CapMan Plc 2018 Financial Statements Bulletin – Significant strategic projects were completed

January 31, 2019

CapMan Plc 2018 Financial Statements Bulletin  31 January 2019 at 8.30 a.m. EET

CapMan Plc 2018 Financial Statements Bulletin – Significant strategic projects were completed

Performance and main events:

  • Group turnover was MEUR 36.0 1 Jan–31 Dec 2018 (MEUR 34.8 1 Jan–31 Dec 2017).
  • Management fees and fees from services were MEUR 32.5 combined (MEUR 26.7), growth was 22 per cent.
  • Change in fair value of investments was MEUR 5.1 (MEUR 17.6). Developments in the trading portfolio had a MEUR 5.7 negative impact on fair values in the last quarter of the year.
  • Operating profit was MEUR 12.0 (MEUR 19.5).
  • Profit for the period after taxes was MEUR 8.5 (MEUR 15.5).
  • Diluted earnings per share for the period were 5.4 cents (10.2 cents).
  • CapMan Real Estate’s investment mandate from BVK increased to MEUR 820 in the end of 2018. The mandate is fully invested.
  • CapMan Infra fund held a second close of MEUR 141 in the end of 2018.
  • CapMan has today announced an acquisition of 60 per cent of JAM Advisors, a reporting, analysis and wealth management firm.
  • CapMan’s Board of Directors proposes a dividend of EUR 0.12 per share for 2018 to be distributed to shareholders.

This stock exchange release is a summary of CapMan Plc’s 2018 Financial Statements Bulletin. 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/shareholders/financial-reports/ .

Joakim Frimodig, CEO:

”Our core business developed strongly in 2018. Fees from fund and investment management and services grew by 22 per cent in 2018. The growth will continue strong in 2019. Since October 2018, we have raised more than MEUR 400 new capital under management. This new capital will contribute over MEUR 4 in fee income to CapMan annually, in full already in 2019. The growth of our service business will also continue strong.

Fee-based profitability was more than MEUR 6 in 2018, growing more than 100 per cent from 2017. We expect this positive trend to continue in 2019 following growth in management fees and continued good cost efficiency. Stronger fee-based profitability enables us to smooth out fluctuations in profitability and improve the predictability of our business.

We expand our product and service portfolio in line with our strategy and strengthen our distribution. Significant projects completed in the last few months support these objectives:

Our infrastructure fund was established in October and had raised more than MEUR 140 in equity commitments by the end of the year. Fundraising continues as planned in 2019. There is international interest in investing in Nordic infrastructure and we are among the frontrunners in bringing products that specialise in this strategy to market;

We completed two significant mandate-based real estate and infrastructure deals in December and January to large international investors: German BVK and Korean NHIS and NH-Amundi. The mandates demonstrate CapMan’s ability to serve international investors in a flexible manner parallel with traditional fund-based products;

We have today announced an acquisition of JAM Advisors, a Finnish company providing reporting, analytics and wealth management services. The acquisition supports our objective to develop specialised, high value-add services, while expanding our customer networks. CapMan’s objective is to grow JAM’s services significantly and scale up its commercial operations in full. We also seek to offer select private assets products to JAM’s customer base in addition to the existing service portfolio.

Despite the positive developments in the Management Company and Services businesses, the general weak development of the capital markets in the last few months of the year had a negative impact on the fair value of our trading portfolio, and by extension on the fourth quarter result for the Group. We have sold more than MEUR 35 (net) in shares and other market instruments from our trading portfolio and invested proceeds mainly in our own new products in accordance with our strategy. Market investments are not part of CapMan’s core business, and we aim to continue reducing the trading portfolio during 2019. Investments into own funds and products have performed well, returning approx. 10 per cent in 2018.

CapMan’s Board of Directors proposes that a dividend of EUR 0.12 per share to be paid. CapMan’s growing business, strong balance sheet and significant liquid and distributable earnings support our long-term objective to distribute an annually growing dividend to our shareholders.”

Financial objectives and outlook estimate for 2019

CapMan’s objective is to pay an annually increasing dividend to its shareholders.

The combined growth objective for Management Company and Service 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. CapMan’s equity ratio target is more than 60 per cent.

CapMan expects to achieve these financial objectives gradually and key figures are expected to show fluctuation on an annual basis considering the nature of the business. CapMan expects management fees and fees from services to continue growing in aggregate in 2019. Our objective is to improve the aggregate profitability of Management Company and Service businesses 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, market instrument and inflation development, valuation multiples of peer companies, exchange rates and various other factors outside of CapMan’s control, as well as the combined effect of the aforementioned factors, influence fair value development of CapMan’s overall investments in addition to portfolio company and asset-specific development.

CapMan’s objective is to improve results in the longer term, taking into account annual fluctuations affecting the business. For these and other above-mentioned reasons, CapMan does not provide numeric estimates for 2019.

Items affecting comparability are described in the Tables section of this report.

Key figures

MEUR 1-12/18 1-12/17
Operating profit 12.0 19.5
Items affecting comparability
Items related to the acquisition of Norvestia, of which:
transaction costs 0.6
integration related costs 1.2
Reassessment of potential repayment risk to the funds 0.1
Reorganization costs 1.0
Impairment of goodwill 1.5
Items affecting comparability, total 4.4
Adjusted operating profit 12.0 23.9
Profit for the period 8.5 15.5
Items affecting comparability
Items related to the acquisition of Norvestia 1.7
Reassessment of potential repayment risk to the funds 0.1
Reorganization costs 0.8
Impairment of goodwill 1.5
Items affecting comparability, total 4.0
Adjusted profit for the period 8.5 19.5
Earnings per share, cents 5.5 10.4
Items affecting comparability, cents 2.8
Adjusted earnings per share, cents 5.5 13.1
Earnings per share, diluted, cents 5.4 10.2
Items affecting comparability, cents 2.7
Adjusted earnings per share, diluted, cents 5.4 13.0

 

31.12.18 31.12.17
Return on equity, % 6.5 11.5
Equity ratio, % 58.7 60.0

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

CapMan’s management will present the result for the review period to press, analysts and institutional investors 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. To join the conference in person, please register with linda.tierala@capman.com. The conference is also accessible over a live webcast at https://capman.videosync.fi/2018-financial-statement. The conference will be held in English. A replay of the webcast will be available on the company’s website after the event. Welcome!

Helsinki, 31 January 2019

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-2018-FSB-31012019

CapMan
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 30 years. CapMan employs today approximately 120 private equity professionals and has approximately €3 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 Buyout, Growth, Real Estate, Infra, Credit and Russia. We also have a growing service business that currently includes procurement services (CaPS), fundraising advisory (Scala Fund Advisory), and fund management services. www.capman.com