CapMan Plc's Interim Report 1 January - 30 September 2017

CapMan Plc Interim Report 2 November 2017 at 8.30 a.m. EET

CapMan Plc's Interim Report 1 January - 30 September 2017

Performance and main events for the review period 1 January-30 September 2017:

  • Group turnover was MEUR 26.0 (MEUR 22.0 1 Jan-30 September 2016).
  • Operating profit was MEUR 22.9 (MEUR 10.0). Comparable adjusted operating profit was MEUR 23.8 (MEUR 10.9).
  • Profit before taxes was MEUR 20.5 (MEUR 7.5).
  • Profit for the period was MEUR 18.7 (MEUR 7.1). Comparable adjusted profit was MEUR 19.5 (MEUR 8.3).
  • Diluted earnings per share for the period were 12.4 cents (7.3 cents). Comparable adjusted diluted earnings per share were 13.1 cents (8.7 cents).
  • Joakim Frimodig was appointed CEO of CapMan as of 1 September 2017.
  • CapMan Real Estate II fund reached its maximum size with EUR 425 million of equity commitments in its first and final closing.
  • After the review period Bayerische Versorgungskammer (BVK), Germany's largest pension scheme group, increased the investment volume of the mandate advised by CapMan Real Estate to EUR 500 million.
  • After the review period CapMan established a new pan-Nordic real estate fund, CapMan Nordic Property Income Fund.

This stock exchange release is a summary of CapMan Plc's Interim Report 1 January-30 September 2017. The complete report is available in pdf-format as an attachment to this release and on the company's website at https://www.capman.com/newsroom/financial-reports/.


Key figures

1-9/17 1-9/16
Turnover, MEUR 26.0 22.0
Operating profit, MEUR 22.9 10.0
Comparable adjusted operating profit, MEUR 23.8 10.9
Profit for the period, MEUR 18.7 7.1
Comparable adjusted profit for the period, MEUR 19.5 8.3
Diluted earnings / share, cents 12.4 7.3
Comparable adjusted diluted earnings / share, cents 13.1 8.7
30.9.2017 30.9.2016
Return on equity, % p.a. 18.2 14.3
Return on investment, % p.a. 15.1 10.0
Equity ratio, % 55.7 44.8
Net gearing, % 16.4 56.4

Joakim Frimodig, Interim CEO:

"Our earnings during the first nine months of 2017 were at record levels. Our comparable operating profit grew to EUR 23.8 million during the review period, and the comparable earnings per share was 13.1 cents. Our good performance in the first half of the year continued into the third quarter. The realisation of carried interest income and the positive development of our Investment business were key contributing factors.

During the review period, our focus was strongly on driving the growth initiatives forward.

In the Real Estate business, we saw many of our growth projects materialise. At the beginning of September, we launched the Nordic Real Estate II fund, which quickly became oversubscribed and reached its maximum size of EUR 425 million in its first and final closing. This new fund's investment capacity, including loan financing, is over one billion euros. International demand for the fund was strong: two-thirds of the capital came from outside the Nordic countries.

We also continued our co-operation with Germany's largest pension insurance company Bayerische Versorgungskammer (BVK), which increased the total investment capacity of CapMan's Real Estate investment mandate to EUR 500 million. The extension of the mandate is an indication of BVK's confidence in our Real Estate investment team and a good example of our ability to serve an international clientele.

After the review period, we launched our first open-ended real estate fund, the Nordic Property Income Fund. For us, this launch is a step towards expanding our customer base from traditional institutional clients to new customer segments. The fund will become operational in 2017 and aims to accumulate over EUR 200 million of equity during the first two years of its operations.

During the period under review, we launched two new business areas, CapMan Infra and CapMan Growth Equity, both of which have seen good progress in recent months. CapMan Infra has several ongoing projects in which both international and local investors have shown interest. In CapMan Growth Equity a new fund is being raised during 2017.

CapMan Buyout is constantly examining exit opportunities in a current favourable market situation, a good example being, after the review period in October 2017, the divestment of the dentistry chain Oral Hammaslääkärit to the Swiss Colosseum Dental Group. This was a succesful exit from from the latest Buyout X fund, which, as a whole, has developed well.

The positive development of CapMan's services CaPS and Scala Fund Advisors has continued. The contractual procurement volumes of CapMan Procurement Services CaPS grew by 26 per cent to EUR 103.5 million during the review period and the demand for Scala's fund raising and advisory services has remained strong both in North America and in Europe.

The growth launches did not yet have an impact on the earnings for the beginning of the year, but they will have a positive impact on our fee income starting from next year. The efforts made to implement the growth strategy have, however, burdened our cost structure during the year. Despite this, operating expenses during the review period have remained roughly at the same level compared to the corresponding period last year.

We are developing CapMan towards a leading private equity investment and asset management company in the Nordics. We will continue this work, driven by the same level of determination as in previous quarters."

CapMan maintains its outlook estimate for 2017

CapMan renewed its financial objectives at the end of 2016. The growth objective for Management Company and Services business is more than 10 per cent p.a. on average. The objective for return on equity is more than 20 per cent p.a. on average. The objective for net gearing, that is ratio of interest bearing net debt to equity, is a maximum of 40 per cent on average. CapMan's objective is to pay at least 75 per cent of earnings per share as dividend.

CapMan expects to achieve these financial objectives gradually and key figures are expected to show seasonality. CapMan expects fees from services to have a larger impact on results from the Management Company and Services business in 2017. The Management Company and Services business is profitable before carried interest income and any possible items affecting comparability. The integration of Norvestia and other growth initiatives will generate expenses in 2017.

The return on CapMan's investments have a substantial impact on CapMan's overall result. The development of industries and local economies, inflation development, valuation multiples of peer companies, exchange rates and various other factors outside of CapMan's control influence fair value development of CapMan's overall investments in addition to company and real estate specific development.

CapMan's objective is to improve results longer term, taking into account the seasonality affecting services and the Investment business. For these and other above-mentioned reasons, CapMan does not provide numeric estimates for 2017.

Items affecting comparability and alternative performance measures

CapMan uses alternative performance measures to denote the financial performance of its business and to improve the comparability between different periods. Alternative performance measures do not replace performance measures in accordance with the IFRS and are reported in addition to such measures. Alternative performance measures, as such are presented, are derived from performance measures as reported in accordance with the IFRS by adding or deducting the items affecting comparability and they will be nominated as adjusted.

Items affecting comparability are, among others, material items related to mergers and acquisitions or major development projects, material gains or losses related to the acquisition or disposals of business units, material gains or losses related to the acquisition or disposal of intangible assets, material expenses related to decisions by authorities and material gains or losses related to reassessment of potential repayment risk to the funds.

MEUR 1-9/17 1-9/16
Operating profit 22.9 10.0
Items affecting comparability
Items related to the acquisition of Norvestia, of which: 0.9 0.2
transaction costs 0.2 0.2
integration related costs 0.7
Write-down of a value-added tax receivable 1.0
Insurance compensations -0.3
Items affecting comparability, total 0.9 0.9
Adjusted operating profit 23.8 10.9
Profit for the period 18.7 7.1
Items affecting comparability
Items related to the acquisition of Norvestia 0.8 0.2
Write-down of a value-added tax receivable 1.3
Insurance compensations -0.2
Items affecting comparability, total 0.8 1.2
Adjusted profit for the period 19.5 8.3
Earnings per share, cents 12.6 7.4
Items affecting comparability, cents 0.6 1.4
Adjusted earnings per share, cents 13.2 8.8
Earnings per share, diluted, cents 12.4 7.3
Items affecting comparability, cents 0.7 1.4
Adjusted earnings per share, diluted, cents 13.1 8.7

Press, analyst and investor conference today at 10.00 a.m. EET

CapMan's management will present the result for the review period to press, analysts and investors and review the market situation in a press conference to be held at 10.00 a.m. EET at CapMan's head office in Helsinki, address Ludviginkatu 6, 00130 Helsinki. The press and analyst conference will be held in Finnish. To join the conference, please register with katariina.kataja@capman.com. Welcome!

Helsinki, 2 November 2017
CAPMAN PLC
Board of Directors

Further information:
Niko Haavisto, CFO, tel. +358 50 465 4125

Distribution:
NASDAQ Helsinki Ltd
Principal media
www.capman.com

Appendix: CapMan Plc 1 January-30 September Interim Report 2017

CapMan www.capman.com
CapMan is a leading Nordic investment and specialised asset management company. As one of the Nordic private equity pioneers we have actively developed hundreds of companies and real estate and thereby created substantial value in these businesses and assets over the last 28 years. CapMan has today 110 private equity professionals and manages €2.7 billion in assets. We mainly manage the assets of our customers, the investors, but also make direct investments from our own balance sheet in areas without an active fund. Our objective is to provide attractive returns and innovative solutions to investors and value adding services to professional investment partnerships, growth-oriented companies and tenants. Our current investment strategies cover Buyout, Growth Equity, Real Estate, Russia, Credit, Infrastructure and Tactical Opportunities. We also have a growing service business that currently includes fundraising advisory, procurement activities and fund management.

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