Excellent start of the year, good future outlook
- The Group's turnover for the first quarter of 2007 increased to
MEUR 28.1 (MEUR 8.9 in January-March 2006) and operating profit was up
to MEUR 25.4 (MEUR 5.1).
- The growth in turnover and operating profit was mainly influenced by
growth in carried interest income and the impact of the Company's own
investments. Carried interest for the first quarter totalled MEUR 21.2
(MEUR 2.6) and was accrued mainly from CapMan Real Estate I fund, which
began to generate carry as a result of its real estate portfolio sale
finalised on 31 January 2007. Own fund investments had an impact of MEUR
4.4 (MEUR 2.2).
- Profit before taxes was MEUR 26.7 (MEUR 5.1) and profit after taxes was
MEUR 19.9 (MEUR 3.7). The share belonging to the owners of the parent
company was MEUR 14.3 (MEUR 3.6) and minority interests were MEUR 5.6
(MEUR 0.1).
- Earnings per share was EUR 0.19 (EUR 0.05).
- Capital under management increased in the first quarter by 17.5%, which
is over the average annual growth target of 15%. At 31 March 2007
capital under management totalled MEUR 2,996.1 (MEUR 2,549.6 at 31
December 2006 and MEUR 2,245.3 at 31 March 2006).
- The Group's profit before taxes for 2007 will clearly improve from that
of 2006.
Business
CapMan is an alternative asset manager and its core business is private
equity fund management and advisory services. The funds under management
invest mainly in unlisted Nordic companies or real estate assets. CapMan
Plc's income derives from management fees from the funds, carried
interest from funds generating carried interest, returns on direct fund
investments made from CapMan Plc's own balance sheet and returns on real
estate consulting.
CapMan Plc's business areas
CapMan provides management and advisory services in two business areas:
CapMan Private Equity (funds making investments in portfolio companies)
and CapMan Real Estate (private equity real estate funds making
investments in real estate assets as well as real estate consulting).
Investments by CapMan funds investing in portfolio companies focus
mainly on the Nordic countries in three investment areas, which are
middle market buyouts (CapMan Buyout), technology investments (CapMan
Technology) and life science investments (CapMan Life Science). The
investment focus of CapMans private equity real estate funds is on real
estate targets in Finland.
Information on each business area is reported in its own segment in
Interim Reports. Associated company Access Capital Partners has been
included in the Group's figures under CapMan Private Equity. As for
funds, Access Capital Partner's figures have been presented separately.
Turnover and profit development in January-March 2007
CapMan's turnover for the first quarter of 2007 increased to MEUR 28.1
(MEUR 8.9 in January-March 2006) mainly as a result of the rise in
carried interest income.
The sum of management fees paid by the funds increased slightly and was
MEUR 5.8 (MEUR 5.6). CapMan started to receive management fees from
CapMan Technology 2007 and CapMan RE II funds in the period under
review, but on the other hand the sum of management fees received from
older funds decreased with exits that were executed after the
comparative period, for example as a result of the sale of CapMan Real
Estate I fund's portfolio.
Carried interest income received by CapMan totalled MEUR 21.2 (MEUR
2.6). The sale of CapMan Real Estate I fund's real estate portfolio
accrued carried interest totalling MEUR 21.0, of which the share
belonging to the owners of the parent company was MEUR 13.4. The
remaining MEUR 0.2 of carried interest income was accrued from the
transfer of Finnventure Fund V to carry.
The impact of fund investments made from CapMan's own balance sheet
totalled MEUR 4.4 (MEUR 2.2). Realised returns on fund investments were
MEUR 0.3 (MEUR 0.0). Fair value gains/losses associated with fund
investments totalled MEUR 4.1 (MEUR 2.2). Of the gains in fair value
MEUR 1.5 was related to value creation in Moventas Oy, from which CapMan
Equity VII fund made a partial exit during the period, MEUR 1.5 was
mostly related to value creation in other portfolio companies of CapMan
Equity VII fund and MEUR 1.1 to value creation in funds managed/advised
by Access Capital Partners. Value creation is based on portfolio company
valuations, which are made in accordance with EVCA guidelines and with
the realised development in 2006 and the outlook for 2007 taken into
consideration. The aggregate fair value of all fund investments made
from CapMan's own balance sheet was MEUR 38.4 at 31 March 2007.
Returns on real estate consulting operations totalled MEUR 0.6 (MEUR
0.5) and other operating income within turnover was MEUR 0.2 (MEUR 0.2).
Operating expenses were MEUR 6.8 (MEUR 6.0).
The Group's operating profit for the review period increased to MEUR
25.4 (MEUR 5.2). The share from the result of CapMan's associated
companies was MEUR 0.9 (MEUR -0.2). Profit before taxes was MEUR 26.7
(MEUR 5.1) and profit after taxes MEUR 19.9 (MEUR 3.7). The share of
profit belonging to the owners of the parent company was MEUR 14.3 (MEUR
3.6), on the basis of which earnings per share was EUR 0.19 (EUR 0.05).
Balance sheet and financial position at 31 March 2007
The sum of non-current assets in the balance sheet grew to MEUR 60.6
(MEUR 41.6) during the period under review. In line with CapMan's
strategy, the sum of CapMan's own investments increased and their fair
value totalled MEUR 38.4 (MEUR 22.9) at the end of the review period.
Non-current receivables totalled MEUR 12.1 (MEUR 10.2). Of the
receivables MEUR 9.0 (MEUR 8.1) was loan receivables from Maneq funds,
which make portfolio company investments along with CapMan funds and
whose investors are CapMan employees in accordance with certain
principles. Goodwill was MEUR 4.8 (MEUR 4.8), and is directed mainly at
the acquisition of Swedestart Management AB in 2002. CapMan's net cash
assets, including current investments, increased to MEUR 43.7 (MEUR 8.0)
as a result of carried interest received from CapMan Real Estate I fund.
The Company has interest-bearing liabilities of MEUR 10.0 (MEUR 0.0).
CapMan's equity ratio at the end of the review period was 61.9% (87.4%).
Return on equity for the period was 32% (7.6%) and return on investment
36.7% (10.6%). The Company has target levels of at least 50% for the
equity ratio and over 25% for return on equity.
Key ratios
31.3.07 31.3.06 31.12.06
Earnings/share, EUR 0.19 0.05 0.15
Diluted, EUR 0.18 0.05 0.15
Shareholders' equity/share, EUR 0.80 0.62 0.74
Share issue adjusted number of
shares 77 158 698 75 923 348 76 212 849
Number of shares at the end of
the period 77 158 698 75 923 348 77 158 698
Number of shares outstanding 77 158 698 75 923 348 77 158 698
Return on equity, % 32.0 7.6 23.4
Return on investment, % 36.7 10.6 29.9
Equity ratio, % 61.9 87.4 71.6
Turnover and profit quarterly as well as turnover and operating profit
per segment are presented in the tables section of the Interim Report.
Fundraising
Funds investing in portfolio companies
CapMan established a new technology fund CapMan Technology 2007 on 9
February 2007, and commitments totalling MEUR 127 had been raised to the
fund as at the end of the first quarter. Fundraising for the fund has
progressed well, even though the interest of institutional investors is
still directed first and foremost to different buyout products. The
funds defined investment focus on expansion and later stage technology
companies in the Nordic countries has supported the fundraising.
CapMan's own commitment into CapMan Technology 2007 is MEUR 15, and the
allocation of possible carried interest that will be received from the
fund is 50% for CapMan and 50% for the Technology team. The fund has a
target size of MEUR 150 and its fundraising continues.
During the first quarter it was decided that fundraising for CapMan Life
Science IV fund, which was established in March 2006, will continue
until May 2007. The fund invests in medical technology companies mainly
in the Nordic countries. The lack of venture allocations by
institutional investors has reflected on CapMan Life Science IV's
fundraising, but additional investments to the fund are still expected.
CapMan's own commitment into the fund is MEUR 5, and the allocation of
possible carried interest that will be received from the fund is 50% for
CapMan and 50% for the Life Science team.
Real estate funds
The CapMan RE II fund established in September 2006 reached its maximum
investment capacity of MEUR 600 during the review period. The aim is
that an average 75% of the fund's investments are financed with debt
financing, in which case the fund's investment capacity of MEUR 600
comprises MEUR 150 of shareholders' equity and the remainder debt
financing. The investment focus of CapMan RE II is on property
development targets in Finland, and the fund made its first investments
in the period under review. The funds management company CapMan RE II
GP Oy has a commitment of MEUR 2 into the fund. CapMan Plc's share of
possible carried interest that will be received from CapMan RE II is 60%
and the aggregate share of the Real Estate investment team and the
management companys other owner Corintium Oy is 40%.
Capital under management
As at 31 March 2007 CapMan managed a total of MEUR 2,996.1 in capital
(MEUR 2,245.3 at 31 March 2006). Capital under management in funds
making direct portfolio company investments totalled MEUR 1,896.1 (MEUR
1,745.3). There was a growth in capital during the year as a result of
fundraising for CapMan Buyout VIII and CapMan Technology 2007 funds and
a fall in capital as a result of the termination of operations by
Swedestart II and Finnmezzanine I funds as well as Alliance ScanEast
Fund in 2006. Capital under management in real estate funds grew as a
result of fundraising for CapMan RE II fund and totalled MEUR 1,100
(MEUR 500) at the end of the review period.
Capital under management by associated company Access Capital Partners
CapMan Plc's associated company Access Capital Partners managed/advised
MEUR 1,662.1 (MEUR 1,139.1) in total assets as at 31 March 2007. Of
this, MEUR 923.5 (MEUR 720.0) was in funds of funds and MEUR 738.6 (MEUR
419.1) in private equity investment mandates.
Investments and exits by the funds in January-March
Funds investing in portfolio companies
In the first quarter of 2007, the funds made three new investments, four
substantial add-on investments and smaller add-on investments, investing
MEUR 58.1 in total. There were new investments in Komas Oy, John
Nurminen Vehicle Logistics Unit and Mirasys Ltd. Add-on investment
decisions were made in Savcor Group, Aerocrine AB, Jolife AB and
Millicore AB. Additionally new investments in Walki Wisa Group and
Novintel Oy were announced during the review period.
The funds exited in total from Distocraft Oy and made a partial exit
from Moventas Oy during the first quarter. Additionally the funds sold
their shares in SysOpenDigia Plc. Exits at acquisition cost (including
mezzanine loan instalments and partial exits) totalled MEUR 25.5 for the
review period.
Real estate funds
The Real Estate funds made three new investments in the review period.
The new assets are Kiinteistö Oy Helsingin Kalevankatu 20 in Helsinki as
well as Kiinteistö Oy Kasarmikatu 4 and Kiinteistö Oy Parolantie 104 in
Hämeenlinna. In addition new investments were announced in Kiinteistö Oy
Viinikankatu 49 in Tampere and in Tokmanni's logistics centre project in
Mäntsälä, which is scheduled mainly for 2008. The sum of gross
investments for the period under review was MEUR 19.4.
CapMan Real Estate I fund exited in total from 22 properties during the
review period when the sale of its real estate portfolio to Samson
Properties Ltd, The Royal Bank of Scotland (RBS) and Ajanta Oy was
finalised on 31 January 2007. The acquisition cost of the real estate
portfolio was MEUR 304.4 and its sale price was MEUR 377.5.
Investments and exits at acquisition cost, MEUR
1-3/2007 1-3/2006 1-12/2006
New and follow-on
investments
Funds investing in
portfolio companies 58.1 21.7 158.8
Buyout 54.2 15.3 127.8
Technology 2.3 5.6 16.8
Life Science 1.6 0.8 14.2
Real estate funds 19.4 21.3 78.7
Total 77.5 43.0 237.5
Exits*
Funds investing in
portfolio companies 25.5 23.4 173.8
Buyout 22.5 23.4 144.7
Technology 3.0 - 24.7
Life Science - - 4.4
Real estate funds 304.4 - -
Total 329.9 23.4 173.8
*incl. partial exits and mezzanine loan instalments
The investment activities of the funds managed by CapMan are described
in more detail in Appendix 2.
Status of CapMan funds as at 31 March 2007
Funds investing in portfolio companies
Investments in portfolio companies at acquisition cost totalled MEUR
602.4 at 31 March 2007. The fair value of investments was MEUR 723.7.
The funds portfolios are valued to fair value in accordance with the
guidelines of EVCA as specified in Appendix 1.
Excluding realised and estimated future expenses, CapMan funds had an
investment capacity of about MEUR 770 for new and follow-on investments
in portfolio companies. Of this, approx. MEUR 540 is reserved for buyout
investments (incl. mezzanine), approx. MEUR 190 for technology
investments and approx. MEUR 40 for life science investments.
Real estate funds
At the end of the first quarter, the funds investments in real estate
assets at acquisition cost totalled MEUR 19.4 and the fair value of
investments was MEUR 19.0. The current portfolio is wholly comprised of
assets acquired during the period under review. The majority of these
assets are investment targets of CapMan RE II fund, which has investment
focus on property development. The funds have an investment capacity of
about MEUR 710 for new investments.
Funds gross portfolio* as at 31 March 2007, MEUR
Portfolio Portfolio Share of
at at portfolio
acquisition fair (fair
cost value value) %
MEUR MEUR
Funds investing in 602.4 723.7 97.4
portfolio companies
Real estate funds 19.4 19.0 2.6
Total 621.8 742.7 100.0
Funds investing in
portfolio companies
Buyout 462.8 587.9 81.2
Technology 104.9 104.1 14.4
Life Science 34.7 31.7 4.4
Total 602.4 723.7 100.0
* Gross portfolio of all portfolio companies and real estate assets
managed by CapMan funds.
As a result of the real estate portfolio sale that was finalised in
January and the short holding period of the current real estate
portfolio, the relative proportion of real estate assets in the gross
portfolio of all funds managed by CapMan is at an exceptionally low
level.
Funds generating carried interest as at 31 March 2007
A private equity fund begins to generate carried interest after the
investors have regained their investment in addition to a preferred
annual return, usually 7-8%. CapMan Real Estate I and Finnventure V
funds began to generate carried interest during the period under review,
and of these funds CapMan Real Estate I is still in the active
investment phase. At the close of the review period the following funds
were in carry:
CapMans Portfolio at
share fair value
of cash 31.3.2007
flows*
Finnventure Fund II, Finnventure
Fund III and Finnmezzanine Fund II B
in total: 20-35 % 2.9
Finnventure Fund V: 20 % 56.9
Fenno Program (Fenno Fund, Skandia
I and Skandia II) in total: 10-12 % 21.3
CapMan Real Estate I**: 25 % 7.2
* Net share of cash flows, taking into consideration Fenno Management
Oys share as far as Fenno Program is concerned, and of Corintium Oys
and the investment teams shares as far as CapMan Real Estate I is
concerned.
** The fund still continues active investment operations.
At 31 March 2007 the current portfolios of funds generating carried
interest at fair value totalled MEUR 88.3, which represents 11.9% of
fair value of portfolios of all funds at 31 March 2007 (MEUR 742.7).
Information on each funds investment targets is presented on CapMan's
website at www.capman.com/En/InvestorRelations/Funds.
CapMan's share of carried interest received from funds generating carry
is typically 20-25% of a funds cash flow in the case of CapMan funds
that were established before 2004, and 10-15% for newer funds. The lower
carried interest percentage for newer funds results from the
distribution of a share of their carried interest to the members of the
investment team responsible for the funds investment activities during
its life cycle (typically 10 years), in accordance with common practice
in the private equity investment industry.
CapMans own investments in the funds
Since 2002, CapMan Plc has been a substantial investor in the funds
managed by the Group. The Company's objective is to invest about 5-10%
of the total capital in future funds from its own balance sheet. The
investment strategy, which applies to investments by equity funds
investing in portfolio companies, aims to improve the Company's return
on equity and to even out fluctuations in income with coming years with
returns from these investments. The investments made have been valued at
fair value in accordance with EVCA guidelines as specified in Appendix
1. There may be quarterly changes in fair value gains and/or losses and,
in addition to the value creation of portfolio companies, these are
affected by executed realisations.
CapMan, like other investors in the funds, gives commitments to the
funds when they are established. As at 31 March 2007 the total sum of
current investments at fair value and remaining commitments was MEUR
96.4, of which remaining commitments totalled MEUR 58.0. Of these
commitments MEUR 25.4 is targeted for CapMan Buyout VIII and MEUR 15 for
CapMan Technology 2007, with the remainder targeting mainly CapMan Life
Science IV, CapMan Mezzanine IV, CapMan Equity VII and Access Capital
Fund II funds. The commitments will be drawn down gradually within the
next 3-5 years as new investments are made. Fund investments for the
review period totalled MEUR 7.4 (MEUR 1.5). The majority of investments
were made in CapMan Buyout VIII fund. The fair value of cumulative fund
investments made from CapMans own balance sheet was MEUR 38.4 as at 31
March 2007.
CapMans investments and commitments in the funds as at 31 March 2007,
MEUR
Investments Remaining In
at fair commitments total
value
Funds investing in
portfolio companies
Equity funds 27.6 48.6 76.2
Mezzanine funds 3.0 4.5 7.5
Funds of funds* 7.7 2.2 9.9
38.3 55.3 93.6
Real estate funds 0.1 2.7 2.8
Total 38.4 58.0 96.4
* Managed/advised by CapMans associated company Access Capital
Partners.
CapMans own investments in the funds 1 January - 31 March 2007, MEUR
1-3/2007 1-3/2006 1-12/2006
Funds investing in
portfolio companies
Equity funds 5.6 0.5 9.8
Mezzanine funds 1.5 0.1 0.7
Funds of funds* 0.3 0.9 2.6
7.4 1.5 13.1
Real estate funds 0.0 0.0 0.1
Total 7.4 1.5 13.2
* Managed/advised by CapMans associated company Access Capital
Partners.
Personnel
As at 31 March 2007 the Group had 101 (95) employees, of whom 74 (67)
were located in Finland and the remainder in other Nordic countries. In
addition there were five Senior Advisors and two other advisors acting
as consultants for CapMan. Four of the Senior Advisors were located in
Finland and one in Denmark.
31.3.2007 31.3.2006 31.12.2006
CapMan Private Equity 37 39 38
CapMan Real Estate 26 19 24
General functions 38 37 36
Total 101 95 98
During the period under review CapMan was placed in the top third of the
Best Workplaces in Finland 2007 study conducted by Great Place to Work
Institute Finland. CapMan's personnel in Finland responded to the study,
which was implemented through a confidential employee survey in November
2006.
Shares and shareholders
There were no changes in the share capital of CapMan Plc in the first
quarter, and the Company's share capital totalled EUR 771,586.98 at 31
March 2007. The number of listed B shares was 69,158,698 and the number
of A shares was 8,000,000.
There was a clear increase in trading turnover and value of B shares
traded compared to the comparative period of 2006. Share price
development was strong and the B share reached an all-time high of EUR
3.64 in March. At the end of the review period the B shares had a
closing price of EUR 3.48 and market value totalling MEUR 242.1 (MEUR
200.4). The Company's total market capitalisation, including CapMan A
shares, was MEUR 269.9 (MEUR 224.0).
There was also clear growth in trading turnover of 2000A/B stock options
from the comparative period. The subscription period for B shares with
2000A/B options expires on 31 October 2007. Trading of 2003A options
that were listed in October 2006 also continued at a livelier pace than
previously. No shares were subscribed with stock options of either
program during the period under review.
Trading and price development of shares and options
B shares 2000A/B stock 2003A stock
options options
1-3/2007 1-3/2006 1-3/2007 1-3/2006 1-3/2007
Trading
turnover, number 8 819 149 5 902 203 878 690 709 600 250 866
Trading value,
MEUR 28.2 17.5 2.2 1.5 0.4
Trading price,
EUR
Highest 3.64 3.15 2.88 2.27 2.07
Lowest 2.86 2.81 2.06 1.96 1.40
Volume
weighted
average price 3.20 2.97 2.45 2.16 1.64
Closing price 3.48 2.95 2.87 2.22 2.06
31.3
CapMan Plc had 4,813 (5,424) shareholders at the end of the review
period. The number of shareholders has fallen from the comparative
period, and at the same time the proportion of foreign and nominee-
registered shareholders has risen from 28.5% to 32.5%. There was one
disclosure of changes in shareholding during the review period, when the
ownership of Vesasco Oy decreased to less than 5% of the share capital
and to 10% of the voting rights.
Decisions adopted by the AGM
The Annual General Meeting (AGM) of CapMan Plc was held in Helsinki on
29 March 2007. The AGM confirmed the 2006 financial statements and
granted discharge from liability to the Board of Directors and the CEO
for the 2006 financial year and decided that a dividend of EUR 0.12 per
share be paid to shareholders for year 2006. The dividend payment date
was 12 April 2007.
The AGM decided that the Board of Directors consists of six members.
Tapio Hintikka, Lennart Jacobsson, Urban Jansson, Teuvo Salminen and Ari
Tolppanen shall continue as Board members. Sari Baldauf was elected as a
new member to the Board. The organisation meeting of the Board of
Directors that was held immediately after the AGM elected Ari Tolppanen
as Chairman of the Board and Teuvo Salminen as Vice Chairman of the
Board. Board members Sari Baldauf, Tapio Hintikka, Urban Jansson and
Teuvo Salminen are independent of the Company. In addition, the AGM
decided that monthly compensation of EUR 3,500 shall be paid to the
Chairman and Vice Chairman and EUR 3,000 to members. Compensation shall
not be paid for those Board members that are employed by CapMan Group.
Reasonable travel expenses shall be compensated for all Board members.
The AGM elected PricewaterhouseCoopers Oy, corporation of authorised
public accountants, as the Company's auditors with Jan Holmberg, APA
(Auditor approved by the Central Chamber of Commerce), as the Lead
Auditor. Terja Artimo, APA, from the same accounting corporation, shall
act as Mr Holmberg's deputy.
In accordance with the proposals of the Board of Directors, the AGM also
decided
- to amend the Company's Articles of Association
- to authorise the Board of Directors to resolve to issue a maximum of
20,000,000 B shares, or to issue stock options and other entitlements
referred to in the Finnish Companies Act section 10, paragraph 1, and to
determine the terms and conditions related to these issues
- to authorise the Board of Directors to repurchase a maximum of
8,000,000 of the Company's own B shares by using the Company's
unrestricted shareholders' equity. The share repurchases shall be
carried out through public trading on the Helsinki Stock Exchange in
another proportion than according to the holdings of the shareholders.
The repurchase price shall be based on the market price of the Company's
shares in public trading
- that the share subscription prices to be accrued from share
subscriptions pertaining to the Company's stock option plans shall be
recorded in the Company's invested unrestricted shareholders' equity.
The decisions adopted by the AGM and the amended Articles of Association
in their entirety are presented on CapMan's Internet pages under
www.capman.com/En/InvestorRelations/AnnualGeneralMeetings and
www.capman.com/En/AboutCapMan/CorporateGovernance/ArticlesofAssociation/
.
Future outlook
CapMan Private Equity
Private equity investment in Europe is estimated to show growth in the
mid and long term. The foundation for growth is the increasing inclusion
of private equity investment as a part of investment allocations by
institutional investors and other substantial investor groups, including
high net worth individuals. The stock exchange listing intentions of
management companies like CapMan have emerged as a new phenomenon in the
markets. A prominent example of that are the listing preparations by US-
based Blackstone Group, one of the worlds leading private equity
investors. The goal in going public is to create a new source of capital
for funds under management. CapMan's strategy is to invest 5-10% of the
total capital in its respective equity funds.
Private equity investment has also claimed some of the role that has
traditionally been played by public markets in the financing of M&A and
growth. The growth of traditional private equity investment in unlisted
companies in the Nordic countries continues to be accelerated by
consolidation in various sectors, family successions, privatisation of
public services and functions, strong investment in research and
development in technology and life science sectors, and increasing
entrepreneurial activity.
The competition for middle market investee companies in buyout markets
is fierce because of the number of players and the plentiful
availability of loan financing. However the largest and most publicly
visible investment volume is still focused in the bigger buyout segment,
where deals are larger, whereas CapMan's focus is on middle market
buyouts. Competition is also visible in the markets as a rise in
investment professionals' compensation levels. CapMan's local presence
in different Nordic countries, which enables the active search for
investee companies throughout the Nordic region, is important in the
prevailing competitive situation. The competition in technology and life
science sectors is less fierce and there are good opportunities for
syndicated investments.
CapMan will continue to implement its portfolio company investment
strategy on a Nordic level. The number of new potential investee
companies remains at a good level. Our investment teams continue to have
solid market coverage ensuring access to the majority of potential
investment targets, and they have comprehensive resources for value
creation in portfolio companies via active work on the companies Boards
of Directors.
CapMan is in a good position to continue as a proactive player in the
private equity market, as its funds making investments in portfolio
companies have approximately MEUR 770 in capital for new and follow-on
investments. Fundraising for CapMan Technology 2007 and CapMan Life
Science IV funds still continues.
CapMan Real Estate
The liquidity of real estate markets has remained good throughout the
beginning of 2007. The supply and demand of properties has still been at
a high level, as a result of increased vendor activity and the growing
number of foreign investors. Pricing of properties is quite aggressive
and there is tough competition for completed good properties. The number
of real estate funds in Finland is still growing and the funds have
strong activities in the markets. Market activity has also expanded
outside of the greater Helsinki region. The challenge for investors in
the acquisition and management of targets requiring development work is
to find the right and adequate resources.
There are no signs of a turn in Finland's positive economic growth, and
therefore adequate resources and expertise will continue to be in a
critical position for success in the markets. The resources of CapMan's
Real Estate funds have been further strengthened as far as making real
estate investments and developing and managing the real estate portfolio
are concerned. At present our two funds have adequate personnel
resources, a competitive structure and an aggregate investment capacity
of approx. MEUR 710 for finding good investment targets and developing
the current portfolio in Finland. These resources together with the
teams reliability and flexible way to do business have brought the
funds plenty of investment opportunities. We believe that also in future
there will be good potential to find individual properties that fit the
investment focus of our funds and which we can acquire for further
development on competitive terms in the market.
CapMan Plc Group
CapMan's strategy is to exploit growth opportunities within the
alternative asset class. In addition to CapMan's existing product areas
(Private Equity, Real Estate) the alternative asset class includes,
among others, infrastructure investment, forestry investment and active
public market funds. CapMan is investigating the possibilities to expand
into some of these areas and will define its geographical strategy,
especially concerning Russia, during this year.
The Group's profit before taxes for 2007 will clearly improve from that
of 2006. The final result for 2007 will depend on how many exits are
made by funds already generating carried interest, on the possible
transfer of new funds to carry, and on how the value of investments
develops in those funds in which CapMan is a substantial investor.
According to our understanding the exit markets will remain favourable
and CapMan Equity VII A, B and Sweden funds as well as Finnventure Fund
IV are expected to begin to generate carried interest during 2007-2008.
The funds investing in portfolio companies have several exit processes
underway.
CapMan Plc will publish its Interim Report for the period 1 January - 30
June 2007 on 10 August 2007.
Helsinki 3 May 2007
CAPMAN PLC
Board of Directors
Press conference:
A press conference will be held in Finnish for the media and analysts
today at 12.00 p.m. in CapMan's premises, address Korkeavuorenkatu 32,
Helsinki. Heikki Westerlund, CEO, will present CapMan Plc's interim
result and describe the current market environment. A light lunch will
be served at the event.
Presentation material from the press conference will be published in
Finnish and English on the Groups website when the press conference has
commenced.
For further information, please contact:
Mr Heikki Westerlund, CEO, tel. +358 9 6155 8304 or +358 50 559 6580
Mr Olli Liitola, CFO, tel. +358 9 6155 8306 or +358 400 605040
DISTRIBUTION:
Helsinki Exchanges
Principal media
www.capman.com
GROUP BALANCE SHEET
IFRS IFRS IFRS
EUR 31.3.07 31.3.06 31.12.06
ASSETS
Non-current assets
Tangible assets 641,802 879,065 672,155
Goodwill 4,845,174 4,845,174 4,845,174
Other intangible assets 682,864 722,410 709,754
Investments in associated
companies 2,866,089 851,386 2,860 458
Investments at fair value
through profit and loss
Investments in funds 38,377,578 22,909,476 33,121,817
Other financial assets 845,735 1,037,293 848,290
Receivables 12,062,020 10,171,022 13,834,881
Deferred income tax assets 230,562 229,619 230,562
60,551,824 41,645,445 57,123,091
Current assets
Trade and other receivables 9,988,018 9,480,184 5,521,345
Other financial assets at
fair value
through profit and loss 19,653,655 1,986,979 2,779,410
Cash and bank 24,053,072 5,991,821 14,136,732
53,694,745 17,458,984 22,437,487
Total assets 114,246,569 59,104,429 79,560,578
EQUITY AND LIABILITIES
Capital attributable the
Company's
equity holders
Share capital 771,587 759,303 771,587
Share premium account 38,968,183 38,161,514 38,968,186
Other reserves 1,234,715 1,036,890 1,218,624
Translation difference 216,796 -161,410 316,780
Retained earnings 20,155,179 7,412,596 15,073,517
61,346,460 47,208,893 56,348,694
Minority interest 6,035,989 128,881 598,720
Total equity 67,382,449 47,337,774 56,947,414
Non-current liabilities
Deferred income tax
liabilities 3,258,046 943,558 2,233,718
Interest-bearing loans 10,000,000 0 10,000,000
Other liabilities 490,000 457,845 430,000
13,748,046 1,401,403 12,663,718
Current liabilities
Trade and other payables 28,096,982 9,523,454 7,409,436
Interest-bearing loans and
borrowings 0 0 1,943,967
Current income tax
liabilities 5,019,092 841,798 596,313
33,116,074 10,365,252 9,949,446
Total liabilities 46,864,120 11,766,655 22,613,164
Total equity and liabilities 114,246,569 59,104,429 79,560,578
GROUP INCOME STATEMENT
IFRS IFRS IFRS
EUR 1-3/07 1-3/06 1-12/06
Turnover 28,090,550 8,916,867 38,032,121
Other operating income 18,108 150 687,133
Personnel expenses -3,427,394 -2,523,232 -43,957,949
Depreciation and amortisation -142,676 -173,958 -725,993
Other operating expenses -3,205,799 -3,289,437 -11,958,181
Fair value gains / losses of
investments 4,082,718 2,220,716 3,549,490
Operating profit 25,415,507 5,151,106 15,626,621
Financial income and expenses 328,665 170,230 420,027
Share of associated
companies' result 914,873 -247,442 1,279,086
Profit before taxes 26,659,045 5,073,894 17,325,734
Income taxes -6,754,775 -1,407,138 -4,892,972
Profit for the financial year 19,904,270 3,666,756 12,432,762
Attributable to:
Equity holders of the company 14,278,672 3,606,698 11,455,302
Minority interest 5,625,598 60,058 977,460
Earnings per share for profit
attributable
to the equity holders of the
Company:
Earnings per share, 0.19 0.05 0.15
Diluted, 0.18 0.05 0.15
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to the equity holders of the Company
Share Share Other Trans- Re- Total Mino- Total
EUR ('000) capital premium reser- lation tained rity equity
account ves differ- earn- inte-
rences ings 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 9
Options 17 61
Profit for
the
financial
year 14,279 5,625
Dividends
paid -9,259 -188
Equity on
31.3.2007 772 38,968 1,235 216 20,155 61,346 6,036 67,382
GROUP'S CASH FLOW
IFRS IFRS IFRS
EUR 1-3/07 1-3/06 1-12/06
Cash flow from operations
Profit for the financial
year 14,278,672 3,606,698 11,455,302
Depreciation and other
adjustments 7,707,089 -502,349 352,225
Change in working capital 7,914,361 926,737 889,351
Financing items and taxes 135,483 -669,798 -1,549,100
Cash flow from operations 30,035,605 3,361,288 11,147,778
Cash flow from investments -4,601,879 -429,157 -9,466,501
Financial cash flow -15,517,386 -3,786,797 5,608,968
Change in cash funds 9,916,340 -854,666 7,290,245
Cash funds at start of the
period 14,136,732 6,846,487 6,846,487
Cash funds at end of the
period 24,053,072 5,991,821 14,136,732
ACCOUNTING PRINCIPLES
The same accounting principles have been applied in the Interim Report
as in the 2006 financial statements.
AUDIT OF THE ACCOUNTS
The information presented in the Interim Report is un-audited.
SEGMENT INFORMATION
IFRS IFRS IFRS
EUR 1-3/07 1-3/06 1-12/06
Turnover
CapMan Private Equity 5,654,540 7,685,836 33,115,589
CapMan Real Estate 22,436,010 1,231,031 4,916,532
Total 28,090,550 8,916,867 38,032,121
Operating profit
CapMan Private Equity 4,579,334 4,945,062 15,404,707
CapMan Real Estate 20,836,173 206,044 221,914
Total 25,415,507 5,151,106 15,626,621
SEASONAL NATURE OF BUSINESS
Carried interest income is accrued on an irregular schedule depending on
the time of execution of realisations. One exit may have substantial
impact on CapMan Plcs result for the financial year.
TURNOVER AND PROFIT QUARTERLY
YEAR 2007
MEUR 1-3/07
Turnover 28.1
Management fees 5.8
Carried interest 21.2
Income of investments
in funds 0.3
Real Estate
consulting 0.6
Other income 0.2
Fair value gains /
losses of investments 4.1
Financial income and
expenses 0.3
Share of associated
companies' result 0.9
Profit before taxes 26.7
Profit for the period 19.9
YEAR 2006
MEUR 1-3/06 4-6/06 7-9/06 10-12/06 1-12/06
Turnover 8.9 9.5 10.6 9.0 38.0
Management fees 5.6 6.8 6.3 6.2 24.9
Carried interest 2.6 1.2 3.7 1.9 9.4
Income of investments
in funds 0.0 0.7 0.0 0.2 0.9
Real Estate
consulting 0.5 0.6 0.4 0.5 2.0
Other income 0.2 0.2 0.2 0.2 0.8
Fair value gains /
losses of investments 2.2 -0.5 1.0 0.8 3.5
Financial income and
expenses 0.1 0.2 0.2 -0.1 0.4
Share of associated
companies' result -0.2 0.2 0.1 1.2 1.3
Profit after financial
items 5.1 2.8 4.7 4.7 17.3
Profit for the period 3.7 2.2 3.6 2.9 12.4
PERSONNEL 31.3.07 31.3.06 31.12.06
Finland 74 67 72
Denmark 5 8 5
Sweden 16 15 16
Norway 6 5 5
In total 101 95 98
CONTINGENT LIABILITIES
EUR 31.3.07 31.3.06 31.12.06
Leasing contracts and
other
contingent liabilities 10,420,886 11,789,355 13,451,476
Commitments to funds 58,092,795 56,552,801 50,528,624
APPENDIX 1: CAPMAN PLC GROUP FUNDS 31 DECEMBER 2006, MEUR
Size Paid- Funds Distributed Liquid
* in current portfolio casflow assets
capital at at to in- to man-
** cost fair vestors agement
value company
*** (carried
interst)
Funds generating ****
carried interest
FV II, FV III 1)
and FM II B
in total 58.6 57.4 3.2 2.9 179.6 44.1 0.4
FV V 169.9 159.8 63.8 56.9 213.5 0.1 4.2
Fenno Program 2)
(Fenno Fund,
Skandia I and
Skandia II)
in total 59.0 59.0 16.2 21.3 113.2 7.3 0.2
CMRE I 5) 500.0 301.1 7.3 7.2 183.0 28.5 -5.2
In total 787.5 577.3 90.5 88.3 689.3 80.0
Funds that are
expected
to start
generating
carried interest
in 2007/2008
FV IV 59.5 59.5 14.1 16.0 62.2 0.7
CME VII A 156.7 123.0 85.9 144.9 66.4 5.5
CME VII B 56.5 49.9 35.2 66.8 29.7 3.0
CME SWE 67.0 52.4 36.7 61.9 28.5 2.8
In total 339.7 284.8 171.9 289.6 186.8
Other funds not
yet in carry
CME VII C 23.1 14.0 9.4 10.2 5.4 0.2
CMB VIII A 360.0 116.4 76.5 76.5 28.6
CMB VIII B 80.0 25.5 17.0 17.0 6.3
CM LS IV 46.1 10.9 8.7 8.7 0.4
CMT 20071) 127.0
FM III 1) 135.5 131.3 68.5 77.0 99.8 2.7
CMM IV 4) 240.0 108.0 77.2 83.4 10.9 20.6
CMRE II 6) 600.0 3.0 12.1 11.8 -9.3
In total 1,611.7 409.1 269.4 284.6 116.1
Funds with
limited
carried interest-
potential to CapMan
NPEP II 3) 20.6 20.6 7.1 3.2 11.4 0.5
FV V ET 34.0 34.0 14.2 11.8 4.7 1.0
SWE LS 3) 49.2 40.7 26.0 23.0 0.2 0.4
SWE Tech 1), 3) 82.1 61.9 33.8 32.0 23.7 1.1
FM II A,C,D 1) 71.3 71.3 8.9 10.2 72.8 2.0
In total 257.2 228.5 90.0 80.2 112.8
Equity funds in
total 2,996.1 1,499.7 621.8 742.7 1,105.0 80.0
CAPITAL MANAGED/ADVISED BY ASSOCIATED COMPANY ACCESS CAPITAL PARTNERS AS
AT 31 MARCH 2007, MEUR
Fund Size*
ACF 1) 250.3
ACF II A 1) 153.4
ACF II B 1) 123.5
ACF III A 1) 307.4
ACF III B 1) 88.9
Private Equity Mandates 738.6
Total capital 1,662.1
Fund abbreviations:
ACF = Access Capital Fund
ACF II A = Access Capital Fund II Mid-market Buyout
ACF II B = Access Capital Fund II Technology
ACF III A = Access Capital Fund III Mid-market Buyout
ACF III B = Access Capital Fund III Technology
CMB = CapMan Buyout Fund
CME = CapMan Equity
CMLS = CapMan Life Science Fund
CMM = CapMan Mezzanine
CMRE = CapMan Real Estate
CMT 2007 = CapMan Technology 2007
FM = Finnmezzanine Fund
FV = Finnventure Fund
SWE LS = Swedestart Life Science
SWE Tech = Swedestart Tech
* Total capital committed by investors. In CapMan's statistics the terms
capital under management and fund size refer to the gross capital
commitment in the fund. Funds managed by associated company Baltcap
Management Oy are excluded (CapMan's share of Baltcap Management Oy is
20%; the total size of the funds is approx. MEUR 31.2). Capital under
management by Access Capital Partners is presented separately.
** Total capital paid into the fund by investors.
*** The funds portfolios are valued to fair value in accordance with the
guidelines of the European Private Equity & Venture Capital Association
(EVCA). The fair value is the amount for which an asset could be
exchanged between knowledgeable, willing parties in an arms length
transaction. Due to the nature of private equity investment activities,
the funds portfolios contain companies with fair value greater than
acquisition cost as well as companies with fair value less than
acquisition cost.
**** CapMan Plc Group's share of carried interest income.
When the return of a fund has exceeded a required cumulative return
target, the management company is entitled to a share of the cash flow
from the funds (carried interest).
Cash flow includes both the distribution of profits and distribution of
capital. Carried interest % of the remaining cash flows are (for the
funds which were generating carried interest as at 31 December 2006):
Finnventure Fund II: 35%, Finnventure Fund III: 25%, Fenno Program/Fenno
Fund: 20%, Fenno Program/Skandia I: 20%, Fenno Program/Skandia II: 20%,
Finnmezzanine Fund II B: 20%, CapMan Real Estate I: 40%.
CapMan Plc Group's share of the carried interest is less than 100% for
the following funds: CapMan Buyout VIII A and B: 70%, CapMan Mezzanine
IV: 75%, CapMan Real Estate I: 64%, CapMan Real Estate II: 60%, Fenno
Fund and Fenno Program (Skandia I and II): 50-60%, CapMan Technology
2007: 50%, CapMan Life Science IV: 50%, Swedestart Tech: 12%, Swedestart
Life Science: 10%, Alliance ScanEast Fund: 42%, Access Capital Fund:
47.5%, Access Capital Fund II: 45%, Access Capital Fund III: 25%,
Access/Private Equity Mandates: 25%.
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, 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 2007.
4.CapMan Mezzanine IV: The paid-in commitment includes a MEUR 96
bond issued by Leverator Plc. The funds liquid 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 equity investors.
5.CapMan Real Estate I: The paid-in commitment includes a MEUR
100 bond issued by Real Estate Leverator Plc and a MEUR 178.5 senior
loan. Distributed cash flow includes repayment of the bonds and cash
flow to the funds equity investors.
6.CapMan Real Estate II: 25% or MEUR 150 of the funds size is
shareholders equity and the 75% remainder is credit.
APPENDIX 2: INVESTMENTS AND EXITS BY CAPMAN FUNDS 1 JANUARY - 31 MARCH
2007
The investment activities of private equity funds managed by CapMan
comprise investments in portfolio companies mainly in the Nordic
countries as well as real estate investments in Finland. The investment
activities of funds investing in portfolio companies and of funds
investing in real estate assets are presented separately in this
Appendix.
In addition CapMan has a 35% stake in the funds of funds and private
equity investment mandate manager and adviser Access Capital Partners,
which is based in Paris, Munich and Guernsey. Access Capital Partners
manages/advises three funds that invest in European mid-market buyout
and technology venture capital funds. Further information on Access
Capital Partners can be found at www.access-capital-partners.com.
INVESTMENT ACTIVITIES BY THE FUNDS INVESTING IN PORTFOLIO COMPANIES
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 middle
market class in manufacturing, service and retail industries. Technology
investments focus on expansion and later stage technology companies.
Life science investments focus on companies specialising in medical
technology.
Q1 Investments in portfolio companies
CapMan funds investing directly in portfolio companies made three new
investments, four substantial add-on investments and smaller add-on
investments in the first quarter of 2007 (one new investment, one
substantial add-on investment and smaller add-on investments in the
comparative period of 2006). All in all, MEUR 58.1 (MEUR 21.7) was
invested during the period under review.
CapMan Buyout VIII and CapMan Mezzanine IV funds investment in Finnish
Komas Oy was finalised in January. Komas supplies complete products,
subassemblies and individual components within the metal, manufacturing,
vehicle and defence industries. The company's customers mainly operate
in Northern and Western Europe.
On 1 February 2007 CapMan Buyout VIII and CapMan Mezzanine IV funds and
John Nurminen Oy announced an agreement for the transfer of John
Nurminens Vehicle Logistics Unit to the majority ownership of the
funds. Vehicle Logistics Unit provides logistics services to vehicle
manufacturers, importers and dealers, and it is the market leader in the
Baltic Sea Region.
CapMan Equity VII funds invested in the Finnish video surveillance
system specialist Mirasys Ltd. in March. Mirasys develops and markets
innovative solutions for recording, analysing, storing and managing
video and other surveillance-related data for the security industry. The
investment will finance Mirasys growth and internationalisation.
During the review period, add-on investment decisions were made by
Swedestart Life Science fund in its Swedish portfolio companies Aerocine
AB, Jolife AB and Millicore AB as well as by Finnmezzanine Fund III in
Savcor Group.
Q1 Exits from portfolio companies
The funds managed by CapMan made eight final exits and one partial exit
in the first quarter of 2007. Exits at acquisition cost (including
mezzanine loan instalments and partial exits) totalled MEUR 25.5. There
was one exit in the comparative period of 2006, for which exits at
acquisition cost (including mezzanine loan instalments) totalled MEUR
23.6.
CapMan Equity VII fund sold the majority of its shareholding in Moventas
Oy to Industri Kapital 2004 fund in January. At the same time,
Finnmezzanine III and CapMan Mezzanine IV funds exited from the company.
The transaction was closed at the end of March. Moventas Oy is a global
leading manufacturer of industrial and wind turbine gears as well as
provider of gear maintenance and service. CapMan Equity VII fund
retained 16% ownership in the company. The funds invested in Moventas in
April 2005, and their investment in the company has been very good for
investors in the funds.
The exit by CapMan Equity VII and Swedestart Tech funds from the Finnish
provider of software products and solutions for telecom operators
Distocraft Oy, which was announced in August 2006, was finalised during
the period under review. The funds sold their stake in the company to
Ericsson. The funds invested in Distocraft in 2003, and the investment
was good for the funds investors.
At the end of February Finnventure IV, V and V ET funds sold their
remaining shares in SysOpenDigia Plc. The funds had received the shares
when their portfolio company Sentera Plc was merged with SysOpenDigia
Plc in 2006. The funds had initially invested in the company in years
2000 and 2003.
Other events in Q1
In February CapMan Buyout VIII and CapMan Mezzanine IV funds and UPM-
Kymmene Corporation signed an agreement for the transfer of Walki Wisa
Group owned by UPM into the ownership of the funds managed by CapMan. It
is expected that the transaction will be finalised in the second quarter
of 2007. Walki Wisa produces wrappings for the paper, metal and wood
industries and composite materials for the packaging industry and
industrial applications. Walki Wisas net sales totalled MEUR 287 in
2006 and it employs some 950 persons in different countries.
CapMan Equity VII funds announced an investment in Finnish technology
company Novintel Oy at the end of March. Novintel provides customised
Market Intelligence services and solutions for a wide variety of
industries. The investment will support the growth of the companys
international operations in particular. The investment was finalised in
April after the close of the period under review.
Events after the review period
CapMan Equity VII funds announced an exit from the Swedish provider of
integrated facility, security and office services Synerco AB in April.
The funds will sell their stake to Service Management company Addici
Holding AB, and the transaction is expected to be finalised by the end
of May 2007. The funds invested in the company in 2003. The investment
in Synerco has been good for investors in the funds managed by CapMan.
Nordic Private Equity Partners II exited from LindPlast A/S in April.
LindPlast is a manufacturer of plastic polyethylene packaging materials.
The funds invested in the company in 1996. The exit does not have an
impact on CapMan Plc's result for 2007, because the fund is not in
carry.
Finnventure IV, Finnventure V and Finnventure V ET funds sold their
holding in the Finnish information security and mobility management
software provider Secgo Software Oy to the Norwegian listed company
Birdstep Technology ASA at the end of April. In the transaction, the
funds will receive shares in Birdstep Technology ASA listed on the Oslo
Stock Exchange. The funds will exit from the company in total when they
sell the shares received in Birdstep. The transaction is expected to be
closed by the end of the second quarter in 2007. Because the transaction
will be executed as an exchange of shares, it does not have a direct
impact on CapMan Plc's result for 2007. The funds invested in Secgo in
2004 and their holding in Secgo was 18% prior to the sale.
INVESTMENT ACTIVITIES BY THE REAL ESTATE FUNDS
Q1 Investments
The Real Estate funds made three new investments in the first quarter of
2007. Gross investments for the review period totalled MEUR 19.4.
CapMan Real Estate I acquired the property and lot located at
Kalevankatu 20 from the Local Government Pensions Institution in early
January. Kalevankatu 20 is located in the Kamppi district of central
Helsinki, and it is the funds first investee property following the
sale of the real estate portfolio that was announced in December. The
property was constructed in 1968 and it comprises approx. 3,500 m of
lettable space.
In February CapMan RE II fund made its first investments and acquired
two properties located in Hämeenlinna from Aina Group. Kasarmikatu 4 is
located in the centre of Hämeenlinna, and it has a lettable space of
approx. 3,500 m. The property was built in 1965 and its extensions were
completed in 1990. Parolantie 104 is an office, industrial and warehouse
complex that was built in 1979. The lettable space of the buildings
totals approx. 11,000 m. CapMan RE II fund and Aina Group entered into
a long-term lease from the property in connection with the transaction.
Q1 Exits: Sale of CapMan Real Estate I fund's portfolio
The sale of CapMan Real Estate I fund's real estate portfolio comprising
22 commercial properties to Samson Properties Ltd, The Royal Bank of
Scotland (RBS) and Ajanta Oy was closed at the end of January. The
acquisition cost of the portfolio was MEUR 304.4 and its sale price was
MEUR 377.5. CapMan Real Estate I continues its active investment
operations after the transaction.
Other events in Q1
In February CapMan RE II fund signed an agreement with Tokmanni Oy on
the acquisition of a logistics centre to be constructed close to the
Helsinki-Lahti Motorway in Mäntsälä. Tokmanni's logistics centre will
have a lettable space of approx. 74,400 m, and the project will be
completed in autumn 2008. A long-term lease for the centre has been
signed with Tokmanni.
In March, CapMan RE II fund announced an investment in the property
located at Viinikankatu 49 in the Nekala district of Tampere. The
property comprises commercial premises and warehouse space and it was
built in 1968. The lettable area of the property totals 10,000 m, and
it is almost fully leased at the time of investment.
