CapMan Plc Stock Exchange Release 10 August 2007 at 9.30.a.m
CapMan Plc Group Interim Report 1 January - 30 June 2007
A good first half as a whole, high investment stream
- The Group's turnover for the first half of 2007 increased to MEUR
35.6 (MEUR 18.4 in January-June 2006) and operating profit was up to
MEUR 26.5 (MEUR 7.6).
- 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 half totalled MEUR
21.4 (MEUR 3.8) 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 4.9 (MEUR 2.4).
- Profit before taxes was MEUR 28.1 (MEUR 7.9) and profit after taxes
was MEUR 20.9 (MEUR 5.9). The share belonging to the owners of the
parent company was MEUR 15.3 (MEUR 5.8) and minority interests were
MEUR 5.7 (MEUR 0.1).
- Earnings per share was up to EUR 0.20 (EUR 0.08).
- Capital under management increased in the first half by 18%, which
is over the average annual growth target of 15%. At 30 June 2007
capital under management totalled MEUR 3,013.2 (MEUR 2,549.6 at 31
December 2006 and MEUR 2,322.7 at 30 June 2006).
- The funds made investments with MEUR 161.9 (MEUR 174.6). In
addition the funds committed MEUR 310.8 to finance real estate
acquisition and projects in the next few years, increasing the total
value of investments announced to MEUR 472.7.
- 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 CapMan's 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 Partners' figures have been presented
separately.
Turnover and profit development in January-June 2007
CapMan's turnover for the first half of 2007 increased to MEUR 35.6
(MEUR 18.4 in January-June 2006) mainly as a result of the rise in
carried interest income.
The sum of management fees paid by the funds remained at the level of
the comparative period and was MEUR 12.3 (MEUR 12.4). 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 21.4 (MEUR
3.8). 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 0.4 was accrued from carried interest income received
from other funds generating carry.
The impact of fund investments made from CapMan's own balance sheet
totalled MEUR 4.9 (MEUR 2.4). Realised returns on fund investments
were MEUR 0.3 (MEUR 0.7), and fair value gains/losses associated with
fund investments were MEUR 4.6 (MEUR 1.7). The gains in fair value
were positively influenced by value creation in Moventas Oy, from
which CapMan Equity VII fund made a partial exit during the review
period, by value creation in other portfolio companies of CapMan
Equity VII fund and by value creation in the funds managed/advised by
associated company Access Capital Partners. The main value creation
drivers in CapMan's investment operations are increase in sales,
increase in profitability and utilisation of market conditions. The
gains in fair value were negatively influenced by the expenses of new
funds that are investment targets. The aggregate fair value of all
fund investments made from CapMan's own balance sheet was MEUR 40.8
at 30 June 2007.
Returns on real estate consulting operations totalled MEUR 1.1 (MEUR
1.1). Other operating income within turnover was MEUR 0.5 (MEUR 0.4).
There was an increase in operating expenses to MEUR 13.8 (MEUR 13.1)
as a result of a rise in staff numbers as well as the expenses
incurred by new projects.
The Group's operating profit increased to MEUR 26.5 (MEUR 7.6). The
share from the result of CapMan's associated companies was MEUR 1.1
(MEUR 0.0). Profit before taxes was MEUR 28.1 (MEUR 7.9) and profit
after taxes MEUR 20.9 (MEUR 5.9). The share of profit belonging to
the owners of the parent company was MEUR 15.3 (MEUR 5.8), on the
basis of which earnings per share was EUR 0.20 (EUR 0.08).
The impact of especially carried interest income on profit
development is demonstrated in the first two quarters of the year. As
a result of fluctuations in accrued carried interest, CapMan's
financial development should be followed over a longer period of time
instead of quarterly.
Balance sheet and financial position at 30 June 2007
The sum of non-current assets in the balance sheet grew to MEUR 68.4
during the period under review (MEUR 49.1 at 30 June 2006). In line
with CapMan's strategy, the sum of CapMan's own investments increased
and their fair value totalled MEUR 40.8 (MEUR 28.8) at the end of the
review period. Non-current receivables totalled MEUR 17.4 (MEUR
11.7). Of the receivables MEUR 14.5 (MEUR 8.3) 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, were
MEUR 25.5 (MEUR 7.0). The Company has interest-bearing liabilities of
MEUR 10.0 (MEUR 4.4).
CapMan's equity ratio at the end of the review period was 67.1%
(77.6%). Return on equity for the period was 33.3% (11.9 %) and
return on investment 38.6% (15.3%). The Company has target levels of
at least 50% for the equity ratio and over 25% for return on equity.
Key ratios
30.6.07 30.6.2006 31.12.06
Earnings/share, EUR 0.20 0.08 0.15
Diluted, EUR 0.20 0.08 0.15
Shareholders' equity/share, EUR 0.89 0.66 0.74
Share issue adjusted number of
shares 77 479 731 76 008 900 76 212 849
Number of shares at the end of the
period 78 314 418 76 339 548 77 158 698
Number of shares outstanding 78 314 418 76 339 548 77 158 698
Return on equity, % 33.3 11.9 23.4
Return on investment, % 38.6 15.3 29.9
Equity ratio, % 67.1 77.6 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 134.7 had been raised
to the fund as at the end of the first half of the year. 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 fund's 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. Commitments to the fund have risen to
MEUR 140 after the review period, and its fundraising still
continues. The fund has a target size of MEUR 150.
CapMan Life Science IV fund held a final close in May at MEUR 54. The
fund invests in medical technology companies mainly in the Nordic
countries. 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 reached its maximum investment capacity of MEUR
600 on 31 March 2007. 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.
The fund's 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 company's
other owner Corintium Oy is 40%.
Capital under management
As at 30 June 2007 CapMan managed a total of MEUR 3,013.2 in capital
(MEUR 2,322.7 at 30 June 2006). Capital under management in funds
making direct portfolio company investments totalled MEUR 1,913.2
(MEUR 1,822.7). There has been a growth in capital after the
comparative period as a result of fundraising for CapMan Technology
2007 and CapMan Life Science IV 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 in total assets as at 30 June 2007
(MEUR 1,262.9 as at 30 June 2006). Of this, MEUR 923.5 (MEUR 793.5 as
at 30 June 2006) was in funds of funds and MEUR 738.6 (MEUR 469.4 as
at 30 June 2006) in private equity investment mandates. After the
review period Access has held the first closing of its European
mid-market buyout fund of funds of fourth generation, ACF IV Growth
Buy-out Europe. In addition, Access received a new mandate of MEUR
300 in early August, raising the total capital managed/advised by
Access to over EUR 2 billion.
Investments and exits by the funds in the review period
Funds investing in portfolio companies
In the first half of 2007, the funds made seven new investments, four
substantial add-on investments and smaller add-on investments,
investing MEUR 120.7 in total. There were new investments in IT2
Treasury Solutions, Komas Oy, Mirasys Ltd, Movial Applications Oy,
Novintel Oy, Skandia Autologistics Oy and Walki Group. The most
substantial add-on investments were made in Aerocrine AB, Jolife AB,
Millicore AB and Savcor Group. Additionally new investments in KMW
Energi AB and Nacka Närsjukhus Proxima AB were announced during the
review period.
The funds exited in total from Distocraft Oy, LindPlast A/S,
Medianorth Oy and Synerco AB and made a partial exit from Moventas Oy
during the period under review. Additionally the funds sold their
shares in SysOpenDigia Plc. Exits at acquisition cost (including
mezzanine loan instalments and partial exits) totalled MEUR 44.2 for
the review period. In addition, the funds announced exits from Secgo
Software Oy and Hantro Products Oy during the period under review.
Real estate funds
In the first half of 2007 the Real Estate funds announced ten new
investments, of which seven were in finished properties, two in
properties under construction and one in land. Of the assets
Kiinteistö Oy Helsingin Kalevankatu 20, Kiinteistö Oy Malminkaari 9
and Kiinteistö Oy Lönnrotinkatu 20 are located in Helsinki,
Kiinteistö Oy Kasarmikatu 4 and Kiinteistö Oy Parolantie 104 are in
Hämeenlinna and Kiinteistö Oy Viinikankatu 49 is in Tampere.
Mastola's logistics centre and the Kivistö land are located in
Vantaa, the shopping centre Entresse is under construction in Espoo
and Tokmanni's logistics centre is under construction in Mäntsälä.
Immediately after the review period the funds made an investment
decision in the shopping centre Skanssi that is under construction in
Turku. Investments totalling MEUR 41.2 were made in the period under
review, and including the Skanssi investment decision as at 3 July
2007 the funds had additionally committed a total of MEUR 310.8 to
finance real estate acquisitions and projects in the next few years.
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
1-6/2007 1-6/2006 1-12/2006
New and follow-on investments
Funds investing in portfolio
companies 120.7 108.2 158.8
Buyout 101.7 90.1 127.8
Technology 17.0 7.6 16.8
Life Science 2.0 10.5 14.2
Real estate funds 41.2 66.4 78.7
Total 161.9 174.6 237.5
Exits*
Funds investing in portfolio
companies 44.1 68.0 173.8
Buyout 36.2 50.0 144.7
Technology 7.9 13.8 24.7
Life Science - 4.2 4.4
Real estate funds 304.4 - -
Total 348.5 68.0 173.8
* 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 30 June 2007
Funds investing in portfolio companies
Investments in portfolio companies at acquisition cost totalled MEUR
647.0 at 30 June 2007. The fair value of investments was MEUR 780.4.
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 720 for new and follow-on
investments in portfolio companies. Of this, approx. MEUR 490 is
reserved for buyout investments (incl. mezzanine), approx. MEUR 180
for technology investments and approx. MEUR 50 for life science
investments.
Real estate funds
At the end of the first half, the funds' investments in real estate
assets at acquisition cost totalled MEUR 41.2 and the fair value of
investments was MEUR 44.1. The portfolio is wholly comprised of
assets acquired during the period under review, and is divided evenly
between the real estate funds. Additionally as at 3 July 2007 the
funds had committed a total of MEUR 310.8 to finance real estate
acquisitions and projects in the next few years. The funds have an
investment capacity of about MEUR 445 for new investments.
Funds' gross portfolio* as at 30 June 2007, MEUR
Portfolio at Portfolio at Share of
acquisition fair portfolio
cost value (fair
MEUR MEUR value) %
Funds investing in portfolio
companies 647.0 780.4 94.7
Real estate funds 41.2 44.1 5.3
Total 688.2 824.5 100.0
Funds investing in portfolio
companies
Buyout 496.5 626.9 80.4
Technology 115.1 118.8 15.2
Life Science 35.4 34.7 4.4
Total 647.0 780.4 100.0
* 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 a low level.
Funds generating carried interest as at 30 June 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:
CapMan's share Portfolio at fair
of cash flows* value 30.6.2007
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 % 21.5
CapMan Real Estate I**: 25 % 24.5
*Net share of cash flows, taking into consideration Fenno Management
Oy's share as far as Fenno Program is concerned, and of Corintium
Oy's and the investment team's shares as far as CapMan Real Estate I
is concerned.
** The fund still continues active investment operations. Of the
portfolio at fair value MEUR 15.1 is financed with debt.
At 30 June 2007 the current portfolios of funds generating carried
interest at fair value totalled MEUR 105.8, which represents 12.8% of
the portfolios of all funds at fair value at 30 June 2007 (MEUR
824.5). Information on each fund's 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 fund's 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.
CapMan's own investments in the funds
Since 2002, CapMan Plc has been a substantial investor in the funds
managed by the Group. The Company invests about 5-10% of the total
capital in equity funds investing in portfolio companies from its own
balance sheet. The objective of investments in own funds is to
improve the Company's return on equity and to even out fluctuations
in income 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 and
the funds' expenses.
CapMan, like other investors in the funds, gives commitments to the
funds when they are established. As at 30 June 2007 the total sum of
current investments at fair value and remaining commitments was MEUR
100.9 (MEUR 82.5 at 30 June 2006), of which remaining commitments
totalled MEUR 60.1 (MEUR 53.7). Of these commitments MEUR 25.1 is
targeted for CapMan Buyout VIII, MEUR 13.2 for CapMan Technology 2007
and 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 10.8 (MEUR 8.1). The majority of investments were made
in CapMan Buyout VIII fund. The fair value of cumulative fund
investments made from CapMan's own balance sheet was MEUR 40.8 as at
30 June 2007 (MEUR 28.8).
CapMan's investments and commitments in the funds as at 30 June 2007,
MEUR
Investments Remaining In total
at fair commitments
value
Funds investing in portfolio
companies
Equity funds 30.5 50.7 81.2
Mezzanine funds 2.9 4.5 7.4
Funds of funds* 7.2 2.3 9.5
40.6 57.5 98.1
Real estate funds 0.2 2.6 2.8
Total 40.8 60.1 100.9
* Managed/advised by CapMan's associated company Access Capital
Partners.
CapMan's own investments in the funds 1 January - 30 June 2007, MEUR
1-6/2007 1-6/2006 1-12/2006
Funds investing in portfolio companies
Equity funds 8.9 5.9 9.8
Mezzanine funds 1.5 0.7 0.7
Funds of funds* 0.3 1.5 2.6
10.7 8.1 13.1
Real estate funds 0.1 0.0 0.1
Total 10.8 8.1 13.2
* Managed/advised by CapMan's associated company Access Capital
Partners.
Personnel
As at 30 June 2007 the Group had 100 (95) employees, of whom 76 (68)
were located in Finland and the remainder in other Nordic countries.
30.6.2007 31.6.2006 31.12.2006
CapMan Private Equity 35 37 38
CapMan Real Estate 25 20 24
General functions 40 38 36
Total 100 95 98
In addition there were six Senior Advisors and one advisor acting as
consultants for CapMan. Five of the Senior Advisors were located in
Finland and one in Denmark. In addition to the Senior Advisors,
CapMan's Nordic Advisor Network comprises 14 Industrial Advisors.
Peter Augustsson and Jukka Härmälä were invited to become members of
the Advisor Network in the period under review.
Changes in Group ownership
The owners of the Company's A-series shares sold a total of 3,000,000
CapMan Plc A shares and 2,000,000 CapMan Plc B shares to the newly
established company CapMan Partners B.V. in the share transactions
that were announced on 4 May 2007 and executed on 16 May 2007. CapMan
Partners B.V. is owned by corporations under control of the present
13 Senior Partners of CapMan with equal shares. In the same
connection, the Board of Directors of CapMan Plc approved an
application for the conversion of a total of 2,000,000 unlisted
CapMan Plc A shares entitling to voting rights into listed CapMan Plc
B shares. As a result of the share transactions and share
conversions, CapMan Partners B.V. became the second largest owner and
the largest user of voting rights in CapMan Plc.
The following disclosures of change in ownership related to the share
transactions and share conversions were issued in the period under
review:
- The ownership of CapMan Partners B.V. in CapMan Plc surpassed
one-twentieth (1/20) of CapMan Plc's share capital and one-fifth
(1/5) of voting rights carried by CapMan Plc's shares
- The ownership of Aristo-Invest Oy and its controlling shareholder,
Ari Tolppanen, in the voting rights carried by CapMan Plc's shares
decreased from more than one-fifth (1/5) to under three-twentieths
(3/20)
- The ownership of Winsome Oy and its controlling shareholder, Tuomo
Raasio, in CapMan Plc decreased to under one-twentieth (1/20) of
CapMan Plc's share capital and to under one-tenth (1/10) of voting
rights carried by CapMan Plc's shares
- The ownership of Geldegal Oy and its controlling shareholder, Olli
Liitola, in CapMan Plc decreased to under one-twentieth (1/20) of
CapMan Plc's share capital and to under one-tenth (1/10) of voting
rights carried by CapMan Plc's shares
- The ownership of Heiwes Oy and its controlling shareholder, Heikki
Westerlund, in CapMan Plc decreased to under one-twentieth (1/20) of
CapMan Plc's share capital and voting rights carried by CapMan Plc's
shares
- The ownership of Vesasco Oy in the voting rights carried by CapMan
Plc's shares decreased from more than one-tenth (1/10) to under
one-twentieth (1/20)
- The ownership of Novestra Oy and its controlling shareholder, Peter
Buch Lund, in the voting rights carried by CapMan Plc's shares
decreased to under one-twentieth (1/20).
CapMan Plc had 4,695 (5,263) 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 (excluding the 6.4% holding of CapMan
Partners B.V.) has risen from 29.2% to 35.0%.
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 elected Sari Baldauf, Tapio Hintikka, Lennart Jacobsson,
Urban Jansson, Teuvo Salminen and Ari Tolppanen as members of the
Board. 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 and Terja Artimo, APA, from the same accounting
corporation, as Mr Holmberg's deputy.
In addition, in accordance with the proposals of the Board of
Directors the AGM also decided to amend the Company's Articles of
Association and authorised the Board of Directors to resolve to issue
a maximum of 20,000,000 CapMan Plc B shares or to issue stock options
and other entitlements, and to resolve to repurchase a maximum of
8,000,000 CapMan Plc B shares by using the Company's unrestricted
shareholders' equity. The AGM also decided 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/
Share capital, trading and price development
CapMan Plc's share capital totalled EUR 771,583.98 at 30 June 2007.
The number of listed B shares was 72,314,418 and the number of
unlisted A shares entitling to voting rights was 6,000,000.
The trading turnover and value of CapMan B shares increased approx.
twofold compared to the comparative period of 2006. Share price
development was strong and the B share reached an all-time high of
EUR 4.07 on 28 June 2007. At the end of the review period the B
shares had a closing price of EUR 4.03 and market value totalling
MEUR 291.4 (MEUR 167.4). The Company's total market capitalisation,
including CapMan A shares, was MEUR 315.6 (MEUR 187.0).
There was also clear growth in the 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. In the review period 1,155,720 CapMan
B shares were subscribed with 2000A/B options. The subscription price
of the B shares, totalling EUR 694,042.00, was entered in invested
unrestricted shareholders' equity in accordance with the decision of
the AGM. No shares were subscribed with 2003A stock options during
the period under review.
Trading and price development of shares and options
2000A/B 2003A
B shares options options
1-6/2007 1-6/2006 1-6/2007 1-6/2006 1-6/2007
Trading turnover,
number 19 311 250 10 222 243 1 794 596 952 300 429 639
Trading value, MEUR 65.2 29.7 4.9 2.0 0.8
Trading price, EUR
Highest 4.07 3.15 3.40 2.27 2.55
Lowest 2.86 2.33 2.06 1.70 1.40
Volume weighted
average price 3.39 2.90 2.75 2.15 1.83
Closing price
30.6 4.03 2.45 3.40 1.74 2.55
Events after the review period
In July Finnventure Fund V received the final payment from the
transaction announced in March 2006, in which the fund's portfolio
company Mehiläinen Oyj was sold to Swedish H-Careholding AB. CapMan
received approx. MEUR 0.6 in carried interest income as a result of
the purchase price payment.
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
listings of management companies like CapMan have emerged as a new
phenomenon in the markets, of which the most prominent examples are
the US-based Blackstone Group's IPO on the NYSE in June and KKR's
listing preparations. 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 buyout companies is tense because
of the number of players and the availability of loan financing.
There has been some challenges in putting together syndicated debt
packages as far as big buyout investments are concerned and this is
expected to affect to certain extend the availability and pricing of
financing across all industry segments. The competition is also
visible in the market as increasing compensation levels of the
investment professionals. CapMan's local presence in different Nordic
countries, which enables the active search for investee companies
throughout the Nordic region, and value creation e.g. through
buy-and-build strategies and growth are 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 720 in capital for new and
follow-on investments. Fundraising for CapMan Technology 2007 fund
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 445 for finding good
investment targets and developing the current portfolio in Finland.
These resources together with the team's 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
by funds already generating carried interest will occur by the end of
2007 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 at the latest during 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 September 2007 on 31 October 2007.
Helsinki 10 August 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 Group's website when the press conference
has commenced.
For further information, please contact:
Heikki Westerlund, CEO, tel. +358 9 6155 8304 or +358 50 559 6580
Olli Liitola, CFO, tel. +358 9 6155 8306 or +358 400 605 040
DISTRIBUTION:
Helsinki Exchanges
Principal media
www.capman.com
GROUP BALANCE SHEET (IFRS)
€ ('000) 30.6.07 30.6.06 31.12.06
ASSETS
Non-current assets
Tangible assets 893 851 672
Goodwill 4,845 4,845 4,845
Other intangible assets 759 702 710
Investments in associated companies 2,580 977 2,860
Investments at fair value through profit and
loss
Investments in funds 40,770 28,774 33,122
Other financial assets 868 1,031 848
Receivables 17,388 11,726 13,835
Deferred income tax assets 270 204 231
68,373 49,110 57,123
Current assets
Trade and other receivables 8,931 13,789 5,521
Other financial assets at fair value
through profit and loss 9,774 1,376 2,779
Cash and bank 15,760 5,639 14,137
34,465 20,804 22,437
Total assets 102,838 69,914 79,560
EQUITY AND LIABILITIES
Capital attributable the Company's equity
holders
Share capital 772 763 772
Share premium account 38,968 38,452 38,968
Other reserves 1,929 1,037 1,218
Translation difference 258 -98 316
Retained earnings 21,237 9,661 15,074
63,164 49,815 56,348
Minority interest 5,768 181 599
Total equity 68,932 49,996 56,947
Non-current liabilities
Deferred income tax liabilities 3,377 807 2,234
Interest-bearing loans 10,000 0 10,000
Other liabilities 550 470 430
13,927 1,277 12,664
Current liabilities
Trade and other payables 15,268 13,324 7,409
Interest-bearing loans and borrowings 0 4,440 1,944
Current income tax liabilities 4,711 877 596
19,979 18,641 9,949
Total liabilities 33,906 19,918 22,613
Total equity and liabilities 102,838 69,914 79,560
GROUP INCOME STATEMENT (IFRS)
€ ('000) 1-6/07 1-6/06 1-12/06
Turnover 35,582 18,401 38,032
Other operating income 59 616 687
Personnel expenses -7,231 -6,359 -13,958
Depreciation and amortisation -285 -350 -726
Other operating expenses -6,262 -6,422 -11,958
Fair value gains / losses of investments 4,595 1,695 3,549
Operating profit 26,458 7,581 15,626
Financial income and expenses 516 326 420
Share of associated companies' result 1,093 -28 1,279
Profit before taxes 28,067 7,879 17,325
Income taxes -7,128 -1,968 -4,893
Profit for the financial year 20,939 5,911 12,432
Attributable to:
Equity holders of the company 15,281 5,803 11,455
Minority interest 5,658 108 977
Earnings per share for profit attributable
to the equity holders of the Company:
Earnings per share, € 0.20 0.08 0.15
Diluted, € 0.20 0.08 0.15
Operating profit, % 74.4 41.2 41.1
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
31.12.2005 759 38,157 948 -148 9,156 48,872 220 49,092
Share
subscriptions
with options 4 295
Translation
difference 50 6
Options 89 17
Profit for
the
financial
year 5,803 108
Dividends
paid -5,315 -153
Equity on
30.6.2006 763 38,452 1,037 -98 9,661 49,815 181 49,996
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
year 15,281 5,658
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
GROUP'S CASH FLOW STATEMENT (IFRS)
€ ('000) 1-6/07 1-6/06 1-12/06
Cash flow from operations
Profit for the financial year 15,281 5,803 11,455
Adjustments to operating profit 6,811 420 352
Cash flow before change in working capital 22,092 6,223 11,807
Change in working capital 3,177 1,171 889
Financing items and taxes -192 -1,527 -1,548
Cash flow from operations 25,077 5,867 11,148
Cash flow from investments -3,575 -6,948 -9,466
Cash flow before financing 21,502 -1,081 1,682
Dividends paid -9,687 -5,467 -5,923
Other financial cash flow -10,192 5,341 11,532
Financial cash flow -19,879 -126 5,609
Change in cash funds 1,623 -1,207 7,291
Cash funds at start of the period 14,137 6,846 6,846
Cash funds at end of the period 15,760 5,639 14,137
Accounting principles
The Group's Interim Report is in compliance with IAS 34, Interim
Financial Reporting Standard. The same accounting principles as in
the annual financial statements of 31 December 2006 have been
applied. The information presented in the Interim Report is
un-audited.
Appendices in accordance with IFRS 7, Financial Instruments:
Disclosures (effective as of 1 January 2007) have been included in
the Interim Report in so far as their significance to the Group's
financial information is concerned.
Segment information
€ ('000) 1-6/07 1-6/06 1-12/06
Turnover
CapMan Private Equity 12,053 15,947 33,116
CapMan Real Estate 23,529 2,454 4,916
Total 35,582 18,401 38,032
Operating profit
CapMan Private Equity 5,374 7,332 15,405
CapMan Real Estate 21,084 249 222
Total 26,458 7,581 15,627
Income taxes
The Group's taxes 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 0.12 per share or total of MEUR 9.3 was paid for
year 2006 (EUR 0.07 per share, MEUR 5.3 in total for the year 2005).
Non-current assets
€ ('000) 30.6.07 30.6.06 31.12.06
Investments in funds at fair value through
profit and loss at Jan 1 33,122 20,288 20,288
Additions 10,746 8,105 13,233
Disposals -7,693 -1,314 -4,117
Fair value gains/losses on investments 4,595 1,695 3,718
Investments in funds at fair value through
profit and loss at end of the period 40,770 28,774 33,122
Transactions with related parties (associated companies)
€ ('000) 30.6.07 30.6.06 31.12.06
Receivables - non-current 13,511 6,498 7,940
Receivables - current 125 125 125
Non-current liabilities
€ ('000) 30.6.07 30.6.06 31.12.06
Interest bearing loans 10,000 0 10,000
The interest-bearing liability is related to a financial credit limit
agreement, the sum of the facility is MEUR 16.
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 Plc's result for the financial year.
Personnel 30.6.07 30.6.06 31.12.06
Finland 76 68 72
Denmark 3 7 5
Sweden 16 14 16
Norway 5 6 5
In total 100 95 98
Contingent liabilities
€ ('000) 30.6.07 30.6.06 31.12.06
Leasing contracts and other
contingent liabilities 10,104 14,044 13,451
Commitments to funds 60,108 53,742 50,529
Turnover and profit quarterly
Year 2007
MEUR 1-3/07 4-6/07
Turnover 28.1 7.5
Management fees 5.8 6.5
Carried interest 21.2 0.2
Income of investments in funds 0.3 0.0
Real Estate consulting 0.6 0.5
Other income 0.2 0.3
Fair value gains / losses of investments 4.1 0.5
Operating profit 25.4 1.1
Financial income and expenses 0.3 0.2
Share of associated companies' result 0.9 0.2
Profit before taxes 26.7 1.4
Profit for the period 19.9 1.0
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
Operating profit 5.2 2.4 4.4 3.6 15.6
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
APPENDIX 1: CAPMAN PLC GROUP FUNDS 30 JUNE 2007, MEUR
Size Paid-in Fund's current Distributed Net
* capital portfolio cash flow cash
** at cost at fair to in- to man- assets
value vestors agement *****
*** company
(carried
interest)
Funds generating ****
carried interest
FV II, FV III 1)
and FM II B
in total 58.6 57.4 3.1 2.9 179.6 44.1 0.5
FV V 169.9 159.8 62.4 56.9 213.5 0.1 4.0
Fenno Program 2)
(Fenno
Fund Skandia I
and
Skandia II)
in total 59.0 59.0 15.8 21.5 114.7 7.5 0.1
CMRE I 5) 500.0 315.7 21.3 24.5 183.0 28.5 -15.1
In total 787.5 591.9 102.6 105.8 690.8 80.2 -10.5
Funds that are
expected
to start
generating
carried interest
at the latest
during 2008
FV IV 59.5 59.5 12.0 15.2 64.0 0.5
CME VII A 156.7 125.4 85.6 144.3 72.9 3.6
CME VII B 56.5 49.9 33.9 65.3 33.3 1.9
CME SWE 67.0 53.3 36.6 61.7 31.3 0.9
In total 339.7 288.1 168.1 286.5 201.5 6.9
Other funds
not yet
in carry
CME VII C 23.1 14.9 10.3 11.0 5.4 0.2
CMB VIII A 360.0 119.3 102.8 105.4 4.2
CMB VIII B 80.0 25.6 22.8 23.4
CM LS IV 54.1 11.1 9.1 9.1 0.2
CMT 2007 1) 134.7 11.7 9.6 9.6 0.9
FM III 1) 135.5 131.3 65.2 74.3 103.7 4.4
CMM IV 4) 240.0 108.0 88.9 96.1 12.8 7.9
CMRE II 6) 600.0 21.9 19.9 19.6 -12.2
In total 1,627.4 443.8 328.6 348.5 121.9 5.6
Funds with
limited
carried interest
potential
to CapMan
NPEP II 3) 20.7 20.7 6.4 3.4 11.4 0.8
FV V ET 34.0 34.0 12.6 11.7 4.7 0.7
SWE LS 3) 49.7 41.1 26.3 25.6 0.2 0.2
SWE Tech 1), 3) 82.9 63.4 34.8 32.8 24.0 1.1
FM II A,C,D 1) 71.3 71.3 8.8 10.2 72.8 2.0
In total 258.6 230.5 88.9 83.7 113.1 4.8
Equity funds
in total 3,013.2 1,554.3 688.2 824.5 1,127.3 80.2 6.8
CAPITAL MANAGED/ADVISED BY ASSOCIATED COMPANY ACCESS CAPITAL PARTNERS
AS AT 30 JUNE 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' investments in portfolio companies are valued to fair
value in accordance with the guidelines of the European Private
Equity & Venture Capital Association (EVCA) and investments in real
estate assets are valued in accordance with the value appraisements
of external experts. The fair value is the amount for which an asset
could be exchanged between knowledgeable, willing parties in an arm's
length transaction. Due to the nature of private equity investment
activities, the funds' portfolios contain investment targets with
fair value greater than acquisition cost as well as investment
targets with fair value less than acquisition cost. Portfolio
companies are valued at acquisition cost from the time of investment
for a 12-month period, after which they are valued at fair value.
According to the EVCA's conservative policies, technology and life
science targets are typically valued at acquisition cost or less up
to exit.
**** 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 30 June 2007):
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%, Access Capital Fund: 47.5%, Access
Capital Fund II: 45%, Access Capital Fund III: 25%, Access/Private
Equity Mandates: 25%.
***** When calculating the investors' share, the fund's net cash
assets have to be taken into account in addition to the portfolio at
fair value.
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
30 June 2007.
4) CapMan Mezzanine IV: The paid-in commitment includes a MEUR 96
bond issued by Leverator Plc. The fund's 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 188.6 senior
loan. Distributed cash flow includes repayment of the bonds and cash
flow to the fund's equity investors. The combined investors' and
management company's share of the fund's assets is calculated by
deducting net cash assets from the fair value.
6) CapMan Real Estate II: 25% or MEUR 150 of the fund's size is
shareholders' equity and the 75% remainder is debt. The investors'
share of the fund's assets is calculated by deducting net cash assets
from the fair value.
APPENDIX 2: INVESTMENTS AND EXITS BY CAPMAN FUNDS 1 JANUARY - 30 JUNE
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 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.
Investments in portfolio companies in the review period
The CapMan funds investing directly in portfolio companies made seven
new investments, four substantial add-on investments and smaller
add-on investments in the first half of 2007 (six new investments,
two substantial add-on investments and smaller add-on investments in
the comparative period of 2006). All in all, MEUR 120.7 (MEUR 108.2)
was invested during the period under review.
Q2 Investments in portfolio companies
The acquisition of Walki Group (formerly Walki Wisa) by CapMan Buyout
VIII and CapMan Mezzanine IV funds from UPM-Kymmene Corporation was
finalised in May. Walki Group produces wrappings for the paper, metal
and wood industries and composite materials for the packaging
industry and industrial applications. Walki Wisa's net sales totalled
MEUR 287 in 2006 and the Group employs some 950 persons in different
countries.
The investment in Finnish technology company Novintel Oy that was
announced by CapMan Equity VII funds in March was finalised in April.
Novintel provides customised Market Intelligence services and
solutions for a wide variety of industries. The investment will
support the growth of the company's international operations in
particular.
CapMan Technology 2007 made its first investment in May, when the
fund invested in Finnish technology company Movial Applications Oy.
Movial develops IP (Internet Protocol) communication software for
network equipment manufacturers, device manufacturers and operators.
The investment will finance expansion of the company's software
product sales and international customer support operations
throughout Europe, Asia and the Americas.
The acquisition of Danish IT2 Treasury Solutions by CapMan Technology
2007 fund from SimCorp A/S listed on the Copenhagen Stock Exchange
was finalised in June. IT2 is a software solutions and services
provider of treasury management systems mainly to medium and large
size enterprises and financial institutions. The company has over 40
employees in Denmark, the UK, USA and Hong Kong.
Q1 Investments in portfolio companies
In the first quarter of 2007 the funds made new investments in
Finnish buyout targets Komas Oy and Skandia Autologistics Oy
(formerly John Nurminen's Vehicle Logistics Unit) and Finnish
technology company Mirasys Ltd. In addition the funds made add-on
investment decisions in Swedish life science companies Aerocrine AB,
Jolife AB and Millicore AB and in Finnish buyout target Savcor Group.
Exits from portfolio companies in the review period
The funds managed by CapMan made four final exits and several partial
exits in the first half of 2007. Exits at acquisition cost (including
mezzanine loan instalments and partial exits) totalled MEUR 44.2.
There were six final exits and several partial exits in the
comparative period of 2006, for which exits at acquisition cost
(including mezzanine loan instalments) totalled MEUR 60.8.
Q2 Exits from portfolio companies
The exit by CapMan Equity VII funds from Synerco AB, the Swedish
provider of integrated facility, security and office services, was
finalised in May. The funds sold their stake to Services Management
company Addici Holding AB. The funds invested in Synerco in 2003. The
investment has been good for investors in the funds managed by
CapMan. The exit does not have impact on CapMan Plc's result for
2007, because the fund is not in carry.
In April, Nordic Private Equity Partners II fund exited from
LindPlast A/S. LindPlast manufactures plastic polyethene packing
materials. The exit does not have 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 Medianorth Oy to Avaus Consulting Oy at the end of June.
Medianorth owns city magazines Nöjesguiden in Sweden and Natt & Dag
in Norway as well as the Loyalty North unit in Finland focusing on
development of customer loyalty programs. The initial investment in
Medianorth was made in 1999, and it has been poor for investors in
the funds managed by CapMan. The exit has no substantial impact on
CapMan Plc's result for 2007.
Q1 Exits from portfolio companies
In the first quarter of the year the funds made a final exit from
Finnish technology company Distocraft Oy and sold their remaining
listed shares in Finnish SysOpenDigia Plc. Additionally the funds
made a partial exit from Finnish buyout target Moventas Oy.
Other events in the review period
At the end of April Finnventure IV, Finnventure V and Finnventure V
ET funds announced the sale of their holding in the Finnish
information security and mobility management software provider Secgo
Software Oy to the Norwegian listed company Birdstep ASA. The funds
received shares in Birdstep Technology ASA listed on the Oslo Stock
Exchange in the transaction, which was closed in May. Because the
transaction was executed as an exchange of shares, the exit does not
have a direct impact on CapMan Plc's result for 2007. The funds will
exit from the company in total when they sell the shares received in
Birdstep. The funds invested in Secgo in 2004, and their holding in
the company was 18% prior to the sale.
Finnventure V and Finnventure V ET funds sold their stake in Hantro
Products Oy, a provider of mobile multimedia solutions, to the
American listed company On2 Technologies, Inc in May. The transaction
is subject to approval by On2's Annual General Meeting, and it is
expected to be finalised by the end of August 2007. Because the
transaction will be executed as an exchange of shares, the funds'
exit from Hantro does not have a direct impact on CapMan Plc's result
for 2007. The funds will exit from the company in total when they
sell the shares received in On2. The funds initially invested in
Hantro in 2002 and they held approx. 30% ownership in the company
prior to the sale.
Swedestart Life Science fund's portfolio company Aerocrine AB went
public on the Stockholm Stock Exchange in mid-June. Aerocrine is a
medical technology company that has developed NIOX and NIOX MINO
monitoring devices for the diagnosis and control of airway
inflammation such as asthma. The fund did not sell its Aerocrine
shares in connection with the IPO and the shares are subject to a
12-month lock-up period. The fund invested in Aerocrine in 2005, and
the company's business has developed well during the investment
period.
At the end of June CapMan Buyout VIII and CapMan Life Science IV
funds announced the acquisition of Swedish Nacka Närsjukhus Proxima
AB together with the company's management. Nacka Närsjukhus Proxima
is a private healthcare provider offering specialised healthcare and
emergency unit services in the greater Stockholm area. The company
had net sales of approx. MEUR 19.3 in 2006. The transaction is
subject to approval by competition authorities, and it is expected to
be finalised by the end of August. The investment in Nacka Närsjukhus
Proxima is a joint investment target of CapMan's Buyout and Life
Science funds.
Events after the review period
The acquisition of a majority holding in KMW Energi AB by CapMan
Technology 2007 fund, SEB Venture Capital and the energy and
environment fund specialist Aloe Private Equity that was announced in
June was finalised in July. KMW Energi is a leading supplier of bio
fuel combustion plants in Sweden. The company's turnover in 2006 was
MEUR 21.6 and it has 40 employees.
In early July CapMan Buyout VIII and CapMan Life Science IV funds
invested in the Norwegian Telemark Group, which is comprised of
Telemark Røntgensenter AS, Haugesund Røntgeninstitutt AS, Nordland
Medisinske Senter Røntgeninstitutt AS and Tromsø MR-Senter AS. The
companies are providers of high quality medical imaging services such
as x-ray, MR (magnetic resonance), CT (computer tomography),
mammography and ultrasound diagnostics in Norway. In 2006 Telemark
Group employed 50 persons and had net sales of approx. MEUR 15. The
execution of the investment is subject to approval by competition
authorities, and it is expected to be closed in August 2007.
CapMan Equity VII, Finnventure V ET and Swedestart Tech funds exited
from the Swedish repeater manufacturer Avitec AB after the review
period in July. Avitec was acquired by ECI, a UK-based private equity
investor. Avitec's net sales totalled MEUR 22.1 in 2006, and the
company has 64 employees. The CapMan funds made the initial
investment in Avitec in 2002, and they owned 43.1% of the company's
shares prior to the exit. The investment in Avitec has been moderate
for the investors in the CapMan funds. The exit has no substantial
impact on CapMan Plc's result for 2007.
After the review period in July Finnventure Fund V received the final
payment from the transaction announced in March 2006, in which the
fund's portfolio company Mehiläinen Oyj was sold to Swedish
H-Careholding AB. CapMan received approx. MEUR 0.6 in carried
interest income as a result of the purchase price payment.
INVESTMENT ACTIVITIES BY THE REAL ESTATE FUNDS
Investment decisions made in the review period
In the first half of 2007 the real estate funds announced ten new
investments, of which seven were in finished properties, two in
properties under construction and one in land. Immediately after the
review period the funds made an investment decision in the shopping
centre Skanssi that is under construction in Turku. Investments
totalling MEUR 41.2 were made in the period under review, and
including the Skanssi investment decision as at 3 July 2007 the funds
had additionally committed a total of MEUR 310.8 to finance real
estate acquisitions and projects in the next few years.
Q2 Investment decisions
The acquisition by CapMan RE II fund of the property located at
Viinikankatu 49 in the Nekala district of Tampere was closed in early
April. The property is comprised of commercial premises and warehouse
space and it was built in 1968. The lettable area of the property
totals 10,000 m², and it is almost fully leased at the time of
investment.
CapMan Real Estate I fund acquired the commercial property located at
Malminkaari 9 in the suburb of Malmi in Helsinki from Fennia Life
Insurance Company Ltd at the end of May. The property was built in
1987. The lettable area of the property totals ca. 5,000 m², and it
is fully leased at the time of investment.
At the end of May, CapMan RE II fund made an investment in land
located in the Kivistö area of Vantaa. Under the existing plans the
land and surrounding properties will be zoned as a commercial
services district. The acquired land has an area of ca. 11.5 hectares
and it is located in the Kivistö/Petas or Marja-Vantaa area, a
strongly developing section of the City of Vantaa. The Kivistö area
is one of few unbuilt commercial districts specified in provincial
land use plans. The City of Vantaa has an option to exercise its
right of pre-emption and buy the land until 31 August 2007.
CapMan Real Estate I fund acquired the property located at
Lönnrotinkatu 20 in the Kamppi district of Helsinki from Polaris
Pension Foundation at the end of June. The property was built in
1972, and it has a leasable area of ca. 4,650 m². In addition the
fund acquired the garage from the neighbouring property As Oy
Kalevankatu 36 for use by tenants of Lönnrotinkatu 20.
The acquisition by CapMan Real Estate I fund of the real estate and
plot of land of Mastola's central warehouse located in Hakkila,
Vantaa from SOK Corporation was announced at the end of June. The
INEX Group's logistics centre operates at the property, which has a
leasable area of ca. 41,600 m². The transaction was finalised after
the review period in July.
Additionally, at the end of June CapMan Real Estate I fund announced
an agreement for the acquisition of the Entresse Shopping Centre that
is under construction in Espoo from YIT Construction Ltd. Entresse is
located next to the central market square and railway station in
Espoo centre. Construction work commenced in June and the shopping
centre is scheduled for completion by the Christmas season of 2008.
The shopping centre will comprise lettable retail space of ca. 9,500
m². The investment commitment made for the acquisition of the
shopping centre will be drawn down during 2008.
Q1 Investment decisions
In the first quarter of the year CapMan Real Estate I fund acquired
the property and lot located at Kalevankatu 20 in Helsinki, and
CapMan RE II fund acquired the commercial property located at
Kasarmikatu 4 in Hämeenlinna as well as the office, industrial and
warehouse complex located at Parolantie 104 also in Hämeenlinna. In
addition 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. The project will be completed in
autumn 2008. The investment commitment made for the logistics centre
project will be drawn down during 2008.
Sale of CapMan Real Estate I fund's portfolio in January
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.
Events after the review period
In early July CapMan RE II fund signed an agreement to acquire
ownership of Skanssin Kauppakeskus Oy, a shopping centre, from the
Hartela Group. Skanssi is situated four kilometres east of Turku city
centre. The shopping centre will comprise a leasable area of ca.
37,000 m² on two floors, and once it is completed in April 2009 it
will attract some 4.5 million visitors annually. Hartela will
continue as the property's constructor and will participate in its
development. The investment commitment made for the shopping centre
project will be drawn down in stages during years 2007-2009.
