Leverator Plc Interim Report 12 May 2009 at 11.30 a.m.
Business
Leverator Plc’s (Leverator) business consists of the issue of bonds and the grant of loans to CapMan Mezzanine IV L.P. mezzanine fund (CMM IV). Leverator’s result is formed by the difference between interest received from CMM IV’s loans and interest paid to bondholders. The issued bonds are listed on the Helsinki Exchanges.
Bonds
Leverator has issued a serial loan with a fixed coupon interest of 8.162%. The bonds will be issued in a maximum of five tranches in accordance with the loan capital needed by CMM IV, and investors have committed to subscribe all five tranches. The last tranche will be issued no later than 18 June 2009.
The tranches have a maximum size of MEUR 60 each. The maximum total issue is MEUR 192. The bonds’ trading lot is MEUR 0.5 and the final loan maturity is 21 June 2016. Leverator has a call option to repay the bonds or part thereof not earlier than 22 June 2009. In the event that the bonds are called prior to 22 June 2011, a premature payment premium is paid as specified in the listing particulars.
Issued tranches and Leverator’s financial performance
Issued tranches (trading code LEVJ816216) | ||||
Tranche | Issue date | Size of the tranche, MEUR | Date of listing | Subscription price, % |
1st tranche | 12 July 2004 | 8.0 | 13 July 2004 | 100.00 |
2nd tranche | 5 June 2006 | 40.0 | 13 June 2006 | 99.137 |
3rd tranche | 28 March 2007 | 48.0 | 13 April 2007 | 98.290 |
No tranches were issued during the review period. Leverator’s turnover for the review period was EUR 0, because the Company’s interest earnings and interest expenses are presented as financial items in the income statement. Leverator’s operating loss was EUR 10,787 (EUR 9,408 for the review period 1 January – 31 March 2008) and financial income and expenses totalled EUR 31,888 (EUR 34,096). The result for the review period was EUR 12,071 (EUR 14,993).
Leverator’s solvency and risks
The security for the bonds is Leverator’s receivable from CMM IV. The security for this receivable to Leverator is CMM IV’s mezzanine loan receivables from portfolio companies as well as associated options and portfolio company shares that are possibly subscribed on the basis of those options.
Leverator’s solvency to pay the bonds’ interest and principal is based on CMM IV’s solvency to pay the loan receivable and interest to Leverator. CMM IV’s solvency is dependent on its mezzanine loan receivables from portfolio companies and on the value of associated options or shares as well as on CMM IV’s right to call the commitments and clawback of the Fund’s Limited Partners and on the credit limit of CMM IV. The most significant risks or uncertainty factors in Leverator’s operations are that the portfolio companies would not be able to pay their debt to the fund, that the fund’s Limited Partners would not be able to fulfil their obligations in accordance with fund agreement or that the fund’s solvency would be put at risk due to some other cause.
An examination of CMM IV’s solvency to manage the loan receivable to Leverator is first carried out in order to determine Leverator’s solvency.
CMM IV’s solvency
MEUR | |
Outstanding balance to Leverator | 96.0 |
CMM IV’s mezzanine loans and associated options and shares: | |
- acquisition cost | 151.6 |
- value appreciation | -7.7 |
Net cash assets | 3.0 |
Commitments at call from Limited Partners | 10.0 |
Clawback at call | 10.9 |
Credit limit balance | -41.8 |
Total | 126.0 |
The values given above are reported by CMM IV’s management company. The management company’s assessment of the value appreciation of mezzanine loans and associated options and shares is based on reporting principles common to the private equity industry. These principles aim at take into account risk factors caused by the general economic environment. The amount of commitments and clawback that the fund has a right to call from the Fund’s Limited Partners is based on CMM IV’s fund agreement.
Leverator’s solvency
MEUR | |
Balance of bonds at nominal value | 96.0 |
Leverator’s receivable from CMM IV at nominal value | 96.0 |
Net cash assets | 0.7 |
Total | 96.7 |
Leverator’s solvency exceeds the balance of the bonds.
Leverator’s more detailed financial position is presented in the income statement, balance sheet, and cash flow statement in Appendix 1. There are no exceptional liabilities of Leverator or CMM IV in the knowledge of Leverator’s Board of Directors that should be considered in the above calculations.
Leverator’s ownership
The owners of Leverator Plc are CapMan Plc, Etera Mutual Pension Insurance Company, Foundation for Economic Education, Ilmarinen Mutual Pension Insurance Company, OP Life Assurance Company Ltd, Pharmacy Pension Fund, Mandatum Life Insurance Company Limited, Varma Mutual Pension Insurance Company and Yleisradio Pension Fund with equal holdings.
Leverator’s management
On 12 May 2009 the shareholders of Leverator Plc elected the following members to the Company’s Board of Directors: Mr Risto Autio, Mr Karri Alameri, Mr Kari Joutsa, Mr Harri Lemmetti, Mr Olli Liitola, Mr Jyrki Orpana, Mr Jorma Tammenaho, Mr Hannu Tarkkonen and Mr Kyösti Ylikortes. The members elected Mr Jyrki Orpana as Chairman of the Board.
Adoption of IFRS standards (IAS)
As of 1 January 2007, Leverator Plc has adopted International Financial Reporting Standards (IFRS) in its financial reporting.
Events after the review period
Leverator issued the fourth tranche on 28 April 2009. The size of the fourth tranche was MEUR 36.0 and the subscription price was 97.389%. The tranche was listed on 5 May 5009.
After the review period Leverator forwarded a MEUR 36.0 loan to CMM IV from the proceeds received from the issue of the second tranche.
Future outlook
Developments in the general market environment in the next few years may cause difficulties in the ability of fund’s portfolio companies to pay interest on their mezzanine loans and repay principal to the fund. This, in turn, might weaken the fund’s ability to meet in full its debt to Leverator Plc, which would affect Leverator Plc’s solvency. The last possible date of issue of the last tranche is 18 June 2009. It is highly probable that the Company’s interest earnings will cover its interest payable and other expenses in 2009.
Leverator Plc will publish its Interim Report 1 January – 31 June 2009 on 7 August 2009.
Helsinki 12 May 2009
LEVERATOR PLC
Board of Directors
For further information, please contact:
Olli Liitola, Member of the Board of Directors, tel. +358 207 207 506 or mobile +358 400 605 040
DISTRIBUTION
Helsinki Exchanges
Principal media
Bondholders
APPENDIX 1. Income statement, balance sheet, cash flow statement and statement of changes in equity
Interim Report 1 January – 31 March 2009 has been prepared in compliance with International Financial Reporting Standards (IFRS) applying IAS and IFRS standards, as well as SIC and IFRIC interpretations, valid on 31 December 2007. The figures in the Interim Report are unaudited.
APPENDIX 1. INCOME STATEMENT, BALANCE SHEET, STATEMENT OF CHANGES IN EQUITY AND CASH FLOW STATEMENT
INCOME STATEMENT, IFRS | |||
EUR | 1.1.- 31.3.2009 | 1.1.- 31.3.2008 | 1.1.- 31.12.2008 |
Turnover | 0 | 0 | 0 |
Personnel expenses | 0 | 0 | -23 200 |
Other operating expenses | -10 787 | -9 408 | -52 963 |
Operating loss | -10 787 | -9 408 | -76 163 |
Financial income and expenses | 31 888 | 34 096 | 161 429 |
Profit/loss before taxes | 21 101 | 24 688 | 85 266 |
Income taxes | -9 030 | -9 695 | -35 758 |
Profit/loss for the financial year | 12 071 | 14 993 | 49 508 |
Earnings per share: | |||
Earnings per share, € | 0,0117 | 0,0146 | 0,0481 |
BALANCE SHEET, IFRS | |||
EUR | 31.3.2009 | 31.3.2008 | 31.12.2008 |
ASSETS | |||
Fixed assets | |||
Investments | |||
Other investments | 95 289 749 | 95 046 233 | 95 289 749 |
Total fixed assets | 95 289 749 | 95 046 233 | 95 289 749 |
Current assets | |||
Deferred tax assets | 0 | 0 | 0 |
Short-term receivables | 2 612 177 | 2 583 611 | 508 144 |
Cash and bank | 348 978 | 178 830 | 377 480 |
Total current assets | 2 961 155 | 2 762 441 | 885 624 |
TOTAL ASSETS | 98 250 904 | 97 808 674 | 96 175 373 |
SHAREHOLDERS' EQUITY AND LIABILITIES | |||
Shareholders' equity | |||
Share capital | 102 857 | 102 857 | 102 857 |
Other reserves | 231 989 | 231 989 | 231 989 |
Retained earnings | -89 528 | -139 036 | -139 036 |
Profit/loss for the financial year | 12 071 | 14 993 | 49 508 |
Total shareholders' equity | 257 389 | 210 803 | 245 318 |
Liabilities | |||
Capital loan | 572 543 | 519 251 | 558 915 |
Long-term liabilities | 95 132 348 | 94 833 982 | 95 132 348 |
Short-term liabilities | 2 243 975 | 2 235 082 | 203 173 |
Deferred tax liabilities | 44 649 | 9 556 | 35 619 |
Total liabilities | 97 993 515 | 97 597 871 | 95 930 055 |
TOTAL SHAREHOLDERS' EQUITY | 98 250 904 | 97 808 674 | 96 175 373 |
AND LIABILITIES |
STATEMENT OF CHANGES IN EQUITY, IFRS | ||||
Share capital | Other reserves | Retained earnings | Total equity | |
Equity on 31.12.2008 | 102 857 | 231 989 | -89 528 | 245 318 |
Profit for the financial year | 12 071 | 12 071 | ||
Equity on 31.3.2009 | 102 857 | 231 989 | -77 457 | 257 389 |
Share capital | Other reserves | Retained earnings | Total equity | |
Equity on 31.12.2007 | 102 857 | 231 989 | -139 036 | 195 810 |
Profit for the financial year | 49 508 | 49 508 | ||
Equity on 31.12.2008 | 102 857 | 231 989 | -89 528 | 245 318 |
CASH FLOW STATEMENT, IFRS | |||
EUR | 1-3/2009 | 1-3/2008 | 1-12/2008 |
Cash flow from operations | |||
Operating profit/loss | 12 071 | 14 993 | 49 508 |
Other adjustments to operating profit | -40 573 | -55 418 | -136 513 |
Interest paid | 0 | 0 | -7 835 520 |
Interest received | 0 | 0 | 8 080 750 |
Cash flow from operations | -28 502 | -40 425 | 158 225 |
Cash flow from investments | |||
Investments in other placements | 0 | 0 | 0 |
Cash flow from investments | 0 | 0 | 0 |
Financial cash flow | |||
Change in long-term liabilities | 0 | 0 | 0 |
Financial cash flow | 0 | 0 | 0 |
Change in cash funds | -28 502 | -40 425 | 158 225 |
Cash funds at start of the period | 377 480 | 219 255 | 219 255 |
Cash funds at end of the period | 348 978 | 178 830 | 377 480 |