Quest for Growth : Semi-annual report 30 June 2023

QUEST FOR GROWTH

Semi-annual report 30 June 2023

PRESS RELEASE

27 July 2023 / 5.40 PM

The enclosed information constitutes regulated information as defined in the Royal Decree of 14 November 2007 regarding the duties of issuers of financial instruments which have been admitted for trading on a regulated market

MANAGER'S

REPORT

VALUATION QUEST FOR GROWTH

Stock Price		Net asset value/share
30/06/2023	30/06/2023		31/03/2022		31/12/2022
5.46 EUR	7.78 EUR		7.98 EUR		7.93 EUR
Number of shares	18,733,961		18,733,961		18,199,212

Discount of the share price versus Net Asset Value: 29.81%

Source: Estimate by Capricorn Partners NV

Results

Quest for Growth closed the first six months of its financial year with a net profit of € 1,452,533. Return on equity was 1.00%, not taking into account an increase in outstanding shares of around 2.9%. Quest for Growth's share price decreased by about 9% over the first six months of the year to a closing price of € 5.46 on 30 June 2023. The discount of the share price in relation to the net asset value rose to 29.8% at the end of the first six months, compared to 24.3% at the end of 2022.

Simplified capital structure, increased number of ordinary shares and reduced rights for preference shares

The Extraordinary General Meeting of 30 March 2023 has made the following unanimous decisions:

1. The preferred class of shares A and the preferred class of shares B are merged into one class of preference shares.
2. Of the 1,000 existing preference shares, 500 will be divided into 535,249 ordinary shares and lose their rights as preference shares. As a result, 535,249 ordinary shares will be added without increasing capital, which means the intrinsic value of each ordinary share is diluted by 2.86%.
3. These additional 535,249 ordinary shares are subject to a lock-up obligation. Every six months, 25% of the non-transferability will be eliminated so that the shares are fully marketable as from 30 March 2025.
4. Another 500 preference shares remain which continue to be reserved as variable incentive for the active management and on which a purchase option rests to the benefit of the Managing Company.
5. The 500 preference shares are entitled to propose two candidate directors of the board of directors of QfG.
6. The surplus share of the dividend that is distributed to the preferred shareholders will no longer be calculated based on the share of the net profit which exceeds the amount necessary to pay all shareholders a reimbursement which is equal to a nominal value of 6% on an annual basis, but will be calculated based on the share of the dividend which exceeds the amount necessary to pay the shareholders a reimbursement equal to a nominal value of 6% cumulative and recoverable for previous years in which there were insufficient or no dividend distributions; this is to be calculated from 1 January 2023.
7. The surplus preferential dividend entitlement is reduced from 20% to 10% so that the fraction of the surplus share of the dividend credited of all shareholders is raised from 80% to 90%.

Market environment

The European stock market index STOXX Europe 600 Net Return rose by 10.9% during the first six months of 2023. The STOXX Europe Small 200 Net Return increased by 5.7%. The American S&P 500, converted to EUR, achieved a total return of 14.7%. While the first quarter was still marked by problems in the banking sector and high volatility in equity markets, the bulls regained the upper hand in the second quarter. Fuelled by a technological breakthrough in artificial intelligence, the US S&P500 ended at its highest level in more than a year. The market mainly touts US Big Tech companies as the big winners from the breakthrough in AI. The Nasdaq even achieved a 29.8% return over the first six months, converted into EUR. European stock markets, for their part, seem less exposed to AI and lagged behind their US counterparts over the first six months. Small & Mid Caps did not underperform the market so far in 2023. Investors seem to prefer the more liquid Large Caps since inflation started to accelerate in Europe about 2 years ago now.

Lei 19 | 3000 Leuven | Belgium | T: [phone] | www.questforgrowth.com | [e-mail]	1

Investments in quoted equities

The estimated gross performance of the listed shares stands at about +5%. The portfolio's outliers over the first half of the year were TKH (+28%), Swiss technology company LEM (+23%) and B&C Speakers (+21%), an Italian manufacturer of inverters for speakers. B&C Speakers is heavily dependent on the music industry, which, after several years without concerts and festivals, is on a marked recovery now that lock- downs are definitely a thing of the past.

The main portfolio decline was Steico (-32%), the German producer of insulation materials based on wood pulp. Steico is facing increased competition in its German home market while at the same time the construction industry is facing falling demand. Umicore (-25%) is seeing precious metals prices normalise, putting pressure on the profitability of its important recycling business. Strate (-24%), a producer of machines for medical diagnostics, is still struggling with the declining demand for COVID tests.

During the first semester, Quest for Growth bought one new position in SII (Société pour l'Informatique Industrielle) and withdrew from the Swiss company Gurit and the German software giant SAP. Gurit, a supplier in the wind power sector, saw its profitability decline significantly over the past two years. SII is a French service provider to various end sectors. The company focuses on technology support and IT consultancy to companies in the aviation, telecoms and utilities sectors, for instance. In recent years, SII has achieved an above-average growth, mainly through geographic expansion in Eastern Europe. SII's founders are still on board and opt for a decentralised structure with a focus on local entrepreneurship to expand the business further. SII has a considerable net cash position, and despite the strong growth, the share is valued low.

Investments in venture and growth capital

The Liege-based company Miracor Medical, specialised in interventional cardiology, was unable to attract new investors. The company has halted the pre-marketing of its PiCSO device and let go some of its employees. The value of Miracor Medical was already fully written off at the end of the 2022 financial year.

After the acquisition of HalioDx in 2021, part of the escrow amount was received during the second quarter of 2023. The remaining part will be paid out later and is currently valued at a 10% discount.

Investments in venture and growth funds

Confo Therapeutics was able to conclude two successful agreements at the Capricorn Health-Tech Fund. Confo Therapeutics, which has developed a platform for the discovery of medicines focused on G protein-linked receptors (GPCRs), announced a global licensing agreement with Eli Lilly to finance the further phases of the clinical development of a medicine for treating pain due to nerve damage. The company subsequently also announced a collaboration with the large Japanese pharma company Daiichi Sankyo for the development of medicines to combat neurological illnesses. For both agreements, Confo Therapeutics will receive an advance payment and milestone payments.

Following the 2017 sale of Ogeda to Astellas Pharma in the Capricorn Health Tech Fund, a potential milestone payment is still outstanding. Astellas Pharma has published that its application for a new drug for fezolinetant has been approved with the US FDA. As a result, the total amount of the milestone was released by Astellas Pharma into an escrow account. This escrow account will be released and paid out to Ogeda's former shareholders after one year. The valuation has been positively adjusted as a result.

During the second quarter of 2023, Capricorn Digital Growth Fund invested in the Belgian company VoxelSensors. The company is developing a revolutionary 3D perception system for fusing physical and digital worlds. Their Switching Pixels™ system is a revolutionary sensor architecture designed for laser beam scanning-based 3D perception and offers low latency at low power consumption, as is required for future extended reality applications.

On Friday 10 March, Silicon Valley Bank (SVB) in California was declared bankrupt after a run on the bank. This bank, although little known in Belgium, is globally one of the key money lenders for the tech industry in the United States. Moreover, the balances of many innovative start-ups and scale-ups - often after rounds of capital - were held at this bank. Several portfolio companies of the Capricorn venture capital funds were also customers at SVB. Because of the bailout by the American government, the bank will continue under the name Silicon Valley Bridge Bank and the immediate danger has passed. There is no direct damage for our portfolio companies. The companies have adjusted their cash management strategies.

Indirectly, however, the SVB incident has had an impact on venture capital by attracting attention to the fragility of the ecosystem - and this, after the succession of the pandemic, global supply chain problems, rising inflation and rising interest, and the Russian-Ukraine war.

Lei 19 | 3000 Leuven | Belgium | T: [phone] | www.questforgrowth.com | [e-mail]	2

Prospects

The past months have seen a period of recovery in global stock markets. For the time being, the predicted economic doom scenarios appear to be too pessimistic. The tensions that quickly arose in both the American and the European banking sector are obvious offshoots of the restrictive monetary policy of recent months, but were limited to some specific problem cases in the sector. The total impact of that restrictive monetary policy on the global economy is currently still difficult to determine. In addition, geopolitical topics and the higher than average inflation and interest level continue to be prominently featured as additional uncertainties.

Relatively seen, the general valuation level of the European exchanges continues to be attractive for an investor with a sufficiently long hori- zon. The STOXX 600 Europe notes a price-earnings ratio of 12.6. We believe that Quest for Growth's theme-based approach, as compared to the broad European stock market, offers good prospects. Our focus on small caps with sufficiently high earning power, good solvency and reasonable valuation multiples remain the core of our strategy.

EVOLUTION SHARE PRICE AND NET ASSET VALUE

60%

50%

40%

30%

20%

10%

0%

-10%

-20%

PERFORMANCE PER SHARE IN QUOTED PORTFOLIO SINCE 31/12/2022

30

20

10

0

%

-10

-20

-30

STEICO SE

UMICORE

STRATEC SE

ABO WIND AG

MAYR-MELNHOF KARTON AG

ROCHE HOLDING AG-GENUSSCHEIN

THERMADOR GROUPE

EVS BROADCAST EQUIPMENT S.A.

FINANCIERE DE TUBIZE

NEXUS AG

SOCIETE POUR L'INFORMATIQUE

QfG quoted (e)

STOXX Europe Small 200 NR

CEWE STIFTUNG & CO KGAA

KERRY GROUP PLC-A

DATRON AG

STOXX Europe 600 NR

NEDAP N.V.

EQUASENS

MELEXIS NV

B&C SPEAKERS SPA

JENSEN-GROUP NV

WOLTERS KLUWER

LEM HOLDING SA-REG

-40

TKH GROUP NV-DUTCH CERT

Bron: Bloomberg, Capricorn Partners

QfG Quoted (e): estimate excluding costs and cash

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Financial assets breakdown at 30 June 2023

QUOTED EQUITIES
			Changes				in % of
		Number of	since			Valuation	Net Asset
Company	Sector / Market	shares	31/12/2022	Currency	Share price	in €	Value
	Cleantech
ABO WIND	Deutsche Börse (Xetra)	37,607	-23,180	€	59.6000	2,241,377	1.54%
FRX INNOVATION	TSXV (Canada)	493,842	0	CAD	0.2700	92,499	0.06%
JENSEN GROUP	Euronext Brussels	135,876	-17,000	€	30.8000	4,184,981	2.87%
KERRY GROUP	Euronext Dublin	44,250	2,750	€	89.3800	3,955,065	2.71%
MAYR-MELNHOF KARTON	Deutsche Börse (Xetra)	22,500	0	€	134.2000	3,019,500	2.07%
STEICO	Deutsche Börse (Xetra)	65,471	2,138	€	30.3500	1,987,045	1.36%
THERMADOR	Euronext Paris	35,444	0	€	82.4000	2,920,586	2.00%
UMICORE	Euronext Brussels	95,000	20,000	€	25.5900	2,431,050	1.67%
						20,832,103
	Digital
B&C SPEAKERS	Borsa Italiana	165,004	0	€	14.1500	2,334,807	1.60%
CEWE STIFTUNG	Deutsche Börse (Xetra)	55,309	-9,986	€	91.2000	5,044,181	3.46%
DATRON	Deutsche Börse (Xetra)	119,000	0	€	11.7000	1,392,300	0.96%
EVS	Euronext Brussels	161,125	27,500	€	21.4000	3,448,075	2.37%
LEM HOLDING	SWX Swiss Exchange	1,446	0	CHF	2,240.0000	3,309,195	2.27%
MELEXIS	Euronext Brussels	51,289	0	€	89.9000	4,610,881	3.16%
NEDAP	Euronext Amsterdam	83,148	-10,000	€	58.2000	4,839,214	3.32%
SII	Euronext Paris	70,746	70,746	€	53.9000	3,813,209	2.62%
TKH GROUP	Euronext Amsterdam	143,570	10,000	€	45.4200	6,520,949	4.47%
WOLTERS KLUWER	Euronext Amsterdam	39,000	-11,000	€	116.3000	4,535,700	3.11%
						39,848,511
	Health
EQUASENS	Euronext Paris	67,330	0	€	84.7000	5,702,851	3.91%
NEXUS	Deutsche Börse (Xetra)	62,919	3,518	€	56.5000	3,554,924	2.44%
ROCHE	SWX Swiss Exchange	16,500	0	CHF	273.5000	4,610,492	3.16%
STRATEC	Deutsche Börse (Xetra)	36,003	6,000	€	63.4000	2,282,590	1.57%
TUBIZE	Euronext Brussels	72,588	8,000	€	71.0000	5,153,748	3.54%
						21,304,605
						81,985,218	56.26%

VENTURE & GROWTH CAPITAL

				Changes			In % of Net
Equity	Sector			since 31/12/2022	Currency	Valuation in €	Asset Value
DMC	Cleantech				$	1,582,918		1.09%
ECLECTICIQ	Digital				€	1,506,026		1.03%
FINQUEST	Digital				$	1,840,604		1.26%
FRUITCORE ROBOTICS	Diversified				€	2,000,327		1.37%
NGDATA	Digital			106,000	€	1,133,114		0.78%
QPINCH	Cleantech				€	2,137,498		1.47%
REIN4CED	Cleantech			520,057	€	1,411,166		0.97%
SENSOLUS	Digital				€	2,275,481		1.56%
						13,887,133		9.53%
				Changes			In % of Net
Debt	Sector			since 31/12/2022	Currency	Valuation in €	Asset Value
FINQUEST	Digital			300,000	$	276,091		0.19%
						276,091		0.19%
	Lei 19 |	3000 Leuven |	Belgium |	T: [phone] | www.questforgrowth.com |	[e-mail]	4

VENTURE & GROWTH FUNDS
		Changes
		since		Last valuation		In % of Net
		31/12/2022	Currency	date	Valuation in €	Asset Value
CAPRICORN PARTNERS	Sector
CAPRICORN CLEANTECH FUND	Cleantech	-625,000	€	30/06/2023	334,292	0.23%
CAPRICORN DIGITAL GROWTH FUND	Digital		€	30/06/2023	6,480,237	4.45%
CAPRICORN FUSION CHINA FUND	Diversified	+453,750	€	30/06/2023	2,888,368	1.98%
CAPRICORN HEALTH-TECH FUND	Health		€	30/06/2023	11,549,333	7.93%
CAPRICORN ICT ARKIV	Digital		€	30/06/2023	5,734,227	3.94%
CAPRICORN SUSTAINABLE CHEMISTRY FUND	Cleantech	+1,600,000	€	30/06/2023	12,883,727	8.84%
THIRD PARTY FUNDS
CARLYLE EUROPE TECHNOLOGY PARTNERS II	Diversified	-98,113	€	31/03/2023	10,389	0.01%
LIFE SCIENCES PARTNERS III	Health		€	31/03/2023	143,000	0.10%
LIFE SCIENCES PARTNERS IV	Health		€	31/03/2023	625,000	0.43%
					40,648,572	27.89%

PORTFOLIO OVERVIEW

Quoted equities

Venture & Growth capital

Venture & Growth Capital Funds

Change in valuation Venture & Growth capital

Financial Assets

Cash

Other net assets & liabilities

Net Asset Value

Net Asset Value per share (€)

Stock price (€)

Discount %

81,894,218	56.26%
14,163,224	9.72%
40,648,572	27.89%
-1,063,580	-0.73%%
135,733,435	93.15%
8,550,752	5.87%
1,437,296	0.99%
145,721,483	100.00%
7.78
5.46
-29.81%

	Cash & Other
	net assets &
	liabilities
Health	7%
Cleantech
25%
30%
	Venture &
	Growth	Quoted
	Capital Funds
	equities
Diversified	27%
56%
2%
	Venture &
Digital	Growth
43%	capital
	10%

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