2012-02-03 08:00:00 CET
2012-02-03 08:00:44 CET
REGULATED INFORMATION
CapMan - Financial Statement Release
CapMan Group's Financial Statements Bulletin for 2011
CapMan Plc Stock Exchange Release - 3 February 2012 at 9.00 a.m. EET
CapMan Group's Financial Statements Bulletin for 2011
Performance and main events during 2011:
- Group turnover totalled MEUR 32.4 (January-December 2010: MEUR 38.2).
- The Group's operating profit was MEUR 11.1 (The Group's operating
profit for 2010 was MEUR 6.3 excluding one-off items and MEUR 21.0
including one-off items).
- The Management Company business recorded an operating loss of
MEUR -1.1 (MEUR 18.9). The Fund Investment business recorded
an operating profit of MEUR 12.2 (MEUR 2.1), of which exits accounted
for approximately 40%.
- Profit before taxes was MEUR 13.7 (MEUR 23.9) and profit after taxes
was MEUR 11.1 (MEUR 17.6).
- Profit attributable to the owners of the parent company was MEUR 10.9
(MEUR 17.3). Earnings per share were 10.1 cents (17.7 cents).
- Capital under management as of 31 December 2011 totalled
MEUR 3,065.9 (31 December 2010: MEUR 3,231.1).
- A total of MEUR 35 of new capital was raised for the CapMan Mezzanine
V fund during the last quarter, and the fund's final size reached MEUR 95.
- The Board of Directors of CapMan Plc will propose paying a dividend
of EUR 0.07 per share for 2011.
Future outlook:
CapMan's next major fundraising rounds will take place in 2012. The
development of the company's management fees during 2012 will depend
on the timing of exits made from current funds and the size and timing of
new funds to be established.
Our operating expenses will continue to decline as a result of various
efficiency enhancement measures taken. Due to our fundraising efforts,
management fees will not fully cover operating expenses until the new
funds currently in the process of being established reach an adequate
size.
The fair value of CapMan's fund investments developed favourably
during 2011. We believe that our portfolio companies are well-placed
to continue performing well in this respect during 2012, which would
have a positive effect on the fair value development of our fund
investments.
The Group's overall result for 2012 will mainly depend on whether
new exits are made by funds already generating carried interest,
whether new funds will transfer to carry, and on how the value of
investments develops in those funds in which CapMan is a substantial
investor. Due to difficulties to forecast these developments, CapMan
will not issue guidance on its result for the full year.
CEO Lennart Simonsen:"Our result for 2011 was satisfactory, given the challenging nature of our
operating environment, particularly during the latter half of the year. The
portfolio companies and real estate owned by our funds developed well on the
whole. As a result, the fair values of our fund investments developed
favourably, although stock market performance was weak during the year. The
strong development of our portfolio companies indicates that we have been
successful in implementing our strategy, with its focus on constantly improving
our performance.
The decline in M&A activity in Europe towards the end of the year was also
reflected in CapMan's operations and delayed a number of exits. The bank
financing has continued to be available in the Nordic region, particularly for
small and medium-sized M&A transactions and for real estate investments.
Economic uncertainty was also reflected in the fundraising market, and the
amount of capital raised for new funds globally during 2011 was historically at
a low level*. We believe that the fundraising market will remain challenging
during 2012, when we will launch our next major rounds of fundraising. CapMan's
strong market position, long-term investor relations, historically good levels
of returns, and more than 20 years' experience in the private equity industry
will, however, provide a solid foundation for the success of our fundraising
activities. Compared to other areas of Europe, international investors' interest
in the Nordic countries has increased in relative terms as a result of the
European debt crisis, which should support our fundraising in 2012."
Business operations
CapMan Group 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 CapMan is to work actively
and directly towards increasing the value of investments. The Group has two
operating segments: a Management Company business and a 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 highly
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 2011
The Group's turnover in 2011 was lower compared to 2010 and totalled MEUR 32.4
(2010: MEUR 38.2). Turnover was impacted by lower management fees compared to
2010.
Operating expenses totalled MEUR 34.9 (MEUR 42.8). The lower expenses booked in
2011 compared to 2010 were largely the result of the one-off expenses booked
during the last quarter of 2010,which served to increase operating expenses for
the year as a whole. Operating expenses were higher during the last quarter of
2011 than the other quarters of the year, mainly because of costs associated
with reductions in personnel numbers during the quarter.
The Group recorded an operating profit of MEUR 11.1 (MEUR 21.0). This compares
to an operating profit for 2010, excluding one-off items, of MEUR 6.3. The rise
in operating profit compared to 2010 was largely the result of the positive
development of the value of CapMan's own fund investments.
Financial income and expenses amounted to MEUR 0.6 (MEUR 0.6). CapMan's share of
the profit of its associated companies was MEUR 2.1 (MEUR 2.4).
Profit attributable to the owners of the parent company was MEUR 10.9 (MEUR
17.3). Earnings per share were 10.1 cents (17.7 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 year totalled
MEUR 32.4 (MEUR 38.2). Management fees decreased, as expected, compared to 2010
and totalled MEUR 27.1 (MEUR 32.9). This was attributable to exits made after
the 2010 financial year and the decision taken in the last quarter of 2010 to
reduce the size of the CapMan Technology 2007 fund.
Following the sale of the real estate consulting business, income from real
estate consulting was lower than in 2010 and totalled MEUR 1.0 (MEUR 1.6). The
aggregate total of management fees and income from real estate consulting was
MEUR 28.1 (MEUR 34.5).
Carried interest income totalled MEUR 3.1 (MEUR 2.6) and came mainly from the
Finnventure V fund, following the exit from A&R Carton, and from the
Finnmezzanine III B fund, following its transfer to carry after exiting OneMed
Group.
The Management Company business recorded an operating loss of MEUR -1.1 (MEUR
18.9) and a loss for the year of MEUR -1,7 (MEUR 14.1). 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 2011 were MEUR 12.8 (MEUR
2.7) and represented a 21.8% increase in value over the year (4.2% increase in
value during 2010). Fair value changes during the last quarter were MEUR 2.6
(MEUR 11.1) and represented a 3.9% increase in value during the quarter (1.6%
increase in value during Q4 2010). Fair value development was good, despite
negative developments in the fair value of listed peer companies, which forms
part of the valuation criteria applied to CapMan's portfolio companies. This
positive trend was the result of the good financial progress made by portfolio
companies during 2011. Completed exits accounted for approximately MEUR 5.0 of
fair value changes or approximately 40% of total fair value changes. The
aggregate fair value of fund investments as of 31 December 2011 was MEUR 70.2
(31 December 2010: MEUR 66.5).
Operating profit for the Fund Investment business was MEUR 12.2 (MEUR 2.1) and
profit for the year MEUR 12,8 (MEUR 3.5). CapMan's share of the result of its
Maneq associated companies impacted profit performance. Changes in the fair
value of Maneq fund investments impacted the performance of Maneq companies.
CapMan made new investments in its funds totalling MEUR 11.9 (MEUR 11.8) during
2011. The majority of these were made in the CapMan Buyout IX and CapMan Public
Market funds. CapMan received distributions from funds totalling MEUR 19.5 (MEUR
6.8), the majority coming from the CapMan Buyout VIII fund following its exits
from OneMed and Proxima. CapMan did not make any new commitments to funds during
the review period.
The amount of remaining commitments totalled MEUR 24.4 as of 31 December 2011
(31 December 2010: MEUR 36.3). The aggregate fair value of existing investments
and remaining commitments as of the same date was MEUR 94.6 (MEUR 102.8).
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.
Investments at fair value and remaining investment capacity by investment area
are presented in the Tables section.
Balance sheet and financial position as of 31 December 2011
CapMan's balance sheet totalled MEUR 142.5 as of 31 December 2011 (31 December
2010: MEUR 155.8). Non-current assets amounted to MEUR 111.3 (MEUR 112.7), of
which the carrying amount of goodwill totalled MEUR 6.2 (MEUR 6.4). A goodwill
write-down of approximately MEUR 0.2 was made as a result of the sale of the
real estate consulting business during the third quarter.
Fund investments booked at fair value totalled MEUR 70.2 (MEUR 66.5). Long-term
receivables amounted to MEUR 19.6 (MEUR 24.8), of which MEUR 18.7 (MEUR 23.5)
were loan receivables from Maneq funds. Both CapMan Plc and 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 27.7 (MEUR 39.6). Liquid assets (cash in hand
and at banks, plus other financial assets at fair value through profit and loss)
amounted to MEUR 22.3 (MEUR 35.0) as a result of the OneMed and Proxima exits
made during the review period.
The size of CapMan Plc'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 totalling MEUR 44.4 (MEUR
50.6) available as of 31 December 2011, of which MEUR 34.4 (MEUR 40.6) was
utilised. Trade and other payables totalled MEUR 15.3 (MEUR 17.4). The Group's
interest-bearing net debts amounted to MEUR 12.7 (MEUR 6.6).
The Group's cash flow from operations totalled MEUR -8.2 (MEUR 6.0). 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 14.6 (MEUR 20.0) and is related to fund investments and repaid
capital received by the company. Cash flow before financing totalled MEUR 6.4
(MEUR 26.0), while cash flow from financing was MEUR -18.6 (MEUR -9.9). Cash
flow from financing includes the dividend paid to shareholders in April, which
totalled MEUR 10.3.
Key figures 31 December 2011
CapMan's equity ratio as of 31 December 2011 was 61.9% (31 December
2010: 58.5%), its return on equity 12.4% (20.8%), and its return on investment
11.9% (19.7%). Taking one-off items into account, the return on equity for 2010
was 8.7% and the return on investment 6.7%. The target level for the company's
equity ratio is at least 60% and over 20% for return on equity.
Key figures
31.12.11 31.12.10
------------------------------------------------------------------------
Earnings per share, cents 10.1 17.7**
Earnings per share, diluted, cents 10.1 17.7**
Shareholders' equity / share, cents* 104.7 107.7
Share issue-adjusted number of shares 84,255,467 84.255,467
Number of shares as of 30.9 84,281,766 84.281,766
Number of shares outstanding 84,255,467 84,255,467
Number of company shares held by CapMan as of 30.9 26,299 26,299
Return on equity, % p.a.* 12.4 20.8**
Return on investment, % p.a. 11.9 19.7**
Equity ratio, % 61.9 58.5
Net gearing, % 7.3
14.4
* 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.
** Figures include one-off items.
Board's proposal for distribution of profit
CapMan Plc's goal is to distribute at least 50% of net profit as dividends.
CapMan Plc's distributable assets amounted to MEUR 13.8 on 31 December 2011
(MEUR 17.4 on 31 December 2010). CapMan Plc's Board of Directors will propose to
the Annual General Meeting to be held on 14 March 2012 that a dividend of EUR
0.07 per share should be paid from the distributable assets for 2011 to
shareholders, equivalent to a total of approx. MEUR 5.9. A dividend of EUR 0.12
per share was paid for 2010.
Fundraising during 2011 and capital under management as of 31 December 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.
Increased economic uncertainty during the second half of 2011 was reflected in
the global fundraising market. The slow-down in the M&A market delayed the exits
made by private equity funds and the resulting distributions made to investors.
The reduction in the amount of capital repaid to investors has affected their
ability to make new investment commitments.* Over the short term, investors'
interest in private equity funds has also declined as a result of the lower
value generated by other classes of investments and increased regulation
affecting the industry. Globally, the overall amount of capital raised for new
funds was historically at a low level during 2011*, and the fundraising market
is expected to continue to remain challenging during 2012.
CapMan continued fundraising for its CapMan Mezzanine V fund during 2011, and
the final size of the fund reached MEUR 95. CapMan also initiated fundraising
preparations for a Nordic real estate fund. CapMan's next significant new
fundraising rounds will take place in 2012. Despite the challenging market
situation, CapMan's fundraising is well-placed to succeed, thanks to CapMan's
strong market position, long-term investor relations, historically good levels
of returns, and more than 20 years' experience in the private equity industry.
Capital under management totalled MEUR 3,065.9 as of 31 December 2011 (31
December 2010: MEUR 3,231.1). The reduction in the size of this capital compared
to 2010 is attributable to the exits made in 2011. Of total capital under
management, MEUR 1,632.0 (MEUR 1,795.2) was held in funds making investments in
portfolio companies and MEUR 1,433.9 (MEUR 1,435.9) in real estate funds.
Funds under management, together with their investment activities, are presented
in more detail in Appendices 1 and 2.
Other events during the review period
CapMan sold its real estate consulting business to the business' management at
the end of June. The transaction did 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 Corintium Oy's 20% stake in the managing companies of CapMan's
current real estate funds at the end of June and now owns these companies in
full. These transactions did not have a substantive impact on CapMan's result
for 2011 or the administration and carried interest agreements related to
existing real estate funds.
CapMan signed a partnership agreement in September with NEP Partners, a real
estate investment and management company founded in 2005 that operates mainly in
Sweden. The aim of the new partnership is to extend CapMan Real Estate's
operations to the broader Nordic market, and, in line with this, CapMan has
initiated fundraising preparations for establishing a Nordic real estate private
equity fund.
Events after the end of the review period
CapMan Plc issued a flagging notice on 3 January 2012 linked to the change in
Legg Mason Inc.'s ownership of CapMan Plc that took place on 28 December 2011,
stating that the total number of CapMan Plc shares held by Legg Mason Inc. had
fallen below 5%.
Based on the recommendation by the Remuneration Committee, CapMan Plc's Board of
Directors decided on 2 February 2012 to increase the proportion of carried
interest payable to the Buyout team to reflect general practice in the field and
investors' requirements regarding compensation of investment professionals. The
aim is to align the interests of fund investors and investment professionals and
thereby create the basis for even more successful fund management business
operations over the long term. The share of carried interest payable to the
investment teams was changed in respects of the CapMan Equity VII A, B, C, and
Sweden funds and in the CapMan Buyout VIII fund. Investment professionals' share
of CapMan's carried interest is approximately 40% in the CapMan Buyout VIII fund
and 25% on average in CapMan Equity VII funds.
Personnel
CapMan employed a total of 122 people as of 31 December 2011 (31.12.2010: 150),
of whom 79 (103) worked in Finland and the remainder in the other Nordic
countries, Russia, and Luxembourg. The drop in personnel numbers during 2011 is
largely attributable to the sale of the real estate consulting business and
efficiency enhancement measures carried out during the year. A breakdown of
personnel by country and team is presented in the Tables section.
Authorisations held by the Board of Directors
Following a decision by the Annual General Meeting, CapMan Plc's Board of
Directors is authorised to purchase CapMan B shares and accept them as pledges,
and decide on a share issue and the issuance of stock option rights and other
entitlements related to CapMan shares. These authorisations will remain in force
until 30 September 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.
Shares and share capital
There were no changes in CapMan Plc's share capital during 2011. Share capital
as of 31 December 2011 totalled EUR 771,586.98. Although no changes took place
in the total of number of shares, the numbers of B and A shares changed
following the share conversion announced on 22 December 2011, which resulted in
the number of B shares as of the end of the year standing at 78,531,766 and the
number of A shares at 5,750,000. As of the end of 2010, 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 15% during 2011 and
totalled 5,659 as of 31 December 2011 (31 December 2010: 4,834). Five flagging
notices were issued during the year.
As a result of share transactions carried out by shareholders of CapMan Plc A
shares on 6 October 2011, the Ilmarinen Mutual Pension Insurance Company's share
of the total number of CapMan Plc's shares and voting rights exceeded 5%, while
Ari Tolppanen's and Oy Aristo-Invest Ab's combined share of the total number of
shares in CapMan Plc fell below 10% and their combined share of voting rights in
CapMan Plc exceeded 20%. Heikki Westerlund's and Heiwes Oy's combined share of
the voting rights in CapMan Plc exceeded 10%, and CapMan Partners B.V.'s share
of the total number of shares and voting rights in CapMan Plc fell below 5%.
Flagging notices related to the above changes in share ownership were issued on
6 October 2011.
In addition, a flagging notice was issued on 22 December 2011 announcing that
Ari Tolppanen and Oy Aristo-Invest Ab's combined share of voting rights in
CapMan Plc had fallen below 20%.
CapMan Plc issued a flagging notice on 3 January 2012 linked to the change in
Legg Mason Inc.'s ownership of CapMan Plc that took place on 28 December 2011,
stating that the total number of CapMan Plc shares held by Legg Mason Inc. had
fallen below 5%.
Company shares
As of 31 December 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
year.
Stock option programmes
As of 31 December 2011, CapMan Plc had one stock option programme in place -
Option Programme 2008 - as part of its 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 will
start on 1 May 2012 for 2008B options. Receivables from shares subscribed to
under these options will be entered in the company's unrestricted shareholders'
equity. As of the end of December 2011, 1,809,750 2008A stock option
entitlements and 1,490,000 2008B stock option entitlements were allocated.
Trading and market capitalisation
CapMan Plc's B shares closed at EUR 1.01 on 31 December 2011 (31 December 2010:
EUR 1.78). The average price during the year was EUR 1.39 (EUR 1.98). The
highest price paid was EUR 1.84 (EUR 1.98) and the lowest EUR 0.90 (EUR 1.28).
The number of CapMan Plc B shares traded was significantly higher than during
2010, with a total of 24.1 million (14.1 million) shares traded, valued at MEUR
32.0 (MEUR 22.0).
The market capitalisation of CapMan Plc B shares as of 31 December 2011 was MEUR
79.3 (31 December 2010: MEUR 139.3). The market capitalisation of all company
shares, including A shares valued at the closing price of B shares, was MEUR
85.1 (MEUR 150.0).
Publication of the Financial Statements and the Report of the Board of
Directors, and the Annual General Meeting for 2012
The key details of the CapMan Group's Financial Statements and the Report of the
Board of Directors for 2011 will be published in the company's Annual Report for
2011 in Week 8. CapMan Plc's 2012 Annual General Meeting will be held on
Wednesday 14 March 2012 at 10.00 am in Helsinki. Complete financial statements,
as required under the terms of the Finnish Companies Act, will be available on
CapMan's website by 22 February 2012 at the latest.
Corporate Governance Statement
CapMan Plc's Corporate Governance Statement will be published separately from
the Report of the Board of Directors as part of the company's electronic Annual
Report for 2011 in Week 8 and will be available on the company's website.
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. Should the current uncertainty surrounding general economic
developments continue, it will impact CapMan's operations through a weakening of
the exit market and a decline in the fair value of CapMan's own fund
investments.
If prolonged, the uncertainty in the market is also 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 during 2012, which could impact the outcome of fundraising during
the year. The EU's Basel III and Solvency II legislative initiatives limit the
ability of European banks and insurance companies to invest in private equity
funds, and could also impact CapMan's fundraising and the amount of capital that
it has under management, as well as any new management fees that CapMan might
receive.
Business environment
Long-term growth prospects in terms of the demand for private equity funds
continue to remain good, but the current market turmoil and its impact have
reduced activity in the private equity industry. It is difficult at the moment
to predict how the prevailing uncertainty will affect investors' willingness to
make new commitments in the near future. International investor interest is
currently focused primarily on small and mid-cap buyout funds. Compared to other
areas of Europe, interest in the Nordic countries has increased in relative
terms as a result of the European debt crisis.
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 continues to be available especially for
small and mid-sized M&A transactions and real estate investments in the Nordic
countries. Continued financial turmoil reduces the visibility of both deal flow
and bank financing during the early part of the year. As a result, the future
development of the exit market is uncertain. The portfolios of CapMan's funds
contain a number of investments that the company is now ready to exit.
The development of our portfolio companies during 2011 was largely good, and
profit and growth projections for 2011 were generally achieved. The turnover and
profit projections for portfolio companies in 2012 are also largely positive. In
accordance with IPEVG criteria, the fair value development of portfolio
companies will also be impacted 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 portfolio
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
investors. International investor interest in the Finnish real estate market has
mainly focused on prime properties with a lower risk ratio, but the number of
these on offer has been small. Demand for higher-risk properties was low in
2011 and led to a low overall number of real estate transactions. This low
volume was also impacted in part by the lower level of loan capital available.
The leasing market remained reasonably stable, although some downward pressure
on rate levels was seen. Growth in the retail sector continued during the fourth
quarter, although at a significantly lower level than during the third quarter.
CapMan funds investing in portfolio companies have some MEUR 537 available for
making new and add-on investments, while real estate funds have an investment
capacity of approximately MEUR 61, 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 operate within the requirements of these
new regulations.
Changes in reporting
We have amended the table of funds presented in Appendix 1 to make it easier for
investors to evaluate the carried interest potential of our funds. The biggest
changes affect the way that funds are categorised and the projections provided
regarding when they will transfer to carry. We estimate that funds in exit and
value creation phase will transfer to carry within 1-5 years. In respect of
funds in this category, we also report the cash flow as of the reporting date
that must be repaid to investors before the funds in question can transfer to
carry. In the future, we will not provide any projections on the timetable under
which individual funds are expected to transfer to carry. A more detailed
description of these changes in reporting can be found in Appendix 1.
We have also changed the method we use for calculating the capital managed by
our real estate funds. This new method has been adopted as of 31 December 2011.
Under this, calculations of the amount of capital managed by CapMan's real
estate funds do not take account of uninvested loan capital, on which no
management fee is payable under fund agreements. As a result, the figure given
for the amount of capital under management provides a better picture of the
management fee base represented by CapMan's funds. The adoption of the new
calculation method reduced the amount of capital managed by CapMan as of 31
December 2011 by MEUR 271.8. To ensure comparability, the figures for 31
December 2010 have been restated using the new method in respect of capital
under management.
Future outlook
CapMan's next major fundraising rounds will take place in 2012. The development
of the company's management fees during 2012 will depend on the timing of exits
made from current funds and the size and timing of new funds to be established.
Our operating expenses will continue to decline as a result of various
efficiency enhancement measures taken. Due to our fundraising efforts,
management fees will not fully cover operating expenses until the new funds
currently in the process of being established reach an adequate size.
The fair value of CapMan's fund investments developed favourably during 2011. We
believe that our portfolio companies are well-placed to continue performing well
in this respect during 2012, which would have a positive effect on the fair
value development of our fund investments.
The Group's overall result for 2012 will mainly depend on whether new exits are
made by funds already generating carried interest, whether new funds will
transfer to carry, and on how the value of investments develops in those funds
in which CapMan is a substantial investor. Due to difficulties to forecast these
developments, CapMan will not issue guidance on its result for the full year.
The CapMan Group will publish its Interim Report for 1 January - 31 March 2012
on Friday, 4 May 2012.
Helsinki, 3 February 2012
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 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 the CapMan 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 Private Equity Spotlight, December 2011
Appendices (after the Tables section):
Appendix 1: The CapMan Group's funds under management as of 31 December 2011,
MEUR
Appendix 2: Operations of CapMan's funds under management, 1 January - 31
December 2011
Accounting principles
The Financial Statements Bulletin has been prepared in accordance with the
International Financial Standards (IFRS) and interpretations in force as of 31
December 2011. The information presented in the Financial Statements Bulletin is
un-audited.
GROUP STATEMENT OF COMPREHENSIVE INCOME (IFRS)
€ ('000) 10-12/11 10-12/10 1-12/11 1-12/10
-----------------------------------------------------------------------------
Turnover 6,832 8,488 32,440 38,150
Other operating income 29 22,898 670 22,963
Personnel expenses -5,975 -9,597 -22,349 -25,241
Depreciation and amortisation -178 -223 -811 -884
Impairment of goodwill 0 -3,839 0 -3,839
Other operating expenses -3,286 -3,739 -11,704 -12,835
Fair value gains / losses of investments 2,629 1,055 12,849 2,707
Operating profit 51 15,043 11,095 21,021
Financial income and expenses 346 397 559 560
Share of associated companies' result -698 -122 2,055 2,358
Profit / loss before taxes -301 15,318 13,709 23,939
Income taxes 877 -4,790 -2,622 -6,383
Profit for the period 576 10,528 11,087 17,556
Other comprehensive income:
Translation differences -32 148 -31 461
Total comprehensive income 544 10,676 11,056 18,017
Profit attributable to:
Equity holders of the company 576 10,538 10,899 17,328
Non-controlling interests 0 -10 188 228
Total comprehensive income attributable
to:
Equity holders of the company 544 10,686 10,868 17,789
Non-controlling interests 0 -10 188 228
Earnings per share for profit attributable
to the equity holders of the Company:
Earnings per share, cents 0.0 11.8 10.1 17.7
Diluted, cents 0.0 11.8 10.1 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)
€ ('000) 31.12.11 31.12.10
------------------------------------------------------------
ASSETS
Non-current assets
Tangible assets 438 602
Goodwill 6,204 6,406
Other intangible assets 1,881 2,42
Investments in associated companies 8,347 6,400
Investments at fair value through profit and loss
Investments in funds 70,167 66,504
Other financial assets 597 619
Receivables 19,601 24,778
Deferred income tax assets 4,025 4,923
111,260 112,656
Current assets
Trade and other receivables 5,467 4,619
Other financial assets at fair value
through profit and loss 378 980
Cash and bank 21,887 34,049
27,732 39,648
Non-current assets held for sale 3,501 3,501
Total assets 142,493 155,805
EQUITY AND LIABILITIES
Capital attributable the Company's
equity holders
Share capital 772 772
Share premium account 38,968 38,968
Other reserves 38,679 38,679
Translation difference 38 69
Retained earnings 9,784 12,241
88,241 90,729
Non-controlling interests 0 273
Total equity 88,241 91,002
Non-current liabilities
Deferred income tax liabilities 2,569 3,078
Interest-bearing loans and borrowings 28,753 35,371
Other liabilities 1,131 1,331
32,453 39,780
Current liabilities
Trade and other payables 15,269 17,395
Interest-bearing loans and borrowings 6,250 6,250
Current income tax liabilities 280 1,378
21,799 25,023
Total liabilities 54,252 64,803
Total equity and liabilities 142,493 155,805
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
1 Jan 2010 772 38,968 37,347 -392 1,097 77,792 413 78,205
Options 1,332 -729 603 603
Dividends -3,370 -3,370 -309 -3,679
Hybrid bond,
interest
(net of tax) -2,414 -2,414 -2,414
Other
changes 329 329 -59 270
Compehen-
sive
profit 461 17,328 17,789 228 18,017
Equity on
31 Dec 2010 772 38,968 38,679 69 12,241 90,729 273 91,002
Equity on
1 Jan 2011 772 38,968 38,679 69 12,241 90,729 273 91,002
Options 591 591 591
Dividends -10,114 -10,114 -222 -10,336
Hybrid bond,
interest
(net of tax) -2,414 -2,414 -2,414
Other
changes 384 384 384
Comprehen-
sive
profit -31 10,899 10,868 188 11,056
Acquisition
of non-
controlling
interests -1,803 -1,803 -239 -2,042
Equity on
30 Sep 2011 772 38,968 38,679 38 9,784 88,241 0 88,241
STATEMENT OF CASH FLOW (IFRS)
€ ('000) 1-12/11 1-12/10
-----------------------------------------------------------
Cash flow from operations
Profit for the financial year 11,087 17,556
Adjustments -10,350 -15,958
Cash flow before change in working capital 737 1,598
Change in working capital -1,142 9,003
Financing items and taxes -7,788 -4,580
Cash flow from operations -8,193 6,021
Cash flow from investments 14,607 19,979
Cash flow before financing 6,414 26,000
Dividends paid -10,336 -3,679
Other net cash flow -8,240 -6,250
Financial cash flow -18,576 -9,929
Change in cash funds -12,162 16,071
Cash funds at start of the period 34,049 17,978
Cash funds at end of the period 21,887 34,049
Segment
information
The Group reports two segments: Management Company business and Fund
Investment business.
10-12/2011 Management Company business Fund Total
CapMan Private CapMan Real Investment
€ ('000) Equity Estate Total business
--------------------------------------------------------------------------------
Turnover 5,427 1,405 6,832 0 6,832
Operating
profit/loss -1,603 -685 -2,288 2,339 51
Profit/loss for
the financial year -2,033 -685 -2,718 3,294 576
10-12/2010 Management Company business Fund Total
CapMan Private CapMan Real Investment
€ ('000) Equity Estate Total business
--------------------------------------------------------------------------------
Turnover 6,426 2,062 8,488 0 8,488
Operating
profit/loss 15,284 -993 14,291 752 15,043
Profit/loss for
the financial year 11,397 -1,305 10,092 436 10,528
1-12/2011 Management Company business Fund Total
CapMan Private CapMan Real Investment
€ ('000) Equity Estate Total business
--------------------------------------------------------------------------------
Turnover 24,633 7,807 32,440 0 32,440
Operating
profit/loss -45 -1,024 -1,069 12,164 11,095
Profit/loss for
the financial year -651 -1,024 -1,675 12,762 11,087
Assets 8,362 627 8,989 102,271 111,260
Total assets
includes:
Investments in
associated
companies 0 0 0 8,347 8,347
Non-current assets
held for sale 3,501 0 3,501 0 3,501
1-12/2010 Management Company business Fund Total
CapMan Private CapMan Real Investment
€ ('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.
After completing a tax audit in Finland, the Finnish tax authorities asserted
that some of the operations of the Group's parent company, CapMan Plc, include
financial services exempt from VAT and that the parent company should not deduct
VAT on certain costs incurred as a result. CapMan Plc disagrees with this
assertion and intends to appeal the decision and submit a request for
rectification. The claim from the tax authorities is approximately MEUR 1.0.
CapMan has not booked a contingency to cover this in its Financial Statements
for 2011.
Dividend
A dividend of €0.12 per share, total €10.1 million, was paid for 2010. The
dividend was paid to shareholders on 11 April 2011 (A dividend of €0.04 per
share, totalling €3.4 million, was paid for 2009.)
Non-current assets
€ ('000) 31.12.11 31.12.10
-------------------------------------------------------------
Investments in funds at fair value through
profit and loss at Jan 1 66,504 59,421
Additions 11,847 11,822
Distributions -19,530 -6,759
Fair value gains/losses on investments 11,346 2,020
Investments in funds at fair value through
profit and loss at end of the period 70,167 66,504
Investments in funds at fair value through
profit and loss at the end of period 31.12.11 31.12.10
Buyout 37,458 36,933
Mezzanine 3,835 4,238
Russia 2,836 1,488
Public Market 3,631 3,610
Real Estate 6,038 5,302
Other 11,961 10,307
Access 4,408 4,626
In total 70,167 66,504
Transactions with related parties (associated companies)
€ ('000) 31.12.11 31.12.10
--------------------------------------------------------------------
Receivables - non-current at end of review period 18,682 23,126
Receivables - current at end of review period 890 765
Non-current liabilities
€ ('000) 31.12.11 31.12.10
--------------------------------------------------------------------
Interest bearing loans at end of review period 28,753 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 31.12.11 31.12.10
--------------------------------------------------------------
Finland 79 103
Denmark 2 3
Sweden 18 22
Norway 8 7
Russia 14 14
Luxembourg 1 1
In total 122 150
By team
--------------------------------------------------------------
CapMan Private Equity 54 64
CapMan Real Estate 21 43
CapMan Platform 47 43
In total 122 150
Contingent liabilities
€ ('000) 31.12.11 31.12.10
--------------------------------------------------------------
Leasing agreements 7,534 9,191
Securities and other contingent liabilities 67,143 68,146
Remaining commitments to funds 24,425 36,299
Remaining commitments by investment area
Buyout 10,008 15,910
Mezzanine 4,826 5,069
Russia 2,113 3,225
Public Market 299 1,443
Real Estate 942 1,215
Other 4,328 7,414
Access 1,909 2,023
In total 24,425 36,299
Turnover and profit quarterly
2011
MEUR 1-3/11 4-6/11 7-9/11 10-12/11 1-12/11
------------------------------------------------------------------------------
Turnover 8.2 7.6 9.8 6.8 32.4
Management fees 7.1 6.8 6.8 6.4 27.1
Carried interest 0.4 0.0 2.6 0.1 3.1
Real Estate consulting 0.5 0.5 0.0 0.0 1.0
Other income 0.2 0.3 0.4 0.3 1.2
Other operating income 0.0 0.6 0.0 0.0 0.6
Operating expenses -8.3 -9.2 -7.9 -9.5 -34.9
Fair value gains of investments 4.1 6.2 -0.1 2.6 12.8
Operating profit 4.0 5.2 1.8 0.1 11.1
Financial income and expenses 0.4 0.0 -0.2 0.4 0.6
Share of associated companies' result 0.5 1.9 0.4 -0.7 2.1
Profit before taxes 4.8 7.2 2.0 -0.3 13.7
Profit for the period 3.7 5.2 1.6 0.6 11.1
2010
MEUR 1-3/10 4-6/10 7-9/10 10-12/10 1-12/10
-------------------------------------------------------------------------------
Turnover 11.4 9.6 8.7 8.5 38.2
Management fees 8.4 8.9 7.9 7.7 32.9
Carried interest 2.4 0.1 0.1 0.0 2.6
Real Estate consulting 0.4 0.4 0.4 0.4 1.6
Other income 0.2 0.2 0.3 0.4 1.1
Other operating income 0.1 0.0 0.0 22.9 23.0
Operating expenses -8.3 -8.6 -8.5 -17.4 -42.8
Fair value gains / losses of
investments 1.1 -0.7 1.3 1.0 2.7
Operating profit 4.3 0.2 1.5 15.0 21.0
Financial income and expenses -0.1 0.1 0.2 0.4 0.6
Share of associated companies' result 0.8 1.1 0.6 -0.1 2.4
Profit after financial items 5.0 1.4 2.2 15.3 23.9
Profit for the period 3.5 1.7 1.8 10.6 17.6
APPENDIX 1: THE CAPMAN GROUP'S FUNDS UNDER MANAGEMENT AS OF 31 DECEMBER 2011,
MEUR
The tables below show the status of the funds managed by CapMan as of 31
December 2011. CapMan groups its funds into four categories in terms of their
life cycle as follows: 1) Funds generating carried interest; 2) Funds in exit
and value creation phase; 3) Funds in active investment phase; and 4) Funds with
no carried interest potential for CapMan. We amended the categories in the table
of funds as of 31 December 2011. A comparison between the old and new categories
is shown below.
Old category New category
Funds generating carried interest Funds generating carried interest
Funds that are expected to transfer to Funds in exit and value creation phase
carry during
2011-2012
Other funds not yet in carry Funds in active investment phase
Funds with no carried interest potential Funds with no carried interest
to CapMan potential for CapMan
Exits made by funds generating carried interest provide CapMan with immediate
carry revenue, while those in the exit and value creation phase can be expected
to start generating carried interest within the next 1-5 years. The carry
potential of funds in active investment phase is likely to be realised over the
next 5-10 years. The last category comprises funds that do not offer any carried
interest potential for CapMan, either because CapMan's share of carry in the
funds concerned is small or because the funds are not expected to transfer to
carry.
When analysing the projected timetable within which a fund could transfer to
carry, the cumulate cash flow that investors have already received should be
compared to the fund's paid-in capital. In order for a fund to enter carry, it
must first return its paid-in capital and pay an annual preferential return to
investors. In the case of funds in the exit or value creation phase, the table
shows the cash flow that must be returned to investors to enable a fund to
transfer to carry. The carry potential of each fund can be evaluated by
comparing this figure to the fair value of the fund's portfolio. A portfolio's
fair value, including its possible net cash flows, provides an indication of the
distributable capital available as of the end of the reporting period. Any
uncalled capital in a fund (relevant especially for funds in the active
investment phase) should be taken into account when evaluating the cash flow
that will be needed to enable a fund to transfer to carry.
The percentage shown in the last column indicates the share of each fund's cash
flow due to CapMan as and when the fund transfers to carry. Following a previous
distribution of carried interest, any new paid-in capital, together with the
annual preferential return payable on it, must be returned to investors before
any further distribution of carried interest can take place. The definitions of
the column headings are shown below the table.
FUNDS INVESTING IN PORTFOLIO COMPANIES
Size Paid- Fund's Net Distributed Amount CapMan's
in ca- current cash cash flow of cash share of
pital portfolio assets flow cash
----------------- -------------- needed flow if
At At To To to fund
cost fair invest- mgmt transfer gene-
value ors com- the fund rates
pany to carry carried
as of interest
31.12.
2011
Funds
gene-
rating
carried
interest
Fenno
Program
1), FM II
B, FV V,
FM IIIB
--------------------------------------------------------------------------------
Total 258.0 252.2 18.1 13.6 1.3 406.8 17.4 10-20%
Funds in
exit and
value
creation
phase
FM III A 101.4 100.6 22.6 23.3 2.6 120.8 9,4 20%
CME VII A
6) 156,7 152,9 72,4 75,6 4,5 148.0 61.3 15%
CME VII B
6) 56.5 56.5 26.3 31.4 2.4 69.1 9.0 13%
CME Sweden
6) 67.0 66.4 31.0 32.4 1.9 63.6 27.6 15%
CMB VIII
2) 6) 440.0 374.6 244.8 262.5 6.7 153.1 345.1 12%
CMLS IV 54.1 47.1 31.1 34.0 1.7 12.1 47.8 10%
CMT
2007 2) 99.6 68.4 42.3 55.5 0.2 2.4 84.3 10%
CMPM 138.0 129.4 101.6 100.5 0.1 53.4 88.7 10%
--------------------------------------------------------------------------------
Total 1,113.3 995.9 572.1 615.2 20.1 622.5 673.2
Funds in
active
invest-
ment
phase
CMR 118.1 73.3 48.8 59.6 0.4 3.4%
CMB IX 294.6 208.7 178.5 194.6 2.3 9.4 10%
CMM V 95.0 19.3 18.0 20.0 0.5 0.5 10%
--------------------------------------------------------------------------------
Total 507.7 301.3 245.3 274.2 3.2 9.9
Fund with
no carried
interest
potential-
for CapMan
FV IV, FV
VET, SWE
LS 3), SWE
Tech
2), 3),
CME VII C
6), FM II
A, C, D
2), FM III
C, CMM IV
4)
--------------------------------------------------------------------------------
Total 579.5 552.2 185.4 164.7 19.4 359.0
Total
private
equity
funds 2,458.5 2,101.6 1,020.9 1,067.7 44.0 1,398.2 17.4 673.2
--------------------------------------------------------------------------------
REAL ESTATE FUNDS
Invest- Paid- Fund's Net Distributed Amount CapMan's
ment in ca- current cash cash flow of cash share of
capacity pital portfolio assets flow cash
----------------- -------------- needed flow if
At At To To to fund
cost fair invest- mgmt transfer gene-
value ors com- the fund rates
pany to carry carried as of interest
31.12.
2011
Funds in
exit and
value
creation
phase
CMRE I 5)
Equity
and
bonds 200.0 188.5 59.9 45.9 205.3 27.4 26%
Debt-
finan-
cing 300.0 277.2 70.5 70.5
--------------------------------------------------------------------------------
Total 500.0 465.7 130.4 116.4 1.6 205.3 27.4 65.0
CMRE II
Equity
and
bonds 150.0 109.5 116.9 108.6 0.5 12%
Debt-
finan-
cing 450.0 268.4 257.2 257.2
--------------------------------------------------------------------------------
Total 600.0 377.9 374.1 365.8 -2.4 0.5 145.9
Total 1,100.0 843.6 504.5 482.2 -0.8 205.8 27.4 210.9
Funds in
active-
invest-
ment
phase
CMRHE
Equity
and
bonds 332.5 315.3 361.6 307.0 27.2 12%
Debt-
finan-
cing 617.5 537.6 507.1 507.1
--------------------------------------------------------------------------------
Total 950.0 852.9 868.7 814.1 -3.6 27.2
PSH Fund
Equity
and
bonds 5,0 3.5 3.5 6.2 0.5 10%
Debt-
finan-
cing 8.0 8.0 7.8 7.8
--------------------------------------------------------------------------------
Total 13.0 11.5 11.3 14.0 0.1 0.5
Total 963.0 864.4 880.0 828.1 -3.5 27.7
Real
Estate
funds
total 2,063.0 1,708.0 1,384.5 1,310.3 -4.3 233.5 27.4 210.9
--------------------------------------------------------------------------------
Abbreviations used to refer to funds:
CMB = CapMan Buyout CMRE = CapMan Real Estate
CME = CapMan Equity CMT 2007 = CapMan Technology 2007CMLS = 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.
Amount of cash flow needed to transfer the fund to carry
This cash flow refers to the profit distributed by funds and the capital they
pay back to investors. The figure indicates the size of the cash flow that must
be returned to investors as of the end of the reporting period to enable a fund
to transfer to carry. A fund's carry potential can be evaluated by comparing
this figure to the fair value of its portfolio.
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) The Fenno Fund (established in 1997, transferred to carry in 2005) and the
Skandia I fund (established in 1997, transferred to carry in 2005) 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 focuses of their investment or portfolios differ
significantly).
3) Currency items are valued at the average exchange rates quoted on 31 December
2011.
4) 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.
5) 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 43.9 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.
6) CapMan Plc's Board of Directors made a decision on 2 February 2012 to
increase Buyout investment teams' share of carried interest to better reflect
the prevailing industry practices. In the case of the CapMan Buyout VIII fund,
the investment teams' share is approximately 40%, and in the case of the CapMan
Equity VII funds approximately 25%.
APPENDIX 2: OPERATIONS OF CAPMAN'S FUNDS UNDER MANAGEMENT, 1 JANUARY - 31
DECEMBER 2011
The operations of the private equity funds managed by CapMan in 2011 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 one in Russia. These 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 in Finland and the other
Nordic countries. CapMan also has two other investment areas (CapMan Technology
and CapMan Life Science), which do not make new investments, but concentrate
instead on developing the value of their existing portfolio companies. These two
latter investments areas are reported under "Other" in Private Equity.
CAPMAN PRIVATE EQUITY
Investments in portfolio companies in 2011
CapMan funds made nine new investments in 2011, together with a number of add-on
investments, investing MEUR 168.7 in all. Add-on investments accounted for under
a third of the total. New investments were made in B&B Tools AB, Design-Talo Oy,
Eastway Oy, Expert Photo, Lumex, Siberian Networks, Solera AS, Virial, as well
as an investment by CapMan's Public Market fund that has not yet been disclosed.
Major add-on investments were made in Esperi Care Oy, Nice Entertainment Oy, and
Walki Group Oy. During 2010, CapMan funds made nine new investments and several
add-on investments totalling MEUR 196.2
Exits from portfolio companies in 2011
CapMan funds exited completely from 14 companies during 2011. Final exits were
made from Aerocrine AB, Affecto Plc, EM4 Inc, Fastrax Oy, Jolife AB, Mirasys Oy,
Moventas Oy, Movial Applications Oy, OneMed Group, Proxima Intressenter AB,
Region Avia, SaaSplaza B.V, SMEF Group A/S, and A&R Carton AB. Partial exits
were made from Cardinal Foods Oy and Ordyhna Holding. Exits had a combined
acquisition cost of MEUR 205.4. During 2010, complete exits were made from 11
companies and partial exits from two, with a combined acquisition cost of MEUR
114.4.
Events after the close of the review period
The CapMan Technology 2007 fund exited Inmeta Crayon ASA in January 2012. The
exit will not have a substantive impact on CapMan Plc's result for 2012, as the
fund is not in carry.
The CapMan Equity VII A, B, and Sweden funds made a complete exit and the
Finnmezzanine III A and III B funds a partial exit from Ordyhna Holding A/S in
January 2012. These exits will not have an impact on CapMan Plc's result for
2012 or have a significant impact on cash flow.
CAPMAN REAL ESTATE
Investments in and commitments to real estate acquisitions and projects in 2011
The CapMan RE II fund invested in an office property in Helsinki in May. A
number of add-on investments were also made by the company's real estate funds,
the most significant of which were linked to a shopping centre site in Hyvinkää,
a business property in Turku, and a hotel property in the centre of Helsinki.
New and add-on investments totalled MEUR 56.6, with the majority focused on
developing existing properties. In addition, funds were committed to finance
real estate acquisitions and projects valued at MEUR 43.0 as of 31 December
2011. During 2010, funds made one new investment and a number of add-on
investments totalling MEUR 45.6. Commitments to finance new projects totalled
MEUR 45.0 as of 31 December 2010.
Exits from real estate investments in 2011
The CapMan Real Estate I fund exited two properties - Kiinteistö Oy Munkkiniemen
puistotie 25 and Kiinteistö Oy Tuusulan Pysaäkkikuja 1 - during the review
period, with a combined acquisition cost of MEUR 35.1. During the comparable
period last year, 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
1-12/2011 1-12/2010
New and add-on investments
Funds investing in portfolio companies 168.7 196.2
Buyout 108.7 118.0
Russia 20.6 14.4
Public Market 31.8 35.6
Other 7.6 28.2
Real estate funds 56.6 45.6
------------------------------------------------------------------------
Total 225.3 241.8
Exits*
Funds investing in portfolio companies 205.4 114.4
Buyout 159.3 66.3
Russia 10.0 -
Public Market 6.5 19.1
Other 29.6 29.0
Real estate funds 35.1 8.7
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Total 240.5 123.1
* including partial exits and repayments of mezzanine loans.
In addition, real estate funds had made commitments to finance real estate
acquisitions and projects valued at MEUR 43.0 as of 31 December 2011.
Funds' combined portfolio* as of 31 December 2011, MEUR
Portfolio at Portfolio at Share of portfolio
acquisition cost fair value (fair value) %
Funds investing in portfolio
companies 1,020.9 1,067.7 44.9
Real estate funds 1,384.5 1,310.3 55.1
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Total 2,405.4 2,378.0 100.0
Funds investing in portfolio
companies
Buyout 717.7 763.7 71.5
Russia 48.8 59.6 5.6
Public Market 101.6 100.5 9.4
Other 152.8 143.9 13.5
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Total 1,020.9 1,067.7 100.0
* Total 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 537 for new
and add-on investments as of 31 December 2011. Of their remaining capital,
approx. MEUR 362 was earmarked for buyout investments (incl. mezzanine
investments), approx. MEUR 69 for technology investments, approx. MEUR 16 for
life science investments, approx. MEUR 59 for investments by the CapMan Russia
team, and approx. MEUR 31 for investments by the CapMan Public Market team. Real
estate funds had a remaining investment capacity of approx. MEUR 61, which has
been reserved primarily for developing funds' existing investments.
[HUG#1582379]
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