIABILITIES

1.3. PROFIT AND LOSS ACCOUNT

1.2.1. Equity

1.3.1. Operating income

The authorised capital is 1,112,428,378 euros, compared to a total of 1,029,812,363 euros at the end of the previous financial year. An initial capital increase of 50 million euros, including 12.5 million euros in fully paid up capital, took place on 6 July 2016. On 18 July 2016 there was a second capital increase of 59,380,681 euros in which Biotech Fonds Vlaanderen was taken over.

Operating income totalled 8,663,399 euros compared to 7,022,075 euros in the previous financial year. Turnover was 7,969,269 euros, consisting of research income and services provided to subsidiaries totalling 6,724,577 euros, management fees amounting to 1,146,643 euros and fees received from governance mandates for 98,049 euros.

In addition to turnover there is also ‘other operating income’ amounting to 694,130 euros.

This mainly concerns income from passing on costs incurred for outside services, fees and various minor expenses.

On 28 October 2016 the participation in School Invest was transferred to the shareholder by means of a capital reduction in kind of 26,764,666 euros.

The profit for the financial year 2016 is 42,178,423 euros and this was added to the legal reserves (2,108,921 euros) and the profit to be carried forward (40,069,502 euros), so these are now 7,857,272 euros and 105,206,164 euros respectively.

1.3.2. Operating costs Operating costs amounted to 16,406,433 euros compared to 15,591,698 euros on 31 December 2015. The main items are purchases of goods and services (5,018,664 euros), staff costs (8,382,808 euros), depreciation (389,170 euros), amounts written off stocks (699,455 euros), additions to provisions (1,330,635 euros) and other operating costs (585,701 euros, mostly non-deductible VAT).

1.2.2. Amounts payable within one year The ‘trade accounts payable’ heading relates to outstanding invoices from suppliers totalling 420,946 euros, invoices yet to be received for 918,063 euros and credit notes to be issued amounting to 89,880 euros.

The operating loss as per 31 December 2016 is 7,743,035 euros.

The ‘taxes’ heading mainly consists of VAT payable and advance corporation tax relating to the month of December 2016.

1.3.3. Financial income Recurring financial income totalled 17,672,608 euros. Income from financial fixed assets was 11,333,802 euros compared to 8,125,543 euros in the previous financial year. Income from current assets was 6,338,041 euros compared to 6,068,321 euros. Income from current assets can be further subdivided into loans and dividends granted as part of investment activities amounting to 5,647,193 euros (last year: 5,059,280 euros) and income from actual treasury assets, amounting to 690,848 euros (in the previous financial year this was 1,009,041 euros).

This was caused by lower yields and a shorter investment horizon.

The ‘salaries and social security’ heading includes necessary provisions made for holiday pay and a provision for variable remuneration in relation to 2016 which is payable in the 2017 financial year.

The rolling fund for current income and expenditure of the Flemish Region ended with a balance of 201,353 euros, while the rolling fund for participations had a balance of 120,785 euros. The SOFI rolling fund (Spin-Off FinancieringsInstrument or Spin-off Financing Instrument) had a balance of 2,038,921 euros. The SOFI II rolling fund closed the year with a negative balance of 2,485,579 euros. The ‘other amounts payable’ heading comprises a sum of 8.7 million euros already received and still to be integrated in the company’s share capital, relating to the financing by SIFO (Social Investment Funds).

Non-recurring financial income mainly related to capital gains from the sale of participations in (or exit from) Punch Powertrain, School Invest and VAC De Meander for a total of 38,425,513 euros. There was also a write-back from an amount written off in relation to the participation in the Capricorn Cleantech Fund.

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1.3.4. Financial costs

2.

Recurring financial costs amounted to -516,923 euros and consisted of amounts written off current assets (-582,200 euros) and other financial costs (65,276 euros).

Nine members of staff were recruited by PMV during the course of 2016. One of these was transferred from a subsidiary to PMV. Seven members of staff left PMV. One of these was transferred to a subsidiary to PMV.

The heading ‘amounts written off current assets’ consists of an addition to amounts written off totalling 1,696,984 euros and a write-back from amounts written off amounting to 2,279,184 euros.

At the end of the 2016 financial year PMV had 68 staff on its payroll comprising 41 men (60 %) and 27 women (40 %). Eight members of staff have opted to work part time.

‘Other financial costs’ amounted to 65,276 euros. This item consists of the premium for CDO insurance and bank and administration costs.

The subsidiaries of PMV had the following staffing levels at the end of 2016: there were 14 members of staff working for Waarborgbeheer nv; there were two members of staff on the payroll of Vinnof Comm. VA; ARKimedes Management nv had three members of staff on its payroll; PMV-TINA Comm.VA had five members of staff on its payroll, Participatiefonds-Vlaanderen nv had 17 and Vlaams Energiebedrijf had has a workforce of 14. Finally, PMV Beheer nv, Biotech Fonds Vlaanderen nv and PMV Fund Management nv had one employee each.

Non-recurring financial costs amounted to 6,553,796 euros, mainly attributed to the writedown booked for the subsidiary Vinnof Comm. VA. The book value of the participation was brought into line with the valuation of Vinnof ’s capital and reserves by means of a writedown. Amounts were also written off in relation to Deme Blue Energy and NeoScores.

At the end of 2016 the PMV group as a whole had 126 staff, comprising 79 men (63 %) and 47 women (37 %). This workforce represents 119.6 full-time equivalents.

1.3.5. Result for the financial year The company ended the financial year 2016 with a profit of 42,178,423 euros compared to a profit of 7,380,916 euros in the previous financial year.

3.

1.3.6. Appropriation of the result

Amounts in euros

Profit for appropriation

107,315,085.51

Profit for the financial year for appropriation

42,178,423.24

Profit brought forward from the previous financial year

65,136,662.27

Addition to equity

2,108,921.16

Addition to the statutory reserve

2,108,921.16

Profit to be carried forward

PARTICIPATIONS MANAGED FOR THE FLEMISH REGION

PMV’s role is to follow up shareholdings on behalf of the Flemish Region. This is a “fiduciary management” role, since the Flemish Region is the owner of the shares. All transactions are both booked in PMV’s suspense accounts and mentioned in the notes to the annual accounts.

The Board of Directors proposed to the Annual General Meeting that the profit to be appropriated be dealt with as follows: APPROPRIATION ACCOUNT

SOCIAL BALANCE SHEET

Activities were unchanged at Trividend cvba, Technopolis nv and Finlab nv. Following the establishment of the SOC (Strategisch Onderzoekscentrum or Strategic Research Centre) “Flanders Make”, the activities of Flanders’ Drive cvba were included in the SOC. The company was liquidated in 2016. The Flemish Government decided on 15 July 2016 to contribute its shares in Biotech Fonds Vlaanderen nv to PMV by means of a capital increase in kind. The Flemish Region and the Flemish Community sold their shares in t-groep nv in 2016. As a result, the fiduciary management activity also ceased.

105,206,164.35

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PMV has a representative on the Board of Directors of the above-mentioned companies.

Reports are submitted both to the Audit Committee and to the Board of Directors on the activities of these companies.

4.

CORPORATE GOVERNANCE

On 17 June 2011 the Flemish Government approved a new financing mechanism for spin-offs established by the Strategic Research Centres (SOCs) in Flanders. These SOCs are iMinds, VIB, IMEC and VITO. To compensate for the lack of available risk capital financing for start-up companies (the so-called “equity gap”), 10 million euros were initially made available by the Flemish Government for SOFI (Spin-Off Financing Instruments).

This was then supplemented by a further allocation of 10 million euros. PMV is responsible under a cooperation agreement for administering these resources and for managing the shareholdings.

The Board of Directors met 11 times in the course of 2016. The attendance record and attendance fees for the members of the Board of Directors were as follows:

The composition of the Board of Directors was unchanged in 2016.

Director

Attendance

Fixed remuneration

Attendance fee

Koen Kennis (Chair)

10/11

12,396 euros

12,400 euros

Christine Claus

10/11

6,198 euros

6,200 euros

Greta D'hondt

11/11

6,198 euros

6,820 euros

Jannie Haeck

7/11

6,198 euros

4,340 euros

The SOFI resources are invested in incubation projects in the form of a convertible loan.

For spin-off projects, a SOFI investment is made through a convertible subordinated loan, a capital shareholding or a combination of the two.

Jeroen Overmeer

10/11

6,198 euros

6,200 euros

Raf Suys

10/11

6,198 euros

6,200 euros

9/11

6,198 euros

5,580 euros

The Flemish Government decided on 19 April 2013 to extend SOFI to include financing of incubation processes and spin-off financing from the University Associations (SOFI II).

The Flemish Government will make a further 10 million euros available for this purpose.

Sas Van Rouveroij

Rosette S'Jegers

Patrick Verjans

11/11

6,198 euros

6,820 euros

10/11

6,198 euros

6,200 euros

The Board of Directors of PMV is supported by two advisory committees: the Appointments and Remuneration Committee and the Audit Committee.

During the 2016 financial year participations were acquired in Confo Therapeutics, Unifly, Indigo Diabetes, Sihto, Luceda and NeoScores. A subordinated loan was granted to PieSync.

A total of five new incubation loans were granted. In all, 2.3 million euros were invested by the SOFI Fund, compared to 2.1 million euros last year. A total of 9.9 million euros have been invested since the fund’s inception.

The Appointments and Remuneration Committee gave consideration during 2016 to the policy on terms and conditions of employment, the staff budget for 2017 and planned recruitment and personnel appraisals. It also determined the level and nature of variable remuneration for 2015 which was payable in 2016.

On 17 January 2017 the Flemish Government decided to incorporate the participations in and loans granted to SOFI within the capital of PMV, with the exception of the incubator loans. The remainder of SOFI’s funds, totalling 17.5 million euros, were contributed by means of a standard capital increase.

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The attendance record and attendance fees for the members of the Appointments and Remuneration Committee were as follows: Member

Attendance

Fixed remuneration

Attendance fee

Greta D'hondt (Chair)

5/5

0 euros

3,100 euros

Rosette S'Jegers

5/5

0 euros

3,100 euros

Clair Ysebaert

5/5

0 euros

3,750 euros

Luc Vandewalle

5/5

0 euros

3,750 euros

Herman De Bode

3/5

0 euros

2,250 euros

The authorised capital thus amounts to 1,112,428,378 euros. It is represented by 35,788 shares. The capital is fully subscribed but only partly paid up. The capital outstanding which is still to be fully paid up amounts to 348,050,000 euros. The Flemish Region is the sole shareholder.

6.

Not applicable.

The Audit Committee performed its normal and regular duties during the 2016 financial year in relation to drafting and discussing of the annual accounts and the budget. It also discussed the interim balance sheets and budget checks, the internal consolidated annual accounts and the annual accounts of the subsidiaries of the PMV group as part of its fiduciary management. The Audit Committee also examined the results of the analytical reports for 2016, as well as the status of the various ICT activities.

7.

Attendance

Fixed remuneration

Attendance fee

Christine Claus (Chair)

4/4

0 euros

2,480 euros

Greta D'hondt

4/4

0 euros

2,480 euros

Rosette S'Jegers

3/4

0 euros

1,860 euros

5.

ACQUISITION OF OWN SHARES (ART. 624 AND 630 COMPANY CODE)

Neither the company, nor a direct subsidiary, nor any person acting in his or her own name but on account of the company or of a direct subsidiary has acquired shares, dividend right shares or certificates in the company.

The attendance record and attendance fees for the members of the Audit Committee were as follows: Member

JUSTIFICATION FOR THE APPLICATION OF VALUATION RULES ON A GOING CONCERN BASIS WHEN THE BALANCE SHEET SHOWS A LOSS CARRIED FORWARD (ART. 96 §1,6° COMPANY CODE)

The company has no current programmes to purchase its own shares.

8.

DIRECTORS’ PERSONAL INTERESTS (ART. 523 COMPANY CODE)

The Directors report that no transactions have been carried out or decisions made during the financial year that fall within the scope of Article 523 of the Company Code, except routine transactions covered by an exception under article 523 of the Company Code.

CAPITAL TRANSACTIONS (ART. 608 COMPANY CODE)

The authorised capital was increased on 7 July 2016 by 50 million euros by a contribution in cash, including 12.5 million euros in fully paid up capital, without issuing new shares. On 18 July 2016 a second capital increase was carried out for 59,380,681 euros due to the takeover of Biotech Fonds Vlaanderen. On 28 October 2016 the participation in School Invest was transferred to the shareholder by means of a capital reduction in kind of 26,764,666 euros.

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9.

SPECIAL AUDITING DUTIES AND SERVICES PERFORMED

BY THE COMPANY AUDITOR OR COMPANY WITH WHICH THE AUDITOR IS PROFESSIONALLY LINKED

12.

In the context of the conversion of Via-Invest Vlaanderen nv into De Werkvennootschap nv, the Flemish Government decided that the participations held by Via-Invest Vlaanderen in A11 and R4 Zuid would be sold to PMV. On 1 January 2017 Via-Invest Vlaanderen sold its participations in Via-R4 Gent nv and Via A11 nv and loans granted to those companies to PMV. On 27 January 2017 PMV then sold its shares in Via-Invest Vlaanderen to the Flemish Region, followed by a capital reduction so that since that date the Flemish Region is the 100 % owner of Via-Invest Vlaanderen nv.

During the 2016 financial year, BDO Bedrijfsrevisoren burg. ven. o.v.v. cvba performed a limited inspection of the non-compulsory internal consolidation exercise carried out by the PMV group. The fee charged for this was 8,450 euros. A charge of 2,510 euros was made for certification of a report compiled for the National Institute of Company Auditors.

A fee of 2,560 euros was charged for work associated with the contribution of Biotech Fonds Vlaanderen.

10.

Following a decision by the Flemish Government on 17 January 2017, on 17 March 2017 the participations in SOFI and loans granted to the company were contributed to the capital of PMV, for a total of 3,595,785.82 euro. On the same day the remaining SOFI funds were also contributed to PMV, for a total of 17,483,441.68 euros, including 4,370,860.42 euros in fully paid up capital. The authorised capital thus amounts to 1,133,507,605.28 euros.

CIRCUMSTANCES THAT MAY MATERIALLY INFLUENCE THE DEVELOPMENT OF THE COMPANY

The Directors are not aware of any notable circumstances which may have arisen and could materially influence the development of the company.

11.

IMPORTANT EVENTS SINCE THE BALANCE SHEET DATE

13.

MAIN RISKS AND UNCERTAINTIES

MISCELLANEOUS OBLIGATIONS AND CLAIMS, PENDING DISPUTES

There are no pending risks or uncertainties other than those stated in the annual accounts or mentioned in the annual report.

As an investment company, PMV, and by extension also its subsidiaries, faces the usual risks associated with providing financing in the form of equity and/or loans. These risks include the general economic climate, the regulatory context, uncertainty over the time when funds will be requested for investment projects and the time when invested funds will be repaid.

The companies in which PMV and its subsidiaries invest are innovative in nature and are relatively new, as a result of which the financial performance of those companies tends to lag during the first few years.

14.

FINANCIAL INSTRUMENTS

PMV has entered into put and call contracts with third parties (shareholders in companies in which PMV has a participating interest). PMV has also obtained warrants in a number of companies, which may under certain circumstances be convertible into shares in the future.

The Valuation Committee meets twice a year. These committee meetings discuss the content of the projects and a score is awarded on the basis of a risk scoring model. This makes it possible to monitor the evolution of the risk within the portfolio. A report on this is submitted to the Board of Directors.

PMV has obtained partial cover for the principal of CDOs in return for payment of a premium.

Except as set out in the notes above, PMV does not make use of any other financial instruments.

Financing is granted to companies and projects after prior analysis of investment cases and subject to approval by the relevant bodies, according to established investment principles and processes.

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15.

RESEARCH AND DEVELOPMENT

The company has not carried out any activities in the area of research and development during the past financial year.

16.

APPOINTMENT AND REAPPOINTMENT OF DIRECTORS AND AUDITOR

There were no changes in the composition of the Board of Directors during the financial year.

At the General Meeting on 17 May 2016 BDO Bedrijfsrevisoren, permanently represented

by Mr Bert Kegels, was appointed as auditor of the company for a period of three years until the General Meeting in 2019.

17.

DISCHARGE OF DIRECTORS AND COMPANY AUDITOR

The Board of Directors requests that the Annual General Meeting grants discharge to each individual Director, and to the Auditor, for their mandates during the past financial year.

18.

BRANCH OFFICES

The company has no branch offices in Belgium or abroad.

Drawn up and signed in Brussels on 26 April 2017.

The Board of Directors.

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COLOPHON This race report is printed on Cocoon, a 100 % recycled paper with a certificate from the Forest Stewardship Council.

Design and coordination by Cantilis (www.cantilis.be).

Texts by PMV and Cantilis (interviews).

Final editing by Ben Jehaes, 30 June 2017.

Responsible publisher: Ben Jehaes PMV spokesman, Oude Graanmarkt 63 1000 Brussel T +32 (0)2 229 52 30 F +32 (0)2 229 52 31 info@pmv.eu www.pmv.eu Photography, except where photographs were supplied,

by Luc Collet, Sven Everaert, Ben Jehaes, Bert Stephani, Christophe Vander Eecken and NVC Photography.

With thanks to Nico Eeckhout, Jan Alexander, Geert Glorieux, Michael Sneijers, Elke Van de Walle en Bart Van Hoe for their sporting collaboration.

30 June 2017