CapMan Plc 1–9 2020 Interim Report

October 29, 2020

CapMan Plc Stock Exchange Release / 1-9 2020 Interim Report
29 October 2020 at 8:30 a.m. EET

CapMan Plc 1–9 2020 Interim Report

Results and significant events in January–September 2020:

  • Group turnover was MEUR 29.6 1 Jan–30 Sep 2020 (MEUR 32.4
  • 1 Jan–30 Sep 2019), a decrease of 9 per cent from the comparison period.
  • Management Company business turnover was MEUR 20.7 (MEUR 19.8), growth was 5 per cent from the comparison period, and operating profit MEUR 5.5 (MEUR 3.6). Management fees were MEUR 19.2 (MEUR 17.4), growth was 10 per cent.
  • Service business turnover was MEUR 8.8 (MEUR 12.5), decrease was 30 per cent from the comparison period, and operating profit MEUR 4.1 (MEUR 8.2).
  • Investment business operating profit was MEUR -3.1 (MEUR 8.1) due to fair value changes of own investments.
  • Operating profit was MEUR 2.6 (MEUR 16.0).
  • Diluted earnings per share were -1.1 cents (6.8 cents).
  • CapMan Nordic Real Estate III fund held a first closing at MEUR 313. The fund’s target size is MEUR 500 and fundraising for the fund continues.
  • CapMan Growth II fund exceeded its target size and has raised MEUR 88 to date.

This stock exchange release is a summary of CapMan Plc’s 1–9 2020 Interim Report. 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:

”We continued to advance our business in the third quarter of 2020. This year, we have completed several new growth and development initiatives that support our chosen strategic direction and help build a foundation for growing results in the coming years. Our fee-based profitability was on a good level and the impact of recurring fees to our earnings mix is growing. The fair values of our fund investments have continued to develop positively in the third quarter following the decrease brought on by the Covid-19 pandemic in the beginning of the spring.

Our Management Company business grew by 5 per cent following new products and funds under management. The operating profit of the Management Company business was MEUR 5.5, growing by more than 50 per cent from the comparison period due to both growth in fees and improved cost efficiency. During the third quarter, we raised almost MEUR 500 in new capital under management, which increased by approx. 15 per cent from the end of the second quarter. We raised MEUR 313 for the first closing of the CapMan Nordic Real Estate fund and expanded the BVK mandate by MEUR 70. In addition, we increased the size of the CapMan Growth II fund and commitments to the fund have exceeded the target size of MEUR 85. These and other fundraising projects continue, and new capital raised will impact turnover and results in full starting from next year.

Our Service business turnover fell by 30 per cent in the review period compared to last year due to lower transaction-based services in all services areas during the second and third quarter of the year. The market situation following the Covid-19 pandemic provided a backdrop to the lower transaction activity. In comparison, recurring service fees grew well by over 10 per cent in total from the corresponding period last year. We have continued to develop our services and created new business. Our procurement service CaPS has expanded to the Baltcis and investor reporting and analytics company JAY Solutions demonstrated continued strong growth of its customer base. We are also launching a new strategy and wealth advisory operations for the CapMan Wealth Services business. These new initiatives will help build a stronger Service business starting from next year when we also expect growth in transaction-based services. The Service business operating profit was MEUR 4.1 in January–September 2020.

Fair value changes of our own investments form a significant portion of CapMan’s results and account for variability in our earnings model to a large extent. Our reported fair values increased by MEUR 2.6 in the third quarter of the year as valuations continued to correct upward for the second quarter in a row following the steep decline in the early spring. The decrease in fair value of our own investments was as such MEUR 2.6 for the first nine months of the year.

Despite the disturbance brought on by the Covid-19 pandemic, we have successfully maintained our course in developing and growing our business. Results have developed in the right direction in the latest two quarters, fee-based profitability is at a good level and our recurring income grows steadily. Measures taken now build earnings growth for the coming years, including carried interest and return from own investments. Our objective is to pay an annually increasing dividend to our shareholders.”

Financial objectives

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

The combined growth objective for the Management Company and Service businesses 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 maintains its outlook estimate for 2020

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 2020. Our objective is to improve the aggregate profitability of Management Company and Service businesses before carried interest income and any possible items affecting comparability.

Carried interest income from funds managed by CapMan and the return on CapMan’s investments have a substantial impact on CapMan’s overall result. In addition to portfolio company and asset-specific development and exits from portfolio companies and assets, various factors outside of the portfolio’s and CapMan’s control influence fair value development of CapMan’s overall investments as well as the magnitude and timing of carried interest.

CapMan’s objective is to improve results in the longer term, taking into consideration annual fluctuations related to the nature of the business. For these and other above-mentioned reasons, CapMan does not provide numeric estimates for 2020.

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

Key figures

MEUR 1-9/20 1-9/19
Operating loss (profit) 2.6 16.0
Items affecting comparability
Acquisition related costs 1.1
Donations 0.3
Items affecting comparability, total 1.4
Adjusted operating loss (profit) 2.6 17.4
Result for the period -0.9 12.3
Items affecting comparability
Acquisition related costs 1.0
Donations 0.3
Items affecting comparability, total 1.3
Adjusted result for the period -0.9 13.6
Earnings per share, cents -1.1 6.9
Items affecting comparability, cents 0.8
Adjusted earnings per share, cents -1.1 7.7
Earnings per share, diluted, cents -1.1 6.8
Items affecting comparability, cents 0.8
Adjusted earnings per share, diluted, cents -1.1 7.6
% 30.9.20 30.9.19
Return on equity, % -1.1 13.3
Return on equity, comparable, % -1.1 14.8
Equity ratio, % 52.0 59.9

Result webcast today at 10.00 a.m. EET

CapMan’s management will present the result for the review period in a webcast to be held at 10.00 a.m. EET. Please access the webcast at https://capman.videosync.fi/2020-q3-results. The conference will be held in English. A replay of the webcast will be available on the company’s website after the event. Due to the ongoing Covid-19 pandemic, CapMan will not arrange an in-person conference.

Helsinki, 29 October 2020

CAPMAN PLC
Board of Directors

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

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

Appendix: CapMan Plc 1-9 2020 Interim Report

About CapMan

CapMan is a leading Nordic private asset expert with an active approach to value creation. 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 assets and created substantial value in these businesses and assets over the past 30 years. With over €3.5 billion in assets under management, our objective is to provide attractive returns and innovative solutions to investors. We have a broad presence in the unlisted market through our local and specialised teams. Our investment strategies cover Private Equity, Real Estate and Infra. We also have a growing service business that includes procurement services, fundraising advisory, and analysis, reporting and wealth management services. Altogether, CapMan employs around 150 people in Helsinki, Stockholm, Copenhagen, London and Luxembourg. We are a public company listed on Nasdaq Helsinki since 2001 and a signatory of the UN Principles for Responsible Investment (PRI) since 2012. Read more at www.capman.com.