Annual Report • Mar 1, 2019
Annual Report
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| CapMan today - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 3 |
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| CEO's review - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 4 |
| CapMan's business portfolio - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 6 |
| Highlights in 2018 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7 | |
| Private Equity: Growth - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 9 |
| Private Equity: Buyout - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11 | |
| Real Estate - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 13 | |
| Infra - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -15 | |
| Services: CaPS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -17 | |
| CapMan's societal footprint - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 19 | |
| Corporate Governance Statement 2018 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -21 | |
| Board of Directors - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 28 |
| Management Group - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 30 | |
| Contents | Report of the Board of Directors 2018 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -33 | ||
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| Key Figures - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -39 | |||
| Calculation of Key Ratios - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -44 | |||
| Financial Statements - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -45 | |||
| Group Statement of Comprehensive Income (IFRS) - - - - - - - - - - - -46 | |||
| CapMan today - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 3 | Group Balance Sheet (IFRS) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 47 |
| CEO's review - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 4 | Group Statement of Changes in Equity (IFRS) - - - - - - - - - - - - - - - - - - - -48 | |
| CapMan's business portfolio - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 6 | Group Cash Flow Statement (IFRS) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -49 | |
| Highlights in 2018 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7 | Notes to the Consolidated Financial Statements - - - - - - - - - - - - - - - - 50 | ||
| Private Equity: Growth - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 9 | Parent Company Income Statement (FAS) - - - - - - - - - - - - - - - - - - - - - - - - - - -93 | |
| Private Equity: Buyout - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11 | Parent Company Balance Sheet (FAS) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -94 | ||
| Real Estate - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 13 | Parent Company Cash Flow Statement (FAS) - - - - - - - - - - - - - - - - - - - - - - -95 | ||
| Infra - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -15 | Notes to the Parent Company Financial Statements (FAS) - - | 96 - |
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| Services: CaPS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -17 | Signatures to the report of the Board of Directors | ||
| CapMan's societal footprint - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 19 | and financial statements - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 103 | |
| Corporate Governance Statement 2018 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -21 | The Auditor's Note - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 103 | |
| Board of Directors - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 28 | Auditor's Report - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 104 |
| Management Group - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 30 | Shares and shareholders - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 108 | |
| Information for shareholders - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -110 | |||
REPORT 2018
CORPORATE GOVERNANCE BOARD OF DIRECTORS STATEMENTS GROUP
FINANCIAL
REPORT OF THE
CapMan
CapMan is a leading Nordic private asset expert with an active approach to value creation. We offer a wide selection of investment products and services. As one of the Nordic private equity pioneers, we have developed hundreds of com panies and real estate assets and created substantial value in these businesses and assets over the past 30 years. CapMan employs today approximately 120 private equity profession als and has over €3 billion in assets under management. Our objective is to provide attractive returns and innova tive solutions to investors. We have a broad presence in the unlisted market through our local and specialised teams. Our investment strategies cover Private Equity, Real Estate and Infra. We also have a growing service business that currently includes procurement services, fundraising advisory and fund management services.
CapMan's share provides an opportunity to benefit from the value development of unlisted companies, real estate and infrastructure. Private assets and alternative investments are an attractive asset class and investors can access a diversified portfolio of private assets investment strategies in a liquid manner through CapMan's share.
Learn more: www.capman.com
CapMan's business has continued to grow during 2018 and is increasingly versatile. Fee-based income grew by more than 20% and fee-based profitability grew by more than 100%. We continued to renew CapMan and the year was very eventful. We are building CapMan into a leading Nordic private assets expert.
The positive financial development follows a successful completion of recent growth initiatives. During the last 18 months, we have established a Growth fund, two new Real Estate funds and one new Infra fund. In addition, we have completed several investment mandates. During the year, we have raised more than €500 million in new capital under management and expanded our service business. We completed 20 new investments and 15 exits last year and many of our funds demonstrate top quartile performance.
The diversification of our business reflects the growing demand for unlisted investments. Our customers wish to increase their allocation to private assets, which include investments in real estate and infrastructure in addition to traditional private equity. Simultaneously, many investor segments have so far had limited access to private assets. By expanding our product portfolio to include e.g. more open-ended products, we are able to better serve new investor categories.
Our recent infrastructure investment ini tiatives are an example of our expansion into new business areas. During 2018, the Infra team grew by several new investment professionals, completed their first invest ments and established a fund, which already exceeds €140 million. The fund that invests in Nordic mid-market energy, transport and telecom infrastructure has gained a lot of traction and achieved a first close quickly. Nordic infrastructure investing resonates with international investors and we believe that the fund's investor base will broaden further in 2019. The team recently received a mandate from large Korean investors to in vest in a major Swedish wind park, demon strating the confidence that international investors have in the team and in CapMan.
CapMan has one of the largest real estate investment teams in the Nordics, which en ables us to serve investors on a broad scale. We have continued to develop various real estate strategies over the past year. Nordic Real Estate I and II funds deploy a value-add strategy by investing mainly in Nordic office, retail and residential real estate. Another example of our versatile approach is our
co-operation with BVK, Germany's largest pension insurance company, since 2016. At the end of 2018, we expanded our mandate from BVK to invest in residential real estate in the Nordics.
Other real estate investment strategies have also developed favourably. Nordic Property Income fund is an open-ended fund investing in stable income generating properties in the Nordic countries. The fund grew and made new investments in Finland, Sweden and Denmark. The cashflow-focused Hotels fund has new and extended leases in its portfolio.
Funds investing in portfolio companies also had an eventful year. The Growth fund completed its first exit, the sale of Sales force solutions provider Fluido to a global technology company. The exit was very successful to all fund investors, of which CapMan is the largest with an approx. 30% stake in the fund. The fund also made three new investments in Finnish growth compa nies. Our Buyout funds benefited from the positive developments in the capital markets in the beginning of 2018 and successfully exited several companies. The most recent Buyout fund, established in 2012, has to date already exited four of the fund's origi nal 11 investments.
"The positive financial development follows a
The service business grew as planned dur ing the year. CapMan's procurement service CaPS grew both in Finland and in Sweden as a result of larger procurement volumes and new member companies. Scala Fund Advisory successfully completed sever al international fundraising projects. We continue growing our service business in the upcoming years.
Despite the positive development in our core business, our earnings per share in 2018 were lower compared to the previous year. This was mainly due to increased uncer tainty in the capital markets especially in the last quarter of the year, which had a
negative impact on the value of our trading portfolio. We have sold down our trading portfolio by approx. €35 million in 2018. Our objective is to hold approx. 80% of our investments in private assets and the remainder in liquid instruments.
CapMan turns 30 in 2019. When we started our business in 1989, the world was less open and more linear. Today, fund investors, buyers of our portfolio companies and real estate and portfolio company customers are increasingly international. A single investment decision can have widespread consequences. As a result, we rely increas ingly on our values as the foundation for our operations. We are an active owner with strong ethics, dedicated to entrepreneurial development and growth. We build value for our shareholders, our customers, our portfo lio companies and their stakeholders, our real estate tenants, and society as a whole.
Joakim Frimodig, CEO
REPORT 2018
CORPORATE GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS STATEMENTS GROUP
FINANCIAL
CapMan Infra has established its first fund investing in Nordic infrastructure compa nies. The fund has already raised €140 mil lion from a broad investor base. CapMan is also a significant investor in the fund. The Infra team executed a €70 million managed account investment in Elenia, a Finnish electricity network and district heat company, together with a Finnish investor consortium. The team also received a man date from large Korean investors to invest in a Swedish wind farm. The investment was completed in January 2019.
Besides CapMan's own fund investment operations, CapMan Real Estate has continued the successful co-operation with Bayerische Versogungskammer (BVK), Germany's largest public pension fund group. Based on its extensive mandate, CapMan acts as an advisor to the BVK fund and manages investments in the Nordic countries. At the end of 2018, CapMan implemented a signifi cant acquisition of a residential portfolio in Finland, that doubled the investment volume of CapMan's mandate from BVK to €820 million.
In September, CapMan Growth fund, established in 2017, sold its share in Fluido, a leading Salesforce partner, to global technology company Infosys. The transaction returned capital approx. fivefold to investors. Together with the company's founders, management and personnel, the Growth team has grown the company's turnover fivefold during its ownership following strong increase in domestic sales and internationalisa tion of operations.
* Fee-based profitability includes Management Company and Service business operating profit less carried interest and any items affecting comparability.
The Real Estate team has continued its Nordic activities deploying three separate strategies. The funds have completed nine new investments and nine exits in total. CapMan Nordic Real Estate II fund estab lished in 2017 is close to 70% invested and value creation for the predecessor fund Nordic Real Estate I has continued strong in 2018. The latest addition to the product family, CapMan Nordic Property Income fund, has grown during the year following new subscriptions. The fund has made several investments in the Nordic countries in accordance with its strategy.
The Hotels fund has strengthened co-operation with its tenants and signed new leases. Lease maturities were extended to an average of 19 years and the portfolio composition improved following select exits.
REPORT 2018
CORPORATE GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS STATEMENTS GROUP
FINANCIAL
Capman Buyout's portfolio company Harvia's initial public offering was completed in March. During the year, Buyout-funds have exited five companies in total and value creation in the most recent Buyout X fund is proceeding well. The fund has already returned 80% of all invested capital to investors.
Both procurement service CaPS and fundraising advisory Scala have grown significantly in 2018. During the year, Scala has completed several assignments and reinforced its position among both its domestic and international client base. CaPS has continued to expand its oper ations by growing its member network, adding new procurement categories and expanding its footprint in Sweden. To re flect the growing importance of services, CapMan changed its segment reporting in March and now reports service business es as a separate segment. 8 Highlights in 2018 CAPMAN ANNUAL
CapMan renewed its dividend policy in August and updated its long-term financial objectives. CapMan's objective is to distribute an annually growing divi dend to its shareholders. The combined growth objective for the Management Company and Service business is more than 10% p.a. on average. The return on equity target is more than 20% p.a. on average. The objective for the equity ratio is more than 60%.
In line with its strategy, CapMan allo cates more of its investments from its own balance sheet to private assets, mainly its own funds. At the end of 2018 49% of the invested capital was in the private equity asset class. The objective is to hold 80% in private assets.
PROPOSAL FOR DISTRIBUTION OF FUNDS FOR 2018 (€0.11/share (2017) €0.12/share CAPMAN ANNUAL REPORT 2018 CORPORATE
REPORT OF THE BOARD OF DIRECTORS STATEMENTS GROUP
FINANCIAL
Within a short time frame, the five-strong Growth team has developed its growth company-focused fund into a core constituent of CapMan's product portfolio and investment business income.
CapMan's growth investment story began as direct growth investments became part of CapMan's portfolio following the acquisition of Norvestia. At the end of 2017, operations contin ued following the establishment of an €86 million Growth fund. The fund has made minority investments in growth companies with excellent results: In 2018, the value of the portfolio had increased by more than 27%. The overall success of all Growth investments across the board has been a particularly positive development over the fund's lifespan.
The Growth team's strategy was tested in the successful exit of Fluido. Fluido's accomplishments were underpinned by the growth in Salesforce technology combined with a rapidly established market leadership position in the Nordics and an excellent management team. The exit returned invested capital to investors approximately fivefold.
The Growth team focuses on companies, which have evolved beyond the high-risk start-up phase and require capital and expertise in their next growth stage.
– Our activities spur strong growth and know-how for the benefit of the society as a whole: nine of our portfolio companies have recruited more than 4,000 employees in the past five years, says Juha Mikkola, Managing Partner of Growth.
The portfolio companies of the Growth fund represent the finest of Finnish growth-driven entrepreneurship. Last year, the fund completed three new investments in Arctic Security, a cyber security special ist; RealMachinery, a full-service machinery company; and Avidly, Europe's leading HubSpot service provider. In addition, the Growth fund made a significant add-on investment in Digital Workforce, an Intelli gent Process Automation services and AI solutions developer.
In contrast with Venture investors, Growth does not take on technology risk, but instead invests in tested products and services with an established customer base and significant turnover. Although Growth is a minority investor, the team is capable of making larger investments with equity stakes ranging between €15 million and €2 million. Generally, the amounts grow larger if Growth acquires shares from existing owners.
Juha continues: – Our portfolio companies currently generate everything between €120 million and less than €5 million in turnover. Although they vary significantly in size, the common denominator for all of them is a desire to continue rapid growth also in the future.
Growth follows a well-rounded recipe for success with three main ingredients: growth, co-operation and culture. Growth opportunities and ambitions are central when assessing potential investments. The company must operate in a sufficiently large market in order to develop services and solutions in its home markets as well as internationally. The growth strategy can be implemented either organically or through acquisitions. Industry or size is of second ary importance as the most critical factor is the Growth team's ability to grow the com pany into a category leading business.
A second important aspect for suc cess is co-operation. All investors work in a slightly different manner and while the company assesses its investors, Growth also assesses the company management and their expertise. The skilled investor and advisory network, which includes successful entrepreneurs and investment professionals with vast experience from developing similar growth companies, supports the Growth team in its analysis. Growth is an active mi nority investor working through the Board of Directors of its portfolio companies, but the most critical value-add is created outside the boardroom.
Juha explains: – Our team and network are prepared to invest our combined know-how into securing the success of the company, although we leave the decision-making to the entrepreneur.
The third ingredient is culture, compris ing portfolio company culture, investment team culture and fund investor culture. A healthy company culture is an enormous as set, which helps steer the entire organisation towards common goals. Analysing the team of a potential portfolio company is especial ly important when selecting investments, as functioning businesses are built around good teams. Culture that fosters growth and devel opment is built from within, which emphasis es the role of the entrepreneur.
– If the team is selected correctly, it is easy to trust the entrepreneur's vision and instinct, says Juha.
Although the building blocks are similar, every growth company is unique. There fore, flexibility is important when assessing investment options. Entrepreneurs can conduct a partial exit and realisation of already created value by selling shares held by current owners, issuing new shares, or combining these options based on needs. At the same time, the Growth team provides an opportunity for the company to start a new growth phase together with a strong partner.
The Growth fund made a minor ity investment in Arctic Security, a company focusing on cyber security.
CORPORATE REPORT OF THE BOARD OF DIRECTORS STATEMENTS GROUP
CapMan Buyout's portfolio company Harvia was listed on Nasdaq Helsinki in March 2018. The initial public offering was oversubscribed.
FINANCIAL
REPORT 2018 GOVERNANCE
2018 has been a successful year for Buyout. In the renewed Buyout team, solid experience meets the new generation.
CapMan is best known for majority investments, in other words buyouts, that the company has executed in the Nordic countries for 30 years. During the past year, the Buyout team has gone through a generational change. The team has renewed its profile and developed its expertise internally. Professionals with long ex perience have handed over opportunities to new talents and key team members have been made into new partners. The collective experience of these professionals gives rise to new initiatives in the field of buyouts.
Extensive experience combined with new leadership is demon strated in Buyout's way of creating value for portfolio companies. Pia Kåll, Managing Partner in charge of Buyout for two years, comments: – The focus has shifted from transactions towards value creation, in which the strategy development and its implementation in portfolio companies plays a key role. We are even more focused on op erational expertise, and our team has experience from various sectors.
The new profile is also strongly visible in the results of portfolio companies. During the past year, portfolio company turnover in the newest Buyout fund has increased 21% and gross profit has grown 15%. Recent exits from the fund exits have more than doubled the capital returned to the investors and the internal rate of return was 27% for exits made in 2018.
Buyout has emphasised the importance of business culture over the years. A success ful business culture is customer and sales focused, embraces a strong entrepreneurial spirit and values a goal oriented approach. This manifests in the selection of portfolio companies as well as in the value creation phase of the company during the invest ment period. An excellent example of a
strong business culture is Buyout's port folio company Forenom, which is a leading serviced apartment provider in the Nordic region. Forenom's positive and proactively customer-oriented approach is also reflect ed in the result of the company.
The new generation of leaders recognises business culture as a key component in value creation and also measures its effects. The Buyout team has analysed the significance of culture on value creation in portfolio com panies, and the impact has been substantial. In the latest 30 investments, a successful business culture combined with solid growth in the gross margin increased gross income by 55% compared to all investments. By comparison, investments that demonstrated a steady gross margin growth but lacked a strategy supporting a strong business cul ture, ended up with lower results on average.
Investments in portfolio companies are also investments in the growth of society and jobs. During the last 10 years, every one million euros invested in a Buyout fund has generated 10 full-time jobs.
The Buyout team operates locally in Helsinki and Stockholm, which enables the utilisation of local networks, sourcing of new portfolio companies and recruitment of key professionals. The Nordic network also provides support with the internationalisa tion of target companies.
– Our Nordic heritage is an important part of our identity but also a differentiating factor, Pia says.
During 2018 the Buyout funds exited five target companies. The most noteworthy transaction was the listing of the Finnish sauna and spa company Harvia on the Helsinki Stock Exchange. Harvia's domestic growth story is an excellent example of how the Buyout team facilitates the internation alisation of operations. In addition to being an essential part of Finnish everyday life and culture, the sauna experience is receiv -
ing a lot of international attention. Wellness products and concepts related to sauna are in high demand around the world, and thanks to private equity Harvia has been able to meet this demand.
Other exits during the year were Walki, a technical packaging material and lami nate manufacturer; The North Alliance, a consortium of Nordic communications and advertising agencies; Infocare, a Nordic ICT producer; and MPT, which serves clients in the welding, steel and foundry industries.
The Buyout team is assembled, the tenth Buyout fund portfolio is in a good value cre ation and exit stage and the team's focus is clear. The outlook for 2019 is promising.
CapMan Buyout exited five portfolio companies in 2018, among others the Pan-Scandi navian design, communications, and technology consortium The North Alliance.
CAPMAN ANNUAL REPORT 2018
CORPORATE REPORT OF THE BOARD OF DIRECTORS STATEMENTS GROUP
FINANCIAL
CapMan Real Estate is a Nordic real estate investor that counts on local expertise and market knowledge. The entre preneurial team endorses open dialogue, which creates a solid foundation for strong performance over market cycles.
Real Estate in an active asset manager that adds value to its investments through hands -on asset management such as tar geted redevelopment, change of use, leasing, repositioning, and optimising the expense and capital structure of an asset.
The Nordic property market is highly heterogenic and cyclical requiring in depth market knowledge from an investor. Having a thorough understanding of the local property market such as knowing the characteristics and key value drivers of each market segment is a prerequisite for making realistic underwriting assumptions for new investments. Accordingly, Real Estate has offices in its core markets in Finland, Sweden and Denmark.
Real Estate's value-add funds provide strong risk-adjusted returns to investors by investing in assets that typically provide both in-place income and significant capital appreciation potential obtainable through active asset management.
CapMan Real Estate's first Pan Nordic value-add fund was launched in 2013. The €273 million fund made 22 investments across the four Nordic countries. By the end of 2018, 10 investments had already been exited returning 71% of the total invested capital. Mika is extremely pleased with the fund's performance: – CapMan Nordic Real Estate I is outperforming its original targets with a clear margin both on a mark-to-market and forecast basis. There are still some ongoing value-add works to be finished up in the remaining assets, but we expect the fund to be fully divested by the end of 2022.
Real Estate launched its second Pan-Nordic value-add fund in August 2017. The €425 million CapMan Nordic Real Es tate II was oversubscribed 1.5 times over its original target size, demonstrating the trust institutional investors have in the team. By the year-end 2018, the fund had done more than 10 investments in Sweden, Denmark, and Finland. 68% of fund's equity has already been committed providing the in vestors with a good visibility of the portfolio composition at an early stage of the fund. Fundraising for the third value-add fund will
commence once 75% of equity raised for the previous fund has been called.
– If the current investment pace continues, we expect to start raising funds for the next value-add fund by the end of 2019, says Mika.
Real Estate also manages funds that invest in assets with a lower risk profile where yields are based mainly on strong and predictable rental income. The latest new investment product in this fund category is a 2017-established Nordic Property Income Fund, which is an open-ended fund (non-UCITS) investing in income generating commercial properties in the largest and
CapMan Nordic Real Estate II fund acquired a former light industrial property in the Carls berg Redevelopment District to be converted into modern office space.
most liquid Nordic cities. The fund made four new investments across the Nordics during 2018, and the team believes that the size of the fund will exceed €200 million of
equity in the coming year. Another income focused fund is CapMan Hotels Real Estate, which was established in 2008. The €333 million fund has 32 assets in Finland and Sweden. The fund's lease portfolio is very strong based on long-term co-operation with tenants and properties. Real Estate has recently prolonged 11 leas es in the fund with Scandic Hotels Group and Lapland Hotels, thereby extending the weighted average lease length of the portfolio to over 19 years. In addition, all leases now include a turnover-based rent component, in addition to the fixed mini -
mum rent. Real Estate continues adding value to the assets through targeted investments, seeking additional build ing rights enabling redevelopment of existing sites, and pursuing new hotel concepts with operators. The fund sold seven non-core assets in 2018 in ac -
cordance with its updated strategy.
In addition to discretionary funds with multiple investors, Real Estate serves institutional investors through segregated investment mandates. In 2016 Real Estate won a mandate from Bayerische Ver -
sorgungskammer (BVK), Germany's largest pension scheme group, to invest in resi dential real estate across the Nordics. The fund's gross asset value increased to over €800 million when it acquired a 37-asset, residential portfolio in Finland at the end of 2018. Real Estate continues to seek suitable investments to the mandate across the larg est cities in the Nordics. Mika sees future potential in expanding the mandate with BVK, or signing new investment mandates in the future: – Our institutional approach to making and managing investments coupled with our local market knowledge and expertise is something that our clients really value. As a Pan-Nordic core residential mandate did not overlap with any of our existing fund products, we were able to take on this mandate with BVK. Furthermore, we are continuously looking for new ways to serve our growing, global customer base, and we believe that the number of segregated investment mandates will grow in the future.
Real Estate's investment themes and ge ographic focus are supported by prevailing megatrends, such as accelerating urbanisa tion and changing demographics.
– The capital regions in Nordic countries continue to benefit from increasing urbanisation and net migration. Also, many large infrastructure projects are currently moulding the capitals and creating attractive opportunities for investors. The Nordic property market is full of value creation opportunities for an active real estate investor, Mika concludes.
REPORT 2018 STATEMENTS GROUP
CORPORATE GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS FINANCIAL
CapMan Infra completed its second investment on behalf of Korean investors in a large onshore wind farm in Sweden. 15 Infra CAPMAN ANNUAL
2018 was a pivotal year for Infra, the most recent investment area at CapMan. The core investment team was formed, the business made its first investments and the team celebrated a first close for the maiden infrastructure fund.
Infra invests in essential energy, transportation and telecom munication infrastructure in the Nordic countries. Essential infrastructure could, for example, mean energy generation and distribution infrastructure, i.e. district heating networks, electric ity networks, heat or electricity generation plants. Ville Poukka, Managing Partner at Infra and a recent addition to CapMan's management team, explains: – The common denominator for our investments is that they are asset heavy companies with stable cash flow and monopolistic characteristics in their business, which often means captive demand in certain geographic regions or sites where client relationships are based on long-term contracts, concessions or regulation. So far, we have invested in district heating and electricity distribution networks in Finland and wind parks in Sweden.
CapMan is a leading Nordic private assets house with a strong midcap and value creation focus in its home markets. This is also the vision for Infra and highlighted by the fundraising of the midcap infrastructure fund, CapMan Nordic Infrastructure I, focus ing on core / core+ brownfield infrastructure investments in energy, transportation and telecommunication in the Nordic countries. The fund reached its first close in October and received more than €140 million in investor commitments by the end of 2018. The fundraising process to reach the first closing was relatively quick and based on strong investor interest for the local and ac tive value creation strategy. The strongest in vestor interest initially came from CapMan's
core investor base of Finnish institutional and pension investors. Ville is optimistic regarding fundraising going forward: – Fundraising will continue for most of 2019 with an expected increasing appetite from international institutional investors and family offices. A niche midcap strategy focusing on infrastructure investing in the stable Nordic countries with strong local presence and sector knowledge seems to be especially appealing to many European and Asian investors.
Last year was extremely exciting in terms of development and growth also beyond the establishment of the fund. The team made its first investment, which was a mandate deal to invest €70 million in the leading Finn ish electricity network and district heating
CapMan Infra lead a Finnish in vestor consortium to invest €70 million in a managed account solution in Elenia.
Infra recognises its responsibility of being a trustworthy and ethical owner:
company Elenia. The team also worked on the investment in a major wind park develop ment in Sweden in a mandate deal for Korean NHIS and NH-Amundi, which was closed and announced in early 2019. Besides working on occasional mandates, the team was busy de veloping a strong deal pipeline for the midcap infrastructure fund, expecting the first invest ments for the fund to materialise in 2019.
Infra is present in its core markets with a Nordic investment team located in Stock holm and Helsinki. The team consists of infrastructure professionals with experience from Nordic leading investment banks, inter national infrastructure investors and senior operational experts from energy and trans portation sectors. Operational experience from team members that have led successful infrastructure businesses in the energy and transportation sectors also counts.
Infra strives to support the development and growth of Nordic infrastructure companies through channelling private capital from institutional investors to situations where as set owners want to reallocate their resourc es to their other businesses or sectors. This could mean a company focusing its invest ments to its core manufacturing operations instead of passive infrastructure in the industrial site, or a municipality releasing capital from its energy company holdings to finance a new school or a nursing home.
Infrastructure companies in energy, transportation and telecommunications are deeply embedded in the local society, regu lated and under strict public scrutiny – often also with municipal or governmental owner ship. Infra recognises its overriding respon sibility of being a trustworthy and ethical owner to these critical infrastructure assets. In practice this means careful scrutiny of all investments from a financial, environmental and societal perspective.
Ville describes his team's mission: – Our ambition, together with the employees in our portfolio companies, is to improve and create value for society including our investors and our customers. In practice, this might mean sustainable and high-quality heating, electricity distribution or transportation services to the public, for example.
REPORT 2018
CORPORATE REPORT OF THE BOARD OF DIRECTORS STATEMENTS GROUP
FINANCIAL
Product and service procurement outside the core business and indirect spend are a necessary evil in many companies. It is usually carried out alongside more strategic operations without further passion and objective. This very challenge was noticed in CapMan's portfolio companies. But what happens if efficient and resolute procurement becomes a service?
This discovery is crystallised in the business idea of CapMan's CaPS Procurement Services. Maximilian Marschan, the founder of CaPS, noted a weak link in many businesses and started to create a procurement-centred service concept. Maximilian has highlighted the importance of providing a value-add service since the beginning: – The members, our customers, are central to our concept. It is not just about achieving cost advantages but also easing the whole procurement process and making it more efficient.
In practice, CaPS consolidates the member companies' indi rect procurement (e.g. IT services, transportation and travelling) and carries out tenders. At the end of a tender CaPS selects one supplier together with its member companies to serve all
members. There are over 90 recognised in direct procurement sectors and 82 tendered categories in Finland and 53 in Sweden. High volumes generate favourable pricing and delivery terms that otherwise would be out of reach for an individual company. For the supplier partners, in turn, the network brings new customers and a chance to offer service and product concepts to a wider customer base in an exclusive and secure environment.
CaPS and the community around it have grown fast in recent years. At the end of the year, there were 80 member companies in Finland and 51 in Sweden. The procurement volumes increased 22% in 2018 to reach €180 million in total, which is impressive because the business was built from scratch nine years ago. In addition to solid domes tic growth, CaPS has focused on growth in Sweden during the last year. The Swedish market still offers many possibilities, and the team is considering launching the successful service concept to other Nordic countries.
Besides remarkable savings, a CaPS member company receives a tool kit for comprehensive contract management and savings monitoring, as well as a turnkey Em ployee Benefit Scheme to develop member companies' employee satisfaction. Every CaPS member has access to all available
contracts with price and delivery terms. The service also includes a summary of po tential savings that a company can achieve by introducing new contracts. CaPS has invested a lot in the development of the new reporting tool in order to serve its members and suppliers as comprehensively as possi ble and in a user-friendly manner.
Networking, development of best prac tices and exchanging ideas is a big part of the CaPS concept. The members meet each other in events organised by CaPS. Maximil ian highlights the power of having a strong network: – While we pool procurement for member companies, we can also utilise the network for philanthropic efforts. For the fifth year in a row, together with our network, we have raised funds for children and young people at risk of social exclusion through the Tukikummit Foundation. Over the years, donations through CaPS have exceeded 600,000 euros! In 2018, the campaign raised more than 110,000 euros from a total of 75 companies in our network.
Due to high procurement volumes, CaPS provides its members with solutions that help companies reduce their environmental load. A new project of CaPS is to map and report suppliers' carbon emissions. So far, we have compiled information from about 20 suppliers and the member companies are finding the increased transparency very positive. Maximilian sees the new reporting as merely the beginning: – Our goal is to pro- vide our suppliers with the correct tools to track and calculate their carbon footprint, follow the development of emissions as a service to our member companies and utilise suppliers' data as a part of procurement criteria. By creating the demand, we can together encourage our partners towards lowering emissions and developing environmentally friendly solutions.
Successful fast-paced services are a result of a carefully constructed team. CaPS team members share a common value system, internally referred to as the right mental attitude, which means that all decisions are always made from the customers' and suppliers' points of view and that the ser vice is as responsive and comprehensive as possible. The customer satisfaction surveys speak for themselves, as CaPS constantly reach over 9 points on a 10-point scale.
All team members in this high-perfor mance team have a background in compet itive sports. The pace is fast and the profits are gained through helping customers and suppliers.
The shared values lead everyone to speak the same language and understand the importance of co-operation in achiev ing goals. Together, the team has built the CaPS concept and its various components systematically through an iterative process. Every new team member gets their own CaPS guidebook on their first day of work, which strengthens their best practices and encourages their responsibility and ability to take initiative. Through coaching and continuous challenging, the team constantly achieves goals that first seemed impossible.
– In our team, we want every day to be better than yesterday, Maximilian sums up.
CaPS and its member companies and partners raised more than €110,000 for underprivileged youth. The donation was handed to Sauli Niinistö, the President of the Republic of Finland and the Honorary Chair of the Tukikum mit Foundation. Photo: Matti Porre/Office of the President of the Republic of Finland.
At CapMan, our mission is to build value for the enrichment of the society. We recog nise our role as active owners to promote sustainable practices and consider environ mental, social and governance (ESG) issues in all our activities.
CapMan Buyout implements a proprie tary ESG framework for all investments. ESG aspects are included as part of the trans action screening and due diligence process through checklists and by including ESG issues as a separate stream in the 100-day plan. The team follows up proactively on any
"At CapMan, our mission is to build value for the enrichment of the society."
findings, conducts surveys related to ESG performance and reports to investors.
CapMan Real Estate is committed to implementing and performing sustainable business practices in its investments and asset management activities. ESG manage ment has a positive material impact on the competitiveness of investments as well as controls ESG risks and helps to enhance long-term revenue and reduce costs.
CapMan Infra has adopted an ESG poli cy that flags potential issues in the screen ing and due diligence processes. Such issues may prevent an investment. Through its involvement, CapMan Infra can also be an agent for change and help drive a shift in environmental policies, particularly in energy investments, where it can help exist ing companies shift away from fossil-based resources to more renewable energy.
CaPS has started to build a framework for assessing the environmental footprint of its purchasing service. The first step is to report greenhouse gas emissions of its
CapMan presented the Vita Nuova sculpture by Pekka Jylhä as a thank you to all donors that enabled the New Children's Hospital. The sculpture was previously situated in CapMan's office premises.
vendors in order to provide an additional dimension for decision making in tender processes.
CapMan became one of the first private equity firms in the Nordic region to sign the UN PRI (UN Principles of Responsi ble Investing) in 2012. The initiative is an international network of investors working together to put the principles for responsi -
ble investment into practice. The principles guide our investment activities and the work to improve our performance also from an ESG perspective continues in 2019.
CapMan Plc ("CapMan") complies, in accordance with the comply or explain prin ciple, with the Finnish Corporate Governance Code 2015 (the "Code") for listed companies issued by the Securities Market Association and entered into force on 1 January 2016. Furthermore, CapMan's corporate gov ernance is in compliance with the laws of Finland, its articles of association and the rules and directions of Nasdaq Helsinki Ltd. This Corporate Governance Statement (the "Statement") has been prepared in compli ance with the Code's Corporate Governance reporting guidelines. The Code is publicly available on the website of the Securities Market Association at www.cgfinland.fi.
The Statement is reviewed by the Audit Committee of CapMan's Board of Directors (the "Board") and it is issued separate from the report by the Board. CapMan's auditor Ernst & Young Oy has checked that the Statement has been issued and that the de scription of the main features of the inter nal control and risk management systems
pertaining to the financial reporting process contained in the Statement is consistent with the Financial Statements.
For further information regarding Cap - Man's corporate governance, please visit the company's website at https://www.capman. com/shareholders/governance/
The ultimate decision-making power at CapMan lies with the General Meeting of the shareholders. Among other things, the General Meeting adopts the financial state ments, decides on distribution of profits based on the proposal of the Board of Directors, elects the members of the Board of Directors and the auditor, decides on the discharge from liability and on amend ments to the Articles of Association. The notice to the General Meeting is published on the company's webpages and as a stock exchange release. Proposals for the General Meeting are available on the company's webpage before the meeting.
CapMan's Articles of Association and material related to the General Meeting are available on the company's webpage at the address: https://www.capman.com/share holders/governance/
CapMan Plc's 2018 AGM decided to estab lish a Shareholders' Nomination Board to prepare future proposals concerning the election and remuneration of the members of the Board of Directors to the General Meeting. The AGM also adopted a Charter for the Nomination Board. The Sharehold ers' Nomination Board shall serve until fur ther notice. The term of office of the mem bers of the Shareholders' Nomination Board expires annually after the new Shareholders' Nomination Board has been nominated.
The Shareholders' Nomination Board consists of representatives nominated by the four largest shareholders of the com pany and the Chairman of CapMan Plc's Board of Directors, serving as an expert member. As an expert member the Chair -
man of the Board of Directors of CapMan Plc does not take part in the decision-mak ing of the Shareholders' Nomination Board.
The following members were nominated to the Shareholders' Nomination Board in September 2018: Patrick Lapveteläinen (Member of the Board of Directors of Man datum Life Insurance Company Limited), Mikko Mursula (Chief Investment Officer of Ilmarinen Mutual Pension Insurance Compa ny), Ari Tolppanen (Chairman of the Board of Oy Inventiainvest Ab) and Mikko Kalervo Laakkonen. Additionally, Andreas Tallberg, the Chairman of the Board of Directors of CapMan Plc, served as the expert member on the Shareholders' Nomination Board. Patrick Lapveteläinen was the Chairman of the Shareholders Nomination Board.
The Nomination Board has convened three times during its term. Board member nominees were also interviewed between the meetings. The Nomination Board discussed the size, composition and diversity of the Board of Directors and the areas of exper tise that are most beneficial for the com pany. The Nomination Board also reviewed the remuneration of the Board and gave its
proposals to the General Meeting on 25 Jan uary 2019. The proposals were published as a stock exchange release.
The Charter of the Shareholders' Nomination Board is available on CapMan's website at: https://www.capman.com/ wp-content/uploads/2018/12/Sharehold ers\_Nomination\_Board\_Charter\_FINAL.pdf
All members of the Board are elected by the General Meeting. There is no specific order for the appointment of Board members in the articles of association. According to the articles of association, the Board comprises at least three and at most nine members, who do not have deputies. Members are elected for a term of office of one year, which starts at the close of the General Meeting at which they were elected and ends at the close of the AGM following their election. The Board elects a Chairman and a Vice Chairman from among its members. The Shareholders' Nomination Board, which was initially established at the 2018 AGM and which replaced the Board's Nomination Committee, makes the proposals on the composition of the Board of Directors and the remuneration for the Board and Com mittee Members to the AGM. The Share holders' Nomination Board's proposals are typically published as a separate stock 22 Corporate Governance Statement CAPMAN ANNUAL
exchange release and are also included in the notice to convene the AGM.
The AGM held on 14 March 2018 elected five members to the Board of Directors, who were all present at the meeting. Ms. Mam mu Kaario, Mr. Andreas Tallberg and Mr. Ari Tolppanen, were re-elected to the Board. Ms. Catarina Fagerholm and Mr. Eero Heliövaara were elected to the Board of Directors as new members. At its organizing meeting 14 March 2018, the Board elected from among its members Andreas Tallberg as the Chairman of the Board and Mammu Kaario as the Vice Chairman of the Board.
The company values that its Board members' have diverse backgrounds taking into account the competencies that are relevant for CapMan's business, such as know-how of the financial sector. The aim is that the Board consists of representatives of both genders and different age groups, that the Board members' have versatile educational and professional backgrounds and that the Board of Directors as a whole has sufficient experience on an internation al operating environment. Based on the Board's evaluation its composition is suffi ciently aligned with the objectives set for the diversity of the Board composition
The biographical details of the directors are presented in the table on page 6.
The Board has in its organizing meeting on 14 March 2018 assessed its members' independence of the company and of its significant shareholders., Catarina Fager holm, Eero Heliövaara, Mammu Kaario and Andreas Tallberg were independent of both the company and its significant sharehold ers. Ari Tolppanen was non-independent of the company but independent of its signifi cant shareholders.
Shares and share-based rights of each director and corporations over which he/ she exercises control in the company and its group companies are presented in the table on page 6.
Under the Finnish Companies Act and CapMan's articles of association, the Board is responsible for the administration of the company and the proper organisation of its operations. The Board is also responsible for the appropriate arrangement of the control of the company's accounts and finances. The Board has confirmed a written charter for its work, which describes the main tasks and duties, working principles and meet ing practices of the Board, and an annual self-evaluation of the Board's operations and working methods.
In accordance with the charter, the main duties of the Board are:
to approve strategic goals
to decide on the establishment of new CapMan funds and the level of Cap - Man's own commitments therein
The Chairman of the Board ensures and monitors that the Board fulfils the tasks appointed to it under legislation and by the company's articles of association.
| 4.4 Work of the Board in 2018 | Board of Directors in 2018 | ||||
|---|---|---|---|---|---|
| In 2018, the Board of Directors met eight | share-based rights as of 31 Dec | Shares and | Attendance at the Board |
Attendance at the Committee |
|
| times. The Board had seven meetings in the | Name | Personal information | 2018 | meetings | meetings |
| composition as elected by the 2018 AGM | Andreas Tallberg |
Chairman of the Board since 15 March 2017. Member of the Board since 2017 |
|||
| and one meeting in the composition as | Born: 1963 Education: M.Sc. (Econ.). |
Remuneration Committee: 1/1 |
|||
| elected by the 2017 AGM. | Main occupation: CEO of Oy G.W. Sohlberg Ab | ||||
| The table on page 6 presents Board | Chairman of the Nomination Committee (2017) and the Remuneration Committee. Independent of the company and significant shareholders. |
804,530 | 8/8 | Nomination committee 1/1 |
|
| members' attendance at the meetings in | Catarina | Member of the board since 2018, | |||
| 2018. | Fagerholm1) | Born: 1963 Education: M. Sc. (Econ.) |
|||
| Main occupation: Board professional Member of the audit and remuneration committee. |
Audit commit - | ||||
| 5 Board Committees | Independent of the company and significant shareholders. | 40,000 | 7/7 | tee: 4/4 | |
| Eero | Member of the board since 2018 Born: 1956 |
||||
| The Board may establish Committees to ensure efficient preparation of the matters |
Heliövaara1) | Education: M.Sc. (Eng.), M.Sc. (Business Admin.) | |||
| under its responsibility. The Committees are | Main occupation: Board professional Member of the audit committee. |
Audit commit - | |||
| established and their members are elected | Independent of the company and significant shareholders. | 29,000 | 7/7 | tee: 4/4 | |
| from among the members of the Board in | Mammu Kaario |
Member of the Board since 2017 Born 1963 |
|||
| the Board's organizing meeting to be held af - | Education: LL.M., MBA Main occupation: Board professional |
||||
| ter the AGM for the same term as the Board. | Chairman of the Audit Committee. Independent of the company and significant shareholders. |
38,071 | 8/8 | Audit commit - tee: 5/5 |
|
| According to Recommendation 15 (Appoint - | Karri | Chairman of the Board during 7 August 2013 – | |||
| ment of Members to Committees) of the | Kaitue2) | 15 March 2017. | Audit commit - tee: 1/1 |
||
| Code, at least three members will be elected | Vice Chairman of the Board during 20 March – 7 August 2013 and since 15 March 2017 Member of the Board since 2012. |
Nomination | |||
| to the Committees. The charters for each | Born: 1964 Education: LL. Lic. |
Committee: 1/1 | |||
| committee shall be confirmed by the Board | Main occupation: Board professional. Member of the Nomination Committee, Remuneration Committee, and Audit Committee. |
Remuneration | |||
| and the minutes of the meetings shall be | Independent of the company and significant shareholders. | 9,224 | 1/1 | Committee: 1/1 | |
| delivered to the Board for information. The | Nora | Vice Chairman of the Board during 7 August 2013 - 15 March 2017. Member of the Board since 2011. |
|||
| committees do not have autonomous deci - | Kerppola2) | Born: 1964 | |||
| sion-making power, but the Board makes the | Education: MBA. Main occupation: CEO of Nordic Investment Group Oy. |
||||
| decisions within its competence collectively. | Chairman of the Audit Committee. Independent of the company and significant shareholders. |
0 | 1/1 | Audit commit - tee: 1/1 |
|
| In its organizing meeting held on 14 | Ari | Member of the Board since 2013. | |||
| March 2018, CapMan's Board of Directors | Tolppanen | Born: 1953 Education: M.Sc. (Tech.). |
Nomination Committee: 1/1 |
||
| established an Audit and Remuneration | Main occupation: Board professional. Member of the Nomination Committee and Remuneration Committee. |
Remuneration | |||
| Committee. A Nomination Committee was | Independent of the significant shareholders but non-independent of the company. | 7,032,865 | 4/8 | Committee: 1/1 | |
| not established since the AGM decided to establish the Shareholders' Nomination |
1) Was elected as a new member at the AGM held on 14 March 2018. 2) A member of the Board of Directors until the AGM held on 14 March 2018. |
| 5.1 Audit Committee The Audit Committee has been established to improve the efficient preparation of mat - ters pertaining to financial reporting and |
||||||
|---|---|---|---|---|---|---|
| Shares and share-based rights | ||||||
| Name | Responsibilities | Personal information | on 31 Dec 2018 | |||
| supervision. | Joakim Frimodig | CEO | Education: BA (Oxon) | Born: 1978 | Shares: 650,000 2013C-options: 120,000 2016A-options: 100,000 |
|
| The duties of the Audit Committee include: | Anna Berglind (since 9 August 2018) |
Head of People and Culture | Education: M.Sc. (Soc.) | Born: 1974 | Shares: 0 | |
| monitoring the reporting process of financial statements |
Niko Haavisto | CFO | Education: M. Sc. (Busi - | Born: 1972 ness) |
Shares: 243,817 2013C-options: 200,000 2016A-options: 100,000 |
|
| supervising the financial reporting process monitoring the efficiency of the compa - |
Pia Kåll | Head of CapMan Buyout | Education: M.Sc. (Tech.) | Born: 1980 | Shares: 30,000 | |
| ny's internal control and risk manage - ment systems |
Mika Matikainen | Head of CapMan Real Estate | Education: M. Sc. (Econ), M.Soc.Sc |
Born: 1975 | Shares: 45,000 | |
| reviewing the description of the main features of the internal control and risk |
Juha Mikkola | Head of CapMan Growth Equity | Education: M.Sc. (Econ.) | Born: 1961 | Shares: 30,000 2016A-options: 100,000 |
|
| management systems pertaining to the financial reporting process |
Ville Poukka (since 1 November 2018) |
Head of CapMan Infra | Education: M.Sc. (Econ) | Born: 1981 | Shares: 59,916 | |
| monitoring the statutory audit of the financial statements and consolidated financial statements |
Mari Simula | Head of Fund Investor Relations | Education: M.Sc. (Tech.) | Born: 1982 | Shares: 50,249 2013B-options: 100,000 2013C-options: 100,000 2016A-options: 12,500 |
|
| • evaluating the independence of the statutory auditor or audit company, par - ticularly the provision of related services • preparing the proposal for resolution on the election of the auditor. The Board has in its organizing meeting on 14 March 2018 elected Mammu Kaario (chairman), Catarina Fagerholm and Eero Heliövaara as members of the Audit Com - |
5.2 Nomination Committee A Nomination Committee was not estab - lished in the organizing meeting on 14 March 2018, since the AGM decided to es - tablish the Shareholders' Nomination Board. The Nomination Committee established at the AGM 2017 comprising Karri Kaitue |
5.3 Remuneration Committee The Remuneration Committee has been established to improve the efficient prepara - tion of matters pertaining to the remunera - tion and appointment of the CEO and other executives of the company as well as the remuneration policy covering the company's |
• • • |
CEO remuneration company executive remuneration princi - ples generally and individual situations as required company's overall principles for total compensation structure. |
||
| mittee. In 2018, the Committee met four times in this new composition and once in the composition elected by the Board of Directors in 2017. The table on page 6 pre - sents the Committee members' attendance at the meetings. |
(Chairman), Andreas Tallberg and Ari Tolp - panen met once before the AGM of 2018. The table on page 6 presents the Committee members' attendance at the meeting. |
other personnel. The main duty of the Remuneration Com - mittee is to assist the Board by preparing the Board decisions concerning: |
• | The Committee shall further contribute to: securing the objectivity and transpar - ency of the decision-making regarding remuneration issues in the company |
company's overall principles for total compensation structure.
the systematic alignment of remu neration principles and practice with company strategy and its long-term and short-term goals
The Board has in its organizing meeting on 14 March 2018 elected Andreas Tallberg (Chair man), Catarina Fagerholm and Ari Tolppanen as members of the Remuneration Committee. The Committee did not convene in its new composition during 2018 but convened once with the composition elected in 2017. The ta ble below on page 6 presents the Committee members' attendance at the meetings.
The Board elects the company's CEO. The CEO's service terms and conditions are specified in writing in the CEO's service contract, which is approved by the Board. The CEO manages and supervises the com pany's business operations according to the Finnish Companies Act and in compliance with the instructions and authorisations issued by the Board. The CEO shall see to it that the accounts of the company are in compliance with the law and that its finan cial affairs have been arranged in a reliable manner. Generally, the CEO is independently responsible for the operational activities of the company and for day-to-day decisions on business activities and the implementa tion of these decisions. The CEO appoints 25 Corporate Governance Statement CAPMAN ANNUAL
the heads of business areas. The Board approves the recruitment of the CEO's im mediate subordinates. The CEO cannot be elected as Chairman of the Board.
In 2018, CapMan's CEO was Joakim Frimodig (born 1978, BA (Oxon)). Frimodig's shares and share-based rights and those of the corporations over which he exercises control are presented in the table on page 8.
The main tasks of the Management Group consist of (i) coordination of team strategy, fundraising, resources as well as marketing and brand issues, (ii) implementation of decisions by the Board and the CEO/ Man agement Group, (iii) giving input by provid ing information for the decisionmaking and participating in discussion, and (iv) spread ing information within the teams as agreed in the Management Group. The composition of the Management Group, responsibilities and the shares and share-based rights of the members of the Management Group and of the corporations over which he/she exercises control are presented in the table below.
The internal control and risk management pertaining to the financial reporting process is part of CapMan's overall internal control framework. The key roles and responsi -
bilities for internal control and risk man agement have been defined in the group's internal guidelines which are approved and updated by the management and/or the Board of Directors of the company.
CapMan's internal control and risk management concerning financial reporting is designed to provide reasonable assur ance concerning the reliability, compre hensiveness and timeliness of the financial reporting and the preparation of financial statements in accordance with applicable laws and regulations, generally accepted ac counting principles and other requirements for listed companies. The objective is also to promote ethical values, good corporate governance and risk management practices and to ensure the compliance with laws, reg ulation and CapMan's internal policies.
CapMan's operating model is based on having a local presence in Finland, Swe den, Denmark and Russia, and operating the organisation across national borders. CapMan's subsidiaries in six countries re port their results on a monthly basis to the parent company. The bookkeeping function is mainly outsourced.
Financial information is assembled, cap tured, analysed, and distributed in accord ance with existing processes and procedures. The group has a common reporting and con solidation system that facilitates compliance with a set of common control requirements.
The monthly accounting entries of the most significant subsidiaries are transferred to the Group's reporting system on an entry-by-en try level. The other subsidiaries submit their figures either monthly or quarterly to the group accounting to be inserted to the group reporting system for consolidation. The reported figures are reviewed in subsidiar ies as well as in group accounting. Group accounting also monitors the balance sheet and income statement items by analytically reviewing the figures. The consolidated ac counts of CapMan are prepared in compli ance with International Financial Reporting Standards (IFRS) as adopted by the EU.
The Board has the overall responsibility for the proper arrangement of internal con trol and risk management over financial reporting. The Board has appointed the Audit Committee to undertake the more specific tasks in relation to financial re porting process control such as monitoring the financial statements reporting process, the supervision of the financial reporting process and monitoring the efficiency of the company's internal control. The Audit Committee also reviews regularly the main features of the internal control and risk management systems pertaining to the financial reporting process.
The management of the group is re sponsible for the implementation of internal control and risk management processes and
for ascertaining their operational effective ness. The management is also responsible for ensuring that the company's accounting practices comply with laws and regulations and that the company's financial matters are managed in a reliable and consistent manner.
The CEO leads the risk management process by defining and allocating respon sibility areas. The CEO has nominated the group's CFO as risk manager to be in charge of coordinating the overall risk management process. The risk manager reports to the Audit Committee on matters concerning internal control and risk management. The management has allocated responsibility for establishing more specific internal control policies and procedures to personnel in charge of different functions. The group's management and accounting departments possess appropriate levels of authority and responsibility to facilitate effective internal control over financial reporting.
CapMan has defined financial reporting objectives in order to identify risks related to the financial reporting process. The risk assessment process is designed to identify financial reporting risks and to determine how these risks should be managed.
The control activities are linked to risk assessment and specific actions are taken to address risks and achieve financial reporting objectives. Financial reporting risks are managed through control activities performed at all levels of the organisation. These activities include guidelines and instructions, approvals, authorisations, veri fications, reconciliations, analytical reviews, and segregation of duties.
In the annual strategy process of the group, the identified risks are reviewed, the risk management control activities are au dited and effects of potential new identified risks on the strategy are evaluated. The objectives and responsibilities of the risk management process as well as the deter mination of the risk-appetite were updated during 2018.
8.4 Information and communication pertaining to the financial reporting CapMan has defined the roles and respon sibilities pertaining to financial reporting as an essential part of the group's information and communication systems.
In terms of internal control and financial reporting information, CapMan's external and internal information is obtained system atically, and the management is provided with relevant information on the group's activities. Timely, current and accessible information relevant for financial reporting purposes is provided to the appropriate functions, such as the Board, the manage ment group and the monitoring team. All external communications are handled in accordance with the group disclosure policy, which is available on the company's website: https://www.capman.com/shareholders/ statements-policies/disclosure/
To ensure the effectiveness of internal con trol pertaining to financial reporting, mon itoring activities are conducted at all levels of the organisation. Monitoring is performed through ongoing follow-up activities, sep arate evaluations or a combination of the two. Separate internal audit assignments are initiated by the Board or management. The scope and frequency of separate evalua tions depend primarily on the assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control de ficiencies are reported to the management, and serious matters to the Audit Committee and the Board.
Group accounting performs monthly consistency checks of income statement and balance sheet for subsidiaries and business areas. The group accounting team also conducts management fee and cost analysis, quarterly fair value change checks, impairment and cash flow checks as well as control of IFRS changes. The Audit Committee and the Board regularly review group-level financial reports, including com parison of actual figures with prior periods and budgets, other forecasts, monthly cash flow estimates and covenant levels. In addi tion, the Audit Committee monitors in more detail, among others, the reporting process (including the management's discretionary evaluations), risk management, internal control and audit. 26 Corporate Governance Statement CAPMAN ANNUAL
The monitoring team, which is independ ent from the investment teams, is responsi ble for the quarterly valuation process, mon itoring and forecasting fair value movements and preparing the models for and calculat ing carried interest income for the funds under the management of the Group..
CapMan's subsidiaries CapMan Real Es tate Ltd and CapMan AIFM Ltd both hold a license to act as alternative investment fund manager granted by the Finnish Financial Supervisory Authority. For these compa nies CapMan has arranged separate risk management and internal audit functions as required by applicable laws.
The compliance function oversees that the operations of the CapMan group comply with regulation and that the group compa nies will adopt the relevant new regulations promptly.
CapMan complies with the insider rules of the Market Abuse Regulation (596/2014) that came into force on 3 July 2016 and the guidelines for insiders issued by Nasdaq Helsinki. CapMan has supplemented the general insider guidelines with its own set of internal insider guidelines, which are partly stricter than the general rules. The group's Compliance Officer is responsible for insider management.
CapMan maintains project-specific in sider lists for the projects which may have a significant effect on the prices of the finan cial instruments issued by CapMan. These project-specific insider lists will be drafted and maintained in accordance with the Market Abuse Regulation and the internal policies of the company and are established following a decision to delay disclosure of inside information.
CapMan has defined the Board and Management Group members (including the CEO) as 'persons discharging managerial re sponsibilities' pursuant to the Market Abuse Regulation and publishes the transactions by managers and their closely associated persons with the financial instruments issued by CapMan in case the total value of all transactions exceeds EUR 5,000 within a calendar year. The total owning of CapMan's shares and share-based rights of each manager will be published as a part of the Annual Report as required in the the Code. CapMan maintains a non-public listing of the managers and their closely associated persons. CapMan's managers have been instructed to inform their closely associated persons on the duty to disclose transactions. 27 Corporate Governance Statement CAPMAN ANNUAL
CapMan's managers and the employees of CapMan Group are not permitted to trade CapMan's shares, option rights or other
financial instruments issued by CapMan with out a pre-approval of the person responsible for insider management (compliance officer).
The execution of trades in financial instruments issued by CapMan by the aforementioned managers and personnel is prohibited during the 30-day period prior to publication of the company's financial results (closed period). These publication dates are disclosed annually in advance by a stock exchange release. CapMan's manag ers and personnel have been requested to inform their closely associated persons on the closed periods and refrain from trading in CapMan's financial instruments.
The Compliance Officer of the Group supervises the compliance with the internal insider guidelines in accordance with the guidelines for insiders issued by Nasdaq Helsinki through reminding personnel of trading restrictions, maintaining insider lists and training personnel on insider issues and disclosure obligations.
The company does not customarily enter into transactions with its related parties which would be significant for the company and deviating from the ordinary course of business or would be conducted in deviation from customary market terms. No such transactions were made in 2018. Possible significant and out of ordinary transaction deviating from market terms would be dis cussed in the Board meeting. The company maintains a list of its related parties.
In 2018, the audit fees paid to the audi tor amounted to 307,000 euros (257,000 euros in 2017) and the fees related to other non-audit related services amounted to 38,000 euros (165 000 euros in 2017).
Taking into account the nature and extent of the company's business CapMan has not considered it necessary to organise internal audit as a separate function. The internal audit of the licensed operation has been outsourced to an external service provider. CapMan has in recent years increased the number of personnel in compliance and risk management functions in order to ensure that the operations comply with laws and regulations and that the risks are identified, monitored and managed appropriately.
Andreas Tallberg
Chairman of the Board of Directors since 2017 Independent Board Member Chairman of the Remuneration Committee Holdings in CapMan (as of 31 December 2018): 804,530 shares
Education M.Sc. (Econ.) Main occupation CEO, Oy G.W. Sohlberg AB Key Board memberships CapMan Plc (Chairman), Nissala Oy (Chairman), Mehiläinen (Chairman), Rothschild Nordic AB (Member)
Andreas Tallberg has served as the CEO of Finnish investment company Oy G.W. Sohlberg Ab since 2007. Between 1996 and 2006 he was a senior partner at EQT. Before this, he has worked in business development for Nokia Corporation, Wilson Sporting Goods and Amer Group. Tallberg also has extensive experience from board work. He has been Chairman of the Board of Glaston Oyj, Detection Technology Oyj, Staffpoint, Perlos Oyj, TG Group and Wulff Oyj. Tallberg was also the Deputy Chairman of the Board of Lite-On Mobile and a member of the Board of Directors at Handelbanken Finland Branch.
Mammu Kaario
Deputy Chairman of the Board of Directors since 2018 Independent Board Member since 2017 Chairman of the Audit Committee Holdings in CapMan (as of 31 December 2018): 38,071 shares
Education LL.M., MBA Main occupation Board professional Key Board memberships CapMan Plc (Deputy Chairman), Ponsse Oyj, Aspo Oyj, Robit Oyj, Lapti Oy, PerusTerveys Suomi Oy
Mammu Kaario has more than 25 years of experience from the finance industry. She was CEO of Partnera Oy between 2016 and 2017 and an investment manager at Korona Invest between 2011 and 2016. Further, Kaario was a partner at Unicus Ltd between 2005 and 2010 and has held several financial advisory positions between 2004 and 2010. Before this, Kaario was an investment banker for 15 years at Conventum Oyj, among others.
Catarina Fagerholm
Member of the Board of Directors since 2018 Independent Board Member Member of the Audit Committee, Member of the Remuneration Committee Holdings in CapMan (as of 31 December 2018): 40,000 shares
Education M.Sc. (Econ.) Main occupation Board professional Key Board memberships CapMan Plc, Attendo Plc, Restel Ltd
Catarina Fagerholm served as CEO for Instru Optiikka Ltd from 2007 to 2018. She was Member of the Board, Deputy Chairman of the Board in Altia between 2008 and 2015. She was Member of the Board in Kaupan liitto during 2013-2018 and Atasun Optik during 2012-2014. During 1998-2006 she was CEO of BSH Kodinkoneet Ltd (Finland and Baltics) as well as member of the Management Group in BSH Hausgeräte Northern Europe. Between 1996-1998 Fagerholm was Country and Brand Director in Electrolux/AEG (Finland, Russia, Baltics). She has had several managerial positions in Amer Group Ltd in 1987-1996.
Eero Heliövaara
Member of the Board of Directors since 2018 Independent Board Member Member of the Audit Committee Holdings in CapMan (as of 31 December 2018): 29,000 shares
Education M.Sc. (Eng.), M.Sc. (Business Admin.) Main occupation Board professional Key Board memberships CapMan Plc, YIT Oyj (Deputy Chairman), Finnish Foundation of Economic Education, Lympha Touch Ltd, Foundation of the Finnish Cancer Institute, Saastamoinen Foundation, DIF – Directors Institute of Finland
Eero Heliövaara was Director General in the Prime Minister´s Office during 2013–2017. He served as Board professional and angel investor in 2010–2012. He was President and CEO of SRV Group Plc and of Pohjola Group Plc during 2006–2009 and 2001–2005, respectively. In 1998–2001 he was Executive Vice President and Chief Investment Officer in Mutual Pension Insurance Company Ilmarinen. He worked as Managing Director of Merita Asset Management Ltd during 1996–1998 and as First Vice President in Merita Pankki, Private Banking in 1994–1996. Heliövaara served as Managing Director of Union Bank of Luxembourg International S.A. in 1991–1994. He served as Managing Director of Arctos Capital Ltd in 1987-1991, Financial Director of Spontel Ltd in 1985–1987 and as Financial Analyst in Industrialisation Fund of Finland Ltd in 1982–1985. 29 Board of Directors CAPMAN ANNUAL
Ari Tolppanen
Member of the Board of Directors since 2013 Independent of major shareholders, non-independent of the company Member of the Remuneration Committee Holdings in CapMan (as of 31 December 2018): 7,032,865 shares
Education M.Sc. (Eng.) Main occupation Board professional Key Board memberships CapMan Plc, Kämp Group Oy (Chairman), Bright Group Oy
Ari Tolppanen has 30 years of experience in private equity. Tolppanen is one of the founders of CapMan and acted as the CEO of CapMan during 1989–2005. He was also the Chairman of the European Venture Capital Association (EVCA) in 2000– 2001. During 2005–2010, Tolppanen was the Chairman of CapMan Plc's Board of Directors. Previously, Tolppanen was the CEO of Huurre Oy and before that the CEO of Nordfilm Oy.
REPORT 2018 GROUP REPORT OF THE
CORPORATE GOVERNANCE BOARD OF DIRECTORS
FINANCIAL STATEMENTS
Joakim Frimodig
CEO Education: BA, Oxon In Management Group since 2016 Holdings in CapMan Plc (31 December 2018): 650,000 shares, 220,000 2013C and 2016A options
Joakim Frimodig has been the CEO of CapMan since September 2017 and a Management Group member since 2016. He joined CapMan from Summa Capital, where he worked for the past 12 years, most recently as Deputy Managing Partner. Prior to that, he worked for Alfred Berg and ABN Amro Corporate Finance.
Anna Berglind
Head of People and Culture Education: M.Sc. (Soc.) In Management Group since 2018 Holdings in CapMan Plc (31 December 2018): -
Anna Berglind has been Head of People and Culture and member of the Management Group in CapMan from August 2018. She was Vice President, Human Resources during 2013-2018 and HR Manager during 2010-2013 at Mandatum Life.
Niko Haavisto
CFO Education: M.Sc. (Business) In Management Group since 2010 Holdings in CapMan Plc (31 December 2018): 243,817 shares, 300,000 2013C and 2016A options
Niko Haavisto has been CapMan's CFO since 2010. Prior to joining CapMan he worked for Oriola-KD Corporation as Director of Financial Control and Planning. Before that he worked as financial controller at GE Healthcare Finland and as Authorised Public Auditor at PricewaterhouseCoopers.
Pia Kåll
Managing Partner, Buyout Education: M.Sc. (Eng.) In Management Group since 2017 Holdings in CapMan Plc (31 December 2018): 30,000 shares
Pia Kåll joined CapMan Buyout in 2016 as a partner and was designated managing partner in 2017. Before joining CapMan, Kåll was on the Executive Board of Outotec, where she was responsible for Strategy, M&A, Marketing and Operational Excellence. Previously she worked eight years at McKinsey&Company where she was an Associate Principal.
Mika Matikainen
Managing Partner, Real Estate Education: M.Sc. (Econ.), M.Sc. (Soc.) In Management Group since 2010 Holdings in CapMan Plc (31 December 2018): 45,000 shares
Mika Matikainen joined CapMan in 2006, one year after the inception of CapMan Real Estate, and became the head of CapMan Real Estate and a management group member of CapMan in 2010. Matikainen has been responsible for the expansion of CapMan Real Estate from a local Finnish player into a pan-Nordic asset manager with operations in Finland, Sweden, Denmark and Norway. He also had an active role in establishing the CapMan Hotels Real Estate fund including the acquisition of its seed portfolio of 39 hotels in 2008. Prior to CapMan, he worked for UBS Investment Bank in London.
Juha Mikkola
Managing Partner, Growth Education: MBA In Management Group since 2017 Holdings in CapMan Plc (31 December 2018): 30,000 shares, 100,000 2016A options
Juha Mikkola has over 25 years of experience in private equity. During his career he has raised several private equity funds and helped build dozens of successful companies. Before heading the Growth team at CapMan, Mikkola was responsible for successfully managing Norvestia's Growth investments since 2011. Prior to that, he was responsible for the Venture team at Eqvitec. He has also been involved in starting the operations of Finland Industry Investment Ltd.
Ville Poukka
Managing Partner, Infra Education: M.Sc. (Econ.) In Management Group since 2018 Holdings in CapMan Plc (31 December 2018): 59,916 shares
Ville Poukka has 13 years of experience in investment banking and private equity. Poukka has extensive and unique track record of energy and infrastructure transactions. During his career, he has worked as leading advisor and originator in several infrastructure transactions across Nordic and Baltic countries. Before CapMan Poukka worked at Danske Bank as Managing Director and was responsible for Nordic Energy and Infrastructure sector team in M&A advisory.
Mari Simula
Head of Fund Investor Relations Education: M.Sc.(Eng.) In Management Group since 2017 Holdings in CapMan Plc (31 December 2018): 50,249 shares, 212,500 2013B, 2013C and 2016A options
Mari Simula has held several roles at CapMan since 2007 and before her current position, she worked as a Partner at Scala Fund Advisory. Simula has long experience from private equity fundraising, as well as business development and strategy projects. In her current role, she is responsible for group-level fundraising and fund investor relations. Prior to joining CapMan, she did research on the private equity industry at the Research Institute of the Finnish Economy, Etla.
REPORT 2018 GROUP CORPORATE GOVERNANCE FINANCIAL STATEMENTS REPORT OF THE BOARD OF DIRECTORS
The Group's turnover totalled MEUR 36.0 (Jan-Dec 2017: MEUR 34.8). The growth in turnover was mainly due to the increase in management fees and fees from servic es, which were MEUR 32.5 (MEUR 26.7) combined and grew by 22 per cent from the comparison year.
Operating expenses were MEUR 29.1 (MEUR 33.0). Excluding MEUR 4.2 in items affecting comparability in 2017, expenses were stable.
Fair value changes of investments were MEUR 5.1 (MEUR 17.6). The smaller change compared to the comparison period was mainly due to the MEUR 5.7 decrease in the fair value of the trading portfolio especially in the last quarter of the year.
The Group's operating profit was MEUR 12.0 (MEUR 19.5).
Financial income and expenses amount ed to MEUR -2.7 (MEUR -3.2) and it includ ed an arrangement fee of MEUR 0.2 related to the pay back of MEUR 30 bond. Financial expenses decreased due to the repayment of the bond in Q4 2017 and the repayment of the bond and the bank loan in Q2 2018. Profit before taxes was MEUR 9.3
(MEUR 16.2) and profit after taxes was MEUR 8.5 (MEUR 15.5). Profit before taxes and profit after taxes for the comparison period were significantly affected by the exit from Idean, which contributed a total of MEUR 9.4 before taxes and MEUR 7.5 after taxes.
Earnings per share were 5.5 (10.4) cents. Diluted earnings per share were 5.4 (10.2) cents. Accrued interest payable on the hybrid bond, net of taxes, as well as penalties related to the early redemption for the corresponding period last year has been deducted when calculating earnings per share.
Turnover and results per quarter and turnover, operating profit and results per segment are described in the Notes to the Financial Statements in section 2 Segment information.
Management Company business Turnover generated by the Management Company business for the review period totalled MEUR 24.2 (MEUR 25.1).
Management fees totalled MEUR 22.1 (MEUR 19.5). The growth in management fees consisted mainly of management fees from CapMan Nordic Infrastructure I, CapMan Nordic Property Income, CapMan Nordic Real Estate II and CapMan Growth funds. In addition, the fees from CapMan In fra's first investment, Elenia, were included in turnover.
Carried interest income for the review period totalled MEUR 1.0 (MEUR 4.4) and was mainly received from the exit from Info - Care as well as from Access Capital funds. In the comparison period, CapMan received carried interest income from Access Capital funds as well as CapMan Equity VII fund.
Operating expenses of the Management Company business amounted to MEUR 21.4 (MEUR 22.4). Operating profit of the Man agement company business totalled MEUR 2.8 (MEUR 2.7). Profit for the review period was MEUR 2.3 (MEUR 2.2).
Turnover generated by Service business totalled MEUR 8.7 (MEUR 5.6) and the growth consisted mainly of the success fees of Scala Fund Advisory offering fundraising and advisory services and the continued strong growth in net sales of procurement service CaPS. A significant part of the fees for Scala are success fees, which were recognised especially in the first half of the year. Success fees may vary from one period to the next.
Operating expenses of the Service busi ness amounted to MEUR 4.8 (MEUR 3.6). The operating profit of the Service business was MEUR 4.4 (MEUR 2.3). The profit for the review period was MEUR 3.4 (MEUR 1.8). The improved profit for the segment was due to the success fees recorded for the review period and the overall increase in fee income.
Turnover of the Investment business was MEUR 2.5 in 2018 (MEUR 3.7 in 2017) and comprised dividend and interest income from financial assets held for trading. Turn over decreased due to disposal of assets from the trading portfolio during the review period.
Operating profit for the Investment business was MEUR 6.5 (MEUR 17.3). Profit for the Investment business was MEUR 4.2 (MEUR 13.7). The significantly lower profit of the Investment business compared to the previous year was mainly due to the MEUR 5.7 decrease in fair value of the trading portfolio during the last quarter of the year in line with general market development. In 2017, the exit from Idean contributed MEUR 9.4 to operating profit and MEUR 7.5 to profit.
| M€ | Fair value 31 Dec 2018 (MEUR) |
|---|---|
| Fund investments | 80.6 |
| Investments in joint ventures |
4.5 |
| Other financial assets | 2.5 |
| Trading portfolio | 39.0 |
| Total | 126.6 |
| Table 1: CapMan's investments booked at fair value as at 31 December 2018 M€ |
Fair value 31 Dec 2018 |
amount of remaining commitments that have not yet been called totalled MEUR 98.0 as at 31 December 2018 (31 December 2017: MEUR 67.1). The commitments in - |
Balance sheet and financial position as at 31 December 2018 |
CapMan's interest-bearing net debt amounted to MEUR 5.2 as at 31 December 2018 (MEUR 24.6). CapMan's total inter - |
||
|---|---|---|---|---|---|---|
| (MEUR) Fund investments 80.6 Investments in joint ventures 4.5 Other financial assets 2.5 Trading portfolio 39.0 Total 126.6 Fair value of fund investments was MEUR 80.6 on 31 December 2018 (MEUR 58.3). Fair value changes of fund investments were MEUR 8.1 (MEUR 3.4) in 2018, represent - ing a 9.0% increase in value (2017: +6.6%). The positive change in the fair value of fund investments during the year was mainly due to exits completed during 2018 as well as positive development in the valuation of portfolio companies and real estate. Fund |
clude approx. MEUR 30 into CapMan Nordic Infrastructure I fund. The fair value of the trading portfolio, which invests in market instruments, was MEUR 39.0 on 31 December 2018 (MEUR 77.1 on 31 December 2017). The fair value of the trading portfolio decreased by MEUR 5.7 during the last quarter of the year and approx. MEUR 15 was divested during the quarter. In 2018, a total of approx. MEUR 35.0 of the assets in trading portfolio were allocated to CapMan's funds and other investments, as well as cash instruments. Investments in portfolio companies are valued at fair value in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEVG). Fair values of investments, sensitivity analysis by investment area and remaining commit - ments are presented in sections 29 and 32. |
CapMan's balance sheet totalled MEUR 206.0 as at 31 December 2018 (31 December 2017: MEUR 211.3). Non-current assets amounted to MEUR 99.8 (MEUR 102.1), of which good - will totalled MEUR 4.7 (MEUR 4.5). As at 31 December 2018, fund invest - ments booked at fair value totalled MEUR 80.6 (MEUR 58.3 as at 31 December 2017). Other financial assets booked at fair value were MEUR 2.5 (MEUR 0.1). The fair value of investments in joint ventures was MEUR 4.5 (MEUR 4.9). Long-term receivables amounted to MEUR 5.1 (MEUR 3.1). Current assets amounted to MEUR 106.2 (MEUR 109.2). Financial assets booked at fair value, i.e. current invest - ments, were MEUR 39.0 (MEUR 77.1) and included the trading portfolio. Cash in hand and at banks amounted to MEUR 54.5 |
est-bearing debt as at 31 December 2018 is outlined in Table 2. CapMan Plc's long-term credit facility include financing covenants, which are condi - tional on the company's equity ratio and net gearing ratio. CapMan honoured all covenants as at 31 December 2018. Trade and other payables totalled MEUR 16.8 (MEUR 26.8). The Group's cash flow from operations to - talled MEUR -4.7 for the review period (MEUR -3.6). Income from fund management fees is paid semi-annually, in January and July, and is shown under working capital in the cash flow statement. Cash flow from investments totalled MEUR +39.6 (MEUR +33.7) and includes, inter alia, investments and repaid capital received by the Group. Cash flow before financing totalled MEUR +34.9 (MEUR +30.1) and reflects the develop - ment in the Management Company business, |
|||
| investments also include investments in funds not managed by CapMan. CapMan invested a total of MEUR 31.9 (MEUR 10.5) in funds in 2018. CapMan made investments, among others, into Cap - Man Growth-, CapMan Nordic Real Estate II- and CapMan Nordic Property- funds and |
Table 2: CapMan's interest bearing debt | (MEUR 23.3). Debt amount 31 Dec 2018 |
Service business and Investment business. Cash flow from financing was MEUR -3.7 (MEUR |
Debt amount 31 Dec 2017 |
||
| into Elenia, the first investment of CapMan | (MEUR) | Matures latest | Annual interest (%) | (MEUR) | ||
| Infra. CapMan received distributions from | Bank financing | - | - | 8.5 | ||
| funds totalling MEUR 17.4 (MEUR 7.2). The | Multi-issuer bond (issued in 2014) | 10 | Q2 2019 | 1.85 | 10 | |
| majority of the distributions came from | Senior bond (issued in 2015) | - | - | - | 30 | |
| CapMan Growth fund's exit from Fluido | Senior bond (issued in 2018) | 50 | Q2 2023 | 4.13 | ||
| and Buyout VIII fund's exit from Walki. The | Long-term credit facility (available) | (20) | - | (10) |
GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS
FINANCIAL STATEMENTS
| M€ | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|
| Real Estate funds | 1,896 | 1,758 |
| Private Equity funds | 809 | 1,032 |
| Infra and Credit funds | 338 | 134 |
| Total capital under management | 3,043 | 2,924 |
| -51.8), due to the new bond issued in April 2018 with the principal amount of MEUR 50. Board's proposal for |
Partner, Infra) and Mari Simula (Head of Fund Investor Relations). Capital under management |
amount of the assets at the reporting date. Due to this, the figures in the comparison period differ from figures reported earlier. |
company's return on equity is on average over 20 per cent. The objective for the equity ratio is more than 60 per cent. |
|
|---|---|---|---|---|
| distribution of profit¹⁾ CapMan Plc's objective is to distribute an annually growing dividend to shareholders. CapMan Plc's Board of Directors will pro - pose to the Annual General Meeting to be held on 13 March 2019 that a dividend of EUR 0.12 per share will be paid to share - |
as at 31 December 2018 Capital under management refers to the remaining investment capacity, mainly equity, of funds and capital already invested at ac - quisition cost or at fair value, when referring to mandates. As capital under management is calculated based on the capital, which forms |
Key figures 31 December 2018 CapMan's return on equity was 6.5 per cent (31 December 2017: 11.5 per cent) and return on investment 6.7 per cent (10.1 per cent). Equity ratio was 58.7 per cent (60.0 per cent). According to the CapMan's long-term financial targets, the target level for the |
Decisions of the 2018 AGM and the Board's Come to Order Meeting The decisions of the 2018 AGM and the Board's Come to Order Meeting are described in detail in stock exchange releases issued on 14 March 2018. |
|
| holders, equivalent to a total of approx. MEUR 17.7. A dividend of EUR 0.11 per share, totalling MEUR 16.1, was paid for 2017. CapMan Plc's distributable earnings |
the basis for management fees, investment capacity includes in addition to equity also debt for such funds where debt is included in the fee base. Capital increases as fundraising |
Table 3: Capital under management M€ |
31 Dec 2018 | 31 Dec 2017 |
| amounted to MEUR 90.3 on 31 December | for new funds progresses or as investments | Real Estate funds | 1,896 | 1,758 |
| 2018 (MEUR 111.9 on 31 December 2017). | are executed under investment mandates and | Private Equity funds | 809 | 1,032 |
| declines as exits are completed. | Infra and Credit funds | 338 | 134 | |
| CapMan Plc's Board | Capital under management was MEUR | Total capital under management | 3,043 | 2,924 |
| of Directors and Management Group The members of CapMan Plc's Board of |
3,043 as at 31 December 2018 (31 December 2017: MEUR 2,924). The increase in capital under management was mainly due to the es - tablishment of CapMan Nordic Infrastructure |
Table 4: CapMan's key figures | 31 Dec 2018 | 31 Dec 2017 |
| Directors as of the end of 2018 were An - | I fund and the growth in the mandate from | Earnings per share, cents | 5.5 | 10.4 |
| dreas Tallberg (Chairman), Mammu Kaario | BVK, and in the last quarter of the year, capi - | Diluted, cents | 5.4 | 10.2 |
| (Deputy Chairman), Catarina Fagerholm, | tal under management grew by MEUR 362, or | Shareholders' equity / share, cents | 82.6 | 87.3 |
| Eero Heliövaara and Ari Tolppanen. | 14 per cent. Capital under management per | Share issue adjusted number of shares | 146,521,760 | 145,179,460 |
| The members of CapMan Plc's Man - | fund type is displayed in Table 3. | Number of shares at the end of period | 147,142,163 | 145,625,985 |
| agement Group as of the end of 2018 | Capital under management as of 31 | Number of shares outstanding | 147,115,864 | 145,599,686 |
| were Joakim Frimodig (CEO), Niko Haavis - | December 2018 does not include the Infra | Company's possession of its own shares, end of period | 26,299 | 26,299 |
| to (CFO), Anna Berglind (Head of People | mandate that was completed after the end | Return on equity, %, p.a. | 6.5 | 11.5 |
| of the financial year. | Return on investment, %, p.a. | 6.7 | 10.1 | |
| and Culture), Pia Kåll (Managing Partner, | In June 2018, CapMan has clarified | Equity ratio, % | 58.7 | 60.0 |
| Buyout), Mika Matikainen (Managing Part - | ||||
| ner, Real Estate), Juha Mikkola (Managing | the calculation method of capital under | Net gearing, % | 4.3 | 19.4 |
GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS
FINANCIAL STATEMENTS
The AGM authorised the Board of Directors to decide on the repurchase and/or on the acceptance as pledges of the company's shares. The number of shares concerned shall not exceed 14,000,000, which corre sponds to approx. 9.6 per cent of all shares in the company. The authorisation shall remain in force until the end of the following AGM and 30 June 2019 at the latest. The AGM also authorised the Board to decide on the issuance of shares and other special rights entitling to shares. The number of shares to be issued shall not exceed 14,000,000 shares, which corresponds to approx. 9.6 per cent of all shares in the company. The authorisation shall remain in force until the end of the following AGM and 30 June 2019 at the latest. 36 Report of the Board of Directors CAPMAN ANNUAL
Further details on these authorisations can be found in the stock exchange release on the decisions taken by the AGM issued on 14 March 2018.
CapMan Group's Financial Statements and the Report of the Board of Directors for 2018 will be published as part of the company's Annual Report for 2018 in February 2019 during week 8. CapMan Plc's 2019 Annual General Meeting will be held on Wednesday 13 March 2019 at 10:00 a.m. in Helsinki.
The Notice to the Annual General Meet ing and other proposals of the Board of Directors to the Annual General Meeting are published by 20 February 2019 the latest.
Complete financial statements, as re quired under the terms of the Finnish Com panies Act, will be available on CapMan's website by 20 February 2019 the latest.
CapMan Plc's Corporate Governance State ment will be published separately from the Report of the Board of Directors as part of the company's Annual Report for 2018 during week 8 and will be available on the company's website by 20 February 2019 the latest.
There were no changes in CapMan Plc's share capital during the review period.
Share capital totalled EUR 771,586.98 as at 31 December 2018. CapMan had 147,142,163 shares outstanding as at 31 December 2018.
All shares generate equal voting rights (one vote per share) and rights to a dividend and other distribution to shareholders. Cap - Man Plc's shares are included in the Finnish book-entry system.
As at 31 December 2018, CapMan Plc held a total of 26,299 CapMan shares, representing 0.02 % of shares and voting rights. The mar -
ket value of own shares held by CapMan was EUR 38,660 as at 31 December 2018 (31 December 2017: EUR 46,549). No changes occurred in the number of own shares held by CapMan Plc during the review period.
CapMan Plc's shares closed at EUR 1.47 on 31 December 2018 (31 December 2017: EUR 1.77). The trade-weighted average price for the review period was EUR 1.60 (EUR 1.58). The highest price paid was EUR 1.81 (EUR 1.80) and the lowest EUR 1.39 (EUR 1.24). The number of CapMan Plc shares traded totalled 29.4 million (49.7 million), valued at MEUR 46.9 (MEUR 78.1).
The market capitalisation of CapMan Plc shares as at 31 December 2018 was MEUR 216.6 (31 December 2017: MEUR 257.8).
The number of CapMan Plc shareholders increased by 13 per cent from the cor responding period last year and totalled 18,278 as at 31 December 2018 (31 December 2017: 16,237). There were no flagging notices issued in 2018.
As at 31 December 2018, Members of the Board of Directors and the CEO owned, directly or indirectly as beneficiary holders, a total of 9,931,865 shares, which represented 6.7 per cent of all shares and votes. In addition, the CEO owned a total of 220,000 2013C and 2016A options, which entitle to the subscription of the equal amount of shares and represent 0.12 per cent of the shares and votes as at 31 December 2018.
Details on CapMan Plc's owners by sector and size, together with the company's major shareholders, nominee-registered shares, and redemption obligation clauses covering company shares are presented in section 24 Own capital and shares.
CapMan employed 117 people in average during 2018 (2017 average: 113), of whom 77 (71) worked in Finland and the remainder in the other Nordic countries, Russia, Luxem bourg and the United Kingdom. A breakdown of personnel by country is presented in section 5 Employee benefit expenses.
CapMan's compensation scheme consists of short-term and long-term compensation schemes.
The short-term scheme covers all Cap - Man employees, excluding CEO and CFO of the company, and its central objective is earnings per share, for which the Board of Directors has set a minimum target.
The long-term scheme of CapMan con sists of an investment based long-term sharebased incentive plan for key employees.
In the investment based long-term share-based incentive plan the participants are committed to shareholder value creation by investing a significant amount into the CapMan Plc share. The investment-based long-term incentive plan includes one perfor mance period. The performance period will commence on 1 April 2018 and end on 31
GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS
FINANCIAL STATEMENTS
March 2021. The participants may earn a matching reward and a performance-based reward from the performance period. The prerequisite for receiving reward on the basis of the plan is that a participant acquires company's shares or allocates previously owned company's shares up to the num ber determined by the Board of Directors. The performance-based reward from the plan is based on the company share's Total Shareholder Return (TSR) and on a partici pant's employment or service upon reward payment. The rewards from the Plan will be paid fully in the company's shares in 2021. The Board shall resolve whether new Shares or existing Shares held by the Company are given as reward. The target group of the Plan consists of approximately 20 people, includ ing the members of the Management Group. 37 Report of the Board of Directors CAPMAN ANNUAL
At the end of the reporting period, Cap - Man Plc had two stock option programmes, Option Programme 2013 and Stock Option Programme 2016, in place as part of its incentive and commitment arrangements for key personnel. Following the decision of the new long-term incentive plan, CapMan will not grant new options from the ongoing option plans 2013 and 2016. The terms of the option programmes can be found on CapMan's website at www.capman.com.
CapMan Real Estate's Nordic investment mandate from BVK grew to MEUR 820 fol lowing a significant transaction in the end of 2018. Following the acquisition, the mandate is fully invested and generates long-term advisory and performance fees for CapMan.
In October, CapMan Nordic Infrastruc ture I fund held its first close and by the end of the year, it had received commitments of MEUR 141. The funds target size is more than MEUR 300. The fund pays CapMan management fees and carried interest in line with industry standards.
CapMan announced a new dividend policy and updated long-term financial ob jectives in August. The company's objective is to pay an annually increasing dividend to its shareholders. The combined growth objective for Management Company and Service business is more than 10 per cent p.a. on average. The return on equity target is more than 20 per cent p.a. on average. The objective for the equity ratio is more than 60 per cent.
In April, CapMan issued senior unse cured notes in the principal amount of EUR 50 million. The Notes will mature on 16 April 2023 and carry fixed interest at a rate of 4.125 per cent per annum.
In March, CapMan Group changed its structure of reportable segments.
In February, CapMan's Board of Direc tors resolved on a new investment-based long-term incentive plan for key employees.
CapMan has announced that it will acquire 60 per cent of Finnish analysis, reporting and wealth management company JAM Ad -
visors Oy. The acquisition provides CapMan with significant new and technologically advanced service business and wealth man agement services and expands CapMan's networks among new customer segments. The acquisition will be completed with a directed issue of 5,110,000 new CapMan shares to the owners of JAM Advisors. The acquisition is expected to be completed in February 2019.
CapMan Infra completed its second investment based on a mandate from NHIS and NH-Amundi, leading Korean financial institutions. The investment was made into an onshore wind park in Sweden.
Private equity investment is generally subject to a risk of non-liquid investments, among others, which means uncertainty of the realisation of any increase in value, a risk concerning general economic develop ment and market situation and a risk con cerning the economy and political situation of target countries. The general risks are heightened in CapMan's operations in Rus sia, which may impair CapMan's goodwill.
Investment operations carried out by CapMan are subject to general market risk. Market values can change, for example, because of fluctuations in the equity, fixed income, currency and real estate markets.
Changes in market values impact the result of CapMan through the appreciations of its investment assets, including its trading portfolio.
Changes in the equity markets also influence the valuation of unlisted portfolio companies because the valuation methods used by funds include the share values of suitable listed companies. Economic uncer tainty may have a direct impact on the suc cess of the funds administered by CapMan, on the success of CapMan's investment activities, and also on the assets available for investment or solvency of the current and potential investors of the funds.
The business operations of the CapMan Group have a material risk of failure regard ing the establishment of new private equity funds and their fundraising. Successful funding is important to management fees and creates opportunity for receiving carried interest income in the future. For example, poor performance of investments made by funds managed by CapMan, increasing competition or reasons that are independent of CapMan may make it more difficult to raise funds from new or current investors in the future.
Gaining new customers or the launch of new investment areas, products or service businesses may also fail, which may prevent or hamper the realisation of CapMan's growth objectives.
GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS
FINANCIAL STATEMENTS
The values of portfolio companies can vary positively or negatively within short periods if changes occur in the peer group or in the interest in the company of potential buyers. As a result of exit processes, significant return is typically realised on successful investments also in the short term as the exit price is based on strategic value and synergies created for the buyer, and not directly on peer group multiples.
The fair values of real estate and infrastructure investments may also vary between review periods based on changes in, inter alia, demand, capacity, condition or exit process. The variations are typically smaller compared to the variations in the fair value of portfolio companies.
The timing of exits and the magnitude of the potential carried interest profits are diffi cult to foretell. The timing of fees from fund advisory activities are difficult to predict due to the nature of the business.
Group companies managing a fund may in certain circumstances, pursuant to the terms of the fund agreement, have to return carried interest income they have received (so-called clawback). The obligation to return carried interest income applies typically when, according to the final distri bution of funds, the carried interest income
received by the fund management company exceeds the carried interest it is entitled to when the fund expires.
CapMan recognises revenue from car ried interest, to the extent carried interest is based on realised cash flows and repayment risk is estimated to be very low, CapMan is entitled to carried interest, a confirmation on the amount has been received and Cap - Man is relatively close to receiving it in cash. Returned carried interest income based on clawback conditions would in turn have a negative impact on CapMan's result as a potential clawback provision may not be sufficient. CapMan has recorded a EUR 7.6 million clawback provision for the CapMan Real Estate I KY fund. The sufficiency of the provision is reviewed quarterly by the management but its actual amount will only be known after all target investments of the fund have been liquidated. One real estate investment remains in the fund. The realisa tion of the clawback liability would have a negative cash flow impact and it is possible that the provision made is not sufficient. 38 Report of the Board of Directors CAPMAN ANNUAL
The company's financing agreements include financing covenants and other conditions. Violation of covenants related to financing agreements and a failure to fulfil other contractual terms may cause the cost of financing to increase significantly and even jeopardise continued financing for CapMan.
Changes in the securities markets regula tion, significant domestic or international tax regulation or practice and regulation generally applicable to business operations, or measures and actions by authorities or requirements set by authorities, or in the manner in which such laws, regulations and actions are implemented or interpreted, as well as the application and implementation of new laws and regulations, may have a significant effect on CapMan's business operations.
CapMan's objective is to pay an annually increasing dividend to its shareholders.
The combined growth objective for Man agement Company and Service business is more than 10 per cent p.a. on average. The objective for return on equity is more than 20 per cent p.a. on average. CapMan's equi ty ratio target is more than 60 per cent.
CapMan expects to achieve these finan cial objectives gradually and key figures are expected to show fluctuation on an annual basis considering the nature of the busi ness. CapMan expects management fees and fees from services to continue growing in aggregate in 2019. Our objective is to improve the aggregate profitability of Man agement Company and Service businesses before carried interest income and any
possible items affecting comparability.
The return on CapMan's investments have a substantial impact on CapMan's overall result. The development of industries and local economies, market instrument and inflation development, valuation multi ples of peer companies, exchange rates and various other factors outside of CapMan's control, as well as the combined effect of the aforementioned factors, influence fair value development of CapMan's overall in vestments in addition to portfolio company and asset-specific development.
CapMan's objective is to improve results in the longer term, taking into account an nual fluctuations affecting the business. For these and other above-mentioned reasons, CapMan does not provide numeric estimates for 2019.
Items affecting comparability are described in conjunction with section 2: Segment information the Tables section of this report.
Helsinki 31 January 2019
CAPMAN PLC Board of Directors
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| M€ | 2014 | 2015 | 2016 | 2017 | 2018 |
|---|---|---|---|---|---|
| Turnover | 39.5 | 31.8 | 26.7 | 34.8 | 36.0 |
| Fees | 19.6 | 22.1 | |||
| Sales of services | 28.7 | 27.4 | 26.7 | 7.1 | 10.3 |
| Carried interest | 10.8 | 4.4 | 0.0 | 4.4 | 1.0 |
| Dividend and interest income from financial assets held for trading | 3.7 | 2.5 | |||
| Other operating income | 0.2 | 0.3 | 0.1 | 0.0 | 0.0 |
| Operating expenses | -30.2 | -28.0 | -30.7 | -33.0 | -29.1 |
| Fair value gains/losses of investments | -3.2 | 5.2 | 22.6 | 17.6 | 5.1 |
| Operating profit | 6.3 | 9.3 | 18.7 | 19.5 | 12.0 |
| Financial income and expenses | -1.4 | -2.9 | -3.1 | -3.2 | -2.7 |
| Profit before taxes | 4.9 | 6.5 | 15.6 | 16.2 | 9.3 |
| Profit for the financial year | 4.0 | 6.1 | 15.3 | 15.5 | 8.5 |
| Return on equity (ROE), % | 6.1 | 9.3 | 14.7 | 11.5 | 6.5 |
| Return on investment (ROI), % | 7.0 | 8.0 | 10.9 | 10.1 | 6.7 |
| Equity ratio, % | 57.8 | 43.7 | 56.6 | 60.0 | 58.7 |
| Net gearing, % | 5.0 | 72.9 | 14.5 | 19.4 | 4.3 |
| Dividend paid *) | 5.2 | 6.0 | 13.0 | 16.1 | 17.7 |
| Personnel (at year-end 2014–2016, average 2017–2018) | 106 | 101 | 108 | 113 | 117 |
*) The company's Board of Directors will propose to the Annual General Meeting that considering distributable earnings, the dividend per share for 2018 would be EUR 0.06 instead of the originally proposed EUR 0.12. The Board of Directors will issue a Notice to an Extraordinary General Meeting to be convened on 25 March 2019 to decide on the equity repayment of EUR 0.06 per share. The total distribution for 2018 would remain unchanged at EUR 0.12 per share, or a total of approx. MEUR 17.7.
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| 2014 | 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|---|
| Earnings/share, cents | 3.4 | 5.9 | 16.2 | 10.4 | 5.5 |
| Diluted, cents | 3.4 | 5.8 | 16.1 | 10.2 | 5.4 |
| Shareholders' equity/share, cents | 76.1 | 75.5 | 98.6 | 87.3 | 82.6 |
| Dividend/share, cents *) | 6.0 | 7.0 | 9.0 | 11.0 | 12.0 |
| Average share issue adjusted number of shares during the financial year, EUR 1,000 | 86,164 | 86,291 | 88,383 | 145,179 | 146,522 |
| Share issue adjusted number of shares at year-end, EUR 1,000 | 86,317 | 86,317 | 143,313 | 145,626 | 147,142 |
| Number of shares outstanding, EUR 1,000 | 86,291 | 86,291 | 143,287 | 145,600 | 147,116 |
| Own shares, EUR 1,000 | 26 | 26 | 26 | 26 | 26 |
*) The company's Board of Directors will propose to the Annual General Meeting that considering distributable earnings, the dividend per share for 2018 would be EUR 0.06 instead of the originally proposed EUR 0.12. The Board of Directors will issue a Notice to an Extraordinary General Meeting to be convened on 25 March 2019 to decide on the equity repayment of EUR 0.06 per share. The total distribution for 2018 would remain unchanged at EUR 0.12 per share.
Hybrid bond of EUR 15 million is recognised to equity until its repayment date March 17, 2017. Interest on the hybrid bond (net of tax) for the financial year has been deducted when calculat ing earnings per share.
1) CapMan's objective is to pay an annually increasing dividend. The company's Board of Directors will propose to the Annual General Meeting that considering distributable earnings, the dividend per share for 2018 would be EUR 0.06 instead of the originally proposed EUR 0.12. The Board of Directors will issue a Notice to an Extraordinary General Meeting to be convened on 25 March 2019 to decide on the equity repayment of EUR 0.06 per share. The total distribution for 2018 would remain unchanged at EUR 0.12 per share.
• Return on Investment (ROI)
1) The objective for return on equity is more than
1) The objective for equity ratio is more than
1) In addition to management fees, fees recorded also include fees generated by CapMan's Procurement Services (CaPS), fund advisory services (Scala Fund Advisory) and other services (e.g fees from property management)."
1) Adjustments to carried interest income as well as items affecting comparability for 2017 are described in Note 2: Segment information. Carried interest income for 2016 and 2014 have been adjusted for a MEUR 2.3 increase and MEUR 1.2 release of provision for the potential repayment risk of carried interests to the fund, respectively.
Investments and commitments, M€
• Investments at fair value
• Investments at fair value • Remaining commitments • Remaining commitments
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
• Investments by type • Remaining commitments
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| Return on equity = |
Profit / loss | x 100 | Earnings per share = |
Profit/loss for the financial year - hybrid loan interest |
|---|---|---|---|---|
| (ROE), % | Shareholders' equity (average) | (EPS) | Share issue adjusted number of shares (average) | |
| Profit / loss + income taxes + interest expenses and | x 100 | Shareholders' equity | Shareholders' equity | |
| Return on investment = (ROI), % |
other financial expenses Balance sheet total - non-interest bearing debts (average) |
per share = | Share issue adjusted number of shares at the end of the financial year |
|
| Dividend paid in the financial year | ||||
| Equity ratio, % = |
Total shareholders' equity Balance sheet total - advances received |
x 100 | Dividend per share = |
Share issue adjusted number of shares at the end of the financial year |
| Net interest-bearing liabilities | Dividend per | Dividend/share | ||
| Net gearing, % = | Shareholders' equity | x 100 | = earnings, % |
Earnings/share |
| Group Statement of Comprehensive Income (IFRS) | 46 |
|---|---|
| Group Balance Sheet (IFRS) |
47 |
| Group Statement of Changes in Equity (IFRS)48 | |
| Group Cash Flow Statement (IFRS)49 | |
| 50 Notes to the Consolidated Financial Statements |
|
| 50 1. Accounting policies |
|
| 60 2. Segment information |
|
| 3. Turnover64 | |
| 4. Other operating income 64 | |
| 5. Employee benefit expenses64 | |
| 65 6. Depreciation |
|
| 7. Other operating expenses65 | |
| 8. Adjustments to cash flow statement66 | |
| 9. Fair value gains/losses of investments66 | |
| 66 10. Finance income and costs |
|
| 11. Share of the income of investments accounted | |
| 66 for using the equity method |
|
| 12. Income taxes |
67 |
| 13. Earnings per share | 67 |
| 68 14. Tangible assets |
|
| 15. Goodwill68 | |
| Financial | 16. Other intangible assets69 | ||
|---|---|---|---|
| 17. Investments accounted for using the equity method69 | |||
| Statements | 69 18. Investments at fair value through profit or loss |
||
| 19. Receivables - Non-current | 70 | ||
| 20. Deferred tax assets and liabilities |
71 | ||
| 21. Trade and other receivables | 72 | ||
| 22. Financial assets at fair value through profit or loss | 72 |
||
| Group Statement of Comprehensive Income (IFRS) | 46 | 23. Cash and bank | 73 |
| Group Balance Sheet (IFRS) |
47 | 24. Share capital and shares |
73 |
| Group Statement of Changes in Equity (IFRS)48 | 25. Interest-bearing loans and borrowings - Non-current | 75 | |
| Group Cash Flow Statement (IFRS)49 | 26. Trade and other payables - Current | 75 | |
| 50 Notes to the Consolidated Financial Statements |
27. Interest-bearing loans and borrowings - Current | 76 | |
| 50 1. Accounting policies |
28. Financial assets and liabilities | 76 | |
| 60 2. Segment information |
29. Commitments and contingent liabilities77 | ||
| 3. Turnover64 | 30. Share-based payments | 78 | |
| 4. Other operating income 64 | 81 31. Related party disclosures |
||
| 5. Employee benefit expenses64 | 83 32. Financial risk management |
||
| 65 6. Depreciation |
Parent Company Income Statement (FAS)93 | ||
| 7. Other operating expenses65 | Parent Company Balance Sheet (FAS)94 | ||
| 8. Adjustments to cash flow statement66 | Parent Company Cash Flow Statement (FAS)95 | ||
| 9. Fair value gains/losses of investments66 | Notes to the Parent Company Financial Statements (FAS)96 | ||
| 66 10. Finance income and costs |
Signatures to the report of the Board of Directors | ||
| 11. Share of the income of investments accounted | 103 and financial statements |
||
| 66 for using the equity method |
The Auditor's Note103 | ||
| 12. Income taxes |
67 | Auditor's Report104 | |
| 13. Earnings per share | 67 | Shares and shareholders |
108 |
| 68 14. Tangible assets |
110 Information for shareholders |
||
| 15. Goodwill68 | |||
| 45 | Financial Stateme | nts |
| EUR 1,000 | Note | 1 Jan–31 Dec 2018 | 1 Jan–31 Dec 2017 |
|---|---|---|---|
| Management fees | 22,123 | 19,583 | |
| Sale of services | 10,337 | 7,108 | |
| Carried interest | 1,022 | 4,418 | |
| Dividend and interest income from financial assets held for trading | 2,510 | 3,735 | |
| Turnover | 2,3 | 35,992 | 34,843 |
| Other operating income | 4 | 4 | 15 |
| Employee benefit expenses | 5 | -19,863 | -21,366 |
| Depreciation | 6 | -171 | -1,716 |
| Other operating expenses | 7 | -9,102 | -9,876 |
| Fair value gains/losses of investments | 9 | 5,092 | 17,582 |
| Operating profit | 11,951 | 19,482 | |
| Finance income | 10 | 490 | 289 |
| Finance costs | 10 | -3,159 | -3,460 |
| Share of the income of investments accounted for using the equity method | 11 | 0 | -87 |
| Profit before taxes | 9,282 | 16,224 | |
| Income taxes | 12 | -801 | -757 |
| Profit for the financial year | 8,481 | 15,467 | |
| Other comprehensive income: | |||
| Items that may be subsequently reclassified to profit or loss | |||
| Translation difference | 71 | -256 | |
| Total comprehensive income | 8,552 | 15,211 | |
| Profit attributable to: | |||
| Equity holders of the Company | 8,064 | 15,472 | |
| Non-controlling interest | 418 | -5 | |
| Total comprehensive income attributable to: | |||
| Equity holders of the Company | 8,134 | 15,216 | |
| Non-controlling interest | 418 | -5 | |
| Earnings per share for profit attributable to the equity holders of the Company: | |||
| Earnings per share (basic), cents | 13 | 5.5 | 10.4 |
| Earnings per share (diluted), cents | 13 | 5.4 | 10.2 |
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| Note | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|
| 14 | 317 | 287 |
| 15 | 4,704 | 4,547 |
| 16 | 85 | 208 |
| 18 | ||
| 80,583 | 58,264 | |
| 0 | 28,840 | |
| 2,548 | 142 | |
| 4,470 | 4,917 | |
| 19 | 5,075 | 3,143 |
| 20 | 2,026 | 1,752 |
| 99,808 | 102,100 | |
| 21 | 12,646 | 8,725 |
| 22 | 39,006 | 77,144 |
| 23 | 54,544 | 23,291 |
| 106,196 | 109,160 | |
| 211,259 | ||
| 206,003 |
| EUR 1,000 | Note | 31 Dec 2018 | 31 Dec 2017 | EUR 1,000 | Note | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|---|---|---|---|---|
| ASSETS | EQUITY AND LIABILITIES | ||||||
| Non-current assets | Capital attributable to the Company's | ||||||
| Tangible assets | 14 | 317 | 287 | equity holders | 24 | ||
| Goodwill | 15 | 4,704 | 4,547 | Share capital | 772 | 772 | |
| Other intangible assets | 16 | 85 | 208 | Share premium account | 38,968 | 38,968 | |
| Investments at fair value through profit and | Other reserves Translation difference |
83,812 -286 |
82,550 -357 |
||||
| loss | 18 | Retained earnings | -2,728 | 4,766 | |||
| Investments in funds | 80,583 | 58,264 | Total capital attributable to the Company's | ||||
| Growth equity investments | 0 | 28,840 | equity holders | 120,537 | 126,699 | ||
| Other financial assets | 2,548 | 142 | |||||
| Investments in joint ventures | 4,470 | 4,917 | Non-controlling interests | 433 | -5 | ||
| Receivables | 19 | 5,075 | 3,143 | Total equity | 120,970 | 126,694 | |
| Deferred tax assets | 20 | 2,026 | 1,752 | ||||
| 99,808 | 102,100 | Non-current liabilities | |||||
| Deferred tax liabilities | 20 | 3,285 | 8,573 | ||||
| Current assets | Interest-bearing loans and borrowings | 25 | 49,705 | 45,215 | |||
| Trade and other receivables | 21 | 12,646 | 8,725 | Other non-current liabilities | 167 | 124 | |
| Financial assets at fair value through profit and loss |
22 | 39,006 | 77,144 | 53,157 | 53,912 | ||
| Cash and bank | 23 | 54,544 | 23,291 | ||||
| 106,196 | 109,160 | Current liabilities | |||||
| Trade and other payables | 26 | 16,808 | 26,837 | ||||
| Total assets | 206,003 | 211,259 | Interest-bearing loans and borrowings | 27 | 9,989 | 3,000 | |
| Current income tax liabilities | 5,078 | 816 | |||||
| 31,875 | 30,653 | ||||||
| Total liabilities | 85,032 | 84,565 | |||||
| Total equity and liabilities | 206,003 | 211,259 |
| Group Statement of Changes in Equity (IFRS) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Attributable to the equity holders of the Parent Company | ||||||||
| EUR 1,000 | Note | Share capital |
Share premium account |
Other reserves |
Translation difference |
Retained earnings |
Total | Non controlling interests |
| Equity on 31 December 2017 | 24 | 772 | 38,968 | 97,111 | -101 | 6,229 | 142,979 | |
| Profit for the year | 15,473 | 15,473 | -5 | |||||
| Other comprehensive income for the year | ||||||||
| Currency translation differences | -256 | -256 | ||||||
| Total comprehensive income for the year | -256 | 15,473 | 15,217 | -5 | ||||
| Share subscriptions with options | 421 | 421 | ||||||
| Options | 96 | 61 | 157 | |||||
| Dividends | -13,047 | -13,047 | ||||||
| Share issue | -78 | -78 | ||||||
| Repayment of hybrid bond | -15,000 | -3,950 | -18,950 | |||||
| Equity on 31 December 2017 | 24 | 772 | 38,968 | 82,550 | -357 | 4,766 | 126,699 | -5 |
| Profit for the year | 8,064 | 8,064 | 418 | |||||
| Other comprehensive income for the year | ||||||||
| Currency translation differences | 71 | 71 | ||||||
| Total comprehensive income for the year | 71 | 8,064 | 8,135 | 418 | ||||
| Share issue of non-controlling interests | 20 | |||||||
| Share subscriptions with options | 1,139 | 1,139 | ||||||
| Options and Performance Share Plan | 116 | 520 | 636 | |||||
| Dividends | -16,079 | -16,079 | ||||||
| Other changes | 7 | 7 | ||||||
| Equity on 31 December 2018 | 24 | 772 | 38,968 | 83,812 | -286 | -2,728 | 120,537 | 433 |
| The Notes are an integral part of the Financial Statements. | ||||||||
| Group Cash Flow Statement (IFRS) | |||||||
|---|---|---|---|---|---|---|---|
| EUR 1,000 | Note | 1 Jan–31 Dec 2018 | 1 Jan–31 Dec 2017 | EUR 1,000 | Note | 1 Jan–31 Dec 2018 | 1 Jan–31 Dec 2017 |
| Cash flow from operations | Cash flow from financing activities | ||||||
| Profit for the financial year | 8,481 | 15,468 | Share issue Proceeds from borrowings |
1,146 49,748 |
421 9,000 |
||
| Adjustments on cash flow statement | 8 | -766 | -11,810 | Repayment of borrowings | 25 | -38,489 | -42,000 |
| Change in working capital: | Paid withheld tax on dividends | 0 | -6,151 | ||||
| Change in current non-interest- bearing receivables* |
-5,853 | -1,812 | Dividends paid | -16,079 | -13,047 | ||
| Change in current trade payables and other non-interest-bearing liabilities |
-1,031 | 19 | Cash flow from financing activities | -3,674 | -51,777 | ||
| Interest paid | -2,438 | -3,864 | Change in cash and cash equivalents | 31,253 | -21,710 | ||
| Taxes paid | -3,078 | -1,624 | Cash and cash equivalents | ||||
| Cash flow from operations | -4,686 | -3,623 | at start of year | 23,291 | 45,001 | ||
| Cash and cash equivalents at end of year |
23 | 54,544 | 23,291 | ||||
| Cash flow from investing activities | |||||||
| Acquisition of subsidiaries | -8,399 | -1,173 | |||||
| Investments in tangible and intangible assets |
-77 | -260 | |||||
| Investments at fair value through profit and loss |
47,204 | 32,560 | |||||
| Long-term loan receivables granted | -155 | -236 | |||||
| Receivables from long-term receivables | 972 | 2,304 | |||||
| Dividends received | 0 | 210 | |||||
| Interest received | 67 | 286 | |||||
| Cash flow from investing activities | 39,612 | 33,690 | |||||
| * Includes carried interest recognised in the income statement during the period and received after the end of the reporting period. |
The Notes are an integral part of the Financial Statements. | ||||||
| 49 | Group Financial Stateme nts |
| EUR 1,000 | Note | 1 Jan–31 Dec 2018 | 1 Jan–31 Dec 2017 |
|---|---|---|---|
| Cash flow from financing activities | |||
| Share issue | 1,146 | 421 | |
| Proceeds from borrowings | 49,748 | 9,000 | |
| Repayment of borrowings | 25 | -38,489 | -42,000 |
| Paid withheld tax on dividends | 0 | -6,151 | |
| Dividends paid | -16,079 | -13,047 | |
| Cash flow from financing activities | -3,674 | -51,777 | |
| Change in cash and cash equivalents | 31,253 | -21,710 | |
| Cash and cash equivalents at start of year |
23,291 | 45,001 | |
| Cash and cash equivalents at end of year |
23 | 54,544 | 23,291 |
CapMan's business comprise of private equity fund management and advisory services, as well as investment business. The funds managed by CapMan make investments in Nordic and Russian compa nies and in real estate and infrastructure assets in the Nordic countries. The service business includes private equity advisory and fundraising services to fund managers and procurement services to companies. Through its investment business, CapMan invests in the private equity asset class, mainly in its own funds, and listed markets in a diversified manner.
The parent company of the Group is CapMan Plc and is domiciled in Helsinki, with a registered office address at Ludvig inkatu 6, 00130 Helsinki, Finland.
The Consolidated Financial Statements may be viewed online at www.capman.com, or a hard copy is available from the office of the parent company.
The Consolidated Financial Statements for 2018 have been approved for publica tion by CapMan Plc's Board of Directors on January 30, 2019. Pursuant to the Finnish Companies Act, shareholders may adopt or reject the financial statements and make decisions on amendments to them at the Annual General Meeting.
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) in force at December 31, 2018 as adopted by the European Union. International Finan cial Reporting Standards, referred to in the Finnish Accounting Act and in ordinances issued based on the provisions of this Act, are standards and their interpretations adopted in accordance with the procedure laid down in regulation (EC) No 1606/2002 of the European Parliament and of the Council. The notes to the consolidated financial statements have been prepared in accordance with the Finnish accounting standards as and where they supplement IFRS requirements.
The preparation of financial statements in conformity with IFRS requires the Group's management to make estimates and assumptions when applying CapMan's ac counting principles, and these are presented in more detail under 'Use of estimates'.
The Consolidated Financial Statements have been prepared under the historical cost convention, except for financial assets and liabilities valued at fair value through profit or loss. The information in the Consolidat ed Financial Statements is presented in thousands of euros. Figures in the accounts have been rounded and consequently the
sum of individual figures can deviate from the presented sum figure.
applied the following new or amended standards that have come into effect:
IFRS 9 superseded standard IAS 39 Finan cial Instruments: Recognition and Measure ment. The new standard replaced the multi ple classification models of financial assets in IAS 39 with a single model, under which there are three classification categories: am ortised cost, fair value through profit or loss and fair value through other comprehensive income. Classification is based on entity's business model for managing financial assets and their contractual cash flow char acteristics. The new standard also includes a new model for estimating impairment of financial assets, which is based on expected credit losses. The new hedge accounting rules align hedge accounting more closely with common risk management practices. 50 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
The adoption of the new standard caused changes primarily to account ing principles related to financial assets measured at amortised cost, such as trade and loan receivables. The objective of the Group's trade receivables is the possession of financial assets to collect cash flows based on agreements. The Group evalu -
ates the expected credit loss of the trade receivables of the management company and service business by using the simplified approach allowed by IFRS 9. Based on the standard, the Group has established a pro vision matrix, based on the historical credit losses and forward-looking information re garding general economic indicators. In ad dition, the group has evaluated the valuation of materially overdue receivables on a client basis. The adoption of the new standard did not result in significant changes to the val uation of trade receivables, because credit losses have been historically low and are not expected to increase in the future.
In addition, the Group has loan receiva bles relating to management company and service business. The cash flows of these receivables consist of instalments and accumulated interest. The group uses the IFRS 9 based general approach for evaluat ing the expected credit losses for these loan receivables. The group evaluates the credit risk of the borrowers by estimating the de lay of the repayments and borrower's future economic development. Depending on the estimated credit risk, the group measures the loss allowance at an amount equal to 12-month expected credit losses or lifetime expected credit losses. The adoption of the new standard did not result in significant changes to the valuation of loan receivables.
The adoption of IFRS 9 did not result in changes to the classification of financial assets, because under the earlier standard,
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REPORT OF THE BOARD OF DIRECTORS
FINANCIAL STATEMENTS
the Group's financial assets were classified either at fair value through profit or loss or as loans and receivables. Therefore, loans and receivables under IAS 39 were reclas sified to financial assets at amortised cost, and adoption of the new standard did not impact the classification of financial assets at fair value through profit or loss. Changes to the hedge accounting rules do not have an impact, because the Group does not apply hedge accounting.
IFRS 15 is based on the principle that revenue is recognised when control of a good or service transfers to a customer. Adoption of the new standard did not have an impact on the Group's result or financial position, and the impact analysis acting as a basis for this conclusion is presented below. However, based on the requirements of the new standard, CapMan disaggregated its revenue from contracts with customers to categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. This resulted in disclosing man agement fees, service fees, carried interest and income from financial assets held for trading separately from one another.
CapMan's main revenue streams com prise management fees and carried interest. Other fees incurred are generated by the CapMan Procurement Services (CaPS), Sca la Fund Advisory and Real Estate business lines consisting mainly of commissions, retainer and success fees and property
management service fees.
The following sets forth the results of the impact analysis by revenue stream:
As a fund manager, CapMan receives man agement fees during a fund's period of op erations. The management fee is a variable consideration and is during the investment period typically based on the fund's original size and thereafter on the acquisition cost of the fund's remaining portfolio. Fund management was identified being the only performance obligation in the contract, and management fee income is allocated to the provided fund management service over time. Adoption of IFRS 15 did not result in a difference in revenue recognition of manage ment fee income compared to the supersed ed standard IAS 18.
CapMan recognises revenue from carried interest when a fund has transferred to carry and to the extent carried interest is based on realised cash flows and manage ment has estimated it being highly probable that there is no risk of repayment of carried interest back to the fund. Carried interest is recognised when CapMan is entitled to carried interest by the reporting date, a con firmation on the amount has been received and CapMan is relatively close to receiving it in cash.
Carried interest is earned based on the same performance obligation as the man agement fee, i.e. fund management, and is a variable consideration, which is subject to the highly probable constraint under IFRS 15. Potential repayment (clawback) risk is measured by using the expected value meth od, i.e. by estimating a weighted average of all possible outcomes. The fair value of the remaining portfolio companies is deter mined, which CapMan uses as a basis to assess the repayment risk in case CapMan has a contractual obligation to return part of the received carried interest back to the fund. Adoption of the IFRS 15 did not result in a difference in revenue recognition of carried interest income compared to the superseded standard IAS 18.
Scala Fund Advisory earns fundraising fee from its services provided to private equity fund managers and professional investors globally. Fundraising fee typically includes two components: a success fee and a retain er. Success fee is earned when the targeted amount of funds has been raised. Retainer is earned over time, during the fundraising process, and is typically a fixed amount per month. Retainer is recognised monthly as earned and success fee only after the investors have been committed to invest by signing the fund agreement. A fundraising contract is a single contract including both success fee and retainer, and includes only one performance obligation, which is to raise the targeted amount of capital. Trans action price comprises the success fee, be ing a variable consideration, and a retainer, being a fixed consideration. As the retainer is a fixed amount, earned monthly and 51 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
irrevocable after being received, recognising it over time is compliant with both IFRS 15 and IAS 18. With regards to the success fee, earlier approach under IAS 18 was also compliant with the IFRS 15, because the constraint highly probable is not reached before the investors have signed and com mitted to providing the capital reaching the fundraising target, thus entitling CapMan to a success fee as agreed. As long as the fundraising target has not been reached, collecting the remaining minimum amount of commitments is seen strongly dependent on factors outside CapMan's influence and thus constraining CapMan from recognising the revenue in an earlier point in time.
Secondary services of Scala Fund Advisory Scala Fund Advisory earns also fees from so called secondary market services for inves tors and fund managers of non-listed funds and investments. Typically, Scala is entitled to a fixed percentage of the actual transac tion price. Arrangement fee is invoiced and received after the underlying transaction has occurred. According to the analysis, with regards to secondary services, there is only one contract and one performance obliga tion with the customer. Transaction price comprises an arrangement fee, which is a variable consideration. Under the previous and current standard, the arrangement fee is recognised, when the underlying trans action has occurred. Realisation of the transaction is outside CapMan's control and is therefore constraining the revenue recog nition until realised.
CapMan Procurement Services (CaPS) combines service providers (suppliers) of non-strategic services and companies that buy or outsource these services. CapMan negotiates favourable prices with the service providers and earns a monthly commission of the supplier's sales to CaPS member companies. This means CapMan receives the commission fee income as an agent, as the supplier is responsible for providing the service or product and CapMan is not exposed to any credit risk regarding the ser vices provided by the suppliers. Recognition of the commission fee income over time is compliant with both IFRS 15 and IAS 18.
CapMan Procurement Services also earns a yearly fixed fee from certain CaPS member companies. In these contracts, there is one performance obligation, which is providing the customer a membership in CaPS and maintaining CaPS. The transac tion price is the fixed yearly fee received for a fixed period, and it is not subject to reim bursement. Recognition of yearly fee related revenue evenly over time is compliant with both IFRS 15 and IAS 18.
CapMan Procurement Services also maintain an Employee Benefit Program (EBP), where a company can, by partici pating in the program, buy services for its employees, at negotiated prices. The mem bership is based on a yearly fixed fee, which is not subject to reimbursement. The EBP service is run by a third-party service provid er that in most cases also collects the yearly fees and pays them forward to CapMan as
such. As the third-party service provider does not control the service, it is considered an agent to CapMan, and therefore CapMan – controlling the service – has an agree ment with the customer using the service. CapMan's only performance obligation is to provide membership in and maintain the EBP service. The transaction price is the fixed yearly fee, which is recognised evenly over time, which is compliant with both IFRS 15 and IAS 18.
Amendments to IFRS 2 are related to clas sification and measurement of share-based payment transactions. The amendments clarify the accounting for certain types of arrangements with regards to the following accounting areas: measurement of cash-set tled share-based payments, classification of share-based payments settled net of tax withholdings and accounting for a modification of a share-based payment from cash-settled to equity-settled. As the Group's share-based long-term incentive plan contains no such features nor cash-set tled payments, the amendments to IFRS 2 did not have an impact on the Group's financial statements.
The interpretation clarifies the accounting treatment for foreign currency transactions that include a receipt or payment of ad vance consideration. According to the inter -
pretation, a non-monetary asset or liability related to an advance payment is measured using the exchange rate prevailing on the payment date. This interpretation did not have an impact on the consolidated financial statements, as the Group's accounting treatment of such transactions was already compliant with this interpretation.
Other new or amended standards or interpretations had no impact on the consol idated financial statements:
The Group has not yet adopted the following new and amended standards and interpretations already issued by the IASB. The Group will adopt them as of the effec tive date or, if the date is other than the first day of the financial year, from the beginning of the subsequent financial year.
These amendments have been endorsed for use by the European Union:
IFRS 16 will replace the current standard IAS 17 Leases. The new standard sets out the principles for the recognition, measure ment, presentation and disclosure of leases and requires lessees to account for all leas es under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees – lease of low-value assets and short-term leases.
The Group will adopt IFRS 16 using the simplified approach, also known as the modified retrospective approach or the cumulative catch-up method, and within that approach, choose the forward-looking alternative. This means, the right-of-use asset will be an equal to the lease liability, however adjusted for possible prepaid or accrued lease payments, and therefore no adjustment to retained earnings is made on the transition date January 1, 2019. The Group will also elect to use the exemptions allowed by the standard on lease contracts for which the lease term ends within 12 months as of the initial application, and lease contracts for which the underlying asset is of low value. Exemptions will be ap plied to some of the leased premises and to all laptops, printers and copying machines, among others. 52 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
The Group has performed a detailed im pact assessment of IFRS 16. The following sets forth the impact of IFRS 16 adoption as expected at the moment:
Impact on the statement of financial position as at December 31, 2018:
| ASSETS | |
|---|---|
| Tangible assets (right-of use assets) |
3,173 |
| LIABILITIES | |
| Lease liabilities | 3,173 |
| Net impact on equity | - |
FINANCIAL STATEMENTS
Impact on the statement of profit or loss for 2019 based on the lease contracts effective as at December 31, 2018:
EUR 1,000
| Depreciation, amortisation and impairments |
-844 |
|---|---|
| Other operating expenses (lease expenses) |
+871 |
| Operating profit | +27 |
| Finance costs | -61 |
| Income taxes | +7 |
| Profit for the year | -27 |
Interpretation clarifies how to apply the rec ognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments. In such a circumstance, an entity shall recognise and measure its current or deferred tax asset or liability applying the requirements in IAS 12 based on taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined applying this interpretation. The Group does not expect the standard to have a significant impact on its financial statements.
Other new or amended standards or interpretations are not expected to have an impact on the Group's financial statements.
As CapMan has determined it meets the definition of an investment entity, its sub sidiaries are classified either as operating subsidiaries, that are considered to be an extension of the Parent's operations, and as such, they are consolidated or investment entity subsidiaries, that are fair valued through profit or loss. The types of sub sidiaries and their treatment in CapMan's consolidated accounts are as follows:
acquisition of Norvestia. The corner stone of CapMan's business purpose remains to obtain capital from investors to its closedend private equity funds and to provide investment management services to those funds to gain both capital appreciation and investment income. Even after the acquisition of Norvestia, direct investments represent a relatively small part compared to total assets under management. Further, CapMan obtains funds from many external investors for investment purposes. Docu mented exit strategies exist for each fund's portfolio investments. Each fund's portfolio investments and the real estate investments are fair valued and such fair value informa tion is provided both to the fund investors on reporting date and also for CapMan's internal management reporting purposes. In addition, management has assessed that the following characteristics further support investment entity categorization: CapMan holds several investments itself in the funds, investments in the funds are held by several investors, the investors are not related par ties and the investments are held mostly in form of equity. 53 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
One of the most significant judgments man agement made in preparing the Company's consolidated financial statements is the determination that Company does not have control over the funds under its manage ment. Control is presumed to exist when
a parent has power over the investee, has exposure to variable returns from the fund and is able to use its power to affect the level of returns.
CapMan manages the funds against management fee received from the investors on the basis of the investment management mandate negotiated with the investors and it also makes direct investments in the funds under its management. Accordingly, CapMan was required to determine, whether it is acting primarily as a principal or as an agent in exercising its power over the funds.
In the investment management mandate the investors have set detailed instructions in all circumstances relating to the man agement of the fund limiting the actual influence of the general partner at very low. In general, having a qualified majority, investors have a right to replace the general partner and/or fund manager. The remu neration CapMan is entitled to is commen surate with the services it provides and corresponds to remuneration customarily present in arrangements for similar services on an arm's length basis. CapMan's direct investment (typically between of 1% to 5%) in the funds and thus the share of the varia bility of the returns compared with the other investors is relatively small. As an investor in the fund CapMan has no representation nor voting rights as it has been specifically excluded in the investment management mandate.
Therefore, management has conclud ed that despite it from formal perspective exercises power over the funds by controlling the general partner of the fund, its actual
operational ability is limited in the investment management mandate in a manner that the general partner is considers to act as an agent. Furthermore, CapMan's exposure to variable returns from the fund and its power to affect the level of returns is very low for the reasons described above. Therefore, CapMan has determined that it does not have control over the funds under its management.
Subsidiaries are consolidated using the acquisition method. All intercompany trans actions are eliminated in the Consolidated Financial Statements. Profit or loss, together with all other comprehensive income-related items, are booked to the owners of the par ent company or owners not holding a con trolling interest in the companies concerned. Non-controlling interests are presented in the Consolidated Balance Sheet under equity separately from equity attributable to the owners of the parent company.
Subsidiaries and businesses acquired during the year are consolidated from the date on which the Group acquires a con trolling interest, and in the case of compa nies and businesses divested by the Group during the financial year up to the date on which CapMan's controlling interest expires.
An associated company is an entity in which the Group has significant influence but does not hold a controlling interest. This is gen erally defined as existing when the Group holds, either directly or indirectly, more than 20% of a company's voting rights.
As an investment entity, CapMan measures associated companies belonging to growth equity investments at fair value through profit or loss. The group considers this to give more meaningful information about the real value of investments and to better describe the company's business, the company's way of reviewing its investments and making decisions relating to them.
Other associated companies have been consolidated in accordance with the equity method. Under this, the investment in an as sociated company is carried in the balance sheet at cost plus post-acquisition changes in the Group's share of the company's net assets, less any impairment value. If the Group's share of the loss incurred by an associated company exceeds the book value of its investment, the investment is booked at zero in the balance sheet, and losses exceeding book value are not combined unless the Group is committed to meeting the obligations of the company concerned. The Group's share of the profit recorded by an associated company during the financial year in accordance with its holding in the company is presented as a separate item in the income statement after operating profit. 54 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
CapMan has assessed the nature of its in vestment in Maneq Luxembourg S.a.r.l. and classified it as joint venture since based on contractual agreement, CapMan has right to net assets of the arrangement. The in vestment is made through several separate instruments and their values are co-de pendent. As an investment entity CapMan
measures its investment in the joint venture at fair value through profit or loss. In the balance sheet, the investment is presented as part of Investments at fair value through profit or loss as a separate line item "In vestments in joint ventures". Changes in the fair value of the investment are recognised in the group statement of comprehensive income in line item "Fair value changes of investments".
Operating segments are reported in ac cordance with internal reporting presented to the chief operating decision maker. The latter is responsible for allocating resources to operating segments and evaluating their performance and is defined as the Group's Management Group, which is responsible for taking strategic decisions affecting CapMan.
The result and financial position of each of the Group's business units are measured in the currency of the primary economic envi ronment for that unit ('functional currency'). The Consolidated Financial Statements are presented in euros, which is the functional and presentation currency of the Group's parent company.
Transactions in foreign currencies have been recorded in the parent company's functional currency at the rates of exchange prevailing on the date of the transactions; in practice a reasonable approximation of the actual rate of exchange on the date of the transaction is often used. Foreign exchange differences for operating business items are
recorded in the appropriate income state ment account before operating profit and, for financial items, are recorded in financial income and expenses. The Group's foreign currency items have not been hedged.
In the consolidated financial statements, the income statements of subsidiaries that use a functional currency other than the euro are translated into euros using the av erage rates for the accounting period. Their balance sheets are translated using the clos ing rate on the balance sheet date. All re sulting exchange differences are recognised in other comprehensive income. Translation differences caused by changes in exchange rates for the cumulative shareholders' equity of foreign subsidiaries have been recognised in other comprehensive income.
Tangible non-current assets have been reported in the balance sheet at their acqui sition value less depreciation according to plan. Assets are depreciated on a straightline basis over their estimated useful lives.
The estimated useful lives are as follows:
| Machinery and equipment | 4–5 years |
|---|---|
| Other long-term expenditure | 4–5 years |
The residual values and useful lives of assets are reviewed on every balance sheet date and adjusted to reflect changes in the expected economic benefits where neces sary.
REPORT 2018 GROUP CORPORATE GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS
FINANCIAL STATEMENTS
Goodwill acquired in a business merger is booked as the sum paid for a holding, the holding held by owners with a non-con trolling interest, and the holding previously owned that, when combined, exceeds the fair value of the net assets of the acquisition. Write-offs are not made against goodwill, and possible impairment of goodwill is tested annually. Goodwill is measured as the original acquisition cost less accumulated impairment. The goodwill acquired during a merger is booked against the units or groups of units responsible for generating the cash flow used for testing impairment. Every unit or group of units for which goodwill is booked represents the lowest level of the organisation at which goodwill is monitored internally for management purposes. Good will is monitored at operating segment level.
Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets are recognised in the bal ance sheet only if the cost of the asset can be measured reliably and if it is probable that the future economic benefits attributa ble to the asset will flow to the Group.
Agreements and trademarks acquired in business mergers are booked at fair value at the time of acquisition. As they have a limit ed life, they are booked in the balance sheet at acquisition cost minus accumulated
write-offs. IT systems are expensed on the basis of the costs associated with acquir ing and installing the software concerned. Depreciation is spread across the finan cial life of the relevant software licences. Impairment is tested whenever there is an indication that the book value of intangible assets may exceed the recoverable amount of these assets.
The estimated useful lives are:
| Agreements and trademarks | 10 years |
|---|---|
| Other intangible assets | 3-5 years |
The Group reviews all assets for indications that their value may be impaired on each balance sheet date. If such indication is found to exist, the recoverable amount of the asset in question is estimated. The recoverable amount for goodwill is meas ured annually independent of indications of impairment.
The need for impairment is assessed on the level of cash-generating units, in other words at the smallest identifiable group of assets that is largely independent of other units and cash inflows from other assets. The recoverable amount is the fair value of an asset, less costs to sell or value in use. Value in use refers to the expected future net cash flow projections, which are dis counted to the present value, received from the asset in question or the cash-generating unit. The discount rate used in measuring
value in use is the rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment is recorded in the income statement as an expense. The recoverable amount for financial assets is either the fair value or the present value of expected future cash flows discounted by the initial effective interest rate.
An impairment loss is recognised when ever the recoverable amount of an asset is below the carrying amount, and it is recog nised in the income statement immediately. An impairment loss of a cash-generating unit is first allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to reduce the carrying amounts of the other assets of the unit pro rata. An impairment loss is reversed if there is an indication that an im pairment loss may have decreased and the carrying amount of the asset has changed from the recognition date of the impairment loss.
The increased carrying amount due to reversal cannot exceed what the depre ciated historical cost would have been if the impairment had not been recognised. Reversal of an impairment loss for goodwill is prohibited. The carrying amount of good will is reviewed for impairment annually or more frequently if there is an indication that goodwill may be impaired, due to events and circumstances that may increase the probability of impairment.
The Group's financial assets have been clas sified into the following categories:
Investments in equity instruments are always measured at fair value through profit or loss. Classification of debt instruments, such as trade and loan receivables, is based on the business model for managing and for the contractual cash flow characteristics of these financial assets. Debt instruments of the Management Company Business and Service Business are classified as financial assets at amortised cost, because they are held solely in order to collect contractual cash flows, which are solely payments of principal and interest. Current debt instru ments, included in the market portfolio of the Investment Business, are classified as at fair value through profit or loss, because they are held for trading. Non-current debt instruments included in the Investment Business are held for both selling purposes and collecting contractual cash flows (prin cipal and interest), and the Group desig nates these assets as measured at fair value through profit or loss, in order to reduce inconsistency with regards to recognizing gains and losses of financial assets within the Investment Business, because the Group as an investment entity manages and mon - 55 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
itors the performance of these investments based on fair values according to group's investment strategy.
Transaction costs are reported in the initial cost of financial assets, excluding items valued at fair value through profit or loss. All purchases and sales of financial in struments are recognised on the trade date. An asset is eligible for derecognition and removed from the balance sheet when the Group has transferred the contractual rights to receive the cash flows or when it has substantially transferred all of the risks and rewards of ownership of the asset outside the Group. Financial assets are classified as current if they have been acquired for trad ing purposes or fall due within 12 months.
Fair value through profit or loss class com prises of financial assets that are equity instruments or acquired as held for trading, in which case they can be either equity or debt instruments. Debt instruments are also classified to this class, if they are held for both selling purposes and collecting con tractual cash flows and which CapMan as an investment entity designates as financial assets at fair value through profit or loss at initial recognition in order to reduce incon sistency with regards to recognizing gains and losses of financial assets within the Investment Business.
Fund investments, investments in joint ventures and other investments in non-cur rent assets are classified as financial assets at fair value through profit or loss and their
fair value change is presented on the line item "Fair value changes of investments" in the statement of comprehensive income. Fair value information of the non-current fund investments is provided quarterly to Company's management and to other inves tors in the investment funds management by CapMan. The valuation of CapMan's funds' investment is based on International Private Equity and Venture Capital Valuation Guidelines (IPEVG) and IFRS 13. The invest ments in joint ventures mainly consists of investment in Maneq Luxembourg S.a.r.l. As an investment entity CapMan measures its investments in joint ventures at fair value through profit or loss. The investment is made through several separate instruments and their values are co-dependent. The in vestment is thus valued as one entity based on discounted cash flows. 56 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
Investments in listed shares, funds and interest-bearing securities as well as those derivative instruments that do not meet the hedge accounting criteria or for which hedge accounting is not applied in current assets are held for trading and therefore classified as at fair value through profit or loss. Listed shares and derivative contracts in current assets are measured at fair value by the last trade price on active markets on the balance sheet date. The fair value of current invest ments in funds is determined as the funds' net asset value at the balance sheet date. The fair value of current investments in in terest-bearing securities is based on the last trade price on the balance sheet date or, in an illiquid market, on values determined by the counterparty. The change in fair value
of current financial assets measured at fair value through profit or loss is presented on the line item "Fair value changes of invest ments" in the statement of comprehensive income. Dividend and interest income from short-term investments in listed shares and interest-bearing securities is recognised as turnover.
The Group uses derivative financial instruments such as options and futures contracts to manage its portfolio more effectively. The Group does not use hedge accounting in derivative contracts. Derivative financial instruments are initially recognised at fair value on the date on which a deriva tive contract is entered into and are subse quently remeasured at fair value. Fair values of derivative contracts are based on quoted market rates on the balance sheet date or, in an illiquid market, on values determined by the counterparty. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are recorded directly in the income statement on the line item "Fair value changes of investments".
Financial assets at amortised cost mainly include non-interest-bearing trade receiva bles and interest-bearing loan receivables of the Management Company Business and Service Business. These financial assets are held solely in order to collect contractual cash flows, and whose payments are fixed or determinable and which are not quoted in an active market. They are included in
current assets, except for maturities greater than 12 months after the end of the report ing period, which are classified as non-cur rent assets.
Expected credit loss of the trade receiv ables is evaluated by using the simplified approach allowed by IFRS 9, under which a provision matrix is maintained, based on the historical credit losses and forward-looking information regarding general economic indicators. In addition, materially overdue receivables are evaluated on a client basis.
Expected credit losses of loan receiv ables is evaluated based on the general approach under IFRS 9. The group evaluates the credit risk of the borrowers by estimat ing the delay of the repayments and borrow er's future economic development. Depend ing on the estimated credit risk the group measures the loss allowance at an amount equal to 12-month expected credit losses or lifetime expected credit losses. Inputs used for the measurement of expected credit losses include, among others, available statistics on default risk based on credit risk rating grades and the historical credit losses the group has incurred.
Credit risk of a loan receivable is assumed low on initial recognition in case the contractual payments of principal and interest are dependent on the cash proceeds the borrower receives from the underlying investments. In these cases, the borrower is considered to have a strong capacity to meet its contractual cash flow obligations in the near term. It is considered that there has been a significant increase in the credit risk, if the contractual payments have
GOVERNANCE
REPORT OF THE BOARD OF DIRECTORS
FINANCIAL STATEMENTS
become more than 30 days past due, and a default event has occurred, if the payment is more than 90 days past due, unless re sulting from an administrative oversight.
Cash and short-term deposits in the balance sheet comprise cash in banks and in hand, together with liquid short-term deposits. Cash assets have a maximum maturity of three months.
Financial liabilities largely consist of loans from financial institutions and interest op tions used for hedging the interest rates of the Group's interest-bearing debts. Finan cial liabilities are initially recognised at fair value. Transaction costs are reported in the initial book value of the financial liability. Financial liabilities are subsequently carried at amortized cost using the effective interest method. Financial liabilities are reported in non-current and current liabilities.
The hybrid bond has been treated as equity in the Group's financial statements. The hybrid bond has no maturity, but CapMan has the right to call it four years from the issue date. The company has an option to call the bond in two years the earliest from the issue date in accordance with certain terms and conditions. CapMan is obliged to pay interest on the hybrid bond, when it has decided to call it or in certain cases
subject to decision by the Annual General Meeting, such as decision to pay dividend. The interest on the hybrid bond is deducted from equity as interest is paid.
Dividend payment covers the dividend decided on by the Annual General Meeting. The dividend proposed to the Annual Gener al Meeting by the Board of Directors is not subtracted from distributable funds until approved by the Annual General Meeting.
All the Group's leasing arrangements are classified as operating leases, as the risks and benefits of ownership remain with the lessor. Operating lease payments are recog nised as an expense in the income state ment on a straight-line basis. The CapMan Group does not act as a lessor.
Provisions are recognised in the balance sheet when the Group has a current obliga tion (legal or constructive) as a result of a past event, and it is probable that an out flow will be required to settle the obligation and a reliable estimate of the outflow can be made.
The Group's provisions are evaluated on the closing date and are adjusted to match the best estimate of their size on the day in question. Changes are booked in the same entry in the income statement as the origi nal provision.
The defined contribution pension plan is a pension plan in accordance with the local regulations and practices of its business domiciles. Payments made to these plans are charged to the income statement in the financial period to which they relate. Pension cover has been arranged through insurance policies provided by external pension institutions.
The fair value of stock options is assessed on the date they are granted and are ex pensed in equal instalments in the income statement over the vesting period of the rights concerned. An evaluation of how many options will generate an entitlement to shares is made at the end of every reporting period. Fair value is determined using the Black-Scholes pricing model. The terms of the stock option programs are presented in Section 29. Share-based payments.
Revenue from contracts with customers is recognised by first allocating the transaction price to performance obligations, and when the performance obligation is satisfied by transferring the control of the underlying service to the customer, the revenue related to this performance obligation is recog nised. Performance obligation can be satis fied either at a point in time or over time.
As a fund manager, CapMan receives man agement fees during a fund's entire period of operations. Management fee is a variable consideration and is typically based on the fund's original size during its investment period, which is usually five years. Thereafter the fee is typically based on the acquisition cost of the fund's remaining portfolio. An nual management fees are usually 0.5-2.0% of a fund's total commitments, depending whether the fund is a real estate fund, a mezzanine fund, or an equity fund. In the case of real estate funds, management fees are also paid on committed debt capital. The average management fee percentage paid by CapMan-managed funds is approx. 1%. 57 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
Management fees paid by the funds are recognised as income over time, because the fund management service is the only performance obligation in the contract and it is satisfied over time.
CapMan's service business includes fund advisory and fund management services to external funds and fees from CapMan Procurement services (CaPS). Fee from a service is recognised over time, when the service is provided and the control is trans ferred to the customer, except for success fees, which are recognised as income at a point in time, because the underlying perfor mance obligation is satisfied and the control of the related service is transferred to the customer at a point in time.
Some of the contracts with customers related to the service business includes a significant financing component. When determining the transaction price in these cases, the promised amount of consid eration is adjusted for the effects of the time value of money and customer's credit characteristics.
Carried interest refers to the distribution of the profits of a successful private equity fund among fund investors and the fund manager responsible for the fund's invest ment activities. In practice, carried inter est means a share of a fund's cash flow received by the fund manager after the fund has transferred to carry.
The recipients of carried interest in the private equity industry are typically the investment professionals responsible for a fund's investment activities. In CapMan's case, carried interest is split between CapMan Plc and funds' investment teams. The table of funds published in CapMan's Annaul Reports details CapMan Plc's share of a fund's cash flow if it is in carry.
CapMan applies a principle where funds transfer to carry and carried interest income are based on realised cash flows, not on a calculated and as yet unrealised return. As the level of carried interest income varies, depending on the timing of exits and the stage at which funds are in their life cycle, predicting future levels of carried interest is difficult.
To transfer to carry, a fund must return its paid-in capital to investors and pay
a preferential annual return on this. The preferential annual return is known as a hurdle rate, which is typically set between 7-10% IRR p.a. When a fund has transferred to carry, the remainder of its cash flows is distributed between investors and the fund manager. Investors typically receive 80% of the cash flows and the fund manager 20%. When a fund is generating carried interest, the fund manager receives carried interest income from all of the fund's cash flows, even if an exit is made at below the original acquisition cost.
Revenue from carried interest is recog nised when a fund has transferred to carry and to the extent carried interest is based on realised cash flows and management has estimated it being highly probable that there is no risk of repayment of carried interest back to the fund. Carried interest is recognised when CapMan is entitled to it by the reporting date, a confirmation on the amount has been received and CapMan is relatively close to receiving it in cash.
Potential repayment risk to the funds (claw back) is considered when assessing wheth er revenue recognition criteria have been fulfilled. Clawback risk relates to a situation when, in conjunction with the liquidation of a fund, it is recognised that the General Partner has received more carried interest than agreed in the fund agreement. These situations can occur, for example, if there are recallable distributions or if representations and warranties have been given by the vendor in the sale and purchase agreement when the fund is towards the end of its lifecycle.
Potential repayment risk to the funds (clawback) is estimated by the management at each reporting date. The management judgment includes significant estimates relating to investment exit timing, exit probability and realisable fair value. The clawback risk is measured by using the expected value method, i.e. by calculating a probability weighted average of estimated alternative investment exit outcomes. The clawback is an adjustment to the related revenue recognised and is included in the current accrued liabilities in the consolidat ed balance sheet.
Tax expenses in the consolidated income statement comprise taxes on taxable income and changes in deferred taxes for the financial period. Taxes are booked in the income statement unless they relate to other areas of comprehensive income or directly to items booked as equity. In these cases, taxes are booked to either other comprehensive income or directly to equity. Taxes on taxable income for the financial period are calculated on the basis of the tax rate in force for the country in question. Taxes are adjusted on the basis of deferred income tax assets and liabilities from previous financial periods, if applica ble. The Group's taxes have been recognised during the financial year using the average expected tax rate. 58 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
Deferred taxes are calculated on tem porary differences between the carrying
amount and the tax base. Deferred taxes have only been recognised to the extent that it is probable that taxable profit will be avail able against which the deductible temporary differences can be utilised. The largest tem porary differences arise from the valuation of investments at fair value. Deferred taxes are not recognised for non-tax deductible amortisation of goodwill. Deferred taxes have been measured at the statutory tax rates enacted by the balance sheet date and that are expected to apply when the related deferred tax is realised.
CapMan uses alternative performance measures, such as Adjusted operating profit, to denote the financial performance of its business and to improve the compara bility between different periods. Alternative performance measures do not replace per formance measures in accordance with the IFRS and are reported in addition to such measures. Alternative performance meas ures, as such are presented, are derived from performance measures as reported in accordance with the IFRS by adding or deducting the items affecting comparability and they will be nominated as adjusted.
Items affecting comparability are, among others, material items related to mergers and acquisitions or major devel opment projects, material gains or losses related to the acquisition or disposals of business units, material gains or losses related to the acquisition or disposal of intangible assets, material expenses related
to decisions by authorities and material gains or losses related to reassessment of potential repayment risk to the funds.
The preparation of the financial statements in conformity with IFRS standards requires Group management to make estimates and assumptions in applying CapMan's accounting principles. These estimates and assumptions have an impact on the reported amounts of assets and liabilities and disclosure of contingent liabilities in the balance sheet of the financial statements and on the reported amounts of income and expenses during the reporting period. Estimates have a substantial impact on the Group's operating result. Estimates and assumptions have been used in assessing the impairment of goodwill, the fair value of fund investments, the impairment testing of intangible and tangible assets, in determin ing useful economic lives, and in reporting deferred taxes, among others. 59 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
The determination of the fair value of fund investments using the International Private Equity and Venture Capital Valuation Guide lines (IPEVG) takes into account a range of factors, including the price at which an investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating
performance, and financing transactions subsequent to the acquisition of the invest ment. These valuation methodologies involve a significant degree of management judg ment. Because there is significant uncer tainty in the valuation of, or in the stability of, the value of illiquid investments, the fair values of such investments as reflected in a fund's net asset value do not necessarily reflect the prices that would actually be ob tained when such investments are realised.
Valuation of growth equity investments The fair value of growth equity investments is determined quarterly by using valuation methods according to IPEVG and IFRS 13. The valuations are based on forecasted cash flows or peer group multiples. In estimating fair value of an investment, a method that is the most appropriate in light of the facts, nature and circumstances of the investment is applied. External valuations are made at least once a year to verify the fair values of growth equity investments.
Before acquiring the control in Norvestia Oyj, other investments comprised mainly of investments in CapMan's associated company, Norvestia Oyj. The investment in the associate company was measured at fair value through profit or loss, since CapMan has been classified as an investment entity as defined in IFRS 10. The fair value of the
Norvestia investment in CapMan's consoli dated balance sheet was based on the net asset value (NAV) as reported by Norvestia Oyj. Management had used judgement in as sessing that the NAV reported by Norvestia Oyj represents the best available estimate of the fair value of Norvestia Oyj.
The investments in joint ventures mainly consists of investment in Maneq Lux embourg S.a.r.l. As an investment entity, CapMan measures its investments at fair value through profit or loss. The valuation is based on discounted cash flows. The in vestment is made through several separate instruments and their values are co-depend ent. Therefore, the investment has been valued as one entity. Since the fair value is not based on the quoted market value of the investment, management has used its judgement also in assessing the future cash inflows and other main variables of the valuation.
Impairment testing for goodwill is per formed annually. The most significant management assumptions related to the recoverable amount of an asset are linked to the timing and size of new funds to be established and the accrual of potential carried interest income. The management fees received by funds are based on agree -
ments and, for a fund's operational period of approximately ten years, yields can be predicted quite reliably. Estimates and assumptions include new funds established as part of CapMan's ongoing operations. A new fund is established at the end of an investment period, typically four years. Car ried interest income is taken into account in estimates and assumptions when the realisation of carry seems likely.
CapMan has three operating segments: the Management company business, Service business and Investments business.
In its Management Company business, CapMan manages private equity funds that are invested by its partnership-based investment teams. Investments are Nordic and Russian mainly unlisted companies and Nordic real estate and infrastructure assets. CapMan raises capital for the funds from
Nordic and international investors. Income from the Management company business is derived from fees and carried interest received from funds. The fees include man agement fees related to CapMan's position as a fund management company and fees from other services closely related to fund management. 60 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
In the Service business, CapMan offers procurement services to companies in Finland and Sweden through CapMan Procurement Services (CaPS) and private
equity advisory and fundraising services to private equity fund managers and investors through Scala Fund Advisory. Income from the Services business include fees from CapMan Procurement Services (CaPS) and fundraising advisory services (Scala).
Through its Investment business, CapMan invests from its own balance sheet in the private equity asset class and listed markets in a diversified manner. Income in this business segment is generated by changes in the fair value of investments and realised returns following exits and periodic returns, such as interest and dividends.
Other includes the corporate functions not allocated to operating segments. These functions include part of the activities of group accounting, corporate communica tions, group management and costs related to share-based payment. Other also in cludes the eliminations of the intersegment transactions.
| 2018 | |||||
|---|---|---|---|---|---|
| Management | |||||
| EUR 1,000 | company business | Service business | Investment business | Other | Total |
| Management fees | 22,123 | 22,123 | |||
| Service fees | 1,054 | 8,680 | 603 | 10,337 | |
| Carried interest Dividend and interest income from financial |
1,022 | 1,022 | |||
| assets held for trading Turnover, external |
24,199 | 8,680 | 2,510 2,510 |
603 | 2,510 35,992 |
| Turnover, internal | 442 | -442 | |||
| Other operating income | 2 | 1 | 4 | ||
| Personnel expenses, of which | -12,569 | -2,417 | -229 | -4,647 | -19,863 |
| Salaries and bonuses | -12,569 | -2,417 | -229 | -4,011 | -19,226 |
| Share-based payment | -636 | -636 | |||
| Depreciation, amortisation and impairment | -118 | -7 | -46 | -171 | |
| Other operating expenses | -5,104 | -1,086 | -236 | -2,677 | -9,102 |
| Internal service fees | -3,569 | -1,240 | -687 | 5,496 | |
| Fair value changes of investments | 5,092 | 5,092 | |||
| Operating profit | 2,842 | 4,372 | 6,450 | -1,712 | 11,951 |
| Financial items | -2,669 | -2,669 | |||
| Income taxes | -568 | -963 | 387 | 342 | -801 |
| Profit for the period | 2,274 | 3,409 | 4,168 | -1,369 | 8,481 |
| Earnings per share, cents | 5.5 | ||||
| Earnings per share, diluted, cents | 5.4 | ||||
| Non-current assets | 7,255 | 2,338 | 92,159 | -1,944 | 99,808 |
| Total assets include: | |||||
| Investments in joint ventures | 4,470 | 4,470 | |||
| Geographical distribution of turnover: | |||||
| Finland | 21,507 | ||||
| Other countries | 14,485 | ||||
| Total | 35,992 |
| Management company business 19,549 1,098 4,418 |
Service business 5,563 |
Investment business | Other | Total |
|---|---|---|---|---|
| 34 | 19,583 | |||
| 447 | 7,108 | |||
| 4,418 | ||||
| 3,735 | 3,735 | |||
| 25,065 | 5,563 | 3,735 | 480 | 34,843 |
| 252 | -252 | |||
| 117 | 117 | |||
| 117 | 117 | |||
| 25,182 | 5,815 | 3,735 | 229 | 34,960 |
| 3 | 12 | 15 | ||
| -11,301 | -2,346 | -2,177 | -5,543 | -21,366 |
| -11,301 | -2,346 | -2,177 | -5,387 | -21,210 |
| -156 | -156 | |||
| -1,666 | -4 | -13 | -34 | -1,716 |
| -5,436 | -818 | -1,127 | -2,494 | -9,876 |
| -3,982 | -390 | -743 | 5,115 | |
| 17,582 | 17,582 | |||
| 2,680 | 2,258 | 17,259 | -2,716 | 19,482 |
| 117 | 117 | |||
| 645 | 645 | |||
| 1,204 | 1,204 | |||
| 956 | 956 | |||
| 1,500 | 1,500 | |||
| 2,573 | 1,849 | 4,422 | ||
| 5,253 | 2,258 | 19,108 | -2,717 | 23,903 |
| -3,171 | -3,171 | |||
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| Management company business |
Service business | |||
|---|---|---|---|---|
| Investment business | Other | Total | ||
| -87 | ||||
| -543 | -452 | -295 | 534 | -757 |
| 2,137 | 1,806 | 13,706 | -2,183 | 15,467 |
| 94 | 94 | |||
| 653 | 653 | |||
| 1,025 | 1,025 | |||
| 759 | 759 | |||
| 1,500 | 1,500 | |||
| 2,352 | 1,678 | 4,031 | ||
| 4,489 | 1,806 | 15,385 | -2,182 | 19,498 |
| 10.4 | ||||
| 2.8 | ||||
| 13.1 | ||||
| 10.2 | ||||
| 2.7 | ||||
| 13.0 | ||||
| 4,702 | 96,920 | 478 | 102,100 | |
| 4,917 | 4,917 | |||
| 21,109 | ||||
| 13,734 | ||||
| 34,843 | ||||
| -87 |
| 3. Turnover | 4. Other operating income | |||||||
|---|---|---|---|---|---|---|---|---|
| Revenue from contracts with customers include management fees, service fees and carried | 2018 | 2017 | ||||||
| interest, and they have been presented separately from dividend and interest income from | Other items | 4 | 15 | |||||
| financial assets held for trading included in turnover. | Total | 4 | 15 | |||||
| In addition to the segment information (see Note 2), information presented here depict how the nature, amount, timing and uncertainty of revenue are affected by economic factors and how this disaggregation reconciles with the revenue of each reportable segment. Manage - ment and service fee as well as carried interest in the Management company business is |
5. Employee benefit expenses | 2018 | 2017 | |||||
| primarily related to long-term contracts. Management and service fee is typically recorded | Salaries and wages | 16,198 | 18,969 | |||||
| over time, whereas carried interest is recognised at a point in time. Revenue from the Service | Pension expenses - defined contribution plans | 2,716 | 1,786 | |||||
| business is mainly based on short-term contracts and includes both success fees recognised | Share-based payments | 636 | 156 | |||||
| at a point in time and service fees recognised over time. | Other personnel expenses | 311 | 455 | |||||
| Total | 19,861 | 21,366 | ||||||
| Management company |
Service | Invest ment |
Cost for the stock options granted and investment-based incentive plan is based on the fair value of the instrument. The counter-entry to the expenses recognised in the income state - |
|||||
| EUR 1,000 Timing of revenue |
business | business | business | Other | Total | ment is in retained earnings, and thus has no effect on total equity. More information on the share-based payments is disclosed in Note 30. |
||
| recognition: | ||||||||
| Services transferred over time |
23,177 | 5,713 | 603 | 29,493 | ||||
| Services transferred at a point in time |
1,022 | 2,967 | 3,989 | |||||
| Revenue from customer contracts, external |
24,199 | 8,680 | 603 | 33,482 | ||||
| Revenue from other sources than customer contracts |
2,510 | 2,510 |
| 2018 | 2017 | |
|---|---|---|
| Other items | 4 | 15 |
| Total | 4 | 15 |
| 2018 | 2017 | |
|---|---|---|
| Salaries and wages | 16,198 | 18,969 |
| Pension expenses - defined contribution plans | 2,716 | 1,786 |
| Share-based payments | 636 | 156 |
| Other personnel expenses | 311 | 455 |
| Total | 19,861 | 21,366 |
| Average number of people employed | 2018 | 2017* | 7. Other operating expenses | ||
|---|---|---|---|---|---|
| By country | EUR 1,000 | 2018 | 2017 | ||
| Finland | 77 | 71 | Included in other operating expenses: | ||
| Sweden | 19 | 20 | Other personnel expenses | 978 | 884 |
| Denmark | 4 | 3 | Office expenses | 1,443 | 1,478 |
| Russia | 11 | 13 | Travelling and entertainment | 1,172 | 1,171 |
| Luxembourg | 1 | 1 | External services | 3,513 | 4,461 |
| United Kingdom | 5 | 5 | Other operating expenses | 1,997 | 1,882 |
| In total | 117 | 113 | Total | 9,103 | 9,876 |
| Yhteensä | 9 103 | 9 876 | |||
| By segment | |||||
| Management company business | 74 | 73 | |||
| Service business | 13 | 12 | |||
| Investment business and other | 30 | 28 | Audit fees | ||
| In total *Figures for the comparison period have been restated to correspond average number of people employed. 6. Depreciation |
117 | 113 | Ernst & Young chain of companies: EUR 1,000 Audit fees Tax advices Other fees and services |
2018 176 15 44 |
|
| Total | 235 | ||||
| EUR 1,000 | 2018 | 2017 | |||
| Depreciation by asset type | The other fees and services performed by Ernst & Young in 2018 was 59 thousand euros (0) | ||||
| Intangible assets | in total. The services consisted of tax advisory services (15 thousand euros) and other servic - | ||||
| Other intangible assets | 143 | 187 | es (44 thousand euros). | ||
| Total | 143 | 187 | |||
| PricewaterhouseCoopers chain of companies: | |||||
| Tangible assets | EUR 1,000 | 2018 | |||
| Machinery and equipment | 28 | 29 | Audit fees | 131 | |
| Total | 28 | 29 | Tax advices | 2017 2017 257 135 18 |
|
| Total depreciation | 171 | 216 | Other fees and services Fees under Auditing Act chapter 1, section 1, para - graph 2 |
11 | |
| Total | 131 | 421 | |||
| Impairment by asset type Goodwill |
0 | 1,500 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Included in other operating expenses: | ||
| Other personnel expenses | 978 | 884 |
| Office expenses | 1,443 | 1,478 |
| Travelling and entertainment | 1,172 | 1,171 |
| External services | 3,513 | 4,461 |
| Other operating expenses | 1,997 | 1,882 |
| Total | 9,103 | 9,876 |
| Yhteensä | 9 103 | 9 876 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Audit fees | 176 | |
| Tax advices | 15 | |
| Other fees and services | 44 | |
| Total | 235 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Audit fees | 131 | 257 |
| Tax advices | 135 | |
| Other fees and services | 18 | |
| Fees under Auditing Act chapter 1, section 1, para - graph 2 |
11 | |
| Total | 131 | 421 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Depreciation by asset type | ||
| Intangible assets | ||
| Other intangible assets | 143 | 187 |
| Total | 143 | 187 |
| Tangible assets | ||
| Machinery and equipment | 28 | 29 |
| Total | 28 | 29 |
| Total depreciation | 171 | 216 |
| Impairment by asset type | ||
| Goodwill | 0 | 1,500 |
| Total impairments | 0 | 1,500 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Personnel expenses | 636 | 156 |
| Depreciation | 171 | 1,716 |
| Unrealized fair value gains/losses of investments | -5,092 | -17,582 |
| Finance income and costs | 2,669 | 3,171 |
| Share of the income of investments accounted for using the equity method |
0 | 87 |
| Taxes | 801 | 757 |
| Other adjustments | 48 | -114 |
| Total | -766 | -11,809 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Investments at fair value through profit and loss | ||
| Investments in funds | 8,041 | 4,013 |
| Growth equity investments | 1,336 | 11,749 |
| Market portfolio | -4,740 | 2,302 |
| Investments in joint ventures | 280 | -358 |
| Other investments* | 175 | -124 |
| Total | 5,092 | 17,582 |
| EUR 1,000 | 2018 | 2017 | EUR 1,000 | 2018 | 2017 |
|---|---|---|---|---|---|
| Personnel expenses | 636 | 156 | Finance income | ||
| Depreciation | 171 | 1,716 | Interest income, loan receivables | 123 | 214 |
| Unrealized fair value gains/losses of investments | -5,092 | -17,582 | Other interest income | 4 | 5 |
| Finance income and costs Share of the income of investments accounted for using the equity method |
2,669 0 |
3,171 87 |
Exchange gains Total |
363 490 |
70 289 |
| Taxes | 801 | 757 | |||
| Other adjustments | 48 | -114 | Finance costs | ||
| Total | -766 | -11,809 | Interest expenses/loans | -2,381 | -2,726 |
| Other interest and finance expenses | -401 | -560 | |||
| Exchange losses | -378 | -174 | |||
| 9. Fair value gains/losses of investments | Total | -3,160 | -3,460 | ||
| Investments at fair value through profit and loss | |||||
| Investments in funds | 8,041 | 4,013 | accounted for using the equity method | ||
| Growth equity investments | 1,336 | 11,749 | EUR 1,000 | 2018 | 2017 |
| Market portfolio | -4,740 | 2,302 | Associates | 0 | -87 |
| Investments in joint ventures | 280 | -358 | Total | 0 | -87 |
| Other investments* | 175 | -124 | |||
| Total | 5,092 | 17,582 | |||
| *Includes a net gain of EUR 0.2 million from financial assets designated at fair value through profit or loss. |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Associates | 0 | -87 |
| Total | 0 | -87 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Current income tax | 5,150 | 960 |
| Taxes for previous years | 1,066 | 1,274 |
| Deferred taxes | ||
| Temporary differences | -5,415 | -1,477 |
| Total | 801 | 757 |
| 2018 | 13. Earnings per share | |||||
|---|---|---|---|---|---|---|
| 2017 | Basic earnings per share is calculated by dividing the distributable retained profit for the | |||||
| 5,150 | 960 | financial year by the average share issue adjusted number of shares, excluding shares that | ||||
| 1,066 | 1,274 | have been purchased by the Company and are presented as the Company's own shares. | ||||
| -5,415 | -1,477 | Diluted earnings per share is calculated by adjusting the weighted average number of ordi - | ||||
| 801 | 757 | nary shares outstanding to assume conversion of all dilutive potential ordinary shares. | ||||
| 2018 | 2017 | |||||
| Attributable to the equity holders of the Company, €, EUR 1,000 |
8,064 | 15,473 | ||||
| 2018 | 2017 | Interest expense on hybrid bond (net of tax) | -435 | |||
| 9,282 | 16,224 | Profit/loss used determine diluted earnings per share |
8,064 | 15,038 | ||
| Tax calculated at the domestic corporation tax rate | 1,856 | 3,245 | Weighted average number of shares, EUR 1,000 | 146,522 | 145,179 | |
| 43 | -60 | Own shares, EUR 1,000 | -26 | -26 | ||
| -1,841 | -1,118 | Weighted average number of shares, EUR 1,000 | 146,495 | 145,153 | ||
| Effect of options, EUR 1,000 | 1,630 | 1,845 | ||||
| 146,998 | ||||||
| Change of deferred tax expense liability concerning | ||||||
| 10.4 | ||||||
| 15 | 10 | 10.2 | ||||
| 801 | 757 | |||||
| 215 -280 410 383 0 |
44 -1,706 1,267 -1,224 300 |
effect of dilution, EUR 1,000 Earnings per share (basic), cents |
Weighted average number of shares adjusted for the Earnings per share (diluted), cents |
148,125 5.5 5.4 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Profit before taxes | 9,282 | 16,224 |
| Tax calculated at the domestic corporation tax rate of 20% |
1,856 | 3,245 |
| Effect of different tax rates outside Finland | 43 | -60 |
| Tax exempt income | -1,841 | -1,118 |
| Non-deductible expenses | 215 | 44 |
| The use of previous years' tax losses | -280 | -1,706 |
| Taxes for previous years | 410 | 1,267 |
| Change of deferred tax expense liability concerning taxes for previous years |
383 | -1,224 |
| Impairment of goodwill | 0 | 300 |
| Other direct taxes | 15 | 10 |
| Income taxes in the Group Income Statement | 801 | 757 |
| 14. Tangible assets | Impairment testing of goodwill | ||
|---|---|---|---|
| EUR 1,000 | 2018 | 2017 | The majority of goodwill consists of CapMan's acquisition on 27 August 2008 of private equi - ty house Norum, whose goodwill was €4.2 million (€4.1 million) as at 31 December 2018. |
| Machinery and equipment | |||
| The management of the Russian funds form a cash generating unit. Cash flow projections | |||
| Acquisition cost at 1 January | 2,148 | 1,989 | have been prepared for ten years with no residual value consideration. The cash flow is |
| Additions | 77 | 159 | based on a long term contract, whereby the cash flows for the current fund can be reasona - |
| Acquisition cost at 31 December | 2,225 | 2,148 | bly reliable estimated. In addition, cash flow projections include new fee income, for which |
| an agreement is not yet made. The discount rate used is 15.7% (2017: 14.6%), except for | |||
| Accumulated depreciation at 1 January | -1,980 | -1,940 | carried interest, whose discount rate is 18.0% (2017: 18.0%). There is no significant country |
| Accumulated depreciation in changes | 0 | 0 | risk attached to these cash flows, as they relate to management fees received from interna - |
| Depreciation for the financial year | -48 | -40 | tional investors. |
| Accumulated depreciation at 31 December | -2,028 | -1,980 | |
| A sensitivity analysis for the valuation of goodwill allocated to the Russian fund management | |||
| Book value on 31 December | 197 | 168 | business has been carried out, by making downside scenarios for the key parameters used in |
| the impairment test. Recoverable amount of the cash-generating unit is currently exceeding | |||
| Other tangible assets | its carrying amount by EUR 0.6 million. According to the sensitivity analysis, an increase of | ||
| 3.8 percent points in the pre-tax discount rate, 21% decrease in the estimated fee income, 17% decrease in the estimated carried interest or 50% decrease in the estimated fee income |
|||
| Acquisition cost at 1 January | 120 | 120 | from agreements not yet made, would result in the recoverable amount being lower than the |
| Book value on 31 December | 120 | 120 | carrying amount. |
| Tangible assets total | 317 | 288 | |
| In the comparison period, the annual goodwill impairment test resulted in an impairment | |||
| loss of EUR 1.5 million for the goodwill allocated to the Russian management company busi - | |||
| 15. Goodwill | ness. This was mainly attributable to re-evaluated cash flows, due to continuing political risks | ||
| and uncertainty in the fundraising market, which is expected to slow down the fundraising process of the new fund and decrease its size. |
|||
| EUR 1,000 | 2018 | 2017 | |
| Acquisition cost at 1 January | 13,169 | 13,169 | The carrying amount of goodwill is generally sensitive to the success of fundraising. The |
| Acquisition cost at 31 December | 13,169 | 13,169 | goodwill may be impaired in future in the event that new funds are not established, the funds' |
| size is less than estimated or in case of delays in the fundraising process. Carried interest | |||
| Accumulated impairment at 1 January | -8,622 | -6,965 | income is taken into consideration only when the funds has entered into carry or it can be |
| Impairment | - | -1,500 | reliably be estimated to generate carried interest. |
| Translation difference | 157 | -157 | |
| Accumulated impairment at 31 December | -8,465 | -8,622 | |
| Book value on 31 December | 4,704 | 4,547 | |
| 68 | Notes to the Consolidated Financial Stateme nts |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Acquisition cost at 1 January | 13,169 | 13,169 |
| Acquisition cost at 31 December | 13,169 | 13,169 |
| Accumulated impairment at 1 January | -8,622 | -6,965 |
| Impairment | - | -1,500 |
| Translation difference | 157 | -157 |
| Accumulated impairment at 31 December | -8,465 | -8,622 |
| Book value on 31 December | 4,704 | 4,547 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Acquisition cost at 1 January | 5,330 | 5,223 |
| Additions | - | 107 |
| Acquisition cost at 31 December | 5,330 | 5,330 |
| Accumulated depreciation at 1 January | -5,122 | -4,946 |
| Depreciation for the financial year | -123 | -176 |
| Accumulated depreciation at 31 December | -5,245 | -5,122 |
| Book value on 31 December | 85 | 208 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Associates | 0 | 87 |
| Share of the income of investments accounted for using the equity method |
0 | -87 |
| Total | 0 | 0 |
| EUR 1,000 | Assets | Liabilities | Turnover | Profit/ loss |
Owner ship % |
|
|---|---|---|---|---|---|---|
| BIF Management Ltd | Jersey | 1 | 6 | 0 | -44 | 33.33% |
| Baltic SME Management B.V. |
The Netherlands |
3 | 53 | 0 | -9 | 33.33% |
| Total | 4 | 59 | 0 | -53 |
| EUR 1,000 | Assets | Liabilities | Turnover | Profit/ loss |
Owner ship % |
|
|---|---|---|---|---|---|---|
| BIF Management Ltd | Jersey | 39 | 17 | 0 | -18 | 33.33% |
| Baltic SME Management B.V. |
The Netherlands |
2 | 53 | 0 | -10 | 33.33% |
| Total | 41 | 70 | 0 | -28 |
| 16. Other intangible assets | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR 1,000 | 2018 | 2017 | Investments in funds EUR 1,000 |
2018 | 2017 | ||||
| Acquisition cost at 1 January | 5,330 | 5,223 | |||||||
| Additions | - | 107 | Investments in funds at 1 January | 58,264 | 51,394 | ||||
| Acquisition cost at 31 December | 5,330 | 5,330 | Additions | 31,868 | 10,543 | ||||
| Disposals | 0 | -35 | |||||||
| Accumulated depreciation at 1 January | -5,122 | -4,946 | Distributions | -17,435 | -7,157 | ||||
| Depreciation for the financial year | -123 | -176 | Fair value gains/losses of investments | 8,073 | 3,422 | ||||
| Accumulated depreciation at 31 December | -5,245 | -5,122 | Transfers Investments in funds at 31 December |
-187 80,583 |
97 58,264 |
||||
| Book value on 31 December | 85 | 208 | Investments in funds by investment area at the end of period |
||||||
| 17. Investments accounted for using the equity method | Buyout | 13,456 | 22,020 | ||||||
| EUR 1,000 | 2018 | 2017 | Credit | 2,299 | 1,749 | ||||
| Russia | 3,917 | 4,505 | |||||||
| Associates | 0 | 87 | Real Estate | 27,069 | 17,885 | ||||
| Share of the income of investments accounted for | 0 | -87 | Other investment areas | 13,655 | 2,795 | ||||
| Funds of funds | 340 | 511 | |||||||
| using the equity method | |||||||||
| Total | 0 | 0 | External private equity funds | 14,318 | 8,799 | ||||
| Infra | 5,529 | ||||||||
| Total | 80,583 | 58,264 | |||||||
| EUR 1,000 | Assets | Liabilities | Turnover | Profit/ loss |
Owner ship % |
Investments in funds include the subsidiary, CapMan Fund Investments SICAV-SIF, with a fair | |||
| Nature of investments in associates 2018 BIF Management Ltd |
Jersey | 1 | 6 | 0 | -44 | 33.33% | value of EUR 42.9 million. | ||
| Baltic SME | The | ||||||||
| Management B.V. | Netherlands | 3 | 53 | 0 | -9 | 33.33% | Growth equity investments | ||
| Total | 4 | 59 | 0 | -53 | EUR 1,000 | 2018 | 2017 | ||
| Other investments at 1 January | 28,840 | 37,856 | |||||||
| Profit/ | Owner | Additions | 1,856 | ||||||
| EUR 1,000 | Assets | Liabilities | Turnover | loss | ship % | Disposals* | -26,626 | -20,920 | |
| BIF Management Ltd | Jersey | 39 | 17 | 0 | -18 | 33.33% | Fair value gains/losses of investments | 9,959 | |
| 2017 Baltic SME Management B.V. |
The Netherlands |
2 | 53 | 0 | -10 | 33.33% | Transfers Other investments at 31 December |
-2,214 0 |
89 28,840 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Other investments at 1 January | 28,840 | 37,856 |
| Additions | 1,856 | |
| Disposals* | -26,626 | -20,920 |
| Fair value gains/losses of investments | 9,959 | |
| Transfers | -2,214 | 89 |
| Other investments at 31 December | 0 | 28,840 |
| CapMan has founded a new growth equity based fund on 11.12.2017 with respect to CapMan sold its growth equity investments in January 2018. |
The Group's share of the Maneq funds is approx. EUR 4.5 million. As an investment entity, CapMan measures its investments in joint ventures as at fair value through profit or loss. |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Other financial assets | The owners of Maneq Investments Luxembourg S.a.r.l have agreements relating to the distri - bution of the assets and minority rights in decision making. The investment is made through |
|||||||||
| EUR 1,000 | 2018 | 2017 | several separate instruments and their values are co-dependent. The investment is thus | |||||||
| Other investments at 1 January | 142 | 179 | valued as one entity based on discounted cash flows. Based on the contractual agreement, | |||||||
| Additions | 42 | 0 | CapMan has right to net assets of the arrangement. | |||||||
| Disposals Transfers |
2,213 | -5 | ||||||||
| Fair value gains/losses of investments | 151 | -32 | Team members of CapMan investment teams and other personnel have the option to invest | |||||||
| Other investments at 31 December | 2,548 | 142 | in portfolio companies alongside CapMan via Maneq funds. CapMan has not established the | |||||||
| new Maneq-funds after the year 2011. Maneq 2002 AB fund has been terminated on June 27 | ||||||||||
| Investments in joint ventures | 2017. | |||||||||
| EUR 1,000 | 2018 | 2017 | ||||||||
| Investments in joint ventures at 1 January | 4,917 | 5,376 | The valuation principles are presented in Note 32. Financial risk management g) Determining fair values. |
|||||||
| Additions | 106 | 172 | ||||||||
| Disposals | -832 | -63 | 19. Receivables - Non-current | |||||||
| Distributions | 0 | -210 | ||||||||
| Fair value gains/losses of investments | 280 | -358 | EUR 1,000 | 2018 | 2017 | |||||
| Investments in joint ventures at 31 December | 4,470 | 4,917 | Trade receivables | 2,309 | ||||||
| Loan receivables | 2,766 | 3,143 | ||||||||
| Nature of investments in joint ventures | Total | 5,075 | 3,143 | |||||||
| 2018 | ||||||||||
| EUR 1,000 | Assets | Liabilities | Turnover | Profit/ loss |
Owner ship % |
Non-current trade receivables are related to Scala's fundraising and advisory services. | ||||
| Maneq Investments | Because of the significant financing component related to these receivables, the promised | |||||||||
| Luxembourg S.a.r.l. | Luxembourg | 5,788 | 1,997 | 0 | 447 | 18.18% | amount of consideration has been adjusted for the effects of the time value of money and | |||
| Maneq 2004 AB | Sweden | 53 | 1 | 0 | 0 | 41.90% | the credit characteristics of the customer. However, no contract assets are related to these | |||
| Yewtree Holding AB | Sweden | 12 | 1 | 0 | -9 | 35.00% | customer contracts, as the Group's right to the amount of consideration is unconditional and | |||
| subject only to the passage of time. | ||||||||||
| 2017 | ||||||||||
| EUR 1,000 | Assets | Liabilities | Turnover | Profit/ loss |
Owner ship % |
Loan receivables include EUR 1.5 million from Norum Russia Co-Investment Ltd, EUR 0.4 million from NEP Priedvidza S.a.r.l., EUR 0.4 million from NRE Cream Oy, EUR 0.2 million |
||||
| Maneq Investments | from CapMan Russia Team Guernsey Ltd and EUR 0.3 million related to other co-invest - | |||||||||
| Luxembourg S.a.r.l. | Luxembourg | 5,968 | 2,968 | 0 | 3 | 18.18% | ments. | |||
| Maneq 2004 AB | Sweden | 76 | -1 | 2 | 11 | 41.90% | ||||
| Yewtree Holding AB | Sweden | 69 | 1 | 2 | -4 | 35.00% | ||||
| 70 | Notes to the | Consolidated Financial Stateme | nts |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Investments in joint ventures at 1 January | 4,917 | 5,376 |
| Additions | 106 | 172 |
| Disposals | -832 | -63 |
| Distributions | 0 | -210 |
| Fair value gains/losses of investments | 280 | -358 |
| Investments in joint ventures at 31 December | 4,470 | 4,917 |
| EUR 1,000 | Assets | Liabilities | Turnover | Profit/ loss |
Owner ship % |
|
|---|---|---|---|---|---|---|
| Maneq Investments Luxembourg S.a.r.l. |
Luxembourg | 5,788 | 1,997 | 0 | 447 | 18.18% |
| Maneq 2004 AB | Sweden | 53 | 1 | 0 | 0 | 41.90% |
| Yewtree Holding AB | Sweden | 12 | 1 | 0 | -9 | 35.00% |
| EUR 1,000 | Assets | Liabilities | Turnover | Profit/ loss |
Owner ship % |
|
|---|---|---|---|---|---|---|
| Maneq Investments Luxembourg S.a.r.l. |
Luxembourg | 5,968 | 2,968 | 0 | 3 | 18.18% |
| Maneq 2004 AB | Sweden | 76 | -1 | 2 | 11 | 41.90% |
| Yewtree Holding AB | Sweden | 69 | 1 | 2 | -4 | 35.00% |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Trade receivables | 2,309 | |
| Loan receivables | 2,766 | 3,143 |
| Total | 5,075 | 3,143 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Loan receivables, gross | 2,781 | 3,143 |
| Loss allowance | -16 | |
| Loan receivables, net | 2,766 | 3,143 |
| EUR 1,000 | 31 Dec 2017 | Charged to Income Statement |
Translation difference |
Charged in equity | 31 Dec 2018 |
|---|---|---|---|---|---|
| Deferred tax assets | |||||
| Accrued differences | 1,751 | 273 | 2 | 0 | 2,026 |
| Total | 1,751 | 273 | 2 | 0 | 2,026 |
| Deferred tax liabilities | |||||
| Accrued differences | 1,139 | 319 | -6 | 0 | 1,452 |
| Unrealised fair value changes | 7,434 | -5,601 | 0 | 1,833 | |
| Total | 8,573 | -5,282 | -6 | 0 | 3,285 |
| Non-current receivables' fair value equals their book value. Loan receivables do not include | ||||||
|---|---|---|---|---|---|---|
| EUR 1,000 | 2018 | 2017 | ||||
| credit-impaired financial assets. Allowance for expected credit losses of loan receivables is | Loan receivables, gross | 2,781 | 3,143 | |||
| presented in the table on the right. | Loss allowance | -16 | ||||
| Loan receivables, net | 2,766 | 3,143 | ||||
| 20. Deferred tax assets and liabilities | ||||||
| Changes in deferred taxes during 2018: | ||||||
| EUR 1,000 | 31 Dec 2017 | Charged to Income Statement |
Translation difference |
Charged in equity | 31 Dec 2018 | |
| Deferred tax assets | ||||||
| Accrued differences | 1,751 | 273 | 2 | 0 | 2,026 | |
| Total | 1,751 | 273 | 2 | 0 | 2,026 | |
| Deferred tax liabilities | ||||||
| Accrued differences | 1,139 | 319 | -6 | 0 | 1,452 | |
| Unrealised fair value changes | 7,434 | -5,601 | 0 | 1,833 | ||
| Total | 8,573 | -5,282 | -6 | 0 | 3,285 | |
| Changes in deferred taxes during 2017: | Charged to | Translation | ||||
| EUR 1,000 | 31 Dec 2016 | Income Statement | difference | Charged in equity | 31 Dec 2017 | |
| Deferred tax assets | ||||||
| Accrued differences | 1,567 | 185 | -1 | 0 | 1,751 | |
| Interest expense on hybrid bond Total |
3,320 4,887 |
0 185 |
-1 | -3,320 -3,320 |
0 1,751 |
|
| Deferred tax liabilities | ||||||
| Accrued differences Unrealised fair value changes |
2,088 7,780 |
-944 -346 |
-5 | 0 0 |
1,139 7,434 |
| 21. Trade and other receivables | Trade and other receivables by currency at end of year | |||||
|---|---|---|---|---|---|---|
| EUR 1,000 | 2018 | 2017 | Trade and other receivables | Amount in for eign currency |
Amount in euros |
proportion |
| Trade receivables | 1,473 | 3,052 | EUR | 9,228 | 73% | |
| Loan receivables | 102 | 455 | USD | 2,560 | 2,236 | 18% |
| Accrued income | 3,617 | 2,255 | SEK | 6,061 | 591 | 5% |
| Other receivables | 7,455 | 2,963 | GBP | 529 | 591 | 5% |
| Total | 12,647 | 8,725 | ||||
| Loss allowance for the expected credit losses of trade receivables, based on a provision ma - trix, is presented below. |
22. Financial assets at fair value through profit or loss EUR 1,000 |
2018 | 2017 | |||
| EUR 1,000 | 2018 | 2017 | Financial assets held for trading | 38,706 | 76,841 | |
| Trade receivables, gross | 1,512 | 3,052 | Other financial assets at fair value through profit or loss | 300 | 303 | |
| Loss allowance Trade receivables, net |
-39 1,473 |
3,052 |
Total | 39,006 | 77,144 | |
| other receivables at amortised cost do not contain credit-impaired items. With regards to contracts with customers, the Group's right to the amount of consideration is unconditional. Therefore, they are presented as receivables and no separate contract asset is presented. Loan receivables include mainly current loan receivables from related parties and other employees. Accrued income includes mainly prepayments. Other receivables mainly include unvoiced sale of services, costs to be re-invoiced, income tax receivables and receivables related to sold financial assets. |
at fair value by the last trade price on active markets on the balance sheet date. Their fair value amounted to EUR 21.0 million as at December 31, 2018. The fair value of investments in funds is determined as the funds' net asset value at the bal - ance sheet date. The fair value of fund investments totaled EUR 6.3 million, of which hedge funds and equity funds totaled EUR 1.1 million and EUR 5.2 million, respectively. The fair value of interest-bearing securities on the balance sheet date was EUR 11.3 million, of which bonds and bond funds totaled EUR 8.9 million and EUR 2.4 million, respectively. The fair value of bonds is based on the last trade price on the balance sheet date or, in an illiquid market, on values determined by the counterparty. The fair value of investments in bond funds is determined as the funds' net asset value at the balance sheet date. Other financial assets at fair value through profit or loss includes shares in external invest - ment fund companies. |
|||||
| 72 | Notes to the | Consolidated Financial Stateme | nts |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Trade receivables, gross | 1,512 | 3,052 |
| Loss allowance | -39 | |
| Trade receivables, net | 1,473 | 3,052 |
| Trade and other receivables | Amount in for eign currency |
Amount in euros |
proportion |
|---|---|---|---|
| EUR | 9,228 | 73% | |
| USD | 2,560 | 2,236 | 18% |
| SEK | 6,061 | 591 | 5% |
| GBP | 529 | 591 | 5% |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Financial assets held for trading | 38,706 | 76,841 |
| Other financial assets at fair value through profit or loss | 300 | 303 |
| Total | 39,006 | 77,144 |
REPORT 2018 GROUP CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Index derivatives, bought call options and sold futures |
||
| Fair value | -50 | 37 |
| Underlying value | -21,207 | -21,962 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Bank accounts | 54,544 | 23,291 |
| Total | 54,544 | 23,291 |
| 1,000 shares | Number of A shares |
Number of B shares |
Total |
|---|---|---|---|
| 31 Dec 2014 | 5,750 | 80,567 | 86,317 |
| 31 Dec 2015 | 5,750 | 80,567 | 86,317 |
| A-shares converted into B-shares | -5,750 | 5,750 | |
| Share subscriptions with options | 29 | 29 | |
| Share issue | 56,967 | 56,967 | |
| 31 Dec 2016 | 143,313 | 143,313 | |
| Share subscriptions with options | 636 | 636 | |
| Share issue | 1,677 | 1,677 | |
| 31 Dec 2017 | 145,626 | 145,626 | |
| Share subscriptions with options | 1,490 | 1,490 | |
| 31 Dec 2018 | 147,116 | 147,116 |
| Derivative contracts The Group uses standardized derivative contracts to make portfolio management more effec - |
EUR 1,000 | Share capital |
Share premium account |
Other reserves |
Total | |||
|---|---|---|---|---|---|---|---|---|
| tive. The fair values of the derivative contracts as well as the underlying values are given in | ||||||||
| the table below. The fair values are adjusted for the corresponding share's dividend income. | 31 Dec 2014 | 772 | 38,968 | 27,175 | 66,915 | |||
| Derivative contracts are recognized at fair value on the date on which the derivative contract | Options | 222 | 222 | |||||
| is entered into and are subsequently remeasured at fair value. The fair value of futures corre - | 31 Dec 2015 | 772 | 38,968 | 27,397 | 67,137 | |||
| sponds to the futures' gain or loss. Hedge accounting is not used. | Share subscriptions with options Options |
22 64 |
22 64 |
|||||
| Share issue | 69,628 | 69,628 | ||||||
| EUR 1,000 | 2018 | 2017 | 31 Dec 2016 | 772 | 38,968 | 97,111 | 136,851 | |
| Index derivatives, bought call options and sold futures |
Share subscriptions with options | 421 | 421 | |||||
| Fair value | -50 | 37 | Options | 96 | 96 | |||
| Underlying value | -21,207 | -21,962 | Share issue | -78 | -78 | |||
| Hybrid bond repayment | -15,000 | -15,000 | ||||||
| 31 Dec 2017 | 772 | 38,968 | 82,550 | 122,290 | ||||
| 23. Cash and bank | Share subscriptions with options | 1,139 | 1,139 | |||||
| Options | 116 | 116 | ||||||
| EUR 1,000 | 2018 | 2017 | Other changes | 7 | 7 | |||
| Bank accounts | 54,544 | 23,291 | 31 Dec 2018 | 772 | 38,968 | 83,812 | 123,552 | |
| Total | 54,544 | 23,291 | ||||||
| Cash and bank includes bank accounts. 24. Share capital and shares |
Other reserves During the financial year 2018, granted stock option subscription rights and subscribed shares were recorded to unrestricted equity fund. During the financial year 2017, in addition to the beforementioned options, the share issue costs relating to the acquisition of Norvestia |
|||||||
| 1,000 shares | Number of A shares |
Number of B shares |
Total | and repaid hybrid bond of EUR 15 million were deducted from the unrestricted equity fund. | ||||
| 31 Dec 2014 | 5,750 | 80,567 | 86,317 | The stock option programs are presented in Table 30. Share-based payments. | ||||
| 31 Dec 2015 | 5,750 | 80,567 | 86,317 | |||||
| A-shares converted into B-shares | -5,750 | 5,750 | Translation difference | |||||
| Share subscriptions with options | 29 | 29 | The foreign currency translation reserve includes translation differences arising from currency | |||||
| Share issue | 56,967 | 56,967 | conversion in the closing of the books for foreign units. | |||||
| 31 Dec 2016 | 143,313 | 143,313 | ||||||
| Share subscriptions with options | 636 | 636 | ||||||
| Share issue | 1,677 | 1,677 | ||||||
| 31 Dec 2017 | 145,626 | 145,626 | ||||||
| Share subscriptions with options | 1,490 | 1,490 | ||||||
| 31 Dec 2018 | 147,116 | 147,116 | ||||||
| 73 | Notes to the | Consolidated Financial Stateme | nts |
| Shareholding | Number of holdings |
% | Number of shares and votes |
% |
|---|---|---|---|---|
| 1–100 | 2,045 | 11.19% | 105,281 | 0.07% |
| 101–1 000 | 7,694 | 42.09% | 3,994,906 | 2.72% |
| 1 001–10 000 | 7,280 | 39.83% | 24,789,619 | 16.85% |
| 10 001–100 000 | 1,159 | 6.34% | 28,214,255 | 19.18% |
| 100 001–1 000 000 | 82 | 0.45% | 20,810,697 | 14.14% |
| 1 000 001– | 18 | 0.10% | 69,208,696 | 47.04% |
| Total | 18,278 | 99.95% | 147,123,454 | 100.00% |
| of which Nominee registered | 10 | 0.06% | 8,854,297 | 6.02% |
| Total shares outstanding | 147,142,163 | 100.00% |
|---|---|---|
| On the book-entry register joint account |
18,709 | 0.00% |
| Dividends paid and proposal for profit distribution ¹⁾ The Board of Directors will propose to the Annual General Meeting to be held on 13 March |
Distribution of shareholdings by number of shares and sector as at 31 December 2017 |
||||
|---|---|---|---|---|---|
| of approx. EUR 17.7 million. | Shareholding | Number of holdings |
% | Number of shares and votes |
% |
| 1–100 | 2,045 | 11.19% | 105,281 | 0.07% | |
| 101–1 000 | 7,694 | 42.09% | 3,994,906 | 2.72% | |
| 1 001–10 000 | 7,280 | 39.83% | 24,789,619 | 16.85% | |
| Redemption obligation clause A shareholder whose share of the entire share capital or the voting rights of the Company to redeem his or her shares and related securities in accordance with the Articles of Associa - tion of CapMan Plc. |
10 001–100 000 | 1,159 | 6.34% | 28,214,255 | 19.18% |
| reaches or exceeds 33.3 % or 50 % has, at the request of other shareholders, the obligation | 100 001–1 000 000 | 82 | 0.45% | 20,810,697 | 14.14% |
| 2019 that a dividend of EUR 0.12 per share will be paid to shreholders, equivalent to a total A dividend of EUR 0.11 per share, total EUR 16.0 million, was paid for the year 2017. The dividend was paid to the shareholders on 23 March 2018. Ownership and voting rights agreements on the share value of CapMan Plc. |
1 000 001– | 18 | 0.10% | 69,208,696 | 47.04% |
| Total of which Nominee registered |
18,278 10 |
99.95% 0.06% |
147,123,454 8,854,297 |
100.00% 6.02% |
|
| As at 31 December 2017 CapMan Plc had no knowledge of agreements or arrangements, re - | On the book-entry register joint account |
18,709 | 0.00% | ||
| lated to the Company's ownership and voting rights, that were apt to have substantial impact | Total shares outstanding | 147,142,163 | 100.00% | ||
| Sector | Number of shares and votes |
% | |||
| Corporations | 31,708,549 | 22.90% | |||
| Households | 70,522,671 | 51.00% | |||
| Non-profit and public sector institutions | 18,756,252 | 13.60% | |||
| Financial and insurance corporations | 17,017,041 | 12.30% | |||
| Non-Finnish holders | 264,644 | 0.20% | |||
| Total | 147,123,454 | 100.00% | |||
| Nominee registered | 8,854,297 | 6.00% | |||
| On the book-entry register joint account | 18,709 | 0.00% | |||
| 1) The company's Board of Directors will propose to the Annual General Meeting that considering | Total shares outstanding | 147,142,163 | 100.00% | ||
| distributable earnings, the dividend per share for 2018 would be EUR 0.06 instead of the originally proposed EUR 0.12. The Board of Directors will issue a Notice to an Extraordinary General Meeting to be convened on 25 March 2019 to decide on the equity repayment of EUR 0.06 per share. The total distribution for 2018 would remain unchanged at EUR 0.12 per share, or a total of approx. MEUR 17.7. |
Source: EuroClear Finland Ltd, as at 31 December 2018. Figures are based on the total number of shares 147 142 163 and total number of shareholders 18,278. CapMan Plc had 26,299 shares as at 31 Decem - ber 2018. |
||||
| 1) The company's Board of Directors will propose to the Annual General Meeting that considering |
|---|
| distributable earnings, the dividend per share for 2018 would be EUR 0.06 instead of the originally |
| proposed EUR 0.12. The Board of Directors will issue a Notice to an Extraordinary General Meeting |
| to be convened on 25 March 2019 to decide on the equity repayment of EUR 0.06 per share. The total |
| distribution for 2018 would remain unchanged at EUR 0.12 per share, or a total of approx. MEUR 17.7. |
| CapMan's largest shareholders as at 31 December 2017 | 25. Interest-bearing loans and borrowings - Non-current | ||||
|---|---|---|---|---|---|
| Number of shares and votes |
Proportion of shares, % |
EUR 1,000 | 2018 | 2017 | |
| Mandatum Henkivakuutusosakeyhtiö | 10,737,228 | 7.30 | Bank loans | - | 5,489 |
| Keskinäinen Eläkevakuutusyhtiö Ilmarinen | 10,464,415 | 7.11 | Senior bond | 49,705 | 29,737 |
| OY Inventiainvest AB2) + Ari Tolppanen1) | 7,032,865 | 4.78 | Multi-issuer bond | - | 9,989 |
| OY Inventiainvest AB2) | 7,024,794 | 4.77 | Total | 49,705 | 45,215 |
| Tolppanen Ari1) | 8,071 | 0.01 | |||
| Laakkonen Mikko Kalervo | 6,378,320 | 4.34 | The bank loan was fully repaid in 2018. | ||
| Keskinäinen työeläkevakuutusyhtiö Varma | 3,675,215 | 2.50 | |||
| Joensuun Kauppa Ja Kone Oy | 3,511,853 | 2.39 | |||
| Vesasco Oy | 3,088,469 | 2.10 | CapMan issued a EUR 30 million fixed-rate unsecured senior bond to institutional investors | ||
| Valtion Eläkerahasto | 2,500,000 | 1.70 | in October 2015. The bond was originally scheduled to mature in four years on 15 October | ||
| Winsome Oy2) + Tuomo Raasio1) | 2,130,043 | 1.45 | 2019 and had a fixed coupon interest rate of 4.2% per annum, but an early redemption was | ||
| Winsome Oy2) | 2,076,299 | 1.41 | made in April 2018. At the same time, CapMan issued senior unsecured notes in the princi - | ||
| Raasio Tuomo1) | 53,744 | 0.04 | pal amount of EUR 50 million, which will mature on 16 April 2013 and carry a fixed annual | ||
| Heiwes Oy | 2,094,480 | 1.42 | interest of 4.125%. The coupon interest is paid semi-annually. | ||
| Momea Invest Oy | 2,079,222 | 1.41 | |||
| Laakkonen Hannu | 1,992,742 | 1.35 | The multi-issuer bond, EUR 10 million guaranteed by Garantia Insurance Company Ltd | ||
| Sijoitusrahasto Taaleritehdas Mikro Markka | 1,500,000 | 1.02 | matures in 18 June 2019 and has been transferred to current interest-bearing loans and | ||
| Oy G.W.Sohlberg Ab | 1,356,000 | 0.92 | borrowings. | ||
| Laine Capital Oy | 1,287,995 | 0.88 | |||
| Keskinäinen Vakuutusyhtiö Kaleva | 1,138,200 | 0.77 | |||
| K. Hartwall Invest Oy Ab | 1,000,000 | 0.68 | 26. Trade and other payables - Current | ||
| Immonen Jukka Kalevi | 974,544 | 0.66 | EUR 1,000 | 2018 | 2017 |
| Mandatum Life | 867,958 | 0.59 | |||
| Oy Nissala Ab2) + Andreas Tallberg1) | 804,530 | 0.55 | Trade payables | 1,247 | 635 |
| Oy Nissala Ab2) | 793,000 | 0.54 | Advance payments received | 26 | 170 |
| Tallberg Andreas1) | 11,530 | 0.01 | Accrued expenses | 13,784 | 15,879 |
| Total | 64,614,079 | 43.92% | Other liabilities | 1,751 | 10,153 |
| Total | 16,808 | 26,837 | |||
| Nominee registered3) | 8,854,297 | 6.02% | |||
| Shareholdings of management and employees3) | 4,725,964 | 3.21% | The maturity of trade payables is normal terms of trade and don't include overdue payments. | ||
| CapMan has not received any flagging notifications during year 2018. An up-date information | Advance payments received are liabilities based on customer contracts. | ||||
| of all flagging notifications can be found at www.capman.com. | |||||
| 1) Employed by CapMan. | |||||
| 2) CapMan employee who exercises controlling power in the aforementioned company but who does not | |||||
| own CapMan shares directly. | |||||
| 3) Shareholders among the 200 largest shareholders of the Company. | |||||
| 75 | Notes to the | Consolidated Financial Stateme | nts |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Bank loans | - | 5,489 |
| Senior bond | 49,705 | 29,737 |
| Multi-issuer bond | - | 9,989 |
| Total | 49,705 | 45,215 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Trade payables | 1,247 | 635 |
| Advance payments received | 26 | 170 |
| Accrued expenses | 13,784 | 15,879 |
| Other liabilities | 1,751 | 10,153 |
| Total | 16,808 | 26,837 |
| Trade and other liabilities | Amount in foreign currency |
Amount in euros |
Proportion |
|---|---|---|---|
| EUR | 15,606 | 93% | |
| SEK | 12,004 | 1,171 | 7% |
| GBP | 28 | 31 | 0% |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Bank loans | 0 | 3,000 |
| Multi-issuer bond | 9,989 | 0 |
| Total | 9,989 | 3,000 |
| Accrued expenses include a clawback liability of EUR 7.6 million (2016: EUR 7.6 million) relat - | 28. Financial assets and liabilities | ||||||
|---|---|---|---|---|---|---|---|
| ing to potential repayment of carried interest to CapMan Real Estate I Fund. Liability is related | |||||||
| to the exit in 2007. The other significant items in accrued expenses relate to accrued salaries and social benefit expenses. |
Financial assets | ||||||
| 2018 | Balance sheet | ||||||
| Trade and other liabilities by currency at end of year | EUR 1,000 | Note | value | Fair value | |||
| Trade and other liabilities | Amount in foreign currency |
Amount in euros |
Proportion | Investments at fair value through profit or loss |
|||
| Investments in funds | 18 | 80,583 | 80,583 | ||||
| EUR | 15,606 | 93% | Growth equity investments | 18 | 0 | 0 | |
| SEK | 12,004 | 1,171 | 7% | Other financial assets* | 18 | 2,548 | 2,548 |
| GBP | 28 | 31 | 0% | Investments in joint ventures | 18 | 4,470 | 4,470 |
| Loan receivables | 19 | 5,075 | 5,075 | ||||
| Trade and other receivables | 21 | 12,647 | 12,647 | ||||
| Financial assets at fair value | 22 | 39,006 | 39,006 | ||||
| 27. Interest-bearing loans and borrowings - Current | 54,544 | ||||||
| Cash and bank | 23 | 54,544 | |||||
| EUR 1,000 Bank loans Multi-issuer bond |
2018 0 9,989 |
2017 3,000 0 |
Total *Other financial assets consists of financial assets that are specifically classified as investments at fair value through profit and loss |
198,873 | 198,873 | ||
| Total | 9,989 | 3,000 | 2017 | Balance sheet | |||
| The bank loan was fully repaid in 2018. The multi-issuer bond, EUR 10 million guaranteed by Garantia Insurance Company Ltd, has an annual coupon interest rate of 1.85% and it |
EUR 1,000 Investments at fair value through profit |
Note | value | Fair value | |||
| or loss | |||||||
| Investments in funds | 18 | 58,264 | 58,264 | ||||
| matures in 18 June 2019. | Growth equity investments | 18 | 28,840 | 28,840 | |||
| Other financial assets | 18 | 142 | 142 | ||||
| Investments in joint ventures Loan receivables |
18 19 |
4,917 3,143 |
4,917 3,143 |
||||
| Trade and other receivables | 21 | 8,725 | 8,725 | ||||
| Financial assets at fair value | 22 | 77,144 | 77,144 | ||||
| Cash and bank | 23 | 23,291 | 23,291 |
| EUR 1,000 | Note | Balance sheet value |
Fair value |
|---|---|---|---|
| Investments at fair value through profit or loss |
|||
| Investments in funds | 18 | 58,264 | 58,264 |
| Growth equity investments | 18 | 28,840 | 28,840 |
| Other financial assets | 18 | 142 | 142 |
| Investments in joint ventures | 18 | 4,917 | 4,917 |
| Loan receivables | 19 | 3,143 | 3,143 |
| Trade and other receivables | 21 | 8,725 | 8,725 |
| Financial assets at fair value | 22 | 77,144 | 77,144 |
| Cash and bank | 23 | 23,291 | 23,291 |
| Total | 204,466 | 204,466 |
| 2018 | |||
|---|---|---|---|
| EUR 1,000 | Note | Balance sheet value |
Fair value |
| Non-current liabilities | 25 | 49,705 | 49,705 |
| Trade and other liabilities | 26 | 16,808 | 16,808 |
| Current liabilities | 9,989 | 9,989 | |
| Total | 76,502 | 76,502 |
| EUR 1,000 | Note | Balance sheet value |
Fair value |
|---|---|---|---|
| Non-current liabilities | 26 | 45,215 | 45,215 |
| Trade and other liabilities | 27 | 26,837 | 27,651 |
| Current liabilities | 3,000 | 3,000 | |
| Total | 75,052 | 75,052 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Cash and cash equivalents | 54,544 | 23,594 |
| Borrowings - repayable within one year | -9,989 | -3,000 |
| Borrowings - repayable after one year | -49,705 | -45,215 |
| Net debt | -5,150 | -24,621 |
| Cash and cash equivalents | 54,544 | 23,594 |
| Gross debt - variable interest rates | 0 | -8,489 |
| Gross debt - fixed interest rates | -59,694 | -39,726 |
| Net debt | -5,150 | -24,621 |
| EUR 1,000 | Cash | Borrow due within 1 year |
Borrow due after 1 year |
Total |
|---|---|---|---|---|
| Net debt as at 1 Jan 2018 | 23,594 | -3,000 | -45,215 | -24,621 |
| Cash flows | 30,950 | -6,989 | -4,490 | 19,471 |
| Net debt as at 31 Dec 2018 | 54,544 | -9,989 | -49,705 | -5,150 |
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Other hire purchase commitments | ||
| Within one year | ||
| After one but not more than five years | 919 | 1,027 |
| After five years | 2,213 | 2,483 |
| Total | 40 | 502 |
| Yhteensä | 3,172 | 4,012 |
| Financial liabilities | 29. Commitments and contingent liabilities | ||||||
|---|---|---|---|---|---|---|---|
| 2018 | |||||||
| EUR 1,000 | Note | Balance sheet value |
Fair value | Leasing agreements - CapMan Group as lessee EUR 1,000 |
2018 | 2017 | |
| Non-current liabilities | 25 | 49,705 | 49,705 | ||||
| Trade and other liabilities | 26 | 16,808 | 16,808 | Other hire purchase commitments Within one year |
|||
| Current liabilities | 9,989 | 9,989 | After one but not more than five years | 919 | 1,027 | ||
| Total | 76,502 | 76,502 | After five years | 2,213 | 2,483 | ||
| Total | 40 | 502 | |||||
| Yhteensä | 3,172 | 4,012 | |||||
| 2017 | |||||||
| EUR 1,000 | Note | Balance sheet value |
Fair value | The Group has leased the offices. The rental agreements are typically for 1 to 7 years. | |||
| Non-current liabilities | 26 | 45,215 | 45,215 | ||||
| Trade and other liabilities | 27 | 26,837 | 27,651 | Securities and other contingent liabilities | |||
| Current liabilities | 3,000 | 3,000 | EUR 1,000 | 2018 | 2017 | ||
| Total | 75,052 | 75,052 | Contingencies for own commitment | ||||
| Pledged deposit for own commitment | 32,120 | ||||||
| Business mortgage | 30,000 | ||||||
| Net debt | Pledged securities | 2,460 | 2,799 | ||||
| EUR 1,000 | 2018 | 2017 | Pledged cash and bank | 5,499 | 846 | ||
| Cash and cash equivalents | 54,544 | 23,594 | |||||
| Borrowings - repayable within one year | -9,989 | -3,000 | Other contingent liabilities | ||||
| Borrowings - repayable after one year | -49,705 | -45,215 | Bank guarantee counter-obligation | 10,500 | |||
| -5,150 | -24,621 | Remaining commitments to funds | |||||
| by investment area | |||||||
| Net debt | 13,178 | ||||||
| Cash and cash equivalents | 54,544 | 23,594 | |||||
| Gross debt - variable interest rates | 0 | -8,489 | Buyout | 11,883 | |||
| Gross debt - fixed interest rates | -59,694 | -39,726 | Credit Russia |
1,846 1,123 |
|||
| Net debt | -5,150 | -24,621 | Real Estate | 9,130 | |||
| Other investment areas | 3,610 | ||||||
| Funds of funds | 713 | 2,316 1,477 10,584 3,272 717 |
|||||
| Borrow due | Borrow due | Growth Equity* | 14,500 | ||||
| EUR 1,000 | Cash | within 1 year | after 1 year | Total | Infra | 29,829 | 26,626 |
| Net debt as at 1 Jan 2018 Cash flows |
23,594 30,950 |
-3,000 -6,989 |
-45,215 -4,490 |
-24,621 19,471 |
External private equity funds Total |
25,409 98,043 |
8,911 67,081 |
| CapMan estimates that EUR 75-85 million of the remaining commitments will be called in the next 4 years, particularly due to unused investment capacity of the older funds. |
The fair value of the stock option programs has been measured at the grant date and is ex - pensed on a straight-line basis over the vesting period. Fair value of options at the grant date is determined in accordance with the Black&Scholes option pricing model. |
|---|---|
| 30. Share-based payments | |
| The total expense recognised for the period arising from share-based payment transactions | |
| CapMan has an investment based long-term share-based incentive plan and two stock option | amounted to EUR 0.6 million. There were no liabilities arising from share-based payment |
| programs, the stock option program 2013 and the stock option program 2016. These pro - | transactions. |
| grams are used to commit key individuals and executives to the company and reinforce the | |
| alignment of interests of key individuals and executives and CapMan shareholders. In the | Key information on the incentive-based incentive plan and stock option programs is present - |
| investment based long-term share-based incentive plan the participants are committed to | ed in the following tables. |
| shareholder value creation by investing a significant amount into the CapMan Plc share. | |
| Investment-based incentive plan | |
| The investment-based long-term incentive plan includes one performance period. The per - | |
| formance period commenced on 1 April 2018 and will end on 31 March 2021. The partici - | Grant date 27 Apr 2018 |
| pants may earn a matching reward and a performance-based reward from the performance | Vesting period starts 27 Apr 2018 |
| period. The prerequisite for receiving reward on the basis of the plan is that a participant | Vesting period ends 31 Aug 2021 |
| acquires company's shares or allocates previously owned company's shares up to the number | Maximum number of shares granted 5 232 500 |
| determined by the Board of Directors. The performance-based reward from the plan is based | Grant date share price, EUR 1.5872 |
| on the company share's Total Shareholder Return (TSR) and on a participant's employment | Assumption for the Total Shareholder Return, per annum 8% |
| or service upon reward payment. The rewards from the Plan will be paid fully in the compa - | Present value of the expected dividends, EUR 0.33 |
| ny's shares in 2021 and the plan is thus equity-settled. The Board shall resolve whether new | Forfeiture rate assumption 10% |
| Shares or existing Shares held by the Company are given as reward. The target group of the | Fair value of the plan as at the grant date, EUR million 2.2 |
| Plan consists of approximately 20 people, including the members of the Management Group | Expense recorded during the financial year, EUR million 0.5 |
| The fair value of the investment-based incentive plan has been measured at the grant date | Number of participants in the plan 16 |
| and is expensed on a straight-line basis over the vesting period. Expected dividends and forfeiture rate have been incorporated into the measurement of the fair value as decreasing |
|
| factors. | |
| 78 | Notes to the Consolidated Financial Stateme nts |
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| Stock option program 2016 | |||
|---|---|---|---|
| Stock option 2016A | Stock option 2016B | Stock option 2016C | |
| Stock options, number | 1,410,000 | 1,410,000 | 1,410,000 |
| Entitlement to subscribe for B shares | 1,410,000 | 1,410,000 | 1,410,000 |
| Share subscription period begins | 01 May 2019 | 01 May 2020 | 01 May 2021 |
| Share subscription period ends | 30 Apr 2021 | 30 Apr 2022 | 30 Apr 2023 |
| Share subscription price | Trade volume weighted average price of the B share on the Nasdaq OMX Helsinki 1.4.-31.5.2016 with an addition of ten (10) per cent less dividends i.e. €0.84 |
Trade volume weighted average price of the B share on the Nasdaq OMX Helsinki 1.4.-31.5.2017 with an addition of ten (10) per cent less dividends |
Trade volume weighted average price of the B share on the Nasdaq OMX Helsinki 1.4.-31.5.2018 with an addition of ten (10) per cent less dividends |
| Assumptions used in the Black&Scholes model | |||
| Expected volatility | 21.56% | - | |
| Risk-free interest | 0.0 % | - |
| Stock option programs effective during the financial year | Stock option program 2016 | ||
|---|---|---|---|
| Stock option 2016A | Stock option 2016B | Stock option 2016C | |
| Stock options, number | 1,410,000 | 1,410,000 | 1,410,000 |
| Entitlement to subscribe for B shares | 1,410,000 | 1,410,000 | 1,410,000 |
| Share subscription period begins | 01 May 2019 | 01 May 2020 | 01 May 2021 |
| Share subscription period ends | 30 Apr 2021 | 30 Apr 2022 | 30 Apr 2023 |
| Share subscription price | Trade volume weighted average price of the B share on the Nasdaq OMX Helsinki 1.4.-31.5.2016 with an addition of ten (10) per cent less dividends i.e. €0.84 |
Trade volume weighted average price of the B share on the Nasdaq OMX Helsinki 1.4.-31.5.2017 with an addition of ten (10) per cent less dividends |
Trade volume weighted average price of the B share on the Nasdaq OMX Helsinki 1.4.-31.5.2018 with an addition of ten (10) per cent less dividends |
| Assumptions used in the Black&Scholes model | |||
| Expected volatility | 21.56% | - | |
| Risk-free interest | 0.0 % | - | |
| Stock option program 2013 | |||
| Stock option 2013A | Stock option 2013B | Stock option 2013C | |
| Stock options, number | 1,410,000 | 1,410,000 | 1,410,000 |
| Entitlement to subscribe for B shares | 1,410,000 | 1,410,000 | 1,410,000 |
| Share subscription period begins | 01 May 2016 | 01 May 2017 | 01 May 2018 |
| Share subscription period ends | 30 Apr 2018 | 30 Apr 2019 | 30 Apr 2020 |
| Share subscription price | Trade volume weighted average price of the B share on the Nasdaq OMX Helsinki 1.4.-31.5.2014 with an addition of ten (10) per cent less dividends i.e. €0.83 |
Trade volume weighted average price of the B share on the Nasdaq OMX Helsinki 1.4.-31.5.2015 with an addition of ten (10) per cent less dividends i.e. €0.85 |
|
| Assumptions used in the Black&Scholes model | |||
| Expected volatility | 18.7 % | 20.5 % | 20.5 % |
| Risk-free interest | 0.0 % | 0.0 % | 0.0 % |
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| Changes in option rights during the financial year | ||||||
|---|---|---|---|---|---|---|
| Stock option 2013A |
Stock option 2013B |
Stock option 2013C |
Stock option 2016A |
Stock option 2016B |
Stock option 2016C |
|
| Initial amount of option rights, pcs | 1,410,000 | 1,410,000 | 1,410,000 | 1,410,000 | 1,410,000 | 1,410,000 |
| Amount of granted option rights, pcs | 1,325,000 | 1,268,334 | 1,277,291 | 673,958 | 0 | 0 |
| Outstanding at the beginning of the reporting period, pcs | 544,420 | 1,185,358 | 1,227,291 | 623,958 | - | |
| Changes during the period: | ||||||
| Granted | 0 | 50,000 | 50,000 | 50,000 | - | |
| Exercised | 544,419 | 633,413 | 189,995 | 0 | - | |
| Weighted average subscription price, € | 0.62 | 0.85 | 0.85 | - | - | |
| Weighted-average share price during the subsicription period in the financial year |
1.64 | 1.60 | 1.54 | - | - | |
| Outstanding at the end of the reporting period, pcs | 0 | 601,945 | 1,087,296 | 673,958 | - | |
| Exercised by the end of the reporting period, pcs | 1,324,599 | 666,389 | 189,995 | 0 | - | |
| Option rights, % of shares and votes, if all outstanding granted stock options would be exercised |
0.0 % | 0.4 % | 0.7 % | 0.5 % | - | |
| 80 | Notes to the | Consolidated Financial Stateme | nts |
| 31. Related party disclosures | Parent | Group companies | Group ownership of shares, % |
Parent company ownership of shares, % |
|||
|---|---|---|---|---|---|---|---|
| Group ownership |
company ownership |
CapMan Endowment GP Oy | Finland | 100% | 100% | ||
| Group companies | of shares, % | of shares, % | CapMan Collection Oy | Finland | 100% | 100% | |
| CapMan Plc, parent company | Finland | United | |||||
| CapMan Capital Management Oy | Finland | 100% | 100% | CapMan Real Estate UK Limited | Kingdom | 100% | |
| CapMan Sweden AB | Sweden | 100% | 100% | Nest Capital 2015 GP Oy | Finland | 100% | 100% |
| CapMan AB | Sweden | 100% | 100% | Dividum AB | Sweden | 100% | |
| CapMan (Guernsey) Limited | Guernsey | 100% | 100% | Valo Advisors Oy | Finland | 100% | 100% |
| CapMan Mezzanine (Guernsey) Limited | Guernsey | 100% | 100% | Valo Fund Management Oy | Finland | 100% | |
| CapMan (Guernsey) Buyout VIII GP Limited | Guernsey | 100% | 100% | Kokoelmakeskus GP Oy | Finland | 100% | 100% |
| CapMan (Sweden) Buyout VIII GP AB | Sweden | 100% | 100% | Norventures Oy | Finland | 100% | |
| CapMan Classic GP Oy | Finland | 100% | 100% | CapMan Growth Equity Oy | Finland | 100% | |
| CapMan Real Estate Oy | Finland | 100% | 100% | CapMan Nordic Real Estate Manager II S.A. | Luxembourg | 100% | 100% |
| Dividum Oy | Finland | 100% | 100% | CapMan Infra Management Oy | Finland | 70% | 70% |
| CapMan RE I GP Oy | Finland | 100% | 100% | CapMan Infra Lux Management S.á.r.l. | Luxembourg | 70% | |
| CapMan RE II GP Oy | Finland | 100% | 100% | CapMan Lynx Holding SCA | Luxembourg | 70% | |
| CapMan (Guernsey) Life Science IV GP Limited | Guernsey | 100% | 100% | CapMan Lynx S.á.r.l. | Luxembourg | 70% | |
| CapMan (Guernsey) Technology 2007 GP Limited | Guernsey | 100% | 100% | CapMan Growth Equity 2017 GP Oy | Finland | 100% | 100% |
| CapMan (Sweden) Technology Fund 2007 GP AB | Sweden | 100% | 100% | Scala Fund Advisory Oy | Finland | 60% | 60% |
| CapMan Hotels RE GP Oy | Finland | 100% | 100% | CapMan Foil S.á.r.l. | Luxembourg | 70% | |
| CapMan Public Market Manager S.A. | Luxembourg | 100% | 100% | CapMan Nordic Infrastructure Manager S.á.r.l. | Luxembourg | 100% | 100% |
| CapMan Private Equity Advisors Limited | Cyprus | 100% | 100% | CapMan Infra Lynx GP Oy | Finland | 70% | |
| CapMan (Guernsey) Russia GP Limited | Guernsey | 100% | 100% | CapMan Buyout XI GP S.á.r.l | Luxembourg | 100% | 100% |
| CapMan (Guernsey) Investment Limited | Guernsey | 100% | 100% | CapMan AIFM Oy | Finland | 100% | 100% |
| CapMan (Guernsey) Buyout IX GP Limited | Guernsey | 100% | 100% | ||||
| CapMan Fund Investments SICAV-SIF | Luxembourg | 100% | 100% | Investments accounted for using the equity method are presented in Table 17. Investments | |||
| CapMan Mezzanine V Manager S.A. | Luxembourg | 100% | 100% | accounted for using the equity method. | |||
| CapMan (Guernsey) Buyout X GP Limited | Guernsey | 100% | 100% | ||||
| CapMan (Guernsey) Russia II GP Limited | Guernsey | 100% | 100% | The investments in joint ventures are presented in Table 18. Investments at fair value through | |||
| Maneq 2012 AB | Sweden | 100% | 100% | profit and loss. | |||
| CapMan Nordic Real Estate Manager S.A. | Luxembourg | 100% | 100% | ||||
| CapMan Buyout X GP Oy | Finland | 100% | 100% | Commitments to related parties | 2018 | 2017 | |
| Commitments to Maneq funds | 3,797 | 3,903 |
| Group companies | Group ownership of shares, % |
Parent company ownership of shares, % |
|
|---|---|---|---|
| CapMan Endowment GP Oy | Finland | 100% | 100% |
| CapMan Collection Oy | Finland | 100% | 100% |
| CapMan Real Estate UK Limited | United Kingdom |
100% | |
| Nest Capital 2015 GP Oy | Finland | 100% | 100% |
| Dividum AB | Sweden | 100% | |
| Valo Advisors Oy | Finland | 100% | 100% |
| Valo Fund Management Oy | Finland | 100% | |
| Kokoelmakeskus GP Oy | Finland | 100% | 100% |
| Norventures Oy | Finland | 100% | |
| CapMan Growth Equity Oy | Finland | 100% | |
| CapMan Nordic Real Estate Manager II S.A. | Luxembourg | 100% | 100% |
| CapMan Infra Management Oy | Finland | 70% | 70% |
| CapMan Infra Lux Management S.á.r.l. | Luxembourg | 70% | |
| CapMan Lynx Holding SCA | Luxembourg | 70% | |
| CapMan Lynx S.á.r.l. | Luxembourg | 70% | |
| CapMan Growth Equity 2017 GP Oy | Finland | 100% | 100% |
| Scala Fund Advisory Oy | Finland | 60% | 60% |
| CapMan Foil S.á.r.l. | Luxembourg | 70% | |
| CapMan Nordic Infrastructure Manager S.á.r.l. | Luxembourg | 100% | 100% |
| CapMan Infra Lynx GP Oy | Finland | 70% | |
| CapMan Buyout XI GP S.á.r.l | Luxembourg | 100% | 100% |
| CapMan AIFM Oy | Finland | 100% | 100% |
| Commitments to related parties | 2018 | 2017 |
|---|---|---|
| Commitments to Maneq funds | 3,797 | 3,903 |
| Management remuneration | Pension costs | |||||||
|---|---|---|---|---|---|---|---|---|
| EUR 1,000 | 2018 | 2017 | Pension costs | Additional pension costs | ||||
| Salaries and other short | EUR 1,000 | 2018 | 2017 | 2018 | 2017 | |||
| term employee benefits | 1,287 | 1,899 | CEO | |||||
| Other long-term benefits | 344 | Heikki Westerlund | 145 | 30 | ||||
| Share-based payments | 261 | 205 | Joakim Frimodig | 122 | 58 | 37 | 21 | |
| Total* | 1,548 | 2,448 | ||||||
| Remuneration and fees | Management remuneration includes members of the board, CEO and management group. | |||||||
| CEO | The CEO has a mutual notice period of six months and he will be entitled to a severance fee | |||||||
| Heikki Westerlund | Until 3 May 2017 | 1,231 | of 12 months' salary, if his employment is terminated by the company. | |||||
| Share-based payments | ||||||||
| Joakim Frimodig | From 4 May 2017 | 376 | 231 | The CEO and some of the Management Group members are covered by additional pay - | ||||
| Share-based payments | 186 | 105 | ment-based pension insurance. The retirement age of the CEO is 63 years. | |||||
| Total | 562 | 1,567 | In 2018 the Management Group members were granted 0 stock options (2017: 412 500). | |||||
| The stock options granted to the management are subject to the same terms as for stock | ||||||||
| Members of the Board | options granted to employees. The Management Group members have allocated a total of | |||||||
| Claes de Neergaard | Until 14 March 2017 | 14 | 690 000 shares to the investment based long term incentive plan. | |||||
| Dirk Beeusaert | From 16 March 2016 to 14 March 2017 |
13 | ||||||
| Andreas Tallberg | From 15 March 2017 | 67 | 55 | |||||
| Karri Kaitue | Until 13 March 2018 | 17 | 66 | |||||
| Nora Kerppola | Until 13 March 2018 | 18 | 53 | |||||
| Ari Tolppanen | 43 | 50 | ||||||
| Mammu Kaario | From 15 March 2017 | 52 | 38 | |||||
| Catarina Fagerholm | From 14 March 2018 | 35 | ||||||
| Eero Heliövaara | From 14 March 2018 | 35 | ||||||
| *Excluding the CEO | ||||||||
| 82 | Notes to the | Consolidated Financial Stateme | nts |
| Pension costs | Additional pension costs | ||||
|---|---|---|---|---|---|
| EUR 1,000 | 2018 | 2017 | 2018 | 2017 | |
| CEO | |||||
| Heikki Westerlund | 145 | 30 | |||
| Joakim Frimodig | 122 | 58 | 37 | 21 |
The purpose of financial risk management is to ensure that the Group has adequate and effectively utilised financing as regards the nature and scope of the Group's business. The objective is to minimise the impact of negative market development on the Group with consideration for cost-efficiency. The financial risk management has been centralised and the Group's CFO is responsible for financial risk management and control.
The policy of the management is to constantly monitor cash flow forecasts and the Group's liquidity position on behalf of all Group companies. In addition, the Group's principles for liquidity management include rolling 12-month loan covenant assessments. The loan covenants are related to equity ratio and net gearing. During the financial year all the loan covenants have been fullfilled.
The Group has a Monitoring team, which monitors the performance and the price risk of the investment portfolio (financial assets entered at fair value through profit and loss) inde pendently and objectively of the investment teams. The Monitoring team is responsible for reviewing the monthly reporting and forecasts for portfolio companies. Valuation proposals made by the case investment professionals are examined by the Monitoring team and subse quently approved by the Valuation Committee, which comprises the Chairman of the Investee Committee, the Group CFO and Heads of investment teams.
The Group's cash flow is a mix of cash flow from management fees received and volatile car ried interest income. The third main component in liquidity management is the timing of the capital calls to the funds and the proceeds received from fund investments.
Management fees received from the funds are based on long-term agreements and are target ed to cover the operational expenses of the Group. Management fees are relatively predicta ble for the coming 12 months.
The timing and receipt of carried interest generated by the funds is uncertain and will con tribute to the volatility of the results. Changes in investment and exit activity levels may have a significant impact on cash flows of the Group. A single investment or exit may change the cash flow situation completely and the exact timing of the cash flow is difficult to predict.
The CapMan Real Estate I fund transferred into carry in 2007. From the EUR 27.4 million of carried interest paid in 2007 approximately EUR 6.4 million was not recognised in the reve nue in 2007 but instead left as a liability in case that some of the carried interest would have to be returned to the investors in the future. CapMan's share of the entered carried interest was approx. EUR 13.5 million and the share of minority owners was approx. EUR 7.5 million. In 2014, the clawback risk was reassessed and the related liability decreased by EUR 1.2 million to EUR 5.2 million. However, in light of the current market situation, it is considered unlikely that any further carried interest would be paid from the CapMan Real Estate I fund. The clawback risk was reassessed again in 2016, and as a result, the related liability was increased by EUR 2.3 million to EUR 7.5 million. After the reassessment of the clawback risk in 2017 the liability was increased by EUR 0.1 million. The current clawback liability of EUR 7.6 million, including the minority owners' share, is estimated to be adequate to cover the possible return of carried interest. 83 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
CapMan has made commitments to the funds it manages. As at December 31, 2018, the undrawn commitments to the funds amounted to EUR 98.0 million (67.1) and the financing capacity available (cash and third party financing facilities) amounted to EUR 74.5 million (33.3).
CapMan issued a EUR 30 million fixed-rate unsecured senior bond to institutional investors in October 2015. The bond was originally scheduled to mature in four years on 15 October 2019 and had a fixed coupon interest rate of 4.2% per annum, but an early redemption was made in April 2018. At the same time, CapMan issued senior unsecured notes in the princi pal amount of EUR 50 million, which will mature on 16 April 2023 and carry a fixed annual interest of 4.125%. The coupon interest is paid semi-annually.
Furthermore, CapMan Plc has a EUR 10 million multi-issuer bond guaranteed by Garantia In surance Company Ltd. The Bond has an annual coupon interest rate of 1.85% and it matures in 18 June 2019.
CapMan repaid its remaining bank loan of EUR 8.5 million during 2018. CapMan has an unused long-term credit facility of EUR 20 million available.
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| Maturity analysis | |||||
|---|---|---|---|---|---|
| 31 December 2018 | |||||
| EUR 1,000 | Due within 3 months | Due between 3 and 12 months |
Due between 1 and 3 years |
Due between 3 and 5 years |
Due later |
| Bonds | 9,989 | 49,705 | |||
| Bank loan | |||||
| Accounts payable | 1,247 | ||||
| Interests, bonds | 2,247 | 6,188 | 1,031 | ||
| Interests, bank loan | |||||
| Commitments to funds | 1,428 | 12,693 | 1,218 | 3,482 | 79,197 |
| Commitments to Maneq -funds | 3,797 | ||||
| Clawback | 7,607 | ||||
| 31 December 2017 | |||||
| EUR 1,000 | Due within 3 months | Due between 3 and 12 months |
Due between 1 and 3 years |
Due between 3 and 5 years |
Due later |
| Bonds | 0 | 29,737 | |||
| Bank loan | 3,000 | 5,489 | |||
| Accounts payable | 635 | ||||
| Interests, bonds | 1,440 | 1,440 | |||
| Interests, bank loan | 53 | 140 | 68 | ||
| Commitments to funds | 2,664 | 16,793 | 5,614 | 212 | 41,798 |
| Commitments to Maneq -funds | 3,903 | ||||
| Clawback | 7,607 | ||||
| 84 | Notes to the | Consolidated Financial Stateme nts |
| EUR 1,000 | Due within 3 months | Due between 3 and 12 months |
Due between 1 and 3 years |
Due between 3 and 5 years |
Due later |
|---|---|---|---|---|---|
| Bonds | 0 | 29,737 | |||
| Bank loan | 3,000 | 5,489 | |||
| Accounts payable | 635 | ||||
| Interests, bonds | 1,440 | 1,440 | |||
| Interests, bank loan | 53 | 140 | 68 | ||
| Commitments to funds | 2,664 | 16,793 | 5,614 | 212 | 41,798 |
| Commitments to Maneq -funds | 3,903 | ||||
| Clawback | 7,607 |
Interest-bearing liabilities have a fixed interest rate. Exposure to interest rate risk would arise principally from the long-term credit facility of EUR 20 million with a floating interest rate. However, it has not been used during the financial year.
The annual coupon rate of the multi-issuer bond is 1.85%, and the interest is paid annually. The senior bond issued in April 2018 has an annual coupon rate of 4.125%, and the interest is paid semi-annually.
| EUR 1,000 | 2018 | 2017 |
|---|---|---|
| Floating rate | 0 | 8,489 |
| Fixed rate | 59,694 | 39,726 |
| Total | 59,694 | 48,215 |
Credit risks arise from changes in the result caused by counterparties failing to meet their commitments. Money market investments and bonds therefore include credit risks, and to minimize these, the company has diversified its investments. As money market investments are short-term, and both money market investments and bonds are made in Nordic listed compa nies, these risks are regarded as small.
As at December 31, 2018, the group had EUR 8.9 million invested in bonds. The longest ma turity of these investments was 3.2 years and the average maturity was 1.7 years. None of the investments were past due.
Group's other credit risks relate to trade, loan and other receivables recognised at amortised cost. The maximum credit loss of these receivables is the carrying amount of the receivable in question. There are no collaterals relating to the receivables and there have been no credit losses in the past. More information on the expected credit losses of receivables is presented in notes 19 and 21.
Group does not have financial guarantee contracts and thus no related credit risk. Group's loan commitments are low and thus also their credit risk is deemed low.
In June 2013, CapMan transferred its ownership in 2005-2011 Maneq funds (including equity and loan receivables) to a Luxembourg company founded by CapMan and sold part of that company for a cash consideration of EUR 14 million. After the transaction, the Group's share of the Maneq funds is approx. EUR 4.5 million at fair value as at December 31, 2018. The Group's holdings in Maneq funds are presented as investments in joint ventures. Following the transaction, CapMan has a loan receivable from the Luxembourg company, but the risk profile of this receivable is like that of an equity investment. 85 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
Changes in exchange rates, particularly between the Swedish krona and the euro, impact the company's performance, since a majority of the company's investments in hedge funds are krona-denominated. Any strengthening/weakening of the krona against the euro would improve/weaken the returns from investments in Swedish funds. In turn, however, changes in other exchange rates may affect the funds' krona-denominated results.
CapMan has subsidiaries outside of the Eurozone, and their equity is exposed to movements in foreign currency exchange rates. However, the Group does not hedge currency as the impact of exposure to currency movements on equity is relatively small. The group is not exposed to significant currency risks, because Group companies operate in their primary domestic markets.
As at December 31, 2018, 81% of the Group's assets were in euros, 10% in Swedish krona, 8% in US dollars and 1% in other currencies. The following table presents the fair values of the foreign currency denominated financial assets.
| EUR 1,000 | SEK | USD | Other currencies |
Total |
|---|---|---|---|---|
| 2018 | 8,488 | 8,343 | 1,108 | 17,939 |
| 2017 | 11,762 | 8,626 | 672 | 21,060 |
| e) Capital management | EUR 1,000 | 2018 | 2017 |
|---|---|---|---|
| Group's aim is to have an efficient capital structure that allows the company to manage its | Interest-bearing loans | 59,694 | 48,215 |
| ongoing obligations and that the business has the prerequisites for operating normally. The | Cash and cash equivalents | -54,544 | -23,291 |
| Return on equity (ROE) and the Equity ratio are the means for monitoring capital structure. | Net debt | 5,150 | 24,924 |
| The long-term targets and dividend policy of the Group have been confirmed by the Board | Equity | 120,971 | 126,694 |
| of Directors of CapMan Plc. The targets are based on profitability (ROE) and balance sheet. The return on equity target is more than 20 per cent p.a. on average, and target for Equity |
Net gearing | 4.3% | 19.7% |
| ratio at least 60%. The company's objective is to pay an annually increasing dividend to its | Return on equity | 6.5% | 11.5% |
| shareholders. | Equity ratio | 58.7% | 60.0% |
| in October 2015. The bond was originally scheduled to mature in four years on 15 October 2019 and had a fixed coupon interest rate of 4.2% per annum, but an early redemption was made in April 2018. At the same time, CapMan issued senior unsecured notes in the princi - pal amount of EUR 50 million, which will mature on 16 April 2023 and carry a fixed annual interest of 4.125%. The coupon interest is paid semi-annually. Furhermore, CapMan Plc has a EUR 10 million multi-issuer bond guaranteed by Garantia In - surance Company Ltd. The Bond has an annual coupon interest rate of 1.85% and it matures in 18 June 2019. The EUR 50 million bond issued in April 2018 and the long-term credit facility of EUR 20 mil - lion, currently unused, include financing covenants, which are conditional on the company's equity ratio and net gearing. |
f) Price risk of the investments in funds Investments in funds The investments in funds are valued using the International Private Equity and Venture Capital Valuation Guidelines. According to these guidelines, the fair values are generally de - rived by multiplying key performance metrics of the investee company (e.g., EBITDA) by the relevant valuation multiple (e.g., price/equity ratio) observed for comparable publicly traded companies or transactions. Changes in valuation multiples can lead to significant changes in fair values depending on the leverage ratio of the investee company. Financial assets held for trading In its operations the Group is exposed to market risks arising from price fluctuations of its financial assets held for trading. Performance is greatly affected by economic developments and share price movements both in Finland and abroad. One of the guiding principles of CapMan's investment activities is to diversify its investments and thereby reduce overall risks, as well as to pursue steady asset growth. Occasionally a significant part of investments may be focused on certain types of investments and securities, the possible negative development of which may substantially decrease CapMan's result. CapMan occasionally hedges its invest - ments with options and futures, although there may be situations where such hedges are not effective. |
||
| 86 | Notes to the | Consolidated Financial Stateme | nts |
| EUR 1,000 | Fair value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Investments in funds | 80,582 | 0 | 0 | 80,582 |
| Growth equity investments | 0 | 0 | 0 | 0 |
| Joint ventures | 4,470 | 0 | 0 | 4,471 |
| Other non-current investments | 2,548 | 0 | 166 | 2,382 |
| Current financial assets at fair value through profit or loss |
39,006 | 28,960 | 10,046 | 0 |
| g) Determining fair values | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Fair value hierarchy of financial assets measured at fair value at 31 December 2018 |
Fair value hierarchy of financial assets measured at fair value at 31 December 2017 |
||||||||
| EUR 1,000 | Fair value | Level 1 | Level 2 | Level 3 | EUR 1,000 | Fair value | Level 1 | Level 2 | Level 3 |
| Investments in funds | 80,582 | 0 | 0 | 80,582 | Investments in funds | 58,264 | 0 | 19 | 58,245 |
| Growth equity investments | 0 | 0 | 0 | 0 | Growth equity investments | 28,840 | 0 | 0 | 28,840 |
| Joint ventures | 4,470 | 0 | 0 | 4,471 | Joint ventures | 4,458 | 0 | 0 | 4,917 |
| Other non-current investments | 2,548 | 0 | 166 | 2,382 | Other non-current investments | 142 | 0 | 124 | 18 |
| Current financial assets at fair value through profit or loss |
39,006 | 28,960 | 10,046 | 0 | Current financial assets at fair value through profit or loss |
77,144 | 66,121 | 11,023 | 0 |
| The different levels have been defined as follows: | The different levels have been defined as follows: | ||||||||
| Level 1 Quoted prices (unjusted) in active markets for identical assets |
Level 1 Quoted prices (unjusted) in active markets for identical assets |
||||||||
| Level 2 Other than quoted prices included within Level 1 that are observable for the asset, either directly (that is, as price) or indirectly (that is, derived from prices) Level 2 assets measured at fair value consist of investments for which the quoted price is available from markets that are not active. CapMan has measured level 2 investments using the last trading price of the reporting period end. |
Level 2 Other than quoted prices included within Level 1 that are observable for the asset, ei - ther directly (that is, as price) or indirectly (that is, derived from prices). Level 2 assets measured at fair value consist of investments for which the quoted price is available from markets that are not active. CapMan has measured level 2 investments using the last trading price of the reporting period end. |
||||||||
| Level 3 The asset that is not based on observable market data. |
Level 3 The asset that is not based on observable market data |
||||||||
| 87 | Notes to the | Consolidated Financial Stateme | nts |
| APMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| EUR 1,000 | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Investments in funds | ||||
| at Jan 1 | 19 | 58,245 | 58,264 | |
| Additions | 31,868 | 31,868 | ||
| Disposals | 0 | 0 | ||
| Distributions | -19 | -17,417 | -17,436 | |
| Fair value gains/losses | 8,073 | 8,073 | ||
| Transfers | -187 | -187 | ||
| at the end of period | 0 | 80,582 | 80,582 | |
| Growth equity investments | ||||
| at Jan 1 | 28,840 | 28,840 | ||
| Disposals | -26,626 | -26,626 | ||
| Transfers | -2,214 | -2,214 | ||
| at the end of period | 0 | 0 | ||
| Other investments | ||||
| at Jan 1 | 124 | 18 | 142 | |
| Additions | 42 | 42 | ||
| Disposals | 0 | 0 | ||
| Transfers | 2,213 | 2,213 | ||
| Fair value gains/losses | 151 | 151 | ||
| at the end of period | 166 | 2 382 | 2 548 | |
| Investments in joint ventures | ||||
| at Jan 1 | 4,917 | 4,917 | ||
| Additions | 106 | 106 | ||
| Disposals | -832 | -832 | ||
| Distributions | 0 | 0 | ||
| Fair value gains/losses | 280 | 280 | ||
| at the end of period | 4,471 | 4,471 |
| Non-current investments at fair value through profit or loss 2018 EUR 1,000 |
Level 1 | Level 2 | Level 3 | Total | Non-current investments at fair value through profit or loss 2017 EUR 1,000 |
Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|---|---|---|---|---|
| Investments in funds | Investments in funds | ||||||||
| at Jan 1 | 19 | 58,245 | 58,264 | at Jan 1 | 41 | 51,353 | 51,394 | ||
| Additions | 31,868 | 31,868 | Acquisitions | 0 | 0 | ||||
| Disposals | 0 | 0 | Additions | 10,543 | 10,543 | ||||
| Distributions | -19 | -17,417 | -17,436 | Disposals | -35 | -35 | |||
| Fair value gains/losses | 8,073 | 8,073 | Distributions | -22 | -7,135 | -7,157 | |||
| Transfers | -187 | -187 | Fair value gains/losses | 3,422 | 3,422 | ||||
| at the end of period | 0 | 80,582 | 80,582 | at the end of period | 97 | 97 | |||
| Growth equity investments | Growth equity investments | ||||||||
| at Jan 1 | 28,840 | 28,840 | at Jan 1 | 37,856 | 37,856 | ||||
| Disposals | -26,626 | -26,626 | Additions | 1,856 | 1,856 | ||||
| Transfers | -2,214 | -2,214 | Disposals | -20,920 | -20,920 | ||||
| at the end of period | 0 | 0 | Acquisitions | 0 | 0 | ||||
| Other investments | Fair value gains/losses | 9,959 | 9,959 | ||||||
| at Jan 1 | 124 | 18 | 142 | Transfers | 89 | 89 | |||
| Additions | 42 | 42 | at the end of period | 28,840 | 28,840 | ||||
| Disposals | 0 | 0 | Other investments | ||||||
| Transfers | 2,213 | 2,213 | at Jan 1 | 124 | 55 | 179 | |||
| Fair value gains/losses | 151 | 151 | Additions | 0 | 0 | ||||
| at the end of period | 166 | 2 382 | 2 548 | Disposals | -5 | -5 | |||
| Investments in joint ventures | Acquisitions | 0 | 0 | ||||||
| at Jan 1 | 4,917 | 4,917 | Fair value gains/losses | -32 | -32 | ||||
| Additions | 106 | 106 | at the end of period | 124 | 18 | 142 | |||
| Disposals | -832 | -832 | Investments in joint ventures | ||||||
| Distributions | 0 | 0 | at Jan 1 | 5,376 | 5,376 | ||||
| Fair value gains/losses | 280 | 280 | Additions | 172 | 172 | ||||
| at the end of period | 4,471 | 4,471 | Disposals | -63 | -63 | ||||
| Distributions | -210 | -210 | |||||||
| Investments in joint ventures reported in Level 3 include investments in Maneq Investments | Fair value gains/losses | -358 | -358 | ||||||
| Luxembourg S.a.r.l. | at the end of period | 4,917 | 4,917 | ||||||
| Kauden lopussa | 4 917 | 4 917 | |||||||
| There were no transfers from one level to another during the review period. | Fund investments in Level 2 are investments in the CapMan Public Market fund. All other fund investments are included in Level 3. Investments in joint ventures reported in Level 3 include investments in Maneq Investments |
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| 31.12.2018 | Valuation methodology | inputs | (weighted average) | to a +/- 10% change in input value |
|---|---|---|---|---|
| Peer group earnings multiples |
EV/EBITDA 2018 10.8x | -/+ 0.9 MEUR | ||
| 13.7 | Peer group | Discount to peer group multiples |
26% | -/+ 0.3 MEUR |
| Peer group earnings multiples |
EV/EBITDA 2018 8.5x | - 2.5 MEUR / + 2.3 MEUR | ||
| Discount to peer group multiples |
20% | +/- 0.6 MEUR | ||
| 27.1 | Valuation by an independent valuer |
|||
| 14.3 | Reports from PE fund management company |
|||
| Peer group earnings multiples |
EV/EBITDA 2018 7.9x | - 0.4 MEUR / + 0.3 MEUR | ||
| Discount to peer group multiples |
20% | -/+ 0.1 MEUR | ||
| 5.5 | Price of recent investment | |||
| Peer group earnings multiples |
EV/EBITDA 2018 10.3x | -/+ 0.3 MEUR | ||
| Peer group | Discount to peer group multiples |
33% | -/+ 0.1 MEUR | |
| 2.3 | Discounted cash flows | Discount rate; market rate and risk premium |
10% | - 0.1 MEUR / value increase based on a change in the discount rate is not booked |
| 0.3 | Reports from PE fund management company |
|||
| Peer group earnings multiples |
EV/EBITDA 2018 7.8x | -/+ 0.1 MEUR | ||
| Peer group | Discount to peer group multiples |
10% | -/+ 0.0 MEUR | |
| 13.5 4.5 3.9 2.4 |
Peer group Peer group |
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| Sensitivity analysis of Level 3 investments at 31 December 2017 Fair value MEUR |
Valuation | Unobservable | Used input value | Fair value sensitivity to a +/- 10% change |
|
|---|---|---|---|---|---|
| Investment area | 31.12.2017 | methodology | inputs Peer group |
(weighted average) EV/Sales 2017 1.1x |
in input value |
| Growth investments | 28.8 | Peer group | earnings multiples | EV/EBITDA 2017 10.9x | +/- 2.1 MEUR |
| Discount to peer group multiples |
26% | -/+ 0.8 MEUR | |||
| Peer group earnings multiples |
EV/EBITDA 2017 9.4x | + 3.7 / - 3.8 MEUR | |||
| Buyout | 22.0 | Peer group | Discount to peer | ||
| Real Estate | 17.9 | Valuation by an independent valuer |
group multiples | 26% | +/- 1.4 MEUR |
| Investments in external PE funds |
8.8 | Reports from PE fund management company |
|||
| Investments in joint | Peer group earnings multiples |
EV/EBITDA 2017 9.5x | +/- 0.6 MEUR | ||
| ventures | 4.9 | Peer group | Discount to peer group multiples |
29% | -/+ 0.3 MEUR |
| Peer group earnings multiples |
EV/EBITDA 2017 11.5x | +/- 0.4 MEUR | |||
| Russia | 4.5 | Peer group | Discount to peer group multiples |
30% | +/- 0.1 MEUR |
| Credit | 1.7 | Discounted cash flows | Discount rate; market rate and risk premium |
10% | - 0.1 MEUR / value increase based on a change in the discount rate is not booked |
| Funds of funds | 0.5 | Reports from PE fund management company |
|||
| Other investment | Peer group earnings multiples |
EV/EBITDA 2017 8.9x | +/- 0.1 MEUR | ||
| areas | 2.4 | Peer group | Discount to peer group multiples |
15% | -/+ 0.0 MEUR |
| 90 | Notes to the | Consolidated Financial Stateme nts |
CapMan has made some investments also in funds that are not managed by CapMan Group companies. The fair values of these investments in CapMan's balance sheet are based on the valuations by the respective fund managers. No separate sensitivity analysis is prepared by CapMan for these investments.
The changes in the peer group earnings multiples and the peer group discounts are typically opposite to each other. Therefore, if the peer group multiples increase, a higher discount is typically applied. Because of this, a change in the peer group multiples may not in full be reflected in the fair values of the fund investments.
The valuations are based on euro. If portfolio company's reporting currency is other than euro, P&L items used in the basis of valuation are converted applying the average foreign exchange rate for corresponding year and the balance sheet items are converted applying the rate at the time of reporting. Changes in the foreign exchange rates, in CapMan's estimate, have no significant direct impact on the fair values calculated by peer group multiples during the reporting period.
The valuation of CapMan funds' investment is based on international valuation guidelines that are widely used and accepted within the industry and among investors. CapMan always aims at valuing funds' investments at their actual value. Fair value is the best estimate of the price that would be received by selling an asset in an orderly transaction between market participants on the measurement date.
Determining the fair value of fund investments for funds investing in portfolio companies is carried out using International Private Equity and Venture Capital Valuation Guidelines (IP - EVG). In estimating fair value for an investment, CapMan applies a technique or techniques that is/are appropriate in light of the nature, facts, and circumstances of the investment in the context of the total investment portfolio. In doing this, current market data and several inputs, including the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and the financial situation of the investment, are evaluated and combined with market participant assumptions. In selecting the appropriate valuation technique for each particular investment, consideration of those specific terms of the investment that may impact its fair value is required.
Different methodologies may be considered. The most applied methodologies at CapMan include the price of recent investments, which is typically applied in the case of new invest ments, and the earnings multiple valuation technique, whereby public peer group multiples are used to estimate the value of a particular investment. CapMan always applies a discount to peer group multiples, due to e.g. limited liquidity of the investments. Due to the qualitative nature of the valuation methodologies, the fair values are to a considerable degree based on CapMan's judgment.
The Group has a Monitoring team, which monitors the performance and the price risk of the investment portfolio (financial assets entered at fair value through profit or loss) independent ly and objectively of the investment teams. The Monitoring team is responsible for reviewing the monthly reporting and forecasts for portfolio companies. Valuation proposals made by the case investment professionals are examined by the Monitoring team and subsequently reviewed and decided by the Valuation Committee, which comprises the Group CFO, Head of Monitoring team and either Risk Manager of the relevant fund or Head of the relevant investment team. The portfolio company valuations are reviewed in the Valuation Committee on a quarterly basis. The valuations are back tested against realised exit valuations, and the results of such back testing are reported to the Audit Committee annually. 91 Notes to the Consolidated Financial Statements CAPMAN ANNUAL
| Investments in real estate are valued at fair value based on appraisals made by independent | ||||
|---|---|---|---|---|
| external experts, who follow International Valuation Standards (IVS). The method most appro - | ||||
| priate to the use of the property is always applied, or a combination of such methods. For | ||||
| the most part, the valuation methodology applied is the discounted cash flow method, which is based on significant unobservable inputs. These inputs include the following: |
||||
| Future rental cash inflows | Based on the actual location, type and quality of the proper - | |||
| ties and supported by the terms of any existing lease, other | ||||
| contracts or external evidence such as current market rents | ||||
| for similar properties; | ||||
| Discount rates | Reflecting current market assessments of the uncertainty in | |||
| the amount and timing of cash flows; | ||||
| Estimated vacancy rates | Based on current and expected future market conditions after | |||
| expiry of any current lease; | ||||
| Property operating expens - | Including necessary investments to maintain functionality of | |||
| es | the property for its expected useful life; | |||
| Capitalisation rates | Based on actual location size and quality of the properties | |||
| and taking into account market data at the valuation date; | ||||
| Terminal value | Taking into account assumptions regarding maintenance | |||
| costs , vacancy rates and market rents. | ||||
| The value of investments in joint ventures consists almost entirely of investments in Maneq Investments Luxembourg which is indirectly invested into portfolio companies in the funds managed by CapMan. The fair values of investments are determined in the same way as in funds investing in portfolio companies. The investment is made through several separate instruments and their values are co-dependent. Therefore the investment has been valued as one entity based on the fair values of the underlying portfolio companies. |
||||
| 92 | Notes to the | Consolidated Financial Stateme nts |
| Parent Company Income Statement (FAS) | |||||
|---|---|---|---|---|---|
| EUR | Note | 1 Jan–31 Dec 2018 | 1 Jan–31 Dec 2017 | ||
| Turnover | 1 | 44,843,794.44 | 10,593,566.00 | ||
| Raw materials and services | 2 | -37,283,042.68 | 0.00 | ||
| Other operating income | 3 | 0.00 | 12,222.65 | ||
| Employee benefit expenses | 4 | -5,049,602.55 | -6,444,178.40 | ||
| Depreciation | 5 | -45,416.20 | -35,271.17 | ||
| Other operating expenses | 6 | -3,605,168.36 | -4,805,627.44 | ||
| Operating loss | -1,139,435.35 | -679,288.36 | |||
| Finance income and costs | 7 | -15,757,994.31 | -11,389,136.86 | ||
| Profit before appropriations and taxes | -16,897,429.66 | -12,068,425.22 | |||
| Appropriations | 8 | 14,150,000.00 | 14,217,000.00 | ||
| Income taxes | -3,873,735.23 | -699,636.63 | |||
| Loss for the financial year | -6,621,164.89 | 1,448,938.15 | |||
| 93 | Parent Company Financial Stateme | nts |
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| EUR | Note | 1 Jan–31 Dec 2018 | 1 Jan–31 Dec 2017 | EUR | Note | 1 Jan–31 Dec 2018 | 1 Jan–31 Dec 2017 |
|---|---|---|---|---|---|---|---|
| ASSETS | SHAREHOLDERS' EQUITY AND LIABILITIES |
||||||
| Non-current assets | Shareholders' equity | 15 | |||||
| Intangible assets | 9 | 168,319.73 189,073.47 |
203,650.27 151,289.13 |
Share capital | 771,586.98 | 771,586.98 | |
| Tangible assets Investments |
10 11 |
Share premium account | 38,968,186.24 | 38,968,186.24 | |||
| Shares in subsidiaries | 90,793,613.53 | 198,884,614.74 | Invested unrestricted shareholders' equity |
80,766,422.88 | 79,626,999.28 | ||
| Investments in associated com - | Retained earnings | 16,167,271.44 | 30,797,652.15 | ||||
| panies | 1,108,700.60 | 1,108,700.60 | Profit for the financial year | -6,621,164.89 | 1,448,938.15 | ||
| Other investments | 10,681,614.14 | 6,669,772.75 | |||||
| Investments total | 102,583,928.27 | 206,663,088.09 | Shareholders' equity, total | 130,052,302.65 | 151,613,362.80 | ||
| Non-current assets, total | 102,941,321.47 | 207,018,027.49 | Liabilities | ||||
| Current assets | |||||||
| Non-current liabilities | 16 | 51,239,839.69 | 46,833,734.97 | ||||
| Inventories | 12 | 37,855,455.86 | Current liabilities | 17 | 35,614,693.54 | 48,982,925.55 | |
| Long-term receivables | 13 | 6,410,006.11 | 7,298,885.22 | ||||
| Short-term receivables | 14 | 28,187,943.50 | 23,289,315.86 | Liabilities, total | 86,854,533.23 | 95,816,660.52 | |
| Cash and bank | 41,512,108.94 | 9,823,794.75 | Total shareholders' equity and | ||||
| liabilities | 216,906,835.88 | 247,430,023.32 | |||||
| Current assets, total | 113,965,514.41 | 40,411,995.83 | |||||
| Total assets | 216,906,835.88 | 247,430,023.32 |
| EUR | Note | 1 Jan–31 Dec 2018 | 1 Jan–31 Dec 2017 |
|---|---|---|---|
| SHAREHOLDERS' EQUITY AND LIABILITIES |
|||
| Shareholders' equity | 15 | ||
| Share capital | 771,586.98 | 771,586.98 | |
| Share premium account | 38,968,186.24 | 38,968,186.24 | |
| Invested unrestricted shareholders' equity |
80,766,422.88 | 79,626,999.28 | |
| Retained earnings | 16,167,271.44 | 30,797,652.15 | |
| Profit for the financial year | -6,621,164.89 | 1,448,938.15 | |
| Shareholders' equity, total | 130,052,302.65 | 151,613,362.80 | |
| Liabilities | |||
| Non-current liabilities | 16 | 51,239,839.69 | 46,833,734.97 |
| Current liabilities | 17 | 35,614,693.54 | 48,982,925.55 |
| Liabilities, total | 86,854,533.23 | 95,816,660.52 | |
| Total shareholders' equity and liabilities |
216,906,835.88 | 247,430,023.32 |
| EUR | 1 Jan–31 Dec 2018 |
1 Jan–31 Dec 2017 |
EUR | 1 Jan–31 Dec 2018 |
1 Jan–31 Dec 2017 |
|---|---|---|---|---|---|
| Cash flow from operations | Cash flow from financing activities | ||||
| Profit before extraordinary items | -16,897,430 | -12,068,425 | Share issue | 1,139,424 | 420,934 |
| Finance income and costs | 15,757,994 | 11,389,137 | Proceeds from short-term debt | 26,200,000 | 30,750,000 |
| Adjustments to cash flow statement | Repayment of short-term debt | -4,800,000 | -300,000 | ||
| Depreciation, amortisation and impairment | 45,416 | 35,271 | Proceeds from loans from financial institutions | 49,748,000 | 9,000,000 |
| Depreciation of merger loss | 10,917,044 | Repayment of loans from financial institutions | -38,542,747 | -42,000,000 | |
| Change in net working capital | Dividends paid | -16,077,266 | -13,045,081 | ||
| Change in current assets, non-interest-bearing | 587,706 | -1,063,472 | Change in group liabilities | 2,074,312 | -3,994,250 |
| Change in inventories | 20,908,927 | Group contributions received | 2,849,000 | 2,950,000 | |
| Change in current liabilities, non-interest-bearing | -1,575,680 | -882,494 | |||
| Interest paid | -2,376,901 | -3,857,498 | Cash flow from financing activities | 22,590,723 | -16,218,397 |
| Interest received | 47,917 | 356,233 | |||
| Dividends received | 100,000 | 5,008,125 | Change in cash and cash equivalents | 31,688,314 | -22,627,212 |
| Direct taxes paid | -1,287,603 | Cash and cash equivalents at beginning of year | 9,823,795 | 32,451,007 | |
| Cash and cash equivalents at end of year | 41,512,109 | 9,823,795 | |||
| Cash flow from operations | 26,227,391 | -1,083,123 | |||
| Cash flow from investments | |||||
| Acquisition of subsidiaries, Norvestia Plc | -8,267,062 | ||||
| Cash of a merged subsidiary | 9,976,738 | ||||
| Investments in subsidiaries | -23,875,933 | -2,759,647 | |||
| Capital reduction of subsidiaries | 12,650,000 | ||||
| Investments in tangible and intangible assets | -42,601 | -227,234 | |||
| Investments in other placements | -4,911,409 | -4,824,234 | |||
| Long-term loan receivables granted | -4,631,780 | -1,374,193 | |||
| Repayment of long-term loan receivables | 1,972,247 | 3,859,616 | |||
| Cash flow from investments | -17,129,800 | -5,325,692 |
| EUR | 1 Jan–31 Dec 2018 |
1 Jan–31 Dec 2017 |
|---|---|---|
| Cash flow from financing activities | ||
| Share issue | 1,139,424 | 420,934 |
| Proceeds from short-term debt | 26,200,000 | 30,750,000 |
| Repayment of short-term debt | -4,800,000 | -300,000 |
| Proceeds from loans from financial institutions | 49,748,000 | 9,000,000 |
| Repayment of loans from financial institutions | -38,542,747 | -42,000,000 |
| Dividends paid | -16,077,266 | -13,045,081 |
| Change in group liabilities | 2,074,312 | -3,994,250 |
| Group contributions received | 2,849,000 | 2,950,000 |
| Cash flow from financing activities | 22,590,723 | -16,218,397 |
| Change in cash and cash equivalents | 31,688,314 | -22,627,212 |
| Cash and cash equivalents at beginning of year | 9,823,795 | 32,451,007 |
| Cash and cash equivalents at end of year | 41,512,109 | 9,823,795 |
CapMan Plc's financial statements for 2018 have been prepared in accordance with the Finn ish Accounting Act. On March 1, 2018, Norvestia Oyj, subsidiary of CapMan Plc, merged into the parent company, which has an impact on the comparability of the balance sheet.
Transactions in foreign currencies have been recorded at the rates of exchange prevailing at the date of the transaction. Foreign currency denominated receivables and payables are recorded at the rates of exchange prevailing at the closing date of the review period.
Investments are valued at acquisition cost. If the probable future income from the investment is permanently lower than the value at acquisition cost excluding depreciation, the difference is recognised as an expense.
Intangible and tangible assets are valued at cost less accumulated depreciation and amorti sation according to the plan, except for assets having an indefinite useful life.
Inventories are stated at the lower of cost and net realizable value. Cost is determined on a first-in first-out (FIFO) basis. Listed shares, other securities, funds and bonds are measured at the lower of cost and fair value. Unlisted shares and holdings are recognized at lower of cost and probable realizable value.
Receivables comprise receivables from Group companies and associated companies, trade receivables, accrued income and other receivables. Receivables are recorded at nominal val ue, however no higher than at probable value. Receivables are classified as non-current assets if the maturity exceeds 12 months.
The financial risk management of CapMan Group is centralised with the parent company. The financial risk management principles are provided in the Notes to the Group financial state ments under 32. Financial risk management.
Senior bonds maturing later than one year after the balance sheet date are recorded as non-current liabilities at nominal value.
Lease payments are recognised as other expenses. The remaining commitments under each lease are provided in the Notes section under "Commitments".
Provisions are recognised as expenses in case the parent company has an obligation that will not result in comparable income or losses that are deemed apparent.
Statutory pension expenditures are recognised as expenses at the year of accrual. Pensions have been arranged through insurance policies of external pension institutions.
Revenue includes the sale of services to subsidiaries and revenue from the sale of securities, dividends and other similar income from securities classified as inventories. Revenue from services is recognised, when the service is delivered.
Income taxes are recognised based on Finnish tax law. Deferred taxes are calculated on tem porary differences between the carrying amount and the tax base. Deferred taxes have been measured at the statutory tax rates that have been enacted by the balance sheet date and are expected to apply when the related deferred tax is realised. 96 Notes to the Parent Company Financial Statements CAPMAN ANNUAL
Appropriations in the income statement consist of possible given and received group con tributions and possible depreciation in excess of plan, and in the balance sheet, possible accumulated depreciation in excess of plan.
| EUR | 2018 | 2017 |
|---|---|---|
| Sale of services | ||
| Finland | 5,925,605 | 4,967,632 |
| Foreign | 2,482,026 | 5,625,934 |
| Sale of securities in inventories | 36,436,163 | 0 |
| Total | 44,843,794 | 10,593,566 |
| 2017 4,967,632 5,625,934 0 10,593,566 |
EUR Salaries and wages Pension expenses Other personnel expenses Total Management remuneration Salaries and other remuneration of the CEO |
2018 4,276,459 939,303 -166,160 5,049,603 |
2017 5,654,460 993,340 -203,622 6,444,178 |
|---|---|---|---|
| Heikki Westerlund (1 Jan 2017–3 May 2017) | 0 | 560,143 | |
| 2017 | Joakim Frimodig (4 May 2017–) | 376,392 | 335,798 |
| 0 | |||
| Board members | 267,100 | 154,520 | |
| 2017 | |||
| 12,223 | |||
| 12,223 | |||
| 0 0 0 * Norvestia Plc, subsidiary of CapMan Plc, merged to CapMan Plc on March 1, 2018. Item includes the depreciation of the merger loss allocated to the carrying amount of the received securities in inventories. |
Average number of employees party disclosures. |
35 Management remuneration is presented in the Group Financial Statements Table 31. Related |
| EUR | 2018 | 2017 |
|---|---|---|
| Purchases during the period | -5,444,149 | 0 |
| Change in inventories | -20,921,849 | 0 |
| Depreciation of the merger loss* | -10,917,044 | 0 |
| Total | -37,283,043 | 0 |
| EUR | 2018 | 2017 |
|---|---|---|
| Other | 0 | 12,223 |
| Total | 0 | 12,223 |
| EUR | 2018 | 2017 |
|---|---|---|
| Depreciation according to plan | ||
| Other long-term expenditure | 37,891 | 33,019 |
| Machinery and equipment | 7,525 | 2,253 |
| Total | 45,416 | 35,271 |
| 5. Depreciation | 7. Finance income and costs | ||||
|---|---|---|---|---|---|
| EUR | 2018 | 2017 | EUR | 2018 | 2017 |
| Depreciation according to plan | Dividend income | ||||
| Other long-term expenditure | 37,891 | 33,019 | Group companies | 1,100,000 | 4,798,600 |
| Machinery and equipment | 7,525 | 2,253 | Associated companies | 0 | 209,525 |
| Total | 45,416 | 35,271 | Total | 1,100,000 | 5,008,125 |
| Other interest and finance income | |||||
| 6. Other operating expenses | Group companies | 229,891 | 181,432 | ||
| EUR | 2018 | 2017 | Others | 451,486 | 239,400 |
| Other personnel expenses | 334,054 | 290,398 | Total | 681,377 | 420,832 |
| Office expenses | 652,455 | 625,483 | |||
| Travelling and entertainment | 290,288 | 302,051 | Interest and other finance costs | ||
| External services | 2,203,529 | 3,441,537 | Impairment of shares and interests | -862,411 | -12,631,095 |
| Other operating expenses | 124,843 | 146,159 | Depreciation of the merger loss* | -13,197,954 | |
| Total | 3,605,168 | 4,805,627 | Group companies | -557,620 | -284,800 |
| Others | -2,921,386 | -3,902,199 | |||
| Audit fees | Total | -17,539,372 | -16,818,094 | ||
| Audit | 93,305 | 63,478 | Finance income and costs total | -15,757,994 | -11,389,137 |
| Tax advices | 0 | 11,256 | |||
| Other fees and services | 20,428 | 85,375 | * Norvestia Plc, subsidiary of CapMan Plc, merged to CapMan Plc on March 1, 2018. Item includes the depreciation of the merger loss allocated to the carrying amount of the received shares in subsidiaries. |
||
| Total | 113,733 | 160,109 | |||
| 98 | Notes to the | Parent Company Financial Stateme | nts |
| EUR | 2018 | 2017 |
|---|---|---|
| Other personnel expenses | 334,054 | 290,398 |
| Office expenses | 652,455 | 625,483 |
| Travelling and entertainment | 290,288 | 302,051 |
| External services | 2,203,529 | 3,441,537 |
| Other operating expenses | 124,843 | 146,159 |
| Total | 3,605,168 | 4,805,627 |
| Audit fees | ||
| Audit | 93,305 | 63,478 |
| Tax advices | 0 | 11,256 |
| Other fees and services | 20,428 | 85,375 |
| Total | 113,733 | 160,109 |
| EUR | 2018 | 2017 |
|---|---|---|
| Group contributions received | 14,150,000 | 14,217,000 |
| 8. Appropriations | 10. Tangible assets | ||||
|---|---|---|---|---|---|
| EUR | 2018 | 2017 | EUR | 2018 | 2017 |
| Group contributions received | 14,150,000 | 14,217,000 | Machinery and equipment | ||
| 9. Intangible assets | Acquisition cost at 1 January | 935,958 76,976 |
902,094 0 |
||
| Transferred in a merger* Additions |
42,601 | 33,864 | |||
| EUR | 2018 | 2017 | Acquisition cost at 31 December | 1,055,535 | 935,958 |
| Intangible rights | |||||
| Accumulated depreciation at 1 January | -904,347 | -902,094 | |||
| Acquisition cost at 1 January | 828,188 | 828,188 | Transferred in a merger* | -74,267 | 0 |
| Acquisition cost at 31 December | 828,188 | 828,188 | Depreciation for the financial period | -7,525 | -2,253 |
| Accumulated depreciation at 31 December | -986,139 | -904,347 | |||
| Accumulated depreciation at 1 January | -828,188 | -828,188 | Book value on 31 December | 69,396 | 31,612 |
| Depreciation for financial year | 0 | 0 | |||
| Accumulated depreciation at 31 December | -828,188 | -828,188 | Other tangible assets | ||
| Book value on 31 December | 0 | 0 | |||
| Acquisition cost at 1 January | 119,677 | 119,677 | |||
| Other long-term expenditure | Book value on 31 December | 119,677 | 119,677 | ||
| Acquisition cost at 1 January | 2,578,449 | 2,360,280 | Tangible assets total | 189,073 | 151,289 |
| Transferred in a merger* | 44,243 | 0 | |||
| Additions | 0 | 218,169 | * Norvestia Plc, subsidiary of CapMan Plc, merged to CapMan Plc on March 1, 2018. | ||
| Acquisition cost at 31 December | 2,622,692 | 2,578,449 | |||
| Accumulated depreciation at 1 January | -2,374,799 | -2,341,781 | |||
| Transferred in a merger* | -41,682 | 0 | |||
| Depreciation for the financial period | -37,891 | -33,019 | |||
| Accumulated depreciation at 31 December | -2,454,373 | -2,374,799 | |||
| Book value on 31 December | 168,320 | 203,650 | |||
| Intangible rights total | 168,320 | 203,650 | |||
| EUR | 2018 | 2017 |
|---|---|---|
| Machinery and equipment | ||
| Acquisition cost at 1 January | 935,958 | 902,094 |
| Transferred in a merger* | 76,976 | 0 |
| Additions | 42,601 | 33,864 |
| Acquisition cost at 31 December | 1,055,535 | 935,958 |
| Accumulated depreciation at 1 January | -904,347 | -902,094 |
| Transferred in a merger* | -74,267 | 0 |
| Depreciation for the financial period | -7,525 | -2,253 |
| Accumulated depreciation at 31 December | -986,139 | -904,347 |
| Book value on 31 December | 69,396 | 31,612 |
| Other tangible assets | ||
| Acquisition cost at 1 January | 119,677 | 119,677 |
| Book value on 31 December | 119,677 | 119,677 |
| Tangible assets total | 189,073 | 151,289 |
| 12. Inventories | |||||
|---|---|---|---|---|---|
| EUR | 2018 | 2017 | EUR | 2018 | 2017 |
| Shares in subsidiaries | Shares in listed companies | 18,405,864 | |||
| Options | 44,080 | ||||
| Acquisition cost at 1 January | 198,884,614 | 208,724,967 | Bonds | 8,631,500 | |
| Transferred in a merger* | 2,223,988 | 0 | Funds | 5,980,329 | |
| Additions | 24,543,665 | 2,759,647 | Merger loss* | 4,793,683 | |
| Merger loss* | 2,058,524 | 0 | |||
| Disposals* | -137,917,178 | -12,600,000 | Inventories, total | 37,855,456 | |
| Acquisition cost at 31 December | 89,793,613 | 198,884,614 | Market value of financial assets in inventories | 38,706,094 | |
| Difference | 850,638 | ||||
| Acquisition cost at 1 January Additions Disposals |
1,108,701 0 0 |
1,171,604 0 -62,903 |
* Norvestia Plc, subsidiary of CapMan Plc, merged to CapMan Plc on March 1, 2018. Merger loss is partially allocated to the carrying amount of the received securities in inventories. 13. Long-term receivables |
||
| Acquisition cost at 31 December | 1,108,701 | 1,108,701 | |||
| EUR | 2018 | 2017 | |||
| Receivables from Group companies | |||||
| Shares, other | Loan receivables | 1,000,000 | 0 | ||
| Acquisition cost at 1 January | 6,669,773 | 1,813,730 | Receivables from associated companies | ||
| Additions | 5,000,187 | 5,006,568 | Loan receivables | 3,596,767 | 4,226,540 |
| Disposals | -988,346 | -150,525 | |||
| Acquisition cost at 31 December | 10,681,614 | 6,669,773 | Other loan receivables | 2,456,651 | 3,072,345 |
| Accounts receivable | 356,588 | 0 | |||
| Investments total | 101,583,928 | 206,663,088 | Long-term receivables total | 7,410,006 | 7,298,885 |
| EUR | 2018 | 2017 |
|---|---|---|
| Shares in listed companies | 18,405,864 | |
| Options | 44,080 | |
| Bonds | 8,631,500 | |
| Funds | 5,980,329 | |
| Merger loss* | 4,793,683 | |
| Inventories, total | 37,855,456 | |
| Market value of financial assets in inventories | 38,706,094 | |
| Difference | 850,638 |
| EUR | 2018 | 2017 |
|---|---|---|
| Receivables from Group companies | ||
| Loan receivables | 1,000,000 | 0 |
| Receivables from associated companies | ||
| Loan receivables | 3,596,767 | 4,226,540 |
| Other loan receivables | 2,456,651 | 3,072,345 |
| Accounts receivable | 356,588 | 0 |
| Long-term receivables total | 7,410,006 | 7,298,885 |
| 15. Shareholders' equity | ||||||
|---|---|---|---|---|---|---|
| -- | -- | -- | -- | -------------------------- | -- | -- |
| EUR | 2018 | 2017 | EUR | 2018 | 2017 |
|---|---|---|---|---|---|
| Accounts receivable | 997,564 | 1,137,291 | Share capital at 1 January | 771,587 | 771,587 |
| Share capital at 31 December | 771,587 | 771,587 | |||
| Receivables from Group companies | |||||
| Accounts receivable | 43,675 | 20,785 | Share premium account at 1 January | 38,968,186 | 38,968,186 |
| Dividend receivables | 1,000,000 | 0 | Share premium account at 31 December | 38,968,186 | 38,968,186 |
| Loan receivables | 9,557,537 | 6,065,000 | |||
| Other receivables | 14,916,565 | 14,857,544 | Invested unrestricted shareholders' equity | 79,627,000 | |
| Total | 25,517,777 | 20,943,328 | at 1 January | 79,206,066 | |
| Share subscriptions with options | 1,139,423 | 420,934 | |||
| Receivables from associated companies | Invested unrestricted shareholders' equity at 31 December |
80,766,423 | 79,627,000 | ||
| Accrued income | 14,040 | 71,544 | |||
| Total | 14,040 | 71,544 | Retained earnings at 1 January | 32,246,590 | 43,844,417 |
| Dividend payment | -16,079,319 | -13,046,765 | |||
| Loan receivables | 52,451 | 7,451 | Retained earnings at 31 December | 16,167,271 | 30,797,652 |
| Other receivables | 599,489 | 806,558 | |||
| Accrued income | 1,006,622 | 323,143 | Profit for the financial year | -6,621,165 | 1,448,938 |
| Short-term receivables total | 28,187,944 | 23,289,316 | Shareholders' equity, total | 130,052,303 | 151,613,363 |
| Calculation of distributable funds EUR |
2018 | 2017 | |||
| Retained earnings | 16,167,271 | 30,797,652 | |||
| Profit for the financial year | -6,621,165 | 1,448,938 | |||
| Invested unrestricted shareholders' equity | 80,766,423 | 79,627,000 | |||
| Total | 90,312,530 | 111,873,590 | |||
| CapMan Plc´s share capital is divided as follows: | |||||
| Number of shares Series B share (1 vote/share) |
2018 147,142,163 |
2017 145,625,985 |
|||
| EUR | 2018 | 2017 |
|---|---|---|
| Share capital at 1 January | 771,587 | 771,587 |
| Share capital at 31 December | 771,587 | 771,587 |
| Share premium account at 1 January | 38,968,186 | 38,968,186 |
| Share premium account at 31 December | 38,968,186 | 38,968,186 |
| Invested unrestricted shareholders' equity at 1 January |
79,627,000 | 79,206,066 |
| Share subscriptions with options | 1,139,423 | 420,934 |
| Invested unrestricted shareholders' equity at 31 December |
80,766,423 | 79,627,000 |
| Retained earnings at 1 January | 32,246,590 | 43,844,417 |
| Dividend payment | -16,079,319 | -13,046,765 |
| Retained earnings at 31 December | 16,167,271 | 30,797,652 |
| Profit for the financial year | -6,621,165 | 1,448,938 |
| Shareholders' equity, total | 130,052,303 | 151,613,363 |
| EUR | 2018 | 2017 |
|---|---|---|
| Retained earnings | 16,167,271 | 30,797,652 |
| Profit for the financial year | -6,621,165 | 1,448,938 |
| Invested unrestricted shareholders' equity | 80,766,423 | 79,627,000 |
| Total | 90,312,530 | 111,873,590 |
| Number of shares | 2018 | 2017 |
|---|---|---|
| Series B share (1 vote/share) | 147,142,163 | 145,625,985 |
| EUR | 2018 | 2017 |
|---|---|---|
| Senior bond | 49,748,000 | 29,737,500 |
| Multi-issuer bond | 0 | 9,989,100 |
| Loans from financial institutions | 0 | 5,488,500 |
| Other non-current liabilities | 1,491,840 | 1,618,635 |
| Non-current liabilities total | 51,239,840 | 46,833,735 |
| EUR | 2018 | 2017 | Leasing agreements | ||
|---|---|---|---|---|---|
| Senior bond | 49,748,000 | 29,737,500 | EUR | 2018 | 2017 |
| Multi-issuer bond | 0 | 9,989,100 | Operating lease commitments | ||
| Loans from financial institutions | 0 | 5,488,500 | Within one year | 47,449 | 57,282 |
| Other non-current liabilities | 1,491,840 | 1,618,635 | After one but not more than five years | 28,562 | 71,515 |
| Non-current liabilities total | 51,239,840 | 46,833,735 | Total | 76,011 | 128,797 |
| Other hire purchase commitments | |||||
| 17. Current liabilities | Within one year | 871,245 | 461,322 | ||
| EUR | 2018 | 2017 | After one but not more than five years | 2,183,947 | 1,845,288 |
| Accounts payable | 537,820 | 335,046 | After five years | 40,445 | 501,767 |
| Total | 3,095,637 | 2,808,377 | |||
| Liabilities to Group companies | |||||
| Pohjola Bank plc; Group account | 4,384,866 | 2,310,554 | |||
| Securities and other contingent liabilities | |||||
| Accounts payable | 70,941 | 0 | |||
| Other liabilities | 13,582,000 | 30,450,000 | |||
| Accrued interests | 421,078 | 284,800 | EUR | 2018 | 2017 |
| Accrued expenses | 78,846 | 173,204 | Contingencies for own commitment | 30,000,000 | |
| Total | 18,537,731 | 33,218,558 | Enterprise mortgages Pledged securities |
2,486,892 | |
| Pledged cash and bank | 5,499,129 | ||||
| Multi-issuer bond | 9,989,100 | 0 | Loan commitments to Maneq funds | 3,797,056 | 3,903,056 |
| Loans from financial institutions | 0 | 3,000,000 | Other contingent liabilities | 0 | 32,119,965 |
| Other liabilities | 305,611 | 8,489,634 | |||
| Accrued expenses | 6,244,432 | 3,939,687 | Remaining commitments to funds | ||
| Equity funds | 168,967 | 724,777 | |||
| Current liabilities total | 35,614,694 | 48,982,926 | Fund of funds | 276,221 | 279,875 |
| EUR | 2018 | 2017 |
|---|---|---|
| Operating lease commitments | ||
| Within one year | 47,449 | 57,282 |
| After one but not more than five years | 28,562 | 71,515 |
| Total | 76,011 | 128,797 |
| Other hire purchase commitments | ||
| Within one year | 871,245 | 461,322 |
| After one but not more than five years | 2,183,947 | 1,845,288 |
| After five years | 40,445 | 501,767 |
| Total | 3,095,637 | 2,808,377 |
| EUR | 2018 | 2017 |
|---|---|---|
| Contingencies for own commitment | ||
| Enterprise mortgages | 30,000,000 | |
| Pledged securities | 2,486,892 | |
| Pledged cash and bank | 5,499,129 | |
| Loan commitments to Maneq funds | 3,797,056 | 3,903,056 |
| Other contingent liabilities | 0 | 32,119,965 |
| Remaining commitments to funds | ||
| Equity funds | 168,967 | 724,777 |
| Fund of funds | 276,221 | 279,875 |
| Total | 445,188 | 1,004,652 |
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| Signatures to the report of the Board of Directors and financial statements | ||||
|---|---|---|---|---|
| Helsinki, 30 January 2019 | The Auditor's Note | |||
| Andreas Tallberg Chairman |
Mammu Kaario | Our report has been issued today. | ||
| Catarina Fagerholm | Eero Heliövaara | Helsinki, 30 January 2019 | ||
| Ernst & Young Oy Audit firm |
||||
| Ari Tolppanen | Joakim Frimodig CEO |
Ulla Nykky, Authorised Public Accountant | ||
| 103 | Signatures to the report of the |
Board of Direc | tors and financial stateme nts |
To the Annual General Meeting of CapMan Plc
We have audited the financial statements of CapMan Plc (business identity code 0922445-7) for the year ended 31 De cember, 2018. The financial statements comprise the consolidated balance sheet, statement of comprehensive income, state ment of changes in equity, statement of cash flows and notes, including a summary of significant accounting policies, as well as the parent company's balance sheet, income statement, statement of cash flows and notes.
• the consolidated financial statements give a true and fair view of the group's finan cial position as well as its financial perfor -
mance and its cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
• the financial statements give a true and fair view of the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit Committee.
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing prac tice are further described in the Auditor's Responsibilities for the Audit of Financial Statements section of our report.
We are independent of the parent com pany and of the group companies in accord ance with the ethical requirements that are
applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
In our best knowledge and understand ing, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provid ed have been disclosed in 7 to the consoli dated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit proce dures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompa nying financial statements. 104 Auditor's Report CAPMAN ANNUAL
We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud.
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
| Key Audit Matter | How our audit addressed the Key Audit Matter |
Key Audit Matter | How our audit addressed the Key Audit Matter |
|---|---|---|---|
| Revenue recognition and claw back liability We refer to the accounting policies in the finan cial statements and the Notes 3 and 26. CapMan's turnover in consolidated group accounts amounted to 36,0 million euros. It consists of management fees, sale of services, carried interest income as well as dividend and interest income. In certain circumstances, pursuant to the terms of the fund agreement, the carried interest income has to be returned (so called claw back). The claw back provision recorded 31.12.2018 amounted to 7,6 million euros. The timing of revenue recognition can be judgmental as revenue may be recognized either over time or at the point in time de - pending on the circumstances and provided services. The assessment of recognized rev - enue and claw back includes management assumptions and estimates. Revenue recognition and claw back liability was determined to be a key audit matter and a sig nificant risk of material misstatement referred to in EU Regulation No 537/2014 point (c) of Article 10(2) in respect of its timely recognition and at a proper amount. |
Our audit procedures included, among other things, assessing that the revenue recogni - tion principles comply to applicable account - ing standards. We also identified and tested key controls relating to revenue recognition. We tested the sales cutoff with analytical procedures. We supplemented our proce - dures with test of details on a transaction level in order to ensure that the revenue has been recognized in a correct accounting period and it's based on the corresponding agreements. We also analyzed the basis of assumptions and estimates relating to the defining the amount claw back liability. In addition, we also assessed the adequacy of disclosures relating to the fee and com - mission income of the group. |
Valuation of non-liquid investments We refer to the accounting policies in the financial statements and the Notes 18 and 32. The Group's investment portfolio 31.12.2018 amounts to 87,6 million euros. The investment portfolio includes mainly in - vestments to the funds managed by CapMan group companies. Determining the fair value of funds and direct investments to portfolio companies is carried out using International Private Equity and Venture Capital valua - tion guidelines (IPEV) and IFRS and the fair values are based on estimated cash-flows or peer-group multiples. Fair value meas - urement includes subjective estimations by management, specifically in areas where fair value is based on a model based valuation. Valuation techniques for private equity funds involve setting various assumptions regard - ing pricing factors. The use of different valuation techniques and assumptions could lead to different estimates of fair value. Valuation of non-liquid investments was deter mined to be a key audit matter and a significant risk of material misstatement referred to in EU Regulation No 537/2014 point (c) of Article 10(2). |
Our audit procedures included identifying and testing the controls in place over record - ing fair values of non-liquid investment. We performed additional procedures for areas of higher risk and estimation, involving our valuation specialists. Our audit procedures included: • Developing an understanding of the private equity and real estate portfolios • Reviewing the price of recent transactions and investments • Assessing assumptions used in the valua - tions and corroborating that the valuation appropriately reflects the risks of the portfolios • Comparing the assumptions against es - tablished policies and determining if they have been applied appropriately • Reviewing and assessing the valuations determined by CapMan or other party • Verifying that the International Private Equity and Venture Capital Valuation Guidelines and valuation methodology of IFRS have been applied correctly. In addition, we also assessed the adequacy of disclosures relating to the non-liquid investments. |
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of finan cial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial state ments in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of finan cial statements that are free from material misstatement, whether due to fraud or error. 106 Auditor's Report CAPMAN ANNUAL
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company's and the group's ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so.
Our objectives are to obtain reasonable as surance on whether the financial statements as a whole are free from material misstate ment, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individual ly or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
As part of an audit in accordance with good auditing practice, we exercise profes sional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not de tecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrep resentations, or the override of internal control.
audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the parent com pany or the group to cease to continue as a going concern.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other mat ters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we de termine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclo sure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 107 Auditor's Report CAPMAN ANNUAL
Information on our audit engagement This has been our first year as CapMan Plc's auditors. We were appointed as auditors by the Annual General Meeting on March 14th,2018.
The Board of Directors and the Manag ing Director are responsible for the other information. The other information com prises the report of the Board of Directors but does not include the financial state ments and our auditor's report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor's report, and the Annual Report is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect
to report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consist ent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstate ment of this other information, we are required to report that fact. We have nothing to report in this regard.
Ernst & Young Oy Authorized Public Accountant Firm
Ulla Nykky Authorized Public Accountant
CapMan is one of the few listed private equi ty asset management and investment com panies in Europe. CapMan Plc's share has been listed on the Helsinki Stock Exchange (Nasdaq Helsinki) since 2001. CapMan had 18,278 shareholders as of the end of 2018.
CapMan's shares are quoted on the main list of Nasdaq Helsinki. All shares generate equal voting rights and rights to a dividend and oth er distribution to shareholders. CapMan had 147,142,163 shares outstanding as of 31 De cember 2018. CapMan's shares are included in the book-entry securities register and have no nominal value. CapMan's share capital as of 31 December 2018 was 771,586.98.
CapMan Plc's foreign shareholders can register their holdings in nominee-registered book-entry accounts, for which a custodian is registered in the company's list of share holders rather than the ultimate owner. For eign and nominee-registered shareholders held a total of 6% of CapMan's shares as of the end of 2018. A breakdown by sector and size of holding can be found on the Notes to the Financial Statements.
CapMan's objective is to pay an annually increasing dividend to its shareholders. The Board of Directors will propose to the Annu al General Meeting that a dividend of €0.12 per share should be paid to shareholders.
CapMan's IR contacts are the joint responsi bility of the CEO, the CFO and the Commu nications and IR Manager. The company observes a two-week silent period prior to publication of its interim reports and financial statements, during which it does not comment on the company's financial performance or future prospects.
1) The company's Board of Directors will propose to the Annual General Meeting that considering distrib utable earnings, the dividend per share for 2018 would be EUR 0.06 instead of the originally proposed EUR 0.12. The Board of Directors will issue a Notice to an Extraordinary General Meeting to be convened on 25 March 2019 to decide on the equity repayment of EUR 0.06 per share. The total distribution for 2018 would remain unchanged at EUR 0.12 per share.
| CAPMAN ANNUAL | GROUP | CORPORATE | REPORT OF THE | FINANCIAL |
|---|---|---|---|---|
| REPORT 2018 | GOVERNANCE | BOARD OF DIRECTORS | STATEMENTS |
Share price and index development in 2018
| 2018 | 2017 | |
|---|---|---|
| Share price € | ||
| High | 1,81 | 1,80 |
| Low | 1,39 | 1,24 |
| Trade-weighted aver - age share price |
1,60 | 1,58 |
| Closing price 31 Dec | 1,47 | 1,77 |
| Volume | ||
| Shares (million) | 29,4 | 49,7 |
| Euros (million) | 46,9 | 78,1 |
| Milj. euroa | 46,9 | 78,1 |
| CapMan share | |
|---|---|
| Market | Nasdaq Helsinki |
| Currency | € |
| Listing date | 2 April 2001 |
| ISIN | FI0009009377 |
| Symbol | CAPMAN |
| Reuters-symbol | CAPMAN.HE |
| Bloomberg-symbol | CAPMAN |
| List | Nordic Mid Caps |
| Industry | Finance |
| Number of shares | 147,343,966 |
| Votes/share | 1/share |
| Stock options, number | 1,410,000 |
|---|---|
| Share subscription price | €0.83 |
| Exercise period | 1 May 2017 – 30 April 2019 |
| CapMan 2013 C option | |
|---|---|
| Stock options, number | 1,410,000 |
| Share subscription price | €0.85 |
| Exercise period | 1 May 2018 – 30 April 2020 |
| CapMan 2016 A option | |
| Stock options, number | 1,410,000 |
| Share subscription price | €0.84 |
| Stock options, number |
1,410,000 |
|---|---|
| Share subscription price |
The trade volume weight - ed average quotation of the share on NASDAQ OMX Helsinki Ltd. during 1 April–31 May 2017 with an addition of 10 per cent and less distributed dividends. |
| Exercise period |
1 May 2020 – 30 April 2022 |
| CapMan 2016 C option | |
|---|---|
| Stock options, number |
1,410,000 |
| Share subscription price |
The trade volume weight - ed average quotation of the share on NASDAQ OMX Helsinki Ltd. during 1 April–31 May 2018 with an addition of 10 per cent and less distributed dividends. |
| Exercise period |
1 May 2021 – 30 April 2023 |
Option programmes 2013 B, 2013 C, 2016 A, 2016 B, 2016 C each entitle holders to subscribe to 1,410,000 shares.
CapMan Plc's Annual General Meeting 2019 will be held on Wednesday, 13 March 2019 at 10.00 am EET at Glo Hotel Art at the address Lönnrotinkatu 29, Helsinki. All share holders registered with the company's list of shareholders maintained by Euroclear Finland Oy on Friday, 1 March 2019 are entitled to attend.
Shareholders wishing to attend the AGM should inform the company by 10.00 am EET on Friday 8 March 2019 at the latest. Registration can be made electronically by utilizing Euroclear's electronic general meeting service at www.capman.com/shareholders/general-meetings/, by e-mail to the address [email protected], or by sending a written notification to the company's address (CapMan Plc/ AGM, Ludviginkatu 6, 00130 Helsinki). Registrations must reach the company by the date and time specified above. Any proxy for exercising voting rights must be delivered to CapMan at the aforementioned postal address before expiry of the registration period. 110 Information for shareholders CAPMAN ANNUAL
The Board of Directors will propose to the AGM that a divi dend of €0.12 per share will be paid.
CapMan Plc will publish one half-year report and two interim reports during 2019:
Financial reports are published in Finnish and English. The company's Annual Reports, Interim Reports, and stock exchange releases and press releases can be consulted at www.capman.com. The company's website also includes other IR material. Anyone interested in receiving CapMan releases by email can subscribe them in the News and mate rials section of the website.
CapMan's IR contacts are the joint responsibility of the CEO, the CFO, and the Communications and IR Manager. The com pany observes a two-week silent period prior to publication of its interim reports and financial statements, during which it does not comment on the company's financial perfor mance or future prospects.
Evli Jerker Salokivi, tel. +358 (0)45 133 2229 Inderes Sauli Vilén, tel. +358 (0)44 025 8908 Nordea Harri Paakkola, tel. +358 (0)9 5300 8206
1) The company's Board of Directors will propose to the Annual General Meeting that considering distributable earnings, the dividend per share for 2018 would be EUR 0.06 instead of the originally proposed EUR 0.12. The Board of Directors will issue a Notice to an Extraordinary General Meeting to be convened on 25 March 2019 to decide on the equity repayment of EUR 0.06 per share. The total distribution for 2018 would remain unchanged at EUR 0.12 per share.
Ludviginkatu 6, 4 fl. 00130 Helsinki Finland +358 207 207 500
Stureplan 13, 3rd fl 111 45 Stockholm Sweden +46 8 410 731 30
Østergade 4, 4. sal 1100 København K Denmark +45 20 43 55 63
1 Lyric Square London W6 0NB United Kingdom +44 20 7495 9020
1, rue Hildegard von Bingen L-1282 Luxembourg +352 26 49 58 42 05
Starokonyushenny pereulok, 10 119002 Moscow Russia +7 495 620 48 85
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