DOUGHTY HANSON ANNUAL REVIEW 2012
CONTENTS
ABOUT Doughty Hanson
05 Our investors
06 Letter from the Chairman
08 Doughty Hanson in 2012
10 Sustainablility and the
Investment Lifecycle
12NORIT CASE STUDY
14TUMI CASE STUDY
3
Our portfolio companies
17 ASCO Group
18 Avanza Group
19 Balta
20EuRofiber
21 HellermannTyton
22 KP1
23 LM Wind Power
24 QuirÓn
25 TMF Group
26 TV3
27 Vue Entertainment
28 Zobele Group
Responsible investing
30 Charitable initiatives
31 Social investment
32 ESG policy and initiatives
Doughty Hanson is a member of the EVCA and the BVCA.
Doughty Hanson is carbon neutral and offsets its carbon footprint through Carbon Retirement (www.carbonretirement.com).
DOUGHTY HANSON
4
Doughty Hanson is one of the longest-established and most
experienced private equity firms in Europe.
For more than 25 years, we have been investing in market-leading companies
and creating value by driving operational improvements across our portfolio.
Through our network of six investment offices across Europe, our team has
developed close relationships with the owners of, and advisers to, family
businesses and industrial operations throughout Europe.
Working alongside management, we have helped many companies grow into
large, successful international organisations. Many of the companies we have
acquired are now listed on major stock exchanges, and others have become
divisions of larger global companies.
63
Private equity
investments
OUR INVESTORS
5
Investors in Doughty Hanson’s private
equity funds represent a broad spectrum
of institutions including pension funds,
family offices, endowments, funds of
funds, sovereign wealth funds, insurance
groups and banks.
Our investor base is global and includes
particularly strong representation from the
US, the UK and Europe.
$10.6bn
Aggregate return
to investors
We work in close partnership with management teams, develop shared
strategic goals and provide ongoing support through the value creation
initiatives that we undertake.
Our pension fund investors range from school
teachers in New York and Arkansas, to police
officers in Montreal, university professors in the
UK and Texas, and retired telecommunications
workers in Australia and across the US.
There is also significant investment from
6
European investment
Doughty Hanson’s own employees, thereby
ensuring a strong alignment of interests with
our investors.
We are proud that the investor base features
strong representation from family offices
around the world, including several families
that sold businesses to us and have
subsequently chosen to reinvest some
of the proceeds in our funds.
Our investors benefit from the experience
of Doughty Hanson’s in-house reporting
and monitoring teams that provide ongoing
support through our proprietary online
reporting systems.
Our team of dedicated investor relations
professionals also provides investors with
regular updates on developments across
the funds’ portfolios and coordinates access
to senior members of the investment teams.
offices
our management group
Francisco Churtichaga
Partner, Spain
Yann Duchesne
Partner, France
Claus Felder
Partner, Germany
Richard Hanson
Executive Chairman and Head of Private Equity
Julian Huxtable
Partner, UK
John Leahy
Partner, Value Enhancement
Richard Lund
Partner, CFO
Stephen Marquardt
CEO
Graeme Stening
Partner, General Counsel
27
Years of generating
£167m
DOUGHTY HANSON
FUND i – 1990
DM1bn
DOUGHTY HANSON
FUND ii – 1995
$2.7bn
DOUGHTY HANSON
FUND iii – 1998
Our investors
by GEOGRAPHY
Our investors
by type
superior returns for
our investors
€1.5bn
DOUGHTY HANSON
FUND iv – 2004
North America
Insurance companies
Asia
Endowments
Rest of world
Funds of funds
United Kingdom
SOVEREIGN WEALTH FUNDS
Europe (excluding UK)
Banks
Pension funds
Private individuals
€3.0bn
DOUGHTY HANSON
FUND v – 2007
LETTER FROM THE CHAIRMAN
It was a very busy, challenging but
ultimately rewarding 2012 for Doughty
Hanson. For many reasons, it was a time
for reflection, on what we’ve achieved and
what we hope to achieve over the years
ahead.
In April, Doughty Hanson listed Tumi, a Fund IV
portfolio company, on the New York Stock
Exchange. Through the IPO proceeds and a
secondary public offering in November, we
returned more than $400m to our investors. In
March 2013, we sold another tranche of Tumi
shares, allowing us to return a further $164m
to investors.
Taking into account the publicly-traded shares
still held by Doughty Hanson, the value of our
investment in Tumi is equivalent to 6.6x cost.
Our efforts to realise the value we’ve created in
the portfolio have continued into 2013. The
listing of HellermannTyton on the London Stock
Exchange in March 2013 allowed us to sell
approximately half of our shareholding in
the company and distribute £176m to
Fund IV investors.
The Tumi and HellermannTyton realisations
mean that Fund IV has already returned 1.4x
called capital (including publicly-traded
shares), with five unrealised investments
remaining in the portfolio.
We are confident that Fund IV, like previous
Doughty Hanson funds, will deliver top-quartile
returns to our investors, when all investments
are fully realised.
In 2012 we also completed our first full
realisation from our Fund V portfolio with the
sale of the Activated Carbon unit of Norit to a
trade buyer for $1.1bn. This follows the sale of
Norit Clean Process Technologies in May 2011
for €503m. Collectively, the two transactions
returned 2.5x capital invested in Norit to
Fund V investors.
6
Five major acquisitions
In February and April 2012, Doughty Hanson
agreed to acquire USP Hospitales and a stake
in Grupo Hospitalario Quirón, its second and
third investments in Spain.
USP was the third-largest private healthcare
operator in the country and a strong business
operating in an attractive sector. USP and
Quirón were merged during the summer to
create the largest private healthcare business
in Spain.
These investments demonstrate both Doughty
Hanson’s understanding of the Spanish market
– developed thanks to a local presence since
2006 – and the firm’s previous experience in
the healthcare sector.
In April, Fund V agreed to acquire Eurofiber,
the largest independent fibre network in the
Netherlands. This transaction continues
Doughty Hanson’s long heritage of buying
businesses from family owners.
We were also active at a portfolio level. Vue
Entertainment made two major acquisitions,
Apollo Cinemas in the UK and CinemaxX in
Germany, to become the second-largest cinema
operator in Europe.
an opportunity to reflect
In February 2012, the whole firm was saddened
by the death of Nigel Doughty. It is difficult to
overstate his contribution to the development
of both the firm and the European private equity
industry as a whole.
I had the pleasure of working with Nigel for
more than 25 years and I miss him as both a
friend and a valued adviser. We were all moved
by the messages of condolence from Nigel’s
former acquaintances, investors in the funds
and management teams with whom he
worked for more than two decades.
6.6x
Return on Fund IV
investment in Tumi
2.5x
Return on Fund V
investment in Norit
48
Vue cinemas added
in 2012 thanks to the
acquisition of Apollo
and CinemaxX
7
We are particularly grateful for the support of
our investors during that challenging time for
the firm. The acquisition of USP Hospitales by
Fund V was sealed in the days following Nigel’s
death and, just two months later, Tumi listed
on the NYSE.
We have often talked about the development
of Doughty Hanson as an institutional platform
and, albeit due to unfortunate circumstances,
it is pleasing to see that the firm has continued
to thrive and move forward with a new
organisational structure.
During the summer, we decided to move to
a partnership model under which the
investment team will become partners in the
business. As a result, ownership of the firm
will be spread widely among our 27-strong
private equity team and other senior executives.
This creates very strong alignment between the
Doughty Hanson team and our investors.
During 2012, we spent considerable time
speaking with our investors and reflecting on
the future of the business. While we have
achieved notable successes with our Real
Estate and Technology Ventures funds, in early
2013 we communicated our intention to focus
our future fundraising efforts solely on our
private equity business, where we have an
outstanding track record. We feel this decision
is in the best interests of our investors, the firm
and our many other stakeholders.
A new fund
In 2013 we will focus on the process of raising
a new private equity fund: Doughty Hanson VI.
With Fund VI, Doughty Hanson will maintain
the disciplined investment strategy that has
served the firm and its investors well since
1985: that is, targeting businesses with strong
management teams and significant growth
opportunities.
Europe has endured a difficult period since the
credit crisis in 2008. Many countries, having
experienced one or more recessions, still have
structural issues to address. Investors,
particularly those in Asia or the US, could be
forgiven for assuming this makes it a bad time
to be investing in businesses with substantial
sales and operations in the region.
We do not subscribe to this view. Doughty
Hanson’s bottom-up investment approach
looks at each company on its own merits
rather than as a decision to invest in a
particular sector or region. We do not rely
on a rising market or a benign investment
landscape – indeed, some of the strongest
returns in our 27-year history have been
generated in challenging economic times.
Doughty Hanson has a large, experienced and
motivated team and we are confident in our
ability to create value from the headwinds and
tailwinds facing Europe over the next decade.
I would like to thank our colleagues in the firm
and across our portfolio companies for their
hard work in 2012. Finally, I want to use this
opportunity to thank our investors for their
continued support.
Richard Hanson
Executive Chairman and
Head of Private Equity
April 2013
“Ownership of
Doughty Hanson will
be spread widely
among our 27-strong
private equity team,
creating very strong
alignment with our
investors”
Doughty hanson in 2012
8
9
2012 was a very busy and successful year for
Doughty Hanson. We enjoyed a NYSE IPO for
one of our Fund IV businesses, our first full
realisation from Fund V and made a number
of acquisitions and follow-on investments.
2
exits
$992m
Returned to investors
5
Acquisitions or follow-on
investments
FEBRUARY
APRIL
MAY
JULY
AUGUST
November
Co-founder Nigel
Doughty dies at his
home in Lincolnshire
—
Fund V agrees to
acquire private hospital
group USP Hospitales
in Spain
Luxury travel brand
Tumi lists on NYSE
with a market value
of $1.2bn, raising
$242m for Fund IV
investors
—
Fund V agrees to
acquire family-owned
private hospital group
Quirón in Spain
—
Fund V agrees to
acquire family-owned
fibre network business
Eurofiber in the
Netherlands
Vue Entertainment
completes follow-on
investment in UK
cinema chain Apollo
Sale of Norit Activated
Carbon delivers 2.5x
return to investors
—
Doughty Hanson
announces new
partnership structure,
strengthening
alignment between
the firm and its
investors
—
Merger of USP
Hospitales and
Quirón completed
to create the largest
private hospital
business in Spain
Vue Entertainment
completes public to
private acquisition of
CinemaxX to become
Europe’s secondlargest cinema chain
Secondary sale of Tumi
shares raises $160m for
Fund IV investors. The
Fund continues to hold
30% of the company
SUSTAINABILITY AND THE
INVESTMENT LIFECYCLE
HOW ESG CREATES VALUE
In 2008, Doughty Hanson became
the first European private equity
firm to appoint a dedicated Head
of Sustainability. Five years on,
Adam Black explains how his role
creates value for the firm and its
investors at every stage of the
investment process.
10
Acquisition
I’ve worked in or alongside private equity
firms for more than 20 years so I understand
the importance of making acquisitions,
at both a portfolio level and through follow-on
transactions.
My role is not about preventing Doughty
Hanson’s investment team from doing deals,
it’s about helping them to understand the main
risks, issues and opportunities arising from the
transaction. After all, if we spot an issue and
believe we can resolve it then it becomes an
obvious way to make a business more valuable.
I get involved very early on and often before
a formal due diligence process starts.
This early focus gives us a real competitive
advantage. It often means we get information
more quickly than other bidders, allowing us
to pinpoint potential issues sooner and tailor
an action plan for the holding period.
When formal due diligence begins, we normally
involve specialist consultants to advise us on
specific issues. This gives our work a real
focus – targeting certain areas where we have
concerns or where we feel there is scope for
value creation. Other bidders often rely on a
more broad-brush approach.
The best recent example of our approach is
our acquisition of oil and gas logistics business
ASCO in 2011. There was a significant amount
of data and information to sift through, some
more relevant than others, as well as a wide
range of potential environmental, social and
governance (ESG) issues to cover, given the
nature of the target company’s business and
sector within which it operated.
The overall context of the broader due
diligence effort was that it was part of a highly
competitive process and so speed and accuracy
were an advantage. Our in-house ESG
capability gave us a slight edge during what
was a highly competitive process.
We could target questions to management
more accurately and were able to tailor a more
useful scope of work for our external advisers
to focus on both risks and opportunities to
enhance the business post-deal.
20
YEARS OF PRIVATE EQUITY
ESG EXPERIENCE
€2m
ENERGY EFFICIENCY
SAVINGS AT IMPRESS
€4m
ADDITIONAL SALES OF
BALTA’s NEW GREEN
PRODUCT LINES BY 2014
11
Management
The work I do when we own a business is by
far the largest part of my job. We’re very hands
on at Doughty Hanson, and ESG is no exception.
It’s not my job to disengage from the portfolio
and write policies all day: I actively work with
the companies we own to make them more
valuable. We use a large number of levers to
achieve this, which we split into four broad
categories: efficiency cost savings, revenue
enhancement, cost avoidance and risk
management.
Crucially, we don’t apply a one-size-fits-all
approach to each portfolio company; rather,
we work out the issues facing each business
and where we can deliver the greatest impact.
I have a large network of specialists and
consultants – what we like to call a virtual
team – so we can pursue many initiatives
simultaneously and make a real difference
across the portfolio.
While some of our activity is pretty obvious,
such as energy efficiencies, health and safety,
and environmental costs, our work includes
initiatives that impact a business’s top-line or
internal ESG capabilities.
For example, we’ve helped Balta develop a
series of “green” products, which are expected
to generate more than €4m of additional sales
by 2014. Studies show there is increased
demand for environmentally and socially
sustainable products. So it makes sense for
Balta, which is already managing these issues
properly across its supply chain, to use these
features to promote its products.
We also focus on strategy and competence.
At ASCO, we are working with senior
management to develop a strategy and build
sustainability into existing ESG management
processes, including for example a more
sustainable approach to procurement,
improving fuel efficiency within its vehicle fleet
and enhancing workplace transport safety.
Exit
Eco-efficiencies and cost savings tend to
impact the bottom line, so it can sometimes
be easy to quantify the value we create at a
portfolio company through ESG activity. At
Impress, our ESG initiatives delivered a 50%
reduction in the accident frequency rate,
recycled 500 metric tons of waste and saved
1,800 metric tons in carbon emissions annually.
This saved €2m a year and we sold the
business for six times EBITDA, so it’s not
disingenuous to say those actions generated
an additional €12m of equity value.
Often the value we create is more nebulous
and, in that sense, I like to think of our ESG
activity as an enabler of deals. Evidence
suggests that trade buyers are spending
more time evaluating ESG performance before
making an acquisition. Indeed, a January 2013
report commissioned by the United Nations
Principles for Responsible Investment (UNPRI),
of which Doughty Hanson is a signatory,
found that 80% of corporate buyers had
reduced the valuation of an acquisition target
or not gone ahead with a deal because of poor
ESG performance.
There is a clear link between strong ESG
credentials and a strong brand and reputation,
so this is a logical way to both create and
protect value. During our ownership of Tumi,
we were very wary of the potential reputational
risks of manufacturing in the Far East, so we
made extensive visits to suppliers to examine
their labour practices and work environments.
We initiated programmes to improve employee
welfare and stopped doing business with
suppliers that did not meet our required health
and safety and welfare standards. During the
IPO roadshow with Tumi, potential investors
were reassured by the steps taken by
Tumi to mitigate potential reputational risks
arising from its manufacturing activities.
We generated a return to our investors of 6.6x
on Tumi based on the value of shares still held.
How much of that value would have been
destroyed if we had not proactively managed
and protected the reputation of the business?
“We generated a
return to our
investors of 6.6x on
Tumi. How much of
that value would
have been destroyed
if we had not
proactively managed
and protected the
reputation of
the business?”
Norit case study
Norit was founded in 1918, starting out as
a producer of activated carbon, a product
initially used in the purification of air and
water. In 1996, the company began
expanding into more advanced purification
systems and clean process technologies
for purification through a combination of
organic growth and acquisitions.
Why did we invest?
Norit enjoys a global footprint with international
manufacturing facilities and a distribution
network and service support in more than 150
countries. The company has a strong business
model, with end-to-end services that generate
high recurring revenue and margins. Its
operations include research and development
(R&D), engineering and manufacturing.
At the time of Doughty Hanson’s acquisition,
the company was managed centrally and
operated through two divisions: Activated
Carbon and Clean Process Technologies.
Norit’s Activated Carbon products are widely
used to remove pollutants, contaminants
and other impurities from water, air and other
liquids and gases in an efficient and costeffective manner. They are used in power plants
to remove hazardous pollutants, water
facilities to remove impurities, food and
beverage plants to filter products for human
consumption, as well as automobiles to prevent
vapour dispersion in fuel systems and air filters
to improve passenger experience.
12
The Clean Process Technologies business
offers components, systems and integrated
solutions for water and other liquid-processing
industries such as beverages, non-solid foods
and pharmaceuticals. Products and
applications include membranes for water
filtration, beer filtration, waste water treatment,
CO2 recovery systems and quality control
systems and other components used in
the filtration process.
What happened?
Focus on innovation
Norit accelerated its product development
cycle under Doughty Hanson’s ownership with
market-driven projects representing 80%
of total R&D expenditure. In 2009 alone, the
Clean Process Technologies business launched
15 products and by 2010 30% of revenues
generated were from products introduced in
the previous five years.
In the Activated Carbon business, Norit was
the first player to enter the fast-growing
mercury removal segment by launching a
new product range. US Department of
Energy-sponsored studies now refer to these
new products as the benchmark for mercury
removal at coal-fired utilities.
Growth in the Clean Process Technologies
business was driven by significant capacity
expansion of its flagship brand X-Flow, which
produces membranes for water purification.
Under Doughty Hanson’s ownership, Norit
invested in two state-of-the-art proprietary
spinning lines for membranes and assembly
lines for modules in the Netherlands, which
doubled production capacity in Europe.
€837m
Total distribution
to Fund V
2.5x
Return on investment
for Fund V
Norit value creation
attribution (%)
12%
100%
Creation of two independent businesses
Despite the focus on similar end markets,
Norit’s Activated Carbon and Clean Process
Technologies businesses had few synergies
and no overlap in competitors. Doughty Hanson
successfully separated the divisions into
independent businesses to facilitate separate
exits and maximise value for investors.
What was the outcome?
Under Doughty Hanson’s ownership, Norit
significantly increased its revenues and profits.
Between 2006 and 2010 sales jumped almost
50% while EBITDA margins increased from
13.4% to 20.9%.
With the expansion programme, Norit became
the world’s largest producer of activated carbon
products. The company now produces around
150 different activated formulations for a broad
spectrum of industrial applications.
7%
81%
Capacity expansion
Doughty Hanson supported significant capacity
expansion programmes in both divisions,
ensuring the company capitalised on strong
growth prospects in its end markets.
Norit’s Activated Carbon products are used
for a number of industrial applications,
one of which is to remove mercury from flue
gas in coal-fired utilities. In anticipation of
the strengthening of regulations governing
mercury emissions in North America, the
company expanded its production capacity to
meet a rise in demand for Activated Carbon.
Doughty Hanson oversaw the addition of two
new multi-hearth furnaces at the facility in
Marshall, Texas and set up Norit’s first
Activated Carbon plant in Canada as part
of a joint venture. In total, Doughty Hanson
provided additional capital of €50m to fund
this expansion.
13
In the Activated Carbon business, the margin
increase was achieved by shifting the business
from more commoditised applications in the
water area towards higher margin applications
such as powdered activated carbon for
mercury removal applications or activated
carbons for use in the production of herbicides
and gold processing.
Exit
In May 2011, Norit’s Clean Process
Technologies division was sold to a trade buyer
for €503m. The proceeds from the sale and the
refinancing of the remaining Activated Carbon
business returned €336m.
In October 2011, an additional €20.2m was
returned from proceeds from Norit’s successful
litigation with a competitor.
In July 2012, Norit Activated Carbon was
sold to a trade buyer for $1.1bn, returning
a further €480.6m.
The total return on Doughty Hanson’s
investment was 2.5x, representing a total
distribution of €836.8m. This equates to
an IRR of 23%.
In the Clean Process Technologies business, the
margin increase was achieved by increasing the
percentage of high-margin consumables, such
as membranes, as a percentage of total sales.
EBITDA
GROWTH
MULTIPLE
DEBT
EXPANSION REDUCTION
TOTAL
Norit revenue and EBITDA 2006-2010 (€m)
2006
2007
2008
2009
2010
€0
revenue
EBITDA
€309.9
€41.6
€361.2
€55.7
€395.0
€67.7
€410.6
€77.8
€456.9
€95.4
€100
€200
€300
€400
€500
“Doughty Hanson
provided additional
capital of €50m to
fund this expansion”
TUMI case study
14
Tumi is a leading international lifestyle
brand offering travel and business
products. When Doughty Hanson acquired
the business in 2004, it had a strong
heritage of producing high-end travel
goods and business cases. The quality
and design of these products had created
exceptional brand loyalty among
professionals and frequent travellers.
The business was predominantly focused
on the US market, with a small
international presence.
What happened?
International expansion
With Doughty Hanson’s investment, Tumi
opened a third-party warehouse facility in
Thailand to serve the growing Asia-Pacific
market, and expanded its existing warehouse
in Germany.
Organisation changes
A slow and unresponsive supply chain frequently
resulted in product shortages instore and lost
sales opportunities. Doughty Hanson replaced
Tumi’s functional silos with a coordinated supply
chain, shortening lead times and increasing
product availability.
Why did we invest?
Doughty Hanson identified scope for further
expansion into high-growth economies that
have a rising middle class with increased
disposable income. In addition, Doughty
Hanson recognised the opportunity for further
rollout and development of Tumi’s retail
network, the potential of new sales channels
(e-commerce) and expansion into new product
categories (e.g. women’s accessories).
$1.06bn
Equity value creation
at IPO
6.6x
return to Fund IV as
at 31 MARCH 2013*
Strong retail network
Between 2008 and 2011, the number of
company-owned and partner stores doubled
to 200 stores worldwide, and retail distribution
grew to account for 48% of sales. Online sales
grew to 10% of revenues.
Doughty Hanson also encouraged management
to enhance sales staff performance by
improving recruitment and training processes
and benchmarking performance indicators
across stores.
2005
2006
2007
2008
2009
2010
$127.8
$163.0
$195.7
$38.7
$231.4
$41.6
$232.6
$29.0
$196.6
$27.3
$252.8
$50.8
$330.0
$74.0
$398.6
2012
$0
Revenues increased as a result of a stronger
retail business and new products, growing
by 158% between 2004 and 2011. In particular,
revenue growth accelerated over the last
two years, with sales increasing by 68% from
2009 to 2011. EBITDA improved by 171% during
the same two-year period.
$31.1
2011
$93.9
$50
$100
$150
$200
Responsible investing and governance
Wary of the risks of manufacturing in the Far
East, Doughty Hanson undertook several visits
to suppliers to examine their labour practices
and work environments. Employee welfare
programmes were initiated and Tumi stopped
doing business with suppliers who failed to
meet required health and safety and welfare
standards. In 2008, the company joined the
Fair Labor Association, an international nonprofit organisation that promotes responsible
labour practices.
Tumi had expanded into new markets,
particularly in Asia. During 2011 alone, the
number of points of sale in China increased
from 15 to 48.
revenue
EBITDA
$22.1
Product innovation
Product development lead time was reduced
from about two years to as little as three
months in some cases, allowing the company
to plan more effectively and expand its product
range. A number of new product categories
were developed, including a luxury category in
2007 that incorporated a specific collection for
women. Within a year, this category accounted
for 11% of total product sales.
What was the outcome?
By 2011, Tumi’s products were being sold in
more than 70 countries through about 1,600
points of distribution, including companyowned retail stores, third parties and
e-commerce channels.
Tumi revenue and EBITDA since acquisition ($m)
2004
15
$250
$300
$350
$400
* including publicly-traded shares as at
31 March 2013
Exit
In April 2012, Tumi was listed on the New York
Stock Exchange at $18 per share, generating
$242.5m for Fund IV while retaining a
significant shareholding in the company. The
total market capitalisation at IPO was $1.22bn,
representing equity value creation of $1.06bn
since Doughty Hanson’s acquisition of Tumi
in 2004.
In November 2012, Fund IV sold part of its
residual holding in Tumi via a secondary public
offering at $21.10 per share, generating a
further $159.8m. An additional tranche of Tumi
shares was sold in March 2013, also at $21.10
per share, allowing Doughty Hanson to return a
further $164m to Fund IV investors. Together
with the proceeds of the IPO, Fund IV has now
returned 4.6x cost while retaining a 17.7%
holding in the company.
The total valuation of the fund’s investment in
Tumi, including the publicly-traded shares (as
at 31 March 2013), is 6.6x cost.
“Revenues increased
as a result of a
stronger retail
business and new
products, growing
by 158% between 2004
and 2011”
our portfolio companies
Doughty Hanson advocates greater transparency in the private equity
industry and voluntarily complies with the Walker Guidelines issued
in 2007.
An annual report and accounts for Vue Entertainment prepared in accordance
with the Walker Guidelines is available online at http://corporate.myvue.com
The remaining companies in our portfolio do not meet the criteria for
enhanced disclosure. However, we recognise the importance of open
communication with all of our stakeholders and therefore include a
review of each of our portfolio companies in the pages that follow.
As at December 2012, the average investment holding period for current
portfolio companies was 5.1 years.
16
our portfolio companies
asco group
17
ASCO Group is the largest global provider of outsourced logistics
services and solutions to the oil and gas industry
Headquartered in Aberdeen, Scotland, the
company employs almost 1,900 people
worldwide and has operations in 12 countries
including the UK, Norway, Canada, Azerbaijan,
Oman, the US, Trinidad, Brazil and Australia.
ASCO has three primary service lines. Its oilfield
logistics division coordinates the supply of a
variety of goods, both offshore and onshore,
via sea, air and road. ASCO also provides waste
management services, including industrial
cleaning and advisory services. The company is
also involved in specialist international logistics
and freight management.
In the UK, ASCO is the clear market leader
and has been operating in the North Sea for
more than 45 years. Having doubled its market
share since 2008, the company is also the
second-largest operator in the fast-growing
Norwegian market.
ASCO’s global infrastructure allows the
company to offer an integrated service to major
oil and gas clients. It owns or has a long-term
lease on extensive quayside facilities in prime
locations in the UK and, over recent years,
has developed strategic logistical facilities
in Norway, Canada, Trinidad, the Caspian,
the Middle East and Australia.
ASCO’s customer base includes major oil and
gas companies and oilfield service providers
such as BP, ExxonMobil, Shell, Chevron and
ConocoPhillips, many of whom have worked
with ASCO for many decades. The business
generates strong recurrent revenues and
operates on long-term contracts (usually three
to five years), giving ASCO a strong position to
lead consolidation in the industry.
The company is led by a strong and wellestablished management team with a track
record of expanding organically and via M&A
activity. Since Doughty Hanson acquired ASCO
in late 2011, the business has made five
follow-on investments: three in Alberta,
Canada, one in the UK and one in Australia.
Strong health, safety and environmental (HSE)
performance is a key requirement of customers
and a prerequisite for inclusion within business
tenders. ASCO takes its HSE obligations
extremely seriously and has adopted the formal
structures necessary to monitor, measure and
enhance HSE performance across the business.
There is also a growing emphasis on
environmental, sustainability and governance
issues within the business. Recent initiatives
include a tyre re-grooving programme resulting
in longer tyre use, less waste and lower
replacement costs. More than half of ASCO
vehicles operate on cleaner Euro V engines,
which along with driver training, has generated
an incremental increase in fuel efficiency. In
2012, ASCO's “Eclipse” tank-cleaning system
won the VIBES Award for Environmental
& Clean Technology. This innovation improved
both environmental and safety performance.
ASCO Group Limited
Regent Centre
Regent Road
Aberdeen
AB11 5NS
UK
www.ascoworld.com
INVESTOR
Fund V
TURNOVER (2012)
£724m
NUMBER OF EMPLOYEES
1,890
Management
– Billy Allan, CEO
– Mark Walker, CFO
– Derek Smith, COO
DOUGHTY HANSON TEAM
– Alessandro Baroni
– Philos Carnio
– John Gemmell
– Julian Huxtable
– Julien Millet
our portfolio companies
AVANZA GROUP
18
Avanza Group is the largest private urban bus operator in Spain
Avanza Group was created in March 2002 as a
result of the merger of Auto Res, Transportes
Urbanos de Zaragoza and Viguesa de
Transportes, and the subsequent acquisition
of La Sepulvedana in April 2003.
Headquartered in Madrid, Avanza Group
operates four business units: urban, suburban,
long-distance and bus stations.
All of Avanza’s operations are in Spain, where it
is the second-largest private bus operator, the
largest private urban bus operator, the
market-leading operator in the Madrid suburbs
and the largest operator of bus stations. Avanza
is also the second-largest long-distance and
suburban transport operator in the country.
The company’s revenues are generated through
the operation of a portfolio of 65 exclusive
long-term regulated transport concessions,
which provide excellent stability and visibility
of earnings. These concessions are operated
across different regions and are provided by a
variety of state, regional and local authorities.
The diversified concessions increase durability
of cash flows and decrease termination risks.
Since Doughty Hanson bought Avanza in
February 2007, the company has made a
number of acquisitions, further consolidating
its market-leading position.
In 2007 and 2008, Avanza acquired CTSA,
Spain’s third-largest bus operator, and Alosa, a
leading regional bus operator. In 2010, Avanza
acquired two suburban concessions in the
southern commuter catchment area of Madrid,
making Avanza the largest commuter bus
operator in Madrid. During 2011, Avanza
acquired two further suburban bus concessions
from two family owners. These long-term
concessions lengthen the average expiry date
of Avanza’s concessions, provide scale at the
company’s suburban business in Madrid and
have generated significant cost synergies.
Doughty Hanson’s value enhancement work with
management focuses on initiatives aimed at
sustaining top-line growth, with a particular
emphasis on pricing management and web sales
for long-distance routes. More than 30% of
tickets are now sold online compared to just
6% at the time of Doughty Hanson’s acquisition.
Procurement functions have also been
restructured and centralised into a new
company-wide unit, resulting in substantial
savings in both operating expenses and
capital expenditure.
Bus, coach and tram travel can make an
important contribution to reducing urban air
pollution and congestion. Doughty Hanson and
Avanza’s management continue to be actively
engaged in a range of sustainable business
practices that are helping Avanza generate
earnings, cut costs and manage risks. Avanza
continues to work to reduce fuel consumption
through driver education and increased control
and monitoring as well through the use of
vehicles with cleaner emissions. In 2012, this
included testing three types of hybrid vehicles,
with results suggesting that fuel consumption
could be reduced by 22%- 30%.
Avanza Group
C/ San Norberto 48-50
28021 Madrid
Spain
www.avanzagrupo.com
www.avanzabus.com
INVESTOR
Fund V
TURNOVER (2012)
€435m
NUMBER OF EMPLOYEES
5,082
Management
– Jesús López Torralba, CEO
– Valentin Alonso, CFO
DOUGHTY HANSON TEAM
– Francisco Churtichaga
– Christopher Fielding
– Jon Higginson
– David Torralba
our portfolio companies
BALTA GROUP
19
Balta is the leading European manufacturer of wall-to-wall carpets
and rugs
Balta is Europe’s leading carpet and rug
manufacturer. It is a global market leader in
mechanically-woven rugs, the European
market leader in wall-to-wall carpets and a
leading European player in carpet tiles.
The company operates manufacturing facilities
in Belgium and Turkey and a warehouse in
the US.
Balta was founded in 1964 by the Balcaen
family, who significantly reinvested when
Doughty Hanson acquired the business in 2004.
Filip Balcaen, while no longer the CEO,
retains an active involvement in the further
development of Balta.
Since 2004, Doughty Hanson has provided
ongoing support to the company to increase
production efficiency, reduce working capital
and grow profitability. Doughty Hanson’s value
enhancement work in 2012 included pricing
projects, enabling Balta to pass on higher raw
material costs to customers, and supporting
the company to significantly increase the scale
of its existing production facilities in Turkey.
Doughty Hanson has actively worked with the
company to shape its business portfolio. As
part of this process, Balta disposed of its
non-core wall covering activities in 2007.
Balta acquired family-owned Domo Group in
2010 to further consolidate the European
broadloom market, increase its geographical
exposure to Eastern Europe and grow activities
in carpet tiles. Most recently, Balta signed an
agreement in January 2013 to sell its 50%
interest in laminate joint venture Trinterio
to IVC NV.
As part of the latter transaction, Balta will first
acquire the 50% it does not currently own in
Trinterio from Spano Group and subsequently
on-sell 100% to IVC. The transaction is subject
to competition approvals. If the transaction
successfully completes, Balta’s remaining
operations will consist of complementary,
market-leading soft flooring businesses
including broadloom carpet (#1 in Europe),
rugs (#1 in Europe) and carpet tiles (#3
in Europe).
Hendrik Deruyck joined Balta as CEO in
October 2012. He has a very good
understanding of the business as he
managed Balta's ITC division until 2000.
Balta is committed to sustainability and has
worked on a wide range of initiatives. Roofmounted solar panels installed at Balta’s
factories in Belgium are the largest solar
project in the Benelux region. It generates
annual income and energy efficiency cost
savings of €1.7m and saves the equivalent of
4,750 metric tons of CO2.
Energy efficiency initiatives continued in 2012,
including the replacement of co-generation
units, which create energy from waste heat,
at two plants in Belgium. The company also
actively focuses on the development of
sustainable products, launching a new
“green” product range in 2012 which
generated €2m of sales during the year.
Balta Group
Wakkensteenweg 2
8710 Sint Baafs Vijve
Belgium
www.baltagroup.com
INVESTOR
Fund IV
TURNOVER (2012)
€621m
NUMBER OF EMPLOYEES
3,737
Management
– Hendrik Deruyck, CEO
– Carl Verstraelen, CFO
DOUGHTY HANSON TEAM
– Yann Duchesne
– John Gemmell
– Julian Huxtable
– Hidde Vedder
– Mike Youlden
our portfolio companies
EUROFIBER
20
Eurofiber owns and operates the second-largest fibre network in
the Netherlands
Eurofiber was founded in 2000 following the
liberalisation of the telecommunications market
in the Netherlands. It is now the owner of the
largest independent fibre network in the country,
covering nearly 14,000km and connecting more
than 4,500 unique locations. The business also
has a smaller operation in Belgium.
Demand for Eurofiber’s services is expected
to grow over the coming years as the Dutch
market continues to transition from an
infrastructure based on a copper or COAX3
cable, which offers lower bandwidth and
reliability, to faster and higher bandwidth
fibre-based connections.
The company targets the enterprise market
only and does not provide fibre to households.
The enterprise market comprises telecom
companies (which themselves serve the
household market) and large organisations
that require high-speed, reliable and high
bandwidth connectivity. This includes
businesses and public/semi-public authorities,
such as utilities, hospitals and universities.
Although further expansion of Eurofiber’s
infrastructure is planned, the network already
has sufficient nationwide coverage to target
the majority of potential new customers and
win significant nationwide contracts with
clients such as Vodafone and T-Mobile.
Eurofiber is one of only two fibre providers to
have such a nationwide network and carries
more than 25% of Dutch internet traffic and
50% of Dutch mobile traffic. High barriers to
entry and plans to invest a further €180m by
2016 will help Eurofiber increase its market
share. Eurofiber is also well placed to acquire
smaller regional operators.
Eurofiber provides the core infrastructure only:
telecom providers, system integrators and
service providers can deliver their services to
end users over Eurofiber’s network. In addition,
Eurofiber delivers directly to larger businesses
and utilities. The long-term nature of its revenue
base (contracts range from three to 30 years in
length) means that Eurofiber has a high level of
recurring revenues and good visibility.
Since 2011, Eurofiber has implemented
activities which incorporate environmental,
social and safety considerations into its
operations. The company’s carbon footprint
was calculated in 2012 and will be followed
by year-on-year carbon reduction targets.
Suppliers are screened on their ESG policy and
results, leading to exclusion of ESG "unfriendly"
parties in RFP procedures and an explicit
preference for suppliers with a strong ESG
record. Finally, the new Eurofiber data centre
was built according to the highest standards
of energy efficiency (Power Usage
Effectiveness <1.3).
Eurofiber has a strong safety programme
in place to ensure that its employees and
subcontractors are working according to the
highest safety standards. No accidents or
fatalities occurred in 2012 and Doughty Hanson
will work with Eurofiber to further develop its
HSE policy in 2013.
Eurofiber
Safariweg 25-31
3605 MA Maarssen
Postbus 7072
3502 KB Utrecht
The Netherlands
www.eurofiber.com
INVESTOR
Fund V
TURNOVER (2012)
€75m
NUMBER OF EMPLOYEES
136
Management
– Alex Goldblum, CEO
– Bart Oskam, COO
– Jaap Truijens, CFO
DOUGHTY HANSON TEAM
– Francisco Churtichaga
– Pascal Keutgens
– Michal Lange
– Alex Moss
– Hidde Vedder
our portfolio companies
HellermannTyton
21
HellermannTyton is a market-leading global manufacturer and supplier
of high-performance and innovative cable management solutions
Established in the 1930s and acquired by
Doughty Hanson in 2006, HellermannTyton is
a market-leading global manufacturer and
supplier of high-performance and innovative
cable management solutions. The company’s
products are used for fastening, identifying,
insulating, protecting, organising, routing and
connecting components, and add value to
electrical and communications networks in
a wide variety of applications and industries.
HellermannTyton has a long-standing and
diverse customer base with a global footprint,
including many blue-chip companies that are
leaders in their respective markets. No single
customer accounts for more than 6% of sales,
which contributes to the resilience of its
earnings. The company’s two largest end
markets are electrical and automotive. In
addition, the company supplies the data
communication market.
HellermannTyton operates world-class
production facilities in 11 primary locations
across nine countries offering over 20,000
products. The company has manufacturing
plants near many of its key customers as both
HellermannTyton and they have expanded
geographically. The company’s global network
includes over 34 sales offices and warehouses
employing an experienced global sales force of
770 employees.
Following an impressive 2010 and 2011 with
sales growing at a CAGR of 24% as the company
rebounded strongly from the recession,
HellermannTyton sustained its performance in
2012 with top-line growth of approximately 9%
thanks to strong demand for its products across
all major end markets and regions.
Historically focused on its core geographies of
the European Union, the US, Japan and Brazil,
in recent years HellermannTyton has been
increasing its focus on high-growth
geographies such as China, India,
Russia and South Korea.
In 2011, work began on a number of expansion
projects to create additional capacity around
the world, not only including the higher-growth
BRIC economies but also meeting
HellermannTyton’s successful growth strategy
in the US and selected European markets.
These projects will increase manufacturing
floor space by over 40% and are
approximately halfway complete.
On 26 March 2013, HellermannTyton Group plc
listed on the London Stock Exchange at a price
of 195 pence per share, resulting in a market
capitalisation at IPO of approximately £419.9m.
Proceeds from the listing returned 1.1x cost to
Fund IV. At IPO, the total valuation of Fund IV’s
investment in HellermannTyton was 2.1x cost.
HellermannTyton adopts an active approach
towards the management of environmental and
health and safety issues. All manufacturing
locations and large offices have set goals to
improve environmental performance, including
managing company sustainability by reducing
power consumption and carbon emissions,
reducing solvent usage in production,
minimising production waste and promoting
products that involve the use of eco-materials.
Thanks to the continued focus on health and
safety governance there were no major injuries
during 2012.
HellermannTyton S.à.r.l.
28 Boulevard Royal
L-2449
Luxembourg
www.hellermanntyton.com
INVESTOR
Fund IV
TURNOVER (2012)
€514m
NUMBER OF EMPLOYEES
3,229
Management
– Steve Salmon, CEO
– Tim Jones, CFO
DOUGHTY HANSON TEAM
– Philos Carnio
– Alex Moss
– Mike Youlden
our portfolio companies
KP1
22
KP1 is the leading supplier of prefabricated concrete products to the French
market, focusing on floors and structural systems for the building industry
Founded in 1959, KP1 was created in its current
form in 1993 through the merger of two privatelyowned companies that were major players in
the French prefabricated concrete industry.
Headquartered in France, KP1 operates 22
manufacturing facilities (20 in France and two in
Poland) and eight engineering offices (seven in
France, one in Tunisia).
The company’s activities are structured around
four main business units. Three of these
focus on the engineering, production and
commercialisation of products for the housing
and industrial building industries. These
include products for the individual housing
market, products for industrial buildings and
bespoke products for residential and
commercial markets. The fourth business
unit involves the group’s international activities,
which are principally focused in Poland.
The company is the market leader in France
with an overall market share in excess of 40%
and has built up leadership positions in most
sub-segments of the building industry.
Doughty Hanson’s value enhancement team
has been working with KP1’s management to
implement cost-cutting measures to
preserve margins in what has been a difficult
environment while also maintaining the
company’s manufacturing footprint in the
event of a market rebound.
KP1 has embraced sustainable business
practices and is working hard to enhance
health and safety and address environmental
issues both within its operations and in respect
of its products and services.
KP1 is at the forefront of developing a suite of
innovative lightweight and energy-efficient
products. The lightweight products facilitate
on-site installation and handling, enabling
better working conditions for builders and
reduced concrete consumption. In 2012, the
company launched a new lighter floor beam,
which will help to reduce the carbon footprint
of its product through raw materials savings
and reduced transport.
The company’s energy-efficient products
improve the insulation of buildings and lead to
a significant reduction in energy waste. Sales of
these insulation materials are expected to grow
strongly due to additional regulations in the
construction sector following global efforts to
reduce energy consumption.
Following the successful installation of two
large photovoltaic power plants in 2011, the
largest of their type in France, KP1 continues to
install solar projects, contributing to reduced
energy costs and a lower carbon footprint.
In 2012, KP1 completed a comprehensive and
detailed audit of all workplace safety hazards
and installed new and more effective wastewater
treatment capabilities at five locations in France.
The business also achieved a reduction in fuel
consumption and emissions by making more
effective use of loads on trucks used by the
company, thereby reducing the number of
journeys required for transport of goods.
KP1
M.I.N. – Bâtiment D
135, Avenue Pierre Semard
84 000 Avignon
France
www.kp1.fr
INVESTOR
Fund IV
TURNOVER (2012)
€289m
NUMBER OF EMPLOYEES
1,490
Management
– Jean-François Trontin, President
– Bart Deman, CEO
– Pierre Diesler, CFO
DOUGHTY HANSON TEAM
– Yann Duchesne
– Pascal Keutgens
– Julien Millet
our portfolio companies
LM Wind Power
23
LM Wind Power is the world’s leading supplier of wind
turbine components
In 2009, the world’s largest independent wind
turbine blade manufacturer LM Glasfiber
merged with Svendborg Brakes, the leading
supplier of hydraulic brake systems for the
wind industry, to form LM Wind Power. The
merger created a global market leader with
additional scale, product diversification and
critical mass.
With production, sales and service facilities in
more than 25 locations across 12 countries –
Australia, Brazil, Canada, Chile, China,
Denmark, Germany, India, Poland, South Africa,
Spain and the US – the company is the only
independent blade and brake supplier with
global operations. This global reach ensures
close contact with international customers and
enables the group to minimise transport and
logistics costs, shorten delivery time and
reduce working capital requirements.
LM Wind Power continues to benefit from
strong fundamental demand drivers in the
medium and long term from global long-term
commitments to use renewable energy sources
to meet an increase in energy demand and a
reduction in fossil fuel emission targets. As the
wind market continues to industrialise, the cost
of wind energy production has declined rapidly,
which will ultimately allow wind to compete
with traditional fuel sources without
government subsidy, and further increase
demand. The process of industrialisation is also
expected to lead to greater outsourcing of blade
manufacture by OEMs.
Despite this long-term positive outlook, LM
Wind Power expects to face a one-year
contraction in the global wind market in 2013,
driven primarily by the rebalancing of the US
market following the late renewal of local
tax incentives.
In response, Doughty Hanson and LM Wind
Power’s management team have implemented
the next phase of the ongoing cost reduction
and cash generation programme. Doughty
Hanson appointed a new CEO (Leo Schot)
during 2012 with particular expertise in such
measures from previous experience in supply
chain at Siemens Wind Power and GE Wind
Energy. The market is expected to return to
growth in 2014, currently forecast to be a new
record year for wind turbine installations.
The group’s research and development
capabilities and production capacity continue to
help LM Wind Power maintain its marketleading position. The company has a long track
record of product innovation: in 2008 it
launched a 61.5m blade and in 2011 a 73.5m
blade, both the world’s longest blades at the
time. LM Wind Power remains the industry’s
technology leader and in 2012 the 73.5m blade
for Alstom became the first 70+ metre blade to
be installed on the world’s largest offshore
wind turbine.
LM Wind Power has particularly strong
environmental credentials. Operationally, the
carbon footprint of the group’s manufacturing
activities continues to be measured and
reduced as a result of initiatives to better
manage energy use, water consumption and
waste generation.
The sustainability focus and achievements of
2012 were very much in line with the activities
in 2011. Health and safety remained at the top
of the agenda as well as waste and energy
reductions in the manufacturing process to
achieve cost savings contributing to the overall
financial performance, while minimising the
impact on the environment.
LM Wind Power
Jupitervej 6
DK-6000 Kolding
Denmark
www.lmwindpower.com
INVESTOR
Fund III, V
TURNOVER (2012)
€751m
NUMBER OF EMPLOYEES
5,122
Management
– Leo Schot, CEO
– Damien Harte, CFO
DOUGHTY HANSON TEAM
– Adam Black
– Jon Higginson
– John Leahy
– Daniel Linnergren-Fleck
– Tim Robson
our portfolio companies
QUIRÓN
24
Quirón is the largest private hospital group in Spain
Quirón was formed in 2012 by the merger of
USP Hospitales and Grupo Hospitalario Quirón.
With a 10% market share and more than 2,300
beds, Quirón is the largest private hospital
network in Spain.
Quirón operates 20 hospitals and a number of
fertility clinics, consultation centres and day
hospitals. It has sites across mainland Spain,
the Balearics and the Canary Islands. It is
present in more regions than any other private
operator and has a strong presence in
Barcelona, Madrid and Seville.
Quirón offers a comprehensive range of
medical specialities, with a particular strength
in trauma, gynaecology, oncology, cardiology,
neuroscience and internal medicine.
Doughty Hanson created the supergroup in
2012, first by acquiring USP Hospitales in April.
In July 2012 a stake in Grupo Hospitalario
Quirón was acquired from a minority
shareholder and the two businesses were
merged to create Quirón. The combined
business is in a strong position to further
consolidate the fragmented private hospital
market in Spain.
Integration of the two businesses started in
autumn 2012. Extensive synergies are expected
through the combination of procurement
practices and the merger of two head offices.
Quirón currently derives almost three-quarters
of its revenues from health insurance
companies. Smaller proportions of revenue are
generated by private customers and from traffic
originating in the Spanish National Health
System (NHS).
The private hospital sector in Spain has
proved resistant to the recession and has
experienced compound annual growth in
revenue of 4.9% since 2007. The market has
strong organic growth fundamentals driven
by demographics, the difficulties of the NHS
to remain a quality alternative and the
proliferation of new medical technologies
only covered by private insurers.
Quirón recognises the importance of robust
social responsibility, good governance and
environmental protection. Many hospitals
have implemented formal environmental
management systems certified to international
standards (ISO 14001) and many actively
monitor and track safety and environmental
performance indicators, including incidents,
energy use, water use and waste.
QuirÓn
Plaça d'Alfonso Comin, 5
08023 Barcelona
Spain
www.quiron.es
INVESTOR
Fund V
TURNOVER (2012)
€656m
NUMBER OF EMPLOYEES
6,740
Management
– María Cordón Muro, CEO
– José Ramón Rubio Laporta,
Deputy Chairman
DOUGHTY HANSON TEAM
– Philos Carnio
– Francisco Churtichaga
– Jon Higginson
– David Torralba
our portfolio companies
TMF GROUP
25
TMF Group is the world’s leading independent provider of corporate
compliance outsourcing solutions
TMF has grown substantially since it was
founded in 1988, driven by a combination of
strong organic growth and more than 60
acquisitions, including 14 since Doughty
Hanson acquired the business in October 2008.
In January 2011, Doughty Hanson acquired
Equity Trust, a global provider of non-advisory
fiduciary and administrative services to
multinational clients, financial institutions,
intermediaries and high net worth individuals.
After securing the necessary regulatory
approvals in numerous jurisdictions,
TMF and Equity Trust merged in June 2011
to create TMF Group, the world’s leading
provider of outsourced back office and
administrative services.
The merger has delivered significant cost
synergies and generated cross-selling
opportunities, supporting organic growth.
In 2012, Doughty Hanson worked with
management on a range of operational
workstreams connected with the merger,
including finance, procurement, sales
and marketing.
The company now has 114 offices in 80
countries and provides services to more than
35,500 client entities, including approximately
40% of the current S&P 500 and Fortune 500
companies.
TMF’s market continues to expand thanks to
increasing regulation, the global trend towards
greater transparency and the continued
international expansion of current and
prospective clients. The company provides its
international and local clients with specialised
administrative services that are critical from a
financial, reputational and risk management
perspective. TMF also helps its clients in new
markets with compliance issues and regulatory
regimes where they have either no, or
insufficient, experience.
Historically, the majority of TMF’s revenues
have been generated in Europe, where the
company has a long-established, strongly
competitive position, particularly in the Benelux
and Central and Eastern Europe. Through a
combination of new greenfield sites and
acquisitions, TMF has also developed a
presence in Asia, Latin America and the Middle
East, all of which have strong growth potential
and are expected to be the key growth drivers
over the coming years.
In 2012, TMF continued to develop its corporate
social responsibility programme. At the core of
this is a commitment to working within local
communities around the world focusing on
the environment, charitable contributions and
educational assistance. Many offices have
established links with recognised charities,
which include annual working days in the
community and financial contributions, assisting
local educational and environmental causes.
The year also saw the company develop its
Sustainable Procurement Supplier Screening
process to be implemented across TMF’s global
spend during 2013. This process will be used as
another tool to determine the quality of the
company’s suppliers and, going forward, TMF
will seek to partner with suppliers who are able
to demonstrate a commitment to sustainable
development and social agendas.
TMF Group
Herikerbergweg 238
1101 CM Amsterdam Zuidoost
The Netherlands
www.tmf-group.com
INVESTOR
Fund V
TURNOVER (2012)
€392m
NUMBER OF EMPLOYEES
4,634
Management
– Hugo van Vredenburch, CEO
– Gordon Stuart, CFO
DOUGHTY HANSON TEAM
– Matt Appleton
– Claus Felder
– Chris Harwood
– Jon Higginson
– John Leahy
– Hidde Vedder
our portfolio companies
TV3
26
TV3 is a leading digital multimedia group operating in the Republic
of Ireland
Launched in September 1998, TV3 is the
second most-viewed channel in Ireland,
after the government-owned station RTE1.
The channel reaches 98% of the Irish
television-owning population and has
a market share of greater than 30%.
Targeting the important 15- to 44-year-old
demographic, TV3 differentiates itself from
non-terrestrial channels through an emphasis
on Irish programming and a broad range of
home-produced content. This level of homeproduced content has increased from 20% to
40% under Doughty Hanson’s ownership and
complements a highly successful schedule
which includes premium sport and other
highly-rated content.
TV3 has developed a multi-channel offering
following its acquisition of Channel 6 in August
2008. The station was rebranded as 3e at the
start of 2009 and has subsequently grown to
become Ireland’s No.1 digital channel,
overtaking E4 and Sky1. TV3’s successful
3Player, launched in 2011, is now being
distributed in the US on the ROKU platform.
The majority of TV3’s revenues are derived
from advertising during commercial breaks
in programming, sponsorship and promotions,
as well as certain programming and
interactive applications.
The economic climate in Ireland continues to
be challenging: between 2008 and 2011 GDP
dropped by 10%. Although the economy
returned to growth in 2011 and 2012 (up 0.9%
in 2012), forecasts for 2013 remain low. The
advertising market is hyper-cyclical which led
to peak-to-trough market falls of 40% over the
recession. In spite of this difficult backdrop, TV3
has remained profitable and cash-generative.
TV3 is well placed to benefit from changes to
the Irish television market following a binding
Competition Authority agreement which
requires RTE to abolish certain pricing
practices. TV3 continues to push for policy
reform including the elimination of marketdistorting deficits in RTE, a rebalancing of the
broadcast advertising market and fair access
to the digital terrestrial television platform.
During 2012, TV3 focused on audience growth,
home production and digital media. At
acquisition, TV3 had a similar share to RTE2,
its closest comparable channel, but in 2012
TV3 attracted 3.65m viewers every month and
an adult audience share 55% higher than
RTE2’s. The company’s commitment to home
production continued in 2012 and this costefficient activity has resulted in a new revenue
stream of programme sales abroad.
In 2012, TV3 continued to invest in new facilities
with the construction of Ireland’s first major
high-definition studio and a partnership with
Sony to complete the fit-out. The €5m facility,
which opened in Q4 2012, will allow TV3 to grow
international sales and attract third-party
usage by international producers.
In 2012, TV3 further improved its environmental
and safety performance with initiatives to cut
waste and improve energy efficiency: a
company-wide recycling focus increased the
amount of material recycled by 21% and no
recyclable waste has been sent to landfill
since September 2011. TV3 continues to
conduct health and safety audits and monitor
accident statistics.
TV3 Television Network
Limited
Westgate Business Park
Ballymount
Dublin 24
Ireland
www.tv3.ie
INVESTOR
Fund IV
TURNOVER (2012)
€57m
NUMBER OF EMPLOYEES
216
Management
– David McRedmond, CEO
– Aodha O’Connor, CFO
DOUGHTY HANSON TEAM
– Christopher Fielding
– John Leahy
– Daniel Linnergren-Fleck
our portfolio companies
VUE ENTERTAINMENT
27
Vue Entertainment is the second-largest cinema operator in Europe
Headquartered in London, Vue Entertainment is
the second-largest cinema operator in Europe.
It operates a total of 116 cinemas, including 79
in the UK, where it is the third-largest operator,
34 in Germany and Denmark and one each in
Ireland, Portugal and Taiwan.
Vue’s CEO and CFO founded the business in 1998
as SBC International Cinemas. It rebranded as
Vue in 2003 following the acquisition of Warner
Village Cinemas and has continued to grow
organically and through acquisitions.
Since 2002, it has acquired 101 sites in nine
separate transactions. In May 2012, Vue
acquired Apollo Cinemas from its family
owners, adding 14 new sites and strengthening
Vue’s position in the UK market.
In July 2012, Vue began its international
expansion by agreeing to acquire 85% of
CinemaxX, the second-largest circuit in
Germany. A public tender offer took Vue’s
ownership to 95% in September. CinemaxX has
34 sites and 293 screens and this means
that more than a third of Vue’s revenues
are non-UK.
Vue has also opened new sites in the UK,
including 12 since the end of 2006, and
continues to focus on expanding into new
markets both internationally and in the UK. The
company’s recent developments in Westfield
London and Westfield Stratford City, opened in
2010 and 2011 respectively, are now the firstand third-highest grossing cinemas
in the UK.
Vue Entertainment
566 Chiswick High Road
London
W4 5XS
UK
www.myvue.com/corporate
INVESTOR
Fund V
TURNOVER (2012 PF)
£493m*
The company has a highly experienced
management team. The core members of the
team each have more than 20 years of industry
experience and have pioneered the introduction
of digital technologies, 3D movies and dynamic
ticket-pricing strategies into the UK market.
NUMBER OF EMPLOYEES
c.5,100
In February 2006, Vue cinemas in Cheshire
Oaks and in London’s West End were the first
cinemas in Europe to show a 3D movie. In
September 2008, Vue screened the first 3D live
music event shown in a cinema. In 2012, the
company completed its UK rollout of new 4k
digital projectors, giving the very best picture
quality available, and 98% of Vue’s UK screens
are "stadium format", giving uninterrupted
views of a floor-to-ceiling, wall-to-wall screen.
DOUGHTY HANSON TEAM
– Christopher Fielding
– Julian Huxtable
– Michal Lange
– Tim Robson
Management
– Tim Richards, CEO
– Alan McNair, CFO and Deputy CEO
– Steve Knibbs, COO
Vue is committed to achieving greater
sustainability within its business and continues
to enhance existing activities aimed at
improving environmental and health and safety
performance. Key initiatives and achievements
include a programme of capital and operational
initiatives that will deliver major reductions in
the company’s carbon footprint and improve
water conservation and waste management.
During 2012, 60% of all waste produced at the
company’s cinemas and head office was
recycled – up from 35% in 2011. This is
expected to rise to 85% in 2013 for all Vuemanaged sites. Water conservation initiatives
are expected to save 300m litres relative to
2011 levels. This saving will be achieved in each
year of operation going forward. Initiatives to
reduce electricity consumption such as
energy-efficient lighting and improvements to
heating and ventilation equipment are expected
to generate substantial reductions in 2013. The
same initiatives will be rolled out across the
newly acquired Apollo circuit in 2013.
* Includes Apollo and CinemaxX
our portfolio companies
ZOBELE GROUP
28
Zobele Group is the global leader in the manufacture of electric air
freshener and insecticide devices
Zobele is the world’s leading manufacturer of
electric air fresheners and domestic insecticide
products. Based in Italy, the company was
founded by Enrico Zobele Sr in 1919. During the
early years, Zobele’s main activity was the
manufacture of flypaper.
In 2012, Zobele continued to diversify its
revenues across categories, customers and
geographies. This included helping its customers
to launch new products on to the market and
leveraging its innovation capabilities, customer
relationships and global footprint.
The group expanded its product lines over the
second half of the 20th century to include
mosquito products, plug-in and portable
vapourisers. The group also manufactures
electrical dispensers of pharmaceutical
formulations and household cleaning products.
During the year, Doughty Hanson’s value
enhancement work with management focused
on initiatives aimed at ensuring top-line growth
while continuing to drive operational excellence
and improve organisational effectiveness. The
Zobele Production System, which adopts lean
manufacturing techniques to improve
operational efficiency, is being deployed
across all sites.
In addition to plants in Italy, Zobele has
low-cost manufacturing operations in China,
Mexico, India, Brazil and Bulgaria. The group
also has substantial research and development
capabilities and works with its multinational
and regional customers to develop and
manufacture new products to be distributed
worldwide under the customers’ brands.
Zobele’s customers include Reckitt Benckiser,
Procter & Gamble and Henkel.
Zobele’s manufacturing footprint is also
expanding, with extra capacity in India and
Brazil enabling Zobele to capture growth
opportunities across South-East Asia and
South America.
our portfolio companies
FUND III
– LM Wind Power
Zobele Group
Via Fersina, 4
38123 Trento
Italy
www.zobele.com
NETHERLANDS
INVESTOR
Fund IV
UK
STOCKHOLM
BELGIUM
TURNOVER (2012)
€337m
NUMBER OF EMPLOYEES
5,958
DENMARK
Management
– Enrico Zobele, Chairman
– Roberto Schianchi, CEO
– Christopher Wood, CFO
DOUGHTY HANSON TEAM
– Alessandro Baroni
– Philos Carnio
– Chris Harwood
– John Leahy
FUND IV
– Balta
– HellermannTyton
– KP1
– TV3
– Zobele
LONDON
IRELAND
FRANKFURT
FUND V
– ASCO
– Avanza
– Eurofiber
– LM Wind Power
– Quirón
– TMF Group
– Vue
PARIS
SPAIN
During 2012, Zobele consolidated the
improvements achieved in previous years
to further reduce environmental impact,
enhance social responsibility and improve
health and safety performance.
In Brazil, the company moved to a new, larger
facility which has been designed to ensure
treated wastewater is captured and reused
for irrigation purposes. In Spain, Zobele
moved into a new, more energy-efficient and
environmentally-friendly office building. In
Bulgaria, there were no reportable safety
incidents during the whole of 2012, and in
Mexico water consumption was reduced by
more than 50% compared to 2011.
29
FRANCE
MILAN
ITALY
MADRID
DOUGHTY HANSON
OFFICE LOCATIONS
Responsible investing
Charitable initiatives
Founded in 2000, the Doughty Hanson
Charitable Foundation (DHCF) has
supported more than 240 different
charities and causes with donations
totalling over £2m.
The Foundation is run by a committee of seven
members of staff who evaluate the causes and
projects to be supported and oversee the
disbursement of funds.
Many of the charities we sponsor receive
more than one donation or annual support.
The focus of the Foundation’s work continues
to be on smaller charities where a specific
project has been identified, often requiring
capital expenditure.
We encourage applications to be made by
investors, business partners and portfolio
companies. The Foundation also matches
amounts raised in sponsorship by an employee.
In 2012, the Foundation supported 37 causes
and charities. While the UK is the main focus
of the Foundation, with UK-based charities
accounting for 86% of donations, we endeavour
to offer support in the aftermath of worldwide
disasters and humanitarian aid.
In 2012, 28% of our donations went to children’s
charities, 12% to the disabled, 11% to the
elderly, 11% to the homeless, 30% to medical
causes and the remaining 8% to social, cultural
and environmental groups.
Some of the organisations receiving financial
support during the year included:
The Snowdon Trust
Formerly known as the Snowdon Award Scheme,
the Trust awards grants to disabled students to
assist with fees or special equipment that will
enable them to undertake training or study at
further and higher education centres. Lord
Snowdon set up the scheme in 1981, and in the
first year support was provided to six students.
Last year, the Trust was able to help 105
students. DHCF has supported the Trust for
nine years and in 2012 our donation provided
assistance for seven students.
30
Brainwave
Brainwave supports children with brain
injuries, genetic disorders or developmental
delay. The charity receives no government
funding, relying totally on voluntary
contributions. The Brainwave Programme is
a partnership between parents and a team
of therapists and in the past five years it has
doubled the number of children it supports.
This is the ninth year Doughty Hanson has
supported the organisation.
Canine Partners
Canine Partners transforms the lives of people
with disabilities by providing them with highly
trained assistance dogs. These dogs help their
disabled partner with basic everyday tasks so
that they can continue to live independently.
This is the seventh year we have supported
Canine Partners. Our recent donations have
helped to purchase and train a puppy, Xena,
which has now been placed with her partner.
Cardinal Hume Centre
The Cardinal Hume Centre provides homeless
young people with the opportunities they need
to rebuild their lives. The Centre offers a hostel
for 16- to 21-year-olds with drug or alcohol
dependencies who cannot live in their family
home due to neglect or abuse. DHCF’s most
recent donations are helping the Cardinal
Hume Centre to build flats, which will be used
as a halfway house for people taken off the
streets before returning to society.
Elizabeth Finn Care
Elizabeth Finn Care helps ordinary people in
the UK and Ireland who have been overcome
by circumstances, such as family breakdown,
redundancy, injury or physical or mental
illness. DHCF has supported Elizabeth Finn
Care for six years and our most recent donation
helped to provide hampers for the elderly over
the festive period.
Switchback
Switchback supports 18- to 24-year-old
offenders by providing sustainable employment
after leaving prison. The organisation helps the
youngsters build on skills learned in prison
kitchens, provides mock interviews and training
courses and assists in managing health and
housing issues.
Responsible investing
Social investment
Doughty Hanson has been a longstanding supporter of Bridges Ventures,
a privately-owned venture capital
company that funds businesses and
invests in assets that generate strong
social or environmental returns.
For more information on
these charities, please see:
snowdontrust.org
brainwave.org.uk
caninepartners.org.uk
cardinalhumecentre.org.uk
elizabethfinncare.org.uk
switchback.org.uk
For more information on the
activities of the Foundation
or to suggest a charity,
please contact:
info@doughtyhanson.com
For more than a decade, Bridges has been
raising money from the private sector to invest
in deprived geographical areas, delivering
financial returns for its investors in the process.
It operates three fund platforms: venture funds
which invest in ambitious businesses in the
most deprived parts of England, property funds
which invest in properties in regeneration areas
and environmentally sustainable buildings, and
a social entrepreneurs fund, which targets fastgrowing social enterprises looking to scale up.
Doughty Hanson has invested in all three of
Bridges’ venture funds, the third of which
achieved a first close in 2011 with equity
commitments totalling £72m. The fund
provides growth capital to small and mediumsized businesses in sectors where underlying
social or environmental needs create the
opportunity for both commercial returns and
positive impacts.
A member of the Doughty Hanson team sits
on the investment committees and on the
Board of Directors of Bridges Ventures.
In 2012, Bridges exited Pure Washrooms and
The Hoxton Hotel to deliver a strong return
to its first two venture funds. Also during the
year, Bridges’ investee company The Gym
Group was ranked 13th in the Sunday Times
Fast Track 100, a list of the UK’s fastestgrowing companies.
In 2012, Bridges teamed up with Big Society
Capital to invest in a Social Impact Bond
commissioned by Essex County Council.
The Bond will fund an intensive intervention
programme to help vulnerable young people
at risk of going into care.
31
Doughty Hanson supports the European
Venture Philanthropy Association (EVPA),
a non-profit association established in
2004 to promote venture philanthropy
across Europe.
The EVPA currently has more than 160
members from 22 countries including venture
philanthropy funds, grant-making foundations,
private equity firms, professional services
firms, philanthropy advisers and
business schools.
EVPA members apply venture capital business
models to the non-profit and charitable sectors.
By combining financial contributions with
advisory services such as strategic planning,
marketing, executive coaching and access to
other networks, venture philanthropists seek
to increase the social impact of the funds
they donate.
The EVPA has two main aims: to support
its members in carrying out their venture
philanthropy activities and to promote
venture philanthropy throughout Europe.
The EVPA’s activities include conferences and
events, country seminars, research projects
on venture philanthropy activity in Europe
and working groups exploring key issues for
venture philanthropists. The EVPA also provides
training workshops and peer-learning events
for its members.
In 2011 and for the first time, the EVPA
collected comprehensive data on the venture
philanthropy industry in Europe showing
that cumulative investments made by
venture philanthropy organisations had
surpassed €1bn.
Please visit
www.bridgesventures.com
for more information on
Bridges Ventures
Please visit www.evpa.eu.com
for more information on
the EVPA
Responsible investing
ESG policy and initiatives
Environmental, social and governance
(ESG) issues can have a material impact
on financial performance and the
communities in which both Doughty
Hanson and our portfolio companies
operate.
In June 2007, Doughty Hanson became one of
the first private equity signatories to the United
Nations Principles for Responsible Investment
(UNPRI).
The voluntary principles provide a highly
practical framework for incorporating
environmental, social and governance (ESG)
issues into mainstream investment decisionmaking and ownership practices.
A member of the Doughty Hanson team is
involved with the UNPRI’s Private Equity Work
Stream Steering Committee, which shares best
practice, undertakes research to understand
better the impact of ESG factors on financial
performance and develops tools and guidance
to assist UNPRI signatories to implement more
effectively the UNPRI in private equity.
As part of the firm’s commitment to the
UNPRI, Doughty Hanson has been actively
involved in the creation of the UNPRI document
“Responsible Investment in Private Equity:
A Guide for Limited Partners”.
32
Our ESG policy
The partners and staff of Doughty Hanson
will, to the best of our ability:
– Comply with relevant regulations governing
the protection of human rights, occupational
health and safety standards and labour,
environmental and business practices of the
jurisdictions in which we conduct business.
– Adhere to the highest standards of conduct
intended to avoid even the appearance of
negligent, unfair or corrupt business
practices.
– Appoint a Head of Sustainability and provide
for the assignment of and accountability for
ESG responsibilities to senior managers at
companies entrusted to our care and control.
– Instruct Doughty Hanson investment
professionals in the identification and
management of ESG risks and opportunities
and provide them with appropriate support
and assistance.
– Identify ESG risks and opportunities prior
to the acquisition of companies entrusted to
our care and control and manage ESG risks
and opportunities following acquisition.
– Establish appropriate ESG policies and
practices for companies entrusted to our care
and control comparable to standards adopted
First published in July 2009, and subject to
by Doughty Hanson that provide for the
further reviews, the guide sets out some of
identification and management of ESG risks
the unique characteristics of private equity
and opportunities and the disclosure of ESG
investments and provides practical suggestions
matters for public review.
on how the Principles for Responsible
Investment can be applied to the asset class.
– Regard implementation of our ESG
engagement as an ongoing project. Our Head
Separately, Adam Black, our Head of
of Sustainability will review the policy’s
Sustainability, also sits on the BVCA (British
effectiveness and implementation on a regular
Private Equity and Venture Capital Association)
basis, and will report relevant findings and
Responsible Investment Advisory Committee
recommendations to our Board.
and the EVCA (European Private Equity and
Venture Capital Association) Responsible
– Distribute this policy and related ESG
Investment Roundtable. He also acts as a
information to all Doughty Hanson employees
trainer on responsible investing for the
and appropriate employees of companies
EVCA Academy.
entrusted to our care and control.
In developing our ESG policy, we have given
consideration to a range of codes and
standards, including the UNPRI and the
United Nations Global Compact.
Please visit www.unpri.org
for more information on
the UNPRI
Additional information
London
45 Pall Mall
London
SW1Y 5JG
United Kingdom
Tel +44 20 7663 9300
Frankfurt
Platz der Einheit 2
60327 Frankfurt am Main
Germany
Tel +49 69 97 12 02 0
Luxembourg
28 Boulevard Royal
L-2449 Luxembourg
Luxembourg
Tel +352 26 27 56 1
Madrid
C/Serrano, 26
28001 Madrid
Spain
Tel +34 91 436 4420
33
Milan
Via dei Bossi 4
Milan 20121
Italy
Tel +39 02 806 0681
Paris
60 Avenue Hoche
75008 Paris
France
Tel +33 1 56 68 55 15
Stockholm
Biblioteksgatan 8
S-111 46 Stockholm
Sweden
Tel +46 8 54 50 60 30
This document is issued and distributed in the UK by Doughty Hanson & Co Managers Limited, which is authorised and regulated by the UK Financial Conduct Authority. While this
information has been prepared in good faith, Doughty Hanson & Co Managers Limited makes no representation or warranty as to its accuracy or completeness. The information
herein is for information purposes only and does not constitute an offer to sell, or a solicitation of an offer to purchase, an interest in any private equity fund. If such offer or solicitation
is to be made, it will only be made on the basis of final offering documents and not on the basis of this document or any oral statements or representations made in connection
herewith. This document contains information concerning the past performance of various investments, but this should not be taken as an indication of the likely future
performance of any investments.
Cert no. SGS-COC-0620