CapMan Plc Stock Exchange Release - 11 August 2011 at 8.30 a.m. EET
CapMan Plc Group's Interim Report, 1 January - 30 June 2011
Performance during the review period:
- Group turnover totalled MEUR 15.7 (January-June 2010: MEUR 21.0).
- The Group's operating profit was MEUR 9.2 (MEUR 4.5).
- The Management Company business recorded an operating profit of MEUR -0,9
(MEUR 4.2). The Fund Investment business recorded an operating profit of MEUR
10.1 (MEUR 0.3), of which exits accounted for approximately half.
- Profit before taxes was MEUR 12.0 (MEUR 6.4) and profit after taxes was MEUR
8.9 (MEUR 5.2).
- Profit attributable to the owners of the parent company was MEUR 8.7 (MEUR
5.1). Earnings per share were 8.9 cents (4.6 cents).
- Capital under management as of 30 June 2011 totalled MEUR 3,351.3 (30 June
2010: MEUR 3,541.0).
- Our guidance for 2011 remains unchanged. We expect CapMan's operating profit
for 2011 to exceed the 2010 operating profit, mainly as a result of positive
development in CapMan's own fund investments. CapMan recorded an operating
profit of MEUR 6.3 excluding non-recurring items in 2010. Our guidance assumes
that the drop in the current stock market valuations is partly temporary and
will not impact the fair values of CapMan's own fund investments in full.
CEO Lennart Simonsen:
"We saw an overall good development in our portfolio companies resulting in a
good fair value development of our own fund investments during the first half of
the year. The M&A market picked up in the second quarter of the year, in terms
of both increased quality deal flow and number of exit processes initiated by
our funds. Our funds continue to have several exit processes ongoing both for
portfolio companies and real estate, but their outcomes are difficult to
forecast in the current market environment. The continued turmoil in the
financial markets may decrease the visibility of both deal flow and bank
financing during the rest of the year.
Fundraising market continues to be challenging despite some signs of recovery in
the first half of the year. CapMan's significant new fundraising rounds will
take place in 2012. The most visible simplification measure during the period
was the sale of CapMan Real Estate's consulting business. We expect the cost
saving effects of the simplification measures to be fully visible during 2012."
Business operations
CapMan is a private equity fund manager operating in the Nordic countries and
Russia; and also makes investments in its own funds. The guiding principle for
the investment activities of the funds managed by the Group is to work actively
and directly towards increasing the value of investments. The Group has two
operating segments: the Management Company business and the Fund Investment
business.
Income from the Management Company business is derived from management fees paid
by funds and carried interest received from funds. Management fees normally
cover the company's operating costs and generally represent a steady and very
predictable source of income.
Income from the Fund Investment business comes from changes in the fair value of
investments and realised returns on CapMan's own fund investments. Depending on
the development of funds' investments and the general market situation, these
can have a significant positive or negative impact on the Group's result.
As there may be considerable quarterly fluctuations in carried interest and the
fair value of fund investments, the Group's financial performance should be
analysed over a longer time span than the quarterly cycle.
Group turnover and result in January - June 2011
The Group's turnover decreased in the first half of 2011 compared to the first
half of 2010 and totalled MEUR 15.7 (MEUR 21.0). This was attributable to lower
carried interest income and lower management fees than in the first half of
2010. Operating expenses were MEUR 17.5 (MEUR 16.9).
The Group's operating profit totalled MEUR 9.2 (MEUR 4.5). Financial income and
expenses amounted to MEUR 0.4 (MEUR 0.0). CapMan's share of the profit of its
associated companies was MEUR 2.4 (MEUR 1.9). Profit before taxes was MEUR 12.0
(MEUR 6.4) and profit after taxes was MEUR 8.9 (MEUR 5.2).
Profit attributable to the owners of the parent company was MEUR 8.7 (MEUR
5.1). Earnings per share were 8.9 cents (4.6 cents).
A quarterly breakdown of turnover and profit, together with turnover, operating
profit/loss, and profit/loss by segment for the review period, can be found in
the Tables section of this report.
Management Company business
Turnover generated by the Management Company business during the review period
totalled MEUR 15.7 (MEUR 21.0). Management fees decreased, as expected, compared
to the same period last year and totalled MEUR 13.9 (MEUR 17.3). This was
attributable to exits made after the comparable period in question and the
decision made in the last quarter of 2010 to reduce the size of the CapMan
Technology 2007 fund.
Income from real estate consulting increased compared to the same period last
year and totalled MEUR 1.0 (MEUR 0.8). The aggregate total of management fees
and income from real estate consulting was MEUR 14.9 (MEUR 18.1).
Carried interest income totalled MEUR 0.4 and came mainly from the Finnmezzanine
III B fund following its transfer to carry after its exit from OneMed Group.
Carried interest income during the first half of 2010 totalled MEUR 2.5.
The Management Company business recorded an operating profit of MEUR -0.9 (MEUR
4.2) and a profit of MEUR -0.5 (MEUR 3.5). The status of the funds managed by
CapMan is presented in more detail in Appendix 1.
Fund Investment business
Fair value changes related to fund investments during the first half of 2011
were MEUR 10.3 (MEUR 0.4) and represented a 16.9% increase in value over the
period, compared to a 0.6% increase in value during the comparable period last
year. Completed exits accounted for approximately half of fair value changes.
The development of individual portfolio companies, as well as changes in the
market capitalisation of their listed peers, impacted fair value development.
The aggregate fair value of fund investments as of 30 June 2011 was MEUR 65.2
(30 June 2010: MEUR 60.7).
Operating profit for the Fund Investment business was MEUR 10.1 (MEUR 0.3) and
profit for the period was MEUR 9.4 (MEUR 1.7). CapMan's share of the result of
its Maneq associated companies impacted profit performance. The changes in the
fair value of investments made by Maneq funds impacted the performance of Maneq
companies.
CapMan made new investments in its funds totalling MEUR 6.5 (MEUR 5.5) during
the review period. The majority of these were made in CapMan Buyout IX and
CapMan Public Market funds. CapMan received distributions from funds totalling
MEUR 17.0 (MEUR 4.4). The majority of this capital was received from the CapMan
Buyout VIII fund following its exit from OneMed Group and Proxima. CapMan did
not make any new commitments to funds during the first half.
The amount of remaining commitments totalled MEUR 28.0 as of 30 June 2011 (30
June 2010: MEUR 37.0). The aggregate fair value of existing investments and
remaining commitments as of the same date was MEUR 93.2 (MEUR 97.7). CapMan's
objective is to invest 1-5% of the original capital in the new funds that it
manages, depending on fund size, fund demand, and CapMan's own investment
capacity.
Investments in portfolio companies are valued at fair value in accordance with
the International Private Equity and Venture Capital Valuation Guidelines
(IPEVG), while real estate assets are valued in accordance with the value
appraisals of external experts, as detailed in Appendix 1. Fair value changes
have no impact on the Group's cash flows.
Investments at fair value and remaining investment capacity by investment area
are presented in the Tables section.
Balance sheet and financial position as of 30 June 2011
CapMan's balance sheet totalled MEUR 142.0 as of 30 June 2011 (30 June 2010:
MEUR 139.7). Non-current assets amounted to MEUR 106.5 (MEUR 114.6), of which
the carrying amount of goodwill totalled MEUR 6.2 (MEUR 10.2). A goodwill write-
down of approximately MEUR 0.2 at the end of the review period was related to
the sale of the real estate consulting business. Goodwill was lower compared to
the comparable period last year also as a result of the write-down related to
the reorganisation of technology operations booked in the last quarter of 2010.
Fund investments booked at fair value totalled MEUR 65.2 (MEUR 60.7). Long-term
receivables amounted to MEUR 19.1 (MEUR 25.4), of which MEUR 18.4 (MEUR 24.5)
were loan receivables from Maneq funds. In addition to CapMan Plc, CapMan
personnel are investors in Maneq funds. The expected returns from CapMan's Maneq
investments are broadly in line with the return expectations for CapMan's other
investments in its own funds, and Maneq funds pay market rate interest on loans
they receive from CapMan Plc.
Current assets amounted to MEUR 32.0 (MEUR 25.1). Liquid assets (cash in hand
and at banks, plus other financial assets at fair value through profit and loss)
increased as a result of the OneMed and Proxima exists made during the review
period, and amounted to MEUR 27.7 (MEUR 16.0).
The size of CapMan's hybrid bond stands at MEUR 29.0. Due to the dividends paid,
the interest on the bond for the financial year is deducted from equity in line
with the terms of the loan. The interest on the bond is payable semi- annually.
CapMan Plc had a bank financing package of MEUR 44.4 (MEUR 53.8) available as of
30 June 2011, of which MEUR 34.4 (MEUR 43.8) was utilised. Trade and other
payables totalled MEUR 17.3 (MEUR 13.7). The Group's interest-bearing net debts
amounted to MEUR 7.3 (MEUR 29.1).
The Group's cash flow from operations totalled MEUR -5.2 (MEUR 3.9). Income from
fund management fees is paid semi-annually, in January and July, and is shown
under working capital in the cash flow statement. Cash flow from investments
totalled MEUR 17.0 (MEUR -1.1) and is related to fund investments and repaid
capital received by the company. Cash flow before financing totalled MEUR 11.9
(MEUR 2.8), while cash flow from financing was MEUR -18.6 (MEUR -6.2). Cash flow
from financing includes the dividend paid to shareholders in April, which
totalled MEUR 10.3.
Key figures as of 30 June 2011
CapMan's equity ratio as of 30 June 2011 was 60.2% (30 June 2010: 55.7%). Return
on equity was 20.2% (13.3%) and return on investment was 19.9% (11.7%). The
target level for the company's equity ratio is at least 60% and at least 20% for
return on equity.
Key figures
30.6.11 30.6.10 31.12.10
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Earnings per share, cents 8.9 4.6 17.7
Earnings per share, diluted, cents 8.7 4.6 17.7
Shareholders' equity / share, cents * 101.3 92.0 107.7
Share issued-adjusted number of shares 84,255,467 84,281,766 84,255,467
Number of shares as of 30.6 84,281,766 84,281,766 84,281,766
Number of shares outstanding 84,255,467 84,255,467 84,255,467
Number of company shares held by CapMan as of
30.6 26,299 26,299 26,299
Return on equity, % p.a.* 20.2 13.3 20.8
Return on investment,% p.a. ** 19.9 11.7 19.7
Equity ratio,% ** 60.2 55.7 58.5
Net gearing,% 8.6 37.4 7.3
* In line with IFRS standards, the MEUR 29.0 hybrid bond has been included in
equity when calculating equity per share and return on equity. The net interest
on the hybrid bond for the review period has been included when calculating
earnings per share.
** These figures have been adjusted to reflect annualised levels.
Fundraising during the first half and capital under management as of 30 June
2011
Capital under management refers to the remaining investment capacity of funds
and capital already invested at acquisition cost. Capital increases as
fundraising for new funds progresses and declines as exits are made.
Globally speaking, the fundraising market showed some signs of improvement
during the early part of the year and the amount of capital raised for new funds
has increased slightly. The overall amount of capital raised for new funds still
remains at a significantly low level, however. The market is expected to
continue to remain challenging as the number of funds raising capital is likely
to grow and fund investors are increasingly selective in their investment
choices.* CapMan continued fundraising for its CapMan Mezzanine V fund during
the review period. CapMan's significant new fundraising rounds will take place
in 2012.
Capital under management decreased following the exits made after the comparable
period last year and the decision made in the last quarter of 2010 to reduce the
size of the CapMan Technology 2007 fund, and totalled MEUR 3,351.3 as of 30 June
2011 (30 June 2010: MEUR 3,541.0). Of this, MEUR 1,635.3 (MEUR 1,813.2) was held
in funds making investments in portfolio companies and MEUR 1,716.0 (MEUR
1,727.8) in real estate funds.
Funds under management and their investment activities are presented in more
detail in Appendices 1 and 2.
Board authorisations
The AGM authorised the Board to purchase CapMan B shares and accept them as
pledges, to decide on a share issue, as well as the issuance of special rights
entitling holders to shares. These authorisations will remain in force until 30
June 2012 and their content is covered in more detail in the stock exchange
release related to the decisions adopted by the AGM issued on 30 March 2011.
Personnel
CapMan employed a total of 122 people as of 30 June 2011 (30 June 2010: 146), of
whom 80 (103) worked in Finland and the remainder in the other Nordic countries,
Russia, and Luxembourg. Personnel numbers dropped in the period under review
mainly as a result of the sale of the real estate consulting business. A
breakdown of personnel by country and team is presented in the Tables section.
Shares and share capital
There were no changes in either CapMan Plc's share capital or the number of
shares during the review period. Share capital as of 30 June 2011 totalled EUR
771,586.98. The number of B shares totalled 78,281,766 and the number of A
shares 6,000,000.
B shares entitle holders to one vote per share and A shares to 10 votes per
share.
Shareholders
The number of CapMan Plc shareholders increased by over 10% from the comparable
period and totalled 5,371 as of 30 June 2011 (30 June 2010: 4,871). No flagging
notices were issued during the review period.
Company shares
As of 30 June 2011, CapMan Plc held a total of 26,299 CapMan Plc B shares. There
were no changes in the number of shares held by CapMan Plc during the review
period.
Stock option programmes
As of 30 June 2011, CapMan Plc had one stock option programme in place - Option
Programme 2008 - as part of incentive and commitment arrangements for personnel.
The maximum number of stock options issued under Option Programme 2008 will be
4,270,000, which will carry an entitlement to subscribe to a maximum of
4,270,000 new B shares. The programme is divided into A and B series, both of
which cover a maximum of 2,135,000 option entitlements. The share subscription
price of the 2008A options is EUR 2.53 and of the 2008B option EUR 0.96. The
subscription period for 2008A options started on 1 May 2011 and for 2008B
options will start on 1 May 2012. Receivables from shares subscribed to using
these options will be entered in the company's invested unrestricted
shareholders' equity. As of the end of June 2011, 1,811,500 of 2008A stock
option entitlements and 1,630,000 2008B stock option entitlements were
allocated.
Trading and market capitalisation
CapMan Plc's B shares closed at EUR 1.35 on 30 June 2011 (30 June 2010: EUR
1.41). The average price during the review period was EUR 1.63 (EUR 1.67). The
highest price paid was EUR 1.84 (EUR 1.98) and the lowest EUR 1.23 (EUR 1.33).
The number of CapMan Plc B shares traded during the first half of 2011 was
clearly higher than in the first half of 2010, with a total of 10.7 million (6.3
million) shares traded, valued at MEUR 17.5 (MEUR 10.5).
The market capitalisation of CapMan Plc B shares as of 30 June 2011 was MEUR
105.7 (MEUR 110.4). The market capitalisation of all company shares, including A
shares valued at the closing price of B shares, was MEUR 113.8 (MEUR 118.9).
Other events during the review period
The final exit of CapMan-managed funds from Å&R Carton AB was announced in June.
The transaction is expected to be closed during the third quarter and will have
an approximately MEUR 2.5 impact on CapMan's result for 2011 as a result of the
carried interest income generated for the funds involved.
CapMan sold its real estate consulting business to the business' management at
the end of June. The transaction will not have a substantive impact on CapMan's
2011 result. Following the divestment, CapMan Real Estate will focus on managing
the company's real estate funds. CapMan Partner Mika Matikainen was appointed
Head of the CapMan Real Estate Team as of 1 July 2011.
CapMan acquired from Corintium Oy its 20% stakes in the managing companies of
CapMan's current real estate funds and now owns these companies fully. The
transactions will not have a substantive impact on CapMan's result for 2011 or
the administration and carried interest agreements related to existing real
estate funds.
Significant risks and short-term uncertainties
CapMan's Management Company business is generally profitable on an annual basis,
but a major element of uncertainty is associated with forecasting the company's
overall financial performance because of the timing of revenue generated from
possible carried interest and the development of the fair value of fund
investments. After the reporting period ending on 30 June 2011 the financial
turmoil has increased and impacted the business environment. If the current
uncertainty regarding the general economic development continues and negative
developments in stock market values prevail, CapMan's operations will be
affected by both the weakening of exit market and the decrease in fair values of
CapMan's own fund investments. The fair value of CapMan's own fund investments
is now reported as per 30 June 2011, and it doesn't therefore take into account
the recent negative developments in the stock market values nor its impacts on
the market multiples of our portfolio companies' listed peer group.
If prolonged, the market turmoil is likely to impact fundraising by reducing
fund investors' willingness to make new commitments as a result of postponed
distributions and the denominator affecting allocations between different asset
classes. The fundraising environment is expected to remain challenging for at
least the next 12 months, which could impact the outcome of fundraising during
this period. The EU's Basel III and Solvency II legislative initiatives will
limit the ability of European banks and insurance companies in particular to
invest in private equity funds, and this could also impact CapMan's fundraising
and consequently the amount of capital it has under management, and any new
management fees that CapMan might receive.
Business environment
Long term growth prospects in the demand for private equity funds continue to
remain good. The financial recession and its impacts have clearly slowed growth
in the private equity industry, however. The fundraising market is expected to
remain difficult in 2011 despite some signs of its gradual recovery in the first
half of the year. According to a study made by Preqin in June 2011* nearly half
of the institutional investors interviewed plan to commit more capital to
private equity funds in 2011 in comparison to 2010, and over a half plan to
commit more in 2012 than in 2011. On the other hand, a record number of funds
are currently in the market and investors are proving more selective in their
investment decisions than previously.* It is unclear how the current market
uncertainty affects the investors willingness to make new commitments in the
coming months. International investor interest is currently focused primarily on
small and mid-cap buyout funds.**
Private equity has consolidated its position in financing M&A activities and
growth, and continues to focus typically on sector consolidation, family
successions, and the privatisation of public services and functions. Real estate
funds, for their part, have gained an established share of institutional
investors' investment allocations.
CapMan funds investing in portfolio companies will continue to implement their
investment strategies. Bank financing for both mergers and acquisitions and for
real estate investments has been at a good level in the Nordic countries in the
first part of 2011, and the volume of deal flow has remained good across all
CapMan's investment areas. At the same time the continued financial turmoil may
decrease the visibility of both deal flow and bank financing during the rest of
the year. The portfolios of our funds contain a number of investments that
CapMan is now ready to exit from.
The development of our portfolio companies during the review period was largely
good, and profit and growth projections for 2011 are mainly positive. In
accordance with IPEVG criteria, the fair value development of portfolio
companies will be impacted also by how the profit projections and market
valuations of listed companies develop and by how the currencies used in our
areas of operations perform against the euro. We plan to keep sufficient
reserves in our funds to support the growth and financing of our companies.
Long-term cooperation with the Nordic banks is particularly important for us,
and has worked well.
In the real estate market, a significant proportion of transactions in recent
years have taken place between Finnish investors, mainly institutional ones.
International investor interest in the Finnish real estate market is clearly
increasing, however. For the present, international interest has mainly focused
on prime properties with a lower risk ratio, despite the limited availability of
this type of property compared to demand. Along with increased demand, rising
yield expectations have tailed off and property valuation levels have risen
slightly, particularly in properties with a low level of lease-related cash flow
risk. The number of transactions related to non-prime properties has remained
low. We expect the number of real estate transactions, including those related
to the latter category, to increase somewhat towards the end of 2011, partly as
a result of an imbalance between supply and demand in lower-risk properties.
Occupancy rates for office premises have continued to be satisfactory and there
have been signs of a recovery in demand. The retail sector grew by approximately
6% during the first half of 2011, which had a positive effect on shopper numbers
and sales at large shopping centres.
CapMan funds investing in portfolio companies have some MEUR 615 available for
making new and add-on investments, while real estate funds have an investment
capacity of approximately MEUR 300, mainly for developing their existing
portfolios.
The European Directive on Alternative Investment Fund Managers (AIFM directive)
came into force on 21 July 2011, after which member states will have 24 months
to integrate it into national legislation. The directive stipulates an operating
license for participants, as well as other significant requirements, including
fund investor and authority reporting. Thanks to its organisation and operating
model, CapMan is in a good position to adopt the new regulations.
Future outlook
Management fees are expected to fall behind 2010 levels in 2011 as a result of
exits reducing the management fee base and significant new fundraising rounds
taking place primarily in 2012. Following restructuring carried out in 2010,
operating expenses will decrease, but proportionally less than management fees.
CapMan will continue to develop its organisation during 2011 to ensure growth in
key investment partnerships. Management fees will not fully cover our operating
expenses in 2011.
Exit negotiations are under way in respect of a number of companies and
properties in the portfolios of CapMan funds. We expect the CapMan Equity VII A,
B, and Sweden funds, as well as the Finnmezzanine III A fund, to transfer to
carry during 2011-2012. The development of the fair value of fund investments
will depend on the development of portfolio companies and the general market
situation.
Our guidance remains unchanged and we expect our operating profit for 2011 to
exceed our 2010 operating profit, mainly as a result of positive development in
CapMan's own fund investments. CapMan recorded an operating profit of MEUR 6.3
excluding non-recurring items in 2010.
Our guidance assumes that the drop in the current stock market valuations is
partly temporary and will not impact the fair values of CapMan's own fund
investments in full.
The CapMan Plc Group will publish its Interim Report for 1 January - 30
September 2011 on Thursday, 3 November 2011.
Helsinki, 11 August 2011
CAPMAN PLC Board of Directors
Press conference:
A press conference (in Finnish) for analysts and the media will be held today at
12.00 EET in CapMan's offices at Korkeavuorenkatu 32, Helsinki, Finland, at
which CapMan's CEO Lennart Simonsen will present the result and review the
market situation. A light lunch will be served.
Presentation material for the press conference will be published in Finnish and
English on CapMan Plc Group's website once the conference has started.
Further information:
Lennart Simonsen, CEO, tel. +358 207 207 567 or +358 400 439 684
Niko Haavisto, CFO, tel. +358 207 207 583 or +358 50 465 4125
Distribution:
NASDAQ OMX Helsinki
Principal media
www.capman.com
* Preqin Quarterly Research Q2 2011 July 2011.
** Preqin Investor Outlook: Private Equity, January 2011.
Appendices (after the Tables section):
Appendix 1: CapMan Plc Group's funds under management as of 30 June 2011, MEUR
Appendix 2: Operations of CapMan's funds under management, 1 January - 30 June
2011
Accounting principles
The Interim Report has been prepared in accordance with the International
Financial Standards (IFRS) and is in conformity with the accounting policies
published in the 2010 financial statements. The revised and amended standards
that came into force on 1 January had no impact on this report. The information
presented in the Interim Report is un-audited.
GROUP STATEMENT OF COMPREHENSIVE INCOME (IFRS)
EUR ('000) 1-6/11 1-6/10 1-12/10
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Turnover 15,749 20,973 38,150
Other operating income 601 65 22,963
Personnel expenses -11,372 -10,173 -25,241
Depreciation and amortisation -430 -456 -884
Impairment of goodwill 0 0 -3,839
Other operating expenses -5,663 -6,294 -12,835
Fair value gains / losses of investments 10,321 358 2,707
Operating profit 9,206 4,473 21,021
Financial income and expenses 408 24 560
Share of associated companies' result 2,406 1,897 2,358
Profit before taxes 12,020 6,394 23,939
Income taxes -3,125 -1,194 -6,383
Profit for the period 8,895 5,200 17,556
Other comprehensive income:
Translation differences -14 -75 461
Total comprehensive income 8,881 5,125 18,017
Profit attributable to:
Equity holders of the company 8,707 5,057 17,328
Non-controlling interests 188 143 228
Total comprehensive income attributable to:
Equity holders of the company 8,693 4,982 17,789
Non-controlling interests 188 143 228
Earnings per share for profit attributable
to the equity holders of the Company:
Earnings per share, cents 8.9 4.6 17.7
Diluted, cents 8.7 4.6 17.7
Accrued interest payable on the hybrid loan for the review period has been taken
into account when calculating earnings per share.
GROUP BALANCE SHEET (IFRS)
EUR ('000) 30.6.11 30.6.10 31.12.10
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ASSETS
Non-current assets
Tangible assets 506 704 602
Goodwill 6,190 10,245 6,406
Other intangible assets 2,114 2,677 2,424
Investments in associated companies 8,720 7,698 6,400
Investments at fair value through profit and loss
Investments in funds 65,212 60,697 66,504
Other financial assets 597 617 619
Receivables 19,120 25,378 24,778
Deferred income tax assets 4,003 6,586 4,923
106,462 114,602 112,656
Current assets
Trade and other receivables 4,336 9,075 4,619
Other financial assets at fair value
through profit and loss 378 1,368 980
Cash and bank 27,319 14,611 34,049
32,033 25,054 39,648
Non-current assets held for sale 3,501 0 3,501
Total assets 141,996 139,656 155,805
EQUITY AND LIABILITIES
Capital attributable the Company's
equity holders
Share capital 772 772 772
Share premium account 38,968 38,968 38,968
Other reserves 38,679 38,678 38,679
Translation difference 55 -317 69
Retained earnings 6,881 -585 12,241
85,355 77,516 90,729
Non-controlling interests 0 247 273
Total equity 85,355 77,763 91,002
Non-current liabilities
Deferred income tax liabilities 3,114 1,897 3,078
Interest-bearing loans and borrowings 31,885 38,819 35,371
Other liabilities 1,260 1,267 1,331
36,259 41,983 39,780
Current liabilities
Trade and other payables 17,257 13,660 17,395
Interest-bearing loans and borrowings 3,125 6,250 6,250
Current income tax liabilities 0 0 1,378
20,382 19,910 25,023
Total liabilities 56,641 61,893 64,803
Total equity and liabilities 141,996 139,656 155,805
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to the equity holders of the Company
Trans- Non-
Share lation controll-
Share premium Other differ- Retained ing Total
EUR ('000) capital account reserves ences earnings Total interest equity
--------------------------------------------------------------------------------
Equity on
31 Dec 2009 772 38,968 37,347 -392 1,097 77,792 413 78,205
Options 1,331 -955 376 376
Dividends -3,370 -3,370 -309 -3,679
Hybrid bond,
interest
(net of tax) -2,414 -2,414 -2,414
Comprehen-
sive
profit 75 5,057 5,132 143 5,275
Equity on
30 June 2010 772 38,968 38,678 -317 -585 77,516 247 77,763
Equity on
31 Dec 2010 772 38,968 38,679 69 12,241 90,729 273 91,002
Options 222 222 222
Dividends -10,114 -10,114 -222 -10,336
Hybrid bond,
interest
(net of tax) -2,414 -2,414 -2,414
Comprehen-
sive
profit -14 8,707 8,693 188 8,881
Acquisition
of non-
controlling
interests -1,761 - 1,761 -239 -2,000
Equity on
30 June 2011 772 38,968 38,679 55 6,881 85,355 0 85,355
STATEMENT OF CASH FLOW (IFRS)
EUR ('000) 1-6/11 1-6/10 1-12/10
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Cash flow from operations
Profit for the financial year 8,895 5,200 17,556
Adjustments -8,210 -48 -15,958
Cash flow before change in working capital 685 5,152 1,598
Change in working capital -3,206 1,645 9,003
Financing items and taxes -2,668 -2,870 -4,580
Cash flow from operations -5,189 3,927 6,021
Cash flow from investments 17,045 -1,096 19,979
Cash flow before financing 11,856 2,831 26,000
Dividends paid -10,336 -3,679 -3,679
Other net cash flow -8,250 -2,519 -6,250
Financial cash flow -18,586 -6,198 -9,929
Change in cash funds -6,730 -3,367 16,071
Cash funds at start of the period 34,049 17,978 17,978
Cash funds at end of the period 27,319 14,611 34,049
Segment information
The Group has two reporting segments: the Management Company business and the
Fund Investment business.
1-6/2011 Management Company business Fund Total
CapMan Private CapMan Real Investment
EUR ('000) Equity Estate Total business
--------------------------------------------------------------------------------
Turnover 11,291 4,458 15,749 0 15,749
Operating
profit/loss -197 -700 -897 10,103 9,206
Profit/loss for
the financial year 232 -700 -468 9,363 8,895
Assets 8,635 772 9,407 97,055 106,462
Total assets
includes:
Investments in
associated
companies 0 0 0 8,720 8,720
Non-current assets
held for sale 3,501 0 3,501 0 3,501
1-6/2010 Management Company business Fund Total
CapMan Private CapMan Real Investment
EUR ('000) Equity Estate Total business
--------------------------------------------------------------------------------
Turnover 16,689 4,284 20,973 0 20,973
Operating
profit/loss 4,029 166 4,195 279 4,474
Profit/loss for
the financial year 3,382 161 3,543 1,657 5,200
Assets 15,184 1,559 16,743 97,859 114,602
Total assets
includes:
Investments in
associated
companies 1,336 0 1,336 6,362 7,698
1-12/2010 Management Company business Fund Total
CapMan Private CapMan Real Investment
EUR ('000) Equity Estate Total business
--------------------------------------------------------------------------------
Turnover 29,745 8,405 38,150 0 38,150
Operating
profit/loss 19,844 -908 18,936 2,085 21,021
Profit/loss for
the financial year 15,326 -1,235 14,091 3,465 17,556
Assets 9,272 1,519 10,791 101,865 112,656
Total assets
includes:
Investments in
associated
companies 0 0 0 6,400 6,400
Non-current assets
held for sale 3,501 0 3,501 0 3,501
Income taxes
The Group's income taxes in the Income Statements 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.
Dividend
A dividend of EUR 0.12 per share, totalling MEUR 10.1 in all, was paid for
2010. The dividend was paid to shareholders on 11 April 2011. (A dividend of EUR
0.04 per share, totalling MEUR 3.4 in all, was paid for 2009.)
Non-current assets
EUR ('000) 30.6.11 30.6.10 31.12.10
-------------------------------------------------------------------
Investments in funds at fair value through
profit and loss at Jan 1 66,504 59,421 59,421
Additions 6,451 5,526 11,822
Distributions -16,984 -4,408 -6,759
Fair value gains/losses on investments 9,241 158 2,020
Investments in funds at fair value through
profit and loss at end of the period 65,212 60,697 66,504
Investments in funds at fair value through
profit and loss at the end of period 30.6.11 30.6.10 31.12.10
Buyout 33,104 36,803 36,933
Mezzanine 4,607 3,650 4,238
Russia 1,981 1,311 1,488
Public Market 3,812 2,113 3,610
Real Estate 5,831 4,572 5,302
Other 11,106 7,287 10,307
Access 4,771 4,961 4,626
In total 65,212 60,697 66,504
Transactions with related parties (associated companies)
EUR ('000) 30.6.11 30.6.10 31.12.10
--------------------------------------------------------------------------
Receivables - non-current at end of review period 18,232 23,381 23,126
Receivables - current at end of review period 352 1,272 765
Non-current liabilities
EUR ('000) 30.6.11 30.6.10 31.12.10
--------------------------------------------------------------------------
Interest bearing loans at end of review period 31,885 38,819 35,371
Seasonal nature of CapMan's business
Carried interest income is accrued on an irregular basis depending on the timing
of exits. An exit may have an appreciable impact on CapMan Plc's result for the
financial year.
Personnel
By country 30.6.11 30.6.10 31.12.10
----------------------------------------------
Finland 80 103 103
Denmark 3 2 3
Sweden 18 20 22
Norway 6 7 7
Russia 14 13 14
Luxembourg 1 1 1
In total 122 146 150
By team
----------------------------------------------
CapMan Private Equity 59 60 64
CapMan Real Estate 21 40 43
CapMan Platform 42 46 43
In total 122 146 150
Contingent liabilities
€ ('000) 30.6.11 30.6.10 31.12.10
--------------------------------------------------------------------
Leasing agreements 8,132 10,004 9,191
Securities and other contingent liabilities 66,667 66,825 68,146
Remaining commitments to funds 28,026 36,982 36,299
Remaining commitments by investment area
Buyout 12,522 17,766 15,910
Mezzanine 4,313 904 5,069
Russia 2,788 3,420 3,225
Public Market 571 2,548 1,443
Real Estate 1,097 1,292 1,215
Other 4,780 8,886 7,414
Access 1,955 2,166 2,023
In total 28,026 36,982 36,299
Turnover and profit quarterly
2011
MEUR 1-3/11 4-6/11 1-6/11
---------------------------------------------------------
Turnover 8.2 7.6 15.8
Management fees 7.1 6.8 13.9
Carried interest 0.4 0.0 0.4
Real Estate consulting 0.5 0.5 1.0
Other income 0.2 0.3 0.5
Other operating income 0.0 0.6 0.6
Operating expenses -8.3 -9.2 -17.5
Fair value gains of investments 4.1 6.2 10.3
Operating profit 4.0 5.2 9.2
Financial income and expenses 0.4 0.0 0.4
Share of associated companies'
result 0.5 1.9 2.4
Profit before taxes 4.8 7.2 12.0
Profit for the period 3.7 5.2 8.9
2010
MEUR 1-3/10 4-6/10 1-6/10 7-9/10 10-12/10 1-12/10
--------------------------------------------------------------------------------
Turnover 11.4 9.6 21.0 8.7 8.5 38.2
Management fees 8.4 8.9 17.3 7.9 7.7 32.9
Carried interest 2.4 0.1 2.5 0.1 0.0 2.6
Real Estate consulting 0.4 0.4 0.8 0.4 0.4 1.6
Other income 0.2 0.2 0.4 0.3 0.4 1.1
Other operating income 0.1 0.0 0.1 0.0 22.9 23.0
Operating expenses -8.3 -8.6 -16.9 -8.5 -17.4 -42.8
Fair value gains / losses of
investments 1.1 -0.7 0.4 1.3 1.0 2.7
Operating profit 4.3 0.2 4.5 1.5 15.0 21.0
Financial income and expenses -0.1 0.1 0.0 0.2 0.4 0.6
Share of associated companies'
result 0.8 1.1 1.9 0.6 -0.1 2.4
Profit after financial items 5.0 1.4 6.4 2.2 15.3 23.9
Profit for the period 3.5 1.7 5.2 1.8 10.6 17.6
APPENDIX 1: CAPMAN PLC GROUP'S FUNDS UNDER MANAGEMENT AS OF 30 JUNE 2011, MEUR
The tables below show the status of funds managed by CapMan as of 30 June 2011.
When analysing the timetable according to which funds should start generating
carried interest, the relationship between the cumulative cash flows already
distributed to investors and paid-in capital should be compared. When a fund
starts generating carried interest the capital must be returned and an annual
preferential return paid on it. The fair value of a portfolio, including any of
the fund's net cash assets, represents the capital distributable to investors at
the end of the review period.
When assessing the level of cash flow a fund needs to start generating carried
interest, it should be noted that the capital of some funds has not yet been
called and paid in. The percentage figures in the last column on the right of
the tables below show CapMan's share of cash flows if a fund is generating
carried interest. After the previous distribution of profits, any new capital
paid in, as well as the preferential annual return on it, must be returned to
investors before further carried interest income can be paid.
The definitions of column headings are presented below the tables.
FUNDS INVESTING DIRECTLY IN PORTFOLIO COMPANIES
Fund's CapMan's
Size Paid-in current Net Distributed share of
capital portfolio cash cash flow
at at assets to in- to man- cash
cost fair vestors agement flow, if
value company fund
(carried generates
interest) carried
interest
Funds
generating
carried
interest
Fenno
program 1)
and FM II B,
in total 76.0 74.7 8.1 5.8 0.4 145.0 9.3 10-20 %
FV V 169.9 165.7 32.3 18.5 0.9 249.7 7.8 20 %
FM III B 20.2 19.9 3.2 4.0 1.0 26.2 0.4 20 %
--------------------------------------------------------------------------------
Total 266.1 260.3 43.6 28.3 2.3 420.9 17.5
Funds that
are expected
to transfer
to carry
during
2011-2012
CME VII A 156.7 152.9 74.9 87.8 3.7 138.8 20 %
CME VII B 56.5 56.5 26.3 37.1 2.1 64.0 20 %
CME SWE 67.0 66.4 32.1 37.6 1.6 59.7 20 %
FM III A 101.4 100.6 22.6 22.2 3.0 119.3 20 %
--------------------------------------------------------------------------------
Total 381.6 376.4 155.9 184.7 10.4 381.8
Other funds
not yet in
carry
CMB VIII 2) 440.0 365.1 238.8 222.8 5.3 153.1 14 %
CM LS IV 54.1 44.1 28.0 28.0 2.2 12.1 10 %
CMT
2007 2), 3) 99.6 66.3 45.4 53.8 0.6 0.5 10 %
CMR 118.1 59.1 33.2 38.6 3.3 3.4 %
CMPM 138.0 122.0 94.6 104.2 0.1 53.4 10 %
CMB IX 294.6 160.7 132.1 143.0 13.3 10 %
CMM V 60.0 18.8 18.0 19.1 0.9 10 %
--------------------------------------------------------------------------------
Total 1,204.4 836.1 590.1 609.5 25.7 219.1
Funds with
no carried
interest
potential to
CapMan
FM III C, FV
IV, FV V ET,
SWE LS
4)(,) SWE
Tech
2), 4), CME
VII C ja FM
II A, C, D
2), CMM IV
5)
--------------------------------------------------------------------------------
Total 575.5 548.6 191.9 168.6 22.4 343.8
Funds
investing in
portfolio
companies,
total 2,427.6 2,021.4 981.5 991.1 60.8 1,365.6 17.5
REAL ESTATE FUNDS
Fund's
Origi- Paid-in current Net Distributed CapMan's
nal capital portfolio cash cash flow share of
invest- at cost at fair assets to in- to man- cash
ment value vestors agement flow, if
capa- company fund
city (carried generates
interest) carried
interest
--------------------------------------------------------------------------------
Funds not
yet in carry
CMRE I 6)
equity
and
bonds 200.0 188.5 62.1 50.7 200.8 27.4 26 %
debt
financing 300.0 277.2 78.2 78.2
--------------------------------------------------------------------------------
total 500.0 465.7 140.3 128.9 1.2 200.8 27.4
CMRE II
equity 150.0 104.7 109.2 98.1 0.5 12 %
debt
financing 450.0 261.8 247.4 247.4
--------------------------------------------------------------------------------
total 2.6
600.0 366.5 356.6 345.5 0.5
CMHRE
equity 332.5 309.3 349.7 286.1 21.1 12 %
debt
financing 617.5 534.5 510.8 510.8
--------------------------------------------------------------------------------
total 950.0 843.8 860.5 796.9 -3.2 21.1
PSH Fund
equity 5.0 3.5 3.4 5.6 10 %
debt
financing 8.0 8.0 7.9 7.9
--------------------------------------------------------------------------------
total 13.0 11.5 11.3 13.5 0.5
Real estate
funds, total 2,063.0 1,687.5 1,368.7 1,284.8 1.1 222.4 27.4
All funds,
total 4,490.6 3,708.9 2,350.2 2,275.9 61.9 1,588.0 44.9
Rahastojen lyhenteet:
CMB = CapMan Buyout CMRE = CapMan Real Estate
CME = CapMan Equity CMT 2007 = CapMan Technology 2007
CMLS = CapMan Life Science FM = Finnmezzanine Fund
CMM = CapMan Mezzanine FV = Finnventure Fund
CMHRE = CapMan Hotels RE PSH Fund = Project Specific Hotel Fund
CMPM = CapMan Public Market Fund SWE LS = Swedestart Life Science
CMR = CapMan Russia Fund SWE Tech = Swedestart Tech
Explanation of the terminology used in the fund tables
Size/Original investment capacity:
Total capital committed to a fund by investors, i.e. the original size of a
fund. For real estate funds, investment capacity also includes the share of debt
financing used by a fund.
Paid-in capital:
Total capital paid into a fund by investors as of the end of the review period.
Fund's current portfolio at fair value:
Fund investments in portfolio companies are valued at fair value in accordance
with the International Private Equity and Venture Capital Valuation Guidelines
(IPEVG, www.privateequityvaluation.com), and investments in real estate assets
are valued in accordance with the appraisals of external experts.
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, fund portfolios contain investments
with a fair value that exceeds their acquisition cost, as well as investments
with a fair value less than the acquisition cost.
Net cash assets:
When calculating the investors' share, a fund's net cash assets must be taken
into account in addition to the portfolio at fair value. The proportion of debt
financing in real estate funds is presented separately in the table.
CapMan's share of cash flow if a fund generates carried interest:
When a fund has generated the cumulative preferential return for investors
specified in the fund agreements, the management company is entitled to an
agreed share of future cash flows from the fund, known as carried interest.
Cash flow, in this context, includes both profit distributed by funds and
repayments of capital. After the previous distribution of profits, any new
capital called in, as well as any annual preferential returns on it, must be
returned to investors before any new distribution of profits can be paid.
Footnotes to the tables
1) So-called "Old funds": Finnmezzanine Fund II B (established 1998, transferred
to carry 2006). Fenno Fund (established in 1997, transferred to carry in 2005),
Skandia I (established in 1997, transferred to carry in 2005) and Skandia II
(established in 1997, transferred to carry in 2004) together form the Fenno
Program, which is jointly managed with Fenno Management Oy.
2) The fund comprises two or more legal entities (parallel funds are presented
separately only if the focus of their investment or portfolios differ
significantly).
3) CapMan Technology 2007: Further to the reorganisation of technology
investment operations announced in November 2010, the size of the CapMan
Technology 2007 fund has been reduced by 30%.
4) Currency items are valued at the average exchange rates quoted on 30 June
2011.
5) CapMan Mezzanine IV: The paid-in commitment includes a MEUR 192 bond issued
by Leverator Plc. Distributed cash flow includes payments to both bond
subscribers and to the fund's partners.
6) CapMan Real Estate I: Distributed cash flow includes repayment of the bonds
and cash flow to the fund's partners. Following the previous payment of carried
interest, a total of MEUR 48.4 in paid-in capital had not yet been returned to
investors. This capital, together with the annual income entitlement payable on
it, must be paid to investors before further carried interest can be
distributed.
CapMan's management considers it unlikely that further carried interest will be
provided by the CapMan Real Estate I fund. As a result, the fund is no longer
included in the category of funds in carry. A total of some MEUR 6 of carried
interest was not entered in CapMan's profit in 2007 but held in reserve in case
some carried interest might have to be returned to investors in the future.
APPENDIX 2: OPERATIONS OF CAPMAN'S FUNDS UNDER MANAGEMENT, 1 JANUARY - 30 JUNE
2011
During the review period, the operations of private equity funds managed by
CapMan comprised direct investments in portfolio companies in the Nordic
countries and Russia (CapMan Private Equity), as well as real estate investments
(CapMan Real Estate). Investments by CapMan funds investing in portfolio
companies focus on two key investment areas in the Nordic countries and on one
investment area in Russia. The investment areas are mid-size buyouts (CapMan
Buyout), investments in mid-sized companies operating in Russia (CapMan Russia),
and significant minority shareholdings in listed small and mid-cap companies
(CapMan Public Market). The investment focus of CapMan's real estate funds is on
real estate properties, principally in Finland. CapMan also has two other
investment areas (CapMan Technology and CapMan Life Science), which do not make
new investments, but focus instead on developing the value of their existing
portfolio companies. These two investments areas are reported under "Other" in
Private Equity.
CAPMAN PRIVATE EQUITY
Investments in portfolio companies in January-June 2011
CapMan funds made five new investments, as well as some add-on investments,
during the review period, investing MEUR 88.9 in all. Add-on investments
accounted for under 20% of the total. New investments were made in B&B Tools AB,
Design-Talo Oy, Eastway Oy, and Virial, as well as an investment by CapMan's
Public Market fund that has not yet been disclosed. During the first half of
2010, funds made six new investments and several add-on investments totalling
MEUR 107.1.
Exits from portfolio companies in January-June 2011
CapMan funds exited completely from 11 companies during the first half of 2011.
Final exits were made from Aerocrine AB, Affecto Plc, EM4 Inc, Fastrax Oy,
Jolife AB, Moventas Oy, OneMed Group, Proxima Intressenter AB, Region Avia,
SaaSplaza B.V, and SMEF Group A/S. Partial exits were made from Cardinal Foods
Oy, Ordyhna Holding, and Å&R Carton AB. Exits made during the first half had a
combined acquisition cost of MEUR 163.9. During the first half of 2010, complete
exits were made from eight companies and partial exits from two, with a combined
acquisition cost of MEUR 73.1.
Other events during the review period
An investment by CapMan Buyout IX funds in Solera AS and a final exit by CapMan-
managed funds from Å&R Carton AB were announced during the review period. Both
transactions are expected to be closed during the third quarter of the year.
Events after the close of the review period
The CapMan Russia fund made an investment in Russian-based ExpertPhoto after the
close of the review period.
CAPMAN REAL ESTATE
Investments in and commitments to real estate acquisitions and projects in
January-June 2011
The CapMan RE II fund invested in an office property in Helsinki in May; and a
number of add-on investments were made by the company's real estate funds. New
and add-on investments totalled MEUR 30.3 in all. In addition, funds were
committed to finance real estate acquisitions and projects valued at MEUR 50.0
as of 30 June 2011. During the first half of 2010, funds made one new investment
and various add-on investments totalling MEUR 16.4. Commitments to finance new
projects totalled MEUR 29.0 as of 30 June 2011.
Exits from real estate investments in January-June 2011
The CapMan Real Estate I fund exited two properties - Kiinteistö Oy Munkkiniemen
puistotie 25 and Kiinteistö Oy Tuusulan Pysäkkikuja 1 - during the first half,
with a combined acquisition cost of MEUR 24.8. During the first half of 2010,
one exit was made, with an acquisition cost of MEUR 8.7.
FUND INVESTMENT ACTIVITIES IN FIGURES
Investments and exits made by funds at acquisition cost, MEUR
1-6/2011 1-6/2010 1-12/2010
New and add-on investments
Funds investing in portfolio 88.9 107.1 196.2
companies
Buyout 56.4 73.0 118.0
Russia 5.0 12.0 14.4
Public Market 24.8 6.1 35.6
Other 2.7 16.0 28.2
Real estate funds 30.3 16.4 45.6
--------------------------------------------------------------------------------
Total 119.2 123.5 241.8
Exits*
Funds investing in portfolio 163.9 73.1 114.4
companies
Buyout 127.7 41.7 66.3
Russia 10.0 - -
Public Market 6.5 14.3 19.1
Other 19.7 17.1 29.0
Real estate funds 24.8 8.7 8.7
--------------------------------------------------------------------------------
Total 188.7 81.8 123.1
* including partial exits and repayments of mezzanine loans.
In addition, real estate funds had commitments to finance real estate
acquisitions and projects totalling MEUR 50.0 as of 30 June 2011.
Funds' aggregate combined portfolio* as of 30 June 2011, MEUR
Portfolio at Portfolio Share of
acquisition at fair portfolio
cost value (fair value) %
Funds investing in portfolio companies 981.5 991.1 43.5
Real estate funds 1,368.7 1,284.8 56.5
----------------------------------------------------------------------------
Total 2,350.2 2,275.9 100.0
Funds investing in portfolio companies
Buyout 679.1 709.6 71.6
Russia 33.2 38.6 3.9
Public Market 94.6 104.2 10.5
Other 156.6 138.7 14.0
----------------------------------------------------------------------------
Total 981.5 991.1 100.0
* Aggregate of all investments of funds under management.
Remaining investment capacity
After deducting actual and estimated expenses, funds investing in portfolio
companies had a remaining investment capacity amounting to some MEUR 615 for new
and add-on investments as of 30 June 2011. Of their remaining capital, some MEUR
410 was earmarked for buyout investments (incl. mezzanine investments), some
MEUR 75 for technology investments, some MEUR 20 for life science investments,
some MEUR 80 for investments by the CapMan Russia team, and some MEUR 35 for
investments by the CapMan Public Market team. Real estate funds had a remaining
investment capacity amounting to some MEUR 300, which has largely been reserved
for developing funds' existing investments.
[HUG#1537802]
