CapMan Plc Stock Exchange Release 7 May 2008 at 9.30 a.m.
CapMan Plc Group's Interim Report January-March 2008
Financial performance and major events during the review period:
- The Group's turnover totalled MEUR 7.2 (Jan-Mar 2007: MEUR 28.1).
The comparable period in 2007 included carried interest income of
MEUR 21.0 as a result of CapMan Real Estate I fund's real estate
portfolio sale.
- Operating profit was MEUR 0.4 (25.4 following the MEUR 21.0 carried
interest from CapMan Real Estate I fund).
- Profit before taxes totalled MEUR 0.7 (26.7) and after taxes MEUR
0.5 (19.9).
- Parent company shareholders' share of profit was MEUR 0.5 (14.3),
and earnings per share based on it were 0.6 cents (18.5 cents).
- Capital under management grew in the first quarter by 38% to MEUR
3,016.7 (2,190.5 on 31 December 2007), through CapMan's establishment
of a new MEUR 835 private equity fund focusing on hotel properties,
CapMan Hotels RE Ky. The aggregate size of the funds under management
was MEUR 3,853.6 on 31 March 2008 (2,996.1 on 31 March 2007).
- CapMan Plc changes the practise for reporting capital under
management. In future capital under management will refer to funds'
remaining investment capacity and capital already invested at
acquisition cost. The figure excludes capital from which the funds
have already exited. The fund size will refer to the original capital
of the fund, including capital from which the fund has already
exited.
- CapMan will invest in its future funds 2-10 per cent of their
original capital.
CEO Heikki Westerlund comments the financial performance in the
review period and future prospects:
"The profit for the period was clearly lower than in the comparable
period last year, largely due to the high volume real estate
portfolio sale in the first quarter of 2007. Such large quarterly
fluctuations are typical in our business operations.
CapMan's operational outlook for the longer term remains favourable,
as the demand for alternative assets has continued its growth. An
increasing number of institutional investors are allocating a growing
proportion of their investments to this asset class. Our new product
development projects in Russia and on publicly listed markets have
made concrete progress and are now in the fundraising phase.
It can be seen in the investment and exit activities of our funds
that the effects of the international credit crunch are emerging in
CapMan operating areas. We believe, however, that our investment
teams will continue to have a good basis for making new investments.
Nevertheless, the impact on the exit market will be reflected in
lower prices and longer times to exit. If the exit market continues
to slow, we expect the carried interest income to fall below the 2007
figure."
Business operations
CapMan is an alternative asset manager with two business areas:
CapMan Private Equity, which manages funds that invest in portfolio
companies, and CapMan Real Estate, which manages funds that invest in
real estate and also provides real estate consulting. The guiding
principle for funds' investment activities is to directly and
actively work towards increasing the value of investments.
Information about each business area is reported in a separate
segment in the company's interim reports.
CapMan Plc's income is derived from management fees paid by funds,
from carried interest received from funds, from returns on fund
investments made from CapMan Plc's own balance sheet, and from income
generated by real estate consulting. There can be considerable
quarterly fluctuation in carried interest as well as in the fair
value of fund investments. For this reason CapMan's financial
performance should be analysed over a longer time span than the
quarterly cycle.
Turnover and profit in January-March 2008
CapMan's turnover for the review period was MEUR 7.2 (MEUR 28.1 for
Jan-Mar 2007). The main factors affecting turnover and profit are
described in more detail in the relevant sections of this Interim
Report.
The Group's operating profit totalled MEUR 0.4 (25.4). Profit before
taxes amounted to MEUR 0.7 (26.7) and the profit after taxes to MEUR
0.5 (19.9).
The parent company shareholders' share of the profits was MEUR 0.5
(14.3), and earnings per share based on it were 0.6 (18.5) cents.
The quarterly breakdown of turnover and profit as well as turnover
and profit by segment are presented in the tables section of this
Interim Report.
Management fees, real estate consulting income and operating expenses
The amount of management fees grew during the review period to MEUR
6.3 (5.8). Growth in management fees was largely due to establishment
of the new CapMan Hotels RE real estate fund during the review
period. Management fees also increased through the fundraising for
CapMan Technology 2007 fund and investments made by the CapMan RE II
fund.
Income from real estate consulting totalled MEUR 0.7 (0.6). The
aggregate total of management fees and income from real estate
consulting was MEUR 7.0 (6.4), and covered the operating expenses of
MEUR 6.7 (MEUR 6.8 taking into results-linked bonuses for the
comparable period). Comparable expenses rose slightly as a result of
the organisation's growth.
Carried interest
CapMan receives carried interest income from funds that have already
repaid paid-in capital to their investors and paid an annual
preferential return on the capital. No exits were made from funds
generating carried interest during the review period and no carried
interest was generated. Carried interest for the comparison period
amounted MEUR 21.2, which accrued primarily through the sale of
CapMan Real Estate I fund's real estate portfolio.
There were no exits during the review period that would have moved
funds closer to generating carried interest. The status of funds
managed by CapMan is presented in more detail in Appendix 1.
Income from CapMan's own fund investments and investment commitments
During the first quarter of 2008 the fair value changes of fund
investments produced a slight loss. The weak market early in 2008 was
reflected in returns from fund investments through the decreasing
market valuations of the investment targets' listed peer groups.
Funds' portfolios also saw positive value adjustments for individual
companies.
Fair value changes related to fund investments were MEUR -0.1 (4.1).
The change in fair value during the comparable period was
exceptionally large and broadly attributable to a value adjustment in
CapMan Equity VII fund's portfolio company Moventas, from which there
was a partial exit during the comparison period. There were no exits
by funds from their investments during the review period, and
consequently no realised returns (comparable period: MEUR 0.3). Fund
investments made from CapMan's own balance sheet had an overall
impact of MEUR -0.1 (4.4) on profit for the period. CapMan Plc's
financial target is a 15% annual return to fund investors.
CapMan made new investments in its funds during the review period
amounting to MEUR 10.8 (7.4). Most of these investments were made in
CapMan Buyout VIII and CapMan Hotels RE funds. The aggregate fair
value of CapMan's fund investments from its own balance sheet was
MEUR 53.5 on 31 March 2008 (MEUR 38.4 on 31 March 2007).
CapMan committed MEUR 5 to the CapMan Hotels RE funds during the
review period. The amount of outstanding investment commitments at
the end of the review period was MEUR 50.9 (58.1). The aggregate fair
value of existing investments and outstanding investment commitments
on 31 March 2008 was MEUR 104.4 (MEUR 96.4 on 31 March 2007).
Investments in portfolio companies are valued at fair value in
accordance with the guidelines of the European Private Equity &
Venture Capital Association (EVCA) and real estate assets are valued
in accordance with the value appraisements of external experts, as
detailed in Appendix 1.
Balance sheet and financial position on 31 March 2008
There were no significant changes in CapMan's balance sheet in
January-March 2008, and the balance sheet totalled MEUR 121.7 the end
of the review period (MEUR 114.2 on 31 March 2007). Non-current
assets increased during the review period to MEUR 88.9 (60.6), mainly
due to growth in investments made in funds and receivables. Long-term
receivables amounted to MEUR 20.3 (12.1), of which MEUR 16.1 (9.0)
was loan receivables from the Maneq funds.
Current assets declined to MEUR 32.9 (53.7) owing to dividend
payments made to minority shareholders and investments made in funds.
Liquid assets (cash and bank plus other financial assets at fair
value through profit and loss) amounted to MEUR 19.4 (43.7). In the
comparison period liquid assets were exceptionally high due to the
carried interest income received from CapMan Real Estate I fund as a
result of its real estate portfolio sale.
Interest-bearing liabilities increased to MEUR 19.0 (10.0), as CapMan
pursued its strategy of using debt financing to finance some of its
investments in funds. The amount of trade and other payables rose to
MEUR 43.0 (28.1), partly due to tax reserves and dividend payment
liabilities. The Group's interest-bearing net debts amounted to MEUR
-0.4 (-33.7).
Key figures
CapMan's equity ratio on 31 March 2008 was 47.6% (61.9% on 31 March
2007). The equity ratio fell below the 50% target level owing to a
dividend liability. If the dividend had been paid in the first
quarter, the equity ratio would have been 53.5%. Return on equity was
0.8% (32.0%) and return on investment was 1.6% (36.7%). The company
aims for a return on investment of over 25%.
31 Mar 08 31 Mar 07 31 Dec 07
Earnings per share, cents 0.6 18.5 23.8
Diluted, cents 0.6 18.2 23.7
Shareholders' equity/share,
cents 69.1 79.5 86.4
Share issue adjusted
number of shares 79,968,818 77,158,698 78,142,867
Number of shares
at the end of period 79,968,818 77,158,698 79,968,819
Number of shares outstanding 79,968,818 77,158,698 79,968,819
Return on equity, % 0.8 32.0 38.9
Return on investment,% 1.6 36.7 44.2
Equity ratio, % 47.6 61.9 57.6
Net gearing, % -0.7 -50.0 -27.5
New products and product development
On 18 January 2008 CapMan Plc established CapMan Hotels RE Ky, a new
private equity real estate fund that invests in hotel properties. The
size of this hotel fund was MEUR 834.9 on the establishment date, and
can rise to a maximum EUR 1.1 billion. In conjunction with its
establishment, the fund acquired a total of 39 hotel properties worth
altogether MEUR 805 from Northern European Properties Ltd (NEPR).
Seven professionals in the hotels business transferred to the CapMan
Group's employment. CapMan Hotels RE Ky's management company is
CapMan Hotels RE Oy, of which CapMan Plc owns 80%. Establishment of
the fund is forecast to have a slightly positive impact on CapMan's
profit for the current year, as a result of the management fees paid
by the fund.
During the review period CapMan continued to explore opportunities
for expanding operations into Russia, and for establishing a fund for
investing in publicly listed markets. At the end of March the
transfer of Jukka Ruuska, President of the OMX Nordic Exchanges and
the Stockholm Stock Exchange, to CapMan was announced. Mr Ruuska will
head CapMan's business development project to establish an equity
fund investing in Nordic companies listed on public markets. The fund
will create value with active ownership, for example by utilising
methods and tools from the private equity environment. Ruuska will
start at CapMan in September 2008 at the latest. The company expects
to finalise both of the aforementioned projects during 2008.
Reporting of capital under management as from 1 January 2008
CapMan Plc will change the principles for reporting capital under
management. In future capital under management or assets under
management will refer to funds' remaining investment capacity and
capital already invested valued at acquisition cost. The figure
excludes capital from which the funds have already exited. The
capital under management increases with new funds raised and declines
through exits. Return expectations are directed to the capital under
management both in the form of management fees and any possible
carried interest.
In future the terms funds under management or original capital of a
fund will be used to refer to the original size of a fund, including
capital from which the fund has already exited. The tables below set
out the development of capital under management and of funds under
management in euro terms since 2003.
CapMan's target is to increase the capital under management by an
average 15% a year.
Capital and funds under management 2003 - 31 March 2008, MEUR
Capital under Funds under
management Growth, % management Growth, %
31 Dec 2003 980.1 1,153.0
31 Dec 2004 1,051.4 7.3% 1,274.1 10.5%
31 Dec 2005 1,844.9 75.5% 2,173.4 70.6%
31 Dec 2006 2,115.8 14.7% 2,544.4 17.1%
31 Dec 2007 2,190.5 3.5% 3,016.7 18.6%
31 Mar 2008 3,016.7 37.7% 3,853.6 27.8%
Capital under management has grown between 2003 and 2007 by an
average 24.9% a year. The foreign currency items in the funds'
capital under management have been transferred for the entire period
at the average exchange rate of 31 March 2008.
Capital under management on 31 March 2008
Capital under management grew by some 38% in January-March as a
result of the establishment of the CapMan Hotels RE fund, and
amounted to MEUR 3,016.7 on 31 March 2008 (MEUR 2,190.5 on 31
December 2007 and MEUR 2,237.6 on 31 March 2007). Of this sum MEUR
1,386.2 (MEUR 1,442.0) was in funds making investments in portfolio
companies and MEUR 1,630.5 (MEUR 795.6) in real estate funds. Capital
was raised during the review period as follows:
Fund Estab- Capital Capital CapMan CapMan
lished 31.12.2007 31.3.2008 Group's Group's
commit- carried
ment interest
(net*)
CapMan Technology 2007 9.2.2007 140.3 142.3 15.0 10%
CapMan Hotels RE Ky 18.1.2008 0.0 834.9 5.0 12%
* Taking into account carried interest due to management companies'
other owners and investment teams after the fund has started
generating carried interest.
More detailed information about managed funds and their investment
activities is presented in Appendices 1 and 2.
Funds and mandates managed by associated company Access Capital
Partners
The aggregate size of funds and private equity mandates managed by
Access Capital Partners rose during the review period to MEUR 2,498.5
(MEUR 1,662.1 on 31 March 2007). The funds' capital has grown since
the review period, largely due to growth in private equity mandates
and the establishment of the new fund, ACF IV Growth Buy-out Europe.
The fund's fundraising will continue in 2008. The funds managed byAccess Capital Partners are described in more detail in Appendix 3.
CapMan Plc owns 35% of the capital stock of Access Capital Partners.
The shares are valued in the balance sheet at their acquisition cost.
Personnel
On 31 March 2008 CapMan employed altogether 119 (101) people, of whom
94 (74) worked in Finland and the remainder worked in other Nordic
countries. The establishment of the new hotel fund in particular
contributed to growth in the number of personnel. A breakdown of
personnel by country and by team is presented in the tables section
of this Interim Report.
Shares and share capital
There were no changes in CapMan Plc's share capital or number of
shares during the review period. Share capital on 31 March 2008 was
MEUR 771,586.98 (MEUR 771,586.98 on 31 March 2007). The number of
listed B shares was 73,968,819 and the number of unlisted A shares
6,000,000. The company's B shares have one vote per share and A
shares 10 votes per share.
No shares were subscribed for by exercising 2003A or 2003B options
during the review period. Another 575,572 B shares can still be
subscribed for with 2003A options 625,000 B shares with 2003B
options. The subscription period for 2003A options expires on 31
October 2008, and for 2003B options on 31 October 2009. The
subscription prices of the shares will be entered in the invested
unrestricted shareholders' equity.
Shareholders
CapMan Plc had 4,490 shareholders on 31 March 2008 (4,813 on 31 March
2007). There were no significant changes in the ownership of the
company during the review period and no flagging notices were issued.
Neither CapMan Plc nor any of its subsidiaries held the company's own
shares.
Market capitalisation and trading
CapMan Plc's B shares had a closing price of EUR 2.55 on 31 March
2008 (EUR 3.48 on 31 March 2007). The average price during the review
period was EUR 2.79 (3.20). The highest price was EUR 3.40 (3.64) and
the lowest EUR 2.40 (2.86). The trading of the company's shares, in
terms of volume and value, declined appreciably with respect to the
comparable period. Altogether 4.2 million (8.8 million) CapMan Plc B
shares were traded during the review period for a total of MEUR 11.6
(28.2).
The market capitalisation of CapMan Plc B shares on 31 March 2008 was
MEUR 188.6 (242.1). The market capitalisation of all shares, in which
the A shares are valued at the closing price for the review period of
B shares, was MEUR 203.9 (269.9).
Decisions adopted by the Annual General Meeting
CapMan Plc's Annual General Meeting (AGM) was held in Helsinki on 27
March 2008. The meeting confirmed the 2007 financial statements and
granted discharge from liability to the Board of Directors and the
CEO for the 2007 financial year.
The AGM accepted the Board's proposal that a dividend of EUR 0.16 per
share be distributed to shareholders for the 2007 financial year. The
dividend was paid on 8 April 2007. CapMan Plc's target is to
distribute at least 50 per cent of the net profit as dividend, and
the dividend paid corresponds to 67% of the profit per share.
The AGM confirmed that the Board consists of six members. Sari
Baldauf, Tapio Hintikka, Lennart Jacobsson, Teuvo Salminen and Ari
Tolppanen will continue as Board members. Conny Karlsson was elected
as a new member to the Board of Directors.
PricewaterhouseCoopers Oy, authorised public accountants, with Jan
Holmberg, APA as the Lead Auditor, was elected as CapMan Plc's
auditor. Terja Artimo, APA, from the same auditing firm, was elected
as deputy auditor.
The AGM decided to issue stock options to the key personnel of the
company and its subsidiaries (Stock Option Program 2008). The Board
of Directors will decide on distributing the stock options to key
personnel already employed by, or to be recruited by, the company.
The maximum total number of stock options issued within the Stock
Option Program 2008 will be 4,270,000 and the stock options entitle
their owners to subscribe for a maximum total of 4,270,000 new
B-shares in the company. Of the stock options, 2,135,000 will be
marked with the symbol 2008A and 2,135,000 with the symbol 2008B. The
subscription price of a share will be based on the prevailing market
price of the B share on the OMX Nordic Exchange Helsinki during the
May-June 2008 period plus a 10% surcharge (for 2008A options) and
during the May-June 2009 period plus a 10% surcharge (for 2008B
options). The subscription period for the shares with 2008A options
is 1 May 2011-31 December 2012 and with 2008B options is 1 May
2012-31 December 2013. The share subscription price will be entered
into the invested unrestricted shareholders' equity.
Authorisations granted by the Annual General Meeting
The AGM authorised the Board to decide on a share issue that includes
the right to issue new shares or to reissue existing B shares in the
company, as well as to issue stock options and other entitlements to
B shares referred to in chapter 10, paragraph 1 of the Finnish
Companies Act. The authorisation covers a maximum total of 20,000,000
of the company's B shares, and can be used to finance and implement
acquisitions, or other business transactions and investments, or
employee incentive plans. The authorisation includes: the right to
deviate from the shareholders' pre-emptive right to the company's
shares, provided that weighty financial reasons exist pursuant to the
Finnish Companies Act; the right to resolve to issue shares without
payment provided that particularly weighty financial reasons exist
pursuant to the Finnish Companies Act; and the right to issue shares
to the company itself without payment. In a share issue, however, the
maximum amount of shares issued to the company itself must be less
than 10% of the company's total number of shares. The authorisation
includes the right for the Board to determine the terms and
conditions of the issue and re-issue of shares, share option rights
and other entitlements referred to in chapter 10, paragraph 1 of the
Finnish Companies Act, as well as to determine other matters
pertaining to these actions in accordance with the Finnish Companies
Act, including the right to resolve how the subscription price is
entered in the accounts. The authorisation is valid until 30 June
2009.
The AGM authorised the Board to purchase the Company's own B shares
and accept them as a pledge. The authorisation covers a maximum total
of 8,000,000 B shares. The shares in the possession of, or held as
pledges by, the company must, however, be less than 10% of the
company's total number of shares. The shares may be purchased or
accepted as a pledge in order to finance or implement acquisitions or
other business transactions, to develop the company's capital
structure, to improve the liquidity of the company's shares, to be
disposed for other purposes, or to be cancelled. The repurchase of
shares will reduce the funds available for the distribution of
profits. The repurchases will be carried out through public trading
on the OMX Nordic Exchange Helsinki, whereby the shares will be
purchased in another proportion than according to the holdings of the
shareholders and in accordance with the rules and regulations of the
OMX Nordic Exchange Helsinki and the Finnish Central Securities
Depository. The repurchase price must be based on the market price of
the Company's shares in public trading. The authorisation is valid
until 30 June 2009.
Organisation of Board and independence from company
At the Board's organisation meeting held immediately after the AGM,
Ari Tolppanen was elected Chairman and Teuvo Salminen was elected
Deputy Chairman of the Board of Directors. The Board also assessed
the independence from the company of the Board members and of the
company's major shareholders. Sari Baldauf, Tapio Hintikka, Conny
Karlsson and Teuvo Salminen were declared to be independent members.
Events after the review period
CapMan Plc signed on 7 May 2008 a MEUR 50 loan agreement. The purpose
of this five-year agreement is to finance CapMan Plc's own
investments in its future funds.
Business environment
The demand for alternative assets has continued its growth, and an
increasing number of institutional investors are allocating a growing
proportion of their investments to this asset class. Private equity
investment has consolidated its position in financing M&A and growth,
and its growth in the Nordic countries is further accelerated by
consolidation in various sectors, family successions, privatisation
of public services and functions, the strong contribution of R&D in
the technology and life science sectors and increasing
entrepreneurial activity. Real estate market growth is speeded up by
accelerated structural change, in which particularly pension
companies transfer real estate investments from their balance sheets
into funds.
CapMan will continue to implement its Nordic investment strategy as
far as the funds investing in portfolio companies are concerned. The
nervousness of debt markets has started to be reflected in CapMan's
operating area also. Nordic banks are still offering financing for
middle-market buyouts and real estate transactions, but more moderate
debt ratios are being offered and the price of money has risen during
the spring. The number of new potential portfolio companies has
remained at a good level and our private equity teams are in a good
position for making new investments. However, the nervousness of debt
markets will be reflected in lower prices and longer times to exit.
The slowdown in growth of the real economy has been seen in our
investment targets, especially in those sectors that are linked, for
instance, to US consumer demand. Overall, our portfolio companies'
development has been favourable. A steep decline in the listed market
valuations was reflected in the fair value of our investment targets.
Instability in debt markets has weakened the liquidity of the real
estate market during the first quarter of 2008. Higher interest rates
and tighter bank credit will continue to affect both competition and
the valuation levels in the real estate sector. Consequently, we
expect to see increased use of equity for the financing of real
estate transactions. Good core assets will continue to command high
prices, but requirements for returns on more opportunistic
investments are expected to rise. On the leasing market, the
occupancy rate and demand for office and retail are in a good level.
Numerous new construction projects are in progress this year, which
will in time affect the supply of office premises in particular.
All CapMan's investment teams are in a good position and have
adequate resources to implement their investment strategies in the
Nordic countries. The funds investing in portfolio companies have
some MEUR 650 for making new and follow-on investments, while the
real estate funds have roughly a MEUR 340 investment capacity for
identifying new investment targets and developing existing portfolio.
Short-term risks and uncertainties
Should the crisis in the debt market deepen, the consequent credit
squeeze could result in both a slowdown in investment activity and a
postponement of exits. The reflection of the credit market turbulence
on the real economy growth may weaken the business operations of
funds' portfolio companies.
Future outlook
CapMan's strategy is to exploit growth opportunities within the
alternative asset class. In addition to CapMan's existing business
areas (Private Equity and Real Estate) the alternative asset class
includes, among others, infrastructure investment, forestry
investment and funds actively operating in public securities markets.
CapMan's projects for expanding operations geographically in Russia
and to establish a fund investing in public markets based on CapMan's
value creation expertise have made concrete progress and are now in
the fundraising phase. The aim is to finalise the projects during
2008. CapMan will invest in its future funds 2-10 per cent of their
original capital depending on the fund's demand and CapMan's own
investment capacity.
Management fees and returns on real estate consulting cover CapMan's
fixed expenses. The Group's full-year result for 2008 will depend on
how many new exits are made by funds already generating carried
interest, on whether new funds start generating carried interest, and
on how the value of investments develops in those funds in which
CapMan is a substantial investor. According to our understanding the
CapMan Equity VII A, B and Sweden funds, Finnventure Fund IV fund and
Finnmezzanine III A and B funds will start generating carried
interest in 2008 and 2009. The funds have several exit processes
underway. If the exit market continues to slow, we expect the carried
interest income to fall below the 2007 figure.
We believe that our portfolio companies and real estate assets will
develop favourably in 2008. However the prevailing instability in
financial markets may be reflected in the fair value of the funds'
investment targets as a result of changes in listed peers'
valuations, and thus also in the fair value of CapMan Group Plc's
fund investments in 2008.
CapMan Plc's Interim Report for 1 January - 30 June 2008 will be
published on Wednesday 8 August 2008.
Helsinki, 7 May 2008
CAPMAN PLC
Board of Directors
Press conference:
A press conference for analysts and the media will be held today at
12 noon in CapMan's offices at Korkeavuorenkatu 32, Helsinki,
Finland. CapMan's CEO Heikki Westerlund will present the quarter's
result and review the market situation. A light lunch will be served
at the event.
Presentation material for the press conference will be published in
Finnish and English on CapMan Plc Group's internet website once the
conference has started.
Further information:
Heikki Westerlund, CEO, tel. +358-207-207 504 or +358-50-559 6580
Kaisa Arovaara, CFO, tel. +358-207-207 583 or +358-50-370 3715
Distribution:
Helsinki Stock Exchange
Principle media
www.capman.com
GROUP BALANCE SHEET (IFRS)
€ ('000) 31.3.08 31.3.07 31.12.07
ASSETS
Non-current assets
Tangible assets 809 642 819
Goodwill 5,305 4,845 4,845
Other intangible assets 1,098 683 1,001
Investments in associated companies 3,515 2,866 3,407
Investments at fair value through profit
and loss
Investments in funds 53,496 38,378 44,230
Other financial assets 825 846 878
Receivables 20,296 12,062 16,191
Deferred income tax assets 3,547 230 3,547
88,891 60,552 74,918
Current assets
Trade and other receivables 13,487 9,988 7,837
Other financial assets at fair value
through profit and loss 7,275 19,654 14,857
Cash and bank 12,100 24,053 19,741
32,862 53,695 42,435
Total assets 121,753 114,247 117,353
EQUITY AND LIABILITIES
Capital attributable the Company's
equity holders
Share capital 772 772 772
Share premium account 38,968 38,968 38,968
Other reserves 2,961 1,235 2,961
Translation difference 166 216 133
Retained earnings 12,343 20,155 24,676
55,210 61,346 67,510
Minority interest 74 6,036 34
Total equity 55,284 67,382 67,544
Non-current liabilities
Deferred income tax liabilities 3,702 3,258 3,734
Interest-bearing loans 19,000 10,000 16,000
Other liabilities 802 490 701
23,504 13,748 20,435
Current liabilities
Trade and other payables 42,965 28,098 21,356
Interest-bearing loans and borrowings
Current income tax liabilities 0 5,019 8,018
42,965 33,117 29,374
Total liabilities 66,469 46,865 49,809
Total equity and liabilities 121,753 114,247 117,353
GROUP INCOME STATEMENT (IFRS)
€ ('000) 1-3/08 1-3/07 1-12/07
Turnover 7,181 28,090 51,572
Other operating income 0 18 236
Personnel expenses -3,790 -3,427 -15,381
Depreciation and amortisation -121 -143 -581
Other operating expenses -2,774 -3,206 -11,783
Fair value gains / losses of investments -119 4,083 5,696
Operating profit 377 25,415 29,759
Financial income and expenses 252 329 1,070
Share of associated companies' result 76 915 1,915
Profit before taxes 705 26,659 32,744
Income taxes -239 -6,755 -8,509
Profit for the financial year 466 19,904 24,235
Attributable to:
Equity holders of the company 462 14,278 18,620
Minority interest 4 5,626 5,615
Earnings per share for profit attributable
to the equity holders of the Company:
Earnings per share, cents 0.6 18.5 23.8
Diluted, cents 0.6 18.2 23.7
Operating profit, % 5.25 90.50 57.7
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to the equity holders of the Company
Share Share Other Trans- Re- Total Mino- Total
capital premium reser- lation tained rity equity
account ves differ- ear- inte-
€ ('000) rences nings rest
Equity on
31.12.2006 772 38,968 1,218 316 15,074 56,348 599 56,947
Share
subscriptions
with options
Translation
difference -100
Options 17 61
Profit for
the
financial
year 14,279 5,625
Dividens paid -9,259 -188
Equity on
31.3.2007 772 38,968 1,135 216 20,155 61,346 6,036 67,382
Equity on
1.12.2007 772 38,968 2,961 133 24,676 67,510 34 67,544
Share
subscriptions
with options
Translation
difference 33
Options
Profit for
the
financial
year 462 4
Dividens paid -12,795
Other Changes 36
Equity on
31.3.2008 772 38,968 2,961 166 12,343 55,210 74 55,284
GROUP'S CASH FLOW (IFRS)
€ ('000) 1-3/08 1-3/07 1-12/07
Cash flow from operations
Profit for the financial year 466 19,904 24,235
Adjustments 252 2,082 239
Cash flow before change in working
capital 718 21,986 24,474
Change in working capital 1,523 7,914 5,662
Financing items and taxes -385 135 -1,111
Cash flow from operations 1,856 30,035 29,025
Cash flow from investments -10,039 -4,602 -6,823
Cash flow before financing -8,183 25,433 22,202
Dividends paid -5,794 -188 -9,687
Other net cash flow 6,336 -15,329 -6,911
Financial cash flow 542 -15,517 -16,598
Change in cash funds -7,641 9,916 5,604
Cash funds at start of the period 19,741 14,137 14,137
Cash funds at end of the period 12,100 24,053 19,741
Accounting principles
The company's Interim Report has been prepared in accordance with the
IAS 34 standard on interim financial reporting. The same accounting
principles have been applied in the Interim Report as in the 2007
financial statements. The Interim Report has not been audited.
Segment information
€ ('000) 1-3/08 1-3/07 1-12/07
Turnover
CapMan Private Equity 5,549 5,654 25,840
CapMan Real Estate 1,632 22,436 25,732
Total 7,181 28,090 51,572
Operating profit
CapMan Private Equity 262 4,579 9,484
CapMan Real Estate 115 20,836 20,275
Total 377 25,415 29,759
Income taxes
The Group's income taxes during the review period are calculated on
the basis of the estimated average tax rate during the fiscal year.
Deferred taxes are calculated on the basis of all temporary
differences between book value and fiscal value.
Dividends
A dividend of EUR 0.16 per share was paid for financial year 2007,
representing a total of MEUR 12.8. (2006: EUR 0.12 representing a
total of MEUR 9.3)
Non-current assets
€ ('000) 31.3.08 31.3.07 31.12.07
Investments in funds at fair value through
profit and loss at Jan 1 44,230 33,122 33,122
Additions 10,826 7,393 15,384
Disposals -1,441 -6,220 -9,972
Fair value gains/losses on investments -119 4,083 5,696
Investments in funds at fair value through
profit and loss at end of the period 53,496 38,378 44,230
Additions and investments in funds by area:
1-3/08 1-3/07 1-12/07
Additions
Private equity 5,862 7,066 14,500
Real Estate 4,837 41 598
Access Capital Partners 127 286 286
Total 10,826 7,393 15,384
Investments in funds at fair value through
profit and loss at the end of period
31.3.08 31.3.07 31.12.07
Private equity 40,589 30,604 36,010
Real Estate 5,328 52 526
Access Capital Partners 7,579 7,722 7,694
Total 53,496 38,378 44,230
Transactions with related parties (associated companies)
€ ('000) 31.3.08 31.3.07 31.12.07
Receivables - non-current 16,676 7,464 12,497
Receivables - current 1,641 995 879
Non-current liabilities
€ ('000) 31.3.08 31.3.07 31.12.07
Interest bearing loans 19,000 10,000 16,000
Seasonal nature of business
Carried interest income is accrued on an irregular schedule depending
on the timing of exits. One exit may have an appreciable impact on
CapMan Plc's result for the full financial year.
Personnel
By country 31.3.08 31.3.07 31.12.07
Finland 94 74 86
Denmark 5 5 4
Sweden 15 16 15
Norway 5 6 5
In total 119 101 110
By team 31.3.08 31.3.07 31.12.07
CapMan Private Equity 37 37 37
CapMan Real Estate 37 26 30
Investor Services 26 20 25
Internal Services 19 18 18
In total 119 101 110
Contingent liabilities
€ ('000) 31.3.08 31.3.07 31.12.07
Leasing contracts and other
contingent liabilities 11,268 10,421 11,797
Commitments to funds 50,863 58,093 55,994
Commitments to funds by area
Private Equity 46,409 53,118 51,577
Real Estate 2,338 2,732 2,174
Access Capital Partners 2,116 2,243 2,243
Total 50,863 58,093 55,994
Of the total investment commitments, MEUR 19.8 were given to the
CapMan Buyout VIII fund, MEUR 12.4 to the CapMan Technology 2007
fund, and the remainder mainly to the CapMan Life Science IV, CapMan
Mezzanine IV, CapMan Equity VII and Access Capital Fund II funds.
Turnover and profit quarterly
YEAR 2008
MEUR 1-3/08
Turnover 7.2
Management fees 6.3
Carried interest 0.0
Income of investments
in funds 0.0
Real Estate consulting 0.7
Other income 0.2
Other operating income 0.0
Operating expenses -6.7
Fair value gains / losses of
investments -0.1
Operating profit 0.4
Financial income and expenses 0.3
Share of associated companies'
result 0.1
Profit before taxes 0.7
Profit for the period 0.5
YEAR 2007
MEUR 1-3/07 4-6/07 7-9/07 10-12/07 1-12/07
Turnover 28.1 7.5 8.0 8.0 51.6
Management fees 5.8 6.5 6.2 6.1 24.6
Carried interest 21.2 0.2 1.0 1.2 23.6
Income of investments
in funds 0.3 0.0 0.1 0.1 0.5
Real Estate consulting 0.6 0.5 0.5 0.5 2.1
Other income 0.2 0.3 0.2 0.1 0.8
Other operating income 0.0 0.1 0.0 0.1 0.2
Operating expenses -6.8 -7.0 -6.0 -7.9 -27.7
Fair value gains / losses of
investments 4.1 0.5 2.9 -1.8 5.7
Operating profit 25.4 1.1 4.9 -1.6 29.8
Financial income and expenses 0.3 0.2 0.2 0.4 1.1
Share of associated companies'
result 0.9 0.2 0.8 0.0 1.9
Profit after financial items 26.7 1.4 5.9 -1.3 32.7
Profit for the period 19.9 1.0 4.6 -1.3 24.2
APPENDIX 1: CAPMAN PLC GROUP'S FUNDS UNDER MANAGEMENT AT 31 MARCH
2008, MEUR
The tables below show the status of funds managed by CapMan at the
end of the review period. When analysing the schedule for funds to
start generating carried interest, the relationship between
distributed cash flows to investors to paid-in capital should be
compared. When a fund starts generating carried interest the capital
must be returned and an annual preferential return paid on it. The
fair value of a portfolio, including any of the fund's net cash
assets, represents the capital distributable to investors at the end
of the review period.
When assessing the cash flow a fund needs in order to start
generating carried interest, it should be noted that the capital of
some funds has not yet been called and paid-in. The percentage figure
in the last column on the right shows CapMan's share of cash flows if
the fund is generating carried interest. After the previous
distribution of profits, any new capital paid-in, as well as the
preferred annual return on it, must however be returned to investors
before further carried interest income is paid. Of the funds already
generating carried interest, the CapMan Real Estate I fund is still
in the active investment phase, and the Finnventure V fund can still
make follow-on investments in its current portfolio companies.
The definitions for column headings are presented below the tables.
FUNDS INVESTING DIRECTLY IN PORTFOLIO COMPANIES
Size Paid- Fund's Net Distributed CapMan's
in current cash cash flow share
capital portfolio assets to in- to man- of
at at vestors agement cash
cost fair company flow
value (carried if fund
interest) gene-
rates
carried
inte-
rest
Funds
generating
carried
interest
FV II, FV
III 1)
and FM II B
in total 58.6 57.4 3.1 2.8 0.4 179.7 44.1 20-35%
FV V 169.9 161.8 59.5 55.5 4.2 218.1 1.1 20%
Fenno
Ohjelma
(Fenno
Rahasto,
Skandia I
and
Skandia II)
in total 2) 59.0 59.0 10.8 11.7 0.2 122.9 8.6 10-12%
Total 287.5 278.2 73.4 70.0 4.8 520.7 53.8
Funds that
are
expected
to start
generating
carried
interest
at the
latest
during 2009
FV IV 59.5 59.5 10.3 14.0 0.7 65.7 20%
CME VII A 156.7 129.8 83.6 153.2 11.4 81.0 20%
CME VII B 56.5 51.6 33.4 73.4 6.1 36.5 20%
CME SWE 67.0 55.3 35.8 64.8 5.2 35.0 20%
FM III A 101.4 98.1 30.4 39.6 2.2 100.4 20%
FM III B 20.2 19.8 8.1 11.4 0.5 17.8 20%
Total 461.3 414.1 201.6 356.4 26.1 336.4
Other funds
not yet
in carry
CME VII C 23.1 15.5 9.8 8.7 0.2 6.4 20%
CMB VIII A 360.0 170.4 140.5 143.6 10.3 14%
CMB VIII B 80.0 38.0 31.2 31.8 2.3 14%
CM LS IV 54.1 20.1 16.3 12.2 0.5 10%
CMT 2007 1) 142.3 25.6 18.3 18.3 3.0 10%
FM III C 13.9 13.9 3.5 4.1 2.0 12.4 20%
CMM IV 4) 240.0 116.2 93.3 103.2 3.0 21.0 15%
Total 913.4 399.7 312.9 321.9 21.3 39.8
Funds
with
limited
carried
interest
potential
to CapMan
NPEP II 3),
FV V ET,
SWE LS 3),
SWE Tech
1), 3)
and FM II
A, C, D 1)
Total 256.5 232.3 80.8 71.2 4.9 122.1
Funds that
invest in
portfolio
companies,
total 1,918.7 1,324.3 668.7 819.5 57.1 1,019.0 53.8
REAL ESTATE FUNDS
Invest- Paid- Fund's Net Distributed CapMan's
ment in current cash cash flow share
capa- capital portfolio assets to in- to man- of
city at at vestors agement cash
cost fair company flow
value (carried if fund
interest) gene-
rates
carried
interest
Funds
generating
carried
interest
CMRE I 5)
equity
and bonds 200.0 151.7 27.9 29.1 184.8 27.4 26%
debt
financing 300.0 206.8 65.1 65.1
Total 500.0 357.8 93.0 94.2 6.9 184.8 27.4
Other funds
not yet
in carry
CMRE II
equity 150.0 43.7 40.5 41.8 12%
debt
financing 450.0 118.0 118.0 118.0
Total 600.0 161.7 158.5 159.8 -1.0
CMHRE II 6)
equity 294.9 269.1 258.7 256.2 12%
debt
financing 540.0 526.0 551.8 551.8
Total 834.9 795.1 810.5 808.0 5.8
Real estate
funds, total 1,934.9 1,314.6 1,062.0 1,062.0 11.7 184.8 27.4
All funds,
total 3,853.6 2,638.9 1,730.7 1,881.5 68.8 1,203.8 81.2
Abbreviations used to refer to funds:
CMB = CapMan Buyout Fund CMT 2007 = CapMan Technology 2007
CME = CapMan Equity FM = Finnmezzanine Fund
CMLS = CapMan Life Science Fund FV = Finnventure Fund
CMM = CapMan Mezzanine NPEP = Nordic Private Equity Partners
CMHRE = CapMan Hotels RE SWE LS = Swedestart Life Science
CMRE = CapMan Real Estate SWE Tech = Swedestart Tech
Size / investment capacity:
Total capital committed to the fund by investors, i.e. the original
size of the fund. For real estate funds, investment capacity also
includes the share of debt financing used by the fund.
Capital under management by associated company Access Capital
Partners is presented separately in Appendix 3.
Paid-in capital:
Total capital paid into the fund by investors at the end of the
review period.
Fair value of fund's current portfolio:
The funds' investments in portfolio companies are valued at fair
value in accordance with the guidelines of the European Private
Equity & Venture Capital Association (EVCA) and investments in real
estate assets are valued in accordance with the value appraisements
of external experts.
The fair value is the amount for which an asset could be exchanged
between knowledgeable, willing parties in an arm's length
transaction. Due to the nature of private equity investment
activities, the funds' portfolios contain investment targets with a
fair value that exceeds their acquisition cost as well as investment
targets with a fair value less than the acquisition cost. In defining
the fair value of portfolio companies, investment targets are valued
at acquisition cost from the time of investment for a 12-month
period, after which they are valued at fair value. According to the
EVCA's policy of prudence, technology and life science targets are
typically valued at acquisition cost or a lower figure up until exit.
Net cash assets:
When calculating the investors' share, the fund's net cash assets
must be taken into account in addition to the portfolio at fair
value. Net cash assets in the CapMan Mezzanine IV fund may be
negative, due to the senior debt used in the fund. In real estate
funds the net cash assets do not include senior debt because it is
presented separately.
CapMan's share of cash flow if fund generates carried interest:
When a fund has produced for investors the cumulative preferential
return specified in the fund agreements, the management company is
entitled to an agreed share of future cash flows from the fund
(carried interest). Cash flow, in this context, includes both profit
distributed by the fund and repayments of capital. After the previous
distribution of profits, any new capital called in, as well as any
annual preferential returns on it, must however be returned to
investors before the new distribution of profits can be paid.
Footnotes to table
1) The fund is comprised of two or more legal entities (parallel
funds are presented separately only if their investment focuses or
portfolios differ significantly).
2) The Fenno Rahasto, Skandia I and Skandia II funds together
comprise the Fenno Program, which is managed jointly with Fenno
Management Oy.
3) Currency items are valued at the average exchange rates quoted at
31 March 2008.
4) CapMan Mezzanine IV: The paid-in commitment includes a MEUR 96
bond issued by Leverator Plc. The fund's net cash assets include a
loan facility, with which investments are financed up to the next
bond issue. Distributed cash flow includes payments to both bond
subscribers and to the fund's partners.
5) CapMan Real Estate I: Distributed cash flow includes repayment of
the bonds and cash flow to the fund's partners.
6) CapMan Hotels RE: The portfolio has been financed with a MEUR 25.8
short-term loan in addition to a senior loan of MEUR 526.
APPENDIX 2: OPERATIONS OF CAPMAN'S FUNDS UNDER MANAGEMENT 1 Jan - 31
Mar 2008
The operations of private equity funds managed by CapMan in the
review period comprised investments in portfolio companies mainly in
the Nordic countries as well as real estate investments in Finland.
The investment activities of funds making direct investments in
portfolio companies include buyouts, technology investments and
investments in the life science sector. Buyouts are made in the
mid-market class in manufacturing, service and retail industries.
Technology investments focus on growth-stage technology companies.
Life science investments focus on companies specialising in medical
technology and healthcare services.
CAPMAN PRIVATE EQUITY
Investments in portfolio companies January-March 2008
The CapMan funds made three new investments as well as follow-on
investments worth altogether MEUR 38.2 in January-March. The new
investment targets were Barnebygg Gruppen, The New Black Oy (Varesvuo
Partners Oy) and CargoPartner Group. In the comparable period of 2007
the funds made three new investments as well as follow-on investments
amounting to MEUR 58.1.
During the review period some of the Mawell investment made by the
CapMan Technology 2007 fund in 2007 was syndicated with the CapMan
Life Science IV fund. As a result, and exceptionally, the value of
technology investments was negative.
Exits from portfolio companies January-March 2008
The funds made a final exit from Solid Information Technology Oy
during the review period. In addition to this the LUMENE Group, one
of the CapMan Equity VII fund's portfolio companies, split into the
LUMENE Group and Farmos Oy, which returned some of the original
investment to investors in the fund. Final and partial exits at
acquisition cost by the funds during the review period totalled MEUR
10.7. During the comparable period in 2007 the funds exited finally
from two companies and partially from a number of other companies.
The exits at acquisition cost during the comparable period, including
repayments of mezzanine loans, amounted to MEUR 25.5.
CAPMAN REAL ESTATE
Investments in and commitments to real estate acquisitions and
projects January-March 2008
The CapMan Hotels RE Ky fund in January acquired 39 hotel properties
from Northern European Properties Ltd in conjunction with the
establishment of the fund. Investments in retail properties located
at Yliopistonkatu 22 and Kristiinankatu 8 in Turku were also
finalised in January. In addition, investment commitments made
earlier were used during the review period for financing the Skanssi
Kauppakeskus shopping mall project and an investment in land located
in the Kivistö district of Vantaa was announced. The investment is
subject to the City of Vantaa's decision on its pre-emptive right of
purchase.
Investments amounting to MEUR 902.0 were made during the review
period, in addition to which the funds had made commitments as at 31
March 2008 to finance real estate acquisitions and projects over the
next few years amounting to MEUR 233. In the comparable period in
2007 investments were made in three new targets and the amount
invested totalled MEUR 19.4.
Exits from real estate investments January-March 2008
The funds did not exit from any real estate investments during the
review period. In the comparable period in 2007 the CapMan Real
Estate I fund sold its portfolio of 22 office properties to Samson
Properties Ltd, The Royal Bank of Scotland (RBS) and Ajanta Oy for
MEUR 377.5.
Other events during the review period
On 18 January 2008 the CapMan Real Estate fund signed a Letter of
Intent with Holiday Club Resorts Oy for the development of four spa
hotel projects in the Nordic countries over the next few years. The
planned resorts are located at Himos and Saimaa in Finland and
Västervik and Öresund in Sweden.
FUND'S INVESTMENT ACTIVITIES IN FIGURES
Funds' investments and exits at acquisition cost, MEUR
1-3/2008 1-3/2007 1-12/2007
New and follow-on investments
Funds investing in
portfolio companies 38.2 58.1 164.7
Buyout 36.5 54.2 126.7
Technology -0.6 2.3 28.6
Life Science 2.3 1.6 9.4
Real estate funds 902.0 19.4 160.0
Total 940.2 77.5 324.7
Exits*
Funds investing
in portfolio companies 10.7 25.5 93.2
Buyout 5.1 22.5 74.1
Technology 5.6 3.0 19.1
Life Science - - -
Real estate funds - 304.4 304.4
Total 10.7 329.9 397.6
* Including partial exits and repayments of mezzanine loans.
As at 31 March 2008, the real estate funds had made commitments to
finance real estate acquisitons and projects amounting to MEUR 233.0.
Funds' aggregate combined portfolio * 31 Mar 2008, MEUR
Portfolio at Portfolio at Share of
acquisition fair portfolio
price value (fair
MEUR MEUR value) %
Funds investing
in portfolio companies 668.7 819.5 43.6
Real estate funds 1,062.0 1,062.0 56.4
Total 1,730.7 1,881.5 100.0
Funds investing
in portfolio companies
Buyout 515.2 686.0 83.7
Technology 108.8 96.6 11.8
Life Science 44.7 36.9 4.5
Real estate funds 668.7 819.5 100.0
*Aggregated entity formed of all investment targets of funds under
management.
Remaining investment capacity
After deduction of actual and estimated expenses, on 31 March 2008
the funds that invest in portfolio companies had some MEUR 650
remaining for investments in portfolio companies and for follow-on
investments. Of the remaining capital, some MEUR 430 was earmarked
for buyout investments (including mezzanine investments), MEUR 178
for technology investments and MEUR 42 for life science investments.
The real estate funds have remaining investment capacity amounting to
MEUR 340.
APPENDIX 3: CAPITAL UNDER MANAGEMENT OF ASSOCIATED COMPANY ACCESS
CAPITAL PARTNERS ON 31 MARCH 2008
CapMan has a 35% holding in Access Capital Partners, which is based
in Paris, Munich and Guernsey. Access Capital Partners manages four
funds of funds as well as private equity investment mandates that
invest in European mid-market buyout and technology funds. Further
information on Access Capital Partners and its operations can be
found at www.access-capital-partners.com.
Fund/mandates Size, MEUR*
Access Capital Fund 1) 250.3
Access Capital Fund II Mid-market buy-out 1) 153.4
Access Capital Fund II Technology 1) 123.5
Access Capital Fund III Mid-market buy-out 1) 307.4
Access Capital Fund III Technology 1) 88.9
Access Capital Fund IV Growth buy-out 1) 413.0
Private Equity mandates 1,162.0
Total 2,498.5
1) The fund is comprised of two or more legal entities (parallel
funds are presented separately only if their investment focuses or
portfolios differ significantly).
CapMan Plc Group's share of the carried interest from the Access
funds is: Access Capital Fund: 47.5%, Access Capital Fund II: 45%,
Access Capital Fund III: 25%, Access Capital Fund IV: 25%,
Access/Private Equity Mandates: 25%.
