CapMan Plc's Interim Report 1 January - 31 March 2018

CapMan Plc Interim Report 26 April 2018 at 8.30 a.m. EEST

CapMan Plc's Interim Report 1 January - 31 March 2018

Performance and main events for the review period 1 January - 31 March 2018:

  • Group turnover was MEUR 8.5 (MEUR 7.5 1 January -31 March 2017).
  • Operating profit was MEUR 4.1 (MEUR 10.5).
  • Profit for the period was MEUR 3.3 (MEUR 9.1).
  • Diluted earnings per share for the period were 2.3 cents (5.9 cents, of which the sale of Idean in Q1 2017 had an impact of 5,2 cents).
  • CapMan Buyout portfolio company Harvia Plc was listed on Nasdaq Helsinki stock exchange in March and portfolio company Walki was sold in April after the review period.
  • CapMan issued notes in the principal amount of EUR 50 million after the review period in April.

This stock exchange release is a summary of CapMan Plc's Interim Report 1 January - 31 March 2018. 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

MEUR 1-3/18 1-3/17
Turnover 8.5 7.5
Operating profit 4.1 10.5
Items affecting comparability
Costs related to the integration of Norvestia - 0.4
Adjusted operating profit 4.1 10.9
Profit for the period 3.3 9.1
Items affecting comparability
Costs related to the integration of Norvestia - 0.3
Adjusted profit for the period 3.3 9.4
Earnings per share, cents 2.3 6.0
Items affecting comparability, cents - 0.2
Adjusted earnings per share, cents 2.3 6.2
Earnings per share, diluted, cents 2.3 5.9
Items affecting comparability, cents - 0.2
Adjusted earnings per share, diluted, cents 2.3 6.1
31.3.2018 31.3.2017
Return on equity, % p.a. 11.2 27.6
Return on investment, % p.a. 9.6 21.4
Equity ratio, % 57.6 53.1
Net gearing, % 23.1 18.2

Joakim Frimodig, CEO:

"The first quarter of 2018 developed positively in all our business areas. I am pleased to note that our recent growth enhacing iniatives are already being reflected in our financial result, although the implementation of our long-term strategy is still in an early stage.

The fees from our Management Company business grew by 10 per cent to MEUR 5.8. This growth is largely attributable to the management fees from the new real estate and private equity funds. Meanwhile, we managed to keep our costs under control, thanks to which the segment's operating profit almost doubled from the previous year, amounting to MEUR 0.8. In accordance with our strategic objectives, our aim is to increase our management fees by more than 10 per cent in 2018. The increase in management fees, combined with moderate and well-targeted investments in to growth, will improve the segment's profitability.

Our service business continued to grow strongly and profitably. In Q1, the turnover from services increased to MEUR 1.4, which is 35 per cent more compared to the corresponding period last year. The increase was, to a large extend, fuelled by the excellent sales volumes of CaPS. The segment's operating profit more than doubled from the previous year, amounting to MEUR 0.6. The first quarter did not include any notable success fees from the fundraising services, but success fees can be expected in the following quarters. Our service business will continue its profitable growth in 2018.

Our investment business grew strongly, particularly with regard to our own funds. Our own fund investments yielded a good annualized return, almost 15 per cent, which was largely due to our successful exit from Walki. The listing of the Buyout portfolio company Harvia was also carried out during the period under review. We expect more exits from our portfolio companies in the near future. Our market portfolio developed moderately despite of a difficult market environment, and its annualized return was approximately 4 per cent in Q1. After the review period, we have reduced the size of our market portfolio and, as we announced earlier, we aim to allocate funds from our market portfolio to our new products in 2018 and 2019. The operating profit from our investment business was MEUR 3.2 in the first quarter. The operating profit was nearly three times higher compared to the same period last year, excluding the notable one-time effect of the Idean transaction in the first quarter of 2017.

Our financial costs decreased compared to corresponding period last year. This was affected by the MEUR 15 bond that were paid back last year. After the review period we also announced the issue of a new MEUR 50 bond, which was clearly oversubscribed as a result of the active demand. The new bond lengthens the average maturity of our debt portfolio significantly.

The fundraising project of CapMan Infra fund has started and our goal is to establish a Nordic, MEUR 300 fund. Along with the recent recruitments we have set up a strong team, which has versatile and international infrastructure expertise. We have also proceeded in mandate-based projects, which once actualized will generate long-term fee income for CapMan. I am convinced that the steps taken now will take us far to the future and have an important role in our growth strategy.

Our goal is to grow CapMan into a leading Nordic private asset manager with active approach to value-creation in its target companies. In order to achieve this goal, we will continue to work on new product and service solutions that complement our current offering in private equity and allow us to serve new investors and customer groups."

Financial objectives and outlook estimate for 2018

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 net interest-bearing 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 fluctuation on annual basis considering the nature of the business. CapMan expects fees from services to continue to grow and have an impact on results from the Management Company and Services business in 2018. Our objective is to improve the profitability of Management Company and Services business before carried interest income and any possible items affecting comparability.

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 annual fluctuations affecting the business. For these and other above-mentioned reasons, CapMan does not provide numeric estimates for 2018. Items affecting comparability are described in the Tables section of this report.

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 1-3/18 1-13/17
Management fees 5.6 5.0
Sale of services 1.6 1.4
Carried interest 0.1
Dividend and interest income from financial assets held for trading 1.1 1.1
Turnover, external 8.5 7.5
Turnover, internal
Other operating income 0.1 0.0
Personnel expenses, of which -4.7 -5.0
Salaries and bonuses -4.6 -5.0
Share-based payment -0.1 -0.1
Depreciation, amortisation and impairment -0.1 -0.1
Other operating expenses -2.2 -2.2
Fair value changes of investments 2.5 10.3
Operating profit 4.1 10.5
Items affecting comparability
Norvestia integration related costs 0.4
Items affecting comparability, total 0.4
Adjusted operating profit 4.1 10.9
Financial items -0.5 -0.9
Income taxes -0.2 -0.6
Profit for the period 3.3 9.1
Items affecting comparability
Norvestia integration related costs 0.3
Items affecting comparability, total 0.3
Adjusted profit for the period 3.3 9.4
Earnings per share, cents 2.3 6.0
Items affecting comparability, cents 0.2
Adjusted earnings per share, cents 2.3 6.2


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

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. EEST 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, 26 April 2018

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 - 31 March Interim Report 2018

CapMan www.capman.com


CapMan is a leading Nordic private asset expert with an active approach to value-creation in its target companies and assets. We offer a wide selection of investment products and services. As one of the Nordic private equity pioneers we have developed hundreds of companies and real estate and created substantial value in these businesses and assets over the last 28 years. CapMan has today 115 private equity professionals and manages approximately €2.8 billion in assets under management. We mainly manage the assets of our customers, the investors, but also make investments from our own balance sheet. Our objective is to provide attractive returns and innovative solutions to investors. Our current investment strategies cover Real Estate, Buyout, Russia, Credit, Growth Equity and Infrastructure. We also have a growing service business that currently includes procurement services (CaPS), fundraising advisory (Scala Fund Advisory), and fund management services.

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