annual review 2007 bridgepoint.eu International Private Equity

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1 annual review 2007 International Private Equity Frankfurt Milan Beteiligungsberatung Kaiserstrasse 6 D Frankfurt Tel: +49 (0) Fax: +49 (0) Via Brera Milan Tel: Fax: Paris London 30 Warwick Street London W1B 5AL Tel: +44 (0) Fax: +44 (0) Luxembourg 24 rue Beaumont L-1219 Luxembourg Tel: Fax: Madrid Paseo de la Castellana, 35-7ºB Madrid Tel: Fax: rue de la Bienfaisance Paris Tel: +33 (0) Fax: +33 (0) Stockholm Mäster Samuelsgatan Stockholm Tel: Fax: Warsaw Rondo ONZ Warszawa Tel: Fax: bridgepoint.eu

2 1 Who we are Our values Bridgepoint is a major international private equity group focused on investing in leading middle market businesses across Europe. Our aim is to be the international private equity manager of choice wherever we operate. > A key general partner for institutional investors around the world > A leader in financing businesses and growing them organically and by acquisition > The most evolved pan-european network and investment strategy in the European middle market Bridgepoint s combination of financial strength and industrial and strategic skills makes it a private equity manager trusted by its investors and sought after by businesses seeking expertise to sustain growth and prosperity. Our partners Bridgepoint is led by 19 partners: Benoit Bassi John Barber Guido Belli Michael Black Michael Davy Alastair Gibbons Vince Gwilliam Raoul Hughes William Jackson Uwe Kolb Mikael Lövgren Jose Maria Maldonado Rob Moores James Murray Graham Oldroyd Kevin Reynolds Khai Tan Valerie Texier Guy Weldon Responsible > The firm is conscious of the social, economic and environmental impact of its activities. We are responsible to: Our investors Our portfolio companies and their employees Our employees > We demand high levels of corporate governance and ethics within our own business and those in which we invest. Intelligent > We seek to invest intelligently through: Depth and breadth of experience Shared experience of our portfolio businesses Professional can do approach Open > We take time to understand issues facing management teams > We are independent of prejudice in assessing opportunities > We are receptive to changing markets and business strategies > We are willing to tackle complex transactions or correct mistakes Ambitious > We are ambitious to deliver: For our investors who entrust their funds to us For the 51,000 managers and employees of the companies we back For our people whose teamwork and dedication drive our success

3 2 Managing partner s statement 3 I am pleased to report that 2007 has been a strong year for Bridgepoint and for most of the companies owned by the funds that we manage. Despite more volatile market conditions in the second half of the year, our portfolio has continued to generate strong operating profit growth (averaging 15% in our current fund during the period under review) and many of our investee companies have continued to expand and lead their respective markets. Substantial capital investment has also typically driven organic growth, business expansion and job creation. In the twelve months to 31 December 2007, Bridgepoint committed 995 million to six new investments whose combined transaction value was 3.3 billion. In so doing, we applied Bridgepoint s long-standing middle market investment strategy: to use our depth of resources across Europe to acquire robust, market-leading companies with the potential to grow rapidly, organically or by acquisition, or be capable of further operational improvement, especially in more challenging times. During the year Bridgepoint s investment model and culture was seen at its best, drawing expertise and local insight from across the firm s operations in Europe to conduct quality analysis, to put together strong business development plans and develop transaction-winning strategies. Our investment strategy has seen the firm regularly access capital markets where, in particular, we took advantage of favourable funding conditions during the first half of the year. This has been done with a strong focus on putting in place sustainable and responsible financial structures that will provide our portfolio companies with the resources needed to deliver their individual growth plans. Returning Capital Importantly, 2007 was also notable for excellent progress on exiting successful investments and returning capital to our investment partners. As a result of our ability either to sell or refinance investments, we were able to return 1.1 billion to our investors. To put this in context, Bridgepoint investors have now received 7 billion since 2000, making the firm one of the few private equity funds in Europe to have returned more capital to its investors than it has drawn from them. Strong middle market Investment and exit activity in the European middle market remained strong during 2007, although markets slowed during the credit turmoil towards the end of the year. Despite this correction, Bridgepoint s investment space, involving transactions valued up to 1 billion, remains one of the most robust and attractive parts of the European private equity market. Behind this positive performance are of course some external market issues worthy of note: while credit markets deteriorated dramatically in the second half of the year, middle market financing remained available albeit on terms more typical of those available two years ago. This said, leverage is a less material driver of returns in our space and this has helped insulate the middle market to some degree. Nevertheless, transaction processes became more challenging in the second half of 2007 as, on the one hand, lenders sought to tighten credit availability and, on the other, vendors did not immediately readjust price expectations. Looking ahead, Bridgepoint continues to believe that judgement calls on asset and sector selection remain vital in identifying potential acquisitions for our funds and this will be even more so in the changed markets ahead in Internationalisation Reflecting the continuing geographic expansion of our activity, Bridgepoint announced the opening of a new regional office in Warsaw, Poland to address the market in Central Europe. This allows us to do two things. Many of our existing investments have significant interests in the region and a physical presence will allow us to support them more effectively with acquisitions or with operational developments there. Secondly, a local presence will also allow us to access new investment opportunities in line with our broad European middle market investment strategy. External Affairs As a member of the Walker Working Group, set up by our industry in 2007 to look at issues of disclosure and transparency in private equity, Bridgepoint has been a full supporter of more open communication and corporate responsibility as a means of better explaining our work and the value we create for the companies and employees we back. Bridgepoint also recognises its responsibility to the environment. During the year, our Firm has become a founding contributor to the ERM Foundation Low Carbon Enterprise Fund. We believe that the latter is a more sustainable alternative to carbon offsetting as it channels loans directly to the development of low carbon projects in the emerging world. As a result of its financial contribution, in 2008 Bridgepoint will have become a carbon-neutral company. Fit for the challenge So 2007 has been a good year for Bridgepoint. We have continued to return significant amounts of capital to our investors and invested selectively in market leading businesses across Europe. As responsible owners of businesses, the Bridgepoint team has also focused on delivering strategies for the companies we own designed to maximise and protect value for all stakeholders. It is also encouraging that Bridgepoint s investee companies added over 2,300 jobs during 2007, bringing to over 51,000 the number of employees in the companies we back. I am confident that as we complete the raising of our new Bridgepoint Europe IV Fund, our business and our investee companies are fit for the challenges and opportunities ahead in History shows us that private equity thrives in periods of change and 2009 hold out the prospect of being some of the best vintage years for investment activity for some time. William Jackson, Managing Partner

4 4 How we ve done 5 12 months to 31 December 2007 Amount invested Cost of investments at realisation Realisation proceeds Unrealised investments by sector 995 million 242 million 1.1 billion Investments made in 2007 by country In this year to date, Bridgepoint has: invested in six new transactions with total transaction value of 3.3 billion 995 million 1.1 billion returned to investors in major exits sold 11 investments from our portfolio Consumer services Health/healthcare Media Engineering & Machinery Software & Computer Services Support Services Transport Other Investors by type in Bridgepoint funds UK France Netherlands Sweden Poland Investors by geography in Bridgepoint funds 9 bolt-on acquisitions 37 investments 2,327 additional jobs completed nine add-ons for existing investments managed a portfolio of 37 investments in 10 countries 2,327 new jobs added in 2007 by our portfolio companies Sovereign entities Asset manager Bank Corporate pension funds Endowment foundations Fund of funds Insurance companies Public pension funds Asia Europe Middle East North America Warsaw opened a regional office in Warsaw to address the Central and Eastern European buyout market

5 6 Our investment strategy 7 Our aim is to use Bridgepoint s local insight and industry expertise across Europe to acquire middle market companies valued up to 1 billion that can grow organically or by acquisition and to which we can add value under our ownership.

6 8 Who we ve worked with this year 9 Fat Face Active lifestyle retailer Retail UK Acquired March million enterprise value Revenue: 166 million No. of employees: 1,842 Leeds Bradford International Airport Regional airport Transport UK Acquired May million enterprise value Revenue: 31 million No. of employees: 227 Fat Face is the UK s leading active lifestyle retailer. It was acquired in a transaction totalling 540 million in March The business retails high quality men s, women s and children s clothing and accessories in the activity lifestyle clothing market which is growing faster than any other segment of the UK clothing market. The company operates a multichannel model which includes 141 owned retail stores, 10 international franchised stores, mail order catalogues and an internet store. Thanks to its well differentiated lifestyle brand and broad customer appeal, Bridgepoint believes that Fat Face is scaleable through further store rollout in the UK and internationally. Additionally, there are good prospects for further value creation by expanding the concept into licencing and wholesale ventures. Leeds Bradford International Airport serves the UK s Yorkshire and Humberside regions. It was acquired following a decision by its five local council owners to privatise the airport in a transaction totalling 214 million. The airport, which operates from a prosperous but under-exploited catchment area, has enjoyed strong traffic growth that is expected to continue over the next five years. Following the acquisition, Bridgepoint announced a 100 million expansion plan designed to create additional value through investment in, and development of, the existing airport infrastructure as well as its route network. The aim is to increase the number of destinations and frequency of flights. Passenger capacity is expected to double to seven million passengers by 2015.

7 10 11 Who we ve worked with this year (continued) Infinitas Learning (formerly Wolters Kluwer Education) Educational publisher Media Netherlands Acquired March million enterprise value Revenue: 317 million No. of employees: 1,297 Diaverum (formerly Gambro Healthcare) Dialysis care services group Healthcare Sweden Acquired May 2007 Enterprise value undisclosed Revenue : 239 million No. of employees: 3,200 Infinitas Learning (formerly Wolters Kluwer Education) is a European educational publisher and leading provider of primary, secondary and vocational education material, content and services. It was acquired in March 2007 in a transaction totalling 774 million. The company, previously part of a quoted Dutch-based global information services and publishing group, offers bundled content packages (textbooks, teaching aids, testing and assessment tools and revision aides) in both electronic and traditional print format to 93,000 schools in seven European countries. There are significant opportunities, driven by increased government expenditure on education in Europe, to accelerate expansion in e-learning, new product development and through selective market consolidation. Diaverum (formerly Gambro Healthcare) is Europe s No 2 dialysis care provider with 170 clinics in 14 countries serving over 13,200 patients. It was acquired for an undisclosed sum in May The opportunity to acquire the company arose following the take-private of its Swedish quoted parent company whose new owners deemed the dialysis business to be non-core. The company, which operates in a growing but fragmented sector, treats patients suffering from end stage renal disease who must undergo dialysis treatment on a regular basis to eliminate toxins and fluids arising from failing kidney function. As national healthcare systems move to more efficient outsourced dialysis solutions, there are significant opportunities to expand Diaverum s footprint in Europe through accelerated organic growth in existing clinics as well as greenfield expansion and selective bolt-on acquisitions.

8 12 13 Who we ve worked with this year (continued) Global Design Technologies CTL Logistics Aerospace component supplier Aerospace France Acquired May million enterprise value Revenue: 79 million No. of employees: 667 Private rail logistics company Transport Poland Acquired November 2007 Enterprise value undisclosed Revenue: 249 million No. of employees: 2,500 Global Design Technologies is a Franco-American, market-leading aerospace component supplier. It was acquired in May 2007 in a transaction totalling 254 million. The company operates from sites in France and the US and manufactures permanent couplings used by aerospace manufacturers to connect hydraulic, air, fuel or other tubing in all types of aircraft. The business has also diversified into the power generation market where its products are typically used in electricity substation construction. This represents an attractive opportunity to work with a market leader with valuable intellectual property and sustainable competitive advantages in a global high growth sector. Further value will be created through investment in organic growth, operational improvement, greater coordination of French and US activities, potentially followed by selective acquisition opportunities. CTL Logistics is Poland s leading private rail logistics company and one of the largest private rail operators in Europe. It was acquired in November 2007 when CTL s owner sought to introduce an institutional investor to drive future expansion as well as to realise some of the value he had created in the business. The company provides tailor-made logistics solutions focusing on rail transportation, freight forwarding, siding management and waste disposal for the coal & fuel, fuels & oil, chemicals, construction, materials, and steel industries. The Polish rail freight market is the second largest in Europe and the share of private operators such as CTL is anticipated to grow strongly over the next five years. CTL is also viewed as a platform for further international growth as it begins to exploit its geographic footprint, covering some of the densest freight corridors in Europe, as well as its strategic position in Poland as a potential East-West rail corridor.

9 14 15 Some of the businesses we ve sold in 2007 Safestore IPO and partial exit Self-storage provider Support services UK Acquired August million enterprise value Revenue: 96 million No. of employees: 334 Alliance Medical Exit Diagnostic imaging service provider Healthcare UK Acquired January million enterprise value Revenue: 191 million No. of employees: 690 Marathon Exit Producer and distributor of TV programmes Media France Acquired December million enterprise value Revenue: 110 million No. of employees: 143 Safestore, the largest self-storage group in the UK and the second largest in Europe, listed on the London Stock Exchange, in March 2007 at an implied enterprise value of 661 million. The listing came three and half years after Safestore was the subject of a Bridgepointbacked 39.8 million management buyout and de-listing from AIM. The IPO allowed Bridgepoint to sell 53% of its holding; to date the investment has achieved a realised cash multiple of 3.3x cost. The company was transformed with four acquisitions, the most significant of which was the 210 million purchase and de-listing of Mentmore plc. Bridgepoint had originally identified the self-storage sector as an emerging but largely underconsolidated industry in Europe with high growth potential. Under Bridgepoint ownership and a strong management team, Safestore more than tripled revenues and earnings and the number of stores rose four-fold. Today, Safestore provides around 30,000 domestic business customers with individual, secure self-storage space and related services in the UK and around Paris. Alliance Medical is the leading European provider of diagnostic imaging services (such as MRI, CT and PET scans) to private and publicly owned hospitals across Europe. Founded in 1989, it was the subject of a Bridgepoint-backed buyout in January 2001 when two existing institutional shareholders decided to exit their investment. Bridgepoint s value creation plan for the business focused on Alliance Medical s development of the European outsourced diagnostic market. This saw the company build on its leading positions in each of its key markets by delivering high quality service with state of the art technology and expanding its activities via selective acquisition of independent diagnostic clinics in Europe. Since Bridgepoint s original acquisition, the company successfully consolidated its UK market position and expanded into Continental Europe through 16 acquisitions, most notably in Ireland, Italy, Germany, the Netherlands and Spain, to become the only truly pan-european operator. Under Bridgepoint ownership, Alliance Medical increased revenue six fold and profits five fold. The number of scanners increased from 31 on acquisition in 2001 to 190 in 2007; employee numbers rose from 177 to 690. Alliance Medical was sold to Dubai International Capital in November 2007 in a transaction totalling 600 million giving Bridgepoint investors a multiple in excess of 4x on their original investment. Marathon Group is a leading French producer and distributor of TV programmes in drama, animation, documentaries and prime time entertainment. It was the subject of a buy and build strategy executed by Bridgepoint which saw it make four acquisitions to create a market leader with a portfolio of successful TV programming. Télé Images, the original platform acquisition made by Bridgepoint in December 1998, provided the opportunity to implement the strategy, using the company s offering of an extensive library of high quality TV programming. By 2000, Télé Images had acquired GTV, the programme production arm of a larger media group (Gaumont), thereby boosting the group s offer in prime time programmes. In 2004, Adventure Line Productions, a producer of TV games and entertainment shows, was acquired by the group. In 2006, all three businesses were merged with Marathon, France s most successful independent TV producer in drama and animation, transforming the group into the clear independent leader in the French TV production sector. In July 2007 Marathon was acquired by Italian publishing and media group De Agostini for an undisclosed sum as part of their ambition to build a European leader in audiovisual production.

10 16 About Bridgepoint 17 > Over 65 investment professionals led by 19 partners > 8 offices across Europe in Frankfurt, London, Luxembourg, Paris, Madrid, Milan, Stockholm and Warsaw > 8 billion of committed capital raised to date from a world-class investor base > A portfolio of businesses with 51,000 employees across Europe > Completed over 125 transactions in the last ten years worth over 18 billion > Made over 100 add-on acquisitions for investments since 2000 > Returned over 7 billion to investors since 2000 We communicate regularly with our stakeholders through our magazine, The Point, To obtain a copy go to www. bridgepoint.eu