Permira Annual report 2009

Transcription

Building better businesses
Annual Review 2009
Contents
Permira is a private equity
firm with a European heritage
and a global reach.
The Permira funds, raised
from pension funds and other
institutions, make long-term
investments in companies to
transform their performance
and drive sustainable
long-term growth.
The firm advises funds with
a committed capital of over
€20 billion.
Introduction
01 Introduction
02 2009 Highlights
04 Impact Investing
06 Origination
08 Leadership
10 Development
12 Targets
14 Performance
16 Year in Review
19 Defending the portfolio
20 World class leadership
21 Focus on long-term growth
22 Stable leadership
23 Outlook for 2010
26 Investing in Society
28 Governance
30 Our Portfolio
32 Portfolio Overview
34 Acromas
36 All3Media
38 Arysta LifeScience
40 Birds Eye Iglo Group
42 BorsodChem
44 Cognis
46 Cortefiel
48 DinoSol Supermercados
50 Freescale Semiconductor
52Galaxy Entertainment Group
54Hugo Boss and Valentino
56 Just Retirement
58 Marazzi Group
60 Maxeda
62 NDS Group
64 New Look
66 Principal Hayley Group
68 ProSiebenSat.1
70 Provimi
72 Seat PG
74 Sisal
76 TDC
78 Telepizza
80 Appendix
Walker ‘Guidelines for
Disclosure and Transparency
in Private Equity.’
IBC Contact details
In 2009 the Permira funds continued to identify
and invest in attractive businesses. At the same
time, portfolio companies were strengthening
operations and improving their performance
in response to the still-unpredictable
market environment.
Portfolio company management teams worked
to ensure that every business had the right
operational capability and financial structure.
All portfolio companies reviewed their strategies
and took steps to control costs in light of a more
challenging trading environment, while some
strengthened management. Such actions
have helped to ensure that the funds’ portfolio
companies are now very well positioned for
economic recovery, which we are now starting
to see throughout the portfolio.
Permira Annual Review 2009
The Permira funds completed two new
investments in 2009, Just Retirement
(page 56) and NDS (page 62). These
companies were both identified through
local networks and sector relationships.
We expect that transactions sourced in
this way will be characteristic of the
investment environment in 2010.
Introduction
Contents
1
2009
Highlights
·Portfolio companies took
early and appropriate
action in response to
the global recession
·Focus on controlling costs
and strengthening their
respective management
teams, as well as continued
investment in growth
and innovation
·Two new investments:
Just Retirement (page 56)
and NDS (page 62)
·Attractive businesses
that offer strong prospects
for growth
·Sourced through strong
relationships with corporate
partners and sector network;
complex and lengthy
acquisition processes
which mobilised the full
range of our teams’ skills
and expertise
·Performance stabilised and
in most cases improving
·Rise in portfolio value
by 22% over the past
12 months; 24% over
the last six months
·Further investment in Permira
team to increase our industry
networks and deepen our
local knowledge
·Cash returned to investors
by divesting a number
of minority stakes
·Market conditions showing
·Better conditions for
some signs of improvement,
realisations: exit options
though plans for 2010 based
being evaluated by the
on very gradual recovery
Permira funds for a number
of portfolio companies
·Financing environment for
new investments significantly
improved over the year
2
2009 Highlights
Stabilised
and improving
portfolio
Attractive
investment
environment
Encouraging
outlook
2009 Highlights
Contents
3
For 25 years the
Permira funds have
been delivering
value to investors
by building better
Impact Investing:
How it works
businesses.
1 Origination
2 Leadership
3 Development
Identify a business with
unrealised potential
Build a management team capable
of driving change in the business
Management develops a
transformational strategy
Just Retirement
Provimi
TDC
4 Targets
5 Performance
Targets are set and a monitoring
framework is created
A performance culture is
created in the business,
allowing it to fulfill its potential
New Look
Birds Eye iglo Group
56
70
64
4
Impact Investing
76
At the heart of Impact Investing is the ability
to create a performance culture in which
motivated entrepreneurs can drive change
and sustainable growth. The Permira funds’
portfolio companies do this by securing the
best management talent, developing value
creation plans and setting clear priorities
and responsibilities.
The funds’ strategy is to invest in targeted
sectors, while taking a tailored and focused
approach to each portfolio company; every
company is unique and each requires
a different culture and plan to help it
move forward.
The past few years, characterised by a severe
economic downturn, has emphasised the
value of being able to respond quickly to
a fast-changing environment. Private equity
ownership has enabled the portfolio companies
to adapt and ultimately thrive during this time.
When conditions were especially challenging,
management attention at portfolio companies
was focused on driving the necessary change.
The flexibility and effectiveness of this model
means that today the portfolio is well
positioned for recovery.
40
Impact Investing Contents
5
Origination
www.justretirement.com
Permira used its networks to
identify the investment in Just
Retirement in December 2009.
Knowledge of the financial
services sector meant that
potential could be identified in
what is a complex business
with exciting growth potential.
A strong business with market
leadership in enhanced annuities
and equity release mortgages
Benefiting from increasing need
for individuals to save for their
retirement through defined
contribution pension schemes
Management will work to support
the company’s continued growth,
while helping to broaden its
distribution and product range
6
Impact Investing
Impact Investing
Contents
7
“At Provimi, we are constantly
interested in finding new
opportunities to build the
business. We are a much
stronger company as a result.”
Leadership
Ton van der Laan
Chief Executive Officer, Provimi
Ton van der Laan is
the chairman and chief
executive of Provimi.
He joined Provimi from
Unilever as chief operating
officer in October 2005 and
became CEO in June 2007.
Here he talks to us about
his experience of working
under Permira funds
ownership and the
Impact Investing model.
In the three years we have been owned by the
Permira funds we have been able to do things
that a public company or even most private
companies would never have been able to do.
It is now very much the natural propensity
of our team to look for the optimum in the
business and keep challenging the company
to get there. At Provimi, we are constantly
We wanted to strengthen the way we
interested in finding new opportunities to
managed the business. We increased the size build the business. We are a much stronger
of our management committee, mainly with
company as a result.
the appointment of a chief operating officer.
It was the right thing to do and has been good
for the business.
Initially, we had to work hard to put in place
the right working relationships and to develop
a shared culture within the business. This
wasn’t always easy. The Permira funds’
investment encouraged us from the first
day to go further and make changes in
the business.
We also changed the way we organise our pet
food division. As a result, the pet food division
is much stronger.
www.provimi.com
www.provimipetfood.com
Since the company was
acquired in 2007, Ton van der
Laan has built and led a
world-class management
team at Provimi. It was further
strengthened in 2009 with the
appointment of Kurt Coffyn,
the former operations and
supply chain director in Europe
for Barry-Callebaut.
The outcome is that we have grown much
more quickly and in a more sustainable way.
Being backed by the Permira funds has
allowed us to operate in an objective way. It
has helped us to become a better business.
Improved management process
and a focus on long-term growth
Managerial separation of Provimi’s
pet food division, which is now a
much stronger business
Continuing to identify and pursue
new opportunities: new plants to
be built in Russia, Brazil and China
Sale of the non-core fish feed
business in 2008
8
Impact Investing
Impact Investing
Contents
9
Development
www.tdc.com
TDC has developed and
implemented a strategy that
has transformed the business
since it joined the Permira
funds’ portfolio in 2005.
It has focused on its core
domestic business and is on
course to become one of the
best-performing incumbent
telecom providers in Europe.
A new performance culture within
the business, making the company
more collaborative, fast-paced and
customer-focused
Innovative products brought to
market including an unlimited music
service for broadband users and
video on demand
Acquisitions to strengthen the
mobile and broadband offering
10
Impact Investing
Impact Investing
Contents
11
Targets
www.newlook.co.uk
New Look has been
transformed since joining
the Permira funds’ portfolio,
investing £400 million to target
expansion. It has focused on
growth and improving the
quality of its product range.
New Look is now the No.2
in the UK women’s clothing
and accessories market.
Doubled its retail space in
the UK while expanding into
10 new geographies
Opened a state-of-the-art, highly
automated distribution centre; new
online platform; relocation of buying,
merchandise and design (BMD)
to London
A renewed and refreshed product
range and an obsessive customer
focus: high-profile collections with
leading designers; developed
successful menswear and
childrenswear lines; innovative use
of social media to communicate
with customers
12
Impact Investing
Impact Investing
Contents
13
Performance
www.birdseye.co.uk
Birds Eye iglo Group has a
world-class management
team, led by Martin Glenn,
that has developed and
strengthened the business.
Today it is a thriving business,
with a reputation for producing
healthy, nutritious and
sustainable food.
Successful financial and physical
separation of Birds Eye iglo Group
from Unilever including establishing
a new IT infrastructure
Strengthening of the Birds Eye iglo
Group management team – chief
financial officer Paul Woolf was
appointed having been successful
in the same role at another Permira
funds’ portfolio company
Benefited from investment in a very
strong management team and an
exciting pipeline of new product
innovations; ongoing innovation
is key to generating long-term,
sustainable top line growth
14
Impact Investing
Impact Investing
Contents
15
The portfolio companies
rose to the challenges
they faced in 2009 and
emerged stronger.
They have started to
grow again and are well
positioned for recovery.
ProSiebenSat.1
68
Galaxy Entertainment Group
52
16
Year in Review
Year in Review
Contents
17
Year in Review
Defending
the portfolio
The Permira funds’ portfolio companies rose to the
challenges they faced in 2009 and emerged stronger.
The early and decisive action that was taken paid off
and by the end of the year performance had stabilised
and in most instances was improving. As a result these
companies have started to grow again and they are
well positioned for recovery.
The funds also completed two highly attractive
investments last year, in NDS, a technology company
which provides software to pay, satellite and cable TV
platforms, and in Just Retirement, a UK financial services
company with leading market positions in the specialist
retirement market. Both are outstanding companies that
have performed well since acquisition and serve as good
examples of the kinds of opportunities the funds will be
pursuing in the coming year.
The market conditions today are similar to those in the
early 2000s. Back then, it took a long time to develop
opportunities, the processes were generally highly
complex, but the businesses had enormous potential for
real transformation. These conditions play to the Permira
funds’ strengths – local knowledge and sector expertise.
18
Year in Review
Throughout the year portfolio company
management teams took the action
necessary to manage or mitigate the
effects of the recession, adapting business
strategies to fit the new environment.
All portfolio companies maintained a
relentless focus on cost efficiency but without
compromising their long-term prospects or
competitive position.
In addition, management teams closely
monitored the stability of capital structures
throughout the year, and where appropriate
took action to reduce the level of debt at
portfolio level. This was achieved successfully
in a number of companies such as Freescale
Semiconductor (page 50) and Hugo Boss
and Valentino (page 54) which carried out
full-scale financial restructurings while Galaxy
Entertainment Group (page 52) implemented
a debt buy-back programme. In Permira IV
alone, debt was reduced by €2.5 billion.
BorsodChem (page 42) also took substantial
steps to strengthen its financial position.
Starting in Q4 2008 the business experienced
an unprecedented drop in revenue, driven
by a collapse in end-market demand.
In response the business carried out a financial
restructuring, giving the business flexibility
and a solid platform for long-term growth.
The restructuring was carried out in partnership
with Wanhua Industrial Group, and leaves the
business well placed to move forward as the
global economy recovers.
Restructuring talks between lenders and
shareholders have taken place throughout the
year at Gala Coral (PE3) to adapt the capital
structure to a very challenging economic
environment. These discussions ended in May
2010 and resulted in a change of ownership
of the business. Permira Europe III (2003)
has already returned significantly more than
committed capital to investors and still has
considerable unrealised value left to be
returned to investors in the coming years.
The defensive measures taken by portfolio
companies and the actions taken to position
them for long-term growth will enable the
Permira funds to continue to deliver strong
returns to investors in the years ahead.
Year in Review
Contents
19
World class
leadership
Focused on
long-term growth
Maxeda
Birds Eye iglo Group appointed a new
managing director for the iglo business
and a general manager for Germany
Maxeda brought in new leadership
to head its Hunkemöller brand
Provimi
Provimi appointed a new chief financial
officer and chief operating officer
40
Many portfolio companies
strengthened or changed their
management teams to reflect
the need for a different set of
skills or experience in what was
a particularly unpredictable
operating environment.
70
Acromas
Freescale Semiconductor
Acromas completed a number of
‘bolt-on’ acquisitions including: Drivetech,
a provider of driver training and assessment;
Titan Travel, a UK-based tour operator
that targets the 50+ market; and
AutoWindshields, a British car glass
repair and replacement business
Freescale Semiconductor has taken
the opportunity to refocus its research
and development activity on its core
markets – automotive and networking;
core market segments – consumer and
industrial; and key trends – clean tech,
health & safety and connected devices
ProSiebenSat.1
NDS
ProSiebenSat.1 restructured its
leadership team; a new advertising
model was implemented that has
driven the business’s recovery
Galaxy Entertainment Group invested in its
StarWorld site, refurbishing and relaunching
its mass gaming floor and creating a new
large-scale poker offer
NDS won a number of new international
customers and laid the foundations to
continue building its presence in new
markets in 2010
60
68
34
Although 2009 was a
challenging year for many of
the funds’ portfolio companies,
none of them lost sight of their
long-term growth ambitions.
Many adjusted their strategies
to ensure that they were able
to compete, maintain their
market-leading positions in
a recessionary environment
and prepare to take advantage
of the recovery. In particular
they continued to invest and
expand into new markets
and geographies, organically
or via strategic acquisitions,
throughout the year.
50
52
62
Sisal
74
Sisal introduced new lottery games,
enlarged its retail network and started
planning to introduce a new generation
of slot machine terminals
20
Year in Review
Year in Review
Contents
21
Building the team
Stable leadership
Outlook for 2010
10.5
11.5
9.3
1.8
2.6
4.6
5.5
8.0
9.0
11.3
Permira funds’ investments
and realisations, 2005-2009
(€bn, cumulative)
Throughout 2009 we built on this strength,
appointing 13 new professionals.
21.6*
Roberto has worked in our Italian advisory
business for eight years and is part of the
financial services and financing teams.
Richard has been with Permira since joining our
London office in 2000, before moving to our
New York office, which he helped to found,
in 2002.
Benoit joined Permira’s London office in
2006 where he has worked on a number
of transactions. He is part of the TMT and
financing teams.
In 2010 Permira will complete the management
transition to Kurt Björklund and Tom Lister we
began several years ago. Damon Buffini will
step down as chairman in June (as previously
announced) but will remain a partner, a member
of the investment committee and a member of
the board. He has also recently joined the
boards of two Permira funds’ portfolio
companies, Hugo Boss and NDS. Damon
will continue to play an important role within
the business.
10.5
Our team members come from a wide range of
backgrounds and have considerable private
equity, industrial, consulting, financial, legal
and other business experience. This diversity
is a defining characteristic of Permira.
Cumulative size of funds
advised by Permira
(€bn)
5.4
Our 26 partners have been with the firm for, on
average, over a decade. Our multinational and
multilingual team, with professionals from 23
different countries who speak 22 languages,
is an essential resource if the Permira funds are
to maintain and develop further their extensive
network of local and sector relationships.
Central to the Permira culture is the
development of talent from within the
organisation. This year three of our
professionals who have excelled in the
business have joined the partnership.
Roberto Biondi, Richard Carey and Benoit
Vauchy were elected as partners.
1.9
A strong team, led by a stable partnership,
has always been at the heart of the
Permira business.
1997
2000
2003
2006
*Subsequently P4 reorganised in 2008
(Source: Permira)
2005
2006
Invested
2007
Realised
(Source: Permira)
2008
2009
A responsible approach
We have a robust set of business principles to
guide the behaviour of all our professionals and
underpin the way we operate. All partners and
employees of Permira are expected to conduct
their activities in accordance with both the letter
The decisive action taken by portfolio companies and the spirit of these principles. Furthermore,
continues to bear fruit, allowing all the companies we expect our portfolio companies to adopt
to seek out new opportunities while maintaining
their own appropriate business principles.
their focus on long-term growth.
Once an investment has been made, the
As for new investments, the environment today
performance of portfolio companies is closely
looks very much like the early 2000s in terms
monitored by members of the investment
of the nature of the deal flow and the ability to
teams, supported by our Portfolio Group and
finance transactions. It often takes a long time
the Investment Committee. The focus is on
to develop these opportunities, but levels of
creating sustainable operational improvement,
competition are often lower and the investments as well as monitoring the effective management
themselves have significant potential for real
of risk, therefore delivering attractive returns to
business transformation.
our investors.
The NDS and Just Retirement transactions are
good examples of the kinds of investments that
the Permira funds are likely to pursue over the
next few years. Both were complex transactions
where deep sector knowledge was essential
to identify primary value. This played to the
funds’ strengths and track record of Impact
Investing – the focus on similar such deals
will continue throughout 2010.
The funds’ portfolio companies have
maintained the positive progress they made in
2009. This progress will continue throughout
the remainder of 2010.
The financing environment also continues to
recover. Both the revival of the high-yield
markets and the gradual improvement in the
availability of capital from banks has made
access to debt financing easier recently. This
trend is expected to continue although it will
depend to some degree on the economic and
interest rate policy that central banks and
governments adopt in 2010; the uncertainty
around sovereign debt positions in a number
of geographies makes predicting such policy
decisions difficult today.
The strong progress made at the Permira
funds’ portfolio companies in 2009, and
the subsequent recovery in valuations,
demonstrates the value of the Impact
Investing approach.
Permira would like to thank Damon for his
successful leadership over more than a
decade. In that period the Permira funds
multiplied their assets under management
almost tenfold and returned more than
€15 billion of cash to investors.
22
Year in Review
Year in Review
Contents
23
The decisive action
taken by portfolio
companies continues to
bear fruit, allowing all the
companies to seek out
new opportunities while
maintaining their focus
on long-term growth.
Acromas
34
Cognis
44
24
Year in Review
Year in Review
Contents
25
Investing in Society
Permira continued its successful social investment
programme in 2009. In the UK the firm supports
Breakthrough (see opposite page) – a social
enterprise fund which provides a combination of
financial investment and operational expertise from
experienced professionals to the organisations it backs.
Permira has also made a significant contribution to
the Private Equity Foundation (PEF) - which focuses
on empowering young people who are not fulfilling
their potential to re-enter the worlds of education,
employment and training. In Germany, the firm
supports an initiative launched by the charity Off
Road Kids to fundamentally transform the German
education system. As social enterprise takes on an
increasingly important role in society, we are committed
to continuing our support.
www.privateequityfoundation.org
Permira is a member of the Private Equity Foundation (PEF),
a leading venture philanthropy fund which works with carefully
selected charities to empower young people to reach their full
potential. Its investments address the NEET (young people
not in education, employment or training) issue and include
not just money but also pro bono expertise from the private
equity community.
“The relationship
with Breakthrough is
helping Teach First to
manage expansion
and ensure our
impact is sustained.
Such managerial
support and funding
is invaluable to social
enterprises like
Teach First, which
want to unlock their
potential and achieve
significant scale.”
www.teachfirst.org.uk
www.breakthroughfund.org.uk
Teach First’s mission is
to address educational
disadvantage by
transforming exceptional
graduates into effective,
inspirational teachers and
leaders in their fields.
Teach First has achieved incredible scale in its short history and
its social impact has been far-reaching. The organisation is
poised for significant growth over the next few years and has
already placed nearly 1,500 graduates into challenging
secondary schools.
To meet the demand for their services and their ambitious
growth plans, Permira is assisting Teach First in its work to
strengthen its operational platform; maintaining its impact
while achieving significant nationwide scale.
Brett Wigdortz
Permira is providing significant unrestricted grant funding
towards the cost of hiring a director of operations and a financial
controller, as well as funding the appointment of a number of
other members of the finance team. Furthermore, Permira is
assisting in the formulation and implementation of an operations
strategy, monitored by an oversight group and a roster of
external advisers.
Chief executive and
founder of Teach First
We are also providing support for the measurement of the social
impact of Teach First’s programmes.
“Bringing together two
strong sector leading
organisations will
mean that we are able
to exert a greater force
for positive change,
ensuring that people
have a voice that
counts and rights that
are respected.”
www.speakingup.org
www.breakthroughfund.org.uk
Founded in 1996, Speaking
Up supports and empowers
people with learning
difficulties, disabilities and
mental health problems to
speak up for themselves.
It is one of the largest
providers of advocacy
services in the UK.
Jonathan Senker
www.offroadkids.de
Teach First was launched in July 2002 to encourage top
graduates, who would not normally enter teaching, to teach
for at least two years in challenging secondary schools in
the UK. With tailored leadership training developed with over
100 employers, Teach First aims to develop the leaders of
the future.
Chief executive of
Advocacy Partners
and Craig Dearden-Philips,
founder of Speaking Up
Speaking Up enables people who experience learning
difficulties, mental health issues or other disabilities to find their
voice and shape their own lives by creating positive choices for
disabled people, helping organisations to understand their
needs and representing their views or supporting them to
speak up for themselves.
Speaking Up has a proven business model and has shown
considerable growth over the last few years. In 2008/9 Speaking
Up reached over 3,000 people through its advocacy services
and over 5,500 people in total. Twenty per cent of Speaking Up
staff are disabled or former users of its mental health services.
Throughout 2009, a number of Permira’s investment
professionals worked to assist in the merger of Speaking Up with
Advocacy Partners, which is also a leading provider of advocacy
services to disabled people in the UK. The merger, which was
completed in February 2010, will create a new organisation
which will have the scale and scope to support service users
across the UK. To further ensure services continue to be
improved, investment is also being made in infrastructure
that will help create an integrated organisation. A strategy for
the new organisation will be rolled out in the year ahead.
ORK is a leading (non-profit) relief organisation for “Run-away
Kids” in Germany. It has over 10 years experience in offering a
second chance to over 1,000 German street kids and is the only
area-wide relief organisation with streetworkers in Berlin,
Hamburg, Dortmund and Cologne.
Permira has been supporting a new project set up by CEO,
Markus Seidel, designed to overhaul the German education
system. It will create the country’s first academy for youth
workers, thereby addressing a gap in the education system
and reinforcing the core of the organisation’s charity work.
26
Contents
27
Governance
Kurt Björklund
Co-Managing Partner
Damon Buffini
Carlos Mallo
Nigel Carey
Jörg Rockenhäuser
Veronica Eng
Charles Sherwood
Vic Holmes
David Sullivan
Partner, Chairman
Strong corporate governance is critical to
our ability to maintain the highest standards
at Permira.
Permira Holdings Limited is the group holding
company. The Board of Permira Holdings
Limited is responsible for the management and
operation of the group. It is comprised of the
two co-managing partners, Kurt Björklund,
Tom Lister and a further five Permira partners,
Damon Buffini, Veronica Eng, Carlos Mallo,
Jörg Rockenhäuser and Charles Sherwood,
and three other directors, Nigel Carey, David
Sullivan and Vic Holmes.
In addition there is an Executive Group
comprising Kurt Björklund, Tom Lister,
Damon Buffini, Veronica Eng, Carlos Mallo,
Jörg Rockenhäuser and Charles Sherwood;
and a Management Group which comprises
the seven individuals from the Executive
Group and also Martin Clarke, Mike Garland,
Ian Sellars and Nicola Volpi.
Partner, Head of Spain
The Board has overall responsibility for the
operations of Permira. The Executive Group
is the forum for day-to-day aspects of firm
management and the Management Group
considers firm strategy and long-term planning.
The seven individuals who comprise the
Executive Group also comprise the Investment
Committees of the Permira funds which are
responsible for advising the respective fund
general partners on investment and divestment
decisions and the overall monitoring of the
funds’ investments.
Conflicts of interest
We have in place internal policies and
guidelines which seek to reduce the instances
when conflicts of interest arise and address
conflicts that do arise in a way that protects
and deals fairly with the interests of all
those involved.
Director
Partner, Head of Asia
Director
28
Tom Lister
Co-Managing Partner
Governance
Partner, Head of Germany
Partner
Director
Governance
Contents
29
Our Portfolio
Contents
23
30
Our Portfolio
32 Portfolio overview
34 Acromas
36 All3Media
38 Arysta LifeScience
40 Birds Eye iglo Group
42 BorsodChem
44 Cognis
46 Cortefiel
48 DinoSol Supermercados
50 Freescale Semiconductor
52Galaxy Entertainment Group
54Hugo Boss and Valentino
56 Just Retirement
58 Marazzi Group
60 Maxeda
62 NDS Group
64 New Look
66 Principal Hayley Group
68 ProSiebenSat.1
70 Provimi
72 Seat PG
74 Sisal
76 TDC
78 Telepizza
Our Portfolio
Contents
31
Throughout 2009,
the funds’ portfolio
companies maintained
their focus on longterm growth and
adjusted their strategies
to ensure that they
were well positioned
for recovery.
Portfolio
Overview
Location of Permira funds’ portfolio companies by number
USA
4.3%
Greater China
4.3%
UK
30.4%
Japan
4.3%
Hungary
4.3%
Denmark
4.3%
Netherlands
8.7%
Germany
8.7%
Italy
17.4%
Spain
13%
(Source: Permira)
Sector split of Permira funds’ portfolio companies
by number
Maturity of Permira funds’ portfolio companies
by number
Financial Services
8.7%
>6 years
9.7%
4-6 years
21.7%
Industrials
21.7%
Consumer
43.5%
TMT
26.1%
(Source: Permira)
32
Portfolio Overview
2-4 years
52.2%
1-2 years
8.7%
<1 year
8.7%
(Source: Permira)
Portfolio Overview
Contents
33
Acromas (The AA and Saga)
Investment
overview
Acromas is the holding company for The AA and Saga,
two of the UK’s most iconic brand names with long
traditions that inspire high levels of customer loyalty.
With 15 million members, The AA is the UK’s market
leader in roadside assistance, attending over 3.5 million
breakdowns every year. The AA is also one of the UK’s
biggest names in insurance. Saga provides financial
services to people aged over 50 in the UK, including
motor and home insurance as well as personal
financial products. Saga also offers a broad range of
holidays and other travel services to its customers,
including the famous Saga world cruises.
www.acromas.com/www.theaa.com/www.saga.co.uk
Sector
Financial
Services
Date of Initial Investment
September
2004 1
Acromas is the holding
company for The AA and
Saga, two of the UK’s most
iconic brand names
1
Senior Management
Chief Executive Officer
Andrew Goodsell
Chief Financial Officer
Stuart Howard
Permira Contacts
Charles Sherwood
Philip Muelder
Company Information
Origin
Corporate/Merger
Sales 2009/2010
£1,612m
Total size of transaction
€9,685m
Financial Year End
31 January
Strong year in 2009: group
continues to benefit from
merger efficiencies and the
strengthening of home and
motor insurance markets
Continued performance
improvement expected in
2010 as new acquisitions are
integrated into the business
2009 was a strong year for the Acromas group
with many of the actions taken as a result of
the 2007 merger showing significant benefits.
The group demonstrated solid growth in
customer and policy numbers, coupled with
improving rates of product cross-selling and
cost efficiency. The group experienced a
general strengthening of the motor and home
insurance cycle during the second half of
2009; in addition, Acromas saw the benefits of
responding early to the rise in personal injury
fraud, which began in late 2008 and has
strongly affected competitor profitability.
The AA Roadside business won several key
B2B contracts in 2009, while new service
offerings were well received by customers,
further strengthening the AA’s reputation
for service and innovation leadership
(e.g. ‘best buy’ from ‘Which?’ magazine
for the third year running).
The Saga business saw a number of positive
developments, such as the introduction of a
panel of insurers for Saga home and motor
insurance. This strengthens the product
offering and gives Acromas the option to
underwrite chosen risks. Saga Travel also
acquired a new vessel to replace the Saga
Rose, which will go into service summer 2010
and was refurbished in Swansea, Wales.
Acromas completed three ‘bolt-on’
acquisitions in 2009: Drivetech, a leading
provider of driver training and assessment;
Titan Travel, a UK-based tour operator
that targets the 50-plus market; and
AutoWindshields, which is a leading
player in the UK car glass repair and
replacement market.
Acromas strengthened its management
team over the course of the year; a new
CEO for the Saga Travel division joined
the business and was instrumental in the
acquisition of Titan Travel.
The group proved resilient during the
recession in 2009, achieving earnings growth
and a reduction in its leverage multiple in a
testing economic environment. An area
where significant potential remains is Saga
Personal Finance and Saga Independent
Living, where there is an opportunity to
provide Saga customers with valuable advice
and products to assist in their retirement
planning and ‘at home’ healthcare needs.
Furthermore, Acromas expects good
momentum from the launch of its new cruise
ship, the Ruby II, and has already recorded
an improvement in travel bookings for the
2010/2011 season. The capital investment
programme of 2008 and 2009 should also
deliver further benefits.
Initial investment in The AA. The date of the merger to form Acromas was September 2007
34
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Contents
35
All3Media
Investment
overview
All3Media is one of the largest independent TV
production businesses in the UK, comprising a group
of 13 production companies. The group also includes
a digital media producer, a next generation advertising
agency, an international distribution company and a
talent management business.
All3Media is based in the UK and has an
expanding international presence with
significant production activities in the
Netherlands, Germany and New Zealand,
as well as growing TV production companies
in the US (in New York and Los Angeles)
and Australia.
www.all3media.com
Sector
TMT (Media)
Date of Investment
September
2006
Senior Management
Chairman
Sir Robert Phillis1
Steve Morrison
Chief Operating Officer
Jules Burns
John Pfeil
Creative Director
David Liddiment
Permira Contacts
Robin Bell-Jones
Wouter Snoeijers
Company Information
One of the largest
independent TV production
groups in the UK with
a presence in the
Netherlands, Germany,
New Zealand, the
US and Australia
1
Origin
Financial Vendor
Sales 2009
£366m
€531m
Financial Year End
31 August
2009 full year results
stable despite difficult
trading conditions
Well positioned to take
advantage of improving
commissioning environment
on the back of advertising
recovery; further US
expansion expected
in 2010
The group’s key programmes include:
Hollyoaks; Wild at Heart; Midsomer Murders;
Shameless; The Cube; Peep Show;
Undercover Boss; Skins; How To Look Good
Naked; Shortland Street; and “Are You Smarter
Than A Fifth Grader?”. All3Media has a strong
heritage and production base in the UK,
allowing it to sell its English language and
international format content worldwide.
In 2009, the market backdrop became much
more challenging as a sharp advertising
downturn began to put significant pressure
on broadcaster programming budgets
resulting in increased pressure on content
producers. Despite these more difficult
trading conditions, the company’s earnings
were stable. All3Media has benefited from
the high quality and size of its programme
portfolio and a cost savings initiative
addressing both production costs
and overheads.
Overall, the company has continued to
make progress on its strategy of diversifying
its geographic base and genre mix and
improving the quality of its portfolio. During
2009 the group made further progress in
the US with the integration of Zoo and
several successful commissions from other
All3Media production companies, such
as Undercover Boss by Studio Lambert
(on CBS) and the Skins pilot by Company
Pictures (on MTV). The group also made
continued progress in growing its income
from secondary revenue sources such as
repeats, DVD, digital, video on demand and
syndication: the share of the group’s revenue
from these sources grew from 18% in 2008
to 21% in 2009.
In 2009, All3Media’s international distribution
business received the Queen’s award,
recognising its outstanding achievement in
international trade. All3Media also won four
BAFTAs, including the public’s award for
Skins and an award for online content.
In terms of outlook, the group is well
positioned to take advantage of
improvements in the commissioning
environment when the advertising market
recovers. The group aims to boost growth
by driving further expansion in the US,
continuing to grow entertainment formats,
increasing high-margin secondary revenue
and through further high-growth acquisitions.
Sir Robert Phillis passed away 22 December 2009
36
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Contents
37
Arysta LifeScience
Investment
overview
Arysta LifeScience (‘Arysta’) is an agrochemicals and
pharmaceuticals company that produces a range of
insecticides, fungicides and herbicides as well as a
number of products for the healthcare and veterinary
medicine markets. Created through the consolidation
of the life-science divisions of Tomen Corporation and
Nichimen Corporation, Arysta is the world’s largest,
privately held agrochemical business, marketing a
portfolio of more than 150 crop protection products
in over 125 countries.
www.arystalifescience.com
Sector
Industrials
Date of Investment
February
2008
Senior Management
Chairman
Christopher Richards
Wayne Hewett
Rudolf van Houten
General Counsel
Robert Lence
Permira Contacts
John Coyle
Alex Emery
Paul Mullins
Yuji Kato
Rohit Sahni
Arysta was acquired by Industrial Equity
Investments Limited, an international
investment company backed by the
Permira funds, in March 2008.
Arysta is a global business with exposure
to agrochemical markets in North America,
South America, Europe/Africa/Middle East
and Asia. The company is also diversified
by crop type.
Arysta operates through two units –
‘Agriscience’ and ‘Lifescience’. The
‘Agriscience’ unit produces a range of over
60 products, which include market-leading
insecticides, fungicides and herbicides such
as SELECT®, EVEREST®, and DINAMIC®.
Arysta’s ‘Lifescience’ unit produces more
than 90 different products including
pharmaceutical additives and health food
products, veterinary medicines and animal
feed additives.
Company Information
Agrochemicals and
pharmaceuticals company
with a portfolio of 150
products focused on
crop protection
38
Origin
Financial Vendor
Sales 2009
¥112bn
€1,948m
Financial Year End
31 December
Management team
strengthened in 2009;
covenants successfully
renegotiated
More stable market
expected in 2010; focus
on gross margin, supply
chain improvement and
emerging market growth
Our Portfolio
After a record 2008, the crop protection
market experienced pricing pressure and
weaker demand in 2009. These factors,
combined with a strong Yen for most of 2009
resulted in significant pressure on earnings.
However, Arysta took a series of positive
steps in 2009 including the hiring of 20-year
GE veteran Wayne Hewett as COO who
assumed the President and CEO positions in
January 2010. The company also appointed
new heads of Global Marketing and Supply.
After a challenging 2009, analysts expect
a more stable market for crop protection
products in 2010. Under the leadership
of Wayne Hewett, Arysta is focused on
accelerating a number of gross margin
improvements and supply chain initiatives.
Revenue opportunities will be exploited in
emerging markets and for the company’s
market-leading products. Arysta also expects
to pursue add-on opportunities in key
markets and product areas.
Our Portfolio
Contents
39
Investment
overview
Birds Eye iglo Group (‘BEIG’) is a branded European
frozen food company that produces fish, vegetables,
poultry and ready meals, including a number of iconic
products such as Fish Fingers and Schlemmer Filets.
Around half of the company’s business is in the UK
where it operates under the Birds Eye brand. The
remainder operates in continental Europe, particularly
Germany and Austria, where products are sold under
the iglo brand. BEIG was acquired by a company
backed by the Permira funds from Unilever in
November 2006.
www.birdseye.co.uk
Sector
Consumer
(Products)
Date of Investment
November
2006
Senior Management
Chairman
Erhard Schoewel
Martin Glenn
Paul Woolf
Permira Contacts
Cheryl Potter
Max Biagosch
Company Information
European branded frozen
food company active in fish,
vegetables, poultry and
ready meal categories
40
Origin
Corporate
Sales 2009
€1,079m
€1,891m
Financial Year End
31 December
BEIG demonstrated resilient performance
despite a challenging consumer environment
and achieved EBITDA growth of 4% on a
constant currency basis in 2009. Since
acquisition, the ambition of the business
has been to restore growth in core product
categories whilst maintaining strong
profitability levels. In 2009, BEIG’s core
categories continued to perform well,
driven by new product innovation as well
as renovation of existing products in the
fish and poultry categories. 2009 saw a
significant new launch in the UK with the
‘Bake to Perfection’ range of ‘bake in a
bag’ oven-cooked fish which has already
delivered strong results. Product innovation
successfully launched in one market (e.g.
‘Bake to Perfection’ or poultry) is now being
rolled out into other BEIG geographies.
BEIG also entered two new markets in
2009 – Turkey and Russia. The Turkish frozen
food market is relatively underdeveloped,
which presents a good opportunity for BEIG
to grow the overall category by introducing
‘classic’ products such as Fish Fingers. In
Turkey, BEIG has achieved leading market
shares in less than a year. In Russia, BEIG has
just launched its first major TV campaign to
support the business’s entry into the market.
These two new geographies are an important
step in consolidating BEIG’s position as a
truly pan-European platform for frozen food
and should provide an attractive source
of top line growth going forward.
2009 saw continued strengthening of the
executive management team with several key
new hires to complement the existing team.
New hires included Achim Eichenlaub
(previously with Reckitt Benckiser) as MD
for the iglo business and Martina Sandrock
(previously with Sara Lee) as General
Manager for Germany.
The business is now well positioned to
benefit from the investment in a very strong
management team and an exciting pipeline of
new product innovations. The recent launch
of ‘Field Fresh’ vegetables in the UK is an
example of the innovation that is expected
to contribute to growth in 2010. This level
of ongoing innovation is key to generate
long-term, sustainable top line growth.
Resilient in 2009: core
Will continue to benefit from
categories performed well; strong management team
encouraging start for
and new product pipeline
international expansion
Our Portfolio
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Contents
41
BorsodChem
Investment
overview
BorsodChem (‘BC’) is a European producer of
isocyanate-based chemicals and PVC, headquartered
in Kazincbarcika, Hungary. BorsodChem’s core
products are toluene diisocyanate (‘TDI’) and methylene
diphenyl diisocyanate (‘MDI’), which are used in the
production of rigid and flexible polyurethane foams.
The properties of polyurethanes, such as
their light weight, insulation, durability,
flexibility (even at low temperatures),
abrasion resistance and shock absorbance,
make them suitable for use in a broad variety
of applications including furniture, bedding,
construction, automotive interiors, coatings
and adhesives.
www.borsodchem.hu
Sector
Industrials
Date of Investment
December
2006
Senior Management
Chairman & Chief
Executive Officer
Wolfgang Büchele
Viktor Katona
Head Business Unit Isocyanates
Rik de Vos
Head Business Unit PVC
Vladimir Karkoska
Permira Contacts
Christian Neuss
Torsten Vogt
Christian Baier
Philipp Schulte-Noelle
Company Information
uropean producer
E
of isocyanate-based
chemicals with main
markets in Western and
Central-Eastern Europe
42
Origin
Public Company
Sales 2009
€627m
€1,630m
Financial Year End
31 December
Some recovery in 2009
driven by improved
performance of TDI/
PVC and significant
cost savings
Consensual restructuring
of the capital structure
achieved with Wanhua
subject to debt holder
approval
Our Portfolio
BorsodChem’s products are sold mainly in
Western and Central-Eastern European
markets. The size of the global MDI and TDI
markets is approximately four million tons
and two million tons a year respectively.
The nature of the highly complex
isocyanate production process results in
technology-driven barriers to entry. As one
of the major producers in this market,
BorsodChem has best-in-class technology
capabilities underpinned by a proprietary
TDI production process with the most
favourable cost position in Europe.
The isocyanates market experienced an
unprecedented decline of approximately
30% in end-market demand starting in
Q4 2008 mainly driven by a destocking
effect in the value chain. The business
responded immediately by implementing
a comprehensive set of countermeasures,
including significant cost savings.
expanding geographically, especially
into the Middle East and Africa. This strategy
was also applied to the MDI and PVC
products, where strong management
attention and focused sales initiatives
enabled the company to perform ahead
of its revised plan.
BorsodChem has also taken important steps
to strengthen its management team. The
newly appointed CEO Wolfgang Büchele
has been successful in providing strategic
guidance and driving operational excellence.
The sales strategy that he has developed with
Rik de Vos, the new business unit head for
isocyanates, provided positive 2009 results
and puts the business in a strong position
for the future.
BorsodChem has achieved an operational
turnaround and is positioned to benefit from
an expected market recovery in 2010/2011.
However, the return to and outperformance of
historical profitability levels is only expected
in the medium term upon a full recovery of the
chemical industry and the completion of the
significant capacity expansion projects,
which are currently on hold.
The economic downturn in 2009 resulted
not only in a need for an operational
restructuring but also a financial restructuring
to stabilise operations, provide further
financial flexibility and establish a solid
The key determinant of 2009 performance
platform for long-term growth. A consensual
was the TDI product, which is sold mainly
restructuring of BorsodChem’s capital
to the furniture and bedding industry.
structure has been recently agreed,
BorsodChem management implemented a
strategy focused on broadening the customer subject to debt holder approval.
base, increasing its product range and
Our Portfolio
Contents
43
Cognis
Investment
overview
Cognis is a worldwide supplier of specialty chemicals
and nutritional ingredients with leading expertise in
renewable raw materials and surface technology. It
produces a range of consumer-oriented and industrial
products that combine top performance with the
requirements for environmental compatibility. Its main
focus is on serving growth markets with products that
provide wellness and sustainability. Cognis was formed
in 1999 as a ‘carve-out’ from the German DAX-listed
group Henkel before being acquired by a company
backed by the Permira funds and other financial
sponsors in 2001.
Cognis operates three strategic
business units:
www.cognis.com
Sector
Industrials
Date of Investment
November
2001
Senior Management
Antonio Trius
Marco Panichi
Chief Administrative Officer
Helmut Heymann
Executive Vice President,
Care Chemicals
Richard Ridinger
Functional Products
Paul Allen
Nutrition and Health
Stéphane Baseden
Permira Contacts
Torsten Vogt
Sebastian Hoffmann
Company Information
Supplier of specialty
chemicals and nutritional
ingredients with leading
expertise in nature-based
chemistry and surface
technology
44
Origin
Corporate
Sales 2009
€2,584m
€2,975m
Financial Year End
31 December
Strong 2009 performance
relative to global chemicals
peer group (early-on
cost control, significant
deleverage)
Well positioned for
growth in 2010, benefiting
from wellness and
sustainability trends
Our Portfolio
•Care Chemicals is a global leading
supplier of innovative, environmentally
sound products and formulations for the
personal and home-care markets as well
as for industrial cleaning solutions. These
are in tune with contemporary consumer
demands for well-being, convenience
and sustainability
• Nutrition & Health develops forward-looking
products, formulations and concepts for
food, beverages, functional food and
dietary supplements. Its ingredients
deliver real health, quality and
convenience benefits
•Functional Products creates specific
solutions for a wide spectrum of industrial
sectors. Its ingredients and formulations
deliver a superior performance profile
while at the same time responding to the
demand for sustainable practices and
environmentally friendly products
During 2009, Cognis’s innovative product
portfolio and strong market positions have
proved to be resilient to the effects of the
economic downturn. With full year 2009
EBITDA ahead of 2008 results, Cognis has
shown a strong performance overall and
especially in relation to the chemicals sector.
The earnings growth has been driven by
the company’s efforts in strengthening
operations and counterbalancing weak
demand. In addition, the company reacted
early on to the crisis by implementing a
comprehensive cost reduction programme.
Furthermore, Cognis has worked to
reduce its level of debt by pursuing a debt
buy-back programme, taking advantage of
opportunities to acquire its own debt at a
substantial discount to par. This was partly
financed by cash in the company from
the sales of Oleochemicals and Pulcra in
2008. The business has also focused on
effective working capital management
including the implementation of a receivables
factoring programme, which began in
Q3 2009.
2010 is expected to be another demanding
year with a volatile operating environment.
Cognis is, however, well positioned to face
these challenges given its strong product
portfolio and continuous investments in
innovation and growth, especially in its
emerging markets operations.
Our Portfolio
Contents
45
Cortefiel
Investment
overview
The Cortefiel Group (the ‘Group’) is a Spanish clothing
retailer, operating a multi-format network with three main
fascias: Cortefiel, Springfield and women’secret. The
remaining portfolio consists of other smaller formats
including Pedro del Hierro and Fifty Factory. Spanish
operations account for 75% of sales and in total the
Group operates 1,578 points of sale and is present
in 60 countries.
In 2005, a company financed by Permira
funds, CVC funds and PAI funds agreed to
acquire 100% of the share capital of the
Group, listed on the Madrid Stock Exchange.
Shareholders representing 87% of the share
capital accepted the offer in September 2005.
Subsequently this percentage increased
to 92% and the Group was delisted in
March 2006.
www.grupocortefiel.com
Sector
Consumer
(Retail)
Date of Investment
September
2005
Senior Management
Chairman
Anselm Van Den Auwelant
Juan Carlos Escribano
Marcos Gómez
Permira Contacts
Carlos Mallo
Andrés Echecopar
Pedro Lopez
Company Information
Pan-European fashion
retailer with leading
positions in Iberian markets
46
Origin
Public Company
Sales 2009
€1,053m
€1,802m
Financial Year End
28 February
Prime locations, strong
brand positioning and
product portfolio and
focused promotional
activity improved market
share in the context of
severe Spanish recession
New management team
focusing on operational
restructuring, protecting
margin, cost savings
and improving stock
management
Our Portfolio
The Cortefiel brand (‘CTF’) enjoys strong
market recognition in Spain and offers a
range of classic clothing for men and women
over 30. CTF has 333 own stores (primarily
in the Iberian market) and 33 franchises
which together account for 37% of group
sales. Springfield (‘SPF’) targets the 18-30s
with a casual, contemporary look at value
prices. It has 499 own stores together with
207 franchises and constitutes 40% of group
sales. women’secret (‘WS’) is the leading
lingerie retailer in Spain with its 299 stores
and 182 franchises, which together
contribute 18% to group sales.
The Group took a series of steps to address
2009’s difficult market conditions. The
business closed both of its manufacturing
facilities and outsourced production to East
Asia. Headcounts at CTF, SPF and WS were
also reduced.
The Group continued to gain market share
from competitors in 2009, demonstrating
the strength of its broad product portfolio,
premium store locations and management
focus on driving sales through promotional
activity. CTF continued to be the brand of
reference for the classic mature customer,
SPF strengthened its offering through
line extensions and expansion and WS
completed its turnaround by successful
brand repositioning.
In September 2009, the Group completed
a refinancing of its capital structure,
including a reverse dutch auction to buy back
debt at a discount. This transaction included
a reset of covenants, which should give the
Group additional flexibility going forward.
The outlook for 2010 remains cautious given
the slow recovery in Spain, as unemployment
continues to put downward pressure on
private consumption. The Group’s return to
growth will be supported by the following
top line initiatives: launching an online
business; bringing in an in-store excellence
execution programme; introducing line
extensions; the turnaround of CTF Women;
the restructuring of outlet brand Fifty Factory
and continuous expansion of SPF and WS
in smaller locations.
The group also strengthened its management
team. Juan Carlos Escribano was promoted
from MD of SPF to CEO of the Group;
Ezequiel Szafir, the former operational and
turnaround partner at Deloitte, was appointed
Group COO, while the CTF management
team was changed substantially.
Our Portfolio
Contents
47
DinoSol Supermercados
Investment
overview
DinoSol Supermercados (‘DinoSol’) is a leading
Spanish food retailer, operating two brands: HiperDino
and SuperSol. The company currently has around
450 stores with a total selling space of c.400,000 square
metres. While the supermarket format represents over
60% of total group sales, the company also operates
convenience stores (formerly under the Netto brand in
the Canary Islands, recently rebranded as HiperDino
and HiperDino Express), cash & carry (under the
CashDiplo brand) and hypermarket formats.
Sector
Consumer
(Retail)
Date of Investment
November
2004
Senior Management
Chairman
Luis Gil
Javier Perez de Leza
Luis Sanz
Permira Contacts
Carlos Mallo
Francesco de Mojana
Company Information
Operates the SuperSol and
HiperDino supermarket
brands in southern Spain,
as well as the CashDiplo
cash & carry brand
48
Origin
Corporate
Sales 2009
€1,492m
€895m
Financial Year End
31 December
Cost reduction programme Roll-out of new commercial
in response to severe
strategy in 2010, cost and
consumer downturn in
cash focus will remain
2009; new CEO appointed
Our Portfolio
A series of initiatives has been put in place
to strengthen sales in the group, including
commercial pilots in the supermarkets, the
rebranding of the Netto stores as HiperDino
supermarkets and the targeting of the
hospitality segment by the cash & carry
business. These initiatives are yielding
positive results and are the basis of a
As a result of the 2009 recession, consumer
business plan that the management team will
spending was negatively affected in a number be rolling out between 2010 and 2012. In Q4
of areas. In food retail, consumers reduced
2009, the sales underperformance when
spending overall, traded down to cheaper
compared to Q4 2008 was less acute than
categories and, within each category,
in the previous nine months, which was
focused on private labels. This reduction
driven by specific management initiatives.
in consumer spending led to a significant
In 2010, DinoSol will roll out the pilots on
increase in price competition. In this context,
commercial offerings that were successfully
DinoSol’s sales have severely deteriorated
tested in 2009 to recover customer volumes
across all formats. Netto and CashDiplo
and sales, as well as maintaining a disciplined
formats were particularly affected given their
review of its cost base and cash position
exposure to tourism, while the performance
of supermarket formats was somewhat better. through centralisation of warehouses,
reduction of rents and energy costs, and
In response to this more difficult environment, simplification of administration.
DinoSol has reduced costs by more than
At the beginning of 2010, DinoSol reached
€30 million, while focusing on protecting
an agreement with its financing banks and
cash. Furthermore, the management team
adjusted its capital structure to provide the
was strengthened in 2009 with the hiring of
company with new covenant and liquidity
Javier Perez de Leza as chief executive and
headroom to give more flexibility in terms
Luis Gil took over as chairman.
of the business plan over the next few years.
DinoSol enjoys strong market positions in the
south of Spain: it is the market leader in the
Canary Islands and a key player in Andalucía,
with a particular strength in the Costa del Sol.
More than 85% of the company’s sales are
concentrated in regions where DinoSol has
a strong market share.
www.dinosol.es
Our Portfolio
Contents
49
Freescale Semiconductor
Investment
overview
Freescale is a global leader in the design and
manufacture of embedded semiconductors for the
automotive, consumer, industrial, networking and
wireless markets. The company has a broad portfolio
of more than 14,000 products serving over 10,000
customers, including many of the world’s top original
equipment manufacturers. Freescale has over
50 sales offices located in 25 countries.
www.freescale.com
Sector
TMT
(Technology)
Date of Investment
November
2006
Senior Management
Chairman and
Rich Beyer
Alan Campbell
Chief Sales & Marketing Officer
Henri Richard
Nic Volpi
Company Information
Designs and manufactures
semiconductors; broad
portfolio of more than
14,000 products focused on
the automotive, networking
and industrial end markets
50
Origin
Public Company
Sales 2009
$3,508m
€12,604m
Financial Year End
31 December
New product launches
continued during 2009,
5% increase in design
wins in its core segments
against 2008
Cost reduction plan
successfully implemented
in response to a tough
economic environment,
thereby right-sizing the
company to take advantage
of the economic recovery
Our Portfolio
•It significantly strengthened its
management team with the hiring of
experienced industry leaders, now in place
to drive the future growth of the business
•The exit from the wireless business after
the rapid decline of Motorola handsets in
the market
In addition, in its strategic plan, the
management team has positioned Freescale
for above-market growth by refocusing its
R&D efforts around two core (automotive,
networking) and two select (consumer,
industrial) segments focused on three
key trends (cleantech, health & safety
and the proliferation of the internet and
connected devices).
•Decline in Freescale’s largest end-market
(US automotive) demand by over 30%
•Deep global recession affecting overall
semiconductor demand, down by over 15%
However, the response by the management
team led by CEO Rich Beyer (who joined in
March 2008) has been excellent in the face
of these challenges:
Permira Contacts
Peter Smitham
Tom Lister
The years 2008 and 2009 were difficult
ones for Freescale as three adverse events
concurrently affected operations and
financial results:
•The company successfully implemented a
cost reduction plan delivering more than
US$1 billion of savings ahead of schedule
These efforts, coupled with the expected
recovery of the end-markets, are anticipated
to provide positive momentum for 2010.
Market growth is estimated to be in the
10-15% range with a significant improvement
in profitability driven by the cost reduction
actions taken in 2009.
•It completed the largest debt exchange
of its kind in the capital markets which
reduced net debt by US$2.0 billion and
interest expense by US$150 million
•It achieved year-on-year growth in design
wins in its core markets including some
key wins in the automotive powertrain,
Netbooks and e-books (such as the Kindle),
Digital Signal Processor (DSP) and
sensor products
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Investment
overview
Galaxy Entertainment Group (‘Galaxy’) is a casino
and hotel operator in Macau SAR, China. It is one of six
gaming concessionaires licensed to operate casinos
in Macau, the world’s largest gaming market by revenue
and the only legal gaming location in China. The
company is listed on the Hong Kong Stock Exchange
and is majority owned by the Lui family and the
Permira funds.
www.galaxyentertainment.com
Sector
Consumer
(Leisure)
Date of Investment
November
2007
Senior Management
Chairman
Dr Lui Che Woo
Deputy Chairman
Francis Lui
Bob Drake
President and Chief
Operating Officer
Michael Mecca
Permira Contacts
Martin Clarke
Henry Chen
James Burrell
Company Information
Origin
Family Owner/Public
Company Investment
Total size of initial transaction
€593m
Casino and hotel operator
in Macau SAR, China
52
Strong trading in 2009:
improvements driven by
revenue growth and cost
saving initiatives
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Sales 2009
HK$12,231m
Financial Year End
31 December
Value creation plan focused
on completing construction
programme on Cotai and
increasing profitability at
existing sites
In November 2007, companies backed by
the Permira funds acquired c.20% stake in
Galaxy. Two directors representing the
Permira funds were appointed to the board of
Galaxy. In addition, the Permira funds benefit
from detailed information rights, anti-dilution
rights and a number of veto rights with regard
to the strategy and operation of the business.
Management are positive about the outlook
for StarWorld in 2010, as the market shows
continued signs of growth.
The restrictions on Chinese resident visas
to Macau negatively impacted visitation in
2009. This, combined with the weak global
economic conditions, caused a slowdown
in the growth in Macau’s gaming revenue
to about 9% for 2009 from 31% in 2008.
Construction continued on Galaxy’s Macau
casino, hotel and leisure resort through 2009.
The exterior was largely complete by the
end of 2009 and internal fit out will continue
in 2010. The resort is currently scheduled
to open in the first half of 2011.
Despite the market slowdown, Galaxy’s
flagship casino and hotel, StarWorld,
reported very strong trading improvement
in 2009. The Q4 2009 revenue at StarWorld
was an all time record and marked the sixth
consecutive quarter of growth. The 2009
earnings have shown a significant
improvement on 2008 due to:
During 2009 Galaxy successfully
implemented a debt buy-back programme.
A refinancing to repay existing debt and
recapitalise the company to complete the
Cotai development is due to be finalised
in the first half of 2010.
The four ‘City Club’ casinos operated by
Galaxy also contributed to earnings well in
excess of 2008, due to improved revenue
generation and tight cost control.
•The revenue growth achieved in the
important VIP market, where the number
of tables and VIP relationships increased
in 2009
•The refurbishment and successful
relaunch of the main mass gaming floor
and reconfiguration of a new mass Poker
King Club
•Cost saving initiatives realised through
an operational efficiency programme
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Hugo Boss and Valentino
Investment
overview
Red & Black Lux is the indirect owner of a controlling
stake in the publicly listed German company Hugo Boss
and 100% of the Italian businesses Valentino Fashion
Group (‘VFG’), including Valentino and its licences
division Marlboro Classics and M Missoni (together the
‘three business units’). They operate in the fashion and
luxury goods market, with a presence in more than 100
countries, with over 1,600 single-brand boutiques and
over 430 directly managed shops.
www.hugoboss.com/www.valentinofashiongroup.com
Sector
Consumer
(Retail)
Date of Investment
May
2007
Senior Management
HB Chief Executive Officer
Claus-Dietrich Lahrs
HB Chief Financial Officer
Mark Langer
VFG Chief Executive Officer
Stefano Sassi
VFG Chief Financial Officer
Luca Vianello
Permira Contacts
Martin Weckwerth
Paolo Colonna
Fabrizio Carretti
Damon Buffini
Christoph Röttele
Niklas Einsfeld
For all three business units 2009 has been
a difficult year, as the global economic
downturn has led to a decline in sales.
Hugo Boss is targeting growth through retail
expansion, including geographic expansion,
new product categories and by offering more
flexible customer service initiatives. This
includes a restructuring of the supply chain
strategy, logistics and retail competence.
Similarly VFG has also focused on improving
its product range and design team.
In Q4 2009 steps were taken to strengthen
the financial position of the group and in
December 2009 the business completed a
recapitalisation and restructuring of VFG and
the Permira funds’ stake in Hugo Boss. The
transaction, which was consensually agreed
with the group’s lenders, means that VFG’s
debt has been reduced by one third; as part
of this process additional equity was injected
by the Permira funds and co-investors.
Company Information
Global fashion and luxury
goods group, operating in
more than 100 countries
1
Origin
Public Company
Sales 2009
€2,026m1
€5,343m
Financial Year End
31 December
Financial position
strengthened through
recapitalisation and
restructuring
Financing structures now
appropriate for growth plans
The terms of the remaining VFG debt facilities
were amended to provide the financial
flexibility to support the long-term growth
plans of the businesses. Furthermore,
the group structure was reorganised by
separating the ownership of the Hugo Boss
stake from VFG. Hugo Boss and VFG now
continue to be held by Red & Black Lux
through two separate ownership chains.
These changes represent a positive step
forward for the business. Hugo Boss and VFG
now have appropriate financing structures,
which will allow both businesses to work
towards restored growth as the global
economic climate recovers. Consequently,
Hugo Boss and VFG will be able to focus on
growth in 2010, building on successful
expansion in 2009. Hugo Boss will target
retail expansion with a shift towards directly
operated stores and building on womenswear
while accelerating growth internationally;
while VFG will expand its range of accessible
products at attractive price points.
Total Group sales: Consolidated Annual Report
54
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55
Just Retirement
Investment
overview
Just Retirement (‘JR’) is a specialist financial services
business that provides financial solutions to clients in or
approaching retirement. It was acquired by a company
backed by the Permira funds in November 2009.
www.justretirement.com
Sector
Financial
Services
Date of Investment
November
2009
Senior Management
Chairman
Tom Cross Brown
Mike Fuller1
Group Financial Officer
Simon Thomas
Group Chief Actuary
Shayne Deighton
Permira Contacts
Charles Sherwood
James Fraser
Wouter Snoeijers
Company Information
Specialist financial services
business selling investment
products to clients in or
approaching retirement
1
Origin
Public Company
Sales 2009
£846m
€298m
Financial Year End
30 June
Focus on growing the
business through
broadening distribution
and products, and
investing in a scalable
infrastructure
Results for the last half
of 2009 were strong with
growing demand for both
enhanced annuities and
equity release mortgages
n 17 February 2010 Mike Fuller announced his retirement with effect from July 2010, after which Rodney Cook
O
will take over as Chief Executive Officer.
Over the past year Just Retirement has
demonstrated strong performance in the face
of the global financial crisis and subsequent
recession. In the year to December 2009, the
company reported annuity sales of £668
million, up 19% on the previous year, and
equity release mortgage sales of £178 million,
up 6%. Over the last six months, the group
experienced considerable and growing
demand for its enhanced annuities product,
posting record months in September and
November 2009. Sales of equity release
mortgages in H1 2009/2010 also represent
a record for JR. This underlying strength
supports the Permira funds’ investment
rationale for the business.
Since launching in August 2004, JR has
established market leadership in enhanced
annuities – an annuity is a financial product
that provides a secure way of converting
personal pension savings into a guaranteed
regular income during retirement. JR has
strong underwriting data that allows it to offer
better annuity rates (an ‘enhanced annuity’)
relative to standard annuities for customers
who have a medical condition and shortened
life expectancy.
JR also has a strong presence in equity
release mortgages. These products release
the value tied up in a customer’s home to
provide additional income in retirement.
With the widely publicised lack of mortgage
funding available in the market during the
year, JR has been in a strong position
through its self-financing business model
to consolidate its position and generate
attractive margins.
The business has a strong reputation within
the independent financial adviser (‘IFA’)
sector for providing first class service and
high-quality products to its customers, being
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awarded the highest honour of ‘Company
of the Year’ amongst all life insurers, asset
managers and mortgage lenders in 2009.
JR is expected to benefit from the ageing
population in the UK and the increasing need
for individuals to save for their retirement
through personal and corporate defined
contribution pension schemes. Under UK
regulations at least 75% of pension funds
must be used to purchase an annuity on
retirement (before the age of 75) and currently
about £12 billion is annuitised each year,
growing at approximately 15% p.a. Enhanced
annuities are a niche segment comprising
just over 10% of the annuity market, but
penetration is growing as IFAs and customers
gain awareness of the product. Beyond their
pension savings, a significant proportion
of retirees’ wealth is tied up in their home,
and JR helps customers access this
money through equity release mortgages.
This market is also expected to grow as
customers seek additional income to fund
their retirement.
JR’s strategy is to continue to take advantage
of the underlying growth in the annuity and
equity release mortgage markets, while
investing in broadening distribution and the
product range. There are opportunities
to broaden distribution beyond the core
channel of IFAs to partnership with other life
insurers and affinity groups. In addition, there
is potential to build JR into the pre-eminent
retirement brand by broadening its product
offering into adjacent areas including
long-term care, life assurance and investment
products. JR intends to develop and
strengthen the business’s long-term growth
prospects further in these areas, while
investing in the operational infrastructure
of the business to create scalability.
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Marazzi Group
Investment
overview
Marazzi Group (‘Marazzi’) is a worldwide leader in the
design, manufacturing and distribution of ceramic tiles.
The company is a technological leader in the tiles sector
and has a strong track record in design and innovation.
The group sells into 130 countries, with leadership in
most of the markets in which it operates and has
manufacturing facilities in all of its key areas of activity
(Europe, the US and Russia) as well as direct distribution
in Russia and the US.
www.marazzi.it
Sector
Industrials
Date of Investment
July 2008
Senior Management
Chairman
Filippo Marazzi
Maurizio Piglione
Alessandro Poletto
Permira Contacts
Paolo Colonna
Silvia Oteri
Francesco Pascalizi
Company Information
Worldwide leader in the
design, manufacturing
and distribution of ceramic
tiles with operations in
over 130 countries
Origin
Public Company
Sales 2009
€801m
€1,387m
Financial Year End
30 June
Management team
strengthened: new CEO
and country manager
for Italy
2010 focus on top line
growth development and
further growth opportunities
The Permira funds’ investment in Marazzi was
motivated by the company’s international
leadership, which makes it well positioned
to capture market opportunities through
organic growth and acquisitions, as well as
the proprietary nature of the deal and the fact
that the management were well known to
Permira. Marazzi’s offering extends to both
residential and commercial customers, and
includes products ranging from floor and wall
tiles to solutions for exterior wall coverings.
Marazzi has experienced challenging market
conditions since the business was acquired
by the Permira funds. All of the company’s
key markets experienced sales declines of
between 20% and 40% by volume, while a
devaluation of the Rouble (Russia is one of
Marazzi’s key markets) placed further
pressure on the business. The nature of the
tiles industry, which operates with long lead
times and a continuous manufacturing
process, means that Marazzi and its peers in
the sector have a high operating leverage.
The combination of these factors meant that
the company’s profitability came under
significant pressure throughout 2009.
The company took quick and appropriate
action in response to this pressure.
Marazzi’s management focused on reducing
manufacturing and administrative costs while
maximising cash generation. The business
also successfully reduced its level of debt
through effective management of net working
capital. In addition, debt covenants were
renegotiated in 2009 and Marazzi now has
adequate financial flexibility to pursue its
strategic objectives in the coming years.
Marazzi also strengthened its management
team in 2009, appointing a new CEO and a
new country manager for Italy. Having
successfully finalised the restructuring,
Marazzi is now focusing on developing
its top line and exploring further
growth opportunities.
009 focused on cost
2
reduction and cash
generation; debt also
successfully restructured
in 2009
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Maxeda
Investment
overview
Maxeda is the largest non-food retailer in the
Netherlands, with strong positions in both the DIY and
fashion markets. The group owns nine different brand
formats and operates 1,360 stores in seven European
countries. Maxeda’s DIY formats include Praxis and
Formido in the Netherlands and Brico and Plan-It in
Belgium. Maxeda’s fashion business includes leading
department store formats, such as DeBijenkorf, a luxury
department store chain in the Netherlands, and V&D,
a department store aimed at the mid-market, as well
as womenswear brand M&S Mode and the lingerie
brand Hunkemöller.
www.maxeda.com
Sector
Consumer
(Retail)
Date of Investment
September
2004
Senior Management
Executive Chairman
Tony DeNunzio
Ronald van der Mark
Chief Executive Officer DIY
Nick Wilkinson
Permira Contacts
Cheryl Potter
Max Biagosch
Company Information
Largest non-food retailer in
the Netherlands operating
nine different fascia from
1,360 stores
60
Origin
Public Company
Sales 2009
€2,912m
€2,517m
Financial Year End
31 January
Resilient performance
during 2009 despite a very
challenging consumer
environment; further
investment in several
store formats
Well positioned for 2010
as a result of management
actions during 2009
Our Portfolio
Despite a challenging retail environment
in 2009 the group showed a resilient
performance with only modest top line
declines. This compares favourably with
many European retail peers and direct
competitors in Maxeda’s local markets. In
addition, management maintained its strong
focus on cost and cash control, executing a
highly successful and comprehensive cost
saving programme across all formats and
markets without compromising the core
customer proposition of its retail formats.
The group made good progress during 2009
on its value creation plan. DeBijenkorf
continued to build further on its high-end
department store proposition by selected
store refits and assortment upgrades. It also
benefited from its unique market position in
the Netherlands and its well-invested asset
base. V&D made good progress on its
turnaround plan with two-thirds of the store
portfolio having undergone a remodelling
programme by the end of 2009. This supports
the ongoing repositioning of the format’s
branding and product portfolio. M&S
continues to benefit from its attractive niche
positioning, whilst Hunkemöller is benefiting
from a new and strong management
team. The disposal of two formats (the
underperforming Claudia Sträter brand and a
small local jewellery chain Schaap & Citroën)
has further allowed management to focus
on the core of the retail portfolio. The Belgian
DIY business continued to perform well with
stability in its core Brico format and very
attractive growth from the successful Plan-It
format. The Dutch DIY formats experienced
a more difficult consumer and competitive
environment and responded with strong cost
and cash control as well as a renewed focus
on commercial programmes supported by
a strengthened management team.
Whilst the outlook for consumer demand
remains challenging in 2010, the group’s
resilience in 2009 with its further strategic
progress leaves the group well positioned.
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NDS Group
Investment
overview
NDS Group (‘NDS’) creates technologies and
applications that enable pay-TV operators, telcos and
mobile operators to deliver digital content securely to TV
set-top boxes, digital video recorders (‘DVRs’), personal
computers, mobile phones and other multimedia
devices. Over 70 of the world’s leading pay-TV platforms
rely on NDS solutions to protect and enhance their
businesses. In August 2008, the Permira funds agreed
to acquire NDS in a public-to-private transaction.
The acquisition of NDS was carried out in partnership
with News Corporation, which maintains a significant
interest in the business.
NDS offers solutions for satellite, cable,
internet protocol television (‘IPTV’), terrestrial
and mobile networks as well as hybrid
systems which combine broadcast and
internet technology. NDS has strong
relationships with key customers including
DIRECTV, BSkyB, Sky Italia, Viasat, Sky
Deutschland, CANAL+, Astro, Tata Sky,
CCTV and Cox Communications.
www.nds.com
Sector
TMT
(Technology)
Date of Investment
January
2009
Senior Management
Chairman and Chief
Executive Officer
Dr Abe Peled
Raffi Kesten
Alexander Gersh
Permira Contacts
Damon Buffini
Richard Sanders
Benoit Vauchy
Alexandre Margoline
Company Information
Creates technologies
and applications to enable
the secure delivery of
digital content
62
Origin
Public Company
Sales 2009
$814m
€2,461m
Financial Year End
30 June
Resilient despite economic
environment: solid volume
growth; profitability
and cash generation
remained strong
Opportunity to grow
internationally with new
customers and further
existing account base
penetration
Our Portfolio
NDS VideoGuard® is the world’s leading
conditional access and digital rights
management technology. It is deployed
on more than 119 million active devices.
VideoGuard protects the operators’ service
as well as their content. It safeguards pay-TV
service revenues exceeding US$40 billion.
NDS middleware is deployed in 143 million
TV set-top boxes, enabling a host of
advanced services for subscribers including
EPGs (Electronic Program Guides),
interactive applications and convergence
solutions. NDS’s DVR technology leads
the industry with 28 million units
deployed worldwide.
In FY 2009, NDS added a number of new
customers including KDG (the largest
German cable operator), Vodafone Europe
and ZON (the largest Portuguese cable
operator). It also expanded the scope of its
products and services range.
In 2010, the NDS management team
will continue to grow the business by
strengthening existing client relationships
while targeting new applications and
services, and seeking out further growth
opportunities in emerging markets and in the
cable, IPTV and other market segments.
In 2010, NDS is projecting solid revenue
growth along with an improvement in
profitability. Growth will be driven by
existing clients, especially in emerging
countries; growth in new customers and
the development of business in the US cable
market. There are many opportunities for
new customer/business wins in NDS’s core
pay-TV market. NDS has been expanding its
workforce globally with a particular focus
on the US, China and India. NDS will also
continue to investigate new areas of growth
Despite the adverse economic environment
in 2009, the pay-TV industry has been resilient outside its core pay-TV market, especially in
internet video.
and most NDS clients have continued to
grow and roll out new services. NDS has
experienced solid volume growth in FY June
2009, offset by adverse foreign exchange
effects. In addition, FY 2008 sales benefited
from one-off items that were not repeated
in FY 2009. Profitability and cash flow
generation remained strong, reducing
the leverage multiple materially.
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New Look
Investment
overview
New Look is a European high-street apparel retailer with
a strong presence in the UK with own brand stores in
Ireland, France, Belgium, Netherlands and the Middle
East. The company is positioned as a fast fashion
value retailer with a broad product offering that focuses
on womenswear, but also includes footwear and
accessories as well as an expanding menswear offer.
www.newlook.co.uk
Sector
Consumer
(Retail)
Date of Investment
April
2004
Senior Management
Non-Executive Chairman
(effective January 2010)
John Gildersleeve
Carl McPhail
Alastair Miller
Permira Contacts
Martin Clarke
Leanne Buckham
Company Information
Leading fashion
value retailer with an
attractive market position
transformed since
acquisition and
expanded internationally
Origin
Public Company
Sales 2009
£1,322m
€1,187m
Financial Year End
31 March
Workforce grew from
12,400 to 20,400 in 2009;
UK retail space doubled
since acquisition;
developed in-house
design expertise and
broadened product range
to achieve a 5.3%market
share in womenswear1
Fast-growing online sales
channel now operating in
24 countries
New Look has a broad retail network
comprised of 592 stores in the UK and
55 stores in Europe (Ireland, France,
Belgium and the Netherlands). Through its
franchise partners New Look has opened
35 franchise stores with 27 in the Middle East
(Saudi Arabia, UAE, Kuwait and Bahrain),
two in Egypt, four in Russia with one in each
of Singapore and Poland. The group also
operates 304 stores across France and
Belgium which trade under the Mim brand.
New Look was acquired by a company
backed by the Permira funds and another
financial sponsor in April 2004.
New Look has continued to grow in a tough
economic environment during 2009, building
on the company’s strong performance the
previous year. During the key Christmas
trading period (14 weeks to 2 January 2010),
UK LFL sales rose by 5.9%, while total group
sales grew by 14.4% over the same period.
Over the course of the last year New Look
continued its new store openings programme,
opening 25 stores across the UK during the
year creating over 800 new jobs as well as
securing a new 26,000 sq ft flagship store
in Oxford Street, which was opened on
5 February 2010.
In existing stores, the company has
successfully trialled and launched its
‘Look and Feel’ upgrade and refurbishment
programme, improving the shopping
experience for its customers and generating
LFL sales growth. Internationally, New Look
entered four new markets with an owned
store in the Netherlands and franchise
stores in Egypt, Singapore and Poland.
Sales of the group’s online business
continue to grow strongly. Visitor numbers
rose to over 1.5 million per week in the
Christmas period and 95% of store ranges
are now available online. The website
www.Newlook.com currently services
24 countries worldwide and based on the
number of visitors, New Look has an
estimated 3.4% market share (source:
Hitwise). New Look launched a second
generation website in March 2010 and has
plans to integrate its multi channel model
further through its EPOS roll-out.
In January 2010, New Look appointed John
Gildersleeve as non-executive Chairman
replacing Phil Wrigley who stepped down
after nine years with New Look. John has held
senior roles and board positions in leading
international blue-chip companies spanning
a wide variety of sectors including retail,
property, telecoms and media.
Womenswear defined as women’s clothing and accessories; source TNS – 24 wks ending 6 December 2009
1
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65
Principal Hayley Group
Investment
overview
Principal Hayley Group is a hotel and conference
centre group operating in the UK. Principal Hotels was
originally acquired by a company backed by the Permira
funds in September 2006 and since then has grown
substantially. In May 2007, supported by the Permira
funds, Principal Hotels acquired Hayley Conference
Centres, creating Principal Hayley. Today the group
includes 22 UK sites and two European sites.
www.principal-hayley.com
Sector
Consumer
(Leisure)
Date of Investment
September
2006
Senior Management
Chairman
Roger Devlin
Tony Troy
Tim Doubleday
Permira Contacts
Martin Clarke
Sally Flanagan
Joseph McIntyre
Company Information
Hotel and conference
centre group with value
creation plan based on
organic growth and through
selective acquisitions
66
Origin
Financial Investor
Sales 2009/2010
£128m
Total size of initial transaction
€473m (€1,195m including
acquisitions)
Financial Year End
31 December
Focus on increasing
volume in response to
challenging environment
New acquisitions to provide
a strong platform for growth
in 2010
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Principal Hayley has taken a strategic
approach to geographical expansion. The
portfolio is located in key city centres and
other regional markets with strong corporate
and leisure demand. Principal Hayley is
focused on building value by creating a
strong brand and offering in the highly
fragmented UK hotels and conferencing
sector. The group’s locations have
undergone substantial refurbishment,
positioning them as leading corporate,
conference and leisure destinations.
alternative segments including leisure.
As a result the group sold more rooms
across the estate in 2009 compared to 2008.
However, room sales were achieved at a
lower room rate and as a result revenue
for the group ended the year 8% down.
The challenging market environment in
2009 did, however, present Principal
Hayley with the opportunity to acquire two
complementary properties at attractive
valuations. The Grand Connaught Rooms
and Glasgow Central Hotel, both of which
have prime central city locations, were bought
The management team, led by Tony Troy,
out of administration by Principal Hayley in
has extensive experience of successfully
June 2009. Following the acquisition, the
integrating and improving underperforming,
Grand Connaught Rooms were closed for an
underinvested assets. This is a key element
eight-week period whilst refurbishment work
of the value creation strategy of Principal
was undertaken and were successfully
Hayley. The management team was
relaunched in September 2009. At the time
strengthened during 2009 with the
of acquisition the Glasgow Central Hotel
addition of Tim Doubleday as CFO.
had ceased trading. The property remains
2009 was a challenging year for the UK hotels closed whilst extensive development work
and conference market and along with its
is undertaken and the reopening of the
competitors Principal Hayley faced significant property is expected to take place late
trading pressure. In response to reduced
in 2010 / early 2011.
demand from the corporate segment, the
group successfully drove volume into
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ProSiebenSat.1
Investment
overview
ProSiebenSat.1 Media AG (‘P7S1’) is the second-largest
broadcasting group in Europe, reaching 78 million
households. The company is present in 14 countries in
Northern, Central and Eastern Europe. Its core business
is broadcasting free-to-air television. The company owns
Germany’s largest family of commercial TV stations and
its channels also occupy the number two and number
three market positions in other key European markets.
P7S1 is based in Munich and has more than 5,000
employees across Europe. The company is included
in the German MDAX.
www.prosiebensat1.com
Sector
TMT (Media)
Date of Investment
March
2007
Senior Management
Thomas Ebeling
Axel Salzmann
Head of New Media
Dan Marks
Head of German Free TV
Andreas Bartl
Permira Contacts
Götz Mäuser
Robin Bell-Jones
Jörg Rockenhäuser
Stefan Dziarski
Company Information
pan-European
A
broadcasting group,
present in 14 countries
and reaching 78 million
households and over
200 million viewers
68
Origin
Public Company
Sales 2009
€2,761m
€6,786m
Financial Year End
31 December
P7S1 continued to
benefit from action taken
in 2008 to control costs;
operations centralised
in Munich
Despite a recent
market improvement
visibility is still limited;
new revenue generation
initiatives launched
Our Portfolio
P7S1 distributes its programmes across a
growing range of media platforms, increasing
the availability of its content and opening up
new markets and revenue sources. Beyond
free TV, the company is active in a number
of related areas: it owns numerous internet
brands; runs pay TV stations; has stakes
in radio, print and new media companies;
and owns music, live event and artist
management businesses.
European TV advertising declined in most
markets at over 10% against 2008, yet P7S1
was able to offset this decline in revenue with
a consistent focus on controlling costs. The
group’s recurring EBITDA (EBITDA adjusted
for non-recurring effects) grew 6.1% in 2009 to
reach €697 million (2008 adjusted for CMore
disposal: €657m; 2008 reported: €675m)
and the recurring EBITDA margin improved
by 2.8% to 25.2%.
Throughout 2009, P7S1 continued to benefit
from the decisive action that the group took in
the previous year to control costs.
In addition, the group relocated the Sat.1
channel and a significant part of P7S1’s Berlin
operations to Munich. This integration of the
German FreeTV channel family means a more
effective use of the group’s knowledge and
resources to operate more efficiently, and
make even better use of its stations’ creative
potential. Sat.1, ProSieben, kabel eins and
N24 increased their aggregate viewer market
share by 0.7% to 30.1% in 2009, driven by
improved coordination of programmes
among the group’s stations. Furthermore,
TV stations in the Netherlands, Denmark and
Romania also achieved good market shares.
In March 2009, Thomas Ebeling joined as the
new CEO (announced in 2008). Building
on this positive development, there have also
been further management changes at the
level of the COO, the Head of Sales, the Sat.1
leadership and as of May 1, a new Head
of Media.
Despite a recent market improvement,
visibility is still limited. However, a challenging
market environment also offers opportunities.
Over the past few months, various initiatives
to generate additional revenues beyond
the traditional core business have been
launched with the main goal of using the
group’s existing programming assets
better by launching new stations and
extracting maximum value from unsold
advertising space.
Our Portfolio
Contents
69
Provimi
Investment
overview
Provimi is a world leader in the growing market of animal
nutrition, focusing on the high value-added segments of
the market. Provimi produces a range of products and
feed solutions serving the nutritional and health needs of
many animals including: premix; specialty products for
young animals; and animals with special dietary needs.
Provimi is headquartered in Rotterdam, the Netherlands
and operates 87 production centres in 30 countries.
www.provimi.com
Sector
Industrials
Date of Investment
April
2007
Senior Management
Chairman and Chief
Executive Officer
Ton van der Laan
Group VP, Animal Nutrition
Gijs Scholman
CEO of Provimi Pet Food
Attila Balogh
Kurt Coffyn
Marcel Crince
Group VP, Animal Nutrition
Mark Poeschl
Director Corporate Development
Sarah Vawda
Director Human Resources
Stijn Steendijk
Permira Contacts
Charles Sherwood
Philip Muelder
Company Information
Origin
Public Company
(delisted November 2009)
€1,721m
World leader in the growing
animal nutrition market
70
Strong and resilient
performance in 2009:
strategy to pursue
growth while focusing
on measures to reduce
the cost base and
improve cash flow
Our Portfolio
Sales 2009
€1,687m
Provimi demonstrated resilient performance
during 2009. The business embarked on a
targeted strategy to pursue profitable and
cash generative growth. Provimi’s new
chief operating officer Kurt Coffyn (former
operations and supply chain director in
Europe for Barry-Callebaut) is leading a
programme to integrate the firm’s operations
and supply chain, while the business as a
whole has focused on a number of defensive
measures to reduce the cost base, strengthen
cash flow and improve working capital.
The appointment of Coffyn supplements
broader management and organisational
change throughout the business. Provimi
also successfully rolled out the SAP software
platform across certain group operations;
this programme is expected to complete
by early 2011.
Throughout 2009 Provimi developed a strong
and attractive M&A pipeline in Latin America,
Asia and Europe, with the business expecting
to close some acquisitions over the course of
2010 and 2011.
Provimi Pet Food has been fully separated,
managerially and legally, and is being run by
an independent management team. The Pet
Food business achieved a substantial
improvement in earnings, capitalising on new
capacity and a competitive cost structure.
2009 saw a broadly benign commodity
environment and Provimi has closely
managed prices for its key commodity
purchases. The internal risk control
environment is being developed to ensure
superior performance in even the most
volatile commodity environments.
In November 2009, the squeeze-out of the
remaining minority shareholders and
subsequent delisting of Provimi S.A. was
completed. The Permira funds now fully
control the business. Provimi experienced
an improvement in the trading environment
during the second half of 2009.
For 2010 the focus is on profitable volume
and market share growth. This will be
facilitated by Provimi’s Feed Solutions
initiative, which covers all animal species
served by Provimi, bringing together the
previously fragmented innovation, sales
and marketing efforts into a unified structure.
2010 will also see building of new plants in
China and Russia and an increase in capital
expenditure in growth regions.
Provimi also launched a new group-wide
branding strategy in April to integrate and
coordinate the group’s previously
separate brands.
Financial Year End
31 December
Activity in 2010 will prioritise
volume and market share
growth with a step-up in
capex in growth regions.
A new group-wide brand
identity will also be launched
Our Portfolio
Contents
71
Seat PG
Investment
overview
Seat Pagine Gialle is the leading directory advertising
provider in Italy with a market share in print and online
advertising of about 84%. The group also has a
significant presence in the UK, where the subsidiary
TDL is the number three in classified directories with an
estimated market share of 10% and in Germany, where
the subsidiary Telegate is the number two provider of
directory assistance services with a market share of
33%. The group employs around 6,000 people.
After several years of moderate growth
the Italian advertising market declined by
approximately 18% in 2009 with traditional
local advertising declining by 26% versus
online marketing which grew by 18%.
www.seat.it
Sector
TMT (Media)
Date of Investment
July
2003
Senior Management
Chairman
Enrico Giliberti
Massimo Cristofori
Alberto Cappellini
Permira Contacts
Nicola Volpi
Marco Tugnolo
1
The decline in the printed directories market
is also expected to continue in 2010 as
advertisers’ demand is expected to continue
to migrate to online directories and services
driven by continuing increase of broadband
penetration and online usage.
Origin
Public Company
Sales 2009
€1,210m
To adapt and take advantage of this new
environment, Seat PG will focus on a number
of big priorities. The key strategic priorities
for Seat PG in 2010 are:
€5,650m
Financial Year End
31 December
•Continuous development of online offer
to support usage and lead generation:
Repositioning business
from print-centric to
multimedia-centric with key
focus on online directories
and web services
Revising cost base to
adapt to the new business
paradigm and responding
to a tougher business
environment
Company Information
Multimedia provider of
directory information
services through print,
online and voice
Seat PG has coped with this difficult
environment, common to all directories
businesses, by enlarging its offer of
online products and reducing costs.
Notwithstanding the general market
decline, Seat PG was able to limit the
decrease of its revenues to 11% in 2009.
–Creation of online verticals, e-commerce
and internet mobile offers
–Provision of online services (including
web agencies) to take advantage of the
limited presence of Italian SMEs on the
web and fragmented industry offer
•Alignment of commercial strategy to the
new advertisers’ needs through the
creation of multimedia packages (print,
online and voice) which are expected
to be an attractive and cost-effective
solution for Italian companies and
restructuring the sales force to include
web consultants to support field sales
•Focus on cost reduction by aligning cost
structure to the new business mix and by
focusing continually on cost reduction
to preserve profitability and support
cash generation
•Proactively manage and improve the
maturity profile of debt. A €550 million
seven-year senior secured note was issued
in January 2010 to refinance part of the
senior bank debt.
– Focused content enrichment and
development of new search engine
functionality by exploiting key
commercial agreements (such
as the one with Google)
As of 31 March 2010
72
Our Portfolio
Our Portfolio
Contents
73
Sisal
Investment
overview
Sisal is the number two gaming operator in Italy.
The company operates in all segments of the gaming
market including lotteries, betting, slot machines and
bingo. Sisal employs approximately 1,000 people
and has a network of 38,000 retailers in Italy.
The company has a long history of innovation
in the Italian gaming market including the
launch of Italy’s first ‘pool betting’ game
and the relaunch of the Italian lottery as
SuperEnalotto, which is now operated
under an exclusive concession from the
Italian State Treasury that will continue
until 2018.
www.sisal.it
Sector
Consumer
(Leisure)
Date of Investment
October
2006
Chairman
Augusto Fantozzi
Emilio Petrone
Permira Contacts
Nicola Volpi
Roberto Biondi
Since acquisition in 2006, the business
has grown significantly and diversified away
from lotteries into the new sports gaming
segments (betting and slot machines) and
has reported an approximate EBITDA
compound annual growth rate of 13%
between 2007 and 2009.
Origin
Financial Vendor
Sales 2009
€426m
€1,348m
Financial Year End
31 December
The Italian gaming market has historically
recorded strong and sustained growth driven
by the introduction of innovative formulas
in the traditional lottery business (such
as SuperEnalotto), the launch of slot
machines and the increasing popularity
of sports betting.
Value creation plan in 2010
based on launching new
products (video-lotteries),
exploiting new lotteries
licence and expanding
distribution network
In 2009, despite a recession, the Italian
gaming market is estimated to have reached
€54 billion, a 14% increase on 2008 and is
expected to grow further as operators and
government have aligned incentives given
the significant tax revenues generated by
the gaming industry.
Company Information
Number two gaming
operator in Italy operating
in lotteries, betting, slot
machines and bingo,
with a network of
38,000 retailers
74
Senior Management
Strong growth in
2009, despite
economic downturn
Our Portfolio
The strong performance of SuperEnalotto;
the introduction of new lottery games (‘Win
for Life’); growth in betting and slots and the
enlargement of the retail network by about
10,000 points have allowed Sisal to increase
market share from 10.4% in 2008 to 12.3%
in 2009 while EBITDA increased by14%
year-on-year. This latter result has also been
achieved through increased focus on costs
by the new CFO who joined in June 2009.
The key focus areas for the company
in 2010 are:
•Introduce new Videolotteries (VLTs)
terminals (a new generation of slot
machines) into the market and develop
a dedicated retail network. A new head
of division was hired in mid 2009
•Exploit the new lottery licence by
introducing new games and adding
new features to the existing ones
•Expand the distribution network
•Continue to exploit the cross-selling of
services on retail network (payments,
mobile and pay-TV recharges), by drawing
on the enlarged network, new agreements
on payments and the introduction of new
payment categories.
Our Portfolio
Contents
75
TDC
Investment
overview
TDC is a provider of communications solutions in
Denmark with around 11.7 million customers, including
nearly nine million customer accounts in Denmark.
It also has a significant presence in markets across
the Nordic region and in Switzerland.
www.tdc.com
Sector
TMT (Telecoms)
Date of Investment
December
2005
Senior Management
Chairman
Vagn Sørensen
Henrik Poulsen
Jesper Ovesen
Permira Contacts
Kurt Björklund
Ola Nordquist
Christian Bamberger Bro
Company Information
Major telecoms provider
in Denmark, Switzerland
and the Nordic Region
76
Origin
Public Company
Sales 2009
DKK 35,941m
€13,400m
Financial Year End
31 December
Strong results in 2009:
EBITDA growth; sale of
non-core assets and
new acquisitions in
core market
Sustained value creation
programme has positioned
TDC to become the best
performing incumbent
telecom player in Europe
Our Portfolio
The Danish telecoms market has become
increasingly competitive with the entry of
low-cost operators and electrical utilities.
TDC’s position as the Danish incumbent
operator is strong, providing residential,
business and wholesale customers with
a full suite of communications services.
In the Nordic region, TDC is a leading
provider of data communication services
to large and small businesses and to
wholesale customers through its
pan-Nordic infrastructure.
A holding company, Nordic Telephone
Company (‘NTC’), backed by a consortium
of financial sponsors, including the Permira
funds, acquired TDC in December 2005. At
the time of acquisition, TDC was a relatively
slow-moving business in a rapidly changing
industry. The company has since refocused
on its core domestic business through the
sale of non-core subsidiaries including Bité,
One, Talkline, Polkomtel, Invitel. TDC also
carried out a real estate sale and leaseback.
In addition TDC has seen a significant
strengthening of the management team.
The new team have worked to change
substantially the corporate culture, making
the company more collaborative, fast-paced
and customer-focused, as well as placing a
greater emphasis on controlling costs.
The company is the market leader across all
main technologies including copper, cable,
fibre and mobile. Furthermore, TDC has
brought highly innovative products to the
market including: PLAY, a free music service
with unlimited downloads to Danish mobile
and broadband customers; HomeTrio which
offers bundled packages of fixed voice,
broadband and TV services. The cable
division, YouSee, launched YouSee Clear
offering digital transmission to all customers
– a unique offering in the Danish broadcast
market, leading the way in digital TV and
video on demand.
In 2009, TDC built on its robust performance
of the year before to deliver a strong set of
results. Group revenue remained stable in
a challenging economic environment,
while EBITDA increased by more than 7%.
2009 also saw TDC continue to focus on
its core Nordic markets as part of its value
creation programme through the disposal
of Invitel. In addition, TDC has made
several acquisitions in the Danish market
to strengthen its domestic position in
broadband and mobile including Fullrate,
A+, Dong Fibernet, Unotel and M1.
TDC’s performance in 2009, and its strong
track record while in the Permira funds’
portfolio, positions the business to achieve
its objective of becoming one of the
best-performing incumbent telecom
providers in Europe.
Our Portfolio
Contents
77
Telepizza
Investment
overview
Telepizza is a Spanish home delivery and take away
pizza business that was founded in 1987 in a small
Madrid pizza restaurant. Today, Telepizza operates
around 650 outlets in Spain (both owned and
franchised) that reach 12 million households. The
company also has a presence in Portugal, Chile, Poland
and Central America, where it operates over 400 stores.
According to DBK, Telepizza is the market leader in the
pizza delivery market in Spain, with a 70% share.
Sector
Consumer
(Retail)
Date of Investment
September
2006
Senior Management
Chairman
Pedro Ballvé
Pablo Juantegui
Igor Albiol
Permira Contacts
Carlos Mallo
Francesco de Mojana
Jose Múgica
Company Information
Spanish-based
international pizza
delivery business,
with more than
1,000 outlets globally
78
Origin
Public Company
Sales 2009
€383m
€962m
Financial Year End
31 December
Significant operational
activity in response to
recession: new chief
executive appointed;
new ranges and menus
launched; costs continue
to be reduced
New business plan for
2010, focused on price
positioning, new CRM
strategy and international
expansion
Our Portfolio
Telepizza has proven resilient in the face of
this severe downturn; it is now well positioned
for growth as the economy starts to recover.
The business has appointed a new chief
executive, Pablo Juantegui, who has
extensive experience in marketing, sales
and management in the consumer sector.
In 2010, Mr Juantegui will focus on rolling
out an updated business plan with a focus
on new price positioning and store-by-store
In Spain, Telepizza took a series of important
price differentiation; leveraging of the take
steps to combat the effects of the recession.
away channel as a low-cost option for
A new product range, which includes burgers, customers; reinforcing positioning in
pastas and salads, was launched to increase weekdays by targeting ‘convenience
customer spending and to target new
customers’ and office delivery; a new
consumption events – weekday lunch
CRM strategy with the aim of generating
and dinner as well as weekend lunch.
customer retention and up-selling
Furthermore, Telepizza’s Spanish outlets
opportunities and reinforcing leadership
have introduced individual menus as well as
through product innovation.
new pricing and promotions. As a result of
In 2010, Telepizza will also continue its
these changes, Telepizza continued to gain
process of international expansion. The
market share and strengthen its leadership
position in the Spanish home delivery market. Polish business will be restructured while
new stores will be opened in Chile and
Portugal. Telepizza will also examine new
opportunities to enter new markets that
offer attractive growth prospects.
The global economic downturn meant that
2009 was a relatively tough year for Telepizza.
Private consumption was severely impacted
in most markets. The Spanish food service
market declined by 6%, while the quick
service sector declined by 3%. Outside
of Spain, Telepizza has experienced a
combination of falling consumer demand
and foreign exchange pressures.
www.telepizza.es
Our Portfolio
Contents
79
Appendix
Contact details
Walker ‘Guidelines for Disclosure
and Transparency in Private Equity.’
Frankfurt
Contact: Jörg Rockenhäuser
Permira Beteiligungsberatung GmbH
Bockenheimer Landstraße 33
60325 Frankfurt am Main
Tel: +49 69 97 14 66 0
Guernsey
Contact: Alistair Boyle
Permira (Guernsey) Limited
PO Box 503
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 6DJ
Tel: +44 1481 743200
Communication by a private equity firm
This annual review forms the basis of
Permira’s compliance with Walker’s
guidelines for communication by private
equity firms. As requested by Walker, it
outlines the firm’s investment approach
and history. It also details the holding
period for our investments.
80
London
Contact: Ian Sellars
Permira Advisers LLP
80 Pall Mall
London SW1Y 5ES
Tel: +44 20 7632 1000
Each of Permira Advisers, Permira Advisers
(London) Limited, Permira Advisers LLP
and Permira Debt Managers Limited are
regulated in the United Kingdom by the
Financial Services Authority. These entities,
alongside the different entities in each of the
geographies in which Permira is active, each
individually act as advisers or consultants in
relation to the Permira funds.
Luxembourg
Contact: Séverine Michel
Permira Luxembourg S.àr.l.
282, route de Longwy
L-1940 Luxembourg
Tel: +352 26 86 811
Madrid
Contact: Carlos Mallo
Permira Asesores S.L.
Plaza del Marques de Salamanca, 10
Primero Izquierda
28006 Madrid
Tel: +34 91 4182499
Permira also provides data to the BVCA to
enable it to conduct enhanced research into
the private equity industry.
Appendix
www.conrandesigngroup.com +44 (0)20 7284 5200
A number of other Permira funds’ portfolio
companies in the UK that do not qualify will
also, nonetheless, report as recommended
by the Walker Guidelines.
Hong Kong
Contact: Henry Chen
Permira Advisers Limited
Unit 2806-2807, 28F
One Exchange Square
Central Hong Kong
Tel: +852 3972 0800
The review also clearly identifies the
leadership of the firm globally. The UK
office of Permira is headed by Ian Sellars.
The Governance section of the document
confirms that arrangements are in place to
deal appropriately with conflicts of interest.
The source of our funds’ capital is detailed
on our website www.permira.com. UK
institutions account for approximately 34%
of our most recent fund, post reorganisation.
Designed and produced by ConranDesignGroup
Enhanced disclosure
by a portfolio company
Walker stipulated thresholds to identify the
companies that would be covered by its
enhanced reporting guidelines in the UK.
The Permira funds’ portfolio companies
covered by these thresholds will report on
a ‘comply or explain’ basis as detailed by
the guidelines.
Menlo Park
Contact: Brian Ruder
Permira Advisers L.L.C.
64 Willow Place
Suite 101
Menlo Park, CA 94025
Tel: +1 650 681 4701
Milan
Contact: Nicola Volpi
Permira Associati S.p.A.
Via San Paolo 10
20121 Milano
Tel: +39 02 7600 4740
New York
Contact: John Coyle
Permira Advisers L.L.C.
320 Park Avenue
33rd Floor
New York NY 10022
Tel: +1 212 386 7480
Paris
Contact: Benoit Vauchy
Permira Advisers SAS
6, rue Halévy
2nd Floor
75009 Paris
Tel: +33 1 42 86 63 78
Stockholm
Contact: Ola Nordquist
Permira Advisers KB
Birger Jarlsgatan 12
114 34 Stockholm
Tel: +46 8 503 122 00
Tokyo
Contact: Alex Emery
Permira Advisers KK
Akasaka Intercity Building 3F
1-11-44 Akasaka
Minato-ku 107-0052
Tokyo
Tel: +81 3 6230 2051
Contents
81
www.permira.com
82
Contents

Permira Annual report 2009

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