CapMan Oyj

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CapMan complies with all of the recommendations of the Code. This Corporate Governance Statement (the “Statement”) has been prepared in compliance with the Code’s Corporate Governance reporting guidelines, it has been reviewed by the Audit and Risk Committee of CapMan’s Board of Directors (the “Board”) and it is issued separately from the report by the Board. CapMan’s corporate governance model also follows the Finnish laws, the Articles of Association of the company and the rules and directions of Nasdaq Helsinki Ltd. The Code is publicly available on the website of the Securities Market Association at www.cgfinland.fi/en. For further information regarding CapMan’s corporate governance, please visit the company’s website at capman.com/shareholders/governance/.. 1. CapMan’s governance model CapMan is a Finnish public limited liability company headquar- tered in Helsinki, Finland. The parent company CapMan Plc and its subsidiaries form CapMan group. CapMan’s shares are publicly listed in Nasdaq Helsinki. CapMan’s governance model consists of the General Meeting of shareholders, the Board of Directors and the CEO. In the operative management of the company the CEO is supported by the management group. 2. General Meeting of the shareholders and the Articles of Association The highest decision-making power at CapMan is held by the General Meeting of shareholders. Among other things, the General Meeting adopts the financial statements, decides on distribution of assets based on the proposal of the Board, elects the members of the Board and the auditor, decides on the discharge from liability and on amendments to the Articles of Association. The notice to the General Meeting, the documents to be presented and the proposals for the General Meeting are published on the company’s website and, if needed, as a stock exchange release three weeks prior to the General Meeting at the latest. In 2023, CapMan’s Annual General Meeting (AGM) was held on 15 March in Helsinki. In total 126 shareholders representing approximately 32 % of the registered share capital and voting rights attended the meeting in person or by voting in advance. The decisions are available on the company’s website at https://www. capman.com/shareholders/general-meetings/. CapMan’s Articles of Association and material related to the General Meeting are available on the company’s website at the address: capman.com/shareholders/governance/. . 3. Shareholders’ Nomination Board CapMan Plc’s 2018 AGM decided to establish a Shareholders’ Nomination Board to prepare proposals concerning the election and remuneration of the members of the Board to the General Meeting. The AGM also adopted a Charter for the Nomination Board. The Shareholders’ Nomination Board shall serve until further notice. The term of office of the members of the Shareholders’ Nomination Board expires annually after the new Shareholders’ Nomination Board has been nominated. The Shareholders’ Nomination Board consists of representatives nominated by the four largest shareholders of the company and the Chairman of CapMan Plc’s Board, serving as an expert member. As an expert member the Chairman of the Board of CapMan Plc does not take part in the decision-making of the Shareholders’ Nomination Board. The following members were nominated to the Shareholders’ Nomination Board in September 2023: Stefan Björkman (Managing Director of Föreningen Konstsamfundet r.f., representative of Silvertärnan Ab) (Chairman of the Nomination Board), Mikko Mursula (Chief Investment Officer of Ilmarinen Mutual Pension Insurance Company), Mikko Kalervo Laakkonen and Erkka Kohonen (Senior Portfolio Manager, Varma Mutual Pension Insurance Company). Additionally, Joakim Frimodig, the Chairman of the Board of CapMan Plc, served as the expert member on the Shareholders’ Nomination Board. The Nomination Board convened three times in 2023. The Nomination Board discussed, in particular, the size, composition and diversity of the Board and the areas of expertise that are deemed most beneficial for the company. The Nomination Board also reviewed the remuneration of the Board and gave its proposals to the Annual General Meeting on 2 February 2023. The proposals were included in the notice to the Annual General ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 15 significant shareholders. The Board made an assessment on the independence of the Board members in its organisational meeting on 15 March 2023. According to the assessment Johan Bygge, Catarina Fagerholm, Mammu Kaario, Olli Liitola and Andreas Tallberg were independent of both the company and its significant shareholders. Joakim Frimodig was non-independent of the company due to his CEO position in the company during the past 3 years. Joakim Frimodig and Johan Hammarén were non-independent of the company’s significant shareholder due to their memberships in the Board of Directors of Silvertärnan Ab, which is a significant shareholder of the company. Shares and share-based rights of each Board member and corporations over which he/she exercises control in the company and its group companies are presented in the first table in this statement. 4.4 Duties and responsibilities of the Board Under the Finnish Companies Act and CapMan’s Articles of As- sociation, the Board is responsible for the administration of the company and the proper organisation of its operations. The Board is also responsible for the appropriate arrangement of the con- trols of the company’s accounts and finances. One of the Board’s key tasks is to approve, and monitor the progress of, the strategic goals, including linking those to sustainability targets. The Board has confirmed a written charter for its work, which describes the main tasks and duties, working principles and meeting practices of the Board, and an annual self-evaluation of the Board’s opera- tions and working methods. In accordance with the charter, the main duties of the Board were: • to convene the General Meetings of shareholders • to appoint and dismiss the CEO • to supervise the management of the company and Mammu Kaario as Vice Chair. Joakim Frimodig serves as a full-time Chair of the Board, and his duties include execution of CapMan’s business strategy together with the CEO, especially in relation to significant growth initiatives and M&A transactions. The biographical details of the Board members are presented in the first table in this statement. 4.2 Diversity of the Board of Directors The Shareholders’ Nomination Board shall take into account the Board’s diversity principles and independence requirements set forth in the Code when preparing the proposal on the Board composition to the shareholders’ meeting. The company values that its Board members’ have diverse backgrounds taking into account the competencies that are relevant for CapMan’s business, such as know-how of the financial sector. The aim is that the Board consists of representatives of both genders and different age groups, that the Board members have versatile educational and professional backgrounds and that the Board of Directors as a whole has sufficient experience on an international operating environment. The company considers that the composition of its Board is in its current form sufficiently aligned with the objectives set for the diversity of the Board composition. In 2023 both genders were represented in the Board (33 % women, 67 % men), the members were between 45 and 67 years of age, their educational backgrounds were relevant to the company’s operations, and they had experience on both international and local operating environments. The Shareholders’ Nomination Board does not specifically review the inclusion of under-represented social groups. 4.3 Independence of the Board members The majority of the Board must be independent from the company. At least two of the members that are independent from the company shall also be independent of the company’s Meeting, which was published as a stock exchange release. The Charter of the Shareholders’ Nomination Board is available on CapMan’s website capman.com/shareholders/governance/ nomination-board/ 4. Board of Directors 4.1 Composition of the Board of Directors All members of the Board are elected yearly by the Annual General Meeting. There is no specific order for the appointment of Board members in the Articles of Association. According to the Articles of Association, the Board comprises at least three and at most nine members, who do not have deputies. Members are elected for a term of office, which starts at the close of the Annual General Meeting at which they were elected and ends at the close of the Annual General Meeting following their election. The Board elects a Chair and a Vice Chair from among its members. The Shareholders’ Nomination Board makes the proposals on the composition of the Board and the remuneration for the Board and Committee Members to the Annual General Meeting. The Shareholders’ Nomination Board’s proposals are typically published as a separate stock exchange release and are also included in the notice to convene the Annual General Meeting. Board members’ competencies relevant to the impacts of the organisation are partly reported through disclosures of Board members’ backgrounds and stakeholder representation is reported through the disclosures and independence evaluation of the Board members. The Annual General Meeting held on 15 March 2023 elected six members to the Board of Directors. Mr. Johan Bygge, Ms. Catarina Fagerholm, Ms. Mammu Kaario, Mr. Olli Liitola and Mr. Johan Hammarén were re-elected to the Board and Mr. Joakim Frimodig was elected as a new member of the Board. Mr. Andreas Tallberg had announced that he was not available for re-election. At its organisational meeting on 15 March 2023, the Board elected from among its members Joakim Frimodig as its Chair ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 16 • to approve strategic and financial objectives • to approve the budget • to decide on the establishment of new CapMan funds and the level of CapMan’s own commitments therein • to decide on fund investments to other than CapMan funds and direct investments exceeding EUR 5 million • to decide on major changes in the business portfolio • to ensure that the company has a proper organisation • to ensure the proper operation of the management system • to approve annual financial statements and interim reports • to ensure that the supervision of the accounting and financial management is properly organised • to ensure that there are appropriate arrangements in place to secure that the business complies with applicable rules and regulations • to approve the key principles of corporate governance, internal control, risk management as well as other essential policies and practices • to decide on the CEO’s remuneration as well as on the remuneration policy of other executives and CapMan’s key employees • to confirm the central duties and operating principles of the Board committees The Chair of the Board ensures and monitors that the Board fulfils the tasks appointed to it under legislation and by the com- pany’s Articles of Association. 4.5 Work of the Board in 2023 In 2023, the Board of Directors met eight times. The Board had seven meetings in the composition as elected by the 2023 AGM and one meeting in the composition as elected by the 2022 AGM. The Board evaluates its work, including sustainability matters, annually. The evaluation is generally conducted as an internal self- evaluation. Where deemed appropriate, external consultants may be used in the evaluation. The first table in this statement presents Board members’ at- tendance at the meetings in 2023. 5. Board Committees The Board may establish Committees to ensure efficient preparation of the matters under its responsibility. The Committees are established, and their members are elected from among the members of the Board in the Board’s organisational meeting to be held after the AGM for the same term as the Board. The Committees shall consist of at least three members. The charters for each committee shall be confirmed by the Board. The Chairs of the committees report to the following Board meeting on the topics discussed in the committee meetings. Also, the materials presented, and the minutes of the committee meetings are delivered to the Board for information. The committees generally do not have autonomous decision-making power, but the Board makes the decisions within its competence collectively. In its organisational meeting held on 15 March 2023, CapMan’s Board of Directors established an Audit and Risk Committee and Remuneration Committee. 5.1 Audit and Risk Committee The Audit and Risk Committee has been established to improve the efficient preparation of matters pertaining to financial reporting and controls. The duties of the Audit and Risk Committee included: • monitoring the financial position of the company • monitoring and assessment of the financial reporting process • monitoring and assessment of the company’s internal control and risk management systems and compliance processes • monitoring and assessment of the most significant financial and tax risks • review of the company’s Corporate Governance Statement • monitoring the statutory audit of the financial statements and consolidated financial statements • evaluating the independence of the statutory auditor or audit company, particularly the provision of related services • other communications with the auditor • preparing the proposal for resolution on the election of the auditor • defining the principles concerning the monitoring and assessment of related party transactions • monitoring and assessment of the processes and risks relating to IT security • evaluation of the use and presentation of alternative performance measures • monitoring and assessment of any special issues allocated by the Board and falling within the competence of the audit and risk committee. In addition, the Committee has introduced sustainability topics, including the review of the materiality assessment, in its agenda over the year following the company’s strategic objectives and agenda. The Board has in its organisational meeting on 15 March 2023 elected Mammu Kaario (Chair), Catarina Fagerholm and Johan Bygge as members of the Audit and Risk Committee. In 2023, the Committee convened five times. The table on this page presents the Committee members’ attendance at the meetings. All members of the Audit and Risk Committee were independent of the company and its significant shareholders. All members of the Audit and Risk Committee are experienced in demanding positions in financial administration and business management and they hold degrees suitable for Audit and Risk Committee members. ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 17 5.2 Remuneration Committee The Remuneration Committee has been established to improve the efficient preparation of matters pertaining to the remuneration of the CEO and the rest of the management group as well as the remuneration principles observed by the company. The main duties of the Remuneration Committee in accordance with the charter were to assist the Board by preparing the Board decisions concerning: • CEO remuneration • company’s executive remuneration principles and remuneration of individual executives as required • company’s overall principles for total compensation structure • Remuneration Policy and Report for the governing bodies. The Committee further contributed to: • securing the objectivity and transparency of the decision- making regarding remuneration issues in the company • systematic alignment of remuneration principles and practice with the company strategy and long-term and short-term goals (including sustainability goals) The Board has in its organisational meeting on 15 March 2023 elected Joakim Frimodig (Chair), Catarina Fagerholm and Olli Liitola as members of the Remuneration Committee. The Committee convened twice in in 2023. Both meetings were held with the composition elected by the Board in its organisational meeting in 2022. The table below on page 7 presents the Committee members’ attendance at the meetings. Catarina Fagerholm and Olli Liitola are independent of the company and its significant shareholders. Joakim Frimodig is not independent of the company or its significant shareholder. Further information on the independence of the Board members is available in section 4.3. Name Personal information Shares and share-based rights as of 31 Dec 2023 Attendance at the Board meetings Attendance at the Committee meetings Joakim Frimodig Chair of the Board since 2023 Member of the Board since 2023 Born: 1978 Education: BA (Oxon) Main occupation: Executive Chair of the Board of CapMan Plc Chair of the Remuneration Committee Expert member of the Shareholders’ Nomination Board Non-independent of the company and significant shareholder 1,159,168 7/7 Remuneration Committee: 0/0 Nomination Board: 2/2 Andreas Tallberg Chair of the Board since 2017 Member of the Board since 2017 Born: 1963 Education: M.Sc. (Econ.). Main occupation: CEO of Oy G.W. Sohlberg Ab Chair of the Remuneration Committee Expert member of the Shareholders’ Nomination Board Independent of the company and significant shareholders 11,530 1/1 Remuneration Committee: 2/2 Nomination Board: 1/1 Johan Bygge Member of the Board since 2021 Born: 1956 Education: BA (Econ.) Main occupation: Board professional Member of the Audit and Risk Committee Independent of the company and significant shareholders 28,500 8/8 Audit and Risk Committee: 5/5 Catarina Fagerholm Member of the Board since 2018 Born: 1963 Education: M. Sc. (Econ.) Main occupation: Board professional Member of the Audit and Risk Committee and Remuneration Committee Independent of the company and significant shareholders 73,011 8/8 Audit and Risk Committee: 5/5 Remuneration Committee: 2/2 Johan Hammarén Member of the Board since 2020 Born: 1969 Education: LL.M., Bachelor of Science (Econ.) Main occupation: Managing Director, Oy Hammarén & Co Ab, board professional Independent of the company and non-independent of the significant shareholder 0 8/8 Mammu Kaario Member of the Board since 2017 Born: 1963 Education: LL.M., MBA Main occupation: Board professional Chair of the Audit and Risk Committee Independent of the company and significant shareholders 38,071 8/8 Audit and Risk Committee: 5/5 Olli Liitola Member of the Board since 2019 Born: 1957 Education: M.Sc. (Tech.). Main occupation: Board professional Member of the Remuneration Committee Independent of the company and significant shareholders 750,000 8/8 Remuneration Committee: 2/2 Board of Directors in 2023 * A member and Chair of the Board as of the AGM held on 15 March 2023. ** A member and Chair of the Board until the AGM held on 15 March 2023 In addition, Andreas Tallberg’s controlling interest company Oy Nissala Ab and closely associated company Oy G.W. Sohlberg Ab, Johan Hammarén’s controlling interest company Oy Hammarén & Co, Olli Liitola’s controlling interest company Momea Invest Oy and Joakim Frimodig’s controlling interest company Boldhold Oy are minority owners in Silvertärnan Ab, which owns 14.3% of the shares in CapMan Plc. ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 18 6. Chief Executive Officer (CEO) Pia Kåll (born 1980, M.Sc. (Eng.)) was appointed as the CEO of CapMan as of 15 March 2023. In 2022, CapMan’s CEO was Joakim Frimodig (born 1978, BA (Oxon)) until 15 March 2023. Kåll’s and Frimodig’s shares and share-based rights and those of the companies over which they exercise control are presented in the table on this page. The Board elects the company’s CEO. The terms and conditions of the CEO’s service are specified in writing in the CEO’s service contract, which is approved by the Board. The CEO manages and supervises the company’s business operations according to the Finnish Companies Act and in compliance with the instructions and authorisations issued by the Board. The CEO shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner. Generally, the CEO is independently responsible for the operational activities of the company and for day-to-day decisions on business activities and the implementation of these deci- sions. The CEO appoints the heads of business areas. The Board approves the recruitment of the CEO’s immediate subordinates. The CEO cannot be elected as Chair of the Board. 7. Management Group The main tasks of the Management Group consist of (i) coordination of team strategy, fundraising, resources, sustainability as well as coordination of marketing and brand, (ii) implementation of decisions by the Board and the CEO/ Management Group, (iii) supporting decision-making through providing information and active participation, and (iv) sharing information within the teams and implementing decisions as agreed in the Management Group. The composition of the Management Group, responsibilities and the shares and share- based rights of the members of the Management Group and of the companies over which they exercise control in the end of the financial year of 2023 are presented in the table. Management Group in 2023 Name Responsibilities Personal information Shares and share-based rights on 31 Dec 2023 Pia Kåll CEO as of 15 March 2023, Head of CapMan Buyout until 15 March 2023 Born: 1980 Education: M.Sc. (Eng.) Shares: 274,025 Joakim Frimodig Until 15 March 2023 CEO Born: 1978 Education: BA (Oxon) Shares: 1,159,168 Anna Berglind Head of People and Culture Born: 1974 Education: M.Sc. (Soc.) Shares: 264,165 Atte Rissanen CFO Born: 1987 Education: M. Sc. (Econ.) Shares: 268,493 Heidi Sulin COO Born: 1979 Education: LL.M. Shares: 137,675 Christian Borgström Until 1 September 2023 Head of CapMan Wealth Services Born: 1971 Education: M.Sc. (Econ.) Shares: 843,000 Mika Koskinen As of 1 September 2023 Head of CapMan Wealth Services Born: 1967 Education: Lic.Sc. (Econ.) Shares: 0 Antti Kummu Head of CapMan Growth Equity Born: 1976 Education: M.Sc. (Econ.), CFA Shares: 59,744 Maximilian Marschan Head of CaPS Born: 1974 Education: M.Sc. (Econ.) Shares: 201,300 Mika Matikainen Head of CapMan Real Estate Born: 1975 Education: M. Sc. (Econ), M.Soc.Sc Shares: 186,525 Anna Olsson As of 15 March 2023 Head of Sustainability Born: 1982 Education: M.Soc.Sc. Shares: 40,000 Ville Poukka Head of CapMan Infra Born: 1981 Education: M.Sc. (Econ.) Shares: 277,296 Mari Simula Head of Fund Investor Relations Born: 1982 Education: M.Sc. (Tech.) Shares: 397,017 Antti Uusitalo As of 15 March 2023 Head of Special Situations Born: 1982 Education: M.Sc. (Econ.) Shares: 12,000 * In addition, Joakim Frimodig’s controlling interest company Boldhold Oy is a minority owner in Silvertärnan Ab, which owns 14.3% of all shares in CapMan Plc. ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 19 8. Internal control and risk management The aim of CapMan’s internal control and risk management is to ensure that the company’s operations are efficient, appropriate, reliable and in compliance with regulation, and that risks associated with the company’s business and objectives are identified and appropriately monitored and managed. The group’s internal control system is an essential part of the group’s management system and consists of organization structure, policies, processes, working instructions, allocation of tasks and responsibilities, approval authorizations, manual and automated controls, monitoring reports and reviews. The Board and the CEO are responsible for the internal control and the risk management but the internal control is conducted on all levels of the organization, in all business and support functions. Each employee is individually responsible for the compliance of policies and instructions and for reporting the faults and malpractice to his/her supervisor or other designated persons. 9. Internal control and risk management pertaining to the financial reporting The internal control and risk management pertaining to the financial reporting process is part of CapMan’s overall internal control framework. The key roles and responsibilities for internal control and risk management have been defined in the group’s internal guidelines which are approved and updated by the management and/or the Board of Directors of the company. CapMan’s internal control and risk management concerning financial reporting is designed to provide, inter alia, reasonable assurance concerning the reliability, comprehensiveness and timeliness of the financial reporting and the preparation of financial statements in accordance with applicable laws and regulations, generally accepted accounting principles and other requirements for listed companies. The objective is also to promote good corporate governance and risk management practices and to ensure the compliance with laws, regulation and CapMan’s internal policies. 9.1 General description of the financial reporting process CapMan’s operating model is based on having a local presence in Finland, Sweden, Denmark, Norway, Estonia, Luxembourg and the UK, and operating the organisation across national borders. CapMan’s subsidiaries and branches in eight countries report their results on a monthly or quarterly basis to the parent company. The bookkeeping function is mainly outsourced. Financial information is assembled, captured, analysed, and distributed in accordance with existing processes and procedures. The group has a common reporting and consolidation system that facilitates compliance with a set of common control requirements. The monthly accounting entries of the most significant subsidiaries and branches are transferred to the group’s reporting system on an entry-by-entry level. The other subsidiaries submit their figures either monthly or quarterly to the group accounting to be entered to the group reporting system for consolidation. The reported figures are reviewed in subsidiaries as well as in group accounting. Group accounting also monitors the balance sheet and income statement items by analytically reviewing the figures. The consolidated accounts of CapMan are prepared in compliance with International Financial Reporting Standards (IFRS) as adopted by the EU. 9.2 Control and risk management of the financial reporting process The Board has the overall responsibility for the proper arrangement of internal control and risk management over financial reporting. The Board has appointed the Audit and Risk Committee to undertake the more specific tasks in relation to financial reporting process control such as monitoring the financial statements reporting process, the supervision of the financial reporting process, overview of sustainability (including climate) risks and monitoring the efficiency of the company’s internal control. The Audit and Risk Committee also reviews regularly the main features of the internal control and risk management systems pertaining to the financial reporting process. The management of the group is responsible for the implementation of internal control and risk management processes and for ascertaining their operational effectiveness. The management is also responsible for ensuring that the company’s accounting practices comply with laws and regulations and that the company’s financial and sustainability matters are managed in a reliable and consistent manner. The CEO leads the risk management process by defining and al- locating responsibility areas. The CEO has nominated the group’s COO as risk manager to be in charge of coordinating the overall risk management process. The risk manager reports to the Audit and Risk Committee on matters concerning internal control and risk management. The management has allocated responsibility for establishing more specific internal control policies and proce- dures to personnel in charge of different functions. The group’s management and accounting departments possess appropriate levels of authority and responsibility to facilitate effective internal control over financial reporting. 9.3 Risk assessment and control activities Risks related to the financial reporting process are identified through the objectives of financial reporting. The risk assessment process is designed to identify financial reporting risks and to determine how these risks should be managed. The risk assessment process also considers sustainability risks that relates to material financial outcomes. Control activities based on risk assessments are determined for all levels of the organisation. These activities include guidelines and instructions, approvals, ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 20 authorisations, verifications, reconciliations, analytical reviews, and segregation of duties. In the annual risk assessment process of the group, the identified risks are reviewed, the risk management control activities are mapped and the effects of potential new identified risks are evaluated. The objectives and responsibilities of the risk management process as well as the determination of the risk- appetite were reviewed during 2023. 9.4 Information and communication pertaining to the financial reporting CapMan has defined the roles and responsibilities pertaining to financial reporting as a part of the group’s information and communication practices. External and internal information regarding financial reporting and its internal control is gathered systematically, and relevant information on the group’s transactions is provided to the management. Up-to-date information relevant for the financial reporting is presented in a timely manner to the relevant functions such as the Board and the Management Group. All external communications are carried out in accordance with the group disclosure policy, which is available on the company’s website: capman.com/shareholders/ governance/policies/ 9.5 The organisation and monitoring of internal control activities To ensure the effectiveness of internal control pertaining to financial reporting, monitoring activities are conducted at all levels of the organisation. Monitoring is performed through ongoing follow-up activities, separate evaluations or a combination of the two. Separate internal audit assignments are initiated by the Board or management. The scope and frequency of separate evaluations depend primarily on the assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control deficiencies are reported to the management, and serious matters to the Audit and Risk Committee and the Board. Group accounting performs monthly consistency checks of income statement and balance sheet for subsidiaries and business areas. The group accounting team also conducts management fee and cost analysis, quarterly fair value change checks, impairment and cash flow checks as well as control of IFRS and other applicable regulatory changes. The Audit and Risk Committee and the Board regularly review group-level financial reports, including comparison of actual figures with prior periods and budgets, other forecasts, monthly cash flow estimates and covenant levels. In addition, the Audit and Risk Committee monitors in more detail, among others, the reporting process (including the management’s discretionary evaluations), risk management, internal control and audit. The Risk and Valuations team, which is independent from the investment teams, is responsible for the quarterly valuation process, monitoring and forecasting fair value movements and preparing the models for and calculating carried interest income for the funds under the management of the Group. CapMan’s subsidiaries holding a license to act as alternative investment fund manager or investment firm granted by the Finnish Financial Supervisory Authority, have separate risk management and internal audit functions as required by applicable laws. The compliance function oversees that the operations of the CapMan group comply with regulation and that the group companies will adopt the relevant new regulations promptly. 10. Other information 10.1 Procedures related to insider administration CapMan complies with the Market Abuse Regulation’s (“MAR”, 596/2014) rules on managers’ transactions and insider management and the guidelines for insiders issued by Nasdaq Helsinki. In addition, CapMan has its own internal policy regarding insider management. The group’s compliance function is responsible for insider administration and shall e.g. monitor that employees comply with insider rules and trading restrictions, maintain project-specific insider lists, arrange internal trainings for employees on insider rules and on disclosure responsibilities of listed companies. CapMan maintains an internal, non-public list on managers and persons closely associated with them, which are, according to MAR, obliged to disclose all transactions made with financial instruments issued by CapMan. CapMan has determined the members of the Board and the Management Group (including the CEO) as managers defined in the MAR (hereinafter “Manager(s)”). Each Manager has been instructed to inform the persons closely associated with them about the obligation to disclose transactions. CapMan publishes a release on each transaction which has been executed by a Manager or his/her closely associated person with the financial instruments issued by CapMan in case the total value of all transactions of this person exceeds EUR 5,000 within a calendar year. The total holding of CapMan’s shares and share-based rights of each Manager is annually published as a part of the Annual Report. CapMan maintains project-specific insider lists for the projects, as set out in MAR, which may have a significant effect on the prices of the financial instruments issued by CapMan. These project-specific insider lists are drafted and maintained in accordance with the MAR and CapMan’s internal policies and are established following a decision to delay the disclosure of inside information. The persons added to the project-specific list and other persons who possess inside information related to CapMan, are advised not to trade in financial instruments issued by CapMan. Prior to trading in CapMan’s financial instruments, each manager and employee is obliged to personally assess whether he/she is in the possession of inside information related to CapMan. CapMan’s Managers (as defined above) or employees who ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 21 receive financial information related to CapMan Plc are not permitted to trade in financial instruments issued by CapMan during a closed period of 30 calendar days prior to the publication of CapMan’s interim reports, half year financial report or financial statements bulletin (closed period). The publication dates are announced annually over a stock exchange release. CapMan’s Managers and employees have been instructed to inform their closely associated persons regarding closed periods and trading restrictions on CapMan’s financial instruments during the closed period. According to the internal trading pre-approval procedure, the Managers of CapMan group are obliged to request a written pre-approval from the group’s compliance function before trading in financial instruments issued by CapMan. 10.2 Whistleblowing CapMan has a whistleblowing channel for personnel which offers a possibility to alert CapMan about suspicions of misconduct in confidence and/or anonymously. The channel is available on the company’s intranet. During 2023, one whistleblowing report was received. The report was processed in accordance with the company’s whistleblowing process. In February 2023, CapMan also introduced an external whistleblowing channel on the company’s website for all stakeholders. Both internal and external channels help CapMan to promote responsible business practices. Reporting through the channels is secured and reports may be submitted anonymously. 10.3 Principles regarding Related Party Transactions The company does not customarily enter into transactions with its related parties which would be significant for the company and deviate from the ordinary course of business or would be conducted in deviation from customary market terms. Possible significant and out of ordinary transaction deviating from market terms would be discussed in the Board meeting. The Board also confirms the company’s principles regarding related party transactions. The related party transactions are monitored by the financial administration and the legal function as part of the company’s customary reporting and control processes and the relevant persons are instructed of the related party matters. The company maintains a list of its related parties and related- party transactions are reported in the financial statements, and significant related-party transactions published as stock exchange releases, in accordance with applicable rules and regulations. 10.4 Audit fees Ernst & Young Oy, authorised public accountants, acted as auditor of the company in 2023. Ms. Kristina Sandin, APA, acted as the lead auditor. The audit fees paid to the auditor amounted to 371,000 euros (361,000 euros 2022) and the fees related to other non-audit related services amounted to 90,000 euros (12,000 in 2022). 10.5 Internal audit Taking into account the nature and extent of the company’s business CapMan has not considered it necessary to organise internal audit as a separate function. The internal audit of the licensed operations has been outsourced to an external service provider. ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 22 Report of the Board of Directors We govern by our values Report of the Board of Directors CONTENTS We build better managed and ﬁnancially stable organisations to contribute to overall economic wellbeing Report of the Board of Directors .. 23 Shares and shareholders ........ 31 Calculation of Key Ratios ....... 32 Key figures .................. 33 24 Report of the Board of Directors Group turnover and result in 1–12 2023 CapMan Group’s turnover totalled MEUR 59.4 in the period spanning 1 January–31 December 2023 (1 January–31 December 2022: MEUR 67.5). The 12 per cent decrease in turnover was due to lower carried interest income and lower service income compared to 2022. Management fees remained at level with 2022. Expenses were MEUR 48.6 (MEUR 51.0) in total and consisted of material and services, personnel expenses, depreciations and amortisations, and other operating expenses. The decrease in expenses was mainly due to lower salaries and compensation while other expenses remained at level with the comparison period. Expenses related to material and services were MEUR 1.9 (MEUR 1.0). Personnel expenses, including employer contributions, were MEUR 33.9 (MEUR 34.6). Depreciations and amortisations were MEUR 1.5 (MEUR 4.2). Other operating expenses amounted to MEUR 11.4 (MEUR 11.2). Operating expenses less items affecting comparability were MEUR 46.6 (MEUR 48.4). Fair value changes of investments were MEUR –6.1 (MEUR +36.5) in 2023. The Group’s operating profit was MEUR 4.7 (MEUR 53.1). The decrease from the comparison year was mainly due to negative fair value changes. Operating profit less items affecting comparability was MEUR 6.7 (MEUR 55.7). Comparable fee profit increased from the comparison period and was MEUR 9.7 (MEUR 9.5), growth 2 per cent. Financial income and expenses amounted to MEUR –0.7 (MEUR –5.5) and decreased due to a revaluation of a redemption liability relating to a minority share of a subsidiary. Expenses in the comparison year also included a MEUR 1.2 write-down of loan receivables from an investment team operating in Russia and formerly part of CapMan Group. Profit before taxes was MEUR 4.0 (MEUR 47.6) and profit after taxes was MEUR 3.4 (MEUR 41.0). Diluted earnings per share were 0.8 cents (24.8 cents). Comparable diluted earnings per share were 1.9 cents (26.4 cents). A quarterly breakdown of turnover and profit, together with turnover, operating profit/loss, and profit/loss by segment for the period as well as items affecting comparability are described in the Notes to the Financial Statements in section 2 Segment information. Management Company business Turnover generated by the Management Company business totalled MEUR 48.2 in 2023 (MEUR 55.9). The decrease was mainly due to lower carried interest income compared to the previous year. Fee income was MEUR 45.1 (MEUR 46.2). New capital in funds and investment programmes raised in 2023, as well as other asset management services, contributed favourably to fee income. The negative development was due to the decrease in real estate fund administration service fees. Carried interest in 2023 was MEUR 3.1 (MEUR 9.6) mainly due to exits from the CapMan Growth Equity 2017 fund. In the comparison year, CapMan received carried interest income mainly from the CapMan Growth Equity 2017 and CapMan Nordic Real Estate funds, which transferred to carry during 2022. Of the turnover, 92 per cent was income based on long-term contracts booked over time (82 per cent). Operating expenses of the Management Company business amounted to MEUR 36.0 (MEUR 33.6). Operating expenses excluding items affecting comparability amounted to MEUR 34.6 (MEUR 33.6). Operating profit of the Management Company business was MEUR 12.2 (MEUR 22.3). Comparable operating profit was MEUR 13.7 (MEUR 22.3). The decrease was mainly due to lower carried interest income during the year. Service business Turnover generated by Service business totalled MEUR 10.6 (MEUR 11.1), a 5 per cent decrease due to the sale of JAY Solutions, which was completed on 1 February 2023. The Service business segment includes procurement service CaPS, which grew by 17 per cent (27 per cent) during 2023. Material and service fees from CaPS’s license business amounted to MEUR 1.9 (MEUR 1.0). Operating expenses of the Service business were MEUR 2.8 (MEUR 7.7). Operating expenses excluding items affecting comparability were MEUR 2.8 (MEUR 5.1). The operating profit of the Service business was MEUR 6.0 (MEUR 3.0). Comparable operating profit of the Service business was MEUR 6.0 (MEUR 5.6), growth 8 per cent. Investment business Fair value of fund investments was MEUR 158.9 on 31 December 2023 (31 December 2022: MEUR 169.1). Fair value changes were mainly driven by fund investments and were MEUR –6.1 (MEUR +36.5) in 2023, corresponding to a 3.4 per cent decrease in value (1 January–31 December 2022: +25.3 per cent). CapMan’s own funds developed on average positively over 2023 especially due to the strong development of Private Equity and Infra funds. The development of Real Estate funds was on average negative, due to an unfavourable market situation. Overall, fair value changes were negative due to the negative fair value development of external, predominantly venture capital funds. CapMan invested a total of MEUR 18.1 in its funds in 2023 (MEUR 29.3). CapMan received distributions from funds totalling MEUR 17.6 (MEUR 27.6). The amount of remaining commitments that have yet to be called totalled MEUR 85.2 as at 31 December 2023 (31 December 2022: MEUR 89.1). Capital calls, distributions and remaining commitments are detailed in the Notes to the Financial Statements in Section 17 Investments at fair value through profit and loss. ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 25 Operating loss for the Investment business was MEUR 6.6 (profit MEUR 35.7). The majority of invested capital is in funds managed by CapMan. In addition to own funds, CapMan has invested selectively in private market funds managed by external fund managers. Investments in portfolio companies are valued at fair value in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEVG). Investments in real estate are valued at fair value based on appraisals made by indepen- dent external experts. Valuation of external funds is based on fair values reported by respective external fund managers. Sensitivity analysis by investment area is presented in the Notes to the Financial Statements in Section 17 Investments at fair value through profit and loss. Balance sheet and financial position as at 31 December 2023 CapMan’s balance sheet totalled MEUR 241.5 as at 31 December 2023 (31 December 2022: MEUR 270.5). Non-current assets amounted to MEUR 179.9 (MEUR 188.4), of which goodwill totalled MEUR 7.9 (MEUR 7.9). As at 31 December 2023, fund investments at fair value totalled MEUR 158.9 (MEUR 169.1 as at 31 December 2022). Other financial assets at fair value were MEUR 0.5 (MEUR 0.4). Long-term receivables amounted to MEUR 6.5 (MEUR 5.5). Current assets amounted to MEUR 61.7 (MEUR 76.4). Cash in hand and at banks amounted to MEUR 41.0 (MEUR 55.6). CapMan’s interest-bearing net debt amounted to MEUR 52.8 as at 31 December 2023 (MEUR 37.4). CapMan’s total inter- est-bearing debt as at 31 December 2023 is outlined in Table 1. CapMan’s bonds and long-term credit facility include financing covenants, which are conditional on the company’s equity ratio and net gearing ratio. CapMan honoured all covenants as at 31 December 2023. The senior bond issued in 2022 is linked to sustainability targets, which CapMan achieved in April 2023. Trade and other payables totalled MEUR 24.2 on 31 December 2023 (31 December 2022: MEUR 18.4). The Group’s cash flow from operations totalled MEUR +12.1 in 2023 (MEUR +6.0). Higher fee profit and changes in working capital contributed to the comparably larger inflows of cash from operations. CapMan receives management fees from funds semi-annually, in January and July, which is shown under working capital in the cash flow statement. Cash flow from investments totalled MEUR +3.5 (MEUR +2.4) and includes, inter alia, investments and repaid capital received by the Group. CapMan makes investments mainly through its investment company and its investments and cash on hand are classified as fund investments. Cash flow before financing totalled MEUR +15.5 (MEUR +8.5) and reflects the development in the Management Company business, Service business and Investment business. Cash flow from financing was MEUR –30.3 (MEUR –18.0) and included the payment of dividends and equity repayment. Sustainability CapMan’s vision is to become the most responsible private assets company in the Nordics. A strategic objective is to integrate sustainability into all operations and implement it in the product offering, fundraising, investment activities, fund management, services and the development of personnel and work environment, among others. Progress on environmental targets During 2023, CapMan has made progress with its climate targets in line with the Science Based Targets initiative. CapMan has set to achieve net zero emissions by 2040. The target was established at the end of 2023. 9 percent of the eligible Private Equity & Infra portfolio companies have set science-based targets for reducing greenhouse gas emissions. Emission reduction plans have been developed for real estate properties and their emission reductions will be published later in the first quarter of the year in accordance with the Science Based Targets initiative. CapMan has launched a project to assess the dependencies, impacts, risks, and opportunities related to nature in portfolio companies and properties where environmental aspects are considered essential. As part of the nature-positive approach, CapMan has adopted the WWF Green Office environmental management system with the aim of certifying four CapMan offices in 2024. Progress on social targets CapMan’s employee well-being has remained high with an eNPS of 51, above the target level of 50. Employee participation was measured for the first time in 2023 and was 81 on a scale of 1–100. A policy promoting diversity, equity, and inclusion (DEI) was implemented and an internal DEI working group was established. A comprehensive assessment and analysis of human rights risks in CapMan’s and value chains’ operations was carried out to identify and correct any deficiencies. Although no serious violations or deficiencies were found, corrective action has been taken based on the analysis. CapMan has set medium- and long-term percentage targets for gender diversity, including for appointments to the Management Group and Partner level. By 2025, a maximum of 70% of appointments to the Management Group and investment teams will be of one gender (if there are multiple appointments). The long-term goal (2033) is that the Management Group will consist of no more than 60% of one gender and that the proportion of female partners will be at least 20%. Table 1: CapMan’s interest bearing debt Debt amount 31 Dec 2023 (MEUR) Matures latest Annual interest (%) Debt amount 31 Dec 2022 (MEUR) Senior bond (issued in 2020) 50.0 Q4 2025 4.00% 50.0 Senior bond (issued in 2022) 40.0 Q2 2027 4.50% 40.0 Long-term credit facility (drawn/available) 0/20.0 Q3 2024 Reference rate + 1.75- 2.70% 0/20.0 ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 26 return on investment was 3.0 per cent (24.2 per cent). Equity ratio was 47.8 per cent (52.7 per cent). According to CapMan’s long-term financial targets, the target level for the company’s return on equity is on average over 20 per cent. The objective for the equity ratio is more than 50 per cent. Table 3: CapMan’s key figures 31.12.23 31.12.22 Earnings per share, cents 0.8 25.1 Diluted earnings per share, cents 0.8 24.8 Comparable diluted earnings per share, cents 1.9 26.4 Shareholders' equity / share, cents 72.6 90.2 Share issue adjusted number of shares, avg. 158,573,903 157,560,284 Return on equity, % 2.6 30.5 Return on equity, comparable, % 4.0 32.4 Return on investment, % 2.1 23.1 Return on investment, comparable, % 3.0 24.2 Equity ratio, % 47.8 52.7 Net gearing, % 45.9 26.3 Proposal of the Board of Directors regarding distribution of funds CapMan’s updated distribution policy is to pay sustainable distributions that grow over time. CapMan’s objective is to distribute at least 70 per cent of the Group’s profit attributable to equity holders of the company excluding the impact of fair value changes, subject to the distributable funds of the parent company. The Board of Directors’ resolution proposal to the Annual General Meeting (AGM) to be held on 27 March 2024 is a combined proposal of a dividend distribution and an authorisa- tion for the Board of Directors to decide on distribution of an additional dividend. The Board of Directors expects the overall dividend distribution to be EUR 0.10 per share for 2023. Assets under management as at 31 December 2023 Assets under management refers to the remaining investment capacity, mainly equity, of funds and capital already invested at acquisition cost or at fair value, when referring to mandates and open-ended funds. Assets under management is calculated based on the capital, which forms the basis for management fees, and includes primarily equity without accounting for the funds’ debt. Assets increase as fundraising for new funds progresses or as investments are executed under investment mandates and declines as exits are completed. In addition, changes in fair values impact the assessment of assets under management of open-ended funds as well as wealth management. Assets under management was MEUR 5,005 as at 31 December 2023 (31 December 2022: MEUR 5,039). A total of MEUR 391 in new assets was raised across all investment areas. The growth in assets under management was constrained by completed exits, negative fair value changes in open-ended real estate funds and occasional redemptions. Assets under manage- ment per fund type is displayed in Table 2. Table 2: Assets under management (incl. funds and mandates) 31.12.23 (MEUR) 31.12.22 (MEUR) Real Estate 2,933 3,187 Private Equity & Credit 1,022 933 Infra 562 442 Wealth Management 488 478 Total assets under management 5,005 5,039 Key figures 31 December 2023 CapMan’s return on equity was 2.6 per cent on 31 December 2023 (31 December 2022: 30.5 per cent) and the comparable return on equity was 4.0 per cent (32.4 percent). Return on investment was 2.1 per cent (23.1 per cent) and the comparable The Board of Directors proposes to the AGM that a dividend in the total amount of EUR 0.06 per share would be paid for 2023. The payment date would be 9 April 2024. The Board of Directors further proposes to the AGM that the Board of Directors be authorised to decide on an additional dividend in the maximum amount of EUR 0.04 per share. The authorisation would be effective until the end of the next Annual General Meeting. The Board of Directors intends to resolve on the additional dividend in its meeting scheduled for 18 September 2024. CapMan’s distributable funds amounted to MEUR 37.5 on 31 December 2023. Publication of the Financial Statements and the Report of the Board of Directors, and the Annual General Meeting for 2024 CapMan Group’s Financial Statements and the Report of the Board of Directors for 2023 will be published as part of the company’s Annual Report for 2023 in February 2024 during week 10. CapMan Plc’s 2024 Annual General Meeting (AGM) will be held on Wednesday 27 March 2024 at 10:00 a.m. in Helsinki. The Notice to the Annual General Meeting and other proposals of the Board of Directors to the Annual General Meeting are published by 6 March 2024 the latest. Complete financial statements, as required under the terms of the Finnish Companies Act, will be available on CapMan’s website by 6 March 2024 the latest. Corporate Governance Statement CapMan Plc’s Corporate Governance Statement will be published separately from the Report of the Board of Directors as part of the company’s Annual Report for 2023 during week 10 and will be available on the company’s website by 6 March 2024 the latest. ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 27 Authorisations given to the Board by the AGM The 2023 AGM authorised the Board of Directors to decide on the repurchase and/or on the acceptance as pledges of the company’s shares. The number of own shares to be repurchased and/or accepted as pledge on the basis of the authorisation shall not exceed 14,000,000 shares in total, which on the day of the AGM corresponded to approximately 8.86 per cent of all shares in the company. Only the unrestricted equity of the company can be used to repurchase own shares on the basis of the authorisation. The AGM also authorised the Board to decide on the issuance of shares and other special rights entitling to shares. The number of shares to be issued on the basis of the authorisation shall not exceed 14,000,000 shares in total, which on the day of the AGM corresponded to approximately 8.86 per cent of all shares in the company. The authorisation shall remain in force until the following AGM and 30 June 2024 at the latest. Further details on these authorisations can be found in the stock exchange release on the decisions taken by the AGM issued on 15 March 2023. Shares and shareholders Shares and share capital There were no changes in CapMan’s share capital during 2023. Share capital totalled EUR 771,586.98 as at 31 December 2023. CapMan had 158,849,387 shares outstanding as at 31 December 2023 (158,054,968 shares as at 31 December 2022). All shares generate equal voting rights (one vote per share) and rights to a dividend and other distribution to shareholders. CapMan Plc’s shares are included in the Finnish book-entry system. Company shares As at 31 December 2023, CapMan Plc held a total of 26,299 CapMan shares, representing 0.02 % of shares and voting rights. The market value of own shares held by CapMan was EUR 60,225 as at 31 December 2023 (31 December 2022: EUR Decisions of the 2023 Annual General Meeting Decisions of the AGM regarding distribution of funds CapMan’s 2023 AGM decided, in accordance with the proposal of the Board of Directors, that a dividend of EUR 0.08 per share, equivalent to a total of approx. MEUR 12.6 as well as an equity repayment of EUR 0.09 per share to be returned from the invested unrestricted equity fund, equivalent to a total of approx. MEUR 14.2, would be paid to shareholders. In total, EUR 0.17 per share would be paid to shareholders, equivalent of a total of MEUR 26.9, from distributable funds for 2022. The dividend and equity repayment is paid in two instalments six months apart. The first instalment of EUR 0.09 per share was paid on 24 March 2023 and the second instalment of EUR 0.08 per share was paid on 22 September 2023. Decisions regarding the distribution of funds have been described in greater detail in the stock exchange releases on the decisions taken by the General Meetings issued on 15 March 2023 and 13 September 2023. Decisions of the AGM regarding the composition of the Board The 2023 AGM decided that the Board of Directors comprises six members. Mr. Joakim Frimodig, Mr. Johan Bygge, Ms. Catarina Fagerholm, Mr. Johan Hammarén, Ms. Mammu Kaario and Mr. Olli Liitola were elected as members of the Board of Directors for a term of office expiring at the end of the next Annual General Meeting. The Board composition and remuneration have been described in greater detail in the stock exchange releases regarding the decisions of the AGM and the organisational meeting of the Board issued on 15 March 2023. Amendment of the Articles of Association The Annual General Meeting decided that Article 10 of the Articles of Association be amended to enable holding a general meeting entirely without a meeting venue as a so-called remote meeting in addition to the company’s domicile Helsinki. The change has been described in greater detail in the stock exchange release regarding the decisions of the AGM issued on 15 March 2023. 71,270). No changes occurred in the number of own shares held by CapMan Plc during 2023. Trading and market capitalisation CapMan Plc’s shares closed at EUR 2.29 on 31 December 2023 (31 December 2022: EUR 2.71). The trade-weighted average price for 2023 was EUR 2.49 (EUR 2.66). The highest price paid was EUR 3.09 (EUR 3.19) and the lowest EUR 1.92 (EUR 2.22). The number of CapMan Plc shares traded totalled 22.2 million (36.2 million), valued at MEUR 55.2 (MEUR 96.4). The market capitalisation of CapMan Plc shares as at 31 December 2023 was MEUR 363.8 (31 December 2022: MEUR 427.5). Shareholders The number of CapMan Plc shareholders increased by 2 per cent from the comparison period and totalled 31,157 as at 31 December 2023 (31 December 2022: 30,608). There were no flagging notifications in 2023. As of 31 December 2023, the Board of Directors and Management Group owned 4,166,990 CapMan shares in total either directly or through controlling interest companies, which corresponded to 2.6 per cent of all shares and votes outstanding. Details on CapMan Plc’s owners by sector and size, together with the company’s major shareholders, nominee-registered shares, and redemption obligation clauses covering company shares are presented in Section 23 Share capital and shares. Personnel CapMan employed 183 people on average in 2023 (1 January–31 December 2022 average: 186), of whom 133 (141) worked in Finland and the remainder in the other Nordic countries, Luxembourg and the United Kingdom. A breakdown of personnel by country is presented in the Section 5 Employee benefit expenses. The decrease in employees was due to the disposal of JAY Solutions completed in the beginning of February. The number of employees has increased in other functions. JAY Solutions accounted for an average of 2 (20) persons during 2023. ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 28 Remuneration and incentives CapMan’s remuneration scheme consists of short-term and long-term incentive schemes. The short-term scheme covers all CapMan employees, excluding the CEO of the company, and its central objective is earnings development, for which the Board of Directors has set a minimum target. CapMan had two long-term schemes consisting of investment based long-term share-based incentive plans (Performance Share Plan) for key employees, of which one was terminated during 2023. In the investment based long-term share-based incentive plans the participants are committed to shareholder value creation by investing a significant amount in CapMan Plc shares. CapMan’s 2020 investment-based long-term incentive plan included one performance period that commenced on 1 April 2020 and ended on 31 March 2023. An early payment of the vested reward shares from the 2020 incentive plan was conducted in April 2022 to facilitate participants’ investment into the new 2022 investment-based long-term incentive plan. Irrespective of the early payment, the 2020 plan remained in force until the end of its performance period on 31 March 2023 and the thereby following payment of incentives in line with the original terms. The rewards from the plan were paid in full with company shares. CapMan’s 2022 investment-based long-term incentive plan includes three performance periods that commenced on 1 April 2022 and end on 31 March 2023, 2024 and 2025, respectively. The participants may earn a performance-based reward from each of the performance periods and a matching reward from the 2022–2025 period. The rewards from the plan will be paid fully in company shares in 2024, 2025 and 2026. The aim of the 2022 investment-based long-term incentive plan is to align remuneration with CapMan’s sustainability agenda, to retain the plan participants in the company’s service, and to offer them a competitive reward plan based on owning, earning and accumulating the company’s shares. The prerequisite for receiving a reward on the basis of the plans is that a participant acquires company’s shares or allocates previously owned company’s shares up to the number determined by the Board of Directors. The performance-based reward from the plans is based on the company share’s Total Shareholder Return, the achievement of sustainability targets and on a participant’s employment or service upon reward payment. The Board shall resolve whether new shares or existing shares held by the company are given as reward. The target group of the plans consists of approximately 20 people, including the members of the Management Group. Additional information about remuneration schemes is presented in Section 30 Share-based payments. Other significant events in 2023 Pia Kåll started as the CEO of CapMan Plc on 15 March 2023. The company’s previous CEO Joakim Frimodig was elected to the Board of Directors by the 2023 Annual General Meeting and serves as full-time Chair of the Board of Directors starting from 15 March 2023. In February 2023, CapMan Plc and non-controlling share- holders of JAY Solutions sold their share of CapMan’s subsidiary JAY Solutions to Swedish Bas Invest AB. In April 2023, CapMan resolved on a directed share issue of 794,419 new shares as payment of the vested reward shares from the 2020 incentive plan to CapMan Group management and selected key employees. The new shares were registered with the Trade Register on 4 May 2023. In May 2023, CapMan Growth Equity 2017 fund sold its share in Coronaria. The fund is in carry and the transaction generated carried interest for CapMan. In September 2023, Mika Koskinen became the new Managing Partner of CapMan Wealth Services and a member of the CapMan Plc Management Group. Christian Borgström stepped down from the Management Group and remains a Senior Partner in the company. In September, Johan Pålsson announced his resignation as Managing Partner of CapMan Buyout as he will take on new responsibilities outside of CapMan. Fundraising continued in several funds open for new commit- ments. Most commitments were raised for CapMan Nordic Infrastructure II fund, which reached MEUR 272 at the end of 2023. CapMan established a new CapMan Social Real Estate fund at the end of 2023, which stands at MEUR 55 following an initial investment. The fund continues fundraising targeting EUR 500 million of equity commitments and total investment capacity of nearly EUR 1 billion over the coming years. In October 2023, CapMan updated its distribution policy. CapMan’s updated distribution policy is to pay sustainable distributions that grow over time. In December, CapMan announced an acquisition of Dasos Capital Oy and an expansion into natural capital. The acquisition is expected to close during the first half of 2024. The debt free purchase price is EUR 35 million. In addition, CapMan has committed to paying an additional earn-out consideration of a maximum EUR 5 million based on incurred management fee turnover in 2025 and 2026. The equity price for Dasos’ shares is paid in shares of CapMan by a directed share issue and a cash consideration. Events after 31 December 2023 In January 2024, an Extraordinary General Meeting of share- holders resolved in accordance with the Board of Directors’ proposal that the Board of Directors be authorised to decide to issue a maximum of 20,000,000 new shares by way of a directed share issue in deviation from the shareholders’ pre-emp- tive right. The shares to be issued under the authorisation would be directed to the current shareholders of Dasos Capital Oy in proportion to the number of Dasos Capital Oy shares sold by them to CapMan. The directed share issue is expected to be realised in the first half of 2024 in conjunction to the closing of the acquisition. The completion of the acquisition is also conditional on, among others, the approval by the Finnish Competition and Consumer Authority. The approval was obtained in February 2024. ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 29 Significant risks and short-term uncertainties CapMan faces many different risks and uncertainties which, if realised, could affect its strategic direction, financial position, earnings, operations and reputation. Assessment and manage- ment of risks is an integral part of CapMan’s ability to conduct its operations in a successful manner. CapMan classifies risks according to various categories and identifies principal risks for each category. CapMan performs an annual review of the risk environment at the end of the financial year and reports on any material developments quarterly. An annual risk assessment and risk descriptions is presented on the website under https:// capman.com/shareholders/risks/. A summary of risks is presented in Table 4. Table 4: Risk classification and principal risks Risk classification Principal risks 1. Strategic risks • Failure to achieve strategic or performance targets • Failure to select the correct strategy in a competitive environment • Failure to recruit and retain key personnel • Failure to scale the business 2. Financial risk • Poor financial performance • Insufficient liquidity position • Failure to obtain fincancing 3. Market risks • Interest rate, inflation and asset valuation volatility • Changes in customer preferences • Fluctuations of the transaction market • Failure in fundraising 4. Operational risks • Cyber threats and system errors • Inadequate or failed processes or controls • Corruption, fraud or criminal behaviour • Mistakes 5. Regulatory risks • Adverse changes in the regulatory environment 6. Sustainability risks • Failure to invest in sustainable assets and ESG related incidents or lack of appropriate ESG approach in portfolio companies • Unreasonable increase in costs to comply with sustainability and reporting requirements 7. Reputational risk • Negative public perception Long-term financial objectives CapMan’s distribution policy is to pay sustainable distributions that grow over time. CapMan’s objective is to distribute at least 70 per cent of the Group’s profit attributable to equity holders of the company excluding the impact of fair value changes, subject to the distributable funds of the parent company. In addition, CapMan may pay out distributions accrued from investment operations, taking into consideration foreseen cash requirements for future investments. The combined growth objective for the Management Company and Service businesses is more than 15 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 50 per cent. CapMan expects to achieve these financial objectives gradually and key figures are expected to show fluctuations on an annual basis considering the nature of the business. Outlook estimate for 2024 CapMan’s objective is to improve results in the long term, taking into consideration annual fluctuations related to the nature of the business. 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 asset-specific development and exits from 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. For these reasons, CapMan does not provide numeric estimates for 2024. CapMan estimates assets under management to grow in 2024. The company estimates fee profit also to grow in 2024. These estimations do not include possible items affecting comparability. Helsinki, 6 February 2024 CAPMAN PLC Board of Directors ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 30 CapMan’s largest shareholders as at 31 December 2023 Number of shares and votes Proportion of shares,% Silvertärnan Ab 22,680,519 14.28% Keskinäinen Eläkevakuutusyhtiö Ilmarinen 8,672,000 5.46% Mikko Laakkonen 6,834,635 4.30% Keskinäinen työeläkevakuutusyhtiö Varma 3,675,215 2.31% Joensuun Kauppa ja Kone Oy 3,296,466 2.08% Vesasco Oy 3,088,469 1.94% Valtion Eläkerahasto 2,500,000 1.57% Sijoitusrahasto Danske Invest Suomi Osake 2,053,200 1.29% Hannu Laakkonen 1,992,742 1.25% Laine Capital Oy 1,523,348 0.96% Total 56,316,594 35.44% Nominee registered 5,839,642 3.68% Shareholdings of management 4,166,990 2.62% CapMan has not received any flagging notifications during year 2023. An up-date information of all flagging notifications can be found at www.capman.com Distribution of shareholdings by number of shares and sector as at 31 December 2023 Shareholding Number of Owners % Number of shares % 1–100 5,628 18.07% 263,808 0.17% 101–1,000 14,546 46.71% 6,951,201 4.38% 1,001–10,000 9,641 30.96% 30,204,150 19.01% 10,001–100,000 1,218 3.91% 28,663,417 18.04% 100,001–1,000,000 90 0.29% 22,823,938 14.37% 1,000 001– 17 0.05% 69,942,873 44.03% Total 31,140 100.00% 158,849,387 100.00% of which Nominee registered 5,839,642 3.68% On the book-entry register joint account 18,709 0.01% Sector Number of shares and votes % Finnish Private Individuals 81,810,277 51.50% Other 45,794,206 28.83% Pension & Insurance 19,381,177 12.20% Fund company 6,260,493 3.94% Foundation 1,516,438 0.95% Treasury Shares 26,299 0.02% Anonymous ownership 4,060,497 2.56% Total 158,849,387 100.00% of which Nominee registered 5,839,642 3.68% On the book-entry register joint account 18,709 0.01% Source: EuroClear Finland Ltd, as at 31 December 2023. Figures are based on the total number of shares 158,849,387 and total number of shareholders 31,140. CapMan Plc had 26,299 shares as at 31 December 2023. Shares and shareholders ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 31 Calculation of Key Ratios Adjusted Operating profit (or Operating profit, comparable) = Operating profit – items impacting comparability Adjusted profit for the financial year = Profit for the financial year – items impacting comparability Fee profit = Adjusted operating profit – carried interest – fair value gains/losses of investments Return on equity (ROE), % = Profit for the financial year (incl. non-controlling interest) × 100 Shareholders’ equity (average, incl. non-controlling interest) Return on equity (ROE), comparable, % = Adjusted profit for the financial year (incl. non-controlling interest) × 100 Shareholders’ equity (average, incl. non-controlling interest) Return on investment (ROI), % = Profit for the financial year + income taxes + financial income and expenses × 100 Total shareholders’ equity + interest-bearing debt (average) Return on investment (ROI), % = Adjusted profit for the financial year + income taxes + financial income and expenses × 100 Total shareholders’ equity + interest-bearing debt (average) Equity ratio, % = Total shareholders’ equity × 100 Balance sheet total – advances received Net gearing, % = Net interest-bearing liabilities × 100 Shareholders’ equity Earnings per share (EPS) = Profit/loss for the financial year attributable to the equity holders of the parent company Share issue adjusted number of shares (average) Adjusted earnings per share (EPS) = Profit/loss for the financial year attributable to the equity holders of the parent company – items impacting comparability Share issue adjusted number of shares (average) Shareholders’ equity per share = Shareholders’ equity attributable to the equity holders of the parent company Undiluted number of shares at the end of the financial year Dividend and return of equity per share = Dividend and return of equity per share Earnings per share Dividend per earnings, % = Dividend and return of equity per share × 100 Earnings per share ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 32 Key Performance Indicators for CapMan Group MEUR 2019 2020 2021 2022 2023 Turnover 49.0 43.0 52.8 67.5 59.4 Management fees 24.9 29.0 36.6 38.8 39.0 Sale of services 17.2 13.1 13.3 19.1 17.2 Carried interest 6.9 0.9 2.9 9.6 3.1 Other operating income 0.0 0.1 0.0 0.0 0.1 Materials and services –1.0 –1.9 Operating expenses –41.8 –35.1 –42.1 –50.0 –46.8 Fair value gains/losses of investments 12.2 4.4 33.9 36.5 –6.1 Operating profit 19.4 12.3 44.6 53.1 4.7 Operating profit, comparable 25.0 12.3 44.6 55.7 6.7 Financial income and expenses –1.8 –3.1 –4.0 –5.5 –0.7 Profit before taxes 17.6 9.2 40.6 47.6 4.0 Profit for the financial year 15.9 6.3 35.4 41.0 3.4 Return on equity (ROE), % 12.7 5.2 29.4 30.5 2.6 Return on equity (ROE), comparable, % 16.0 5.2 29.4 32.4 4.0 Return on investment (ROI), % 10.5 6.3 21.2 23.1 2.1 Return on investment (ROI), comparable, % 13.5 6.3 21.2 24.2 3.0 Equity ratio, % 59.9 51.9 53.3 52.7 47.8 Net gearing, % 7.2 22.5 14.0 26.3 45.9 Dividends and return of capital paid 1) 20.0 21.9 23.6 26.9 15.9 Personnel 148 146 161 186 183 1) Proposal of the Board of Directors to the Annual General Meeting for the financial year 2023. Key figures ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 33 Key Ratios Per Share 2019 2020 2021 2022 2023 Earnings per share, cents 9.2 3.3 21.9 25.1 0.8 Diluted earnings per share, cents 9.0 3.3 21.4 24.8 0.8 Comparable diluted earnings per share, cents 11.6 3.3 21.4 26.4 1.9 Shareholders’ equity/share, cents 85.1 72.7 81.4 90.2 72.6 Dividend/share, cents 1) 13.0 14.0 15.0 17.0 10.0 Dividend/earnings, % 1) 141.3 424.2 68.5 67.7 1,250.0 Average share issue adjusted number of shares during the financial year (’000) 152,155 155,797 156,580 157,560 158,574 Share issue adjusted number of shares at year-end (’000) 153,755 156,459 156,617 158,055 158,849 Number of shares outstanding (’000) 153,728 156,433 156,591 158,029 158,823 Own shares (’000) 26 26 26 26 26 1) Proposal of the Board of Directors to the Annual General Meeting for the financial year 2023. ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 34 We manage our assets with long-term care Financial Statements 35 Financial Statements Group Statement of Comprehensive Income (IFRS) ........................... 37 Group Balance Sheet (IFRS) .............................................. 38 Group Statement of Changes in Equity (IFRS) ............................... 39 Group Cash Flow Statement (IFRS) ........................................ 40 Notes to the Consolidated Financial Statements ............................. 41 1. Accounting policies ............................................... 41 2. Segment information ............................................. 47 3. Turnover ........................................................ 50 4. Other operating income ........................................... 50 5. Employee benefit expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 6. Depreciation ..................................................... 51 7. Other operating expenses .......................................... 51 8. Adjustments to cash flow statement and total cash outflow for leases ..... 52 9. Fair value gains/losses of investments ............................... 52 10. Finance income and costs ........................................ 52 11. Income taxes ................................................... 53 12. Earnings per share .............................................. 53 13. Assets held for sale .............................................. 54 14. Tangible assets ................................................. 54 15. Goodwill ....................................................... 55 16. Other intangible assets ........................................... 56 17. Investments at fair value through profit or loss ....................... 56 18. Receivables – Non-current ........................................ 57 19. Deferred tax assets and liabilities .................................. 57 20. Trade and other receivables ....................................... 58 21. Financial assets at fair value through profit or loss .................... 58 22. Cash and cash equivalents ........................................ 59 23. Share capital and shares ......................................... 59 24. Interest-bearing loans and borrowings – Non-current .................. 60 25. Other non-current liabilities ....................................... 60 26. Trade and other payables – Current ................................ 60 27. Interest-bearing loans and borrowings – Current ...................... 60 28. Financial assets and liabilities .................................... 61 29. Commitments and contingent liabilities ............................. 62 30. Share-based payments ........................................... 63 31. Related party disclosures ......................................... 65 32. Financial risk management ....................................... 67 33. Events after the financial year ..................................... 75 Parent Company Income Statement (FAS) ................................... 76 Parent Company Balance Sheet (FAS) ...................................... 77 Parent Company Cash Flow Statement (FAS) ................................ 78 Basis of preparation for parent company financial statements .................. 79 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 36 1,000 EUR Note 2023 2022 Management fees 39,034 38,847 Sale of services 17,204 19,072 Carried interest 3,126 9,613 Turnover 2, 3 59,364 67,532 Material and services –1,856 –985 Other operating income 4 79 2 Employee benefit expenses 5 –33,921 –34,571 Depreciation and impairment 6 –1,491 –4,180 Other operating expenses 7 –11,362 –11,236 Fair value gains/losses of investments 9 –6,115 36,547 Operating profit 4,697 53,108 Financial income and expenses 10 –687 –5,475 Profit before taxes 4,010 47,633 Income taxes 11 –618 –6,585 Profit for the financial year 3,392 41,049 Other comprehensive income: Items that may be subsequently reclassified to profit or loss Translation difference 11 –295 Total comprehensive income 3,403 40,754 Profit attributable to: Equity holders of the Company 1,346 39,616 Non-controlling interest 2,047 1,433 Total comprehensive income attributable to: Equity holders of the Company 1,356 39,321 Non-controlling interest 2,047 1,433 Earnings per share for profit attributable to the equity holders of the Company: Earnings per share (basic), cents 12 0.8 25.1 Earnings per share (diluted), cents 12 0.8 24.8 The Notes are an integral part of the Financial Statements. Group Statement of Comprehensive Income (IFRS) ANNUAL REPORT 2023 FINANCIAL STATEMENTS 37 1,000 EUR Note 31 Dec 2023 31 Dec 2022 ASSETS Non-current assets Tangible assets 14 4,142 3,571 Goodwill 15 7,886 7,886 Other intangible assets 16 10 100 Investments at fair value through profit and loss 17 Investments in funds 158,907 169,063 Other financial assets 508 434 Receivables 18 6,525 5,545 Deferred tax assets 19 1,896 1,790 179,874 188,389 Current assets Trade and other receivables 20 20,382 20,718 Financial assets at fair value through profit and loss 21 275 65 Cash and bank 22 41,017 55,571 61,674 76,353 Assets held for sale 13 0 5,769 Total assets 241,547 270,512 1,000 EUR Note 31 Dec 2023 31 Dec 2022 EQUITY AND LIABILITIES Capital attributable to the Company’s equity holders 23 Share capital 772 772 Share premium account 38,968 38,968 Other reserves 21,114 35,425 Translation difference –570 –582 Retained earnings 52,914 65,473 Total capital attributable to the Company’s equity holders 113,197 140,056 Non-controlling interests 1,928 2,088 Total equity 115,125 142,144 Non-current liabilities Deferred tax liabilities 19 5,991 8,418 Interest-bearing loans and borrowings 24 92,470 91,854 Other non-current liabilities 25 484 7,343 98,945 107,615 Current liabilities Trade and other payables 26 24,155 18,446 Interest-bearing loans and borrowings 27 1,386 1,112 Current income tax liabilities 1,936 478 27,477 20,036 Liabilities associated with assets held for sale 13 0 717 Total liabilities 126,422 128,367 Total equity and liabilities 241,547 270,512 Group Balance Sheet (IFRS) The Notes are an integral part of the Financial Statements. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 38 Attributable to the equity holders of the Company Share premium Translation Retained Non-controlling 1,000 EUR Note Share capital account Other reserves difference earnings Total interests Equity on 1 January 2022 23 772 38,968 52,718 –286 33,607 125,778 1,616 Profit for the year 39,616 39,616 1,433 Other comprehensive income for the year Currency translation differences –295 –295 Total comprehensive income for the year –295 39,616 39,321 1,433 Performance Share Plan –1,126 –1,126 Dividends and return of capital –17,297 –6,755 –24,052 –1083 Transactions with non-controlling interests 4 131 135 122 Equity on 31 December 2022 23 772 38,968 35,425 –582 65,473 140,056 2,088 Profit for the year 1,346 1,346 2,047 Other comprehensive income for the year Currency translation differences 11 11 Total comprehensive income for the year 11 1,346 1,357 2,047 Performance Share Plan –1,148 –1,148 Dividends and return of capital –14,312 –12,819 –27,131 –2,043 Transactions with non-controlling interests 62 62 –163 Equity on 31 December 2023 23 772 38,968 21,114 –570 52,914 113,197 1,928 The Notes are an integral part of the Financial Statements. Group Statement of Changes in Equity (IFRS) ANNUAL REPORT 2023 FINANCIAL STATEMENTS 39 Group Cash Flow Statement (IFRS) 1,000 EUR Note 2023 2022 Cash flow from operations Profit for the financial year 3,392 41,049 Adjustments on cash flow statement 8 9,666 –17,632 Change in working capital: Change in current non-interest-bearing receivables 6,319 –8,054 Change in current trade payables and other non-interest- bearing liabilities –263 –2,215 Interest paid –4,373 –3,955 Taxes paid –2,658 –3,149 Cash flow from operations 12,084 6,044 Cash flow from investing activities Acquisition of subsidiaries –207 0 Proceeds from sale of subsidiaries 4,202 322 Investments in tangible and intangible assets –26 –333 Investments at fair value through profit and loss 172 3,039 Long-term loan receivables granted –1,522 –844 Receivables from long-term receivables 47 175 Interest received 786 83 Cash flow from investing activities 3,452 2,441 1,000 EUR Note 2023 2022 Cash flow from financing activities Proceeds from borrowings 28 11 39,791 Repayment of long-term loan 28 –31,520 Payment of lease liabilities –1,165 –1,189 Dividends paid and return of capital –29,194 –25,073 Cash flow from financing activities –30,317 –17,992 Change in cash and cash equivalents –14,782 –9,507 Cash and cash equivalents at start of year 55,944 65,207 Translation difference –146 244 Cash and cash equivalents at end of year 22 41,017 55,944 The Notes are an integral part of the Financial Statements. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 40 Notes to the Consolidated Financial Statements Group information CapMan’s business comprise of private equity fund management and advisory services, as well as investment business. In the Management Company Business, the funds managed by CapMan make investments in Nordic companies and in real estate and infrastructure assets in the Nordic countries. The Management Company Business also includes the wealth services offered to smaller investors. The Service Business is consisted of procure- ment services to companies. Through its investment business, CapMan invests in the private equity asset class, mainly in its own funds, but also selectively in funds managed by external fund managers. The parent company of the Group is CapMan Plc and is domi- ciled in Helsinki, with a registered office address at Ludviginkatu 6, 00130 Helsinki, Finland. The Consolidated Financial Statements may be viewed online at www.capman.com, or a hard copy is available from the office of the parent company. The Consolidated Financial Statements for 2023 have been approved for publication by CapMan Plc’s Board of Directors on February 6, 2024. Pursuant to the Finnish Companies Act, shareholders may adopt or reject the financial statements and make decisions on amendments to them at the Annual General Meeting. 1. Accounting policies Basis of preparation The Group’s financial statements have been prepared in accor- dance with International Financial Reporting Standards (IFRS) in force at December 31, 2023 as adopted by the European Union. International Financial Reporting Standards, referred to in the Finnish Accounting Act and in ordinances issued based on the provisions of this Act, are standards and their interpretations adopted in accordance with the procedure laid down in regulation (EC) No 1606/2002 of the European Parliament and of the Council. The notes to the consolidated financial statements have been prepared in accordance with the Finnish accounting standards as and where they supplement IFRS requirements . The preparation of financial statements in conformity with IFRS requires the Group’s management to make estimates and assumptions when applying CapMan’s accounting principles, and these are presented in more detail under ’Use of estimates’. The Consolidated Financial Statements have been prepared under the historical cost convention, except for financial assets and liabilities valued at fair value through profit or loss. The infor- mation in the Consolidated Financial Statements is presented in thousands of euros. Figures in the accounts have been rounded and consequently the sum of individual figures can deviate from the presented sum figure. New and amended standards and interpretations applied in financial year ended: The Group has applied the following amended standards and interpretations that have come into effect as of January 1, 2023. • Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction • Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies • Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates The above mentioned amendments had no material impact on the consolidated financial statements, but due to amendments to IAS 1, the Group has added a section describing the impact of climate change related risks to Group’s financial statements in Note 32 Financial risk management. Adoption of new and amended standards and interpretations applicable in future financial years: The Group has not yet adopted the new and amended standards and interpretations already issued by the IASB, such as amend- ments to IAS 1 and IFRS 16. The Group will adopt them as of the effective date or, if the date is other than the first day of the financial year, from the beginning of the subsequent financial year. The Group, however, does not expect these amendments to have a material impact on the Group’s financial statements. Consolidation principles As CapMan has determined it meets the definition of an investment entity, its subsidiaries are classified either as operating subsidiaries, that are considered to be an extension of the Parent’s operations, and as such, they are consolidated or investment entity subsidiaries, that are fair valued through profit or loss. The types of subsidiaries and their treatment in CapMan’s consolidated accounts are as follows: • Subsidiaries that provide fund management services (fund managers) or manage direct investments are considered to be an extension of the Parent’s business and as such, they are consolidated; • Subsidiaries that provide fund management services (fund managers) and which also hold direct investments in the funds are consolidated and the investments in the funds are fair valued through profit or loss; • Subsidiaries that provide fund investment advisory services (advisors) are considered to be an extension of the Parent’s business and as such, they are consolidated; • Investment entity subsidiaries (CapMan Fund Investments SICAV-SIF), through which CapMan makes its own fund investments, are valued at fair value through profit or loss. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 41 Significant judgment applied by management in the preparation of the consolidated financial statements – investment entity basis CapMan qualifies as an investment entity as defined by IFRS 10, because the corner stone of its business purpose is to obtain capital from investors to its closed-end private equity funds and to provide investment management services to those funds to gain both capital appreciation and investment income. Direct investments represent a relatively small part compared to total assets under management. CapMan obtains funds from many external investors for investment purposes. Documented exit strategies exist for each fund’s portfolio investments. Each fund’s portfolio investments and the real estate investments are fair valued and such fair value information is provided both to the fund investors on reporting date and also for CapMan’s internal management reporting purposes. In addition, management has assessed that the following characteristics further support investment entity categorization: CapMan holds several invest- ments itself in the funds, investments in the funds are held by several investors, the investors are not related parties and the investments are held mostly in form of equity. Significant judgment applied by management in the preparation of the consolidated financial statements – control over funds One of the most significant judgments management made in preparing the Company’s consolidated financial statements is the determination that Company does not have control over the funds under its management. Control is presumed to exist when a parent has power over the investee, has exposure to variable returns from the fund and is able to use its power to affect the level of returns. CapMan manages the funds against management fee received from the investors on the basis of the investment management mandate negotiated with the investors and it also makes direct investments in the funds under its management. Accordingly, CapMan was required to determine, whether it is acting primarily as a principal or as an agent in exercising its power over the funds. In the investment management mandate the investors have set detailed instructions in all circumstances relating to the management of the fund limiting the actual influence of the general partner at very low. In general, having a qualified majority, investors have a right to replace the general partner and/or fund manager. The remuneration CapMan is entitled to is commensurate with the services it provides and corresponds to remuneration customarily present in arrangements for similar services on an arm’s length basis. CapMan’s direct investment (typically between of 1% to 5%) in the funds and thus the share of the variability of the returns compared with the other investors is relatively small. As an investor in the fund CapMan has no representation nor voting rights as it has been specifically excluded in the investment management mandate. Therefore, management has concluded that despite it from formal perspective exercises power over the funds by controlling the general partner of the fund, its actual operational ability is limited in the investment management mandate in a manner that the general partner is considers to act as an agent. Furthermore, CapMan’s exposure to variable returns from the fund and its power to affect the level of returns is very low for the reasons described above. Therefore, CapMan has determined that it does not have control over the funds under its management . Subsidiaries Subsidiaries are consolidated using the acquisition method. All intercompany transactions are eliminated in the Consolidated Financial Statements. Profit or loss, together with all other comprehensive income-related items, are booked to the owners of the parent company or owners not holding a controlling interest in the companies concerned. Non-controlling interests are presented in the Consolidated Balance Sheet under equity separately from equity attributable to the owners of the parent company. Subsidiaries and businesses acquired during the year are consolidated from the date on which the Group acquires a controlling interest, and in the case of companies and busi- nesses divested by the Group during the financial year up to the date on which CapMan’s controlling interest expires. Associates An associated company is an entity in which the Group has significant influence but does not hold a controlling interest. This is generally defined as existing when the Group holds, either directly or indirectly, more than 20% of a company’s voting rights. Associated companies have been consolidated in accordance with the equity method. Under this, the investment in an associated company is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of the company’s net assets, less any impairment value. If the Group’s share of the loss incurred by an associated company exceeds the book value of its investment, the investment is booked at zero in the balance sheet, and losses exceeding book value are not combined unless the Group is committed to meeting the obligations of the company concerned. The Group’s share of the profit recorded by an associated company during the financial year in accordance with its holding in the company is presented as a separate item in the income statement after operating profit. Segment reporting Operating segments are reported in accordance with internal reporting presented to the chief operating decision maker. The latter is responsible for allocating resources to operating segments and evaluating their performance and is defined as the Group’s Management Group, which is responsible for taking strategic decisions affecting CapMan. Translation differences The result and financial position of each of the Group’s business units are measured in the currency of the primary economic environment for that unit (’functional currency’). The Consolidated Financial Statements are presented in euros, which is the functional and presentation currency of the Group’s parent company. Transactions in foreign currencies have been recorded in the parent company’s functional currency at the rates of exchange prevailing on the date of the transactions; in practice a reason- able approximation of the actual rate of exchange on the date of the transaction is often used. Foreign exchange differences for ANNUAL REPORT 2023 FINANCIAL STATEMENTS 42 operating business items are recorded in the appropriate income statement account before operating profit and, for financial items, are recorded in financial income and expenses. The Group’s foreign currency items have not been hedged. In the consolidated financial statements, the income state- ments of subsidiaries that use a functional currency other than the euro are translated into euros using the average rates for the accounting period. Their balance sheets are translated using the closing rate on the balance sheet date. All resulting exchange differences are recognised in other comprehensive income. Translation differences caused by changes in exchange rates for the cumulative shareholders’ equity of foreign subsidiaries have been recognised in other comprehensive income. Tangible assets Tangible assets have been reported in the balance sheet at their acquisition value less depreciation according to plan. Assets are depreciated on a straight-line basis over their estimated useful lives. The estimated useful lives are as follows: Machinery and equipment 4–5 years Other long-term expenditure 4–5 years The residual values and useful lives of assets are reviewed on every balance sheet date and adjusted to reflect changes in the expected economic benefits where necessary. Tangible assets include right-of-use assets measured in accordance with IFRS 16, which are disclosed in the notes. More information on these items is included in chapter Leases of Accounting Policies. Intangible assets Goodwill Goodwill acquired in a business merger is booked as the sum paid for a holding, the holding held by owners with a non-controlling interest, and the holding previously owned that, when combined, exceeds the fair value of the net assets of the acquisition. Write-offs are not made against goodwill, and possible impairment of goodwill is tested annually. Goodwill is measured as the original acquisition cost less accumulated impairment. The goodwill acquired during a merger is booked against the units or groups of units responsible for generating the cash flow used for testing impairment. Every unit or group of units for which goodwill is booked represents the lowest level of the organisation at which goodwill is monitored internally for management purposes. Goodwill is monitored at operating segment level. Other intangible assets Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets are recognised in the balance sheet only if the cost of the asset can be measured reliably and if it is probable that the future economic benefits attributable to the asset will flow to the Group. Agreements and trademarks acquired in business mergers are booked at fair value at the time of acquisition. As they have a limited life, they are booked in the balance sheet at acquisition cost minus accumulated write-offs. IT systems are expensed on the basis of the costs associated with acquiring and installing the software concerned. Depreciation is spread across the financial life of the relevant software licences. Impairment is tested whenever there is an indication that the book value of intangible assets may exceed the recoverable amount of these assets. The estimated useful lives are: Agreements and trademarks 5–10 years Other intangible assets 3–5 years Impairment of assets The Group reviews all assets for indications that their value may be impaired on each balance sheet date. If such indication is found to exist, the recoverable amount of the asset in question is estimated. The recoverable amount for goodwill is measured annually independent of indications of impairment. The need for impairment is assessed on the level of cash-gen- erating units, in other words at the smallest identifiable group of assets that is largely independent of other units and cash inflows from other assets. The recoverable amount is the fair value of an asset, less costs to sell or value in use. Value in use refers to the expected future net cash flow projections, which are discounted to the present value, received from the asset in question or the cash-generating unit. The discount rate used in measuring value in use is the rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment is recorded in the income statement as an expense. The recoverable amount for financial assets is either the fair value or the present value of expected future cash flows discounted by the initial effective interest rate . An impairment loss is recognised whenever the recoverable amount of an asset is below the carrying amount, and it is recognised in the income statement immediately. An impairment loss of a cash-generating unit is first allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to reduce the carrying amounts of the other assets of the unit pro rata. An impairment loss is reversed if there is an indication that an impairment loss may have decreased and the carrying amount of the asset has changed from the recognition date of the impairment loss. The increased carrying amount due to reversal cannot exceed what the depreciated historical cost would have been if the impairment had not been recognised. Reversal of an impairment loss for goodwill is prohibited. The carrying amount of goodwill is reviewed for impairment annually or more frequently if there is an indication that goodwill may be impaired, due to events and circumstances that may increase the probability of impairment. Financial assets The Group’s financial assets have been classified into the following categories: 1) financial assets at fair value through profit or loss 2) financial assets at amortised cost Investments in equity instruments are always measured at fair value through profit or loss. Classification of debt instruments, such as trade and loan receivables, is based on the business model for managing and for the contractual cash flow characteristics of these financial assets. Debt instruments of the Management Company Business and Service Business are classified as financial assets at amortised cost, because they are held solely in order to collect contractual cash flows, which are solely payments of principal and interest. Liquid current ANNUAL REPORT 2023 FINANCIAL STATEMENTS 43 debt instruments, such as investments to interest funds, made primarily for cash management purposes, are recognised at fair value through profit or loss. Non-current debt instruments included in the Investment Business are held for both selling purposes and collecting contractual cash flows (principal and interest), and the Group designates these assets as measured at fair value through profit or loss, in order to reduce inconsistency with regards to recognizing gains and losses of financial assets within the Investment Business, because the Group as an investment entity manages and monitors the performance of these investments based on fair values according to group’s investment strategy. Transaction costs are reported in the initial cost of financial assets, excluding items valued at fair value through profit or loss. All purchases and sales of financial instruments are recognised on the trade date. An asset is eligible for derecognition and removed from the balance sheet when the Group has transferred the contractual rights to receive the cash flows or when it has substantially transferred all of the risks and rewards of ownership of the asset outside the Group. Financial assets are classified as current if they have been acquired for trading purposes or fall due within 12 months. Financial assets at fair value through profit or loss Fair value through profit or loss class comprises of financial assets that are equity instruments or acquired as held for trading, in which case they can be either equity or debt instruments or derivative instruments. Debt instruments are also classified to this class, if they are held for both selling purposes and collecting contractual cash flows and which CapMan as an investment entity designates as financial assets at fair value through profit or loss at initial recognition in order to reduce inconsistency with regards to recognizing gains and losses of financial assets within the Investment Business. Fund investments and other investments in non-current assets are classified as financial assets at fair value through profit or loss and their fair value change is presented on the line item “Fair value changes of investments” in the statement of compre- hensive income. Fair value information of the non-current fund investments is provided quarterly to Company’s management and to other investors in the investment funds management by CapMan. The valuation of CapMan’s funds’ investment is based on International Private Equity and Venture Capital Valuation Guidelines (IPEVG) and IFRS 13. Investments in listed shares, funds and interest-bearing secu- rities as well as those derivative instruments that do not meet the hedge accounting criteria or for which hedge accounting is not applied in current assets are measured at fair value through profit or loss. Listed shares and derivative contracts in current assets are measured at fair value by the last trade price on active markets on the balance sheet date. The fair value of current investments in funds is determined as the funds’ net asset value at the balance sheet date. The fair value of current investments in interest-bearing securities is based on the last trade price on the balance sheet date or, in an illiquid market, on values determined by the counterparty. The change in fair value of current financial assets measured at fair value through profit or loss as well as dividend and interest income from short-term investments in listed shares and interest-bearing securities are presented on the line item “Fair value changes of investments” in the statement of comprehen- sive income, except for derivative instruments, which are used for a fair value hedge purpose. In these cases, the effectively hedging component of the derivative instrument’s fair value change is recognised in the same line item as the hedged item’s change in the statement of comprehensive income, and the remainder of the derivative’s fair value change is recognised as a financing cost. CapMan uses derivative instruments, such as foreign currency forward contracts, to hedge against currency changes of foreign currency denominated trade receivables, but does not apply hedge accounting to these derivatives. In these cases, the change of fair value of the derivative instrument that offsets an equal change of the foreign currency denominated trade receivable, being the hedged item, is recognised on the same line item as the change of the hedge item, i.e. in turnover . Financial assets at amortised cost Financial assets at amortised cost mainly include non-in- terest-bearing trade receivables and interest-bearing loan receivables of the Management Company Business and Service Business. These financial assets are held solely in order to collect contractual cash flows, and whose payments are fixed or deter- minable and which are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period, which are classified as non-current assets. Expected credit loss of the trade receivables is evaluated by using the simplified approach allowed by IFRS 9, under which a provision matrix is maintained, based on the historical credit losses and forward-looking information regarding general economic indicators. In addition, materially overdue receivables are evaluated on a client basis. Expected credit losses of loan receivables is evaluated based on the general approach under IFRS 9. The group evaluates the credit risk of the borrowers by estimating the delay of the repayments and borrower’s future economic development. Depending on the estimated credit risk the group measures the loss allowance at an amount equal to 12-month expected credit losses or lifetime expected credit losses. Inputs used for the measurement of expected credit losses include, among others, available statistics on default risk based on credit risk rating grades and the historical credit losses the group has incurred. Credit risk of a loan receivable is assumed low on initial recog- nition in case the contractual payments of principal and interest are dependent on the cash proceeds the borrower receives from the underlying investments. In these cases, the borrower is considered to have a strong capacity to meet its contractual cash flow obligations in the near term. It is considered that there has been a significant increase in the credit risk, if the contractual payments have become more than 30 days past due, and a default event has occurred, if the payment is more than 90 days past due, unless resulting from an administrative oversight. Cash and cash equivalents Cash and short-term deposits in the balance sheet comprise cash in banks and in hand, as well as liquid short-term deposits such as investments to money market funds. Cash assets have a maximum maturity of three months. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 44 Non-current assets held for sale Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continued use. The recognition criteria are regarded to be met when a sale is highly probable, the asset (or a disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary, the management is committed to the plan to sell the asset and the sale is expected to take place within one year from the date of classification. As from the classification date, a non-current asset (or a disposal group) held for sale is measured at the lower of its carrying amount and fair value less costs of disposal. Once classified as held for sale, intangible and tangible assets are no longer amortised nor depreciated. Dividend payment and repayment of capital Payment of dividends and repayment of capital is decided in the Annual General Meeting. The dividend payment and repayment of capital proposed to the Annual General Meeting by the Board of Directors is not subtracted from distributable funds until approved by the Annual General Meeting. Financial liabilities Financial liabilities largely consist of loans from financial institutions, leasing liabilities and derivate liabilities. Financial liabilities are initially recognised at fair value. Transaction costs are reported in the initial book value of the financial liability. Financial liabilities, except for derivative liabilities, are subse- quently carried at amortized cost using the effective interest method. Derivative liabilities are measured at fair value through profit or loss. Financial liabilities are reported in non-current and current liabilities. Leases Group’s lease agreements are mainly related to facilities, company cars and IT equipment. Group applies the exemptions allowed by the standard on lease contracts for which the lease term ends within 12 months as of the initial application, and lease contracts for which the underlying asset is of low value. Exemptions are applicable to some of the leased premises, such as office hotels, and to all laptops, printers and copying machines, among others. These lease payments are recognised as an expense in the income statement on a straight-line basis. Other lease agreements are recognised as right-of-use assets and lease liabilities in the balance sheet. These agreements include long-term lease agreements of facilities and company cars. Right-of-use assets are included in tangible assets and the related lease liabilities are included in non-current and current interest-bearing financial liabilities. CapMan Group does not act as a lessor. Provisions Provisions are recognised in the balance sheet when the Group has a current obligation (legal or constructive) as a result of a past event, and it is probable that an outflow will be required to settle the obligation and a reliable estimate of the outflow can be made. The Group’s provisions are evaluated on the closing date and are adjusted to match the best estimate of their size on the day in question. Changes are booked in the same entry in the income statement as the original provision. Employee benefits Pension obligations The defined contribution pension plan is a pension plan in accordance with the local regulations and practices of its business domiciles. Payments made to these plans are charged to the income statement in the financial period to which they relate. Pension cover has been arranged through insurance policies provided by external pension institutions. Share-based payments The fair value of the share-based long-term incentive plan is measured at the grant date based on the starting share price of the plan, its assumed development during the vesting period, forfeiture rate and estimated dividends to be paid during the vesting period. The fair value is expensed on a straight-line basis over the vesting period. The accumulated amount expensed is adjusted, should the forfeiture rate change or should shares allocated to the plan be sold during the vesting period. The fair value of stock options is assessed on the date they are granted and are expensed in equal installments in the income statement over the vesting period of the rights concerned. An evaluation of how many options will generate an entitlement to shares is made at the end of every reporting period. Fair value is determined using the Black-Scholes pricing model. The terms of the stock option programs are presented in Note 30. Share- based payments. Revenue recognition Revenue from contracts with customers is recognised by first allocating the transaction price to performance obligations, and when the performance obligation is satisfied by transferring the control of the underlying service to the customer, the revenue related to this performance obligation is recognised. Performance obligation can be satisfied either at a point in time or over time. Management fees and service fees in the Management Company Business As a fund manager, CapMan receives management fees during a fund’s entire period of operations. Management fee is a variable consideration and is typically based on the fund’s original size during its investment period, which is usually five years. Thereafter the fee is typically based on the acquisition cost of the fund’s remaining portfolio. Annual management fees are usually 0.5–2.0% of a fund’s total commitments, depending whether the fund is a real estate fund, a mezzanine fund, or an equity fund. In the case of real estate funds, management fees are also paid on committed debt capital. The average management fee percentage paid by CapMan-managed funds is approx. 1%. Management fees paid by the funds are recognised as income over time, because the fund management service is the only performance obligation in the contract and it is satisfied over time. Management company business also includes wealth management services to institutional clients, foundations, family ANNUAL REPORT 2023 FINANCIAL STATEMENTS 45 offices and wealthy private clients. Fees from these services are recognised over time, when the service is provided and the control is transferred to the customer, except for success and transaction fees, which are recognised as income at a point in time, because the underlying performance obligation is satisfied and the control of the related service is transferred to the customer at a point in time. Fees in the Service Business CapMan’s Service Business includes procurement services provided by CapMan Procurement services (CaPS). Until February 1, 2023, Service business also included JAY Solutions, which offered reporting and back office services to investors. Fee from these services are primarily recognised over time. Some of the contracts with customers related to the fundraising services earlier included in the Service Business includes a significant financing component. When determining the transaction price in these cases, the promised amount of consideration is adjusted for the effects of the time value of money and customer’s credit characteristics . Carried interest income Carried interest refers to the distribution of the profits of a successful private equity fund among fund investors and the fund manager responsible for the fund’s investment activities. In practice, carried interest means a share of a fund’s cash flow received by the fund manager after the fund has transferred to carry. The recipients of carried interest in the private equity industry are typically the investment professionals responsible for a fund’s investment activities. In CapMan’s case, carried interest is split between CapMan Plc and funds’ investment teams. CapMan applies a principle where funds transfer to carry and carried interest income are based on realised cash flows, not on a calculated and as yet unrealised return. As the level of carried interest income varies, depending on the timing of exits and the stage at which funds are in their life cycle, predicting future levels of carried interest is difficult. To transfer to carry, a fund must return its paid-in capital to investors and pay a preferential annual return on this. The preferential annual return is known as a hurdle rate, which is typically set between 7–10% IRR p.a. When a fund has transferred to carry, the remainder of its cash flows is distributed between investors and the fund manager. Investors typically receive 80% of the cash flows and the fund manager 20%. When a fund is generating carried interest, the fund manager receives carried interest income from all of the fund’s cash flows, even if an exit is made at below the original acquisition cost. Revenue from carried interest is recognised when a fund has transferred to carry and to the extent carried interest is based on realised cash flows and management has estimated it being highly probable that there is no risk of repayment of carried interest back to the fund. Carried interest is recognised when CapMan is entitled to it by the reporting date, a confirmation on the amount has been received and CapMan is relatively close to receiving it in cash. Potential repayment risk of carried interest to the funds (clawback) Potential repayment risk to the funds (clawback) is considered when assessing whether revenue recognition criteria have been fulfilled. Clawback risk relates to a situation when, in conjunction with the liquidation of a fund, it is recognised that the General Partner has received more carried interest than agreed in the fund agreement. These situations can occur, for example, if there are recallable distributions or if representations and warranties have been given by the vendor in the sale and purchase agree- ment when the fund is towards the end of its lifecycle. Potential repayment risk to the funds (clawback) is estimated by the management at each reporting date. The management judgment includes significant estimates relating to investment exit timing, exit probability and realisable fair value. The clawback risk is measured by using the expected value method, i.e. by calculating a probability weighted average of estimated alternative investment exit outcomes. The clawback is an adjust- ment to the related revenue recognised and is included in the current accrued liabilities in the consolidated balance sheet. Income taxes Tax expenses in the consolidated income statement comprise taxes on taxable income and changes in deferred taxes for the financial period. Taxes are booked in the income statement unless they relate to other areas of comprehensive income or directly to items booked as equity. In these cases, taxes are booked to either other comprehensive income or directly to equity. Taxes on taxable income for the financial period are calculated on the basis of the tax rate in force for the country in question. Taxes are adjusted on the basis of deferred income tax assets and liabilities from previous financial periods, if applicable. The Group’s taxes have been recognised during the financial year using the average expected tax rate. Deferred taxes are calculated on temporary differences between the carrying amount and the tax base. Deferred taxes have only been recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. The largest temporary differences arise from the valuation of investments at fair value. Deferred taxes are not recognised for non-tax deductible amor- tisation of goodwill. Deferred taxes have been measured at the statutory tax rates enacted by the balance sheet date and that are expected to apply when the related deferred tax is realised. Items affecting comparability and alternative performance measures CapMan uses alternative performance measures, such as adjusted operating profit (or ’comparable operating profit’, having the same meaning), to denote the financial performance of its business and to improve the comparability between different periods. 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. Such alternative performance measures are, for example, adjusted operating profit, adjusted profit for the period, and adjusted earnings per share. In addition, CapMan discloses alternative performance measures that have been derived from the beforementioned adjusted performance measures by further adding or deducting some income statement items that have ANNUAL REPORT 2023 FINANCIAL STATEMENTS 46 been adjusted to exclude possible items impacting comparability. This kind of alternative performance measure is fee profit, which is adjusted operating profit or loss deducted with carried interest and fair value changes of investments. Items affecting comparability are, among others, material items related to mergers and acquisitions, such as amortisation and impairment of intangible assets recognised in the purchase price allocation, or costs related to major development projects, such as reorganisation costs. Items impacting comparability include also 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. Items affecting comparability and alternative key figures are presented under the Segment information in the Note 2. Use of estimates The preparation of the financial statements in conformity with IFRS standards requires Group management to make estimates and assumptions in applying CapMan’s accounting principles. These estimates and assumptions have an impact on the reported amounts of assets and liabilities and disclosure of contingent liabilities in the balance sheet of the financial state- ments and on the reported amounts of income and expenses during the reporting period . Estimates have a substantial impact on the Group’s operating result. Estimates and assumptions have been used in assessing the impairment of goodwill, the fair value of fund investments, the impairment testing of intangible and tangible assets, in determining useful economic lives and expected credit losses, and in reporting deferred taxes, among others. Valuation of fund investments The determination of the fair value of fund investments using the International Private Equity and Venture Capital Valuation Guidelines (IPEVG) takes into account a range of factors, including the price at which an investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and financing transactions subsequent to the acquisition of the investment. These valuation methodologies involve a significant degree of management judgment. Because there is significant uncertainty in the valua- tion of, or in the stability of, the value of illiquid investments, the fair values of such investments as reflected in a fund’s net asset value do not necessarily reflect the prices that would actually be obtained when such investments are realised. Valuation of fund investments is described in more detail in the Note 32. Valuation of other investments The fair value of growth equity investments is determined quarterly by using valuation methods according to IPEVG and IFRS 13. The valuations are based on forecasted cash flows or peer group multiples. In estimating fair value of an investment, a method that is the most appropriate in light of the facts, nature and circumstances of the investment is applied. External valuations are made at least once a year to verify the fair values of growth equity investments. Goodwill impairment test Goodwill impairment test is performed annually. The most significant assumptions related to the recoverable amount are turnover growth, operating margin, discount rate and terminal growth rate. Turnover growth and operating margin estimates are based on the current cost structure and turnover generated by the current customer base. Turnover is expected to grow to the extent that can be reasonably supported by the current personnel and other resources. This means such additional turnover and costs included in the business plan that are related to future expansion – and expected to be mainly visible as new customers and increased headcount – have been removed from the cash flow forecasts when preparing the goodwill impairment test. Goodwill impairment test is described in more detail in the Note 15. 2. Segment information CapMan has three operating segments: the Management company business, Service business and Investments business. In the Management Company business, CapMan manages private equity funds and offers wealth advisory services. Private equity funds are invested by its partnership-based investment teams. Investments are mainly Nordic unlisted companies, real estate and infrastructure assets. CapMan raises capital for the funds from Nordic and international investors. CapMan Wealth Services offer comprehensive wealth advisory services related to the listed and unlisted market to smaller investors, such as family offices, smaller institutions and high net worth individuals. Income from the Management company business is derived from fee income and carried interest received from funds. The fee income include management fees related to CapMan’s position as a fund management company, fees from other services closely related to fund management and fees from wealth advisory services. In the Service business, CapMan offers procurement services and distributes software lisences to companies in Finland, Sweden and the Baltics, through CapMan Procurement Services (CaPS). Until February 1, 2023, Service business also included JAY Solutions, which offered reporting and back office services to investors. Through its Investment business, CapMan invests from its own balance sheet in the private equity asset class and mainly to its own funds. Income in this business segment is generated by changes in the fair value of investments and realised returns following exits and periodic returns, such as interest and dividends. Other includes the corporate functions not allocated to operating segments. These functions include part of the activities of group accounting, corporate communications, group management and costs related to share-based payment. Other also includes the eliminations of the intersegment transactions. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 47 2023 EUR 1,000 Management company business Service business Investment business Other Total Fee income 45,108 10,606 524 56,238 Carried interest 3,126 3,126 Turnover, external 48,234 10,606 524 59,364 Turnover, internal 3 44 –46 Materials and services –1,856 –1,856 Other operating income 60 19 79 Personnel expenses, of which –23,548 –1,899 –346 –8,129 –33,921 Salaries and bonuses –23,548 –1,899 –346 –7,160 –32,952 Share-based payment –970 –970 Depreciation, amortisation and impairment –1,048 –127 –14 –302 –1,491 Other operating expenses –6,648 –637 –139 –3,938 –11,362 Internal service fees –4,781 –143 4,923 Fair value changes of investments –6,115 –6,115 Operating profit 12,212 6,048 –6,614 –6,949 4,697 Items impacting comparability: Reorganisation costs 1,466 12 1,478 Acquisition related expenses 566 566 Items impacting comparability, total 1,466 577 2,043 Adjusted operating profit 13,678 6,048 –6,614 –6,372 6,740 Financial items –687 Income taxes –618 Profit for the financial year 3,392 2023 EUR 1,000 Management company business Service business Investment business Other Total Items impacting comparability: Reorganisation costs 1,179 Acquisition related expenses 566 Items impacting comparability, total 1,744 Adjusted profit for the financial year 5,137 Earnings per share, cents 0.8 Items impacting comparability, cents 1.1 Adjusted earnings per share, cents 1.9 Earnings per share, diluted, cents 0.8 Items impacting comparability, cents 1.1 Adjusted earnings per share, diluted, cents 1.9 Fee profit: Operating profit (loss) 6,740 Less: Carried interest –3,126 Fair value changes of investments 6,115 Fee profit 9,729 Geographical distribution of turnover: Finland 30,868 Other countries 28,496 Total 59,364 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 48 2022 Management 2022 Management company Service Investment company Service Investment EUR 1,000 business business business Other Total EUR 1,000 business business business Other Total Fee income 46,249 11,117 553 57,919 Items impacting comparability: Carried interest 9,613 9,613 Goodwill impairment 2,600 Turnover 55,861 11,117 553 67,532 Items impacting comparability, total 2,600 Turnover, internal 83 534 –617 Adjusted profit for the financial year 43,649 Materials and services –985 –985 Earnings per share, cents 25.1 Other operating income 2 2 Items impacting comparability, cents 1.7 Adjusted earnings per share, cents 26.8 Personnel expenses, of which –21,414 –3,331 –459 –9,368 –34,571 Salaries and bonuses –21,414 –3,331 –459 –6,641 –31,844 Earnings per share, diluted, cents 24.8 Share-based payment –2,727 –2,727 Items impacting comparability, cents 1.6 Depreciation, amortisation and Adjusted earnings per share, impairment –947 –2,978 –10 –245 –4,180 diluted, cents 26.4 Other operating expenses –6,652 –1,114 –364 –3,106 –11,236 Internal service fees –4,620 –231 4,851 Fee profit: Fair value changes of investments 36,547 36,547 Operating profit (loss) 55,708 Less: Operating profit 22,312 3,015 35,714 –7,932 53,108 Carried interest –9,613 Fair value changes of investments –36,547 Items impacting comparability: Fee profit 9,548 Goodwill impairment 2,600 2,600 Items impacting comparability, total 2,600 2,600 Geographical distribution of Adjusted operating profit 22,312 5,615 35,714 –7,932 55,708 turnover: Finland 38,032 Financial items –5,475 Other countries 29,500 Total 67,532 Income taxes –6,585 Profit for the financial year 41,049 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 49 3.Turnover Revenue from contracts with customers include management fees, service fees and carried interest. Management company business revenue is primarily related to long-term contracts. Management fees are typically recorded over time, whereas service fees include both transaction fees recorded at a point in time and other service fees, such as fees from wealth and asset management services, recorded over time. Carried interest is recognised at a point in time. Revenue from the Service business is based on both long-term and short-term contracts and includes solely fees recognised over time. Segment information disclosed in Note 2 provides more information on the businesses included in each reportable segment. The below table disaggregates the revenue into management fees, fees from services and carried interest, as well as timing of revenue recognition by reportable segment. 2023 Management company Service Investment EUR 1,000 business business business Other Total Management fees 39,034 39,034 Service fees 6,074 10,606 524 17,204 Carried interest 3,126 3,126 Revenue from customer contracts, external 48,234 10,606 524 59,364 Timing of Services transferred over time revenue recognition: 44,445 10,606 524 55,576 Services transferred at a point in time 3,788 3,788 Revenue from customer contracts, external 48,234 10,606 524 59,364 2022 Management company Service Investment EUR 1,000 business business business Other Total Management fees 38,847 38,847 Service fees 7,401 11,117 553 19,072 Carried interest 9,613 9,613 Revenue from customer contracts, external 55,861 11,117 553 67,532 Timing of Services transferred over time revenue recognition: 45,622 11,117 553 57,293 Services transferred at a point in time 10,239 10,239 Revenue from customer contracts, external 55,861 11,117 553 67,532 4. Other operating income 2023 2022 Other items 79 2 Total 79 2 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 50 5. Employee benefit expenses EUR 1,000 2023 2022 Salaries and wages 27,893 27,170 Pension expenses – defined contribution plans 3,966 3,894 Share-based payments 970 2,727 Other personnel expenses 1,092 780 Total 33,921 34,571 Remuneration of the management is presented in Note 31. Related party disclosures. Cost for the share-based payments is based on the fair value of the instrument. The counter-entry to the expenses recognised in the income statement is in retained earnings, and thus has no effect on total equity. More information on the share-based payments is disclosed in Note 30. Average number of people employed 2023 2022 By country Finland 133 141 Sweden 28 25 Denmark 10 8 Norway 2 2 Luxembourg 3 2 United Kingdom 7 7 In total 183 186 By segment Management company business 119 109 Service business 13 30 Investment business and other 51 46 In total 183 186 6. Depreciation EUR 1,000 2023 2022 Depreciation by asset type Intangible assets Other intangible assets 96 396 Total 96 396 Tangible assets Machinery and equipment 87 73 Right-of-use assets, buildings (IFRS 16) 1,297 1097 Right-of-use assets, machinery and equipment (IFRS 16) 11 14 Total 1,395 1,184 Total depreciation 1,491 1,580 Impairment by asset type Goodwill 0 2,600 Total impairments 0 2,600 7. Other operating expenses EUR 1,000 2023 2022 Included in other operating expenses: Other personnel expenses 1,359 1,474 Office expenses 650 539 Travelling and entertainment 1,297 1,218 External services 6,081 5,551 Other operating expenses 1,975 2,454 Total 11,362 11,236 Short-term lease expense (IFRS 16) 96 97 Expense for leases of low-value assets (IFRS 16) 173 190 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 51 Audit fees Ernst & Young chain of companies: EUR 1,000 2023 2022 Audit fees 371 361 Tax advisory services 57 0 Other fees and services 33 12 Total 461 373 Non-audit services performed by Ernst & Young in 2023 were 90 thousand euros (2022: 12 thousand euros in total) and included 57 (0) thousand euros of tax advisory services and 33 (12) thousand euros of other fees and services in total. 8. Adjustments to cash flow statement and total cash outflow for leases EUR 1,000 2023 2022 Personnel expenses 970 2,727 Depreciation, amortisation and write-downs 1,491 4,180 Fair value gains/losses of investments 6,115 –36,547 Finance income and costs 687 5,475 Costs related to acquisitions –71 Taxes 618 6,585 Other adjustments –144 –52 Total 9,666 –17,632 Total cash outflow for leases (IFRS 16) –1,333 –1,263 9. Fair value gains/losses of investments EUR 1,000 2023 2022 Investments at fair value through profit and loss Investments in funds –6,115 36,547 Total –6,115 36,547 10. Finance income and costs EUR 1,000 2023 2022 Finance income Interest income from loan receivables 1,036 104 Exchange gains 30 491 Change in fair value of financial liabilities 3,122 250 Total 4,188 845 Finance costs Interest expenses for loans –3,814 –4,139 Change of expected credit losses –68 –1,670 Other interest and finance expenses –570 –437 Interest expense of lease liabilities (IFRS 16) –168 –74 Exchange losses –254 Total –4,874 – 6,320 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 52 11. Income taxes EUR 1,000 2023 2022 Current income tax 3,049 2,611 Taxes for previous years 101 131 Deferred taxes Temporary differences –2,532 3,842 Total 618 6,584 Income tax reconcilliation EUR 1,000 2023 2022 Profit before taxes 4,010 47,633 Tax calculated at the domestic corporation tax rate of 20% 802 9,527 Effect of different tax rates outside Finland 92 78 Tax exempt income –1,195 –4,622 Performance share plan –230 –225 Goodwill impairment 0 520 Ohter non-deductible expenses 161 690 Unrecognized tax assets on tax losses and use of previously unrecognised tax losses 931 599 Taxes for previous years 101 131 Other differences –44 –113 Income taxes in the Group Income Statement 618 6,585 12. Earnings per share Undiluted earnings per share is calculated by dividing the distributable retained profit for the financial year by the average share issue adjusted number of shares, excluding shares that have been purchased by the Company and are presented as the Company’s own shares. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. 2023 2022 Profit attributable to the equity holders of the Company, EUR 1,000 1,346 39,616 Profit applied to calculate diluted earnings per share 1,346 39,616 Weighted average number of shares (’000) 158,574 157,560 Treasury shares (’000) –26 –26 Weighted average number of shares (’000) 158,548 157,534 Effect of share-based incentive plans (’000) 1,184 2,170 Weighted average number of shares adjusted for the effect of dilution (’000) 159,731 159,704 Earnings per share (basic), cents 0.8 25.1 Earnings per share (diluted), cents 0.8 24.8 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 53 13. Assets held for sale During the financial year, CapMan Plc and the non-controlling shareholders of JAY Solutions Oy, subsidiary of CapMan Plc, sold their ownership of JAY Solutions Oy to Bas Invest AB and to the management of JAY Solutions Oy. The transaction was closed on February 1, 2023. The sale had a very minor impact on CapMan’s result due to impairment loss written during the previous year 2022. CapMan had an ownership interest of 60% in JAY Solutions Oy, but the subsidiary was consolidated in full without separating non-controlling interest because of a symmetric option arrangement. Resulting from the sale after the closing of the previous financial year, CapMan classified assets and liabilities related to JAY Solutions Oy as non-current assets held for sale on December 31, 2022. In conjunction with this, CapMan valued these net assets to the lower of their carrying amount and their fair value less costs on disposal and resulting from this, recorded an impairment loss of EUR 2.6 million to goodwill allocated to JAY Solutions in the financial year 2022 (see Note 15 for details). Impairment loss was reported under reportable segment Service Business (see Note 2), where JAY Solutions’ assets and liabilities held for sale were included. The sale of shares had an insignificant impact on CapMan’s EBIT in 2022 and did not either have a significant impact on CapMan’s oper- ating profit or financial position in 2023. Assets and liabilities related to JAY Solutions Oy were classified as held for sale and disclosed separately in the Consolidated Balance Sheet as at December 31, 2022. The carrying amounts of those assets and liabilities are presented in the below table. As at December 31, 2023, CapMan did not have any assets held for sale. EUR 1,000 2023 2022 Goodwill 4,828 Other non-current assets 134 Current assets 807 Assets held for sale – 5,769 Current liabilities 717 Liabilities associated with assets held for sale – 717 14. Tangible assets EUR 1,000 2023 2022 Machinery and equipment Acquisition cost at 1 January 2,498 2,347 Additions 22 168 Transfer to assets held for sale 0 –8 Translation difference 1 –9 Acquisition cost at 31 December 2,521 2,498 Accumulated depreciation at 1 January –2,246 –2,183 Depreciation for the financial year –87 –73 Transfer to assets held for sale 0 3 Translation difference –1 7 Accumulated depreciation at 31 December –2,334 –2,246 Book value on 31 December 187 252 Right-of-use assets Machinery and equipment (IFRS 16) Additions 0 0 Depreciations –11 –14 Book value on 31 December 0 10 Leased premises (IFRS 16) Additions 1,944 2,840 Depreciations –1,297 –1,097 Book value on 31 December 3,932 3,285 Other tangible assets Acquisition cost at 1 January 23 23 Book value on 31 December 23 23 Tangible assets total 4,142 3,571 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 54 15. Goodwill EUR 1,000 2023 2022 Acquisition cost at 1 January 20,581 28,009 Transfer to assets held for sale 0 –7,428 Acquisition cost at 31 December 20,581 20,581 Accumulated impairment at 1 January –12,695 –12,695 Impairment 0 –2,600 Transfer to assets held for sale 0 2,600 Accumulated impairment at 31 December –12,695 –12,695 Book value on 31 December 7,886 7,886 Impairment test Goodwill is tested for impairment at least annually and has been allocated to the cash-generating units as follows: EUR 1,000 2023 2022 CapMan Wealth Services 7,412 7,412 JAY Solutions 4,828 Other 474 474 Total 7,886 12,714 JAY Solutions During the financial year, on February 1, 2023, CapMan disposed of JAY Solutions. Therefore, JAY Solutions was classified as an asset held for sale as at December 31, 2022, and its recoverable amount was based on fair value less costs of disposal in the goodwill impairment test. Because the expected selling price of JAY Solutions’s shares less their disposal costs was lower than its carrying amount as at December 31, 2022, an impairment loss of EUR 2.6 million was recorded and reported on the line item Depreciation, amortisation and impairment in the consolidated income statement and in reportable segment Service Business (see Note 2). The fair value of JAY Solutions was classified in the fair value hierarchy level 1, as it was based on the selling price agreed in the Share Purchase Agreement. CapMan Wealth Services Recoverable amount of CapMan Wealth Services is based on value-in-use using five-year discounted cash flow projections based on a business plan approved by the management. Future cash flows arising from additional turnover generated by increased personnel, and thus extending the operations and enhancing the performance, have been excluded from the cash flow projections applied in the impairment test. Cash flows for the period extending over the planning period are calculated using the terminal value method. Based on the impairment test, goodwill allocated to CapMan Wealth Services was not impaired. Key assumptions applied in the impairment test based on value-in-use are set forth in the table below: 2023 2022 Pre-tax discount rate 16.8% 17.8% Average turnover growth 18.0% 20.8% Average EBIT margin 35.2% 50.6% Terminal growth rate 1.0% 1.0% Discount rate takes into account listed domestic asset and wealth managers as a benchmark group. Cost of equity includes risk premiums for Finland and company size. As a risk-free rate, a reference rate of Finnish 10-year government bonds has been applied. The risk premium specific for Finland and risk-free interest rate have slightly decreased during the financial year, which has resulted in a 1 percentage point lower discount rate for 2023 than for 2022. Based on the impairment test, goodwill allocated to CapMan Wealth Services is not impaired. Of key assumptions applied in this year’s impairment test, recoverable amount is most sensitive to changes in turnover growth during the explicit forecasting period (5 years). Based on the sensitivity analysis, if turnover growth during the explicit forecasting period would be 12 percentage points lower, or alternatively, if average EBIT margin would be 14 percentage points lower, recoverable amount would equal the carrying amount of the respective cash-generating unit. At the moment, recoverable amount exceeds carrying amount by EUR 12 million, and no reasonably possible change in any of the other key assumptions would lead to impairment . ANNUAL REPORT 2023 FINANCIAL STATEMENTS 55 16. Other intangible assets EUR 1,000 2023 2022 Acquisition cost at 1 January 6,616 6,944 Additions 16 166 Transfers 0 0 Transfer to assets held for sale –16 –494 Acquisition cost at 31 December 6,616 6,616 Accumulated depreciation at 1 January –6,516 –6,484 Depreciation for the financial year –96 –396 Transfer to assets held for sale 7 364 Accumulated depreciation at 31 December –6,605 –6,516 Book value on 31 December 10 100 17. Investments at fair value through profit or loss Investments in funds EUR 1,000 2023 2022 Investments in funds at 1 January 169,063 130,011 Additions 18,097 29,312 Distributions –17,615 –27,598 Disposals –3,975 –1 Fair value gains/losses of investments –5,926 36,685 Transfers –737 654 Investments in funds at 31 December 158,907 169,063 Investments in funds by investment area at the end of period Buyout 28,314 26,107 Credit 6,048 4,285 Russia 589 307 Real Estate 40,449 44,024 Growth Equity 15,170 18,573 Infra 10,059 12,810 Special Situations 3,105 2,925 Fund of funds 16,694 16,463 External Venture Capital funds 38,085 42,459 Other investment areas 394 1,110 Total 158,907 169,063 Investments in funds include the subsidiary, CapMan Fund Investments SICAV-SIF, with a fair value of EUR 100.9 million. The fair value included EUR 0.1 million of cash. Other financial assets 2023 2022 Other investments at 1 January 434 393 Additions 46 46 Fair value gains/losses of investments 28 –5 Other investments at 31 December 508 434 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 56 18. Receivables – Non-current EUR 1,000 2023 2022 Trade receivables 4,134 5,188 Loan receivables 2,307 263 Other receivables 84 83 Accrued income 0 12 Total 6,525 5,545 Non-current trade receivables are related to previously offered fundraising and advisory services. Because of the significant financing component related to these receivables, the promised amount of consideration has been adjusted for the effects of the time value of money and the credit characteristics of the customer. However, no contract assets are related to these customer contracts, as the Group’s right to the amount of consideration is unconditional and subject only to the passage of time. Loan receivables primarily include loans granted to investment teams for co-investments. Allowance for expected credit losses of loan receivables is presented below separately for portion measured at an amount equal to 12-month and lifetime expected credit losses. As at December 31, 2023 and 2022, loss allowance measured at an amount equal to lifetime expected credit losses is fully related to credit-impaired loan receivables from entities controlled by the former or current investment teams, and granted for making co-investments in funds managed by CapMan. The most significant credit-impaired loan receivables are from entities controlled by the former CapMan Russia investment team. CapMan has determined these loan receivables being credit-impaired, because the underlying funds have filed for liquidation and it seems not probable that the loans and accrued interests would be repaid to CapMan in full. The other credit-impaired loan receivables are related to loans granted to making co-investments to such funds, whose carry potential is estimated to be low, and therefore, CapMan has determined it seems not probable that the borrowing entity would repay these loans and accrued interests in full. EUR 1,000 2023 2022 Loan receivables, gross 3,909 1,848 Loss allowance, 12-month ECL –22 –4 Loss allowance, lifetime ECL –1,581 –1,581 Loan receivables, net 2,307 263 * ECL = expected credit losses Other non-currrent receivables include primarily rental deposits. 19. Deferred tax assets and liabilities Changes in deferred taxes during 2023: Charged to Income Translation Charged in EUR 1,000 12/31/2022 Statement difference equity 12/31/2023 Deferred tax assets Accrued differences 1,790 106 0 0 1,896 Total 1,790 106 0 0 1,896 Deferred tax liabilities Accrued differences 1,261 –1,113 0 0 148 Unrealised fair value changes 7,157 –1,314 0 0 5,843 Total 8,418 –2,427 0 0 5,991 Changes in deferred taxes during 2022: Charged to Income Translation Charged in EUR 1,000 12/31/2021 Statement difference equity 12/31/2022 Deferred tax assets Accrued differences 1,836 –46 0 0 1,790 Total 1,836 –46 0 0 1,790 Deferred tax liabilities Accrued differences 582 684 –5 0 1,261 Unrealised fair value changes 4,045 3,112 0 0 7,157 Total 4,627 3,796 –5 0 8,418 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 57 20. Trade and other receivables EUR 1,000 2023 2022 Trade receivables 8,875 8,661 Loan receivables 815 815 Accrued income 1,839 1,648 Other receivables 8,853 9,593 Total 20,382 20,717 Loss allowance for the expected credit losses of trade receivables, based on a provision matrix, is presented below. 2023 2022 Trade receivables, gross 9,007 8,770 Loss allowance –132 –109 Trade receivables, net 8,875 8,661 Expected credit losses of other receivables measured at amortised cost is insignificant, and other receivables at amortised cost do not contain credit-impaired items . With regards to contracts with customers, the Group’s right to the amount of consideration is unconditional. Therefore, they are presented as receivables and no separate contract asset is presented. Loan receivables include mainly current loan receivables from related parties and other employees. Accrued income includes mainly prepayments. Other receivables mainly include unvoiced sale of services, costs to be re-invoiced, income tax receivables and receivables related to sold financial assets . Trade and other receivables by currency at end of year Amount in Trade and other receivables foreign currency Amount in euros proportion EUR 19,459 72% USD 5,808 5,256 20% SEK 9,186 828 3% GBP 62 71 0% DKK 9,494 1,274 5% NOK 215 19 0% 21. Financial assets at fair value through profit or loss EUR 1,000 2023 2022 Derivate assets 116 65 Interest rate funds 159 0 Total 275 65 Fair value of Foreign exchange forwards derivative instruments 116 65 Total 116 65 Nominal value of derivative instruments Foreign exchange forwards 5,320 6,327 Total 5,320 6,327 Financial assets at fair value through profit or loss include derivative assets and short-term investments made for cash management purposes in interest rate funds. CapMan uses short-term derivative instruments to hedge against currency changes in foreign currency denominated trade receivables. CapMan does not apply hedge accounting to derivative instruments and derivatives are initially measured at costs and thereafter to fair value at the end of the reporting period. Fair values of derivatives are based on market values or values derived from market values at the end of the reporting period (fair value hierarchy level 2). Translation difference incurred to foreign currency denominated trade receivables is recognised to turnover and that fair value change of the derivative instrument that is effectively hedging the underlying trade receivable, is recorded to turnover and the remainder of the derivative’s fair value change is recorded to financial expenses. In the comparison period, no derivative instruments were used. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 58 22. Cash and cash equivalents EUR 1,000 2023 2022 Bank accounts 40,144 55,571 Money market funds 872 Total 41,017 55,571 Cash and cash equivalents include bank accounts and short-term investments made to money market funds for cash management purposes. EUR 2.0 million of bank account balances is related to the launch of a new hotel real estate fund in 2019 and is not available for use by the group. Because of some assets classified as asset held for sale as at December 31, 2022 (see Note 13), below reconciles the cash and cash equivalents reported in the balance sheet to the cash and cash equivalents reported in the cash flow statement: EUR 1,000 2023 2022 Cash and cash equivalents in the balance sheet 41,017 55,571 Cash and cash equivalents related to assets held for sale 373 Cash and cash equivalents in the cash flow statement 41,017 55,944 Other reserves During the financial year, in conjunction with the final reward payment of the performance share plan 2022–23, a total of 794,419 shares were issued in a directed share issue without payment. During previous financial year, in conjunction with a partial reward payment of performance share plan 2020–23, a total of 1,437,675 shares were issued in a directed share issue without payment. During the current and previous financial year, repaid capital was deducted from the unrestricted equity fund. Share-based incentive plans are presented in Note 30. Share-based payments. Translation difference The foreign currency translation reserve includes translation differences arising from currency conversion in the closing of the books for foreign units. Dividends paid and proposal for profit distribution and repayment of capital For the financial year 2022, dividend and repayment of invested unrestricted equity fund amounted to EUR 0.17 per share or EUR 26,9 million in total. Dividend and equity repayment was paid in two instalments, the first of which, amounting to EUR 14.2 million, was paid on March 24, 2023, and the second of which, amounting to EUR 12.7 million, was paid on September 22, 2023. The first instalment included a dividend of EUR 0.04 per share and an equity repayment of EUR 0.05 per share. The second instalment included a dividend of EUR 0.04 per share and an equity repayment of EUR 0.04 per share. As at December 31, 2023, CapMan Plc’s distributable funds amounted to approximately EUR 37.5 million. The Board of Directors’ resolution proposal to the General Meeting is a combined proposal of a dividend distribution and an authorisation for the Board of Directors to decide on distribution of an additional dividend. The Board of Directors expects the overall dividend distribution to be EUR 0.10 per share for the financial period ended 31 December 2023. The Board of Directors proposes to the General Meeting that a dividend in the total amount of EUR 0.06 per share would be paid for the financial period that ended on 31 December 2023 based on the balance sheet adopted for 2023. The dividend would be paid to a shareholder who on the record date of the payment, 2 April 2024, is registered as a shareholder in the shareholders’ register of the Company maintained by Euroclear Finland Oy. The payment date would be 9 April 2024. The Board of Directors further proposes to the General Meeting that the Board of Directors be authorised to decide on an additional dividend in the maximum amount of EUR 0.04 per share. The authorisation would be effective until the end of the next Annual General Meeting. The Board of Directors intends to resolve on the additional dividend in its meeting scheduled for 18 September 2024. Redemption obligation clause A shareholder whose share of the entire share capital or the voting rights of the Company reaches or exceeds 33.3% or 50% has, at the request of other shareholders, the obligation to redeem his or her shares and related securities in accordance with the Articles of Association of CapMan Plc. 23. Share capital and shares Number of B 1000 shares Total At 1 January 2022 156,591 156,591 Directed share issue without payment 1,438 1,438 At 31 December 2022 158,029 158,029 Directed share issue without payment 794 794 At 31 December 2023 158,823 158,823 Share premium Other EUR 1,000 Share capital account reserves Total At 1 January 2022 772 38,968 52,718 92,458 Repayment of capital –17,297 –17,297 Other changes 4 4 At 31 December 2022 772 38,968 35,425 75,165 Repayment of capital –14,311 –14,311 At 31 December 2023 772 38,968 21,114 60,854 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 59 24. Interest-bearing loans and borrowings – Non-current EUR 1,000 2023 2022 Senior bonds 89,750 89,650 Lease liabilities (IFRS 16) 2,720 2,204 Total 92,470 91,854 In the previous financial year 2022, CapMan issued unsecured sustainability-linked notes in the aggregate principal amount of EUR 40 million. The notes will mature on April 13, 2027 and carry a fixed annual interest of 4.5%. In conjunction with this, CapMan redemeed the remaining EUR 31.5 million of its notes issued in 2018. CapMan also has unsecured notes in the aggregate principal amount of EUR 50 million issued in December 2020, which will mature on December 9, 2025 and carry a fixed annual interest of 4.0% paid annually. Both loan agreements include covenants related to equity ratio. 25. Other non-current liabilities EUR 1,000 2023 2022 Acquisition related liabilities 0 6,933 Other liabilities 484 410 Total 484 7,343 In the previous year, acquisition related liabilities consists of call and put options, which were measured at fair value through profit or loss. The change of fair value was recorded as finance income or expense. 26. Trade and other payables – Current EUR 1,000 2023 2022 Trade payables 2,101 1,167 Advance payments received 761 571 Accrued expenses 14,178 12,994 Acquisition related liabilities 3,842 0 Other liabilities 3,274 3,714 Total 24,155 18,446 The maturity of trade payables is normal terms of trade and don’t include overdue payments. Advance payments received are liabilities based on customer contracts. The most significant items in accrued expenses relate to accrued salaries and social benefit expenses. Acquisition related liabilities consists of a symmetric put and call option arrangement made with the non-controlling interest of a subsidiary, which is measured at fair value through profit or loss. The change of fair value is recorded as finance income or expense. In the previous year, this financial liability was included in other non-current liabilities. Trade and other liabilities by currency at end of year Amount in Trade and other liabilities foreign currency Amount in euros Proportion EUR 19,726 82% SEK 32,121 2,895 12% GBP 559 644 3% DKK 5,551 745 3% NOK 1,636 146 1% 27. Interest-bearing loans and borrowings – Current EUR 1,000 2023 2022 Short-term bank facility Lease liabilities (IFRS 16) 1,323 1,060 Liabilities to non-controlling interests 63 52 Total 1,386 1,112 Ownership and voting rights agreements As at 31 December 2023 CapMan Plc had no knowledge of agreements or arrangements, related to the Company’s ownership and voting rights, that were apt to have substantial impact on the share value of CapMan Plc. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 60 28. Financial assets and liabilities Financial assets EUR 1,000 Note Balance sheet value Fair value 2023 Investments at fair value through profit or loss Investments in funds 17 158,907 158,907 Other financial assets 17 508 508 Loan receivables 18 3,122 3,122 Trade and other receivables 18, 20 23,788 23,788 Financial assets at fair value 21 275 275 Cash and bank 22 41,017 41,017 Total 227,617 227,617 * Other financial assets consists of financial assets that are specifically classified as investments at fair value through profit and loss Financial assets EUR 1,000 2022 Investments at fair value through profit or loss Investments in funds 17 169,063 169,063 Other financial assets 17 434 434 Loan receivables 18 1,078 1,078 Trade and other receivables 18, 20 25,185 25,185 Financial assets at fair value 21 65 65 Cash and bank 22 55,571 55,571 Total 251,396 251,396 * Other financial assets consists of financial assets that are specifically classified as investments at fair value through profit and loss Financial liabilities EUR 1,000 Note Balance sheet value Fair value 2023 Non-current liabilities 24 92,470 92,470 Non-current operative liabilities 25 484 484 Trade and other liabilities 26 24,154 24,154 Current liabilities 27 1,386 1,386 Total 118,494 118,494 Financial liabilities EUR 1,000 2022 Non-current liabilities 24 91,854 91,854 Non-current operative liabilities 25 7,343 7,343 Trade and other liabilities 26 18,446 18,446 Current liabilities 27 1,112 1,112 Total 118,755 118,755 Net debt Net debt 2023 2022 Cash and cash equivalents 41,017 55,571 Borrowings – repayable within one year –1,386 –1,112 Borrowings – repayable after one year –92,470 –91,854 Net debt –52,839 –37,395 Cash and cash equivalents 41,017 55,571 Gross debt – variable interest rates –4,106 –3,196 Gross debt – fixed interest rates –89,750 –89,770 Net debt –52,839 –37,395 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 61 Changes in liabilities arising from financing activities January 1, Other December EUR 1,000 2023 Cash flows changes 31, 2023 2023 Non-current loans and borrowings 89,650 0 100 89,750 Non-current lease liabilities 2,204 –1,159 1,675 2,720 Current loans and borrowings 52 11 63 Current lease liabilities 1,060 –5 268 1,323 Total 92,966 –1,154 2,044 93,856 Liabilities associated January 1, with assets Other December EUR 1,000 2022 Cash flows held for sale changes 31, 2022 2022 Non-current loans and borrowings 81,354 8,259 –120 157 89,650 Non-current lease liabilities 683 –1,125 2,646 2,204 Current loans and borrowings 40 12 52 Current lease liabilities 930 –64 194 1,060 Total 83,007 7,082 –120 2,997 92,966 29. Commitments and contingent liabilities Securities and other contingent liabilities EUR 1,000 2023 2022 Contingencies for own commitment Business mortgage 60,000 60,000 Other contingent liabilities 1,239 2,062 Remaining commitments to funds Remaining commitments to funds by investment area Buyout 17,942 25,273 Credit 3,127 4,768 Russia 1,066 1,066 Real Estate 5,916 7,577 Other investment areas 1,489 2,181 Funds of funds 245 245 Growth Equity 19,243 11,171 Infra 10,151 12,127 Special Situations 4,507 4,853 CapMan Wealth Services funds 15,511 13,868 External private equity funds 3,703 4,665 External Veture Capital funds 2,290 1,316 Total 85,190 89,110 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 62 30. Share-based payments As at the balance sheet date, CapMan has one investment based long-term share-based incentive plan “Share plan 2022–25” in force. The program “Share plan 2020–23” has ended and the rewards have been paid during the financial year. Share-based incentive plans are used to commit key individuals and executives to the company and reinforce the alignment of interests of key individuals and executives and CapMan shareholders. In the investment based long-term share-based incentive plan the participants are committed to shareholder value creation by investing a significant amount into the CapMan Plc share. The investment-based long-term incentive plan 2020–23 included one performance period. The performance period commenced on 1 April 2020 and ended on 31 March 2023. The participants might earn a performance-based reward from the performance period. The prerequisite for receiving reward on the basis of the plan was that a participant acquired company’s shares or allocated previously owned company’s shares up to the number determined by the Board of Directors. The perfor- mance-based reward from the plan was based on the company share’s Total Shareholder Return (TSR) and on a participant’s employment or service upon reward payment. An early payment of the vested reward shares was conducted in April 2022, but irrespective of this, the plan remained in force until the end of its performance period on 31 March 2023 in line with the original terms. The early payment and the change in the forfeiture rate resulted in an EUR 1.1 million additional expense for 2022 and EUR 0.7 million increase in the plan’s fair value. The rest of the rewards were paid in 2023 and the expense of the program in year 2023 totaled EUR 0.2 million. The plan was equity-settled by nature and while the participants earned a certain gross amount of reward shares, which was divided into portion paid in shares and portion paid in cash to cover the withholding tax consequences. The Board resolved to issue new shares to pay out the portion of the reward paid in shares. The investment-based long-term incentive plan 2022–25 includes three performance periods. The performance period commenced on 1 April 2022 and ends on 31 March 2023, 2024 and 2025, respectively. The participants may earn a perfor- mance-based reward from each of the performance periods and a matching reward from the 2022–2025 period. The rewards from the plan will be paid in 2024, 2025 and 2026. The aim of the plan is to align remuneration with CapMan’s sustainability agenda, to retain the plan participants in the company’s service, and to offer them a competitive reward plan based on owning, earning and accumulating the company’s shares. The prerequisite for receiving reward on the basis of the plan is that a participant acquires company’s shares or allocates previously owned company’s shares up to the number determined by the Board of Directors. The performance-based reward from the plan is based on the company share’s Total Shareholder Return (TSR) and on a participant’s employment or service upon reward payment. The plan is equity-settled by nature and while the participants earn a certain gross amount of reward shares, it can be partially paid in cash to cover the withholding tax consequences. The Board shall resolve whether new Shares or existing Shares held by the Company are given as reward. The target group of the Plan consists of 22 persons, including the members of the Management Group. The fair value of the investment-based incentive plans has been measured at the grant date and is expensed on a straight-line basis over the vesting period. The fair value has been calculated by applying a Monte-Carlo simulation, where the model inputs have included share price at the grant date, expected annualised volatility over the tenure of the program, risk-free interest rate, expected dividends and expected share rewards to be granted on different target share price levels. The model simulates share price development during the perfor- mance period and the resulting share rewards to be granted after reaching the share price levels defined in the conditions of the plan. In addition, lack of marketability due to the lock-up period as well as forfeiture rate have been incorporated into the measurement of the fair value as decreasing factors. The total expense recognised for the period arising from share-based payment transactions amounted to EUR 1.0 million (EUR 2.7 million). There were no liabilities arising from share- based payment transactions. As at the balance sheet date, based on the closing price of CapMan’s share, it is estimated that for the Share plan 2022–25, the shares to be withheld and paid in cash to cover withholding tax liabilities will amount to EUR 1.0 million. Key information on the investment-based incentive plans is presented in the below table . ANNUAL REPORT 2023 FINANCIAL STATEMENTS 63 Share plan Share plan Investment-based incentive plans 2020–2023 2022–2025 Grant date 16.4.2020 13.4.2022 Vesting period starts 16.4.2020 13.4.2022 13.4.2024, 13.4.2025 ja Vesting period ends 31.8.2023 13.4.2026 Grant date share price, EUR 1.764 2.420 Share price at the end of the period, EUR 2.29 2.29 Expected annualised volatility 27% 26% Assumed risk-free interest rate 0.0% 1.0% Present value of the expected dividends, EUR 0.45 0.63 Forfeiture rate assumption 0% 0% Increase in fair value of share premiums granted during the period 0.0 –0.3 Fair value of the plan, EUR million 3.4 3.0 Expense recorded during the financial year, EUR million 0.2 0.8 Cumulative expense recorded for the plan, EUR million 3.4 1.6 Future cash payment related to withholding taxes, EUR million – –1.0 Number of participants in the plan at the balance sheet date 0 22 Share plan Share plan Changes in the number of share rewards during the period 2020–2023 2022–2025 Outstanding in the beginning of the period 1.1.2022 1,485,000 3,938,348 Granted 0 919,573 Forfeited 0 967,569 Exercised 1,485,000 94,931 Expired 0 0 Exercised at the end of the period 31.12.2022 4,402,500 94,931 Outstanding at the end of the period 31.12.2022 0 3,795,420 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 64 31. Related party disclosures Parent company Parent company Group ownership of ownership of Group ownership of ownership of Group companies shares, % shares, % Group companies shares, % shares, % CapMan Plc, parent company Finland CapMan Infra Management Oy Finland 60% 60% CapMan Capital Management Oy Finland 100% 100% CapMan Infra Lux Management S.á.r.l. Luxembourg 60% CapMan Sweden AB Sweden 100% 100% CapMan Growth Equity 2017 GP Oy Finland 100% 100% CapMan AB Sweden 100% 100% CapMan Nordic Infrastructure Manager S.á.r.l. Luxembourg 100% 100% CapMan (Guernsey) Limited Guernsey 100% 100% CapMan Infra Lynx GP Oy Finland 60% CapMan (Guernsey) Buyout VIII GP Limited Guernsey 100% 100% CapMan Buyout XI GP S.á.r.l Luxembourg 100% 100% CapMan (Sweden) Buyout VIII GP AB Sweden 100% 100% CapMan AIFM Oy Finland 100% 100% CapMan Classic GP Oy Finland 100% 100% Nest Capital III GP Oy Finland 100% 100% CapMan Real Estate Oy Finland 100% 100% CapMan Procurement Services (CaPS) Oy Finland 93% 93% Dividum Oy Finland 100% 100% CapMan Buyout Management Oy Finland 100% 100% RG Invest Oy Finland 100% 100% CapMan Hotels II Holding GP Oy Finland 100% 100% CapMan RE II GP Oy Finland 100% 100% CapMan Wealth Services Oy Finland 60% 60% CapMan (Guernsey) Life Science IV GP Limited Guernsey 100% 100% CapMan Growth Equity II GP Oy Finland 100% 100% CapMan (Guernsey) Technology 2007 GP Limited Guernsey 100% 100% CapMan Special Situations GP Oy Finland 100% 100% CapMan (Sweden) Technology Fund 2007 GP AB Sweden 100% 100% CapMan Special Situations Oy Finland 65% 65% CapMan Private Equity Advisors Limited Cyprus 100% 100% Nest Capital Management AB Sweden 100% 100% RG Growth (Guernsey) GP Ltd Guernsey 100% 100% CM III Feeder GP S.á.r.l. Luxembourg 100% 100% CapMan (Guernsey) Investment Limited Guernsey 100% 100% CaPS Baltic OÜ Estonia 56% CapMan (Guernsey) Buyout IX GP Limited Guernsey 100% 100% Maneq 2010 AB Sweden 86% 86% CapMan Fund Investments SICAV-SIF Luxembourg 100% 100% Maneq 2005 AB Sweden 100% 100% CapMan (Guernsey) Buyout X GP Limited Guernsey 100% 100% CapMan Residential Manager SA Luxembourg 60% 60% RG Growth (Guernsey) II GP Ltd Guernsey 100% 100% CMRF Feeder GP S.á.r.l. Luxembourg 60% Maneq 2012 AB Sweden 100% 100% CMRF Advisors Oy Finland 60% 60% CapMan Nordic Real Estate Manager S.A. Luxembourg 100% 100% CM Nordic Gems GP Oy Finland 100% 100% CapMan Buyout X GP Oy Finland 100% 100% CMH II Feeder GP Sarl Luxemburg 100% 100% CapMan Endowment GP Oy Finland 100% 100% CapMan Nordic Infrastructure II Manager S.á.r.l. Luxemburg 100% 100% CapMan Real Estate UK Limited United Kingdom 100% CMNPI GP II Sarl Luxemburg 100% 100% Nest Capital 2015 GP Oy Finland 100% 100% CapMan Growth Equity III GP Oy Finland 100% 100% Kokoelmakeskus GP Oy Finland 100% 100% CapMan Growth Management Oy Finland 65% 65% CapMan Growth Equity Oy Finland 100% 100% Exmo Solutions OÜ Estonia 56% CapMan Real Estate Manager S.A. Luxembourg 100% 100% ANNUAL REPORT 2023 FINANCIAL STATEMENTS 65 Group ownership Group companies of shares, % Foreign branches CapMan Real Estate Denmark, filial av CapMan AB, Sverige Denmark 100% CapMan Real Estate Oy, filial i Norge Norway 100% CapMan Procurement Services (CaPS) Oy, filial i Sverige Sweden 93% CapMan Buyout Management Oy, filial i Sverige Sweden 100% CapMan Infra Management Oy, filial i Sverige Sweden 60% Transactions with related parties In 2023, CapMan recorded fees, totalling approximately EUR 7 thousand, for financial and legal services to Momea Invest Oy, a controlled entity of Olli Liitola, member of the Board of Directors of CapMan Plc. In the previous financial year 2022, CapMan issued a long-term loan of EUR 210 thousand with a fixed interest rate to Äkäs Capital Oy, a controlled entity of Maximilian Marschan, member of the Management Group. Äkäs Capital Oy used the loan to purchase an additional 1.5% ownership share in CapMan Procurement Services (CaPS) Oy, a subsidiary of CapMan Plc. Receivables from and liabilities to related parties EUR 1,000 2023 2022 Loan receivables, non-current, from related parties 242 235 Capital loan liability to related parties 120 Commitments to related parties EUR 1,000 2023 2022 Loan commitments 98 112 Management remuneration EUR 1,000 2023 2022 CEO Pia Kåll Salaries and other short-term employee benefits 351 Pension costs 62 Additional pension costs 35 Share-based payments 181 Total 630 CEO Joakim Frimodig Salaries and other short-term employee benefits 130 453 Pension costs 23 80 Additional pension costs 13 45 Share-based payments –68 793 Total 98 1,371 Management group excl. CEO Salaries and other short-term employee benefits 2,886 3,483 Share-based payments 585 1,106 Total 3,472 4,590 Remuneration and fees of the Board of Directors EUR 1,000 2023 2022 Joakim Frimodig as of March 15, 2023 291 Andreas Tallberg until March 15, 2023 16 69 Johan Bygge 44 44 Mammu Kaario 55 55 Catarina Fagerholm 45 45 Eero Heliövaara until March 16, 2022 11 Olli Liitola 43 42 Johan Hammarén 42 42 Yhteensä 537 309 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 66 Management remuneration includes members of the board, CEO and management group. The CEO has a mutual notice period of six months and he will be entitled to a severance fee of 12 months’ salary, if his employment is terminated by the company. The CEO and some of the Management Group members are covered by additional defined contribution based pension insurance. The retirement age of the CEO is 63 years. The Management Group members, incl. CEO, have allocated a total of 780,000 shares (740,000 shares in 2022) to the investment-based long-term incentive plan 2022–25. The program PSP 2020–23 has ended and at the end of the previous financial year, the Management Group members had allocated a total of 660,000 shares to this plan. The Management Group members were not granted any stock options during the current or previous financial year. The Management Group and other employees have similar terms in the investment-based long-term incentive plans and stock options granted earlier (see Note 30). 32. Financial risk management The purpose of financial risk management is to ensure that the Group has adequate and effectively utilised financing as regards the nature and scope of the Group’s business. The objective is to minimise the impact of negative market development on the Group with consideration for cost efficiency. The financial risk management has been centralised and the Group’s CFO is responsible for financial risk management and control. The management constantly monitors cash flow forecasts and the Group’s liquidity position on behalf of all Group companies. In addition, the Group’s principles for liquidity management include rolling 12-month loan covenant assessments. The loan covenants are related to equity ratio and net gearing. During the financial year all the loan covenants have been fullfilled. The Group has a Risk and Valuation team, which monitors the performance and the price risk of the investment portfolio (financial assets measured at fair value through profit or loss) independently and objectively of the investment teams. The Risk and Valuation team is responsible for reviewing the monthly reporting and forecasts for portfolio companies. Valuation proposals are examined by the Risk and Valuation team and subsequently reviewed and decided by the Valuation Committee, which comprises at least Valuation Controller, Risk Manager and at least one CapMan AIF Manager’s Board of Directors. The portfolio company valuations are reviewed in the Valuation Committee on a quarterly basis. The valuations are back tested against realised exit valuations, and the results of such back testing are reported to the Audit Committee annually. a) Liquidity risk Cash inflow from operating activities consists of predictable management fees and fees from the Service Business, as well as transaction-based fees and carried interest income, which are more difficult to predict. Cash outflow from operating activities consists of payment of fixed costs, interests and taxes, which are relatively well predictable in the short term. Liquidity management is also significantly impacted by the timing of the capital calls to the funds and proceeds from fund investments, which is difficult to predict. Therefore, the Group maintains a sufficient liquidity in order to fulfill its commitments, which are more difficult to predict. Cash from financing activities consist of proceeds from and repayment of borrowings, and payment of dividends and return of capital. Management fees received from the funds and majority of fees from the Service Business are based on long-term agreements and are targeted to cover the operational expenses of the Group. Management fees and majority of fees from the Service Business are quite reliably predictable for the coming 12 months. However, part of of the fees from the Service Business are transaction-based and thus more difficult to forecast. The timing and receipt of carried interest generated by the funds is uncertain and will contribute to the volatility of the results. Changes in investment and exit activity levels may have a significant impact on cash flows of the Group. A single investment or exit may change the cash flow situation completely and the exact timing of the cash flow is difficult to predict. Group companies managing ANNUAL REPORT 2023 FINANCIAL STATEMENTS 67 a fund may in certain circumstances, pursuant to the terms of the fund agreement, have to return carried interest income they have received (so-called clawback). The obligation to return carried interest income applies typically when, according to the final distribution of funds, the carried interest income received by the fund management company exceeds the carried interest it is entitled to when the fund expires. CapMan has no clawback liabilities recorded at the balance sheet date. CapMan has made commitments to the funds it manages. As at December 31, 2023, the undrawn commitments to the funds amounted to EUR 85.2 (89.1) million and the financing capacity available (cash available for use and third party financing facilities) amounted to EUR 59.2 (74.5) million. The cash available includes the cash of CapMan Fund Investments SICAV-SIF EUR 0.1 million (0.8) which is reported in fund investments in the group balance sheet. In the previous financial year, on April 13, 2022, CapMan issued unsecured sustainability-linked notes in the aggregate principal amount of EUR 40 million. The notes will mature on April 13, 2027 and carry a fixed annual interest of 4.5%. In conjunction with this, CapMan redemeed the remaining EUR 31.5 million of its notes issued in 2018. These notes carried a fixed annual interest of 4.125% that was paid semi-annually. CapMan also has unsecured notes in the aggregate principal amount of EUR 50 million issued in December 2020, which will mature on December 9, 2025 and carry a fixed annual interest of 4.0% paid annually. Both loan agreements include covenants related to equity ratio. At the end of the financial year, CapMan has an unused long-term credit facility of EUR 20 million. CapMan has not used the credit facility during the financial year or the previous year. The long-term credit facility agreement includes a covenant related to net gearing. Maturity analysis Due between Due within 3 3 and 12 Due between Due between 31 December 2023, EUR 1,000 months months 1 and 3 years 3 and 5 years Due later Bonds 50,000 40,000 Accounts payable 2,101 Interests, bonds 3,800 5,474 503 Company acquisitions liabilities 3,842 Commitments to funds 4,194 11,371 6,187 13,151 50,287 Lease liabilities (IFRS 16) 308 882 2,852 Maturity analysis Due between Due within 3 3 and 12 Due between Due between 31 December 2022, EUR 1,000 months months 1 and 3 years 3 and 5 years Due later Bonds 50,000 40,000 Accounts payable 1,167 Interests, bonds 3,800 7,474 2,303 Company acquisitions liabilities 6,933 Commitments to funds 0 11,544 6,779 590 70,198 Lease liabilities (IFRS 16) 323 976 1,089 876 b) Interest rate risk At the end of the financial year, interest-bearing liabilities carry a fixed interest rate. Exposure to interest rate risk arises principally from the long-term credit facility of EUR 20 million with a floating interest rate. This facility was not used during the financial year or the previous year. The interest rate of the credit facility is the aggregate of the reference rate (Euribor) and the margin, which is dependent on the Group’s net gearing and is in the range of 1.75% to 2.70%. The sustainability-linked senior bond issued in April 2022 carry initially an annual coupon rate of 4.500% paid annually. Failure to fulfill the agreed sustainability-linked targets by the end of 2023 would have increased the interest rate by 0.500%-points, at maximum, for the remainder of the loan term, but CapMan succeeded in fulfilling the sustainability-linked conditions and thus, the interest rate will remain at 4.500% for the remainder of the loan term. The senior bond issued in December 2020 carry a coupon rate of 4.000% p.a., which is paid once a year. Loans according to interest rate EUR 1,000 2023 2022 Floating rate 0 0 Fixed rate 89,750 89,770 Total 89,750 89,770 c) Credit risk Group’s credit risks relate to trade, loan and other receivables recognised at amortised cost. The maximum credit loss of these receivables is the carrying amount of the receivable in question. There are no collaterals relating to the receivables. CapMan has some credit-impaired co-investment loan receivables from entities controlled by the former or current investment teams. Co-investment loans are determined to be credit-impaired, if the expected distributions from the underlying fund would not enable full repayment of the loan to CapMan. Events triggering an evaluation to determine, if a loan receivable is credit-impaired, are typically decreased or lost carry potential or decreased fair ANNUAL REPORT 2023 FINANCIAL STATEMENTS 68 value of the underlying fund’s remaining investments or fund filing for liquidation. More information on the expected credit losses of receivables is presented in notes 18 and 20. Group’s loan commitments are related to co-investment loans granted to team entities, which they use in order to make co-investments to funds managed by the Group. Apart from credit-impaired loan receivables, credit risk of loan commitments is deemed low, when the repayment is subject to distributions received from the fund and the fund is capable of making distributions equaling or exceeding the needed cash for repaying the loans and accrued interests . d) Currency risk Changes in exchange rates, particularly between the US dollar and and the euro, impact the compa- ny’s performance, since a part of group’s fund investments and non-current accounts receivables are in US dollar. Any strengthening/weakening of the dollar against the euro would improve/weaken the fair value gains or US dollar fund investments and revenue related to US dollar nominated account receivables. CapMan has started to hedge its US dollar nominated account receivables against changes in exchange rates as of December 2022, and therefore, hedging will have a full impact as of 2023. The group does not, however, apply hedge accounting to the derivative instruments used for hedging purposes. CapMan has subsidiaries outside of the Eurozone, and their equity is exposed to movements in foreign currency exchange rates. However, the Group does not hedge currency as the impact of exposure to currency movements on equity is relatively small. As at December 31, 2023, 87% of the Group’s financial assets were in euros, 12% in US dollars 1% in Swedish krona and 1% in other currencies. The following table presents the fair values of the foreign currency denominated financial assets. Financial assets denominated in foreign currencies, in euros Other EUR 1,000 SEK USD currencies Total 2023 2,925 25,158 2,271 30,354 2022 6,280 26,003 1,799 34,082 e) Capital management Group’s aim is to have an efficient capital structure that allows the company to manage its ongoing obligations and that the business has the prerequisites for operating normally. The Return on equity (ROE) and the Equity ratio are the means for monitoring capital structure. The long-term financial targets of the Group have been confirmed by the Board of Directors of CapMan Plc. The financial targets are based on growth, profitability and balance sheet.The combined growth objective for the Management Company and Service businesses is more than 15 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 50 per cent. The distribution policy was updated during the financial year by the Board of Directors of CapMan Plc. CapMan’s objective is to distribute at least 70 per cent of the Group’s profit attribut- able to equity holders of the company excluding the impact of fair value changes, subject to the distributable funds of the parent company. In addition, CapMan may pay out distributions accrued from investment operations, taking into consideration foreseen cash requirements for future invest- ments. Previously, CapMan’s policy was to pay an annually increasing dividend to its shareholders. At the balance sheet date, CapMan has two unsecured senior bonds outstanding, of which the sustainability-linked unsecured bond of EUR 40 million, with initially fixed interest rate, will mature on April 13, 2027 and the other unsecured bond of EUR 50 million, with fixed interest rate, will mature on December 9, 2025. In addition, CapMan has a long-term credit facility of EUR 20 million available until August 5, 2024, which was not in use at the balance sheet date. The long-term credit facility agreement and senior bond agreements include financial covenants related to both equity ratio and net gearing. EUR 1,000 2023 2022 Interest-bearing loans 93,856 92,966 Cash and cash equivalents –41,017 –55,571 Net debt 52,839 37,395 Equity 115,125 142,144 Net gearing 45.9% 26.3% Return on equity 2.6% 30.5% Equity ratio 47.8% 52.7% f) Price risk of the investments in funds The investments in funds are valued using the International Private Equity and Venture Capital Valuation Guidelines. According to these guidelines, the fair values are generally derived by multi- plying key performance metrics of the investee company (e.g., EBITDA) by the relevant valuation multiple (e.g., price/equity ratio) observed for comparable publicly traded companies or transac- tions. Changes in valuation multiples can lead to significant changes in fair values depending on the leverage ratio of the investee company. g) Climate related risks The Group has assessed the impact of climate-related matters and whether climate related risks could be expected to result in material adjustments in the Group’s financial statements. The Group is committed to Science Based Targets and climate net zero target and has established short-term, ANNUAL REPORT 2023 FINANCIAL STATEMENTS 69 mid-term and long-term sustainability targets for CapMan Group as well as for its investment areas. The Group’s largest assets consist of financial assets, and more precisely, of its own and external fund investments valued at fair value. Therefore, potential climate-related risks are primarily associated with CapMan’s own fund investments, managed by CapMan’s investment professionals, and with external fund investments. CapMan’s commitment to climate net zero, combined with the valuation process described earlier, can therefore be seen taking sufficiently into account climate-re- lated matters impacting the fair value of the underlying portfolio companies, real estate properties and other holdings owned by CapMan’s own funds. Fair value of external fund investments is based on external fund managers’ valuations and no climate-related adjustments are made by CapMan. However, the Group sees that the industries, in which the portfolio companies of the external fund investments operate, are not materially subject to climate related risks with regards to their fair valuation. h) Determining fair values Fair value hierarchy of financial assets measured at fair value at 31 December 2023 EUR 1,000 Fair value Level 1 Level 2 Level 3 Investments in funds 158,907 980 0 157,927 Other non-current investments 508 482 0 25 Current financial assets at FVTPL 275 116 159 0 * fair value through profit or loss The different levels have been defined as follows: Level 1 – Quoted prices (unjusted) in active markets for identical assets. Level 2 – Other than quoted prices included within Level 1 that are observable for the asset, either directly (that is, as price) or indirectly (that is, derived from prices). Level 3 – The asset that is not based on observable market data . EUR 1,000 Level 1 Level 2 Level 3 Total Non-current investments at fair value through profit or loss Investments in funds at Jan 1 1,197 167,866 169,063 Additions 18,097 18,097 Distributions –17,615 –17,615 Disposals –3,975 –3,975 Fair value gains/losses –5,926 –5,926 Transfers –217 –520 –737 at the end of period 980 157,927 158,907 Other investments at Jan 1 408 0 25 433 Additions 46 46 Fair value gains/losses 28 28 at the end of period 482 0 25 508 * Includes the change of cash and cash equivalents of the subsidiary CapMan Fund Investments SICAV-SIF, classified as fund investments, Fair value hierarchy of financial assets measured at fair value at 31 December 2022 EUR 1,000 Fair value Level 1 Level 2 Level 3 Investments in funds 169,063 1,197 0 167,866 Other non-current investments 434 408 0 25 Current financial assets at FVTPL 65 0 65 0 * fair value through profit or loss The different levels have been defined as follows: Level 1 – Quoted prices (unjusted) in active markets for identical assets Level 2 – Other than quoted prices included within Level 1 that are observable for the asset, either directly (that is, as price) or indirectly (that is, derived from prices) Level 3 – The asset that is not based on observable market data ANNUAL REPORT 2023 FINANCIAL STATEMENTS 70 EUR 1,000 Level 1 Level 2 Level 3 Total Non-current investments at fair value through profit or loss Investments in funds at Jan 1 236 129,776 130,012 Additions 29,313 29,313 Distributions –27,600 –27,600 Disposals –1 –1 Fair value gains/losses 36,685 36,685 Transfers 961 –307 654 at the end of period 1197 167,866 169,063 Other investments at Jan 1 368 0 25 393 Additions 45 45 Fair value gains/losses –5 –5 at the end of period 408 0 25 434 * Includes the change of cash and cash equivalents of the subsidiary CapMan Fund Investments SICAV-SIF, classified as fund investments, ANNUAL REPORT 2023 FINANCIAL STATEMENTS 71 Sensitivity analysis of Level 3 investments at 31 December 2023 Fair value MEUR, Used input value (weighted Investment area 31.12.2023 Valuation methodology Unobservable inputs average) Change in input value Fair value sensitivity Peer group earnings multiples EV/EBITDA 2023,11.2× +/– 10% +/– 0.8 MEUR Growth Equity 15.2 Peer group Discount to peer group multiples 22% +/– 10% –/+ 0.3 MEUR Peer group earnings multiples EV/EBITDA 2023,6.5× +/– 10% +/– 3.7 MEUR Buyout 28.3 Peer group Discount to peer group multiples 11% +/– 10% –/+ 0.9 MEUR EUR/SEK 11.0960 +/–1% –/+ 0.1 MEUR Real Estate 40.4 Valuation by an independent FX rate EUR/DKK 7.4529 +/–1% –/+ 0.1 MEUR valuer EUR/NOK 11.2405 +/–1% –/+ 0.0 MEUR Terminal value EV/EBITDA 15.1× +/– 5% +/– 1.1 MEUR Infrastructure 10.1 Discounted cash flows Discount rate; market rate and 13% +/– 100 bps –/+ 1.9 MEUR risk premium Credit 6.0 Discounted cash flows Discount rate; market rate and 10% +/– 100 bps –0.1 MEUR / value change based on a risk premium change in the discount rate is not booked Peer group earnings multiples EV/EBITDA 2023,7.4× +/– 10% +/– 0.2 MEUR Special Situations 3.1 Peer group Discount to peer group multiples 28% +/– 10% –/+ 0.1 MEUR Investments in 16.0 Reports from PE fund funds-of-funds management company Investments in external 38.7 Reports from PE fund venture capital funds management company ANNUAL REPORT 2023 FINANCIAL STATEMENTS 72 Sensitivity analysis of Level 3 investments at 31 December 2022 Fair Value MEUR, Used input value (weighted Investment area 31 Dec 2022 Valuation methodology Unobservable inputs average) Change in input value Fair value sensitivity Peer group earnings multiples EV/EBITDA 2022,9.3× +/– 10% +/– 1.3 MEUR Growth 18.7 Peer group Discount to peer group multiples 24% +/– 10% –/+ 0.5 MEUR Peer group earnings multiples EV/EBITDA 2022,7.4× +/– 10% +/– 2.3 MEUR Buyout 26.1 Peer group Discount to peer group multiples 16% +/– 10% –/+ 0.6 MEUR EUR/SEK 11.1218 +/–1% –/+ 0.1 MEUR Real Estate 44.0 Valuation by an independent FX rate EUR/DKK 7.4365 +/–1% –/+ 0.1 MEUR valuer EUR/NOK 10.5138 +/–1% –/+ 0.0 MEUR Terminal value EV/EBITDA 17.1× +/– 5% +/– 1.0 MEUR Infrastructure 13.1 Discounted cash flows Discount rate; market rate and 15% +/– 100 bps –/+ 1.0 MEUR risk premium Credit 4.3 Discounted cash flows Discount rate; market rate and 10% +/– 100 bps –0.1 MEUR / value change based on a risk premium change in the discount rate is not booked Peer group earnings multiples EV/EBITDA 2022,7.6× +/– 10% +/– 0.2 MEUR Special Situations 2.9 Peer group Discount to peer group multiples 23% +/– 10% –/+ 0.0 MEUR Investments in funds-of- 16.5 Reports from PE fund funds management company Investments in external Reports from PE fund Company level negative venture capital funds 42.5 management company and adjustment for the reported 14% +/– 10% –0.7 MEUR / + 0.7 MEUR possible ajustment by CapMan value by CapMan ANNUAL REPORT 2023 FINANCIAL STATEMENTS 73 CapMan has made some investments also in funds that are not managed by CapMan Group companies. The fair values of these investments in CapMan’s balance sheet are primarily based on the valuations by the respective fund managers. No separate sensitivity analysis is prepared by CapMan for these investments. However, CapMan evaluates the significant investments individually and makes adjustments to them if necessary. Separate sensitivity analysis is prepared by CapMan for these adjustments. The changes in the peer group earnings multiples and the peer group discounts are typically opposite to each other. Therefore, if the peer group multiples increase, a higher discount is typically applied. Because of this, a change in the peer group multiples may not in full be reflected in the fair values of the fund investments. The valuations are based on euro. If portfolio company’s reporting currency is other than euro, P&L items used in the basis of valuation are converted applying the average foreign exchange rate for corresponding year and the balance sheet items are converted applying the rate at the time of reporting. Changes in the foreign exchange rates, in CapMan’s estimate, have no significant direct impact on the fair values calculated by peer group multiples during the reporting period. The valuation of CapMan funds’ investment is based on international valuation guidelines that are widely used and accepted within the industry and among investors. CapMan always aims at valuing funds’ investments at their actual value. Fair value is the best estimate of the price that would be received by selling an asset in an orderly transaction between market participants on the measurement date. Determining the fair value of fund investments for funds investing in portfolio companies is carried out using International Private Equity and Venture Capital Valuation Guidelines (IPEVG). In estimating fair value for an investment, CapMan applies a technique or techniques that is/ are appropriate in light of the nature, facts, and circumstances of the investment in the context of the total investment portfolio. In doing this, current market data and several inputs, including the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and the financial situation of the investment, are evaluated and combined with market participant assumptions. In selecting the appropriate valuation technique for each particular investment, consideration of those specific terms of the investment that may impact its fair value is required. Different methodologies may be considered. The most applied methodologies at CapMan include available market price for actively traded (quoted) investments, earnings multiple valuation technique, whereby public peer group multiples are used to estimate the value of a particular investment, and the Discounted Cash Flows method, whereby estimated future cash flows and the terminal value are discounted to the present by applying the appropriate risk-adjusted rate. CapMan always applies a discount to peer group multiples, due to e.g. limited liquidity of the investments. Due to the qualitative nature of the valuation methodologies, the fair values are to a considerable degree based on CapMan’s judgment. The Group has a Risk and Valuation team, which monitors the performance and the price risk of the investment portfolio (financial assets entered at fair value through profit or loss) independently and objectively of the investment teams. The Risk and Valuation team is responsible for reviewing the monthly reporting and forecasts for portfolio companies. Valuation proposals are examined by the Risk and Valuation team and subsequently reviewed and decided by the Valuation Committee, which comprises at least Valuation Controller, Risk Manager and at least one CapMan AIF Manager’s Board of Directors. The portfolio company valuations are reviewed in the Valuation Committee on a quarterly basis. The valuations are back tested against realised exit valuations, and the results of such back testing are reported to the Audit Committee annually. Investments in real estate are valued at fair value based on appraisals made by independent external experts, who follow International Valuation Standards (IVS). The method most appropriate to the use of the property is always applied, or a combination of such methods. For the most part, the valuation methodology applied is the discounted cash flow method, which is based on significant unobservable inputs. These inputs include the following: Future rental cash inflows Based on the actual location, type and quality of the properties and supported by the terms of any existing lease, other contracts or external evidence such as current market rents for similar properties; Discount rates Reflecting current market assessments of the uncertainty in the amount and timing of cash flows; Estimated vacancy rates Based on current and expected future market conditions after expiry of any current lease; Property operating expenses Including necessary investments to maintain functionality of the property for its expected useful life; Capitalisation rates Based on actual location size and quality of the properties and taking into account market data at the valuation date; Terminal value Taking into account assumptions regarding maintenance costs , vacancy rates and market rents . ANNUAL REPORT 2023 FINANCIAL STATEMENTS 74 33. Events after the financial year CapMan signed on 21 December 2023 an agreement on the acquisition of all the shares of Dasos Capital Oy (“Dasos”) from the company’s current shareholders. Dasos is a leading timberland and natural capital investment asset manager in Europe and a significant player globally. The acquisition will expand CapMan’s activities into natural capital and timberland investments and will bring several opportunities to expand and develop Natural Capital as a new investment area through its offering in the form of other natural capital and impact products. In 2022, Dasos Group’s adjusted turnover was EUR 4.5 million and operating profit was EUR 2.2 million. Operating profit for 2023 is projected at approximately EUR 2.7 million. The acquisition is estimated to expand CapMan’s fee-generating assets under management by approximately EUR 630 million. The acquisition is intended to be completed during the first half of 2024, following the comple- tion of the conditions precedent. The equity price paid at closing equals the enterprise value of EUR 35 million adjusted with net debt/cash at closing and certain customary post-closing adjustments (the “Purchase Price”). CapMan intends to pay the Purchase Price by a directed share issue to the current shareholders of Dasos (the “Share Issue”) and with a cash component, which amounts to a maximum of approximately 9 per cent of the Purchase Price. The subscription price for the shares issued in the Share Issue is agreed at EUR 2.0938 per share, and the total number of issued shares is estimated at 18.3 million. The Purchase Price is now anticipated to be approximately EUR 41.6 million at closing. In addition, CapMan has committed to paying an additional earn-out consider- ation of a maximum EUR 5 million based on management fee turnover incurred in 2025 and 2026, payable when the management fees of the funds managed by Dasos exceed certain limits. The additional consideration will be paid later in 2026 and 2027 in CapMan’s shares. On the balance sheet date, the completion of the acquisition was subject to CapMan’s Extraordinary General Meeting held on January 18, 2024, authorising the Board of Directors to resolve on the issuance of new shares, and also conditional on the approvals by the Finnish Competition and Consumer Authority and the Finnish Financial Supervisory Authority as well as consents from certain investors of certain funds managed by Dasos. CapMan Extraordinary General Meeting authorised the Board of Directors to resolve on the issuance of new shares, and the Finnish Competition and Consumer Authority approved the transaction in the beginning of February 2024. On February 6, 2024, being the date when the financial statements were authorised for issue, the completion of the acquisition was still conditional on the approvals by the Finnish Financial Supervisory Authority as well as consents from certain investors of certain funds managed by Dasos. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 75 Parent Company Income Statement (FAS) EUR Note 1.1.–31.12.2023 1.1.–31.12.2022 Turnover 1 6,815,795.44 5,263,341.70 Other operating income 2 –142,640.32 1,083,303.07 Raw materials and services 3 0.00 0.00 Employee benefit expenses 4 –6,300,619.64 –9,132,098.80 Depreciation 5 –97,783.34 –99,398.53 Other operating expenses 6 –4,049,856.25 –4,041,336.19 Operating loss –3,775,104.11 –6,926,188.75 Finance income and costs 7 19,364,289.83 19,344,116.96 Profit before appropriations and taxes 15,589,185.72 12,417,928.21 Appropriations 8 3,129,500.00 0.00 Income taxes –944.21 0.00 Loss for the financial year 18,717,741.51 12,417,928.21 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 76 Parent Company Balance Sheet (FAS) EUR Note 31.12.2023 31.12.2022 ASSETS Non-current assets Intangible assets 9 6,886.40 41,656.94 Tangible assets 10 151,822.57 205,785.37 Investments 11 Shares in subsidiaries 126,199,336.83 127,798,504.09 Investments in associated companies 34,211.38 34,211.38 Other investments 10,593,627.04 10,559,049.01 Other receivables 1) 6,294,849.42 6,727,077.34 Investments total 143,122,024.67 145,118,841.82 Non-current assets, total 143,280,733.64 145,366,284.13 Current assets Short-term receivables 12 24,489,032.09 21,059,643.21 Investments 13 1,000,000.00 0.00 Cash and bank 22,056,494.29 25,218,756.17 Current assets, total 47,545,526.38 46,278,399.38 Total assets 190,826,260.02 191,644,683.51 EUR Note 31.12.2023 31.12.2022 SHAREHOLDERS’ EQUITY AND LIABILITIES Shareholders’ equity 14 Share capital 771,586.98 771,586.98 Share premium account 38,968,186.24 38,968,186.24 Invested unrestricted shareholders’ equity 18,119,799.89 32,374,156.86 Retained earnings 688,394.09 944,536.16 Profit for the financial year 18,717,741.51 12,417,928.21 Shareholders’ equity, total 77,265,708.71 85,476,394.45 Liabilities Non-current liabilities 15 91,432,514.15 91,283,773.76 Current liabilities 16 22,128,037.16 14,884,515.30 Liabilities, total 113,560,551.31 106,168,289.06 Total shareholders’ equity and liabilities 190,826,260.02 191,644,683.51 1) Long-term receivables have been reclassified from current assets to non-current assets and figures for the comparison period have been adjusted accordingly. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 77 Parent Company Cash Flow Statement (FAS) EUR 1.1.–31.12.2023 1.1.–31.12.2022 Liiketoiminnan rahavirrat Profit before extraordinary items 15,589,186 12,417,928 Finance income and costs –19,364,290 –19,344,117 Adjustments to cash flow statement Depreciation, amortisation and impairment 97,783 99,399 Gain on sale of subsidiary shares 0 –1,433,384 Change in net working capital Change in current assets, non-interest-bearing 611,149 1,126,446 Change in current liabilities, non-interest-bearing –144,400 –808,489 Interest paid –4,436,439 –3,312,011 Interest received 729,394 230,135 Dividends received 22,603,554 22,966,087 Direct taxes paid –34,717 0 Cash flow from operations 15,651,220 11,941,994 Cash flow from investments Acquisition of subsidiaries –206,874 0 Cash of a dissolved or merged subsidiary 160,000 765,825 Investments in subsidiaries –7,987,603 –17,234,994 Sale of subsidiary shares 3,789,444 321,702 Repayment of capital from subsidiaries 4,898,789 428,957 Investments in tangible and intangible assets –9,050 –111,038 Investments in other placements, net –999,707 –25,383 Loan receivables granted –1,992,287 –1,470,139 Repayment of loan receivables 2,381,031 1,118,426 Cash flow from investments 33,743 –16,206,644 EUR 1.1.–31.12.2023 1.1.–31.12.2022 Cash flow from financing activities Repayment of capital –14,254,357 –17,296,893 Proceeds from long-term borrowings 0 39,778,500 Repayment of long-term borrowings 0 –31,520,000 Dividends paid –12,671,736 –6,288,998 Change in group liabilities 7,482,742 4,302,718 Group contributions received 742,000 7,807,936 Cash flow from financing activities –18,701,351 –3,216,737 Change in cash and cash equivalents –3,016,388 –7,481,388 Cash and cash equivalents at beginning of year 25,218,755 32,456,355 Translation difference –145,873 243,789 Cash and cash equivalents at end of year 22,056,494 25,218,755 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 78 Basis of preparation for parent company financial statements Basis of preparation for parent company financial statements CapMan Plc’s financial statements for 2023 have been prepared in accordance with the Finnish Accounting Act. Foreign currency translation Transactions in foreign currencies have been recorded at the rates of exchange prevailing at the date of the transaction. Foreign currency denominated receivables and payables are recorded at the rates of exchange prevailing at the closing date of the review period. Investments Investments are valued at acquisition cost. If the probable future income from the investment is permanently lower than the value at acquisition cost excluding depreciation, the difference is recognised as an expense. Intangible and tangible assets Intangible and tangible assets are valued at cost less accumu- lated depreciation and amortisation according to the plan, except for assets having an indefinite useful life. Receivables Receivables comprise receivables from Group companies and associated companies, trade receivables, accrued income and other receivables. Receivables are recorded at nominal value, however no higher than at probable value. Receivables are classified as non-current assets if the maturity exceeds 12 months. Financial risk management and derivative instruments The financial risk management of CapMan Group is centralised with the parent company. The financial risk management princi- ples are provided in the Notes to the Group financial statements under 32. Financial risk management. CapMan Plc uses derivative instruments, such as foreign exchange forwards, to hedge against currency changes incurred to its certain and significant foreign currency denominated trade receivables. Derivative instruments are measured at the lower of their cost or market value. Non-current liabilities Senior bonds maturing later than one year after the balance sheet date are recorded as non-current liabilities at nominal value. Current liabilities Bonds maturing within one year are presented as current liabili- ties and measured at their nominal value. Derivative liabilities are measured at fair value. Leases Lease payments are recognised as other expenses. The remaining commitments under each lease are provided in the Notes section under “Commitments”. Provisions Provisions are recognised as expenses in case the parent company has an obligation that will not result in comparable income or losses that are deemed apparent. Pensions Statutory pension expenditures are recognised as expenses at the year of accrual. Pensions have been arranged through insurance policies of external pension institutions. Revenue Revenue includes the sale of services to subsidiaries and revenue from the sale of securities, dividends and other similar income from securities classified as inventories. Revenue from services is recognised, when the service is delivered. Income taxes Income taxes are recognised based on Finnish tax law. Deferred taxes are calculated on temporary differences between the carrying amount and the tax base. Deferred taxes have been measured at the statutory tax rates that have been enacted by the balance sheet date and are expected to apply when the related deferred tax is realised. Appropriations Appropriations in the income statement consist of possible given and received group contributions and possible depreciation in excess of plan, and in the balance sheet, possible accumulated depreciation in excess of plan. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 79 1. Turnover by area EUR 2023 2022 Sale of services Finland 1,106,945 1,998,491 Foreign 5,708,850 3,264,850 Total 6,815,795 5,263,342 2. Other operating income EUR 2023 2022 Turnover translation difference –185,905 –370,371 Gain on sale of subsidiary shares 43,249 1,453,658 Other operating income 16 16 Total –142,640 1,083,303 3. Raw materials and services EUR 2023 2022 Change in inventories 0 0 Total 0 0 4. Personnel EUR 2023 2022 Salaries and wages 5,497,998 8,224,832 Pension expenses 664,920 814,879 Other personnel expenses 137,702 92,388 Total 6,300,620 9,132,099 Management remuneration Salaries and other remuneration of the CEO Joakim Frimodig (1.1.–15.3.2023) 922,804 1,741,618 Pia Kåll (15.3.–31.12.2023) 350,036 0 Board members 535,560 318,996 Average number of employees 35 33 Management remuneration is presented in the Group Financial Statements Table 31. Related party disclosures. 5. Depreciation EUR 2023 2022 Depreciation according to plan Other long-term expenditure 34,771 52,586 Machinery and equipment 63,013 46,813 Total 97,784 99,399 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 80 6. Other operating expenses EUR 2023 2022 Other personnel expenses 189,400 354,313 Office expenses 114,449 331,262 Travelling and entertainment 348,374 315,634 External services 2,201,296 1,884,903 Internal services 1,044,488 873,811 Other operating expenses 151,849 281,413 Total 4,049,856 4,041,336 Audit fees Audit 115,738 107,021 Other fees and services 0 18,564 Total 115,738 125,585 7. Finance income and costs EUR 2023 2022 Dividend income Group companies 21,231,776 22,966,087 Total 21,231,776 22,966,087 Other interest and finance income Group companies 2,297,813 720,139 Others 797,787 857,581 Total 3,095,600 1,577,721 Interest and other finance costs Impairment of shares and interests –215,411 336,851 Write-down of receivables –11,338 –1,184,363 Group companies –350,580 0 Others –4,385,755 –4,352,178 Total –4,963,084 –5,199,691 Finance income and costs total 19,364,292 19,344,117 8. Appropriations EUR 2023 2022 Group contributions received 3,129,500 0 9. Intangible assets EUR 2023 2022 Intangible rights Acquisition cost at 1 January 828,188 828,188 Acquisition cost at 31 December 828,188 828,188 Accumulated depreciation at 1 January –828,188 –828,188 Accumulated depreciation at 31 December –828,188 –828,188 Book value on 31 December 0 0 Other long-term expenditure Acquisition cost at 1 January 2,677,518 2,677,518 Additions 0 0 Acquisition cost at 31 December 2,677,518 2,677,518 Accumulated depreciation at 1 January –2,635,861 –2,583,275 Depreciation for the financial period –34,771 –52,586 Accumulated depreciation at 31 December –2,670,632 –2,635,861 Book value on 31 December 6,886 41,657 Intangible rights total 6,886 41,657 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 81 10. Tangible assets EUR 2023 2022 Machinery and equipment Acquisition cost at 1 January 1,327,023 1,215,985 Additions 9,050 111,038 Acquisition cost at 31 December 1,336,073 1,327,023 Accumulated depreciation at 1 January –1,143,978 –1,097,165 Depreciation for the financial period –63,013 –46,813 Accumulated depreciation at 31 December –1,206,991 –1,143,978 Book value on 31 December 129,082 183,045 Other tangible assets Acquisition cost at 1 January 22,739 22,739 Book value on 31 December 22,739 22,739 Tangible assets total 151,821 205,784 11. Investments EUR 2023 2022 Shares in subsidiaries Acquisition cost at 1 January 127,068,504 110,347,424 Additions 8,194,477 17,234,994 Disposals –8,848,233 –850,765 Impairments –215,411 336,851 Acquisition cost at 31 December 126,199,337 127,068,504 EUR 2023 2022 Shares in associated companies Acquisition cost at 1 January 34,212 34,212 Disposals 0 0 Acquisition cost at 31 December 34,212 34,212 Shares, other Acquisition cost at 1 January 10,559,050 10,558,186 Additions 46,209 75,314 Disposals –293 –4,618 Impairment –11,338 –69,832 Acquisition cost at 31 December 10,593,628 10,559,050 Other receivables Receivables from Group companies Capital loan receivables 0 730,000 Loan receivables 0 1,329,471 Other loan receivables 2,161,043 209,805 Accounts receivable* 4,133,806 5,187,801 Long-term receivables total 6,294,849 7,457,077 Investments total 143,122,026 145,366,284 * Non-current loan receivabless and accounts receivable have been reclassified from current assets to non-current assets and figures for the comparison period have been adjusted accordingly. The subsidiaries and the associated companies are presented in the Notes to the Consolidated Financial Statements, Table 31. Related party disclosures. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 82 12. Short-term receivables EUR 2023 2022 Receivables from Group companies Accounts receivable 353,428 0 Accrued income 24,062 145 Dividend receivables 0 256,320 Loan receivables 14,039,759 14,289,759 Other receivables 6,978,048 3,497,576 Total 21,395,297 18,043,800 Accounts receivable 1,575,041 1,435,601 Loan receivables 848,039 808,530 Other receivables 166,525 330,845 Accrued income 504,130 440,868 Short-term receivables total 24,489,032 21,059,643 13. Investments EUR 2023 2022 Acquisition cost at 1 January 0 0 Additions 1,000,000 0 Acquisition cost at 31 December 1,000,000 0 Investments, total 1,000,000 0 14. Shareholders’ equity EUR 2023 2022 Share capital at 1 January 771,587 771,587 Share capital at 31 December 771,587 771,587 Share premium account at 1 January 38,968,186 38,968,186 Share premium account at 31 December 38,968,186 38,968,186 Invested unrestricted shareholders’ equity at 1 January 32,374,157 49,671,050 Invested unrestricted shareholders’ equity, disposals –14,254,357 –17,296,893 Invested unrestricted shareholders’ equity at 31 December 18,119,800 32,374,157 Retained earnings at 1 January 13,362,464 7,236,929 Dividend payment –12,674,070 –6,292,393 Retained earnings at 31 December 688,394 944,536 Profit for the financial year 18,717,742 12,417,928 Shareholders’ equity, total 77,265,709 85,476,394 Calculation of distributable funds Retained earnings 688,394 944,536 Profit for the financial year 18,717,742 12,417,928 Invested unrestricted shareholders’ equity 18,119,800 32,374,157 Total 37,525,936 45,736,621 CapMan Plc’s share capital is divided as follows: 2023 Number of shares 2022 Number of shares Series B share (1 vote/share) 158,849,387 158,054,968 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 83 15. Non-current liabilities EUR 2023 2022 Senior bonds 89,750,033 89,650,433 Other non-current liabilities 1,682,481 1,633,340 Non-current liabilities total 91,432,514 91,283,774 16. Current liabilities EUR 2023 2022 Accounts payable 466,074 146,661 Liabilities to Group companies Group account at OP Yrityspankki Plc 18,038,256 10,555,514 Accounts receivable 0 68,382 Accounts payable 86,827 8,543 Other liabilities 166,354 114,736 Accrued expenses 108,003 89,537 Total 18,399,440 10,836,712 Other liabilities 903,279 926,408 Accrued expenses 2,359,243 2,974,734 Current liabilities total 22,128,036 14,884,515 17. Contingent liabilities EUR 2023 2022 Leasing agreements Operating lease commitments Within one year 135,226 211,124 After one but not more than five years 66,654 97,088 Total 201,880 308,212 Other hire purchase commitments Within one year 757,008 703,098 After one but not more than five years 1,577,100 58,592 Total 2,334,108 761,690 Securities and other contingent liabilities Contingencies for own commitment Enterprise mortgages 60,000,000 60,000,000 Investment commitments to other funds 1,003,556 250,740 Other contingent liabilities 1,204,663 2,044,288 Total 62,208,219 62,295,028 Contingencies for subsidiaries’ commitments Investment commitments 207,656 207,656 Total 207,656 207,656 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 84 18. Derivative instruments EUR 2023 2022 Nominal amount of derivatives Foreign exchange forwards 5,319,743 6,327,027 Total 5,319,743 6,327,027 Fair value of derivatives Foreign exchange forwards 116,491 64,927 Total 116,491 64,927 ANNUAL REPORT 2023 FINANCIAL STATEMENTS 85 Helsinki 6.2.2024 Joakim Frimodig Mammu Kaario Chairman Catarina Fagerholm Johan Hammarén Olli Liitola Johan Bygge Pia Kåll CEO The Auditor’s Note Our report has been issued today. Helsinki 6.2.2024 Ernst & Young Oy Audit firm Kristina Sandin Authorised Public Accountant Signatures to the Report of the Board of Directors and Financial Statements ANNUAL REPORT 2023 FINANCIAL STATEMENTS 86 To the Annual General Meeting of CapMan Plc Report on the Audit of the Financial Statements Opinion We have audited the financial statements of CapMan Plc (busi- ness identity code 0922445-7) for the year ended 31 December, 2023. The financial statements comprise the consolidated balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including material accounting policy information, as well as the parent company’s balance sheet, income statement, statement of cash flows and notes. In our opinion • the consolidated financial statements give a true and fair view of the group’s financial position as well as its financial perfor- mance and its cash flows in accordance with IFRS Accounting Standards as adopted by the EU. • the financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. Our opinion is consistent with the additional report submitted to the Audit and Risk Committee. Basis for Opinion We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements. In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note 7 to the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompa- nying financial statements. We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud. Auditor’s report (Translation of the Finnish original) ANNUAL REPORT 2023 FINANCIAL STATEMENTS 87 Key Audit Matter How our audit addressed the Key Audit Matter Revenue recognition We refer to the accounting policies in the financial statements and the Note 3. CapMan’s turnover in consolidated group accounts amounted to 59,4 million euros. It consists of management fees, sale of services and carried interest income. The timing of revenue recognition can be judgmental as revenue may be recognized either over time or at the point in time depending on the circumstances and provided services. The assessment of recognized revenue includes management assumptions and estimates. Revenue recognition was determined to be a key audit matter and a significant risk of material misstatement referred to in EU Regulation No 537/2014 point (c) of Article 10(2) in respect of its timely recognition and at a proper amount. Our audit procedures to address the risk of material misstatement included, among other things, assessing that the revenue recognition principles comply to applicable accounting standards, assessing the process for recog- nizing revenue and identifying controls relating to revenue recognition. We examined sales cutoff with analytical procedures. We supplemented our procedures with test of details on a transaction level on a random basis in order to ensure that the revenue has been recognized in a correct accounting period and it’s based on the corresponding agreements. In addition, we assessed the adequacy of disclosures relating to the fee and commission income of the group. Key Audit Matter How our audit addressed the Key Audit Matter Valuation of non-liquid investments We refer to the accounting policies in the financial statements and the Notes 17 and 32. The Group’s investment portfolio 31.12.2023 amounts to 158,9 million euros. The investment portfolio includes mainly investments to funds managed by CapMan group companies. Determination of the fair value of funds and direct investments to portfolio companies is executed using International Private Equity and Venture Capital valuation guidelines (IPEV) and IFRS and the fair values are based on estimated cash-flows or peer-group multiples. Fair value measurement includes subjective estimations by management, specifically in areas where fair value is based on a model-based valuation. Valuation techniques for private equity funds involve setting various assumptions regarding pricing factors. The use of different valuation techniques and assumptions could lead to different estimates of fair value. Valuation of non-liquid investments was determined to be a key audit matter and a significant risk of material misstatement referred to in EU Regulation No 537/2014 point (c) of Article 10(2). Our audit procedures to address the risk of material misstatement relating to valuation of non-liquid investments included, among others: • Developing an understanding of the private equity and real estate portfolios. • Reviewing the price of recent transactions and investments. • Assessing assumptions used in the valua- tions and obtaining an understanding that the valuation appropriately reflects the risks of the portfolios. • Comparing the assumptions against established policies and determining if they have been applied appropriately. • Reviewing and assessing the valuations determined by CapMan or other party. • Assessing whether the International Private Equity and Venture Capital Valuation Guidelines and valuation methodology of IFRS have been applied correctly. Our valuation specialists were involved in the audit. In addition, we assessed the adequacy of disclosures relating to the non-liquid investments. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 88 Responsibilities of the Board of Directors and the Managing Director for the Financial Statements The Board of Directors and the Managing Director are respon- sible for the preparation of consolidated financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regula- tions governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company’s and the group’s ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstate- ment, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficien- cies in internal control that we identify during our audit. We also provide those charged with governance with a state- ment that we have complied with relevant ethical requirements regarding independence and communicate with them all relation- ships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Reporting Requirements Information on our audit engagement We were appointed as auditors by the Annual General Meeting on March 14, 2018 and our appointment represents a total period of uninterrupted engagement of six years. ANNUAL REPORT 2023 FINANCIAL STATEMENTS 89 Other information The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual report but does not include the financial statements and our auditor’s report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor’s report, and the Annual Report is expected to be made available to us after that date. Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially incon- sistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accor- dance with the applicable laws and regulations. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Helsinki February 6, 2024 Ernst & Young Oy Authorized Public Accountant Firm Kristina Sandin Authorized Public Accountant ANNUAL REPORT 2023 FINANCIAL STATEMENTS 90 To the Board of Directors of CapMan Oyj We have performed a reasonable assurance engagement on the iXBRL tagging of the consolidated financial statements included in the digital files CapManPlc-2023-12-31-fi.zip of CapMan Oyj (business identity code: 0922445-7) for the financial year 1.1.–31.12.2023 to ensure that the financial statements are marked/tagged with iXBRL in accordance with the requirements of Article 4 of EU Commission Delegated Regulation (EU) 2018/815 (ESEF RTS). Responsibilities of the Board of Directors and Managing Director The Board of Directors and Managing Director are responsible for the preparation of the Report of Board of Directors and financial statements (ESEF financial statements) that comply with the ESESF RTS. This responsibility includes: • Preparation of ESEF-financial statements in accordance with Article 3 of ESEF RTS • Tagging the primary financial statements, notes to the financial statements and the entity identifier information in the consolidated financial statements included within the ESEF-financial statements by using the iXBRL mark ups in accordance with Article 4 of ESEF RTS • Ensuring consistency between ESEF financial statements and audited financial statements. The Board of Directors and Managing Director are also respon- sible for such internal control as they determine is necessary to enable the preparation of ESEF financial statements in accordance the requirements of ESEF RTS. Auditor’s Independence and Quality Management We are independent of the company in accordance with the ethical requirements that are applicable in Finland and are relevant to the engagement we have performed, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The firm applies International Standard on Quality Management (ISQM) 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditor’s Responsibilities In accordance with the Engagement Letter we will express an opinion on whether the electronic tagging of the consolidated financial statements complies in all material respects with the Article 4 of ESEF RTS. We have conducted a reasonable assurance engagement in accordance with International Standard on Assurance Engagements ISAE 3000. The engagement includes procedures to obtain evidence on: • whether the tagging of the primary financial statements in the consolidated financial statements complies in all material respects with Article 4 of the ESEF RTS • whether the tagging of the notes to the financial statements and the entity identifier information in the consolidated financial statements complies in all material respects with Article 4 of the ESEF RTS • whether the ESEF-financial statements are consistent with the audited financial statements. The nature, timing and extent of the procedures selected depend on the auditor’s judgement including the assessment of risk of material departures from requirements sets out in the ESEF RTS, whether due to fraud or error. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our statement. Opinion In our opinion the tagging of the primary financial statements, notes to the financial statements and the entity identifier information in the consolidated financial statements included in the ESEF financial statements CapManPlc-2023-12-31-fi.zip of CapMan Oyj for the year ended 1.1.–31.12.2023 complies in all material respects with the requirements of ESEF RTS. Our audit opinion on the consolidated financial statements of CapMan Oyj for the year ended 1.1.–31.12.2023 is included in our Independent Auditor’s Report dated 6.2.2024. In this report, we do not express an audit opinion any other assurance on the consolidated financial statements. Helsinki 1.3.2024 Ernst & Young Oy Authorized Public Accountant Firm Kristina Sandin KHT Independent Auditor’s Report on CapMan Oyj’s ESEF-Consolidated Financial Statements (Translation of the Finnish original) ANNUAL REPORT 2023 FINANCIAL STATEMENTS 91

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