Annual / Quarterly Financial Statement • Feb 23, 2018
Annual / Quarterly Financial Statement
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Assets under management and income continued to return strong growth in 2017, resulting in operating profit adjusted for items affecting comparability of SEK 414 M (258). It's particularly pleasing to see that our focus on a European platform in Property Investment Management is starting to make a significant contribution to both income and operating profit.
KNUT PEDERSEN, CEO and President
CONSOLIDATED OPERATING PROFIT***
* The sale of shares in Visa Europe was completed in the second quarter 2016, generating non-recurring income for the full year 2016 of SEK 224 M before tax reported in net financial income and
expenses and SEK 150 M after tax. *** Attributable to parent company shareholders. *** Adjusted for items affecting comparability.
Assets under management and income continued to return strong growth in 2017, resulting in operating profit adjusted for items affecting comparability of SEK 414 M (258). It's particularly pleasing to see that our focus on a European platform in Property Investment Management is starting to make a significant contribution to both income and operating profit. This is a corner stone of our strategy of offering a broad range of alternative, active asset management products. Several of our funds in Equity, Hedge and Fixed Income Funds outperformed their comparative indices, which generated customer value and performance-based earnings for Catella. Catella's total assets under management continue to increase in 2017, and capital grew by 21 per cent, corresponding to SEK 31 Bn adjusted for divested operations
Catella's clearer positioning as an active, alternative asset manager and advisor requires a review of operations where no synergies with other parts of the organisation can be found. Accordingly, we've initiated a strategic review of the card acquiring operations in Catella Bank. On the basis of the review, we will be reducing the client portfolio and investigate strategic alternatives for the remaining client portfolio. Income in the card acquiring operations is expected to decrease by some SEK 70 M annually from the end of the first quarter 2018. The strategic review generated impairment losses of goodwill of SEK 20 M and other intangible assets of SEK 33 M as of 31 December 2017.
While Systematic Macro generated lower average returns in 2017 compared to recent years, results from managing the funds were very strong for a majority of our products in Mutual Funds. Assets under management increased by SEK 10.4 Bn in the business area in the year, totalling SEK 109 Bn at the end of the period. Both Mutual Funds (SEK 800 M) and Systematic Funds (SEK 6.3 Bn) saw inflows on funds in the fourth quarter. We're continuing our
focus on distribution, which is mainly aimed at Nordic investors in Mutual Funds while the investor base is more international in Systematic Funds. Annualised profit from fixed earnings/fixed expenses was SEK 282 M at the end of the quarter, an increase of SEK 48 M on the previous quarter. From 1 January, performancebased earnings in Systematic Macro will be settled annually. In the past, we've effected a combination of quarterly and annual settlement.
Acquisitions of property portfolios in a number of our products are the drivers behind year-on-year income and profit growth for the business area. The residential funds and Property Asset Management in France generated variable earnings through acquisitions, at the same time as Project Management, which forms part of Property Asset Management, made a significant income contribution in the quarter through interim invoicing of a development project. The year-on-year increase in assets under management was very strong at SEK 14.7 Bn. This corresponds to growth of 37%, and assets under management totalled SEK 55.0 Bn at year end. We've built a robust European platform that offers local and international investors high-quality products and services, both in regulated and non-regulated structures. A high proportion of the capital we've attracted has a long investment horizon, which reduces sensitivity to market fluctuations.
Transaction volumes for commercial properties in Europe, excluding the UK, were in line with the previous year. We succeeded in increasing full-year profit by 20% yearon-year, which was the result of our positioning towards capital markets-related services, particularly in the Nordics. Catella's Corporate Finance operations are well positioned on the relevant local markets, and we're continuing to increase collaboration between national markets, but
also between business areas, to capitalize on the Catella brand and attract additional capital, primarily international but also local, to our services and products.
Wealth Management completed two major capital raisings in the quarter, both of which originated by Corporate Finance. We're continuing to see considerable interest in Catella's proprietary products from the bank's customers. Property-related products are a key part of our offering, and our ambition is to capitalise on Catella's property expertise to create value for our customers. At the end of the year, Wealth Management had assets under management of SEK 20 Bn, an increase of SEK 3.5 Bn in the year.
As outlined above, we're currently carrying out a strategic review of Catella's card acquiring operations in Cards and Payment Solutions. The review has generated decreased income that affects the bank's profit, but also prepares the ground for more streamlined operations in the future.
In recent years, we've implemented a number of initiatives that have generated profitable growth for Catella. We perceive positive potential to continue to grow and create value for our customers and shareholders, which means that sharpening our focus is becoming increasingly important. As the latest step in our initiatives, we've started up operations in Hong Kong with the primary focus on capital raisings for Catella's European operations. We perceive considerable potential in this initiative, which has already generated a number of concrete opportunities that are currently being evaluated. We're entering 2018 with humility about the challenges that lie ahead, coupled with enthusiasm and confidence about continuing to expand Catella's operations.
Vd och koncernchef
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Catella is a leading specialist in property advisory services and investments, mutual funds and banking, with operations in twelve countries in Europe. Catella is listed in the Mid Cap segment on Nasdag Stockholm.
Amounts are in SEKM unless otherwise indicated.Figuresintablesandcommentsmay be rounded.
The Group's total income was SEK824 M (610) and net sales were SEK 813 M (607), of which SEK 262 M (187) relates to Corporate Finance and SEK 561 M (428) relates to Asset Management and Banking. Comments on the progress of each operating segment are on pages 7-10.
The Group's net financial income and expense was SEK 20 M (-4). Net financial income/expense also includes interest income of SEK 6 M (5), which mainly relates to loan portfolios, and interest expenses of SEK 5 M (3) relating to Catella's bond issue. Fair value measurement of non-recurring securities and current investments resulted in value adjustment of SEK 21 M (-1), of which SEK 19 M relates to value adjustment of the loan portfolios, SEK 7 M derivatives and SEK-5 M value adjustments of fund units in IPM Systematic Macro Fund. Closed currency forwards generated a loss of SEK 9 M. The divestment of subsidiary Catella Trust GmbH to 2IP Institutional Investment Partners Group GmbH generated profit of SEK 4 M.
The Group's profit before tax was SEK 126 M (80) and was charged with costs of SEK 53 M relating to impairment of goodwill and other intangible assets attributable to Catella Bank, which has been reported as Items affecting comparability in the Consolidated Income Statement. Consolidated profit before tax, adjusted for items affecting comparability, was SEK 179 M (80). Consolidated profit after tax was SEK 87 M (58), of which SEK 67 M (37) was attributable to parent company shareholders. This corresponds to Earnings per share of SEK 0.81 (0.45).
The preliminary figures published via press release on 21 February 2018 are confirmed below and in this report.
The Group's total income was SEK 2,477 M (2,027) for the full year 2017, and consolidated net sales were SEK 2,461 M $(2.007)$ .
The Group's net financial income and expense was SEK 34 M (239). The comparative period in 2016 includes non-recurring income from the Visa transaction of SEK 224 M. Net financial income and expense includes interest income of SEK 23 M (24) and interest expenses of SEK 17 M (11). Increased interest expenses are mainly due to the parent company's increased borrowing in June. Net financial income and expense also includes a cost of SEK 2 M relating to the early redemption of the bond loan 2012/2017. Fair value measurement of non-current securities and current investments resulted in a value adjustment of SEK 20 M (-6). Closed currency forwards intended to limit currency exposure generated gains of SEK 5 M. Sales of subsidiaries and other long-term securities holdings generated profit of SEK $5M(241)$ .
Consolidated profit before tax was SEK 395 M (497, excluding Visa; 274). Consolidated profit before tax, adjusted for items affecting comparability, was SEK 449 M (497, excluding Visa; 274). Consolidated profit after tax was SEK 284 M (357, excluding Visa; 207), of which SEK 192 M (272, excluding Visa 122) was attributable to parent company shareholders. This corresponds to Earnings per Share of SEK 2.35 (3.32, excluding Visa; 1,48).
In order to secure its continued control of IPM Informed Portfolio Management AB
("IPM AB"), Catella has entered into an agreement with a number of existing shareholders in parent company IPM Informed Portfolio Management B.V. ("IPM B.V.") regarding the acquisition of shares in IPM B.V. The agreement is conditional on factors including authorisation by the Annual General Meeting in Catella AB (publ) and regulatory approval.
In accordance with the decision of Catella's AGM on 29 May 2017 regarding principles governing the Nomination Committee, a Nomination Committee has been appointed for Catella AB (publ) ahead of the AGM on 28 May 2018.
The Nomination Committee consists of the following members:
In October 2017, following approval by the Luxembourg supervisory authority (CSSF), Catella acquired the shares in Dutch property advisor Panta Rhei Advisory B.V. which has changed its name to Catella Investment Management Benelux B.V.
The acquisition means that Catella will strengthen its position in Property Investment Management on the European property market and increase the number of European countries with local representation from 12 to 13.
In October 2017, following approval by the Luxembourg supervisory authority
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(CSSF), Catella established Property Asset Management operations in Sweden in connection with the assignment Tre Kronor.
Catella will assume responsibility for the management of Tre Kronor's property holding, comprising 72 retail properties located in 68 municipalities in southern Sweden.
In November 2017, following approval by the Luxembourg supervisory authority (CSSF), Catella acquired 60% of the shares in Catella Asia Ltd, for the distribution of products and services destined for the Chinese and other Asian markets, for more information see Note 8.
Extraordinary General Meeting in Catella AB
The Extraordinary General Meeting held on 22 January 2018 in Catella AB (publ) decided the following:
As of 5 February 2018, Catella completed an additional acquisition of some 13% of the shares in IPM B.V. The transaction was based on a company value of IPM AB of some SEK 2 Bn, and the purchase price amounted to SEK 198.5 M. The additional purchase price corresponds to 50% of the transferred shares' proportion of IPM AB's net profit for the financial year 2017. After the transaction, Catella's indirect and direct holding in IPM AB amounts to 60.6%.
Catella has decided to conduct a strategic review of its card acquiring business. As a consequence, the client portfolio will be
reduced and strategic options will be evaluated in relation to the remaining client portfolio. Income within the card acquiring business is expected to decrease by approximately SEK 70 M annually from end of the first quarter of 2018. As a consequence of the strategic review, impairment losses of goodwill of SEK 20 M and other intangible assets of SEK 33 M were recognised per 31 December 2017 in the Banking business area.
In February, Catella accepted a conditional offer for the Loan portfolios Ludgate and Minotaure totalling SEK 80 M. As a result of the accepted offer, Catella reports a positive value adjustment of SEK 19 M as of 31 December 2017.
| 3 Months | 12 Months | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| SEK M | Oct-Dec | Oct-Dec | lan-Dec | Jan-Dec |
| CORPORATE FINANCE | ||||
| Total income | 262 | 188 | 659 | 586 |
| Operating profit/loss | 43 | 20 | 71 | 58 |
| Operating margin, % | 17 | 10 | $\frac{1}{2}$ | 10 ° |
| ASSET MANAGEMENT AND BANKING | ||||
| Total income | 572 | 430 | 1,844 | 1,473 |
| Operating profit/loss before items affecting comparability | 136 | 84 | 419 | 255 |
| Operating profit/loss | 83 | 84 | 365 | 255 |
| Operating margin, % | $15 -$ | 19 | 20 | 17 |
| Equity-, Hedge and Fixed Income Funds | ||||
| Total income * | 218 | 179 | 851 | 748 |
| Operating profit/loss | 76 | 63 | 337 | 258 |
| Operating margin, % | 35 | 35 | 40 | 35 |
| Banking | ||||
| Total income * | 138 | 130 | 475 | 433 |
| Operating profit/loss before items affecting comparability | $\overline{2}$ | 8 | $-6$ | |
| Operating profit/loss | $-51$ | $-45$ | $-6$ | |
| Operating margin, % | $-37$ | $-9$ | $-1$ | |
| Property Investment Management | ||||
| Total income * | 217 | 123 | 521 | 295 |
| Operating profit/loss | 58 | 20 | 73 | 3 |
| Operating margin, % | 27 | 16 | 14 | $\left \right $ |
| OTHER ** | ||||
| Total income | $-10$ | $-9$ | $-26$ | $-31$ |
| Operating profit/loss | $-21$ | $-19$ | $-75$ | $-55$ |
| GROUP | ||||
| Total income | 824 | 610 | 2,477 | 2,027 |
| Operating profit/loss before items affecting comparability | 159 | 84 | 4 4 | 258 |
| Operating profit/loss | 105 | 84 | 361 | 258 |
| Operating margin, % | 13 | 4 | 15 | 13 |
* Includes internal income.
** Includes eliminations.
| 3 Months | 12 Months ** | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| GROUP | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec |
| Profit margin, % | $10 -$ | $ 0\rangle$ | $\mathbf{L}$ | 8 |
| Adjusted profit margin, % *** | 17 | 10 ° | $\sqrt{4}$ | 18 |
| Return on equity, % * | $\sim$ | 12 | 9 | |
| Adjusted return on equity, % * | $\sim$ | i. | 15 | 19 |
| Equity/Asset ratio, % | $\bar{ }$ | 30 | 31 | |
| Equity, SEK M * | $\sim$ | 1.729 | 1,563 | |
| No. of employees, at end of period | 626 | 579 | ||
| Earnings per share, SEK * | 0.81 | 0.45 | 2.35 | 3.32 |
| Adjusted earnings per share, SEK | 1.46 | 0.45 | 2.99 | 3.32 |
| Equity per share, SEK * | 21.12 | 19.10 | ||
| CORPORATE FINANCE | ||||
| Profit margin, % | $\vert \ \vert$ | 6 | $\overline{7}$ | 9 |
| Return on equity, % * | $\sim$ | 30 | 22 | |
| Equity/Asset ratio, % | $\sim$ | 32 | 59 | |
| Equity, SEK M * | $\sim$ | 120 | 254 | |
| No. of employees, at end of period | $\sim$ | 210 | 203 | |
| Property transaction volume for the period, SEK Bn | 22.6 | 21.7 | 56.2 | 55.5 |
| ASSET MANAGEMENT AND BANKING | ||||
| Profit margin, % | 9 | 15 | 4 | 23 |
| Adjusted profit margin, % *** | 18 | 15 | 17 | 23 |
| Return on equity, % * | $\sim$ | 18 | 34 | |
| Adjusted return on equity, % * | $\sim$ | × | 24 | 34 |
| Equity/Asset ratio, % | $\sim$ | 22 | 22 | |
| Equity, SEK M * | $\sim$ | 931 | 859 | |
| No. of employees, at end of period | $\sim$ | 401 | 359 | |
| Asset under management at end of period, SEK Bn | ٠ | 184.3 | 155.7 | |
| net in-(+) and outflow(-) during the period, mdkr | 14.4 | 2.7 | 24.5 | 4.8 |
| Card and payment volumes, SEK Bn | 5.9 | 6.4 | 17.9 | 11.8 |
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Card and payment volumes, SER Bin
* Attributable to shareholders of the Parent Company.
** During the second quarter 2016, Asset Management and Banking received a non-recurring income of SEK 221 M resulting from Visa Inc.'
The total commercial property transaction market in Europe, excluding the UK, totalled EUR 76.4 Bn (77.2) in the quarter, a reduction of 1% year-on-year.
Property transactions where Catella served as advisor totalled SEK 22.6 Bn (21.7) in the quarter. Of total transaction volumes in the quarter. Sweden provided SEK 9.6 Bn (6.7), France SEK 6.7 Bn (11.1) and Germany SEK 1.8 Bn (0.6).
Total income was SEK 262 M (188) and operating profit was SEK 43 M (20) in the quarter.
The year-on-year profit increase was mainly driven by Continental Europe, with France and Germany providing the full increase. In the Nordics, Sweden and Finland saw an increase, while Denmark contracted.
Transaction volumes in Europe, excluding the UK, were EUR 223.1 Bn (218.4) in the period, an increase of 2% in year-on-year terms. Catella's transaction volumes were SEK 56.2 Bn (55.5) in the period.
Total income was SEK 659 M (586) and operating profit was SEK 71 M (58) in the period.
| 3 Months | 12 Months | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| SEK M | Oct-Dec Oct-Dec | Jan-Dec | Jan-Dec | |
| Nordic * | 113 | 82 | 312 | 299 |
| Continental Europe * | 150 | 106 | 346 | 286 |
| Total income | 262 | 188 | 659 | 586 |
| Assignment expenses and commission | $-29$ | $-19$ | $-74$ | $-64$ |
| Operating expenses | $-190$ | $-150$ | $-514$ | $-463$ |
| Operating profit/loss | 43 | 20 | 71 | 58 |
| indy i igui do | ||||
|---|---|---|---|---|
| Operating margin, % | IО | 10 | ||
| Property transaction volume for the period, SEK Bn | 22.6 | 56.2 | 55.5 | |
| of which Nordic | 13.8 | 9.4 | 30.0 | |
| of which Continental Europe | 8.7 | 18.9 | 25.5 | |
| No. of employees, at end of period | $\sim$ | 210 | 203 |
* Includes internal income
Marc Figures
CATELLA'S PROPERTY TRANSACTION VOLUMES
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New savings in mutual funds in Sweden was SEK 44.4 Bn in the quarter, of which PPM SEK 35.3 Bn. The fund categories with the largest inflows were Equity, Mixed and Fixed Income funds. At the end of the quarter, Mutual Funds' share of Swedish fund volumes was 0.8% (0.9).
Catella's assets under management increased by SEK 7.0 Bn (1.1) in the quarter, of which net inflows were SEK 0.8 Bn (-4.3) in Mutual Funds and SEK 6.3 Bn (0.6) in Systematic Funds. Systematic Macro's and Systematic Equity's assets under management at the end of the period totalled SEK 50.7 Bn (37.2) and SEK 26.2 Bn (30.9) respectively. Revenue is mainly generated by Systematic Macro in Systematic Funds.
Total income was SEK 218 M (178) in the quarter. Operating profit/loss was SEK 76 M (63).
The increase in both income and profit on the previous year is mainly due to variable earnings in Mutual Funds, while fixed earnings were in line with the previous year. In Systematic Funds, revenue increased driven by higher fixed earnings while profit was in line with the previous year.
Up until 31 December 2017, Systematic Funds was able to recognise variable earnings on a quarterly basis for a proportion of assets under management through specific agreements with certain customers. From 1 January 2018, Systematic Funds will transfer to annual settlement of all products, meaning that variable earnings will only be recognised for profit at year end.
In future, Catella will provide information on accrued variable earnings to ensure comparability with historical information.
In the period, total fund volumes in Sweden increased by SEK 450.8 Bn, of which new savings were SEK 112.5 Bn, amounting to SEK 4,018 Bn at the end of the period.
Catella's assets under management increased by SEK 10.4 Bn (5.8) in the period, totalling SEK 109.3 Bn (98.9) at the end of the period.
Total income was SEK 851 M (748) and operating profit was SEK 337 M (258).
| . $\sim$ |
3 Months | 12 Months | ||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| SEK M | Oct-Dec Oct-Dec | Jan-Dec | Jan-Dec | |
| Mutual Funds * | 98 | 72 | 396 | 315 |
| Systematic Funds * | 2 | 106 | 455 | 433 |
| Total income | 218 | 179 | 851 | 748 |
| Assignment expenses and commission | $-38$ | $-39$ | $-151$ | $-182$ |
| Operating expenses | $-103$ | $-77$ | $-363$ | $-308$ |
| Operating profit/loss | 76 | 63 | 337 | 258 |
| Key Figures | ||||
|---|---|---|---|---|
| Operating margin, % | 35 | 35 | 40 | 35 |
| Asset under management at end of period, SEK Bn | $\sim$ | 109.3 | 98.9 | |
| net in-(+) and outflow(-) during the period, mdkr | 7.1 | $-3.7$ | 8.9 | $-2.5$ |
| of which Mutual Funds | Section | 32.0 | 30.8 | |
| net in-(+) and outflow(-) during the period, mdkr | 0.8 | $-4.3$ | 0.0 | $-14.4$ |
| of which Systematic Funds | - | 77.3 | 68.1 | |
| net in-(+) and outflow(-) during the period, mdkr | 6.3 | 0.6 | 8.9 | 11.9 |
| No. of employees, at end of period | $\overline{\phantom{a}}$ | 89 | 78 |
* Includes internal income
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Volumes in the Cards and Payment Solutions operations were SEK 5.9 Bn (6.4) in the quarter.
Assets under management in Wealth Management increased by SEK 0.2 Bn (0.9) and net flows were SEK 0.1 Bn (1.1) in the quarter.
The loan portfolio decreased by SEK 33 M in the quarter, totalling SEK 1.3 Bn (1.3) at the end of the period.
Total income was SEK 138 M (130) in the quarter. Operating profit was SEK -51 M (1) in the quarter, of which items affecting comparability were SEK-53 M (0).
Items affecting comparability include impairment of goodwill of SEK 20 M and other intangible assets of SEK 33 M, costs that were largely capitalized in 2017 and were mainly related to IT systems due for replacement or with a limited life, as part of the strategic review.
Fixed earnings increased year-on-year, driven by increased assets under management and variable earnings were in line with the previous year. In Cards and Payment Solutions, earnings were in line with the previous year while profit decreased.
Volumes in Cards and Payment Solutions totalled SEK 17.9 Bn (11.8) in the period.
Assets under management in Wealth Management increased by SEK 3.5 Bn (2.9) and net flows were SEK 1.8 Bn (2.4) in the period, amounting to SEK 20.0 Bn (16.5) at the end of the period.
Total income was SEK 475 M (433), and operating profit before items affecting comparability was SEK 8 M (-6), with operating profit of SEK-45 M (-6).
| 3 Months | 12 Months | ||||
|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | ||
| SEK M | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
| Cards and Payment Solutions * | 8 1 | 80 | 303 | 283 | |
| Wealth Management * | 68 | 56 | 190 | 157 | |
| Total income | 138 | 130 | 475 | 433 | |
| Assignment expenses and commission | $-34$ | $-34$ | $-122$ | $-110$ | |
| Operating expenses | $-102$ | $-94$ | $-344$ | $-329$ | |
| Operating profit/loss before items affecting comparability | $\mathfrak{D}$ | 8 | $-6$ | ||
| Items affecting comparability | $-53$ | 0 | $-53$ | 0 | |
| Operating profit/loss | $-51$ | $-45$ | $-6$ | ||
| Key Figures |
| Operating margin, % | |||
|---|---|---|---|
| Card and payment volumes, SEK Bn | ΕΟ | ||
| Asset under management at end of period, SEK Bn | 20.0 | 16.5 | |
| net in-(+) and outflow(-) during the period, mdkr | 7.4 | ||
| No. of employees, at end of period | 180 | 76 |
* Includes internal income
** Operating profit before items affecting comparability
Assets under management increased by SEK 6.9 Bn (5.4), the adjusted increase of assets under management was SEK 9.6 Bn**, and net flows were SEK 7.2 Bn (5.3) in the quarter, mainly attributable to Property Asset Management.
Total income was SEK 217 M (123). Operating profit was SEK 58 M (20).
The profit increase was mainly driven by Project Management, which forms part of Property Asset Management, residential property funds in Germany and Property Asset Management in France. Project Management's operations create and drive
property development projects. Income in Project Management was generated by Residential Property Development projects: Grand Central, where Catella own 45% through proprietary investments (see Note 3). Both the Residential Property Funds in Germany and Property Asset Management in France acquired properties in the quarter, which contributed to increased variable earnings year-on-year.
Assets under management increased by SEK 14.7 Bn (8.7), the adjusted increase in assets under management was SEK 17.4
Bn**, and net flows were SEK 13.7 Bn (4.9) in the period, totalling SEK 55.0 Bn (40.3) at the end of the period.
Total income was SEK 521 M (295) and operating profit was SEK 73 M (3). The increase in profit is mainly driven by the strong growth in asset under management.
In the quarter, parts of the German Property Asset Management operations were divested, which had full-year income and operating profit of SEK 8 M (10) and SEK -5 M (-2) respectively.
| 3 Months | 12 Months | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| SEK M | Oct-Dec Oct-Dec | Jan-Dec | Jan-Dec | |
| Property Funds * | 153 | 82 | 408 | 212 |
| Property Asset Management * | 104 | 48 | 162 | 95 |
| Total income | 217 | 123 | 521 | 295 |
| Assignment expenses and commission | $-36$ | $-28$ | $-146$ | $-85$ |
| Operating expenses | $-123$ | $-75$ | $-302$ | $-207$ |
| Operating profit/loss | 58 | 20 | 73 |
| $1127 + 1520 + 122$ | ||||
|---|---|---|---|---|
| Operating margin, % | 77 | 16 | IД. | |
| Asset under management at end of period, SEK Bn | $\overline{\phantom{a}}$ | 55.0 | 40.3 | |
| net in-(+) and outflow(-) during the period, mdkr | 53 | 13.7 | 4.9 | |
| of which Property Funds | $\sim$ | 36.9 | 25.6 | |
| net in-(+) and outflow(-) during the period, mdkr | 2.8 | 87 | $3.2^{\circ}$ | |
| of which Property Asset Management | 18.0 | 14.7 | ||
| net in-(+) and outflow(-) during the period, mdkr | 4.4 | 2.8 | ||
| No of employees at end of period | 37 | 105 |
Includes internal income
Key Figures
** In the quarter, parts of the German Property Asset Management operations were divested, and assets under management of SEK 2.7 BN was excluded at the end of the period
In the fourth quarter, the Group's total assets decreased by SEK 120 M, totalling 6,396 M as of 31 December 2017. Intangible assets and Cash and cash equivalents decreased by SEK 33 M and SEK 261 M respectively, while accounts receivable increased by SEK 142 M.
Catella effected impairment tests of assets with indefinite useful lives. Catella's assets with indefinite useful lives comprise goodwill and brands. The testing calculates estimated futures cash flows based on budgets that have been approved by management and the Board. The impairment testing revealed a need for goodwill impairment of SEK 20 M attributable to Catella Bank. In addition, other intangible assets attributable to Catella Bank were impaired by SEK 33 M, mainly relating to IT systems due to be replaced or with a limited life. Total impairment losses of SEK 53 M were recognised in Items affecting comparability in the Consolidated Income Statement in the fourth quarter.
In accordance with IAS 12 Income Tax, deferred tax assets attributable to loss carry-forwards are recognized to the extent that it is probable that future taxable profit will be available. In accordance with this standard. Catella is recognizing a deferred tax asset of SEK 99 M (SEK 97 M as of 31 December 2016), of which the majority consists of tax loss carry-forwards, which is based on an assessment of the Group's future earnings. The Group's total loss carry-forwards amount to some SEK 615 M. Essentially, the loss carry-forwards relate to operations in Sweden and have indefinite useful lives.
In June 2017, Catella issued a new 5-year unsecured bond loan of SEK 500 M, with a framework amount of SEK 750 M, with the purpose of refinancing the existing bond loan (including buy-back), raise additional liquidity for Catella's operating activities and to continue expansion and enable potential future acquisitions. In the Consolidated Statement of Financial Position as of 31 December 2017, the new bond loan was recognized in Long-term Ioan liabilities.
The new bond accrues variable interest at 3-month STIBOR plus 400 b.p.
The Group also has approved overdraft facilities totalling SEK 30 M, of which the unutilized part was SEK 30 M as of 31 December 2017.
The Group's equity increased by SEK 145 M in the fourth quarter, reaching SEK 1,943 M as of 31 December 2017. Apart from profit for the period of SEK 87 M and positive translation differences of SEK 32 M, equity was affected by fair value changes in financial assets held for sale of SEK 3 M. In addition, equity was affected by transactions with non-controlling interests totalling SEK 23 M. The Group's equity/assets ratio as of 31 December 2017 was 31% (30% as of 31 December 2016).
Consolidated cash flow from operating activities before changes in working capital amounted to SEK 176 M (62). Consolidated cash flow from operating activities was SEK-305 M (96), of which changes in working capital for the period was SEK -482 M (35). Of the changes in working capital, SEK -503 M is attributable to banking operations and SEK 21 M to other operations. The sharp change in the bank's working capital was due to a major customer who reinvested cash and cash equivalents in securities.
Cash flow from investing activities was SEK-23 M (-44), of which SEK-15 M related to investments in new IT systems for the banking operations but also new fund management systems. Terminated currency forwards generated cash flows of SEK 9 M in the quarter. The acquisition of shares in Vast Star Ltd (name changed to Catella Asia Ltd) decreased consolidated cash and cash equivalents, less acquired cash and cash equivalents, by SEK 4 M. Cash flows from loan portfolios were SEK 7 M and associated company Nordic Seeding GmbH repaid a capital injection of SEK 4 M.
Financing operations did not generate any cash flows in the quarter (2016: SEK-4 $M$ ).
Cash flow for the period was SEK-328 M (48), of which cash flow from banking operations was SEK -507 M (-8) and cash flow from other operations was SEK 179 M (56).
Cash and cash equivalents at the end of the period were SEK 3,177 M (2,750), of which cash and cash equivalents relating to the banking operations were SEK 2.111 M (2,052) and cash and cash equivalents relating to other activities were SEK 1,066 M $(698).$
Consolidated cash flow from operating activities before changes in working capital amounted to SEK 426 M (184).
Consolidated cash flow from operating activities was SEK 297 M (-137), of which changes in working capital for the period was SEK-129 M (-321). Of the changes in working capital, SEK -4 M was attributable to banking operations and SEK -125 M to other operations.
Cash flow from investing activities was SEK -74 M (55), of which SEK -37 M relates to IPM's investments in proprietary funds, SEK -12 M relates to additional investments in associated company Nordic Seeding GmbH and SEK -10 M to investments in Pamica AB. In addition, SEK 40 M was invested in intangible assets of which the majority relates to new fund management systems and systems for the banking operations. Furthermore, holdings in proprietary funds under management were divested for SEK 13 M and SEK 5 M was received for terminated currency forwards. Cash flow from loan portfolios totalled SEK 23 M.
Cash flow from financing operations was SEK 139 M (-126), of which SEK 291 M relates to net borrowings raised and amortized, SEK -155 M relates to dividends and SEK 2 M to contributions from non-controlling interests.
Cash flow for the full year was SEK 362 M (-208), of which cash flow from the banking operations was SEK 1 M (-62) and cash flow from other activities SEK 361 M $(-146)$ .
Catella AB (publ) is the Parent Company of the Group. Group management and other central Group functions are integrated in the Parent Company.
The Parent Company reported income of SEK 2.0 M (2.8), and operating profit/loss was SEK -16.7 M (-18.8). The profit increase on the previous year is mainly due to last year's figure being burdened by costs associated with the change of listing in 2016.
In June 2017, Catella AB issued a new 5year unsecured bond loan totaling SEK 500 M. The existing bond loan of SEK 200 M was repurchased in July 2017 at 101% of the nominal amount. In the Parent Company Balance Sheet as of 31 December 2017, the new bond loan is reported as a long-term liability.
The Parent Company also reported financial items totalling SEK-5.2 M (-0.9), of which SEK -4.9 M relates to interest and costs associated with arranging bond loans.
Profit/loss before tax was SEK -21.9 M (-19.7), and profit /loss for the period was SEK-21.9 M (19.3).
The Parent Company reported total loss carry-forwards of SEK 168.4 M. Catella's Balance Sheet includes a deferred tax asset of SEK 19.8 M (SEK 18.9 M as of 31 December 2016) relating to these loss carry-forwards. The amount is based on an estimate of the company's future utilization of loss carry-forwards.
Cash and cash equivalent s on the reporting date were SEK 263.9 M, compared to SEK 31.3 M as of 31 December 2016.
The number of employees of the Parent Company expressed as full -time equivalents was $10(9)$ .
The Parent Company reported income of SEK 11.2 M (9.2) for the full year 2017. Operating profit/loss was SEK-51.9 M (-51.0) and profit before tax was SEK 19.5 M (-54.0). The figure includes dividend of SEK 90.0 M from subsidiary Catella Holding AB.
Catella has principal investments of SEK 336 M, which are reported under the 'Other' category in Note 3.
The 'Other' category also includes information on the Parent Company, other holding companies, acquisition and financing costs, Catella's brand and eliminations of intra-group transactions between the various operations.
The number of employees expressed as full-time equivalents was 626 (579) at the end of the period, of which 210 (203) in the Corporate Finance operating segment, 401 (359) in the Asset Management and Banking operating segment and 15 (17) n other functions.
As of 31 December 2017, share capital was SEK 164 M (164) divided between 81,848,572 shares (81,848,572). The quotient value per share is 2. Share capital is divided between two share classes with different voting rights. 2,530,555 Class A shares with 5 votes per share, and 79,318,017 Class B shares with I vote per share.
As of 30 December 2017, the parent company had a total of 7,000,000 outstanding warrants of which 200,000 were held in treasury. On full utilization of the 7,000,000 warrants, dilution of Catella's capital and votes would be 7.9% and 7.1% respectively. In the full year 2017, there were no transactions involving warrants.
Catella is listed on Mid Cap on Nasdaq Stockholm, trading under the ticker symbols CAT A and CAT B. The price of Catella's Class B share was SEK 19.80 (22.90) as of 31 December 2017. Total market capitalization at the end of the period was SEK 1,621 M (1,875).
Catella had 7,135 (6,350) shareholders registered at the end of the period. As of 31 December 2017, the single largest shareholders were the Claesson & Anderzén group, with a holding of 49.8% (49.8) of the capital and 49.1% (49.1) of the votes, followed by Swedbank Robur fonder with a holding of 6.1% (0.0) of the capital and 6.3% (0.0) of the votes.
Catella AB's AGM will be held on Monday 28 May 2018 at 2 p.m. at Summit/GT30, Grev Turegatan 30, Stockholm, Sweden. Information on Catella's AGM is available on the company's website, catella.com.
Catella's Annual Report for 2017 will be available at catella.com, and at Catella's head office at Birger Jarlsgatan 6, Stockholm, Sweden, by 30 April 2018.
The Nomination Committee for the AGM 2018 has the following members: Thomas Andersson Borstam, appointed by TAB Holding AB and through private ownership, Chairman of the Nomination Committee, Johan Claesson, appointed by CA Plusinvest AB, Chairman of Catella AB and Kenneth Andersen, appointed by Strawberry Capital AS.
Catella's target is to transfer the Group's profit after tax to shareholders to the extent it is not considered necessary for developing the Group's operating activities and considering the company's strategy and financial position. Adjusted for profit-related unrealized value in-creases, at least 50% of the Group's profit after tax will be transferred to shareholders over time.
Given the growth opportunities in existing and new operations that are expected to generate long-term shareholder value, the Board proposes a dividend of SEK 1.00 per Class A and B shares to be paid to shareholders for the financial year 2017. For the financial year 2016, the Parent Company paid dividend of SEK 0.80 per Class A and B share respectively to shareholders.
Catella is affected by progress on the financial markets. The Corporate Finance operation is affected by the market's willingness to execute transactions, which in turn, is determined by the macroeconomic environment and the availability of debt finance
Asset Management is affected by market progress on Nordic stock exchanges and progress on the property market. The banking operations are exposed to particularly significant operating risks. The bank's
real time system contains substantial volumes/transactions that require 24-hour availability.
Several companies in the Catella Group conduct licensable operations, regulated by the financial supervisory authorities of the relevant countries of fiscal domicile. Existing regulatory structures and the rapid evolution of these structures are generally complex, and particularly for Catella's banking operations. These regulations set stringent, and in the future, still more stringent standards on licensable operations, as well as on liquidity and capital reserves. Compliance with these regulatory structures is a pre-requisite for licensable operations. Catella works continuously to ensure compliance with cur-rent regulatory structures and prepares for compliance with forthcoming regulatory changes.
The preparation of financial statements requires the Board of Directors and Group management to make estimates and judgments of the value of loan portfolios, goodwill, trademarks and brands, as well as assumptions concerning revenue recognition. The estimates and judgments affect the Consolidated Income Statement and financial position, and disclosures on contingent liabilities, for example. See Note 4 in the Annual Report 2016 for significant estimates and judgments. Actual outcomes may differ from these estimates and judgments due to other circumstances or other conditions.
Catella has investments in property development projects in Germany (see Note 3) through associated company Nordic Seeding GmbH. These projects are run by Catella's German subsidiary Catella Project Management GmbH. Through Nordic Seeding GmbH, Catella intends to invest in the early phases of projects, when concept and frameworks are determined, subsequently divesting projects and realizing capital gains before construction begins and projects are completed. These investments include the risk that Nordic Seeding GmbH may encounter situations where the company is obliged to continue to invest in later stages of projects, pursue projects to completion or abandon projects and lose the associated invested capital.
Within the Corporate Finance operating segment, seasonal variations are significant. This means that sales and results of operations vary during the year. In Corp orate Finance, transaction volumes are usually highest in the fourth quarter, followed by the second quarter, the third quarter and finally the first quarter.
This Interim Report has been prepared in compliance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act.
The Consolidated Financial Statements have been prepared in compliance with International Financial Reporting Standards (IFRS) as endorsed by the EU, the Annual Accounts Act and RFR | Complementary Accounting Rules for Groups issued by RFR, the Swedish Financial Reporting Board
The Parent Company's financial statements are prepared in compliance with the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities issued by RFR. The information provided in Note 8 regarding the consolidated situation, relating to parts of Catella's operations, has been prepared in accordance with the Group's accounting policies and the Annual Accounts for Credit Institutions and Securities Companies Act.
In the first quarter 2017, the SEK 67 M (42) holding in associated company Nordic Seeding GmbH, which invests in and operates property development projects in Germ any, was reclassified from the Asset Management and Banking operating segment to Proprietary Investments under the "Other" category. Comparative figures from earlier periods were adjusted correspondingly. Collating completed and future proprietary investments in a dedicated category creates a structure for continued expansion and progress in this area.
From the first quarter 2017, acquisition-related items are no longer reported separately, as management does not judge the information to be essential.
Items affecting comparability comprise significant and non-recurring events and transactions where the profit effect is material when making comparisons with earlier periods.
Accounting principles critical to the Group and Parent Company are stated in Catella's Annual Report for 2016. Figuresintablesand comments may be rounded.
Two new standards, IFRS 9 and IFRS 15, become effective on 1 January 2018.
Regarding IFRS 15, Revenue from Contracts with Customers, Catella has evaluated the new standard and assesses that it will not have any material impact on the Group.
IFRS 9, Financial Instruments and the new model for calculating credit loss reserves will mainly affect operations in Catella Bank, Based on Catella's assessment of the new standard, the quantitative effect of Group equity as of I January 2018 will be between SEK 3.5 M and SEK 4.0 M. The calculation of the impairment need in accordance with IFRS 9 will require more experience-based credit evaluations of reporting units than is currently required in accordance with IAS 39, which implies a higher degree of subjectivity. The use of forward-looking information increases the complexity and renders provisions more dependent on management's view of the economic outlook
In 2017, Catella made additional investments totalling SEK 16 M in associated company Nordic Seeding GmbH, where the other shareholders are the Claesson $\&$ Anderzen Group and the management of Catella Project Management GmbH. In October 2017, Nordic Seeding GmbH repaid capital contributions received totaling SEK 4 M to Catella. As of 31 December 2017, Catella had invested a net of 63 M of a total commitment of SEK 89 M in Nordic Seeding GmbH. For more information, see Note 3 in this report and Notes 20 and 39 of the Annual Report 2016.
Catella's German subsidiary Catella Project Management GmbH operates the property development projects within associated company Nordic Seeding GmbH. In 2017, Catella Project Management GmbH invoiced Nordic Seeding GmbH a total of SEK 44 M relating to services provided under applicable agreements. No proportion of this income was eliminated
in Catella's Consolidated Income Statement as the associated company falls outside of Catella's associated enterprises.
Catella does not publish forecasts.
Annual Rebort 2017 30 April 2018 Interim Report January-March 2018 8 May 2018
The Annual General Meeting in Catella AB (publ) will be held on 28 May 2018 in Stockholm, Sweden. Shareholders wishing to make nominations to the Nomination Committee must do so in writing before 23 February 2018
Interim Report January-June 2018 23 August 2018
Interim Report January-September 2018 14 November 2018
Year-end Report 2018 21 February 2019
Knut Pedersen, CEO and President Tel. +46 (0)8 463 33 10
More information on Catella and all financial reports are available at catella.com.
The information in this Report is mandatory for Catella AB to publish in accordance with the EU's Market Abuse Regulation and the Swedish Securities Markets Act. This information was submitted to the market, through the agency of the above contact, for publication on 23 February 2018 at 07:00 CET.
The undersigned certify that this Interim report gives a true and fair view of the Parent Company's and the Group's operations, financial position and results of operations, and describes the material risks and uncertainties facing the Parent Company and companies included in the Group.
Johan Claesson, Chairman Johan Damne, Board member Joachim Gahm, Board member Anna Ramel, Board member Jan Roxendal, Board member Knut Pedersen, CEO and President
Auditor's review report for interim financial information in summary (Interim Report) prepared in accordance with IAS 34 and Chapter 9 of the Swedish Annual Accounts Act
We have reviewed the condensed interim financial information (Interim Report) of Catella AB (corporate ID no. 556079-1419) as of 31 December 2017 and the twelve-month period then ended. The Board of Directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on the Interim Report based on our review.
We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express and audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report has not been prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, Sweden, 23 February 2018
PricewaterhouseCoopers AB
Patrik Adolfson Authorized Public Accountant
| 2017 | 2016 | 2017 | 2016 | |
|---|---|---|---|---|
| SEK M | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec |
| Net sales | 813 | 607 | 2,461 | 2,007 |
| Other operating income | $\vert \vert$ | 3 | 16 | 20 |
| Total income | 824 | 610 | 2,477 | 2,027 |
| Assignment expenses and commission | $-132$ | $-113$ | $-479$ | $-417$ |
| Other external expenses | $-148$ | $-130$ | $-496$ | $-441$ |
| Personnel costs | $-372$ | $-276$ | $-1,030$ | $-878$ |
| Depreciation | $-8$ | $-5$ | $-28$ | $-18$ |
| Other operating expenses | $-6$ | $-2$ | $-29$ | $-14$ |
| Operating profit/loss before items affecting comparability | 159 | 84 | 414 | 258 |
| Items affecting comparability | $-53$ | $\theta$ | $-53$ | $\circ$ |
| Operating profit/loss | 105 | 84 | 361 | 258 |
| Interest income | 6 | 5 | 23 | 24 |
| Interest expenses | $-5$ | $-3$ | $-17$ | $\sim$ $\mid$ $\mid$ |
| Other financial items | 20 | $-6$ | 28 | 227 |
| Financial items-net | 20 | $-4$ | 34 | 239 |
| Profit/loss before tax | 126 | 80 | 395 | 497 |
| $-39$ | $-22$ | $\frac{1}{2}$ | ||
| Tax | 87 | 58 | 284 | $-141$ 357 |
| Net profit/loss for the period | ||||
| Profit/loss attributable to: | ||||
| Shareholders of the Parent Company | 67 | 37 | 192 | 272 |
| Non-controlling interests | 20 | 21 | 97 | 85 |
| 87 | 58 | 284 | 357 | |
| Earnings per share attributable to shareholders of the Parent Company, SEK | ||||
| - before dilution | 0.81 | 0.45 | 2.35 | 3.32 |
| - after dilution | 0.75 | 0.42 | 2.17 | 3.06 |
| No. of shares at end of the period | 81,848,572 | 81,848,572 | 81,848,572 | 81.848.572 |
| Average weighted number of shares after dilution | 88,648,572 | 88,648,572 | 88,648,572 | 88,775,608 |
| 2017 | 2016 | 2017 | 2016 | |
|---|---|---|---|---|
| SEK M | Oct-Dec | Oct-Dec | lan-Dec | Jan-Dec |
| Net profit/loss for the period | 87 | 58 | 284 | 357 |
| Other comprehensive income | ||||
| Items that will not be reclassified subsequently to profit or loss: | ||||
| Value change in defined benefit pension plans | $\overline{0}$ | $\Omega$ | $\circ$ | $\mathbf{0}$ |
| Items that will be reclassified subsequently to profit or loss: | ||||
| Fair value changes in financial assets available for sale | 3 | $\Omega$ | 9 | 3 |
| Translation differences | 32 | $-9$ | 31 | 36 |
| Other comprehensive income for the period, net after tax | 35 | -8 | 40 | 39 |
| Total comprehensive income/loss for the period | 122 | 50 | 325 | 395 |
| Profit/loss attributable to: | ||||
| Shareholders of the Parent Company | 0 | 29 | 231 | 310 |
| Non-controlling interests | 21 | 93 | 86 | |
| 122 | 50 | 325 | 395 |
Information on Income Statement by operating segment is in Note 1.
| 2017 | 2016 | |
|---|---|---|
| SEK M Note |
31 Dec | 31 Dec |
| ASSETS | ||
| Non-current assets | ||
| Intangible assets | 390 | 412 |
| Property, plant and equipment | 27 | 26 |
| 3 Holdings in associated companies |
45 | 51 |
| 3, 4, 5 Other non-current securities |
438 | 382 |
| Deferred tax receivables | 99 | 97 |
| Other non-current receivables | 796 | 775 |
| 1,796 | 1,743 | |
| Current assets | ||
| Current loan receivables | 589 | 577 |
| Accounts receivable and other receivables | 725 | 493 |
| 3, 4, 5 Current investments |
108 | 88 |
| Cash and cash equivalents * | 3,177 | 2,750 |
| 4,600 | 3,907 | |
| Total assets | 6,396 | 5,651 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Share capital | 164 | 164 |
| Other contributed capital | 253 | 253 |
| Reserves | $-77$ | $-107$ |
| Profit brought forward including net profit for the period | 1,389 | 1,253 |
| Equity attributable to shareholders of the Parent Company | 1,729 | 1,563 |
| Non-controlling interests | 214 | 167 |
| Total equity | 1,943 | 1,730 |
| Liabilities | ||
| Non-current liabilities | ||
| Borrowings | $\,0\,$ | $\circ$ |
| Long-term loan liabilities | 494 | $\circ$ |
| Deferred tax liabilities | 38 | 34 |
| Other provisions | $\overline{4}$ | 3 |
| 537 | 37 | |
| Current liabilities | ||
| 122 | 260 | |
| Borrowings Current Ioan liabilities |
2,784 | 2,806 |
| 894 | 739 | |
| Accounts payable and other liabilities Tax liabilities |
116 | 79 |
| 3,917 | 3,884 | |
| Total liabilities | 4,453 | 3,921 |
| Total equity and liabilities | 6,396 | 5,651 |
| * Of which pledged and blocked liquid funds | 205 | $\sqrt{88}$ |
Information regarding financial position by operating segment is in Note 2.
| 2017 | 2016 | 2017 | 2016 | |
|---|---|---|---|---|
| SEK M | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec |
| Cash flow from operating activities | ||||
| Profit/loss before tax | 126 | 80 | 395 | 497 |
| Adjustments for non-cash items: | ||||
| Other financial items | $-20$ | 6 | $-28$ | $-227$ |
| Depreciation | 8 | 5 | 28 | 8 |
| Items affecting comparability - Impairment of intangible assets | 53 | $\theta$ | 53 | $\circ$ |
| Impairment current receivables | $\overline{\phantom{a}}$ | 6 | 6 | 12 |
| Change in provisions | $\overline{0}$ | $\theta$ | $\overline{2}$ | $\overline{0}$ |
| Reported interest income from loan portfolios | $-6$ | $-5$ | $-22$ | $-22$ |
| Acquisition expenses | $\mathbf{I}$ | $\mathbf{I}$ | $\overline{2}$ | $\overline{\phantom{a}}$ |
| Profit/loss from participations in associated companies | 6 | $\Omega$ | 20 | $\overline{\phantom{a}}$ |
| Capital gain/loss, financial assets | $\overline{0}$ | $-0$ | $\mathbf{0}$ | $-6$ |
| Personnel costs not affecting cash flow | 32 | 18 | 55 | 35 |
| Paid income tax | $-25$ | $-49$ | $-86$ | $-126$ |
| Cash flow from operating activities before changes in working capital | 176 | 62 | 426 | 184 |
| Cash flow from changes in working capital | ||||
| Increase (-)/decrease (+) of operating receivables | $-102$ | $-268$ | $-234$ | $-533$ |
| Increase (+) / decrease (-) in operating liabilities | $-380$ | 303 | 106 | 212 |
| Cash flow from operating activities | $-305$ | 96 | 297 | $-137$ |
| Cash flow from investing activities | ||||
| Purchase of property, plant and equipment | $-5$ | $-4$ | $-12$ | $-10$ |
| Purchase of intangible assets | $-15$ | $-31$ | $-40$ | $-42$ |
| Purchase of subsidiaries, after deductions for acquired cash and cash equivalents | $-4$ | $-5$ | $-5$ | $-57$ |
| Purchase of associated companies | $\overline{4}$ | $-7$ | $-12$ | $-25$ |
| Purchase of financial assets | $-2$ | $-14$ | $-50$ | $-110$ |
| Sale of financial assets | $-7$ | 8 | 21 | 227 |
| Cash flow from loan portfolios | $\overline{7}$ | 8 | 23 | 71 |
| Dividends from investments | $\theta$ | $\circ$ | $\mathbf{I}$ | $\theta$ |
| Cash flow from investing activities | $-23$ | $-44$ | $-74$ | 55 |
| Cash flow from financing activities | ||||
| Re-purchase of share warrants | $\circ$ | $\circ$ | $\overline{\phantom{a}}$ | $-22$ |
| New share issue | $\mathbf{0}$ | $\circ$ | $\sim$ | $\overline{\phantom{a}}$ |
| Borrowings | $-0$ | $\theta$ | 493 | $\overline{0}$ |
| Repayment of loans | 0 | $-0$ | $-202$ | $-()$ |
| Dividend | $\,0\,$ | $\mathbf 0$ | $-65$ | $-49$ |
| Transactions with, and payments to, non-controlling interests | $\overline{0}$ | $-4$ | $-87$ | $-56$ |
| Cash flow from financing activities | 0 | $-4$ | 139 | $-126$ |
| Cash flow for the period | $-328$ | 48 | 362 | $-208$ |
| 3,438 | 2,711 | 2,750 | 2,854 | |
| Cash and cash equivalents at beginning of period | 67 | -9 | 66 | 104 |
| Exchange rate differences in cash and cash equivalents Cash and cash equivalents at end of the period |
3,177 | 2,750 | 3.177 | 2,750 |
SEK 2,111 M of the Group's cash and cash equivalents relates to Catella Bank and in compliance with the instructions and regulations that Catella Bank is subject to, the rest of the Group does
not have access to Catella Ba
| SEK M | Share capital | Other contributed capital * |
Translation reserve |
Profit brought forward incl. net profit/loss for the period |
Total | Non- controlling interests ** Total equity |
|
|---|---|---|---|---|---|---|---|
| Opening balance as of 1 January 2017 | 164 | 253 | $-107$ | 1,253 | 1,563 | 167 | 1,730 |
| Comprehensive income for January - December 2017: | |||||||
| Net profit/loss for the period | 192 | 192 | 92 | 284 | |||
| Other comprehensive income, net of tax | 30 | 9 | 39 | 40 | |||
| Comprehensive income/loss for the period | 30 | 201 | 231 | 93 | 325 | ||
| Transactions with shareholders: | |||||||
| Transactions with non-controlling interests | $\Omega$ | $\Omega$ | $-46$ | $-46$ | |||
| Dividend | $-65$ | $-65$ | $-65$ | ||||
| Closing balance as of 31 December 2017 | 164 | 253 | $-77$ | 1.389 | 1,729 | 214 | 1,943 |
Equity attributable to shareholders of the Parent Company
* Other capital contributed pertains to reserve funds in the Parent Company.
** Non-controlling interests areattributableto minority holdingsinsubsidiaries inSystematicFundsand Property Funds,andanumber of subsidiaries in Property Asset Management and Corporate Finance
As of 31 December 2017, the Parent company had 7.000,000 warrants outstanding, of which 200,000 held in treasury. There were no transactions involving warrants in 2017. Repurchases of warrantsare reported in the consolidated accountsasOther additional capital where classified as non-restricted equity, and as Retained earnings where classified as residual amounts.
| Equity attributable to shareholders of the Parent Company | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK M | Share capital | Other contributed capital * |
Translation reserve |
Profit brought forward incl. net profit/loss for the period |
Total | Non- controlling interests Total equity |
||
| Opening balance as of 1 January 2016 | 163 | 250 | $-142$ | 1,048 | 1.319 | 17 | 1,436 | |
| Comprehensive income for January - December 2016: | ||||||||
| Net profit/loss for the period | 272 | 272 | 85 | 357 | ||||
| Other comprehensive income, net of tax | 35 | 3 | 38 | 39 | ||||
| Comprehensive income/loss for the period | 35 | 274 | 310 | 86 | 395 | |||
| Transactions with shareholders: | ||||||||
| Transactions with non-controlling interests | -9 | $-9$ | $-37$ | $-46$ | ||||
| Warrants issued | 3 | 3 | 3 | |||||
| Re-purchase of warrants issued | $-12$ | $-12$ | $-12$ | |||||
| New share issue | $\mathbf 0$ | |||||||
| Dividend | $-49$ | $-49$ | $-49$ | |||||
| Closing balance as of 31 December 2016 | 164 | 253 | $-107$ | 1,253 | 1.563 | 167 | 1,730 |
* Other capital contributed pertains to reserve funds in the Parent Company.
** Non-controlling holdings relate to minority holdings in subsidiaries in Systematic Funds and Property Funds, and a majority of subsidiaries in Property Asset Management and Corporate Finance. In 2016, the Swedish Corporate Finance operations were restructured from a limited partnership through a business transfer at market value to a limited company controlled by Catella in which the employees own 40% of the shares.
As of 31 December 2016, the parent company had a total of 7,000,000 outstanding warrants, of which 200,000 held in treasury. In the fourth quarter 2016, 2,034,000 warrants expired without being utilized. Accordingly, a tot newly issued shares at a price of SEK 11 per share and 300,000 warrants held in treasury were sold to a key executive at a purchase price of SEK 3.1 M.
| Asset Management | ||||||||
|---|---|---|---|---|---|---|---|---|
| Corporate Finance | and Banking | Other | Group | |||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |
| SEK M | Oct-Dec | Oct-Dec | Oct-Dec | Oct-Dec | Oct-Dec | Oct-Dec | Oct-Dec | Oct-Dec |
| Net sales | 262 | 187 | 561 | 428 | $-10$ | $-8$ | 813 | 607 |
| Other operating income | $\theta$ | $\overline{2}$ | $\mathbf{L}$ | $\overline{2}$ | $-()$ | $-1$ | $\perp$ | 3 |
| Total income | 262 | 188 | 572 | 430 | $-10$ | $-9$ | 824 | 610 |
| Assignment expenses and commission | $-29$ | $-19$ | $-108$ | $-100$ | 5 | 6 | $-132$ | $-113$ |
| Other external expenses | $-33$ | $-32$ | $-115$ | $-90$ | $\sim$ [ | $-7$ | $-148$ | $-130$ |
| Personnel costs | $-155$ | $-112$ | $-206$ | $-154$ | $-10$ | $-9$ | $-372$ | $-276$ |
| Depreciation | $-$ | $-1$ | $-7$ | $-4$ | $-()$ | $-0$ | $-8$ | $-5$ |
| Other operating expenses | $-$ | $-4$ | $-()$ | $\overline{2}$ | $-5$ | $\Omega$ | $-6$ | $-2$ |
| Operating profit/loss before items affecting comparability | 43 | 20 | 136 | 84 | $-21$ | $-19$ | 159 | 84 |
| Items affecting comparability | $\Omega$ | $\circ$ | $-53$ | $\overline{0}$ | $\circ$ | $\circ$ | $-53$ | $\mathbf{0}$ |
| Operating profit/loss | 43 | 20 | 83 | 84 | $-21$ | $-19$ | 105 | 84 |
| Interest income | $\overline{0}$ | $\circ$ | $\Omega$ | 6 | 5 | 6 | 5 | |
| Interest expenses | $\overline{\phantom{a}}$ | $-0$ | $-$ | $-0$ | $-4$ | $-3$ | $-5$ | $-3$ |
| Other financial items | $-()$ | $-2$ | $-3$ | 20 | $-3$ | 20 | $-6$ | |
| Financial items-net | $\theta$ | $-0$ | $-2$ | $-4$ | 22 | $\overline{a}$ | 20 | $-4$ |
| Profit/loss before tax | 44 | 20 | 81 | 80 | 0 | $-20$ | 126 | 80 |
| Tax | $-15$ | $-8$ | $-31$ | $-16$ | 6 | 3 | $-39$ | $-22$ |
| Net profit/loss for the period | 29 | $\perp$ | 50 | 64 | $\overline{7}$ | $-17$ | 87 | 58 |
| Profit/loss attributable to shareholders of the Parent Company | 29 | $\perp$ | 30 | 43 | $\overline{7}$ | $-17$ | 67 | 37 |
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| lan-Dec | lan-Dec | lan-Dec | Jan-Dec | lan-Dec | Jan-Dec | Jan-Dec | Jan-Dec |
| 656 | 575 | 1,829 | 1.461 | $-24$ | $-29$ | 2,461 | 2,007 |
| 3 | $\perp$ | 15 | $\mathbf{L}$ | $-2$ | $-3$ | 16 | 20 |
| 659 | 586 | 1,844 | 1,473 | $-26$ | $-31$ | 2,477 | 2,027 |
| $-74$ | $-64$ | $-417$ | $-374$ | 12 | 21 | $-479$ | $-417$ |
| $-137$ | $-129$ | $-346$ | $-289$ | $-13$ | $-22$ | $-496$ | $-441$ |
| $-372$ | $-322$ | $-629$ | $-532$ | $-29$ | $-24$ | $-1,030$ | $-878$ |
| $-4$ | $-4$ | $-24$ | $-13$ | $-()$ | $-0$ | $-28$ | $-18$ |
| $-2$ | $-7$ | $-9$ | $-9$ | $-18$ | $\overline{2}$ | $-29$ | $-14$ |
| 71 | 58 | 419 | 255 | $-75$ | $-55$ | 414 | 258 |
| $\Omega$ | $\Omega$ | $-53$ | $\Omega$ | $\Omega$ | $\Omega$ | $-53$ | $\theta$ |
| 71 | 58 | 365 | 255 | $-75$ | $-55$ | 361 | 258 |
| $\circ$ | 22 | 22 | 23 | 24 | |||
| $-3$ | $\Omega$ | $-2$ | $\overline{a}$ | $-13$ | $-10$ | $-17$ | $-$ |
| $\overline{2}$ | 8 | 216 | 9 | 10 | 28 | 227 | |
| $-0$ | $\overline{2}$ | $7\overline{ }$ | 215 | 27 | 22 | 34 | 239 |
| 70 | 60 | 372 | 470 | $-47$ | $-33$ | 395 | 497 |
| $-27$ | $-10$ | $-$ | $-132$ | 27 | $-$ | $-141$ | |
| 43 | 50 | 262 | 338 | $-20$ | $-31$ | 284 | 357 |
| 272 | |||||||
| 43 | Corporate Finance 50 |
169 | Asset Management and Banking 253 |
$-20$ | Other $-31$ |
Group 192 |
The operating segments reported above, Corporate Finance and Asset Management and Banking, are consistent with internal reporting submitted to management and the Board of Direc-The operating segments reported above, Corporate manice and Asset management and banking, are consistent with internal reporting submitted to management and the board of Directors and the "or the Parent Comparing segments
| Corporate Finance | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | ||
| SEK M | Oct-Dec | Jul-Sep | Apr-Jun | lan-Mar | Oct-Dec | Jul-Sep | Apr-Jun | Jan-Mar | |
| Net sales | 262 | 43 | 130 | 2 | 187 | 142 | 172 | 73 | |
| Other operating income | $\Omega$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 6 | |||||
| Total income | 262 | 44 | 3 | 2 | 188 | 44 | 174 | 80 | |
| Assignment expenses and commission | $-29$ | $-13$ | $-19$ | $-13$ | $-19$ | $-26$ | $-14$ | $-4$ | |
| Other external expenses | $-33$ | $-33$ | $-33$ | $-38$ | $-32$ | $-29$ | $-33$ | $-36$ | |
| Personnel costs | $-155$ | $-75$ | $-74$ | $-68$ | $-112$ | $-72$ | $-89$ | $-49$ | |
| Depreciation | $-$ | $\overline{a}$ | $-1$ | $-1$ | $\overline{a}$ | $-1$ | $\overline{a}$ | $-1$ | |
| Other operating expenses | $-1$ | $-2$ | $-()$ | $-4$ | $-2$ | $\overline{a}$ | $-0$ | ||
| Operating profit/loss | 43 | 23 | $\overline{2}$ | $\overline{2}$ | 20 | 4 | 36 | $-12$ | |
| Interest income | $\theta$ | $\circ$ | $\circ$ | $\theta$ | $\Omega$ | $\theta$ | $\circ$ | $\circ$ | |
| Interest expenses | $-$ | $-1$ | $-$ | $-1$ | $-0$ | $\mathbf{0}$ | $\circ$ | $\circ$ | |
| Other financial items | $\Omega$ | $\bigcirc$ | $\Omega$ | $-()$ | $\circ$ | $\circ$ | |||
| Financial items-net | $\Omega$ | $-()$ | $-0$ | $-0$ | $-()$ | ||||
| Profit/loss before tax | 44 | 23 | $\overline{2}$ | $\overline{2}$ | 20 | 15 | 36 | $-11$ | |
| Tax | $-15$ | $-8$ | $-2$ | $-3$ | $-8$ | $-4$ | $-$ | 3 | |
| Net profit/loss for the period | 29 | 15 | 0 | $-1$ | $\vert \vert$ | $\vert \vert$ | 36 | -8 | |
| Profit/loss attributable to shareholders of the Parent Company | 29 | 15 | $\mathbf{0}$ | -1 | $\vert \vert$ | $\mathbf{H}$ | 36 | -8 |
| 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | |
|---|---|---|---|---|---|---|---|---|
| SEK M | Oct-Dec | Jul-Sep | Apr-Jun | Jan-Mar | Oct-Dec | Jul-Sep | Apr-Jun | Jan-Mar |
| Net sales | 561 | 428 | 463 | 377 | 428 | 345 | 309 | 379 |
| Other operating income | $\perp$ | 3 | $\circ$ | 2 | $\mathcal{L}$ | 2 | 6 | |
| Total income | 572 | 430 | 463 | 378 | 430 | 345 | 311 | 386 |
| Assignment expenses and commission | $-108$ | $-88$ | $-132$ | $-90$ | $-100$ | $-98$ | $-81$ | -96 |
| Other external expenses | $-115$ | $-78$ | $-78$ | $-76$ | $-90$ | $-66$ | $-78$ | $-55$ |
| Personnel costs | $-206$ | $-145$ | $-147$ | $-130$ | $-154$ | $-126$ | $-116$ | $-135$ |
| Depreciation | $-7$ | $-7$ | $-5$ | $-5$ | $-4$ | $-3$ | $-3$ | $-3$ |
| Other operating expenses | $-()$ | $-5$ | $-3$ | $-1$ | $\mathcal{L}$ | $-4$ | 8 | $-15$ |
| Operating profit/loss before items affecting comparability | 136 | 107 | 99 | 76 | 84 | 49 | 40 | 82 |
| Items affecting comparability | $-53$ | $\theta$ | $\Omega$ | 0 | 0 | $\theta$ | $\theta$ | $\theta$ |
| Operating profit/loss | 83 | 107 | 99 | 76 | 84 | 49 | 40 | 82 |
| Interest income | $\mathbf{0}$ | $\circ$ | 0 | $\Omega$ | $\mathbf 0$ | $\circ$ | $\circ$ | |
| Interest expenses | $-1$ | $-0$ | $-()$ | $-0$ | $-0$ | $-0$ | $-1$ | $-0$ |
| Other financial items | $-2$ | $\overline{4}$ | $\overline{4}$ | $-3$ | $-2$ | 217 | $\overline{4}$ | |
| Financial items-net | $-2$ | $\overline{4}$ | 3 | $-4$ | $-2$ | 217 | $\overline{4}$ | |
| Profit/loss before tax | 8 1 | 108 | 103 | 80 | 80 | 47 | 257 | 86 |
| Tax | $-31$ | $-31$ | $-27$ | $-21$ | $-16$ | $-10$ | $-83$ | $-24$ |
| Net profit/loss for the period | 50 | 77 | 76 | 58 | 64 | 37 | 174 | 63 |
| Profit/loss attributable to shareholders of the Parent Company | 30 | 53 | 48 | 38 | 43 | 27 | 158 | 24 |
| Asset Management | ||||||||
|---|---|---|---|---|---|---|---|---|
| Corporate Finance | and Banking | Other | Group | |||||
| SEK M | 2017 31 Dec |
2016 31 Dec |
2017 31 Dec |
2016 31 Dec |
2017 31 Dec |
2016 31 Dec |
2017 31 Dec |
2016 31 Dec |
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Intangible assets | 63 | 62 | 271 | 300 | 56 | 50 | 390 | 412 |
| Property, plant and equipment | $\vert \ \vert$ | $\vert \vert$ | 16 | 4 | $\overline{\phantom{a}}$ | 27 | 26 | |
| Holdings in associated companies | $\Large{0}$ | $\overline{0}$ | $\overline{0}$ | $\mathbf{0}$ | 44 | 51 | 45 | 51 |
| Other non-current securities | $\mathbf{O}$ | $\boldsymbol{0}$ | 173 | 136 | 265 | 246 | 438 | 382 |
| Deferred tax receivables | $\circ$ | 31 | 28 | 68 | 68 | 99 | 97 | |
| Other non-current receivables | 8 | 5 | 792 | 771 | $-4$ | $-{\cal O}$ | 796 | 775 |
| 83 | 79 | 1,282 | 1,249 | 431 | 416 | 1,796 | 1,744 | |
| Current assets | ||||||||
| Current loan receivables | $\circ$ | $\theta$ | 589 | 577 | $\circ$ | $\theta$ | 589 | 577 |
| Accounts receivable and other receivables | 173 | 162 | 547 | 327 | 5 | 5 | 725 | 493 |
| Current investments | $\circ$ | $\theta$ | 62 | 59 | 46 | 29 | 108 | 88 |
| Cash and cash equivalents | 255 | 237 | 2,625 | 2,408 | 298 | 105 | 3,177 | 2,750 |
| 428 | 399 | 3,823 | 3,370 | 349 | 138 | 4,600 | 3,907 | |
| Total assets | 511 | 478 | 5,106 | 4,619 | 779 | 554 | 6,396 | 5,651 |
| EQUITY AND LIABILITIES | ||||||||
| Equity | ||||||||
| Equity attributable to shareholders of the Parent Company | 120 | 254 | 931 | 859 | 678 | 451 | 1,729 | 1,563 |
| Non-controlling interests | 45 | 27 | 169 | 139 | $-0$ | $-()$ | 214 | 167 |
| Total equity | 165 | 281 | 1,100 | 998 | 678 | 451 | 1,943 | 1,730 |
| Liabilities | ||||||||
| Non-current liabilities | ||||||||
| Borrowings | $\circ$ | $\mathbf 0$ | $\mathbf 0$ | $\circ$ | $\circ$ | $\mathbf 0$ | $\theta$ | $\circ$ |
| Long-term loan liabilities | $\overline{0}$ | $\overline{0}$ | $\theta$ | $\,0\,$ | 494 | $\theta$ | 494 | $\circ$ |
| Deferred tax liabilities | $\mathbf 0$ | $\,0\,$ | 26 | 23 | 12 | $\ \ $ | 38 | 34 |
| Other provisions | 3 | $\overline{2}$ | 3 | $\overline{0}$ | $\theta$ | $\overline{4}$ | $\overline{3}$ | |
| 3 | $\mathsf{I}$ | 31 | 25 | 502 | П | 537 | 37 | |
| Current liabilities | ||||||||
| Borrowings | $\circ$ | $\,0\,$ | 122 | 260 | $\mathbf 0$ | $\,0\,$ | 122 | 260 |
| Current Ioan liabilities | $\rm{O}$ | $\,0\,$ | 2,784 | 2,606 | $\rm{O}$ | 200 | 2,784 | 2,806 |
| Accounts payable and other liabilities | 314 | 176 | 980 | 678 | $-400$ | $-115$ | 894 | 739 |
| Tax liabilities | 29 | 20 | 88 | 51 | $\sqrt{ }$ | 8 93 |
116 | 79 |
| 343 | 196 | 3,974 | 3,596 | $-400$ | 3,917 | 3,884 | ||
| Total liabilities | 346 | 197 | 4,006 | 3,621 | 102 | 103 | 4,453 | 3,921 |
| Total equity and liabilities | 511 | 478 | 5,106 | 4,619 | 779 | 554 | 6,396 | 5,651 |
From an international perspective, it is important that, in specific circumstances, Catella is able to carry out investments alongside its customers in order to attract capital for the projects and products Catella is working with. Over the coming years, Catella intends to set aside capital for these investments, which are primarily in the property sphere.
The capital to be invested mainly relates to anticipated cash flows from or divestments of Ioan portfolios. Catella perceives significant potential in various projects and dedicated property products where Catella's active participation
will contribute to growth and credibility in addition to generating positive ret urns. The goal is for investments to generate minimum ret urns (IRR) of 20% over time.
Through associated company Nordic Seeding GmbH, Catella has investments in property development projects in Germany (For more information about the projects, see below). The projects are run by Catella's German subsidiary Catella Project Management GmbH. Through Nordic Seeding GmbH, Catella intends to invest in the early phases of projects where the
concept and framework is determined subsequently divesting projects and realizing capital gains before construction begins and projects are completed.
In order to structure its principal investment and support new property products, Catella will be establishing an investment committee whose task is to evaluate the respective investments or divestments of assets
For more information about Catella's principal investments under the 'Other' category divided by Holdings in associated companies, Other non-current securities and Current investments, see below.
| Holdings in associated | Other non-current | |||
|---|---|---|---|---|
| OTHER, SEK M | companies | securities Current investments | Total | |
| Nordic Seeding GmbH * | 44 | $\sim$ | 44 | |
| Loan portfolios | $\overline{\phantom{a}}$ | 238 | 40 | 278 |
| Nordic Light Fund | 14 | 4 | ||
| Other holdings | $\overline{A}$ | 20 | ||
| Total | 44 | 265 | 46 | 356 |
| Investment commitments | 21 |
Investment commitments
* Investments correspond to Catella's 45% holding and include the risk that Nordic Seeding GmbH encounters a situation where it is forced to choose between continuing to invest in later phases of projects, run the projects to completion or abandon projects and the associated invested capital
Residential property development project located in Dusseldorf consisting of 1,000 apartments over a total of 38,075 $m2$ .
Residential property development project located in Frankfurt consisting of 125 apartments and premises over a total of 4,258 m2.
The loan portfolios consist of securitised European loans mainly exposed to residential property. The progress of the loan is
closely, monitored, and revaluations are made on a continuous basis. Forecasting is performed by French investment advisor Cartesia SAS, Book value in Catella's consolidated accounts is determined on the basis of forecast discounted cash flows mainly comprising interest payments, but also amortization.
A summary of Catella's loan portfolio as well as actual and forecast cash flows are presented in the relevant Note below.
Catella holds shares in the Luxembourgbased Nordic Light Fund, which has invested in loan portfolios and is managed by Catella Bank. The loan portfolios consist of loans to small and medium-sized companies, mainly in Germany and Spain. In addition, the port folios include a diversified pool of loans to small and medium-sized companies in the Netherlands and Portugal, with residential mortgages as underlying security. Since the end of 2011, the fund is fully invested and is now repaying cash flows received and realized income on investments to fund holders in the form of quarterly repurchases of units.
Other holdings mainly consist of listed and unlisted shares in Swedish limited companies.
| Forecast | Share of | Forecast | Share of | ||||
|---|---|---|---|---|---|---|---|
| SEK M | undiscounted | undiscounted | discounted | discounted | Discount | ||
| Loan portfolio | Country | cash flow * | cash flow | cash flow | cash flow | rate | Duration, years |
| Pastor 2 | Spain | 49.4 | 13.5% | 44.6 | 17.5% | 5.9% | 1.7 |
| Pastor 3 ** | Spain | ٠ | ٠ | ||||
| Pastor 4 | Spain | 28.7 | 7.9% | 14.7 | 5.7% | 10.9% | 6.5 |
| Pastor 5 ** | Spain | $\sim$ | $\sim$ | $\sim$ | $\sim$ | $\sim$ | |
| Lusitano 3 | Portugal | 80.8 | 22.1% | 66.5 | 26.1% | 5.9% | 3.5 |
| Lusitano 4 ** | Portugal | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | ٠ | $\overline{\phantom{a}}$ | ||
| Lusitano 5 | Portugal | 109.7 | 30.1% | 67.8 | 26.6% | 10.9% | 4.9 |
| Minotaure **** | France | 33.6 | |||||
| Ludgate **** | UK | ٠ | 47.5 | ×, | |||
| Sestante 2 ** | Italy | ٠ | $\sim$ | $\sim$ | ٠ | $\sim$ | |
| Sestante 3 ** | Italy | $\overline{\phantom{a}}$ | $\sim$ | $\overline{\phantom{a}}$ | ٠ | ||
| Sestante 4 ** | Italy | ٠ | $\sim$ | $\overline{\phantom{a}}$ | ٠ | ||
| Total cash flow *** | 365.0 | 100.0% | 274.7 | 100% | 8,7% | 4.2 | |
| Accrued interest | 3.2 | ||||||
| Carrying amount in consolidated balance sheet | 277.9 |
arrying amount in consolidated balance shee:
* The forecast was produced by investment advisor Cartesia S.A.S.
** These investments were assigned a value of SEK 0.
*** The discount rate recognised in the line 'Total cash flow' is the weighted average interest of the total discounted cash flow.
**** Ludgate and Minotaure is intended to be divested during the first quarter of 2018 and have therefor been valued at sale price 31 December 2017.
The cash flow for each loan portfolio is presented in the table on the next page and the discount rates by portfolio are stated above. There is more information on Catella's loan portfolio on the website.
The portfolio is valued according to the fair value method, as defined in IFRS. In the absence of a functional and sufficiently liquid market for essentially all in-vestments and comparable subordinated investment s, valuation is performed using the mark-t o-model method. This method is based on projecting cash flow until maturity for each investment using market based credit assumption. Projected cash flows have been produced by the external investment advisor Cartesia. The credit assumption used by Cartesia is based on the historical performance of each investment and a broad selection of comparable transactions.
Projected cash flows include assumptions of potential deterioration of credit variables. They do not include the full effect of a scenario of low probability and high potential negative impact, such as a dissolution of the Euro zone, where one of the countries in which EETI has underlying investments leaves the European Monetary Union, or similar scenarios. Adjustments of cash flows affect this value and are stated in a sensitivity analysis on Catella's website.
The discount rates applied are set internally, and based on a rolling 24-month index of non-investment grade European corporate bonds as underlying assets (iTraxx). The discount rates per portfolio are also set relative to other assets in the absence of market prices for the assets held by EETI. Each quarter, the Board of EETI evaluates the projected cash flows and related assumptions, combined with the market pricing of other assets for possible adjustment of the discount rates in
addition to variations in the index. Adjustments to discount rates affect this value and are stated in a sensitivity analysis on Catella's website.
Most of the investments consist of holdings in and/or financial exposure to securities that are subordinate in terms of payment and are ranked lower than securities that are secured or represent ownership of the same asset class. Some investments also include structural features by which more highly ranked securities that are secured or represented by owner ship of the same asset class are prioritized in instances of default or if the loss exceeds predetermined levels. This could result in interruptions in the income flow that Catella has assumed from its investment portfolio. For more information, see Note 23 in the Annual Report for 2016.
| SEK M | Spain | Portugal | Italy | Netherlands | Germany | France | UK | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loan portfolio | Pastor 2 | Pastor 3 | Pastor 4 | Pastor 5 | Lusitano 3 Lusitano 5 | Sestante 4 | Memphis ** Shield ** | Gems ** Semper ** | Minotaure $\ast\ast$ |
Ludgate ** | Outcome | Forecast | Diff | ||||
| Outcome | |||||||||||||||||
| Q4 | 2009 | 4.6 | 0.4 | 0.8 | ×, | 0.9 | 1.7 | 0.2 | 1.6 | 2.2 | 0.0 | 12.4 | 7.7 | 4.7 | |||
| Q١ | 2010 | 3.4 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\sim$ | $\sim$ | $\sim$ | $\sim$ | 0.8 | 1.6 | 0.2 | 1.5 | 1.9 | 0.3 | 9.5 | 6.3 | 3.3 |
| Q2 | 2010 | 2.3 | $\overline{\phantom{a}}$ | $\sim$ | × | 0.7 | $\overline{\phantom{a}}$ | ×. | 0.8 | 1.5 | 0.2 | 1.4 | 2.3 | 0.1 | 9.3 | 15.5 | $-6.2$ |
| Q3 | 2010 | 0.6 | $\sim$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 2.0 | $\sim$ | $\sim$ | 0.8 | 1.5 | 0.2 | $\mathsf{I}$ .4 | 2.5 | 0.1 | 9.1 | 8.0 | $\parallel . \parallel$ |
| Q 4 | 2010 | 1.5 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\sim$ | 0.8 | 1.5 | 0.2 | 1.4 | 2.1 | 0.1 | 7.7 | 5.9 | 1.7 |
| Q١ | 2011 | 2.8 | $\sim$ | $\overline{\phantom{a}}$ | $\sim$ | 0.8 | $\sim$ | $\sim$ | 0.8 | 1.5 | 0.2 | 1.3 | 1.2 | 0.1 | 8.6 | 6.5 | 2.1 |
| Q2 | 2011 | 3.4 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 4.7 | $\overline{\phantom{a}}$ | 0.2 | 0.8 | 1.4 | 0.2 | 1.4 | 1.9 | 0.1 | 14.3 | 7.1 | 7.1 |
| Q3 | 2011 | 2.0 | $\sim$ | $\sim$ | $\sim$ | 3.2 | ×, | 0.2 | 0.8 | 1.5 | 0.2 | 1.5 | 2.2 | 0.1 | 11.8 | 6.9 | 4.9 |
| Q4 | 2011 | 1.5 | × | $\sim$ | × | 2.5 | ×, | 0.2 | 0.9 | ÷, | 0.3 | 1.5 | 1.6 | 0.1 | 8.5 | 7.8 | 0.6 |
| Q١ | 2012 | 2.1 | × | ×. | $\overline{\phantom{a}}$ | 4.3 | $\sim$ | 0.2 | 0.8 | $\overline{\phantom{a}}$ | 0.2 | 1.4 | 1.7 | 0.0 | 10.8 | 6.9 | 3.9 |
| Q2 | 2012 | 1.5 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 3.4 | $\overline{\phantom{a}}$ | 0.1 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 0.2 | 1.3 | 1.2 | 0.0 | 7.8 | 8.7 | $-0.9$ |
| Q3 | 2012 | 0.8 | ×, | ×, | ÷, | 2.5 | ÷, | 0.1 | $\sim$ | ä, | 0.1 | 1.3 | 0.9 | 0.0 | 5.7 | 7.7 | $-2.0$ |
| Q4 | 2012 | 0.1 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | ÷, | $\sim$ | 0.1 | $\overline{\phantom{a}}$ | ÷, | 0.1 | 1.2 | ÷, | 0.0 | 1.5 | 6.8 | $-5.3$ |
| Q١ | 2013 | 0.1 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 0.1 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 0.1 | 1.2 | $\overline{\phantom{a}}$ | 0.1 | 1.5 | 1.5 | $-0.0$ |
| Q2 | 2013 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\sim$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 0.1 | $\sim$ | $\sim$ | 0.1 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 0.2 | 2.3 | $-2.1$ |
| Q3 | 2013 | 0.1 | ÷, | $\overline{\phantom{m}}$ | $\overline{\phantom{a}}$ | 1.7 | ÷, | 0.1 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 0.1 | $\overline{\phantom{a}}$ | ÷, | 0.1 | 2.2 | 2.6 | $-0.4$ |
| Q4 | 2013 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{m}}$ | $\overline{\phantom{a}}$ | 1.0 | 0.1 | $\overline{\phantom{a}}$ | ÷, | 0.1 | ÷, | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\vert \, . \, \vert$ | $\vert \, . \, \vert$ | 0.0 | |
| $\mathsf{Q}$ l | 2014 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\sim$ | 1.6 | $\bar{z}$ | 0.1 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 0.1 | ÷, | $\overline{\phantom{a}}$ | 0.0 | 1.9 | $\vert$ .0 | $0.8\,$ |
| Q2 | 2014 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\sim$ | 0.7 | $\overline{\phantom{a}}$ | 0.1 | $\sim$ | 0.1 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 2.6 | 3.5 | 0.3 | 3.3 | |
| Q3 | 2014 | $\overline{\phantom{a}}$ | ÷, | $\overline{\phantom{a}}$ | 2.2 | ÷, | 0.1 | $\sim$ ×, |
$\overline{\phantom{a}}$ | 0.1 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 5.2 | 7.7 | 5.9 | $\vert .8$ | |
| Q 4 | 2014 | 0.3 | ×, | $\overline{\phantom{a}}$ | × | 2.2 | ×, | 0.1 | $\sim$ | $\sim$ | 0.1 | ÷, | ×, | 5.2 | 7.9 | 5.7 | 2.2 |
| $\mathop{\mathrm{Q}}$ | 2015 | 0.0 | $\sim$ | ×, | $\sim$ | $ \cdot $ | $\overline{\phantom{a}}$ | 0.1 | ×, | $\overline{\phantom{a}}$ | 0.1 | ÷, | $\sim$ | 4.3 | 5.6 | 5.8 | $-0.2$ |
| Q2 | 2015 | 0.0 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\sim$ | 1.0 | $\overline{\phantom{a}}$ | 0.1 | $\overline{\phantom{a}}$ | $\sim$ | 0.1 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 4.5 | 5.7 | 5.9 | $-0.2$ |
| Q3 | 2015 | 0.0 | $\overline{\phantom{a}}$ | $\sim$ | $\overline{\phantom{a}}$ | 0.7 | $\overline{\phantom{a}}$ | 0.1 | $\sim$ | $\sim$ | 0.1 | $\frac{1}{2}$ | $\overline{\phantom{a}}$ | 5.1 | $6.0\,$ | 6.1 | $-0.1$ |
| 2015 | ×. | ×, | $\sim$ | × | 1.0 | 0.1 | $\sim$ | $\sim$ | 0.1 | ä, | ×, | 3.1 | 4.3 | 5.4 | $-1.2$ | ||
| Q4 Q١ |
2016 | $\sim$ | $\bar{a}$ | ×. | $\sim$ | 1.7 | ÷, | 0.1 | ×, | ÷, | 46.7 | $\frac{1}{2}$ | $\sim$ | 3.9 | 52.4 | 51.3 | 1,1 |
| 2016 | 0.1 | 2.0 | 0.1 | $\sim$ | $\sim$ | 4.0 | 6.2 | 5.4 | 0.9 | ||||||||
| Q2 | 2016 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ $\sim$ |
$\sim$ | 0.9 | $\sim$ | 0.1 | $\sim$ | $\sim$ | ×, | $\sim$ | $\sim$ × |
3.4 | 4.5 | 5.0 | $-0.5$ | |
| Q3 | 2016 | $\overline{\phantom{a}}$ $\sim$ |
$\overline{\phantom{a}}$ $\sim$ |
$\sim$ | $\overline{\phantom{a}}$ × |
3.7 | $\overline{\phantom{a}}$ $\sim$ |
0.1 | $\overline{\phantom{a}}$ | $\sim$ | $\overline{\phantom{a}}$ ×. |
$\sim$ | 3.4 | 7.2 | 5.2 | 2.1 | |
| Q4 | 2017 | $\sim$ | $\overline{\phantom{a}}$ | 4.1 | 5.0 | $-0.9$ | |||||||||||
| $\mathop{\mathrm{Q}}$ | $\overline{\phantom{a}}$ | $\sim$ | $\overline{\phantom{a}}$ | $\sim$ | 1.5 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\sim$ | 2.6 | 5.5 | |||
| Q2 | 2017 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 1.9 | $\overline{\phantom{a}}$ | $\sim$ | $\sim$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\sim$ | $\overline{\phantom{a}}$ | 3.5 | 5.6 | $-0.1$ | |
| Q3 | 2017 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 1.8 | $\overline{\phantom{a}}$ | $\sim$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 4.6 2.7 |
6.4 6.5 |
5.0 4.8 |
$\vert A$ |
| Q4 Total |
2017 | 0.0 27.2 |
$\overline{\phantom{a}}$ 0.0 |
$\overline{\phantom{a}}$ 0.0 |
$\sim$ 0.0 |
3.8 54.9 |
$\sim$ 0.8 |
$\overline{\phantom{a}}$ 2.9 |
×. 8.4 |
i. 12.2 |
$\sim$ 50.4 |
×. 19.4 |
$\sim$ 21.7 |
59.3 | 257.1 | 232.5 | 1.7 24.6 |
| Forecast Quarter/ |
|||||||||||||||||
| Forecast | Year | Acc. | |||||||||||||||
| Q١ | 2018 | 0.0 | ×. | 2.3 | ÷ | 2.4 | 2.4 | ||||||||||
| O2 | 2018 | 0.0 | 2.6 | 2.6 | 5.0 | ||||||||||||
| Q 3 | 2018 | 0.0 | $\overline{\phantom{a}}$ | 2.5 | $\overline{\phantom{a}}$ | 2.5 | $7.5\,$ | ||||||||||
| Q4 | 2018 | 0.0 | $\sim$ | 2.6 | $\overline{\phantom{a}}$ | 2.6 | 10.2 | ||||||||||
| Full year | 2019 | 49.3 | $\overline{\phantom{a}}$ | 11.9 | $\overline{\phantom{a}}$ | 61.2 | 66.1 | ||||||||||
| Full year | 2020 | $\overline{\phantom{a}}$ | 16.7 | 5.6 | 22.3 | 88.4 | |||||||||||
| Full year | 2021 | $\overline{\phantom{a}}$ | 21.6 | 53.3 | 74.9 | 163.3 | |||||||||||
| Full year | 2022 | $\overline{\phantom{a}}$ | 2.8 | 26.5 | 29.2 | 192.5 | |||||||||||
| Full year | 2023 | $\overline{\phantom{a}}$ | 2.4 | 2.3 | 4.8 | 197.3 | |||||||||||
| Full year | 2024 | 28.7 | 15.2 | 2.0 | 46.0 | 243.3 | |||||||||||
| Full year | 2025 | 1.6 | 1.6 | 244.9 |
$0.0$
$28.7$
$0.0$
$49.4$
Full year
Full year
Total
2026
2027
f The forecast was produced by investment advisor Cartesia S.A.S.
** Shield was divested in Q4 2011, Memphis in Q2 2012 and Semper in Q2 2013. Ludgate and Minotaure is intended to be divested Q1 2018. Gems was re-purchased
$0.0$
$0.0$
$0.0$
$0.0$
$0.0$
$\overline{0.0}$
$0.0$
$1.3$
$|7.1|$
268.6
246.3
$263.4$
$1.3$
$17.1$ $\boxed{109.7}$
$80.8$
| Sek M | 31 December 2017 |
|---|---|
| Loan portfolio and Nordic Light Fund * | 295 |
| Operation-related investments | 204 |
| Other securities | 48 |
| Total ** | 547 |
* of which Loan portfolios SEK 278 M.
** of which short-term investments SEK 89 M and long-term investments SEK 438 M.
In accordance with IFRS7, financial instruments are recognized on the basis of fair value hierarchically with three different levels. Classification is based on the input dataused for measuring instruments. Quoted prices on an active market on the reporting date are applied for level I. Observable market data for the asset or
liability other than quoted prices are used in level 2. Fair value is determined with the aid of valuation techniques. For level 3, fair value is determined on the basis of valuation techniques based on non-observable market data. Specific valuation techniques used for level 3 are the measurement of discounted cash flows to determine the
fair value of financial instruments. For more information, see Note 3 in the Annual Report 2016.
The Group's assets and liabilities measured at fair value as of 31 December 2017 are stated in the following table.
| SEK M | Tier I | Tier 2 | Tier 3 | Total |
|---|---|---|---|---|
| ASSETS | ||||
| Derivative instruments | $\overline{4}$ | 14 | ||
| Financial assets available for sale | 59 | 59 | ||
| Financial assets measured at fair value through profit or loss |
55 | 110 | 309 | 474 |
| Total assets | 55 | 183 | 309 | 547 |
| LIABILITIES | ||||
| Derivative instruments | 5 | |||
| Total liabilities | $\mathbf 0$ | 5 | 0 | 5 |
No changes between levels occurred the previous year.
| 2017 | |
|---|---|
| as of I January | 270 |
| Purchases | $\vert \vert$ |
| Disposals | $-3$ |
| Amortisation | $-14$ |
| Gains and losses recognised through profit or loss | 23 |
| Capitalised interest income | 3 |
| Exchange rate differences | 8 |
| As of 31 December | 309 |
| 253 | 241 | |
|---|---|---|
| Other pledged assets | 48 | |
| Cash and cash equivalents | 205 | 188 |
| SEK M | -31 Dec | 31 Dec |
| 201 | 2016 |
Cash and cash equivalents include pledged cash funds. These funds are used as collateral in the Asset Management and Banking operating segment for ongoing transactions. Cash and cash equivalents also include cash funds in accordance with
minimum retention requirements of Catella Bank's card operations, funds that are to be accessible from time to time for regulatory reasons, as well as frozen funds for other purposes.
| 6. | ||
|---|---|---|
| Other contingent liabilities | ||
| Client funds managed on behalf of clients | 56 | |
| SFK M | 31 Dec | 31 Dec |
| 2.017 | 2016 |
Client funds relate to assets belonging to customers managed by Catella Bank branch office. These assets are deposited in separate bank accounts by the branch
office under a third-party name. Other contingent liabilities mainly re late to guarantee commitments primarily provided for rental contracts with landlords.
| 2.697 | 2.420 | |
|---|---|---|
| Other commitments | ||
| Investment commitments | 48 | |
| Unutilised credit facilities, granted by Catella Bank | 2.668 | 2.366 |
| SFK M | 31 Dec | 31 Dec |
| 2016. |
Unutilized credit facilities mainly relate to the credit commitments issued by Catella Bank to its credit card clients. Customers can utilize these facilities under certain circumstances, depending on what collateral they can provide. Investment commitments
mainly relate to associated company Nordic Seeding GmbH.
| Contractual | Software | ||||
|---|---|---|---|---|---|
| Goodwill | Trademarks and brands |
customer licenses and IT | |||
| Financial year 2016 | relations | systems | Total | ||
| Opening balance | 282 | 50 | 5 | 27 | 363 |
| Purchases | 23 | 8 | 42 | ||
| Cost in acquired companies | 8 | $\overline{2}$ | $\overline{2}$ | 2 | |
| Disposals | $\mathbf{0}$ | ||||
| Depreciation | $-2$ | $-6$ | $-8$ | ||
| Exchange rate differences | 3 | $\Omega$ | $\overline{4}$ | ||
| Closing balance | 292 | 50 | 28 | 42 | 412 |
| As of 31 December 2016 | |||||
| Cost | 292 | 50 | 36 | 44 | 522 |
| Accumulated depreciation and impairment | $-8$ | $-102$ | $-109$ | ||
| Book value | 292 | 50 | 28 | 42 | 412 |
| Financial year 2017 | |||||
| Opening balance | 292 | 50 | 28 | 42 | 412 |
| Purchases | 40 | 40 | |||
| Cost in acquired companies | $\overline{2}$ | $\overline{4}$ | 6 | ||
| Disposals | $\mathbf 0$ | ||||
| Reclassification from tangible assets | $\overline{\phantom{a}}$ | ||||
| Depreciation | $-9$ | $-10$ | $-18$ | ||
| Items affecting comparability - Impairment of intangible assets | $-20$ | $-33$ | $-53$ | ||
| Exchange rate differences | $\overline{2}$ | $\mathbf 0$ | $\Omega$ | 3 | |
| Closing balance | 276 | 50 | 24 | 40 | 390 |
| As of 31 December 2017 | |||||
| Cost | 296 | 50 | 39 | 98 | 483 |
| Accumulated depreciation and impairment | $-20$ | $-15$ | $-58$ | $-93$ | |
| Book value | 276 | 50 | 24 | 40 | 390 |
On 24 November 2017, following approval by the Luxembourg supervisory authority (CSSF), Catella acquired 60% of the shares in Catella Asia Limited (Catella Asia) in a targeted new issue. The acquisition establishes Catella's presence in Hong Kong and provides access to the Chinese and other Asian markets.
Catella Asia has entered a strategic collaboration with China Merchant Securities International relating to the distribution of Catella's products and services in Asia. Catella Asia has two employees, partners in the company, based in Hong Kong.
The acquired operations, included under "Other," has been consolidated as a subsidiary from 30 November 2017. As of this date, the fair value of acquired net as-
sets in Catella Asia was SEK 8 M. If full consolidation of Catella Asia had occurred as of I January 2017, Group income would have amounted to SEK 2,477 M, while profit after tax and comprehensive income for the period would have amounted to SEK 281 M and SEK 321 M respectively. These amounts have been calculated on the basis of the Group's accounting principles and have been adjusted for Catella Asia's profit. Profit includes additional amortisation and depreciation that would have been effected if fair value adjustments of intangible assets had been made as of 1 January 2017, with the ensuing tax consequences.
The total purchase consideration for 60% of the shares in Catella Asia amounts to SEK 10 M and is financed with treasury
through a cash payment in the fourth quarter 2017. In addition, Catella has incurred acquisition-related expenses of SEK 2 M that were charged to operating profit for 2017.
Goodwill of just under SEK 2 M from the acquisition is attributable to operational expansion through access to the Asian market, and human capital. No proportion of reported goodwill is expected to be deductible against income tax.
The fair value of acquired identifiable intangible assets of SEK 4 M (SEK 3.5 M adjusted for latent tax) is attributable to the distribution channels accessed through the agreement with China Merchant Securities International and its main owner China Merchant Group.
NET ASSETS AS OF 30 NOVEMBER 2017, RESULTING FROM THE ACQUISITION OF CATELLA ASIA LTD (SEK M):
| Acquisition-related intangible assets | 4.5 |
|---|---|
| Other receivables | 0 c |
| Cash and cash equivalents | 7.8 |
| Deferred tax liabilities | $-0.7$ |
| Other liabilities | $-3.4$ |
| Fair value, net assets | 8.1 |
| Non-controlling interests | 0 c |
| Goodwill | ۱.S |
| Total purchase price | 10 c |
| Unsettled purchase price | 0 c |
| Cash-settled purchase consideration | 10 c |
| Cash and cash equivalents in acquired subsidiary | -7.8 |
| Acquisition expenses | ٤.١ |
| Change in the Group's cash and cash equivalents on acquisition | 4 c |
This valuation is preliminary while awaiting final valuation of the assets, which is expected to be completed within 12 months
of the acquisition date
Catella AB and those subsidiaries that conduct operations regulated by Swedish or foreign financial supervisory authorities constitute a financial corporate group, known as a consolidated financial situation. The consolidated financial situation is governed by CSSF in Luxemburg. Catella Bank S.A is the reporting entity and responsible institute.
In January 2018, CSSF announced that a further four smaller Group companies, Catella Asset Management AS, Elementum Asset Management AS, Ambolt Advisors Sarl and IPM Informed Portfolio Management UK Ltd, would be included in the
consolidated financial situation from 31 December 2017. Group companies currently included in / excluded from the consolidated financial situation are shown in Note 20 of Catella's Annual Report 2016. Discussions are underway with CSSF regarding reporting and other mattersthat apply to the consolidated financial situation.
The consolidated financial situation complies with the EU 's and the Council's statute (EU) no.575/32013 (CRR).
The Annual Accounts for Credit Institutions and Investment Firms Act (1995: 1559), ÅRKL, stipulates that consolidated accounts shall be prepared for a consolidated financial situation. Catella complies with this requirement by supplying the information contained in this Note on the consolidated financial situation's accounts in accordance with ÅRKL. The accounting principles indicated in Other financial information have been applied when preparing these financial statements, and are consistent with ARKL. Otherwise, please refer to Catella AB's consolidated accounts.
The following tables state extracts from the accounts for the consolidated financial situation
| 2017 | 2016 | |
|---|---|---|
| SEK M | Jan-Dec | Jan-Dec |
| Net sales | 1,694 | 1,392 |
| Other operating income | 15 | $\vert$ |
| Total income | 1,709 | 1,403 |
| Assignment expenses & commission | $-454$ | $-379$ |
| Income excl. direct assignment costs and commission | 1,256 | 1,024 |
| Operating expenses | $-926$ | $-823$ |
| Operating profit/loss before items affecting comparability | 330 | 201 |
| Items affecting comparability | $-53$ | $\overline{0}$ |
| Operating profit/loss | 277 | 201 |
| Financial items-net | 407 | 253 |
| Profit/loss before tax | 684 | 454 |
| Appropriations | $\mathbf{0}$ | $\overline{2}$ |
| Tax | $-72$ | $-122$ |
| Net profit/loss for the period | 612 | 334 |
| Profit/loss attributable to: | ||
| Shareholders of the Parent Company | 520 | 249 |
| Non-controlling interests | 92 | 85 |
| 612 | 334 | |
| Employees at end of period | 343 | 335 |
| 2017 | 2016 | |
|---|---|---|
| SEK M | 31 Dec | 31 Dec |
| Non-current assets | 1,921 | 1,672 |
| Current assets | 4,264 | 3,532 |
| Total assets | 6,185 | 5,204 |
| Equity | 2,011 | 1,497 |
| Liabilities | 4,174 | 3,707 |
| Total equity and liabilities | 6,185 | 5,204 |
The company Catella AB is a parent financial holding company in the Catella Group, and publishes disclosures on capital adequacy for the consolidated financial situation below.
| 31 Dec 31 Dec SEK M 1,111 725 Common Equity Tier capital $\circ$ $\overline{0}$ Additional Tier I capital $\mathbf{0}$ $\mathbf{0}$ Tier 2 capital Own funds 725 1,111 5,708 Total risk exposure amount 4,440 OWN FUNDS AND BUFFERS Own funds requirements Pillar I 457 355 259 196 of which own funds requirements for credit risk 71 of which own funds requirements for market risk 64 126 96 of which own funds requirements for operational risk $\cal O$ $\cal O$ of which own funds requirements for credit valuation adjustment risk Own funds requirements Pillar 2 184 100 129 Institution-specific buffer requirements 200 57 Internal buffer 44 Total own funds and buffer requirements 898 629 212 96 Capital surplus after own funds and buffer requirements Capital surplus after regulatory required own funds and buffer requirements 269 4 CAPITAL RATIOS, % OF TOTAL RISK EXPOSURE AMOUNT 19.5 16.3 Common Equity Tier capital ratio 19.5 16.3 Tier capital ratio 19.5 16.3 Total capital ratio OWB FUNDS AND BUFFERS, % OF TOTAL RISK EXPOSURE AMOUNT Own funds requirements Pillar I 8.0 8.0 Own funds requirements Pillar 2 3.2 2.3 Institution-specific buffer requirements 3.5 2.9 2.5 2.5 of which requirement for capital conservation buffer 1.0 0.4 of which requirement for countercyclical capital buffer 1.0 1.0 Internal buffer 15.7 14.2 Total own funds and buffer requirements Capital surplus after own funds and buffer requirements 3.7 2.2 Capital surplus after regulatory required own funds and buffer requirements 4.7 3.2 Catella AB's consolidated financial situation satisfies the minimum capital base requirements. 2017 2016 Own funds, SEK M 31 Dec 31 Dec Common Equity Tier 1 capital Share capital and share premium reserve 399 399 Retained earnings and other reserves 1,612 1,097 Less: $-298$ $-317$ Intangible assets $-31$ $-27$ Price adjustments $-67$ Deferred tax receivables $-68$ $-51$ Qualifying holdings outside the financial sector $\sim$ $-329$ Positive results not yet verified by the Annual General Meeting $-334$ $-123$ $-27$ Other deductions 725 Total Common Equity Tier I capital 1,111 Additional Tier I capital $\sim$ $\sim$ Tier 2 capital Own funds 1,111 725 |
2017 | 2016 |
|---|---|---|
| 2017 | 2016 | |||||
|---|---|---|---|---|---|---|
| 31 Dec | 31 Dec | |||||
| Specification of risk-weighted exposure amounts and own funds requirements Pillar 1, SEK M | Risk-weighted exp.amount |
Uwii iulius requirements Pillar |
Risk-weighted exp.amount |
UWILTUITUS requirements Pillar I |
||
| Credit risk according to Standardised Approach | ||||||
| Exposures to institutions | 584 | 47 | 451 | 36 | ||
| Exposures to corporates | 850 | 68 | 480 | 38 | ||
| Exposures to retail | 3 | $\mathbf{0}$ | 123 | $ 0\rangle$ | ||
| Exposures secured by mortgages on immovable property | 244 | 20 | 286 | 23 | ||
| Exposures in default | 295 | 24 | 277 | 22 | ||
| Items associated with particular high risk | 169 | 13 | 134 | $\mathbf{1}$ | ||
| Exposures in the form of covered bonds | 3 | $\Omega$ | 3 | $\mathbf{0}$ | ||
| Exposures to collective investment undertakings (funds) | 15 | 16 | ||||
| Equity exposures | 340 | 27 | 129 | 10 | ||
| Other items | 741 | 59 | 548 | 44 | ||
| 3,242 | 259 | 2,446 | 196 | |||
| Market risk | ||||||
| Interest risk | $\overline{0}$ | $\overline{0}$ | $\Omega$ | $\overline{0}$ | ||
| Foreign exchange risk | 893 | 71 | 795 | 64 | ||
| 893 | 71 | 795 | 64 | |||
| Operational risk according to the Basic Indicator Approach | 1,570 | 126 | 1,199 | 96 | ||
| Credit valuation adjustment risk | 3 | $\mathbf{0}$ | $\mathbf{0}$ | $\mathbf{0}$ | ||
| Total | 5,708 | 457 | 4,440 | 355 |
| 2017 | 2016 | 2017 | 2016 | |
|---|---|---|---|---|
| SEK M | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec |
| Net sales | 2.0 | 2.7 | $ \ $ | 9.1 |
| Other operating income | 0.0 | 0.0 | 0.0 | 0.0 |
| Total income | 2.0 | 2.8 | 11.2 | 9.2 |
| Other external expenses | $-6.1$ | $-9.8$ | $-26.8$ | $-29.7$ |
| Personnel costs * | $-12.6$ | $-11.7$ | $-36.2$ | $-30.4$ |
| Depreciation | $-0.0$ | 0.0 | $-0.0$ | $-0.0$ |
| Other operating expenses | $-0.0$ | $-0.0$ | 0.0 | $-0.0$ |
| Operating profit/loss | $-16.7$ | $-18.8$ | $-51.9$ | $-51.0$ |
| Profit/loss from participations in group companies | 0.0 | 0.0 | 90.0 | 0.3 |
| Interest income and similar profit/loss items | 0.0 | 1.4 | $-0.0$ | 6.6 |
| Interest expenses and similar profit/loss items | $-5.2$ | $-2.4$ | $-18.6$ | $-9.8$ |
| Financial items | $-5.2$ | $-0.9$ | 71.4 | $-3.0$ |
| Profit/loss before tax | $-21.9$ | $-19.7$ | 19.5 | $-54.0$ |
| Appropriations | 0.0 | 39.0 | 0.0 | 39.0 |
| Tax on net profit for the year | 0.0 | 0.0 | 0.9 | 0.0 |
| Net profit/loss for the period | $-21.9$ | 19.3 | 20.4 | $-15.0$ |
* Personnel costs include directors' fees
| SEK M | 2017 Oct-Dec |
2016 Oct-Dec |
2017 lan-Dec |
2016 Jan-Dec |
|---|---|---|---|---|
| Net profit/loss for the period | $-21.9$ | 193 | 20.4 | $-15.0$ |
| Other comprehensive income | ||||
| Other comprehensive income for the period, net after tax | 0.0 | 0.0 | 0.0 | 0.0 |
| Total comprehensive income/loss for the period | $-21.9$ | 19.3 | 20.4 | -15.0 |
| 2017 | 2016 | |
|---|---|---|
| SEK M | 31 Dec | 31 Dec |
| Property, plant and equipment | 0.0 | 0.1 |
| Participations in Group companies | 654. | 519.1 |
| Deferred tax receivables | 19.8 | 18.9 |
| Current receivables from Group companies | 46.8 | 164.9 |
| Other current receivables | 3.9 | 5.9 |
| Cash and cash equivalents | 263.9 | 31.3 |
| Total assets | 988.6 | 740.1 |
| Equity | 474.0 | 519.0 |
| Non-current liabilities | 494.0 | 0.0 |
| Other current liabilities | 20.6 | 221.0 |
| Total equity and liabilities | 988.6 | 740.1 |
There were no assets pledged or contingent liabilities as of 31 December 2017.
The Consolidated Accounts of Catella are prepared in accordance with IFRS. See above for more information regarding accounting principles. IFRS defines only a limited number of performance measures.
From the second quarter 2016, Catella applies the European Securities and Markets Authority's (ESMA) new guidelines for alternative performance measures. In summary, an alternative performance measure Definitions
is a financial measure of historical or future profit progress, financial position or cash flow not defined by or specified under IFRS. In order to assist corporate management and other stakeholders in their analysis of Group progress, Catella presents certain performance measures not defined under IFRS. Corporate management considers that this information facilitates the analysis of the Group's performance.
This additional information is complementary to the information provided by IFRS and does not replace performance measures defined in IFRS. Catella's definitions of measures not defined under IFRS may differ from other companies' definitions. All of Catella's definitions are presented below. The calculation of all performance measures corresponds to items in the Income Statement and Balance Sheet.
| Non-IFRS performance measure | Description | Reason for using the measure |
|---|---|---|
| Equity per share attributable to parent company shareholders* |
Equity attributable to parent company shareholders divided by the number of shares at the end of the pe- riod. |
Provides investors with a view of equity as represented by a single share. |
| Return on equity* | Total profit in the period attributable to parent com- pany shareholders for the most recent four quarters divided by average equity attributable to parent com- pany shareholders in the most recent five quarters. |
The company considers that the performance measure provides investors with a better understanding of return on equity. |
| Adjusted return on equity* | Total profit in the period attributable to the parent company share adjusted for items affecting compara- bility for the most recent four quarters divided by av- erage equity attributable to parent company shareholders in the most recent five quarters. |
The company considers that the performance measure provides investors with a better understanding of return on equity when making comparisons with earlier peri- ods. |
| Equity/assets ratio* | Equity divided by total assets. | Catella considers the measure to be relevant to inves- tors and other stakeholders wishing to assess Catella's fi- nancial stability and long-term viability. |
| Dividend per share | Dividend divided by the number of shares. | Provides investors with a view of the company's dividend over time. |
| Profit margin* | Profit for the period divided by total income for the period. |
The measure illustrates profitability regardless of the rate of corporation tax. |
| Adjusted profit margin * | Profit for the period adjusted for items affecting com- parability divided by total income for the period. |
The measure illustrates profitability regardless of the rate of corporation tax when making comparisons with earlier periods. |
| Property transaction volumes in the pe- riod |
Property transaction volumes in the period constitutes the value of underlying properties at the transaction dates. |
An element of Catella's income in Corporate Finance is agreed with customers on the basis of the underlying property value of the relevant assignments. Provides in- vestors with a view of what drives parts of the income. |
| Assets under management at year-end | Assets under management constitutes the value of Catella's customers' deposited/invested capital. |
An element of Catella's income in Asset Management and Banking is agreed with customers on the basis of the value of the underlying invested capital. Provides investors with a view of what drives parts of the income. |
| Card and payment volumes | Card and payment volumes are the value of the un- derlying card transactions processed by Catella. |
Catella's income in Card & Payment Solutions. Provides investors with a view of what drives an element of Ca- tella's income. |
| Adjusted Earnings per share | Profit for the period attributable to parent company shareholders divided by the number of share. |
Provides investors with a view of the company's Earnings per share when making comparisons with earlier peri- ods. |
* See next page for basis of calculation
| 3 Months | 12 Months | ||||
|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | ||
| GROUP | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
| Net profit/loss for the period, SEK M | 87 | 58 | 284 | 357 | |
| Total income, SEK M | 824 | 610 | 2,477 | 2027 | |
| Profit margin, % | $\overline{0}$ | $\overline{0}$ | $\vert \vert$ | 8 | |
| Adjusted profit for the period, SEK M | 40 | 58 | 337 | 357 | |
| Total income, SEK M | 824 | 610 | 2,477 | 2027 | |
| Adjusted Profit margin, % | 7 | $\overline{10}$ | 4 | 8 | |
| Equity, SEK M | $\sim$ | ×. | 1,943 | 1,730 | |
| Total assets, SEK M | $\sim$ | 6,396 | 5,651 | ||
| Equity/Asset ratio, % | $\blacksquare$ | $\overline{\phantom{a}}$ | 30 | 31 | |
| Net profit/loss for the period, SEK M * | 67 | 37 | 192 | 272 | |
| No. of shares at end of the period | 81,848,572 81,848,572 | 81,848,572 81,848,572 | |||
| Earnings per share, SEK * | 0.81 | 0.45 | 2.35 | 3.32 | |
| Adjusted profit for the period, SEK M * | $ 40\rangle$ | 58 | 337 | 357 | |
| No. of shares at end of the period | 81,848,572 81,848,572 | 81,848,572 81,848,572 | |||
| Adjusted earnings per share, SEK | 1.46 | 0.45 | 2.99 | 3.32 | |
| Equity, SEK M * | $\sim$ | ٠ | 1,729 | 1,563 | |
| No. of shares at end of the period | $\sim$ | 81,848,572 81,848,572 | |||
| Equity per share, SEK * | 0.00 | 0.00 |
| 20 L | 20 I | 20 L | 201 | 2016 | 2016. | 2016. | 2016. | 2015 | 2015 | 2015 | 20 F | 2014 | 2014 | 2014 | 2014 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| GROUP | Oct-Dec ul-Sep Apr-Jun an-MarOct-Dec | Jul-Sep Apr-Jun Jan-MarOct-Dec Jul-Sep Apr-Jun Jan-MarOct-Dec Jul-Sep Apr-Jun Jan-Mar | ||||||||||||||
| Net profit/loss for the period, SEK M * | 67 | 59 | 33 | 33 | 35 | 182 | 122 | 38 | 48 | 35 | 96 | 85 | 15 | |||
| Equity, SEK M * | .729 | .628 | .5/ | .59 | .563 | -534 | .484 | .333 | .319 | .233 | .177 | .164 | l .04 | 1.027 | 920 | |
| Return on equity, % | 12 | $\overline{10}$ | 9 | 19 | 19 | 26 | 27 | 18 | 20 | 9 | 8 | 22 | ||||
| Adjusted profit for the period, SEK M * | 120 | 59 | 33 | 33 | 37 | 35 | $ 82\rangle$ | 122 | 38 | 48 | 35 | 96 | 85 | 15 | ||
| Adjusted equity, SEK * | .782 | .628 | -59 | .563 | .534 | .484 | .333 | .319 | .233 | .177 | .164 | 04. ا | 1.027 | 920 | ||
| Adjusted return on equity, % | 15 | $\overline{0}$ | 9. | 19 | 19 | 26 | 27 | 18 | 20 | 9 | 8 | 22 |
| Calculation of performance measures for the Corporate Finance operating segment | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3 Months | 12 Months | ||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| CORPORATE FINANCE | Oct-Dec | Oct-Dec | lan-Dec | lan-Dec | |||||||||||||
| Net profit/loss for the period, SEK M | 29 | 43 | 50 | ||||||||||||||
| Total income, SEK M | 262 | 188 | 659 | 586 | |||||||||||||
| Profit margin, % | 11 | 6 | 9 | ||||||||||||||
| Equity, SEK M | $\overline{\phantom{a}}$ | 165 | 281 | ||||||||||||||
| Total assets, SEK M | $\overline{\phantom{a}}$ | 511 | 478 | ||||||||||||||
| Equity/Asset ratio, % | $\overline{\phantom{a}}$ | 32 | 59 | ||||||||||||||
| 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | 2015 | 2015 | 2014 | 2014 | 2014 | 2014 | ||
| CORPORATE FINANCE | Oct-Dec Jul-Sep Apr-Jun Jan-MarOct-Dec Jul-Sep Apr-Jun Jan-MarOct-Dec Jul-Sep Apr-Jun Jan-MarOct-Dec Jul-Sep Apr-Jun Jan-Mar | ||||||||||||||||
| Net profit/loss for the period, SEK M * | 29 | 15 | $\Omega$ | $-1$ | 36 | $-8$ | 32 | 13 | 16 | $-15$ | 47 | 16 | $-9$ | ||||
| Equity, SEK M * | 120 | 90 | 78 | 177 | 254 | 237 | 222 | 206 | 213 | 183 | 7 | 187 | 206 | 44 | $ 43\rangle$ | 138 | |
| Return on equity, % | 30 | 15 | $\mathbf{1}$ | 26 | 22 | 34 | 37 | 28 | 24 | 31 | 28 | 30 |
* Attributable to shareholders of the Parent Company.
| 3 Months | 12 Months | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| ASSET MANAGEMENT AND BANKING | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | ||||||||||||
| Net profit/loss for the period, SEK M | 50 | 64 | 262 | 338 | ||||||||||||
| Total income. SEK M | 572 | 430 | 1,844 | 1473 | ||||||||||||
| Profit margin, % | 9 | 15 | 4 | 23 | ||||||||||||
| Adjusted profit for the period, SEK M | 103 | 64 | 315 | 338 | ||||||||||||
| Total income. SEK M | 572 | 430 | 1,844 | 1,473 | ||||||||||||
| Adjusted Profit margin, % | 8 | 15 | 17 | 23 | ||||||||||||
| Equity, SEK M | ×, | 1.100 | 998 | |||||||||||||
| Total assets, SEK M | ×, | 5,106 | ||||||||||||||
| Equity/Asset ratio, % | $\overline{\phantom{a}}$ | 22 | 22 | |||||||||||||
| 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | 2015 | 2015 | 2014 | 2014 | 2014 | 2014 | |
| ASSET MANAGEMENT AND BANKING | Oct-Dec | Jul-Sep Apr-Jun Jan-MarOct-Dec | Jul-Sep Apr-Jun Jan-MarOct-Dec | Jul-Sep Apr-Jun Jan-Mar Oct-Dec | Jul-Sep Apr-Jun | Jan-Mar | ||||||||||
| Net profit/loss for the period, SEK M * | 30 | 53 | 48 | 38 | 43 | 27 | 158 | 24 | 66 | 4 | 8 | 44 | 26 | 5 | 20 | 9 |
| Equity, SEK M * | 931 | 967 | 941 | 898 | 859 | 855 | 789 | 649 | 620 | 686 | 660 | 676 | 639 | 651 | 575 | 545 |
| Return on equity, % | 8 | 20 | 8 | 33 | 34 | 38 | 39 | 9 | 22 | 15 | 15 | 15 | ||||
| Adjusted profit for the period, SEK M * | 83 | 53 | 48 | 38 | 43 | 27 | 158 | 24 | 66 | 4 | 8 | 44 | 26 | 5 | 20 | 9 |
| Adjusted equity, SEK * | 984 | 967 | 941 | 898 | 859 | 855 | 789 | 649 | 620 | 686 | 660 | 676 | 639 | 651 | 575 | 545 |
| Adjusted return on equity, % | 24 | 20 | 18 | 33 | 34 | 38 | 39 | 9 | 22 | 15 | 15 | 15 |
* Attributable to shareholders of the Parent Company.
Catella AB (publ)
P.O. Box 5894, 102 40 Stockholm | Visitors: Birger Jarlsgatan 6
Corp. ID no. 556079–1419 | Reg. Office: Stockholm, Sweden
Tel: +46 (0)8 463 33 10 | [email protected]
catella.com
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