CapMan Plc Stock Exchange Release 31 January 2008 at 9.45 a.m.
CAPMAN PLC GROUP FINANCIAL STATEMENTS BULLETIN 1 JANUARY - 31
DECEMBER 2007
Excellent result, proposed dividend payment of EUR 0.16 per share
- The Group's turnover in 2007 increased to MEUR 51.6 (2006: MEUR
38.0).
- Operating profit was up to MEUR 29.8 (MEUR 15.6).
- Carried interest increased to MEUR 23.6 (MEUR 9.4).
- The impact of the Company's own fund investments was MEUR 6.2 (MEUR
4.4), of which fair value gains of investments amounted to MEUR 5.7
(MEUR 3.5)
- Profit before taxes increased to MEUR 32.7 (MEUR 17.3).
- Profit after taxes was up to MEUR 24.2 (MEUR 12.4).
- Profit attributable to the parent company shareholders totalled
MEUR 18.6 (MEUR 11.5), representing earnings per share of EUR 0.24
(EUR 0.15).
- The Board of Directors proposes to the AGM that a dividend of EUR
0.16 per share (EUR 0.12) be paid for 2007.
- Capital under management increased approx. 18% during the year and
totalled MEUR 3,016.1 at 31 December 2007 (MEUR 2,549.6 at 31
December 2006).
- CapMan funds announced investments totalling MEUR 626.8 during the
year. Of this, investments in portfolio companies were MEUR 164.7
(MEUR 158.8) and investments and commitments to finance real estate
assets were MEUR 462.1 (MEUR 78.7).
- CapMan Plc established its third private equity real estate fund
CapMan Hotels RE Ky at MEUR 835 in January 2008. The establishment of
the new fund raised the total capital managed by CapMan to approx.
EUR 3.9 billion.
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 has two business areas: CapMan Private Equity (management of
private equity funds making investments in portfolio companies) and
CapMan Real Estate (management of private equity funds making real
estate investments and providing real estate consulting). The funds
investing in portfolio companies focus mainly on the Nordic countries
in three investment areas: middle market buyouts (CapMan Buyout);
technology investments (CapMan Technology); and life science
investments (CapMan Life Science). The private equity real estate
funds focus on real estate targets mainly in Finland and Sweden.
Information about each business area is reported in its own segment
in interim reports. The associated company Access Capital Partners
has been included in the Group's figures under CapMan Private Equity.
As far as funds are concerned, Access Capital Partner's figures are
presented separately.
Turnover and financial performance in 2007
CapMan's turnover in 2007 increased to MEUR 51.6 (2006: MEUR 38.0),
mainly as a result of the growth in carried interest income.
The amount of management fees paid by the funds, MEUR 24.6 (MEUR
24.9), remained at the level of the previous year. CapMan started
receiving management fees from CapMan Technology 2007 and CapMan RE
II funds during the review period, whereas the amount of fees
received from older funds decreased due to exits implemented during
the year.
Carried interest income received by CapMan totalled MEUR 23.6 (MEUR
9.4). The sale of CapMan Real Estate I fund's portfolio accrued
carried interest totalling MEUR 21.0, of which the share belonging to
the parent company shareholders was MEUR 13.4. The remaining MEUR 2.6
was accrued from carried interest received from other funds
generating carry.
The impact of fund investments made from CapMan's own balance sheet
totalled MEUR 6.2 (MEUR 4.4). Realised returns on the investments
were MEUR 0.5 (MEUR 0.9), and fair value gains/losses relating to
fund investments were MEUR 5.7 (MEUR 3.5). Fair value losses were
recorded in the last quarter due to valuation changes of certain
individual investments and expenses incurred by new funds. As a whole
the fair value of fund investments has developed favourably in 2007
and their return exceeds CapMan Plc's targeted annual return level of
15%. The aggregate fair value of all fund investments made from
CapMan's own balance sheet was MEUR 44.2 at 31 December 2007.
Returns on real estate consulting operations totalled MEUR 2.1 (MEUR
2.0) and other operating income within turnover was MEUR 0.8 (MEUR
0.8). Operating expenses were MEUR 27.7 (MEUR 26.6). The slight
increase in expenses reflects the organisation's growth in 2007. The
cost level in 2008 is expected to increase somewhat from the cost
level in the last quarter of 2007 as a result of the establishment of
CapMan Hotels RE fund.
The Group's operating profit was up to MEUR 29.8 (MEUR 15.6). The
share from the associated companies' result increased to MEUR 1.9
(MEUR 1.3) mainly with value creation in the portfolios of the Maneq
funds, which are included in CapMan's associated companies. Profit
before taxes was MEUR 32.7 (MEUR 17.3) and profit after taxes MEUR
24.2 (MEUR 12.4). Profit attributable to the parent company
shareholders was MEUR 18.6 (MEUR 11.5), representing earnings per
share of EUR 0.24 (EUR 0.15). The preliminary figures for earnings
per share announced on 16 January 2008 were more closely defined with
exact figures from associated company Access Capital Partners.
Carried interest income and fair values of fund investments may
fluctuate strongly between quarters and therefore CapMan's financial
performance should be examined over a longer time span than
quarterly.
Balance sheet and financial position at 31 December 2007
The amount of non-current assets in the balance sheet increased to
MEUR 74.9 during the financial year (MEUR 57.1 at 31 December 2006).
Fund investments from CapMan's own balance sheet increased and their
fair value at year-end was EUR 44.2 (EUR 33.1). Long-term receivables
amounted to MEUR 16.2 (MEUR 13.8). Of the receivables, MEUR 11.6
(MEUR 10.1) was loan receivables from the Maneq funds. Maneq funds
are co-investors in portfolio companies with the funds managed by
CapMan, and their investors are CapMan and CapMan's personnel.
Goodwill was MEUR 4.8 (MEUR 4.8) and it was mainly allocated to the
acquisition of Swedestart Management AB in 2002. The Company's net
cash assets including current investments were MEUR 34.6 (MEUR 16.9).
The Company had interest-bearing liabilities worth MEUR 16.0 (MEUR
11.9).
CapMan's equity ratio at the end of the fiscal year was 57.6%
(71.6%). Return on equity for the period was 38.9% (23.4%) and return
on investment 44.2% (29.9%). The Company has target levels of at
least 50% for the equity ratio and over 25% for return on equity.
Key figures
31.12.2007 31.12.2006
Earnings/share, EUR 0.24 0.15
Earnings/share, diluted, EUR 0.24 0.15
Shareholders' equity/share, EUR 0.86 0.74
Share issue adjusted number of shares 78 142 867 76 212 849
Number of shares at year-end 79 968 819 77 158 698
Number of shares outstanding 79 968 819 77 158 698
Return on equity, % 38.9 23.4
Return on investment, % 44.2 29.9
Equity ratio, % 57.6 71.6
Turnover and profit quarterly as well as turnover and operating
profit per segment are presented in the tables section of the
Financial Statements Bulletin.
Proposal of the Board of Directors for profit distribution
CapMan Plc's objective is to distribute at least half of the net
profit in dividends. The Board of Directors proposes to the Annual
General Meeting that a dividend of EUR 0.16 per share (EUR 0.12),
which equals to 67% (80%) of the net profit, will be distributed to
shareholders for the year 2007.
Fundraising
Funds investing in portfolio companies
On 9 February 2007 CapMan established a new technology fund CapMan
Technology 2007, which has investment focus on expansion and later
stage technology companies in the Nordic countries. Commitments
totalling MEUR 140.3 had been raised to the fund as at the end of
2007 and the fund held a final close in January 2008 at MEUR 142.3.
CapMan's own commitment to the fund is MEUR 15, and division of any
carried interest generated by the fund will be 50% for CapMan and 50%
for the Technology team.
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 to the fund is MEUR 10 and the
division of any carried interest generated by the fund will be 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 to finance an average 75% of the
fund's investments with debt, in which case the MEUR 600 investment
capacity comprises MEUR 150 of shareholders' equity with the
remainder being 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 an investment commitment of MEUR 2 to
the fund. CapMan Plc's share of any carried interest from CapMan RE
II is 60% and the combined share of the Real Estate investment team
and Corintium Oy, the management company's other owner, is 40%.
Capital under management
As at 31 December 2007, CapMan managed a total of MEUR 3,016.1 in
capital (MEUR 2,549.6 at 31 December 2006). The capital under
management in funds making direct portfolio investments in companies
increased during the year as a result of fundraising for CapMan
Technology 2007 and CapMan Life Science IV funds and amounted to MEUR
1,916.1 (MEUR 1,773.6) at year-end. The capital under management in
real estate funds increased during the year as a result of
fundraising for CapMan RE II, and amounted to MEUR 1,100 at 31
December 2007 (MEUR 776 at 31 December 2006).
Capital under management by associated company Access Capital
Partners
The capital under management by CapMan Plc's associated company
Access Capital Partners increased substantially in 2007 and totalled
MEUR 2,326.5 at year-end (MEUR 1,637.5 at 31 December 2006). Of this,
MEUR 1,164.5 (MEUR 918.1) was in the funds of funds and MEUR 1,162.0
(MEUR 719.4) in private equity investment mandates. The assets were
increased especially during the second half when Access received a
MEUR 300 private equity investment mandate from the French
government's pension fund and established a fourth-generation buyout
fund of funds ACF IV Growth Buy-out Europe. The size of the fund was
MEUR 241.0 as at 31 December 2007 and fundraising continues.
CapMan Plc owns 35 per cent of the share capital in Access Capital
Partners. The shares are valuated in the balance sheet at acquisition
cost.
Investments and exits by funds in 2007
Funds investing in portfolio companies
In 2007 the funds made 11 new investments and add-on investments
worth MEUR 164.7 in total. New investment targets include Curato AS,
Global Intelligence Alliance Group Ltd, IT2 Treasury Solutions, KMW
Energi AB, Komas Oy, Mawell Oy, Mirasys Ltd, Movial Applications Oy,
Nacka Närsjukhus Proxima AB, Skandia Autologistics Oy and Walki Group
Oy. In addition, a substantial add-on investments in OneMed Group Oy
and Metallfabriken Ljunghäll AB were announced during the year.
The funds exited from a total of seven companies in 2007, including
Avitec AB, Copterline Oy, Distocraft Oy, LindPlast A/S, MediaNorth
Group Corporation, Savcor Group and Synerco AB, and sold their shares
in Affecto Plc and SysOpenDigia Plc. In addition, the funds made a
partial exit from Moventas Corporation and Inflight Service AB repaid
its mezzanine and equity loans. The acquisition costs of exits
executed during the year (including mezzanine loan instalments and
partial exits) totalled MEUR 93.2. The funds also announced exits
from Secgo Software Oy, Hantro Products Ltd and Solid Information
Technology Oy in 2007.
Real estate funds
The Real Estate funds announced 16 new investments or investment
decisions in 2007. Of these, 13 were in completed properties and
three in properties under construction. Six of the completed
properties are located in Helsinki, two in Hämeenlinna, two in Turku,
one in Jyväskylä, one in Tampere and one in Vantaa, and they are all
mostly office properties. The properties under construction are
Entresse shopping centre in Espoo, Tokmanni's logistics centre in
Mäntsälä and Skanssi shopping centre in Turku. Investments totalling
MEUR 160.0 were made during the fiscal year and the funds have
additionally committed a total of MEUR 302.1 to finance the
aforementioned real estate acquisitions and projects in the next few
years.
CapMan Real Estate I fund exited from a total of 22 properties when
the sale of the fund's real estate portfolio to Samson Properties
Ltd, The Royal Bank of Scotland (RBS) and Ajanta Oy was finalised on
31 January 2007. The acquisition price of the portfolio was MEUR
304.4 and the sale price MEUR 377.5.
Investments and exits at acquisition cost, MEUR
1-12/2007 1-12/2006
New and follow-on investments
Funds investing
in portfolio companies 164.7 158.8
Buyout 126.7 127.8
Technology 28.6 16.8
Life Science 9.4 14.2
Real estate funds 160.0 78.7
Total 324.7 237.5
Exits*
Funds investing in portfolio companies 93.2 173.8
Buyout 74.1 144.7
Technology 19.1 24.7
Life Science - 4.4
Real estate funds 304.4 -
Total 397.6 173.8
* includes 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 December 2007
Funds investing in portfolio companies
Investments in portfolio companies at acquisition price totalled MEUR
640.6 at the end of the year. The fair value of the investments was
MEUR 792.2. The fund's portfolios are valued at fair value in
compliance with EVCA's guidelines, as specified in Appendix 1.
Excluding actual and estimated expenses, CapMan funds had an
investment capacity of some MEUR 690 for new and follow-on
investments in portfolio companies. Of this, some MEUR 470 is
reserved for buyout investments (including mezzanine investments),
some MEUR 175 for technology investments, and about MEUR 45 for life
science investments.
Real estate funds
At the end of 2007 the funds' investments in real estate assets at
acquisition price totalled MEUR 160.0 and the fair value of
investments was MEUR 160.5. The portfolio is wholly comprised of
assets acquired during 2007. The vacancy rate of the portfolio's
completed properties was 8.2% at year-end. As at 31 December 2007 the
funds had also committed a total of MEUR 302.1 to finance real estate
acquisitions and projects over the next few years. The funds have an
investment capacity of some MEUR 340 for new real estate investments.
Funds' gross portfolio* as at 31 December 2007, MEUR
Portfolio at Portfolio at Share of
acquisition fair the portfolio
cost value (fair value) MEUR MEUR %
Funds investing in portfolio 640.6 792.2 83.2
companies
Real estate funds 160.0 160.5 16.8
Total 800.6 952.7 100.0
Funds investing in portfolio
companies
Buyout 483.7 648.1 81.8
Technology 114.7 104.5 13.2
Life Science 42.2 39.6 5.0
Total 640.6 792.2 100.0
* 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 realised in
January 2007 and the short holding period of the current real estate
portfolio, the proportional share of real estate targets in the gross
portfolio of all funds managed by CapMan is at a low level.
Funds generating carried interest as at 31 December 2007
A private equity fund begins to generate carried interest after the
investors have regained their investment and generate a preferred
annual return, usually 7-8%. During the year CapMan Real Estate I and
Finnventure V funds began to generate carried interest, and of these
funds CapMan Real Estate I is still in the active investment phase.
At the end of 2007 the following funds were in carry:
CapMan's Portfolio at fair
share of value 31.12.2007
cash flows* MEUR
Finnventure II and III
and Finnmezzanine II B funds
in total: 20-35 % 2.8
Finnventure Fund V: 20 % 54.5
Fenno Program (Fenno Fund,
Skandia I and II) in total: 10-12 % 11.7
CapMan Real Estate I: 25 % 92.5**
* Net share of cash flows, taking into consideration Fenno Management
Oy's share as far as Fenno Program is concerned and 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 56.1 is financed with debt.
The current portfolios of funds generating carried interest amounted
to MEUR 161.5 at fair value, which is 17.0% of the total fair value
of all portfolio funds at 31 December 2007 (MEUR 952.7). Information
about each fund's investment targets is presented on CapMan's website
at www.capman.com/En/Funds.
CapMan's share of carried interest received from funds generating
carry is generally 20-25% of a fund's cash flow in respect of funds
that were established before 2004, and 10-15% with respect to newer
funds. The lower carried interest percentage for newer funds results
from a share of the carried interest being distributed to the members
of the investment team who have been responsible for the funds'
investment activities during the funds' life cycle (generally 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 from its own balance sheet
about 5-10% of the total capital in equity funds that invest in
portfolio companies. The aim of investing 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 variations in fair value
gains/losses due to changes in the value of investment targets as
well as to realised exits and the expenses incurred by funds.
CapMan, like other investors, gives commitments to the funds when
they are established. As at 31 December 2007 the total sum of current
investments at fair value and remaining commitments was MEUR 100.2
(MEUR 83.6 at 31 December 2006), of which remaining commitments
totalled MEUR 56.0 (MEUR 50.5). Of these, MEUR 23.2 is allocated to
the CapMan Buyout VIII Fund, MEUR 12.4 to the CapMan Technology 2007
fund and the remainder mainly to the CapMan Life Science IV, CapMan
Mezzanine IV, CapMan Equity VII and Access Capital Fund II funds. The
commitments will be drawn down gradually within the next 3-5 years as
new investments are made. Fund investments for the year totalled MEUR
15.4 (MEUR 13.2). 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 44.2 (MEUR 33.1) at
year-end.
CapMan's investments and commitments in the funds as at 31 December
2007, MEUR
Investments Remaining Total
at fair value commitments
Funds investing in portfolio
companies
Equity funds 33.7 47.1 80.8
Mezzanine funds 2.3 4.5 6.8
Funds of funds* 7.7 2.2 9.9
43.7 53.8 97.5
Real estate funds 0.5 2.2 2.7
Total 44.2 56.0 100.2
* Managed by CapMan's associated company Access Capital Partners.
CapMan's own investments in the funds
1-12/2007 1-12/2006
Funds investing in portfolio companies
Equity funds 13.0 9.8
Mezzanine funds 1.5 0.7
Funds of funds* 0.3 2.6
Total 14.8 13.1
Real estate funds 0.6 0.1
Total 15.4 13.2
* Managed by CapMan's associated company Access Capital Partners.
Personnel
As at 31 December 2007 CapMan had 110 (98) employees, of whom 86 (72)
were located in Finland and the remainder in the other Nordic
countries.
31.12.2007 31.12.2006
CapMan Private Equity 37 38
CapMan Real Estate 30 24
Investor Services 25 21
Internal Services 18 15
Total 110 98
Six Senior Advisors also acted 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 15 Industrial Advisors.
Changes in Group management
CapMan Plc announced changes in the Group's management and
organisation on 20 September 2007. Kaisa Arovaara was appointed as
CFO of CapMan Plc and member of the Management Group responsible for
the new Internal Services team, which comprises the Group's finances
and administration as well as IT and office functions. Senior Partner
Olli Liitola continues as Deputy CEO, to whom CapMan Real Estate
reports. Jerome Bouix was nominated as a Senior Partner and he
transferred to head the new Investor Services team, which is
responsible for the Group's fundraising, fund administration,
investor relations, communications and product development. Torben
von Lowzow was nominated as a Partner and member of the Management
Group. Senior Partner Kai Jordahl, Group HR Director Hilkka-Maija
Katajisto and Senior Legal Counsel Martti Timgren were also appointed
as members of the Management Group. All of the changes came into
effect on 1 October 2007.
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 Senior
Partners of CapMan with equal shares. In connection with the same
transaction, 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. Due to these share transactions and conversions, CapMan
Partners B.V. became the second largest shareholder and the largest
holder of voting rights in CapMan Plc. A total of seven statutory
notices of changes were issued in May with respect to these share
transactions.
CapMan Plc issued a flagging announcement in late November, when the
holding of US-based Legg Mason Inc. had surpassed one-twentieth (5%)
of the Company's share capital as a result of a share transaction
concluded on 20 November 2007.
CapMan Plc had 4,489 shareholders (5,103 shareholders) at the end of
2007. The number of shareholders has declined from the previous year
while the proportion of foreign and nominee-registered shareholders
(excluding the 6.3% holding of CapMan Partners B.V.) has increased
from 30.8% to 35.9%.
Share capital, share trading and share price
CapMan Plc's share capital totalled EUR 771,586.98 at the end of the
financial year. The Company had 73,968,819 listed B shares and
6,000,000 unlisted A shares. B shares have one (1) vote each and A
shares ten (10) votes each.
The trading volume of B shares increased by nearly 50% compared to
the previous year and the value of shares traded almost doubled. The
closing price of the B share was EUR 3.25 at year-end. The Company
had a market capitalisation of MEUR 240.4 (MEUR 208.9) on 31 December
2007 and the Company's total market value, including CapMan A shares,
was MEUR 259.9 (MEUR 233.0).
A total of 454,188 2003A stock options, listed in October 2006, were
traded during 2007. The number of 2003A stock options issued is
625,000 pieces and the share subscription period ends on 31 October
2008. A total of 49,428 B shares in CapMan Plc had been subscribed
for with the stock options 2003A in 2007. The share subscription
price, EUR 70,187.76, has been recorded in the Company's invested
unrestricted shareholders' equity.
2003B stock options were listed on OMX Nordic Exchange Helsinki on 1
October 2007. The number of 2003B stock options issued is 625,000
pieces each with entitlement to subscribe to one CapMan Plc B share.
The share subscription price will be recorded in the Company's
invested unrestricted shareholders' equity. No shares in CapMan Plc
had been subscribed for with the stock options 2003B in 2007.
Stock option program 2000A/B expired on 31 October 2007. The scheme
originally included 5,270,000 stock options with entitlement to
subscribe an equivalent number of CapMan Plc B shares. A total of
2,760,693 B shares in CapMan Plc were subscribed with the stock
options 2000A/B in 2007 and the share subscription price, EUR
1,656,415.80, was recorded in the Company's invested unrestricted
shareholders' equity in accordance with the decision of the AGM. All
in all, 5,055,943 B shares in CapMan Plc were subscribed for with the
stock options 2000A/B.
Trading and price development of shares and options
B shares 2003A options 2003B
options
1-12/2007 1-12/2006 1-12/2007 10-12/2006 10-12/2007
Trading
turnover,
number 30 873 119 21 162 823 454 188 92 450 145 550
Trading
value, MEUR 107.0 58.3 0.8 0.1 0.3
Trading
price, EUR
Highest 4.07 3.15 2.55 1.53 2.25
Lowest 2.86 2.33 1.40 1.35 2.09
Volume
weighted
average price 3.49 2.74 1.85 1.82 2.15
Closing price
at 31 Dec 3.25 3.02 2.20 1.98 2.10
Decisions adopted by the Annual General Meeting
CapMan Plc's Annual General Meeting was held on 29 March 2007 in
Helsinki. The AGM adopted the 2006 financial statements and
discharged the Board of Directors and the CEO from liability for the
2006 fiscal year. The AGM decided that a dividend of EUR 0.12 per
share be distributed to shareholders for the 2006 financial year.
Sari Baldauf, Tapio Hintikka, Lennart Jacobsson, Urban Jansson, Teuvo
Salminen and Ari Tolppanen were elected to the Board of Directors by
the AGM. PricewaterhouseCoopers Oy, authorised public accountants,
with Jan Holmberg, APA, as the Lead Auditor and Terja Artimo, APA, as
the Deputy Auditor, were elected as the Company's Auditors.
The AGM adopted the Board's proposals to amend the Company's Articles
of Association and authorised the Board of Directors to decide on
issuing a maximum of 20,000,000 new CapMan Plc B shares or to issue
stock options and other entitlements. In addition, the AGM authorised
the Board of Directors to decide on repurchasing a maximum 8,000,000
CapMan Plc B shares by using the Company's unrestricted shareholders'
equity. The AGM 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 AGM decisions and the amended Articles of
Association are presented in full on CapMan's website at
www.capman.com/En/InvestorRelations/AnnualGeneralMeetings and
www.capman.com/En/AboutCapMan/CorporateGovernance/ArticlesofAssociation/.
Other events in 2007
In the last quarter of 2007 CapMan Plc sold its 20% holding in
Baltcap Management Oy to company management. The sale does not impact
on CapMan Plc's result for 2007 or on the effective carried interest
agreements of Baltcap's Baltic Investment Fund III and Baltic SME
Fund. CapMan continues to co-manage the aforementioned funds with
Baltcap Management Oy and Evli Bank Plc after the transaction.
Events after the review period
On 18 January 2008 CapMan Plc established CapMan Hotels RE Ky, a
private equity real estate fund investing in hotel real estate. The
fund reached MEUR 835 at first closing and the maximum fund size is
MEUR 1,100. In connection with its establishment, the fund acquired a
portfolio of 39 hotels with a transaction value of MEUR 805 from
Northern European Properties Ltd (NEPR).
17 Finnish institutions have committed MEUR 292 of equity into the
fund to date, with the balance comprising senior debt. The fund is
open to new investors for twelve months and the maximum amount of
equity capital will be MEUR 400.
CapMan Hotels RE Oy, which is 80% owned by CapMan Plc and 20% owned
by Corintium Oy, acts as CapMan Hotels RE Ky's management company.
The management company's own commitment into the fund is MEUR 5. The
establishment of the fund is estimated to have a slightly positive
impact on CapMan's result for 2008.
Future outlook
Market and investment activities
Private equity investment in Europe is expected to show growth in the
mid-term and long-term, as institutional investors and other
substantial investor groups have added private equity investment to
their investment allocations. In addition private equity investment
has consolidated its position in financing M&A and growth, and its
growth in the Nordic countries is further accelerated by
consolidation in various sectors, family successions, privatisation
of public services and functions, the strong contribution of R&D in
the technology and life science sectors and increasing
entrepreneurial activity. Real estate market growth is speeded up by
accelerated structural change, in which particularly pension
companies transfer real estate investments from their balance sheets
into funds.
CapMan will continue to implement its Nordic investment strategy as
far as the funds investing in portfolio companies are concerned. The
turmoil in financial markets which labelled the second half of 2007
has not been directly visible in CapMan private equity's investment
activities so far. Banks have continued to finance M&A in CapMan's
market segment of middle market buyout transactions. Based on our
experience the markets have returned to so-called normal levels as
far as enterprise values and debt ratios are concerned, following a
couple of highly aggressive and active years. The number of new
potential investee companies has remained at a good level and there
are attractive opportunities for syndicated investments in technology
and life science sectors. Turbulence in financial markets has also
not been visible in exit markets thus far, but a deepening of
instability may reflect on the funds' exits by postponing
realisations.
The local presence of CapMan's Buyout, Technology and Life Science
teams across the Nordic countries enables the active searching for
investee companies throughout the Nordic region, and the teams 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 690 in capital for new and follow-on investments.
The instability in financial markets has been visible in real estate
markets towards the end of the year as a slightly weaker liquidity,
and in Finland overall sales volumes for 2007 are expected to fall to
some extent from the previous year. Rising interest rates and banks'
increasing reluctance to grant loans will impact on competition and
property values in the industry, and we see that the use of equity in
real estate transactions will increase. High prices will still be
paid for good core targets in future, whereas a rise in yield
requirements is expected in more opportunistic targets. Leasing
activity and demand for office and retail properties have been
strong. There are many new projects are under construction, which
will have an effect on the supply of premises especially in the
office segment.
CapMan's private equity real estate funds have adequate personnel
resources, a competitive structure and aggregate investment capacity
of some MEUR 340 for seeking good investment targets and developing
the current portfolio. The resources, combined with the team's
reliability and flexibility, have provided the funds with lots of
investment opportunities. We anticipate that the establishment of our
new hotel real estate fund in January 2008 will further strengthen
our market position, and we believe that individual properties that
suit our funds' investment focuses will also be available in the
future and will enable our funds to achieve their targets.
CapMan Plc Group
CapMan's strategy is to exploit growth opportunities within the
alternative asset class. In addition to CapMan's existing business
lines (Private Equity and Real Estate) the alternative asset class
includes, among others, infrastructure investment, forestry
investment and active public market funds. CapMan is at present
exploring opportunities to expand geographically into Russia and to
establish a fund investing in public markets based on CapMan's value
creation expertise. We aim to concretise the projects during 2008.
Management fees and returns on real estate consulting operations
cover CapMan's fixed expenses. The Group's result for 2008 will
depend on how many new exits are made by funds already generating
carried interest; on whether new funds transfer to carry; and on how
the value of investments develops in those funds in which CapMan is a
substantial investor. According to our understanding CapMan Equity
VII A, B and Sweden funds, Finnventure Fund IV and Finnmezzanine III
A and B funds will begin to generate carry during 2008 and 2009. The
funds have several exit processes underway.
We expect that our portfolio companies and real estate assets will
develop favourably in 2008. However the prevailing unstable situation
in financial markets may reflect, as a result of the changes in
listed peers' valuations, on the fair value of the funds' investment
targets and hence also reflect on the fair value of the Group's fund
investments in 2008.
CapMan Plc will publish its Interim Report for 1 January - 31 March
2008 on Wednesday, 7 May 2008.
Helsinki 31 January 2008
CAPMAN PLC
Board of Directors
Press conference:
A press conference in Finnish will be held for analysts and the media
today at 12.00 noon in CapMan's premises at Korkeavuorenkatu 32,
Helsinki, Finland. 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 for the press conference will be published in
Finnish and in English on the Group's website after the press
conference has commenced.
For further information, please contact:
Heikki Westerlund, CEO, tel. +358 207 207 504 or mobile +358 50 559
6580
Kaisa Arovaara, CFO, tel. +358 207 207 583 or mobile +358 50 370 3715
Distribution:
Helsinki Exchanges
Principal media
www.capman.com
GROUP BALANCE SHEET (IFRS)
€ ('000) 31.12.07 31.12.06
ASSETS
Non-current assets
Tangible assets 819 672
Goodwill 4,845 4,845
Other intangible assets 1,001 710
Investments in associated companies 3,407 2,860
Investments at fair value through profit and loss
Investments in funds 44,230 33,122
Other financial assets 878 848
Receivables 16,191 13,835
Deferred income tax assets 3,547 231
74,918 57,123
Current assets
Trade and other receivables 7,837 5,521
Other financial assets at fair value
through profit and loss 14,857 2,779
Cash and bank 19,741 14,137
42,435 22,437
Total assets 117,353 79,560
EQUITY AND LIABILITIES
Capital attributable the Company's
equity holders
Share capital 772 772
Share premium account 38,968 38,968
Other reserves 2,961 1,218
Translation difference 133 316
Retained earnings 24,676 15,074
67,510 56,348
Minority interest 34 599
Total equity 67,544 56,947
Non-current liabilities
Deferred income tax liabilities 3,734 2,234
Interest-bearing loans 16,000 10,000
Other liabilities 701 430
20,435 12,664
Current liabilities
Trade and other payables 21,356 7,409
Interest-bearing loans and borrowings 0 1,944
Current income tax liabilities 8,018 596
29,374 9,949
Total liabilities 49,809 22,613
Total equity and liabilities 117,353 79,560
GROUP INCOME STATEMENT (IFRS)
€ ('000) 1-12/07 1-12/06
Turnover 51,572 38,032
Other operating income 236 687
Personnel expenses -15,381 -13,958
Depreciation and amortisation -581 -726
Other operating expenses -11,783 -11,958
Fair value gains / losses of investments 5,696 3,549
Operating profit 29,759 15,626
Financial income and expenses 1,070 420
Share of associated companies' result 1,915 1,279
Profit before taxes 32,744 17,325
Income taxes -8,509 -4,893
Profit for the financial year 24,235 12,432
Attributable to:
Equity holders of the company 18,620 11,455
Minority interest 5,615 977
Earnings per share for profit attributable
to the equity holders of the Company:
Earnings per share, € 0.24 0.15
Diluted, € 0.24 0.15
Operating profit, % 57.7 41.1
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to the equity holders of the Company
Share Share Other Trans- Re- Total Minority Total
capital premium reserves lation tained interest equity
account differ- ear-
€ ('000) ences nings
Equity on
31.12.2005 759 38,157 948 -148 9,156 48,872 220 49,092
Share
subscriptions
with options 13 811
Translation
difference 464 9
Options 270 -222
Profit for
the
financial
year 11,455 977
Dividens paid -5,315 -607
Equity on
31.12.2006 772 38,968 1,218 316 15,074 56,348 599 56,947
Equity on
31.12.2006 772 38,968 1,218 316 15,074 56,348 599 56,947
Share
subscriptions
with options 1,726
Translation
difference -183 223
Options 17
Profit for
the
financial
year 18,620 5,615
Dividens paid -9,259 -6,222
Other Changes 18 42
Equity on
31.12.2007 772 38,968 2,961 133 24,676 67,510 34 67,544
GROUP'S CASH FLOW (IFRS)
€ ('000) 1-12/07 1-12/06
Cash flow from operations
Profit for the financial year 24,235 12,432
Adjustments 239 -625
Cash flow before change in working capital 24,474 11,807
Change in working capital 5,662 889
Financing items and taxes -1,111 -1,548
Cash flow from operations 29,025 11,148
Cash flow from investments -6,823 -9,466
Cash flow before financing 22,202 1,682
Dividends paid -9,687 -5,923
Other net cash flow -6,911 11,532
Financial cash flow -16,598 5,609
Change in cash funds 5,604 7,291
Cash funds at start of the period 14,137 6,846
Cash funds at end of the period 19,741 14,137
Accounting principles
The same accounting principles have been applied in the Financial
Statements Bulletin as in the 2006 financial statements. IFRS
Interpretations issued during the financial year have been observed.
Appendices in accordance with IFRS 7, Financial Instruments:
Disclosures (effective as of 1 January 2007) have been included in
the bulletin in so far as their significance to the Group's financial
information is concerned.
The information presented in the Financial Statements Bulletin is
un-audited.
Segment information
€ ('000) 1-12/07 1-12/06
Turnover
CapMan Private Equity 25,840 33,116
CapMan Real Estate 25,732 4,916
Total 51,572 38,032
Operating profit
CapMan Private Equity 9,484 15,404
CapMan Real Estate 20,275 222
Total 29,759 15,626
Income taxes
The Group's income taxes in the Income Statement are calculated on
the basis of current taxes on taxable income and deferred taxes.
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) 31.12.07 31.12.06
Investments in funds at fair value through
profit and loss at Jan 1 33,122 20,288
Additions 15,384 13,233
Disposals -9,972 -4,117
Fair value gains/losses on investments 5,696 3,718
Investments in funds at fair value through
profit and loss at end of the period 44,230 33,122
Transactions with related parties (associated companies)
€ ('000) 31.12.07 31.12.06
Receivables - non-current 12,497 7,940
Receivables - current 879 243
Non-current liabilities
€ ('000) 31.12.07 31.12.06
Interest bearing loans 16,000 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 31.12.07 31.12.06
Finland 86 72
Denmark 4 5
Sweden 15 16
Norway 5 5
In total 110 98
Contingent liabilities
€ ('000) 31.12.07 31.12.06
Leasing contracts and other contingent
liabilities 11,797 13,451
Commitments to funds 55,994 50,529
Turnover and profit quarterly
YEAR 2007
MEUR 1-3/07 4-6/07 7-9/07 10-12/07 1-12/07
Turnover 28.1 7.5 8.0 8.0 51.6
Management fees 5.8 6.5 6.2 6.1 24.6
Carried interest 21.2 0.2 1.0 1.2 23.6
Income of investments in
funds 0.3 0.0 0.1 0.1 0.5
Real Estate consulting 0.6 0.5 0.5 0.5 2.1
Other income 0.2 0.3 0.2 0.1 0.8
Fair value gains / losses of
investments 4.1 0.5 2.9 -1.8 5.7
Operating profit 25.4 1.1 4.9 -1.6 29.8
Financial income and expenses 0.3 0.2 0.2 0.4 1.1
Share of associated companies'
result 0.9 0.2 0.8 0.0 1.9
Profit before taxes 26.7 1.4 5.9 -1.3 32.7
Profit for the period 19.9 1.0 4.6 -1.3 24.2
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 AT 31 DECEMBER 2007, MEUR
Fund's Size Paid-in current Distributed Net
* capital portfolio cash flow cash
at at
** cost 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 2.8 179.6 44.1 0.4
FV V 169.9 161.8 59.5 54.5 218.1 1.3 4.2
Fenno Program
(Fenno
Fund, Skandia I
and
Skandia II) in
total 2) 59.0 59.0 10.8 11.7 122.9 8.6 0.2
CMRE I 5) 500.0 355.9 93.1 92.5 183.0 28.5 -56.4
In total 787.5 634.1 166.5 161.5 703.6 82.5 -51.6
Funds that are
expected
to start
generating
carried interest
by the end of
2009
FV IV 59.5 59.5 10.3 14.2 65.7 0.8
CME VII A 156.7 128.3 84.6 148.4 77.2 3.6
CME VII B 56.5 51.0 33.4 70.0 35.1 1.9
CME SWE 67.0 54.4 36.2 63.6 33.1 2.0
FM III A 101.4 98.1 33.0 42.9 97.6 2.1
FM III B 20.2 19.8 8.7 11.9 17.2 0.3
In total 461.3 411.1 206.2 351.0 325.9 10.7
Other funds not
yet
in carry
CME VII C 23.1 15.2 10.2 9.3 5.9 0.1
CMB VIII A 360.0 134.7 118.2 126.0 -0.5
CMB VIII B 80.0 30.0 26.2 28.0 -0.2
CM LS IV 54.1 17.0 14.0 11.9 -0.2
CMT 2007 1) 140.3 23.4 19.7 19.7 1.3
FM III C 13.9 13.9 4.0 4.8 11.8 2.0
CMM IV 4) 240.0 108.0 85.4 95.5 21.0 4.2
CMRE II 6) 600.0 73.6 67.0 68.0 -44.4
In total 1,511.4 415.8 344.7 363.2 38.7 -37.7
Funds with
limited
carried interest
potential to
CapMan
NPEP II 3), FV V
ET,
SWE LS 3), SWE
Tech 1), 3)
and FM II A, C,
D 1)
In total 255.9 231.7 83.2 77.0 119.2 5.1
Equity funds in 3,016.1 1,692.7 800.6 952.7 1 188.0 82.5 -73.5
total
CAPITAL MANAGED/ADVISED BY ASSOCIATED COMPANY ACCESS CAPITAL PARTNERS
AS AT 31 DECEMBER 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
ACF IV 1) 241.0
Private Equity Mandates 1,162.0
Total capital 2,326.5
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
ACF IV = Access Capital Fund IV Growth Buyout
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
NPEP = Nordic Private Equity Partners
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. 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 31 December
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, 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 Capital
Fund IV: 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. Net cash assets are typically negative in the real estate
funds and in Mezzanine IV fund, due to the use of senior debt.
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 December 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 206.1 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% of the fund's size or MEUR 150 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 - 31
DECEMBER 2007
The investment activities of private equity funds managed by CapMan
in 2007 comprised 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 four 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 2007
In 2007 the CapMan funds made 11 new investments as well as add-on
investments worth MEUR 164.7 in all. In the comparative year the
funds made eight new investments as well as add-on investments
totalling MEUR 158.8.
No new investments were made by the funds in the final quarter of
2007. In the first three quarters of the year the buyout funds
invested in five portfolio companies, which were Finnish Komas Oy,
Skandia Autologistics Oy (formerly John Nurminen's Vehicle Logistics
Unit) and Walki Group Oy (formerly Walki Wisa), Swedish Nacka
Närsjukhus Proxima AB and Norwegian Curato AS (formerly Telemark
Røntgen Group). In addition the technology funds invested in six
technology companies, which were Finnish Mirasys Ltd, Global
Intelligence Alliance Group Oy (formerly Novintel Oy), Movial
Applications Oy and Mawell Oy, Danish IT2 Treasury Solutions and
Swedish KMW Energi AB. The life science funds co-invested in the
Nacka Närsjukhus Proxima, Curato and Mawell investments.
Exits from portfolio companies in 2007
The funds made nine final exits and several partial exits in 2007.
Exits at acquisition cost (including mezzanine loan instalments and
partial exits) totalled MEUR 93.2 for the financial year. There were
ten final exits and several partial exits in the previous year, for
which exits at acquisition cost (including mezzanine loan
instalments) totalled MEUR 173.8.
Q4 Exits from portfolio companies
In early October the Fenno Fund co-managed by CapMan and Fenno
Management Oy sold its 1,913,044 shares in Affecto Plc, which it had
retained in the company's IPO in 2005. Fenno Fund invested in Affecto
Oy in 1999. The exit has an impact of approx. MEUR 0.8 on CapMan
Plc's result for 2007.
Finnmezzanine Fund III A exited from Savcor Group Ltd. in December
when the company made an IPO of part of its business on the
Australian Securities Exchange. As a result of the public listing
Savcor repaid its mezzanine and equity loans to the fund. Savcor's
main products are surface coatings and surface protection
technologies that shield, among other things, mobile phones against
electronic interference and civil structures and industrial assets
against corrosion. The fund invested in Savcor in 2002. The exit from
Savcor does not impact on CapMan Plc's result for 2007.
Exits from portfolio companies in January-September
In the first three quarters of the year the funds exited from three
buyout targets, which were Swedish Synerco AB, Danish LindPlast
A/Sand Finnish Copterline and from three technology targets, which
were Finnish Distocraft Oy, Finnish MediaNorth Group Corporation and
Swedish Avitec AB. Additionally, the funds sold their listed shares
in Finnish SysOpenDigia Plc.
Other events in 2007
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
was closed in early November as an exchange of shares, and therefore
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.
Swedestart Life Science fund's portfolio company Aerocrine AB went
public on the Stockholm Stock Exchange in mid-June. Aerocrine is a
medtech 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.
In early October Finnmezzanine Fund III sold its entire stake in
Indufor Oy to the company's operative management. Indufor Oy had
transferred to the fund's ownership in March 2007 from Savcor Group,
a portfolio company of Finnmezzanine Fund III.
Equity VII and Swedestart Tech KB funds announced an exit from Solid
Information Technology Oy in late December. The funds sold their
holding in the company to IBM, and the transaction was closed in
January 2008. Solid Information Technology is a provider of database
solutions that enable the reliable functionality mission-critical
network infrastructure and software. The exit does not impact on
CapMan Plc's result.
Events after the review period
CapMan Buyout VIII fund announced an investment in Norwegian
Barnebygg Group in January. Barnebygg, a family-owned company founded
in 1992, is one of Norway's leading providers of day care services.
The execution of the transaction is subject to approval by
competition authorities and it is expected to be finalised by
February 2008.
In January CapMan Buyout VIII fund announced an investment in
Varesvuo Partners Oy, a Finnish television content and commercial
film production company. The company's operative management will also
invest in the company. The investment will finance the company's
growth and strengthen its position as an independent company, and it
is expected to be finalised in the first quarter of 2008.
INVESTMENT ACTIVITIES BY THE REAL ESTATE FUNDS
Investment decisions in 2007
The Real Estate funds announced 16 new investments or investment
decisions in 2007. Of these, 13 were in completed properties and
three in properties under construction. Investments totalling MEUR
160.0 were made during the fiscal year, and as at 31 December 2007
the funds had additionally committed a total of MEUR 302.1 to finance
real estate acquisitions and projects in the next few years. In the
comparative period the funds invested MEUR 78.7 in four new targets.
Q4 Investment decisions
In October CapMan RE II fund acquired the office property located at
Ylistönmäentie 33 in Jyväskylä. The property has a lettable area of
ca. 5,790 m² and is fully leased to TietoEnator Corporation at the
time of investment.
Additionally, CapMan RE II fund acquired the commercial properties
located at Yliopistonkatu 22 and Kristiinankatu 8 in Turku from Niam
Fund III and Whitehall Street Real Estate Funds in December. The
transactions were closed in January 2008. Yliopistonkatu 22 is fully
leased to Stockmann Plc, and Kristiinankatu 8 (Turun Centrum) was
also fully leased at the time of investment.
Investment decisions in January-September
In the first three quarters of 2007 CapMan Real Estate I fund
invested in the following completed properties:
Kiinteistö Oy Helsingin Kalevankatu 20, Helsinki
Kiinteistö Oy Malminkaari 9, Helsinki
Kiinteistö Oy Lönnrotinkatu 20, Helsinki
Kiinteistö Oy Helsingin Ludviginkatu 3-5, Helsinki
Kiinteistö Oy Helsingin Elimäenkatu 9, Helsinki
Kiinteistö Oy Hankasuontie 3, Helsinki
Kiinteistö Oy Mastolan keskusvarasto
In addition the fund gave an undertaking to acquire Entresse, a
shopping centre under construction, from YIT Construction Ltd.
Entresse is located in Espoo centre and is scheduled to be completed
for the 2008 winter season. The capital commitment to buy the
shopping centre will be drawn down during 2008.
CapMan RE II fund acquired the following finished properties in the
first half of 2007:
Kiinteistö Oy Kasarmikatu 4, Hämeenlinna
Kiinteistö Oy Parolantie 104, Hämeenlinna
Kiinteistö Oy Viinikankatu 49, Tampere
In addition the fund signed an agreement with Tokmanni Oy on the
acquisition of a logistics centre to be built in Mäntsälä. The
logistics centre project will be completed in autumn 2008, and the
committed capital will be drawn down during 2008.
In early July CapMan RE II fund signed an agreement to acquire
ownership of Skanssin Kauppakeskus Oy, a shopping centre in Turku,
from the Hartela Group. The capital commitment that has been made in
the shopping centre project will be drawn down in stages during
2007-2009.
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 2007. The acquisition cost of the portfolio was MEUR 304.4
and its sale price was MEUR 377.5. CapMan Real Estate I has continued
its active investment operations after the transaction.
Other events in 2007
In September CapMan RE II fund entered into a cooperation agreement
with Finesco Invest Oy for the development of a shopping centre in
the Hyvinkää town centre. The zoning of the target is currently
underway.
Events after the review period
On 18 January 2008 CapMan Plc established CapMan Hotels RE Ky, a
private equity real estate fund investing in hotel real estate. The
fund reached MEUR 835 at first closing and the maximum fund size is
MEUR 1,100. In connection with its establishment, the fund acquired a
portfolio of 39 hotels with a transaction value of MEUR 805 from
Northern European Properties Ltd (NEPR).
