CapMan Plc Stock Exchange Release 8 August 2008 at 9.45 a.m.
Performance and main events during the review period:
- The Group's turnover totalled MEUR 19.5 (Jan-Jun 2007: MEUR 35.6).
The comparable period in 2007 included carried interest income of
MEUR 21.0 derived from the sale of CapMan Real Estate I fund's real
estate portfolio.
- Operating profit was MEUR 3.7 (26.5).
- Profit before taxes totalled MEUR 3.7 (28.1) and after taxes MEUR
2.7 (20.9).
- Parent company equity holders' share of profit was MEUR 2.6 (15.3),
and earnings per share based on it were 3.3 (19.7) cents.
- Capital under management grew in the first half of the year by some
37% to MEUR 3,005.8 (MEUR 2,189.7 at 31.12.2007), through the
establishment of a new private equity fund focusing on hotel real
estate, CapMan Hotels RE Ky, in January. Capital under management on
30 June 2007 amounted to MEUR 2,233.3.
Main events after the review period:
- In line with its strategy, CapMan expanded its operations in Russia
through the acquisition of Norum that was announced on 26 May 2008
and after the review period, in July, CapMan established a new equity
fund, CapMan Public Market, investing in Nordic public companies.
- On 25 July 2008 CapMan Plc announced the sale of its 35% holding in
Access Capital Partners. The transaction price is at maximum MEUR
23.3, and the impact on CapMan's result for 2008 is MEUR 18.0. The
impact on cash flow for 2008 is MEUR 16.5, and the taxes payable for
2008 are estimated at MEUR 2.2. The transaction is expected to be
closed in the fourth quarter after the relevant regulatory approvals,
i.a., are received.
CEO Heikki Westerlund comments on the events and result of the review
period and on future prospects:"After long preparation we have now taken two important steps forward
in implementing our strategy. Geographical expansion into Russia and
the establishment of a fund investing in public markets broaden our
business portfolio and offer new growth opportunities in the future.
With the proceeds we receive from the sale of our minority holding in
Access Capital Partners, once the transaction is closed, we will
finance growth while still retaining carried interest potential from
Access's existing funds and mandates.""Over the short-term the exit market will be fairly weak as a result
of a general slowdown in economic growth and the nervousness of debt
markets. Our current portfolio, however, contains several
well-developed companies. With the sale of Access the earnings per
share for 2008 is estimated to be at the same level as in the
previous year."
Business operations
CapMan is an alternative asset manager with two business areas:
CapMan Private Equity (manages funds that invest in portfolio
companies) and CapMan Real Estate (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 for January-June 2008
CapMan's turnover for the review period was MEUR 19.5 (MEUR 35.6 for
Jan-Jun 2007). The main factors affecting turnover and profit are
described in more detail in their own sections of this Interim
Report.
The Group's operating profit totalled MEUR 3.7 (26.5). Profit before
taxes amounted to MEUR 3.7 (28.1) and the profit after taxes to MEUR
2.7 (20.9).
The parent company equity holders' share of the profits was MEUR 2.6
(15.3), and earnings per share based on it were 3.3 (19.7) 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
13.6 (12.5). Growth in management fees was largely due to
establishment of the new CapMan Hotels RE real estate fund during the
review period.
Income from real estate consulting totalled MEUR 1.3 (1.1). The
aggregate total of management fees and income from real estate
consulting was MEUR 14.9 (13.6), and it covered the operating
expenses of MEUR 14.6 (13.8).
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. As a result of the exit from
Staffpoint implemented during the review period, carried interest
totalled MEUR 4.1. Carried interest for the comparison period
amounted MEUR 21.4, which accrued primarily through the sale of
CapMan Real Estate I fund's real estate portfolio.
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
Fair value changes related to fund investments were MEUR -1.3 (4.6).
The changes were affected by the general market development in the
first half of the year and by the funds' costs. The multiples used in
fair value calculations decreased as a result of the declining
multiples of portfolio companies' listed peers. Funds' portfolios
also saw positive value adjustments for individual companies, and
portfolios are overall in sound condition.
The change in fair value during the comparable period was
exceptionally large and broadly attributable to a value adjustment in
CapMan Equity VII funds' portfolio company Moventas, from which there
was a partial exit during the comparison period. Realised returns
from fund investments amounted to MEUR 0.2 (0.3). Fund investments
made from CapMan's own balance sheet had an overall impact of MEUR
-1.1 (4.9) 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 14.6 (10.7). Most of these investments were made in
the CapMan Buyout VIII and CapMan Hotels RE funds. The aggregate fair
value of CapMan's fund investments from its own balance sheet was
MEUR 54.7 on 30 June 2008 (MEUR 40.8 on 30 June 2007).
CapMan will invest in its future funds 2-10% of their original
capital depending on the fund's demand and CapMan's own investment
capacity. CapMan made a MEUR 5 investment commitment to the CapMan
Hotels RE fund during the review period. The amount of remaining
investment commitments at the end of the review period was MEUR 47.0
(60.1). The aggregate fair value of existing investments and
remaining investment commitments on 30 June 2008 was MEUR 101.8 (MEUR
100.9 on 30 June 2007).
Investments in portfolio companies are valued at fair value in
accordance with the International Private Equity and Venture Capital
Valuation Guidelines (IPEVG), 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 30 June 2008
There were no significant changes in CapMan's balance sheet in
January-June 2008, and the balance sheet amounted to MEUR 107.1 at
the end of the review period (MEUR 102.8 on 30 June 2007).
Non-current assets increased during the review period to MEUR 90.3
(68.4), mainly due to investments made in funds and to growth in
receivables. Long-term receivables amounted to MEUR 21.6 (17.4), of
which MEUR 17.2 (14.5) was loan receivables from the Maneq funds.
Current assets declined in the first half of the year to MEUR 16.8
(34.5) owing to dividends paid out and investments made in funds.
Liquid assets (cash and bank plus other financial assets at fair
value through profit and loss) amounted to MEUR 6.8 (25.5). 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.
CapMan Plc signed a MEUR 50 loan agreement on 7 May 2008.
Interest-bearing liabilities increased to MEUR 32.0 (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 was MEUR
12.9 (15.3). The Group's interest-bearing net debts amounted to MEUR
25.2 (-15.5).
Key figures
CapMan's equity ratio on 30 June 2008 was 54.5% (67.1% on 30 June
2007). Return on equity was 4.3% (33.3%) and return on investment was
5.3% (38.6%). The target level for the equity ratio is at least 50%
and for return on equity at least 25%.
30 Jun 2008 30 Jun 2007 31 Dec 2007
Earnings per share, cents 3.3 19.7 23.8
Diluted, cents 3.3 19.6 23.7
Shareholders' equity / share,
cents 72.0 89.0 86.4
Share issue adjusted number of
shares 79,977,875 77,479,731 78,142,867
Number of shares at the end of
period 80,007,632 78,314,418 79,968,819
Number of shares outstanding 80,007,632 78,314,418 79,968,819
Return on equity, % 4.3 33.3 38.9
Return on investment, % 5.3 38.6 44.2
Equity ratio, % 54.5 67.1 57.6
Net gearing, % 43.8 -28.1 -27.5
Expansion into Russia
On 26 May 2008 CapMan Plc signed an agreement to acquire the
management companies of Norum Russia Fund III ("Norum") from the
company's senior management, DnB NOR Bank ASA and Sitra Management
Ltd. The closing of the transaction requires that necessary
regulatory approvals are obtained in Guernsey. Expanding operations
into Russia is a significant strategic step for CapMan.
In the first phase of the transaction 51% of Norum Russia Fund III's
management company's and 100% of the advisory company's share capital
and voting rights will be transferred to CapMan Plc's ownership
against the payment of a purchase price of approx. EUR 3.4 million,
whereupon the Norum Russia III fund will be placed under CapMan's
management. The size of the fund is MEUR 88, including CapMan's
commitment of MEUR 13.5, and fundraising is continuing under the
CapMan Russia name. The purchase price of the companies will be
adjusted according to the final size of the fund. CapMan Plc is
financing the acquisition with cash and a directed share issue to the
sellers.
CapMan Plc will have the right to buy the remaining 49% of Norum
shares and voting rights when the investment period for CapMan Russia
Fund ends, that is at the latest in July 2012. The sellers have the
right to sell their remaining Norum shares to CapMan at any time.
Depending on the final size of the CapMan Russia Fund, the
transaction price for the remaining shares will be approx. MEUR
3.3-4.4. The payable transaction price per share will however be the
same as the fundraising adjusted transaction price in the first phase
of the transaction.
Norum has operated in the Russian private equity market since 1995
and is one of the most experienced investors in this market. CapMan
Russia will form a separate investment area, which will be headed by
CapMan's senior partner Mr Petri Saavalainen. Mr Hans Christian Dall
Nygård, the former Managing Director of Norum and now a partner in
CapMan, will be responsible for all the investment activities of
CapMan Russia. CapMan Russia will be included in the CapMan Private
Equity business area in CapMan Plc's future financial reporting.
CapMan Hotels RE fund
On 18 January 2008 CapMan Plc established a new private equity fund
focusing on hotel real estate, CapMan Hotels RE Ky. The size of the
hotel fund at present is MEUR 844.9, and the maximum fund size is
MEUR 1,100. The fund acquired a MEUR 805 hotel portfolio of 39
properties from Northern European Properties Ltd (NEPR) in
conjunction with its establishment. Seven professionals in the hotel
business transferred to CapMan Group through the transaction. The
management company of CapMan Hotels RE Ky is CapMan Hotels RE Oy, of
which CapMan Plc owns 80%. The establishment of the fund is estimated
to have a slightly positive impact on CapMan's result for 2008 as a
consequence of the management fees paid by the fund.
Fundraising
In addition to fundraising for the CapMan Hotels RE, CapMan Russia
and CapMan Public Market funds, preparations were made during the
review period for fundraising for the next buyout fund, CapMan Buyout
IX.
Capital under management on 30 June 2008
Capital under management refers to funds' remaining investment
capacity and capital already invested at acquisition cost. As a
result of the establishment of the CapMan Hotels RE fund, the capital
under management grew by some 37% in January-June from MEUR 2,189.7
on 31 December 2007 to MEUR 3,005.8 on 30 June 2008 (MEUR 2,233.3 on
30 June 2007). At the end of June MEUR 1,365.3 (1,437.5) was in funds
making investments in portfolio companies and MEUR 1,640.5 (795.6) in
real estate funds. Capital was raised during the review period as
follows:
Fund Established Capital Capital CapMan CapMan
31 Dec 30 Jun Group's
2007 2008 Group's
MEUR MEUR commitment carried MEUR interest
(net*)
CapMan
Technology 2007 9 Feb 2007 140.3 142.3 15.0 10%
CapMan
Hotels RE Ky 18 Jan 2008 0.0 844.9 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. Carried interest = share of the fund's
cash flows after it has transferred into carry.
Exits made during the review period reduced the amount of capital
under management. The Nordic Private Equity Partners II fund is no
longer included in managed funds owing to the exit at the end of the
review period June from its last remaining investment.
Capital under management has increased after the review period by
MEUR 178 as a result of the CapMan Russia and CapMan Public Market
funds.
More detailed information about managed funds and their investment
activities is presented in Appendices 1 and 2.
Personnel
On 30 June 2008 CapMan employed altogether 126 people (100 people on
30 June 2007), of whom 100 (76) 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 during the review
period. Share capital on 30 June 2008 was EUR 771,586.98 (EUR
771,586.98 on 30 June 2007). The number of listed B shares rose by
38,813 when 2003A options to subscribe for shares were exercised. The
number of B shares on 30 June 2008 was 74,007,632 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 2003B options during the
review period. Another 536,759 B shares can still be subscribed for
with 2003A options and 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 equity account.
Shareholders
CapMan Plc had 4,467 shareholders on 30 June 2008 (4,695 on 30 June
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 2.50 on 30 June 2008
(EUR 4.03 on 30 June 2007). The average price during the review
period was EUR 2.69 (3.39). The highest price was EUR 3.40 (4.07) and
the lowest EUR 2.30 (2.86). The trading of the company's shares, in
terms of volume and value, declined appreciably with respect to the
comparable period. Altogether 6.3 million (19.3 million) CapMan Plc B
shares were traded during the review period for a total of MEUR 16.9
(65.2).
The market capitalisation of CapMan Plc B shares on 30 June 2008 was
MEUR 185.0 (291.4). 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 200.0 (315.6).
Board authorisations
By decision of the Annual General Meeting, CapMan Plc's Board of
Directors is authorised to decide on a share issue as well as to
issue stock options and other entitlements to shares, and is also
authorised to purchase the Company's own shares and to accept them as
a pledge. The authorisations are valid until 30 June 2009, and the
terms and conditions attached to them were specified in more detail
in the Stock Exchange release issued on 27 March 2008.
Events after the review period
CapMan Public Market fund
On 11 July 2008 CapMan Plc established a new equity fund, CapMan
Public Market, investing in Nordic public companies. Altogether EUR
90 million in investment commitments had been raised by the fund's
first closing, of which CapMan Plc's share is EUR 15 million. The
CapMan Public Market fund will invest in Nordic public companies that
have a market capitalisation of EUR 100-1,000 million, and it will
utilise private equity style value creation methods in public
markets. The fund's fundraising continues.
The establishment of the fund is the start of CapMan's sixth
investment area, CapMan Public Market, which will be headed by Jukka
Ruuska, LL.M., MBA. The establishment of the fund will not have a
substantial impact on CapMan Plc's result for 2008. CapMan Public
Market will be included in the CapMan Private Equity business area in
CapMan Plc's future financial reporting.
The sale of Access Capital Partners shares
On 25 July 2008 CapMan Plc and N+1 Group signed an agreement for the
sale of CapMan's 35 per cent stake in Access Capital Partners to N+1
Group, a Spanish corporation. The transaction price for Access shares
is at maximum EUR 23.3 million, and the transaction will have an
impact of EUR 18.0 million on CapMan Plc's result for 2008. N+1 Group
will pay EUR 16.5 million of the transaction price at the closing of
the transaction and the remaining share in 2012. A portion of the
remaining transaction price is linked to Access' development over the
next few years. The taxes payable in 2008 are estimated to be
approximately EUR 2.2 million. CapMan will still retain return
potential from Access's current products as CapMan's right to any
carried interest income accrued from funds and private equity
mandates currently managed by Access will remain unchanged after the
transaction, excluding the Access Capital Fund IV Growth Buy-out
fund.
Access Capital Partners is a leading European manager and advisor of
private equity funds of funds and mandates, with assets totalling
approx. EUR 2.5 billion. CapMan was a co-founder of Access in 1999
together with the current Access managing partners.
The closing of the transaction requires i.a. the approval of the
relevant regulatory authorities and is expected to be closed in the
fourth quarter of the year.
The funds and mandates managed by Access Capital Partners are
presented in Appendix 3.
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 investment strategy in the
Nordic countries and Russia as far as the funds investing in
portfolio companies are concerned. The nervousness of debt markets
has been 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 appreciably during the first half of the
year. 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 is
reflected in the exit market through 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 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 and Russia. The funds investing in portfolio
companies have some MEUR 800 for making new and follow-on
investments, while the real estate funds have roughly a MEUR 330
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 effect of turbulence in the credit market
on growth of the real economy may weaken the business operations of
funds' portfolio companies.
Future outlook
CapMan's strategy is to exploit growth opportunities within the
alternative asset class. CapMan's projects for expanding operations
geographically in Russia and for establishing a fund investing in
public markets based on CapMan's value creation expertise have been
implemented, and fundraising for these funds continues in the autumn.
The fundraising preparations for a new buyout fund have also started.
Depending on the funds' demand and CapMan's own investment capacity
CapMan will invest in its future funds 2-10% of the funds' total
commitments.
Management fees and income from real estate consulting cover CapMan's
fixed expenses in 2008. Carried interest income in 2008 will be
clearly lower than in 2007. The funds have several exit processes
underway, and we expect CapMan Equity VII A, B and Sweden funds,
Finnventure Fund IV fund and Finnmezzanine III A and B funds to start
generating carried interest by the end of 2009.
We expect our portfolio companies and real estate assets to continue
to develop favourably in 2008. However the prevailing instability in
financial markets may be reflected in the fair value of CapMan Plc's
fund investments also in the second half of 2008.
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. With the sale of Access earnings per share for
2008 is estimated to be at the same level as in the previous year.
CapMan Plc's Interim Report for 1 January - 30 September 2008 will be
published on Thursday 30 October 2008.
Helsinki, Finland
8 August 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 result for
the first half of the year 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
Appendices (after the tables section):
Appendix 1: CapMan Plc Group's funds under management at 30 June
2008, MEUR
Appendix 2: Operations of CapMan's funds under management, 1 Jan - 30
Jun 2008
Appendix 3: Capital and mandates under management of associated
company Access Capital Partners on 30 June 2008
GROUP BALANCE SHEET (IFRS)
TEUR 30.6.08 30.6.07 31.12.07
ASSETS
Non-current assets
Tangible assets 1,000 893 819
Goodwill 5,338 4,845 4,845
Other intangible assets 1,300 759 1,001
Investments in associated companies 1,827 2,580 3,407
Investments at fair value
through profit and loss
Investments in funds 54,734 40,770 44,230
Other financial assets 973 868 878
Receivables 21,607 17,388 16,191
Deferred income tax assets 3,547 270 3,547
Tangible assets 90,326 68,373 74,918
Current assets
Trade and other receivables 8,933 8,931 7,837
Other financial assets at fair value
through profit and loss 378 9,774 14,857
Cash and bank 6,387 15,760 19,741
15,698 34,465 42,435
Non-current assets for sale 1,087 0 0
Total assets 107,111 102,838 117,353
EQUITY AND LIABILITIES
Capital attributable to the
Company's equity holders
Share capital 772 772 772
Share premium account 38,968 38,968 38,968
Other reserves 3,010 1,929 2,961
Translation difference 161 258 133
Retained earnings 14,519 21,237 24,676
57,430 63,164 67,510
Minority interest 123 5,768 34
Total equity 57,553 68,932 67,544
Non-current liabilities
Deferred income tax liabilities 3,375 3,377 3,734
Interest-bearing loans 22,000 10,000 16,000
Other liabilities 1,246 550 701
26,621 13,927 20,435
Current liabilities
Trade and other payables 12,937 15,268 21,356
Interest-bearing loans
and borrowings 10,000 0 0
Current income tax liabilities 0 4,711 8,018
22,937 19,979 29,374
Total liabilities 49,558 33,906 49,809
Total equity and liabilities 107,111 102,838 117,353
GROUP INCOME STATEMENT (IFRS)
TEUR 1-6/08 1-6/07 1-12/07
Turnover 19,528 35,582 51,572
Other operating income 4 59 236
Personnel expenses -8,255 -7,231 -15,381
Depreciation and amortisation -263 -285 -581
Other operating expenses -6,044 -6,262 -11,783
Fair value gains / losses of investments -1,308 4,595 5,696
Operating profit 3,662 26,458 29,759
Financial income and expenses 156 516 1,070
Share of associated companies' result -79 1,093 1,915
Profit before taxes 3,739 28,067 32,744
Income taxes -1,047 -7,128 -8,509
Profit for the financial period 2,692 20,939 24,235
Attributable to:
Equity holders of the company 2,638 15,281 18,620
Minority interest 54 5,658 5,615
Earnings per share for
profit attributable to the equity
holders of the Company:
Earnings per share, cents 3.3 19.7 23.8
Diluted, cents 3.3 19.6 23.7
Operating profit, % 18.8 74.4 57.7
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to the equity holders of the
Company
Share Share Other Trans- Re- Total Min- Total
capital premium reser- lation tained ority equity
account ves differ- ear- inte-
TEUR 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 694
Translation
difference -58
Options 17 141
Profit for
the
financial
period 15,281 5,625
Dividends
paid -9,259 -428
Other changes -61
Equity on
30.6.2007 772 38,968 1,929 258 21,237 63,164 5,768 68,932
Equity on
31.12.2007 772 38,968 2,961 133 24,676 67,510 34 67,544
Share
subscriptions
with options 49
Translation
difference 28
Options
Profit for
the
financial
period 2,638 54
Dividends
paid -12,795
Other changes 35
Equity on
30.6.2008 772 38,968 3,010 161 14,519 57,430 123 57,553
GROUP'S CASH FLOW (IFRS)
TEUR 1-6/08 1-6/07 1-12/07
Cash flow from operations
Profit for the financial period 2,692 20,939 24,235
Adjustments 2,742 1,153 239
Cash flow before change in working capital 5,434 22,092 24,474
Change in working capital -3,460 3,177 5,662
Financing items and taxes -8,762 -192 -1,111
Cash flow from operations -6,788 25,077 29,025
Cash flow from investments -13,149 -3,575 -6,823
Cash flow before financing -19,937 21,502 22,202
Dividends paid (incl. Minority share) -18,589 -9,687 -9,687
Other net cash flow 25,172 -10,192 -6,911
Financial cash flow 6,583 -19,879 -16,598
Change in cash funds -13,354 1,623 5,604
Cash funds at start of the period 19,741 14,137 14,137
Cash funds at end of the period 6,387 15,760 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
TEUR 1-6/08 1-6/07 1-12/07
Turnover
CapMan Private Equity 15,850 12,053 25,840
CapMan Real Estate 3,678 23,529 25,732
Total 19,528 35,582 51,572
Operating profit
CapMan Private Equity 3,727 5,374 9,484
CapMan Real Estate -65 21,084 20,275
Total 3,662 26,458 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
TEUR 30.6.08 30.6.07 31.12.07
Investments in funds at fair value through
profit and loss at Jan 1 44,230 33,122 33,122
Additions 14,635 10,746 15,384
Disposals -2,823 -7,693 -9,972
Fair value gains/losses on investments -1,308 4,595 5,696
Investments in funds at fair value through
profit and loss at end of the period 54,734 40,770 44,230
Additions and investments in funds by area:
1-6/08 1-6/07 1-12/07
Additions
Private equity 9,542 10,373 14,500
Real Estate 4,837 87 598
Access Capital Partners 256 286 286
Total 14,635 10,746 15,384
Investments in funds at fair value through
profit and loss at the end of period 30.6.08 30.6.07 31.12.07
Private equity 41,635 33,402 36,010
Real Estate 5,578 155 526
Access Capital Partners 7,521 7,213 7,694
Total 54,734 40,770 44,230
Transactions with related parties (associated
companies)
TEUR 30.6.08 30.6.07 31.12.07
Receivables - non-current at end of review
period 17,606 13,511 12,497
Receivables - current at end of review
period 2,497 125 879
Non-current liabilities
TEUR 30.6.08 30.6.07 31.12.07
Interest-bearing loans at end of review
period 22,000 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 30.6.08 30.6.07 31.12.07
Finland 100 76 86
Denmark 3 3 4
Sweden 18 16 15
Norway 5 5 5
In total 126 100 110
By team
CapMan Private Equity 36 35 37
CapMan Real Estate 45 25 30
Investor Services 26 22 25
Internal Services 19 18 18
In total 126 100 110
Contingent liabilities
TEUR 30.6.08 30.6.07 31.12.07
Leasing contracts and other
contingent liabilities 11,363 10,104 11,797
Commitments to funds 47,041 60,108 55,994
Commitments to funds by area
Private Equity 42,716 55,244 51,577
Real Estate 2,338 2,621 2,174
Access Capital Partners 1,987 2,243 2,243
Total 47,041 60,108 55,994
Of the remaining investment commitments, MEUR 17.5 were given to the
CapMan Buyout VIII fund, MEUR 11.8 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
2008
MEUR 1-3/08 4-6/08 1-6/08
Turnover 7.2 12.3 19.5
Management fees 6.4 7.2 13.6
Carried interest 0.0 4.1 4.1
Income of investments
in funds 0.0 0.2 0.2
Real estate
consulting 0.7 0.6 1.3
Other income 0.2 0.1 0.3
Other operating income 0.0 0.0 0.0
Operating expenses -6.7 -7.9 -14.6
Fair value gains /
losses
of investments -0.1 -1.2 -1.3
Operating profit 0.4 3.3 3.7
Financial income and
expenses 0.3 -0.1 0.2
Share of associated
companies'result 0.1 -0.2 -0.1
Profit before taxes 0.7 3.0 3.7
Profit for the period 0.5 2.2 2.7
2007
MEUR 1-3/07 4-6/07 1-6/07 7-9/07 10-12/07 1-12/07
Turnover 28.1 7.5 35.6 8.0 8.0 51.6
Management fees 5.9 6.6 12.5 6.3 6.2 25.0
Carried interest 21.2 0.2 21.4 1.0 1.2 23.6
Income of investments
in funds 0.3 0.0 0.3 0.1 0.1 0.5
Real Estate
consulting 0.6 0.5 1.1 0.5 0.5 2.1
Other income 0.1 0.2 0.3 0.1 0.0 0.4
Other operating income 0.0 0.1 0.1 0.0 0.1 0.2
Operating expenses -6.8 -7.0 -13.8 -6.0 -7.9 -27.7
Fair value gains /
losses
on investments 4.1 0.5 4.6 2.9 -1.8 5.7
Operating profit 25.4 1.1 26.5 4.9 -1.6 29.8
Financial income
and expenses 0.3 0.2 0.5 0.2 0.4 1.1
Share of associated
companies'result 0.9 0.2 1.1 0.8 0.0 1.9
Profit after financial
items 26.7 1.4 28.1 5.9 -1.3 32.7
Profit for the period 19.9 1.0 20.9 4.6 -1.3 24.2
APPENDIX 1: CAPMAN PLC GROUP'S FUNDS UNDER MANAGEMENT AT 30 JUNE
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 2.6 0.4 179.9 44.2 20-35%
FV V 169.9 163.5 47.8 34.6 3.2 237.7 5.3 20%
Fenno
Program
in total 2) 59.0 59.0 10.8 11.7 0.3 123.0 8.6 10-12%
Total 287.5 279.9 61.7 48.9 3.9 540.6 58.1
Funds that
are
expected
to start
generating
carried
interest
by end
of 2009
FV IV 59.5 59.5 10.3 13.8 1.1 65.7 20%
CME VII A 156.7 131.4 85.5 158.7 0.4 90.8 20%
CME VII B 56.5 52.2 34.0 75.7 0.3 39.2 20%
CME SWE 67.0 56.3 36.6 68.0 1.0 39.2 20%
FM III A 101.4 98.8 31.1 38.0 2.9 102.0 20%
FM III B 20.2 19.8 8.1 11.0 0.5 18.2 20%
Total 461.3 418.0 205.6 365.2 6.2 357.8
Other funds
not yet
in carry
CME VII C 23.1 15.9 10.2 9.6 0.2 6.4 20%
CMB VIII A 360.0 192.7 157.4 154.3 12.7 14%
CMB VIII B 80.0 43.0 35.0 34.2 5.4 14%
CM LS IV 54.1 20.8 16.0 12.2 1.2 10%
CMT 2007 1) 142.3 25.6 18.9 18.9 2.7 10%
FM III C 13.9 13.9 3.7 3.8 1.9 12.9 20%
CMM IV 4) 240.0 120.0 93.6 104.6 6.2 24.9 15%
Total 913.4 431.9 334.8 337.6 30.3 44.2
Funds
with
limited
carried
interest
potential
to CapMan
FV V ET,
SWE LS 3),
SWE Tech
1), 3)
and FM II
A, C, D 1)
Total 234.9 215.7 78.5 67.0 5.6 110.0
Funds that
invest in
portfolio
companies,
total 1,897.1 1,345.5 680.6 818.7 46.0 1,052.6 58.1
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 28.3 30.8 184.8 27.4 26%
debt
financing 300.0 215.1 65.1 65.1
Total 500.0 366.8 93.4 95.9 12.4 184.8 27.4
Other funds
not yet
in carry
CMRE II
equity 150.0 43.7 42.1 43.6 12%
debt
financing 450.0 135.9 135.9 135.9
Total 600.0 179.6 178.0 179.5 0.0
CMHRE II 6)
equity 304.9 269.1 252.5 247.2 12%
debt
financing 540.0 526.0 551.8 551.8
Total 844.9 795.1 804.3 799.0 43.8
Real estate
funds, total 1,944.9 1,341.5 1,075.7 1,074.4 56.2 184.8 27.4
All funds,
total 3,842.0 2,687.0 1,756.3 1,893.1 102.2 1,237.4 85.5
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 SWE LS = Swedestart Life Science
CMHRE = CapMan Hotels RE SWE Tech = Swedestart Tech
CMRE = CapMan Real Estate
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 International Private Equity and Venture
Capital Valuation Guidelines (IPEVG) 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
IPEVG'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
30 June 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 JANUARY -
30 JUNE 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-June 2008
The CapMan funds made three new investments as well as follow-on
investments worth altogether MEUR 67.9 in January-June. 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 120.7.
Exits from portfolio companies January-June 2008
Final exits from Solid Information Technology Oy and Staffpoint Oy
were implemented during the review period. The CapMan Equity VII
fund's portfolio company LUMENE Group 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 23.5. 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 44.2.
Events after the review period
In early July the funds exited from Spintop Netsolution AB and Reima
Holding, and announced a large follow-on investment in Curato AS. The
investment in the technology company Crayon announced in June was
implemented in July also. The investment in Cederroth International
AB announced in May was implemented in late July.
CAPMAN REAL ESTATE
Investments in and commitments to real estate acquisitions and
projects January-June 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, an investment commitment made
earlier was used during the review period for financing the Skanssi
Kauppakeskus shopping mall project and for purchasing a land area
located in the Kivistö district of Vantaa.
Investments amounting to MEUR 915.7 were made during the review
period, in addition to which the funds had made commitments as at 30
June 2008 to finance real estate acquisitions and projects over the
next few years amounting to MEUR 227.8. In the comparable period in
2007 a decision was made to invest in three new targets and the
investments implemented totalled MEUR 41.2.
Exits from real estate investments January-June 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.
FUND'S INVESTMENT ACTIVITIES IN FIGURES
Funds' investments and exits at acquisition cost, MEUR
1-6/2008 1-6/2007 1-12/2007
New and follow-on investments
Funds investing in portfolio 67.9 120.7 164.7
companies
Buyout 62.1 101.7 126.7
Technology 3.9 17.0 28.6
Life Science 1.9 2.0 9.4
Real estate funds 915.7 41.2 160.0
Total 983.6 161.9 324.7
Exits*
Funds investing in portfolio 23.5 44.1 93.2
companies
Buyout 17.9 36.2 74.1
Technology 5.6 7.9 19.1
Life Science - - -
Real estate funds - 304.4 304.4
Total 23.5 348.5 397.6
* Including partial exits and repayments of mezzanine loans.
In addition, the real estate funds had made commitments to finance
real estate acquisitions and projects with MEUR 227.8.
Funds' aggregate combined portfolio* 30 June 2008, MEUR
Portfolio at Portfolio at Share of
acquisition fair portfolio
price value (fair value) %
Funds investing in portfolio 680.6 818.7 43.2
companies
Real estate funds 1,075.7 1,074.4 56.8
Total 1,756.3 1,893.1 100.0
Funds investing in portfolio
companies
Buyout 523.4 682.1 83.3
Technology 113.0 100.8 12.3
Life Science 44.2 35.8 4.4
Total 680.6 818.7 100.0
*Aggregated entity formed of all investment targets of funds under
management.
Remaining investment capacity
After deduction of actual and estimated expenses, on 30 June 2008 the
funds that invest in portfolio companies had some MEUR 610 remaining
for new and follow-on investments. Of the remaining capital, some
MEUR 400 was earmarked for buyout investments (incl. mezzanine
investments), MEUR 170 for technology investments and MEUR 40 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 30 JUNE 2008
On 25 July 2008 CapMan Plc sold its 35% holding in Access Capital
Partners, which manages four funds of funds and private equity
mandates. At the end of June Access had altogether EUR 2.5 billion of
capital under management.
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) 416.0
Private Equity Mandates 1,162.0
Total 2,501.5
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 on completion of the transaction announced on 25 July 2008 is:
Access Capital Fund: 47.5%, Access Capital Fund II: 45%, Access
Capital Fund III: 45%, Access Capital Fund IV: 25%, Access/Private
Equity Mandates: 25%.
Further information about the operations of Access Capital Partners
is available on the internet: www.access-capital-partners.com.
