Annual Report 2007 Contents KEY FIGURES 05 THE COMPANY AND ITS ENVIRONMENT 06 The Company 07 2007 highlights 08 Share price and net asset value 08 Chairman’s statement 09 Governing bodies 11 Governance of BIP 13 PORTFOLIO 18 Public equity 19 Private equity 29 FINANCIAL INFORMATION 42 Report of the Board of Directors to the General Meeting of shareholders 43 Consolidated nancial statements for the year ended 31 December 2007 51 Independent auditor’s report 84 Summary separate annual nancial statements for the year ended 31 December 2007 85 This is a translation of the of cial report written in French and has been prepared for the convenience of English-speaking readers. In the event of any discrepancy between this document and the French original, only the French original is authoritative. 5 Key Figures in EUR 31.12.2007 31.12.2006 Per share data Estimated value 123.85 106.21 Market price 98.00 80.50 Dividend (proposed) 3.40 3.00 Diluted net income per share 15.14 14.94 EUR millions 31.12.2007 31.12.2006 Earnings Net income 71.5 71.0 Balance sheet Equity 580.7 501.8 Total assets 591.0 510.6 EUR millions 31.12.2007 % 31.12.2006 % Investments Listed companies 384.4 67 318.5 64 Direct private equity investment 84.3 15 92.5 18 Private equity funds 39.6 7 30.9 6 Loans and other accounts 2.8 0 3.8 1 receivable Total non-current investments 511.1 89 445.7 89 Trading assets 7.2 1 10.7 2 Cash at banks 58.8 10 45.3 9 Total investments 577.1 100 501.7 100 31.12.2007 31.12.2006 Shares Total shares issued 4 773 321 4 773 321 Shares held by the Company 84 828 48 534 THE COMPANY AND ITS ENVIRONMENT The Company and its environment / 7 | The Company | BIP Investment Partners SA (BIP) is an investment company founded in April 2000 under the name BGL Investment Partners at the joint initiative of Banque Générale du Luxembourg (BGl), now Fortis Banque Luxembourg, and a group of private investors in Luxembourg. BIP aims to create value for its shareholders over the medium term through investments in listed and unlisted companies with signi cant growth potential in Luxembourg and neighbouring countries. BIP invests in listed companies and promising unlisted companies, either directly in the form of private equity or indirectly through interests in private equity or venture capital funds. The Board of Directors regularly reviews weightings and limits for these three types of assets. Investments in listed companies As an active shareholder, BIP promotes entrepreneurship and provides support for the continuing development of the BIP invests in high-capitalization listed companies that are based companies it invests in. in Luxembourg and neighbouring countries or carry signi cant weight in the Luxembourg economy. These investments, which Private equity and venture capital yield attractive returns for a level of risk close to the market average, provide a sound base for the portfolio, generating a investment funds reliable ow of earnings to fuel steady rises in the dividends paid BIP offers its shareholders privileged access to the best- out each year. performing private equity and venture capital funds invest- ing in companies based in Luxembourg and neighbouring BIP also uses its research capabilities and familiarity with busi- countries, focusing on technology centres and high-growth nesses and markets to identify small and medium-sized listed business sectors. companies, a category often neglected by institutional investors, with potential for attractive gains. In most cases, these compa- BIP aims to create value through its expertise in portfolio nies are based in the countries surrounding Luxembourg. management and active support for the companies in which it holds direct interests, in particular by fostering synergies In additional to its geographical pro le, BIP uses in-depth between them. knowledge of speci c economic sectors to acquire interests in companies in these areas. BIP is listed on the Luxembourg stock exchange and is a component of the LuxX index. Private equity Fortis Banque Luxembourg holds a 25.8% equity interest in BIP, BIP intends to win a leading place in Luxembourg and its region La Luxembourgeoise holds 10%. for private equity investments including management buyouts, development capital and later-stage venture capital. 8 \ The Company and its environment | 2007 highlights | | Share price and net asset value | - Net income for the 2007 nancial year came to EUR 71.5 140 million, up from EUR 71 million in 2006, in a market environ- 120 ment marked by the impact of the sub-prime crisis in the US. 100 - BIP shares gained 21.7% over the year. With the dividend of 80 EUR 3 per share paid in March, this set total shareholder return 60 for the year at 25.5%. 40 - At December 31, 2007, estimated value per share stood 20 at EUR 123.85 and consolidated shareholders’ equity at EUR 580.7 million. 0 07/07 07/05 10/07 01/07 07/06 07/04 10/05 01/05 10/06 01/08 01/06 10/04 01/04 04/07 04/05 04/06 - Capital gains reached strong totals of EUR 40 million on listed 04/04 investments and EUR 17 million on private equity. BIP share price - BIP’s investment in VOXmobile was sold in full at a multiple BIP estimated fair value of 2.7 times the acquisition price. - Investments in Option and Arcelor Brasil were sold in full. Indices - BIP’s interest in Fortis increased signi cantly with a The table below lists performances of main references: EUR 26 million investment relating to the acquisition by Fortis of a part of ABN Amro’s business. 31.12.2007 31.12.2006 Change - BIP’s private equity portfolio was rounded out with a EUR 3 million investment in Assisteo Europe, a company special - Eurostoxx 50 4 399 4 119 6.79% ized in personal and household services. S&P 500 1 468 1 418 3.53% - A new investment of EUR 6 million in Nanogate, a listed LuxX 2 419 2 176 11.13% company based in Germany’s Sarreland region, special izing in BIP - nanotechnology for industrial applications. 98.00 80.50 21.74% share price BIP - - A new investment of EUR 5 million in Evertz Technolo gies, a estimated 123.85 106.21 16.61% listed Canadian company offering HD solutions for TV studios. fair value - A new investment in Field SICAR, a Luxembourg fund specialized in development capital and LBO nancing in Luxembourg and neighbouring areas of other countries. Liquidity 2007 2006 Total number of shares traded 388 295 411 485 The Company and its environment / 9 | Share price | Chairman’s Statement | and net asset value | In 2007 our Company mourned the death of Mr Marc Meyer, BIP’s investment strategy is fundamentally different. It is based who had been a director of BIP Investment Partners since 2001. on the substance and intrinsic quality of assets maturing to Drawing on his extensive business experience and knowledge create value over the medium-term, a process that is essential to of nance, he made an invaluable contribution to the Board’s sustainable economic growth. The synthetic nancial products operation and the quality of its decisions. We all continue to miss that are the cause of current woes have thus never been part of his sincerity, his openness and his total loyalty to colleagues our Company’s portfolio. and BIP. This strategy was illustrated by several important transactions in Results for the year were once again excellent, with earnings 2007, among them the VOXmobile exit, which is an exemplary slightly higher than the previous records set in 2006. Net case in the current context. BIP was among the founders of this income held high at EUR 71.5 million for the 2007 nancial high-potential business that has made a signi cant contribution year, and total net asset value calculated in accordance with to the quality of Luxembourg’s economic fabric. We followed IFRS rose from EUR 507 million at the end of 2006 to EUR up our initial move with nancial and operational support over 580 million at the end of 2007. Net assets per share rose from several years until the business was pro table, then sold our EUR 106.21 at the end of 2006 to EUR 123.85 at the end of interest to a new shareholder promising to favour continued 2007, with the rise exceeding 19% when including the dividend growth. Well received by employees, management and share- distributed during the year. Over the same period, BIP shares holders, the transaction also generated a healthy pro t for BIP. gained 21.7%, closing the year at EUR 98. During the year, we sold our interest in Belgium’s Option, Considering these favourable developments, the Board of a company that failed to deliver the transparent communi- Directors has proposed that shareholders should approve a 13% cations essential to the trust-based relationships that are a rise in the dividend to EUR 3.4 per share. This sets the current matter of principle in our investment philosophy. This left us no yield close to that available on the savings market, while at the choice. The sale was made at a timely moment and yielded a same time allowing for reinforcement of the shareholders’ funds signi cant pro t. that are the foundations for future prosperity. The ArcelorMittal saga also continued, with the shares gaining The results achieved in 2007 are all the more remarkable as 66% in 2007 to take rst place for CAC 40 index components on the nancial environment was generally unfavourable, with most the Paris market, which was at overall for the year as a whole.