CapMan Plc's Half-Year Financial Report 1 January - 30 June 2018

CapMan Plc Half-Year Financial Report 2018 9 August 2018 at 8.30 a.m. EEST

CapMan Plc's Half-Year Financial Report 1 January - 30 June 2018

Performance and main events for the review period 1 January - 30 June 2018:

  • Group turnover was MEUR 19.9 (MEUR 16.6 1 January -30 June 2017).
  • Operating profit was MEUR 10.1 (MEUR 17.8).
  • Profit for the period after taxes was MEUR 7.6 (MEUR 14.8).
  • Diluted earnings per share for the period were 4.8 cents (9.8 cents, of which the sale of Idean in Q1 2017 had an impact of 5.2 cents).
  • In May, CapMan Infra completed its first EUR 70 million investment into Elenia and launched a EUR 300 million fundraising.
  • In May, CapMan announced that the renewed management group of CapMan had invested approximately MEUR 1.6 of their personal funds in to CapMan shares.
  • CapMan announced a new dividend policy and updated long-term financial objectives after the review period.

This stock exchange release is a summary of CapMan Plc's Half-Year Financial report 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 1-6/18 1-6/17
Operating profit 10.1 17.8
Items affecting comparability
Items related to the acquisition of Norvestia, of which: 0.5
transaction costs 0.1
integration related costs 0.4
Items affecting comparability, total 0.5
Adjusted operating profit 10.1 18.3
Profit for the period 7.6 14.8
Items affecting comparability
Items related to the acquisition of Norvestia 0.4
Items affecting comparability, total 0.4
Adjusted profit for the period 7.6 15.3
Earnings per share, cents 4.8 9.9
Items affecting comparability, cents 0.3
Adjusted earnings per share, cents 4.8 10.2
Earnings per share, diluted, cents 4.8 9.8
Items affecting comparability, cents 0.3
Adjusted earnings per share, diluted, cents 4.8 10.1

30.6.2018 30.6.2017
Return on equity, % p.a. 11.4 22.1
Return on investment, % p.a. 11.4 17.8
Equity ratio, % 58.4 55.4
Net gearing, % 25.1 25.0

Joakim Frimodig, CEO:

"CapMan is back on the growth track. This is demonstrated by approximately 30% growth in the fee income for the Management Company and Service businesses during the first half of 2018. It is especially positive to notice that our fee based profitability increased even more; combined operating profit for the Management Company and Service businesses reached MEUR 4.5, which is almost three times the figure in the corresponding period last year. The growth comes from fees of our new private equity and real estate funds and in particular from our Service business where we saw continued strong growth in fee income and significant success fees recorded in the review period.

The good activity in the Investment business continued and the operating profit for the first half of 2018 reached MEUR 6.6. The net cash flow from investments was strong due to completed exits. In our Buyout business, we have completed six successful exits during the last eight months, with more exits expected during the rest of the year. We have also made new investments in the beginning of the year 2018; CapMan Growth Equity invested into two rapidly growing Finnish companies and CapMan Real Estate completed eight deals across the Nordics. Our market portfolio developed favourably. We reduced the size of our market portfolio by approximately MEUR 20 and these assets were allocated mainly to our own, new funds.

Our strategic growth initiatives progress according to plan. The previously announced fundraising of Infra is proceeding well and we expect the first closing to take place during 2018. In the Infra business we also completed a mandate based project where CapMan Infra lead a Finnish investor consortium to invest EUR 70 million in the electricity network company Elenia. We work on new mandate-based projects, which once actualized will generate stable and long-term fee income for CapMan. In addition to this, we are developing new investment products and analysing opportunities to strengthen our distribution channels.

Today we announced a new dividend policy and updated long-term financial objectives for CapMan. With the new dividend policy, CapMan wants to be an even better dividend payer than before, where the objective is to pay an annually increasing dividend. This objective is supported by the company's strong financial position and solid balance sheet. We have increased the dividend per share every year since 2012.

During the review period we announced our management group's significant investment in CapMan shares. I am proud that the renewed management group shows such a strong commitment to our common goal to increase the shareholder value of CapMan."

Financial objectives and outlook estimate for 2018

CapMan announced a new dividend policy and updated long-term financial objectives after the review period.

The company's objective is to pay an annually increasing dividend to its shareholders. Previously, CapMan's objective was to pay at least 75 per cent of earnings per share as dividend.

The combined growth objective for Management Company and Service business is more than 10 per cent p.a. on average. The return on equity is more than 20 per cent p.a. on average. These objectives remain unchanged. According to the company's new financial objective the equity ratio target is more than 60 per cent. Previously, CapMan's objective for net gearing was a maximum of 40 per cent on average.

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 Service business in 2018. Our objective is to improve the profitability of Management Company and Service 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 1-6/18 1-6/17
Management fees

Service fees

Carried interest income

Dividend and interest income from financial assets held for trading

Turnover



Other operating income



Personnel expenses, of which

Salaries and bonuses

Share-based payment

Depreciation, amortisation and impairment

Other operating expenses

Fair value changes of investments



Operating profit

Items affecting comparability

Norvestia acquisition related costs

Norvestia integration related costs

Items affecting comparability, total

Adjusted operating profit



Financial items

Income taxes



Profit for the period

Items affecting comparability

Norvestia acquisition related costs

Norvestia integration related costs

Items affecting comparability, total

Adjusted profit for the period


Earnings per share, cents

Items affecting comparability, cents

Adjusted earnings per share, cents


Earnings per share, diluted, cents

Items affecting comparability, cents

Adjusted earnings per share, diluted, cents
11.4

5.7

0.7

2.1


19.9


0.0



-10.2

-9.9

-0.3

-0.1

-4.8

5.2



10.1









10.1


-1.5

-1.0



7.6









7.6




4.8





4.8


4.8




4.8
9.7

3.5



3.4


16.6


0.0



-10.0

-9.9

-0.1

-0.1

-4.6

15.9



17.8



0.1

0.4

0.5

18.3


1.7

-1.2



14.8


0.1

0.3

0.4


15.3




9.9

0.3

10.2


9.8

0.3

10.1

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, 9 August 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 - 30 June Half-Year Financial 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 approximately 120 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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