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CapMan Oyj — Governance Information 2023
Mar 4, 2024
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Download source fileCORPORATE GOVERNANCE STATEMENT
2023 CapMan Plc (“CapMan”) complies with the Finnish Corporate Governance Code 2020 for listed companies issued by the Securities Market Association which entered into force on 1 January 2020 (the “Code”). CapMan complies with all of the recommendations of the Code. This Corporate Governance Statement (the “Statement”) has been prepared in compliance with the Code’s Corporate Governance reporting guidelines, it has been reviewed by the Audit and Risk Committee of CapMan’s Board of Directors (the “Board”) and it is issued separately from the report by the Board. CapMan’s corporate governance model also follows the Finnish laws, the Articles of Association of the company and the rules and directions of Nasdaq Helsinki Ltd. The Code is publicly available on the website of the Securities Market Association at www.cgfinland.fi/en. For further information regarding CapMan’s corporate governance, please visit the company’s website at capman.com/shareholders/governance/.
1. CapMan’s governance model
CapMan is a Finnish public limited liability company headquartered in Helsinki, Finland. The parent company CapMan Plc and its subsidiaries form CapMan group. CapMan’s shares are publicly listed in Nasdaq Helsinki. CapMan’s governance model consists of the General Meeting of shareholders, the Board of Directors and the CEO. In the operative management of the company the CEO is supported by the management group.
2. General Meeting of the shareholders and the Articles of Association
The highest decision-making power at CapMan is held by the General Meeting of shareholders. Among other things, the General Meeting adopts the financial statements, decides on distribution of assets based on the proposal of the Board, elects the members of the Board and the auditor, decides on the discharge from liability and on amendments to the Articles of Association. The notice to the General Meeting, the documents to be presented and the proposals for the General Meeting are published on the company’s website and, if needed, as a stock exchange release three weeks prior to the General Meeting at the latest.
In 2023, CapMan’s Annual General Meeting (AGM) was held on 15 March in Helsinki. In total 126 shareholders representing approximately 32 % of the registered share capital and voting rights attended the meeting in person or by voting in advance. The decisions are available on the company’s website at https://www.capman.com/shareholders/general-meetings/.
CapMan’s Articles of Association and material related to the General Meeting are available on the company’s website at the address: capman.com/shareholders/governance/.
3. Shareholders’ Nomination Board
CapMan Plc’s 2018 AGM decided to establish a Shareholders’ Nomination Board to prepare proposals concerning the election and remuneration of the members of the Board to the General Meeting. The AGM also adopted a Charter for the Nomination Board. The Shareholders’ Nomination Board shall serve until further notice. The term of office of the members of the Shareholders’ Nomination Board expires annually after the new Shareholders’ Nomination Board has been nominated.
The Shareholders’ Nomination Board consists of representatives nominated by the four largest shareholders of the company and the Chairman of CapMan Plc’s Board, serving as an expert member. As an expert member the Chairman of the Board of CapMan Plc does not take part in the decision-making of the Shareholders’ Nomination Board.
The following members were nominated to the Shareholders’ Nomination Board in September 2023: Stefan Björkman (Managing Director of Föreningen Konstsamfundet r.f., representative of Silvertärnan Ab) (Chairman of the Nomination Board), Mikko Mursula (Chief Investment Officer of Ilmarinen Mutual Pension Insurance Company), Mikko Kalervo Laakkonen and Erkka Kohonen (Senior Portfolio Manager, Varma Mutual Pension Insurance Company). Additionally, Joakim Frimodig, the Chairman of the Board of CapMan Plc, served as the expert member on the Shareholders’ Nomination Board.
The Nomination Board convened three times in 2023. The Nomination Board discussed, in particular, the size, composition and diversity of the Board and the areas of expertise that are deemed most beneficial for the company. The Nomination Board also reviewed the remuneration of the Board and gave its proposals to the Annual General Meeting on 2 February 2023. The proposals were included in the notice to the Annual General
ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 15
significant shareholders. The Board made an assessment on the independence of the Board members in its organisational meeting on 15 March 2023. According to the assessment Johan Bygge, Catarina Fagerholm, Mammu Kaario, Olli Liitola and Andreas Tallberg were independent of both the company and its significant shareholders. Joakim Frimodig was non-independent of the company due to his CEO position in the company during the past 3 years. Joakim Frimodig and Johan Hammarén were non-independent of the company’s significant shareholder due to their memberships in the Board of Directors of Silvertärnan Ab, which is a significant shareholder of the company. Shares and share-based rights of each Board member and corporations over which he/she exercises control in the company and its group companies are presented in the first table in this statement.
4.4 Duties and responsibilities of the Board
Under the Finnish Companies Act and CapMan’s Articles of 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 controls of the company’s accounts and finances. One of the Board’s key tasks is to approve, and monitor the progress of, the strategic goals, including linking those to sustainability targets. The Board has confirmed a written charter for its work, which describes the main tasks and duties, working principles and meeting practices of the Board, and an annual self-evaluation of the Board’s operations and working methods. In accordance with the charter, the main duties of the Board were:
- to convene the General Meetings of shareholders
- to appoint and dismiss the CEO
- to supervise the management of the company and Mammu Kaario as Vice Chair. Joakim Frimodig serves as a full-time Chair of the Board, and his duties include execution of CapMan’s business strategy together with the CEO, especially in relation to significant growth initiatives and M&A transactions. The biographical details of the Board members are presented in the first table in this statement.
4.2 Diversity of the Board of Directors
The Shareholders’ Nomination Board shall take into account the Board’s diversity principles and independence requirements set forth in the Code when preparing the proposal on the Board composition to the shareholders’ meeting. The company values that its Board members’ have diverse backgrounds taking into account the competencies that are relevant for CapMan’s business, such as know-how of the financial sector. The aim is that the Board consists of representatives of both genders and different age groups, that the Board members have versatile educational and professional backgrounds and that the Board of Directors as a whole has sufficient experience on an international operating environment.# ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 16
4. Board of Directors
4.1 Composition of the Board of Directors
All members of the Board are elected yearly by the Annual General Meeting. There is no specific order for the appointment of Board members in the Articles of Association. According to the Articles of Association, the Board comprises at least three and at most nine members, who do not have deputies. Members are elected for a term of office, which starts at the close of the Annual General Meeting at which they were elected and ends at the close of the Annual General Meeting following their election. The Board elects a Chair and a Vice Chair from among its members. The Shareholders’ Nomination Board makes the proposals on the composition of the Board and the remuneration for the Board and Committee Members to the Annual General Meeting. The Shareholders’ Nomination Board’s proposals are typically published as a separate stock exchange release and are also included in the notice to convene the Annual General Meeting.
Board members’ competencies relevant to the impacts of the organisation are partly reported through disclosures of Board members’ backgrounds and stakeholder representation is reported through the disclosures and independence evaluation of the Board members. The Annual General Meeting held on 15 March 2023 elected six members to the Board of Directors. Mr. Johan Bygge, Ms. Catarina Fagerholm, Ms. Mammu Kaario, Mr. Olli Liitola and Mr. Johan Hammarén were re-elected to the Board and Mr. Joakim Frimodig was elected as a new member of the Board. Mr. Andreas Tallberg had announced that he was not available for re-election. At its organisational meeting on 15 March 2023, the Board elected from among its members Joakim Frimodig as its Chair
The company considers that the composition of its Board is in its current form sufficiently aligned with the objectives set for the diversity of the Board composition. In 2023 both genders were represented in the Board (33 % women, 67 % men), the members were between 45 and 67 years of age, their educational backgrounds were relevant to the company’s operations, and they had experience on both international and local operating environments. The Shareholders’ Nomination Board does not specifically review the inclusion of under-represented social groups.
The central duties of the Board include:
* to approve strategic and financial objectives
* to approve the budget
* to decide on the establishment of new CapMan funds and the level of CapMan’s own commitments therein
* to decide on fund investments to other than CapMan funds and direct investments exceeding EUR 5 million
* to decide on major changes in the business portfolio
* to ensure that the company has a proper organisation
* to ensure the proper operation of the management system
* to approve annual financial statements and interim reports
* to ensure that the supervision of the accounting and financial management is properly organised
* to ensure that there are appropriate arrangements in place to secure that the business complies with applicable rules and regulations
* to approve the key principles of corporate governance, internal control, risk management as well as other essential policies and practices
* to decide on the CEO’s remuneration as well as on the remuneration policy of other executives and CapMan’s key employees
* to confirm the central duties and operating principles of the Board committees
The Chair of the Board ensures and monitors that the Board fulfils the tasks appointed to it under legislation and by the company’s Articles of Association.
4.3 Independence of the Board members
The majority of the Board must be independent from the company. At least two of the members that are independent from the company shall also be independent of the company’s significant shareholders.
4.5 Work of the Board in 2023
In 2023, the Board of Directors met eight times. The Board had seven meetings in the composition as elected by the 2023 AGM and one meeting in the composition as elected by the 2022 AGM. The Board evaluates its work, including sustainability matters, annually. The evaluation is generally conducted as an internal self-evaluation. Where deemed appropriate, external consultants may be used in the evaluation. The first table in this statement presents Board members’ attendance at the meetings in 2023.
5. Board Committees
The Board may establish Committees to ensure efficient preparation of the matters under its responsibility. The Committees are established, and their members are elected from among the members of the Board in the Board’s organisational meeting to be held after the AGM for the same term as the Board. The Committees shall consist of at least three members. The charters for each committee shall be confirmed by the Board. The Chairs of the committees report to the following Board meeting on the topics discussed in the committee meetings. Also, the materials presented, and the minutes of the committee meetings are delivered to the Board for information. The committees generally do not have autonomous decision-making power, but the Board makes the decisions within its competence collectively. In its organisational meeting held on 15 March 2023, CapMan’s Board of Directors established an Audit and Risk Committee and Remuneration Committee.
5.1 Audit and Risk Committee
The Audit and Risk Committee has been established to improve the efficient preparation of matters pertaining to financial reporting and controls. The duties of the Audit and Risk Committee included:
* monitoring the financial position of the company
* monitoring and assessment of the financial reporting process
* monitoring and assessment of the company’s internal control and risk management systems and compliance processes
* monitoring and assessment of the most significant financial and tax risks
* review of the company’s Corporate Governance Statement
* monitoring the statutory audit of the financial statements and consolidated financial statements
* evaluating the independence of the statutory auditor or audit company, particularly the provision of related services
* other communications with the auditor
* preparing the proposal for resolution on the election of the auditor
* defining the principles concerning the monitoring and assessment of related party transactions
* monitoring and assessment of the processes and risks relating to IT security
* evaluation of the use and presentation of alternative performance measures
* monitoring and assessment of any special issues allocated by the Board and falling within the competence of the audit and risk committee.
In addition, the Committee has introduced sustainability topics, including the review of the materiality assessment, in its agenda over the year following the company’s strategic objectives and agenda. The Board has in its organisational meeting on 15 March 2023 elected Mammu Kaario (Chair), Catarina Fagerholm and Johan Bygge as members of the Audit and Risk Committee. In 2023, the Committee convened five times. The table on this page presents the Committee members’ attendance at the meetings. All members of the Audit and Risk Committee were independent of the company and its significant shareholders. All members of the Audit and Risk Committee are experienced in demanding positions in financial administration and business management and they hold degrees suitable for Audit and Risk Committee members.
5.2 Remuneration Committee
The Remuneration Committee has been established to improve the efficient preparation of matters pertaining to the remuneration of the CEO and the rest of the management group as well as the remuneration principles observed by the company. The main duties of the Remuneration Committee in accordance with the charter were to assist the Board by preparing the Board decisions concerning:
* CEO remuneration
* company’s executive remuneration principles and remuneration of individual executives as required
* company’s overall principles for total compensation structure
* Remuneration Policy and Report for the governing bodies.
The Committee further contributed to:
* securing the objectivity and transparency of the decision-making regarding remuneration issues in the company
* systematic alignment of remuneration principles and practice with the company strategy and long-term and short-term goals (including sustainability goals)
The Board has in its organisational meeting on 15 March 2023 elected Joakim Frimodig (Chair), Catarina Fagerholm and Olli Liitola as members of the Remuneration Committee. The Committee convened twice in in 2023. Both meetings were held with the composition elected by the Board in its organisational meeting in 2022. The table below on page 7 presents the Committee members’ attendance at the meetings. Catarina Fagerholm and Olli Liitola are independent of the company and its significant shareholders. Joakim Frimodig is not independent of the company or its significant shareholder. Further information on the independence of the Board members is available in section 4.3.
| Name | Personal information | Shares and share-based rights as of 31 Dec 2023 | Attendance at the Board meetings | Attendance at the Committee meetings |
|---|---|---|---|---|
| Joakim Frimodig* | Chair of the Board since 2023 Member of the Board since 2023 Born: 1978 Education: BA (Oxon) Main occupation: Executive Chair of the Board of CapMan Plc Chair of the Remuneration Committee Expert member of the Shareholders’ Nomination Board Non-independent of the company and significant shareholder | 1,159,168 | 7/7 | Remuneration Committee: 0/0 Nomination Board: 2/2 |
| Andreas Tallberg** | Chair of the Board since 2017 Member of the Board since 2017 Born: 1963 Education: M.Sc. (Econ.). Main occupation: CEO of Oy G.W. | |||
| Chair of the Remuneration Committee | ||||
| Expert member of the Shareholders’ Nomination Board | ||||
| Independent of the company and significant shareholders | ||||
| 11,530 | ||||
| 1/1 Remuneration Committee: 2/2 Nomination Board: 1/1 |
Johan Bygge
Member of the Board since 2021
Born: 1956
Education: BA (Econ.)
Main occupation: Board professional
Member of the Audit and Risk Committee
Independent of the company and significant shareholders
28,500
8/8 Audit and Risk Committee: 5/5
Catarina Fagerholm
Member of the Board since 2018
Born: 1963
Education: M. Sc. (Econ.)
Main occupation: Board professional
Member of the Audit and Risk Committee and Remuneration Committee
Independent of the company and significant shareholders
73,011
8/8 Audit and Risk Committee: 5/5 Remuneration Committee: 2/2
Johan Hammarén
Member of the Board since 2020
Born: 1969
Education: LL.M., Bachelor of Science (Econ.)
Main occupation: Managing Director, Oy Hammarén & Co Ab, board professional
Independent of the company and non-independent of the significant shareholder
0
8/8
Mammu Kaario
Member of the Board since 2017
Born: 1963
Education: LL.M., MBA
Main occupation: Board professional
Chair of the Audit and Risk Committee
Independent of the company and significant shareholders
38,071
8/8 Audit and Risk Committee: 5/5
Olli Liitola
Member of the Board since 2019
Born: 1957
Education: M.Sc. (Tech.).
Main occupation: Board professional
Member of the Remuneration Committee
Independent of the company and significant shareholders
750,000
8/8 Remuneration Committee: 2/2
Board of Directors in 2023
* A member and Chair of the Board as of the AGM held on 15 March 2023.
** A member and Chair of the Board until the AGM held on 15 March 2023
In addition, Andreas Tallberg’s controlling interest company Oy Nissala Ab and closely associated company Oy G.W. Sohlberg Ab, Johan Hammarén’s controlling interest company Oy Hammarén & Co, Olli Liitola’s controlling interest company Momea Invest Oy and Joakim Frimodig’s controlling interest company Boldhold Oy are minority owners in Silvertärnan Ab, which owns 14.3% of the shares in CapMan Plc.
ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 18
6. Chief Executive Officer (CEO)
Pia Kåll (born 1980, M.Sc. (Eng.)) was appointed as the CEO of CapMan as of 15 March 2023. In 2022, CapMan’s CEO was Joakim Frimodig (born 1978, BA (Oxon)) until 15 March 2023. Kåll’s and Frimodig’s shares and share-based rights and those of the companies over which they exercise control are presented in the table on this page. The Board elects the company’s CEO. The terms and conditions of the CEO’s service are specified in writing in the CEO’s service contract, which is approved by the Board. The CEO manages and supervises the company’s business operations according to the Finnish Companies Act and in compliance with the instructions and authorisations issued by the Board. The CEO shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner. Generally, the CEO is independently responsible for the operational activities of the company and for day-to-day decisions on business activities and the implementation of these deci- sions. The CEO appoints the heads of business areas. The Board approves the recruitment of the CEO’s immediate subordinates. The CEO cannot be elected as Chair of the Board.
7. Management Group
The main tasks of the Management Group consist of (i) coordination of team strategy, fundraising, resources, sustainability as well as coordination of marketing and brand, (ii) implementation of decisions by the Board and the CEO/ Management Group, (iii) supporting decision-making through providing information and active participation, and (iv) sharing information within the teams and implementing decisions as agreed in the Management Group. The composition of the Management Group, responsibilities and the shares and share-based rights of the members of the Management Group and of the companies over which they exercise control in the end of the financial year of 2023 are presented in the table.
Management Group in 2023
| Name | Responsibilities | Personal information | Shares and share-based rights on 31 Dec 2023 |
|---|---|---|---|
| Pia Kåll | CEO as of 15 March 2023, Head of CapMan Buyout until 15 March 2023 | Born: 1980 Education: M.Sc. (Eng.) | Shares: 274,025 |
| Joakim Frimodig | Until 15 March 2023 CEO | Born: 1978 Education: BA (Oxon) | Shares: 1,159,168 |
| Anna Berglind | Head of People and Culture | Born: 1974 Education: M.Sc. (Soc.) | Shares: 264,165 |
| Atte Rissanen | CFO | Born: 1987 Education: M. Sc. (Econ.) | Shares: 268,493 |
| Heidi Sulin | COO | Born: 1979 Education: LL.M. | Shares: 137,675 |
| Christian Borgström | Until 1 September 2023 Head of CapMan Wealth Services | Born: 1971 Education: M.Sc. (Econ.) | Shares: 843,000 |
| Mika Koskinen | As of 1 September 2023 Head of CapMan Wealth Services | Born: 1967 Education: Lic.Sc. (Econ.) | Shares: 0 |
| Antti Kummu | Head of CapMan Growth Equity | Born: 1976 Education: M.Sc. (Econ.), CFA | Shares: 59,744 |
| Maximilian Marschan | Head of CaPS | Born: 1974 Education: M.Sc. (Econ.) | Shares: 201,300 |
| Mika Matikainen | Head of CapMan Real Estate | Born: 1975 Education: M. Sc. (Econ), M.Soc.Sc | Shares: 186,525 |
| Anna Olsson | As of 15 March 2023 Head of Sustainability | Born: 1982 Education: M.Soc.Sc. | Shares: 40,000 |
| Ville Poukka | Head of CapMan Infra | Born: 1981 Education: M.Sc. (Econ.) | Shares: 277,296 |
| Mari Simula | Head of Fund Investor Relations | Born: 1982 Education: M.Sc. (Tech.) | Shares: 397,017 |
| Antti Uusitalo | As of 15 March 2023 Head of Special Situations | Born: 1982 Education: M.Sc. (Econ.) | Shares: 12,000 |
- In addition, Joakim Frimodig’s controlling interest company Boldhold Oy is a minority owner in Silvertärnan Ab, which owns 14.3% of all shares in CapMan Plc.
ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 19
8. Internal control and risk management
The aim of CapMan’s internal control and risk management is to ensure that the company’s operations are efficient, appropriate, reliable and in compliance with regulation, and that risks associated with the company’s business and objectives are identified and appropriately monitored and managed. The group’s internal control system is an essential part of the group’s management system and consists of organization structure, policies, processes, working instructions, allocation of tasks and responsibilities, approval authorizations, manual and automated controls, monitoring reports and reviews. The Board and the CEO are responsible for the internal control and the risk management but the internal control is conducted on all levels of the organization, in all business and support functions. Each employee is individually responsible for the compliance of policies and instructions and for reporting the faults and malpractice to his/her supervisor or other designated persons.
9. Internal control and risk management pertaining to the financial reporting
The internal control and risk management pertaining to the financial reporting process is part of CapMan’s overall internal control framework. The key roles and responsibilities for internal control and risk management have been defined in the group’s internal guidelines which are approved and updated by the management and/or the Board of Directors of the company. CapMan’s internal control and risk management concerning financial reporting is designed to provide, inter alia, reasonable assurance concerning the reliability, comprehensiveness and timeliness of the financial reporting and the preparation of financial statements in accordance with applicable laws and regulations, generally accepted accounting principles and other requirements for listed companies. The objective is also to promote good corporate governance and risk management practices and to ensure the compliance with laws, regulation and CapMan’s internal policies.
9.1 General description of the financial reporting process
CapMan’s operating model is based on having a local presence in Finland, Sweden, Denmark, Norway, Estonia, Luxembourg and the UK, and operating the organisation across national borders. CapMan’s subsidiaries and branches in eight countries report their results on a monthly or quarterly basis to the parent company. The bookkeeping function is mainly outsourced. Financial information is assembled, captured, analysed, and distributed in accordance with existing processes and procedures. The group has a common reporting and consolidation system that facilitates compliance with a set of common control requirements. The monthly accounting entries of the most significant subsidiaries and branches are transferred to the group’s reporting system on an entry-by-entry level. The other subsidiaries submit their figures either monthly or quarterly to the group accounting to be entered to the group reporting system for consolidation. The reported figures are reviewed in subsidiaries as well as in group accounting. Group accounting also monitors the balance sheet and income statement items by analytically reviewing the figures. The consolidated accounts of CapMan are prepared in compliance with International Financial Reporting Standards (IFRS) as adopted by the EU.
9.2 Control and risk management of the financial reporting process
The Board has the overall responsibility for the proper arrangement of internal control and risk management over financial reporting. The Board has appointed the Audit and Risk Committee to undertake the more specific tasks in relation to financial reporting process control such as monitoring the financial statements reporting process, the supervision of the financial reporting process, overview of sustainability (including climate) risks and monitoring the efficiency of the company’s internal control. The Audit and Risk Committee also reviews regularly the main features of the internal control and risk management systems pertaining to the financial reporting process.# CORPORATE GOVERNANCE STATEMENT 2023
The management of the group is responsible for the implementation of internal control and risk management processes and for ascertaining their operational effectiveness. The management is also responsible for ensuring that the company’s accounting practices comply with laws and regulations and that the company’s financial and sustainability matters are managed in a reliable and consistent manner. The CEO leads the risk management process by defining and allocating responsibility areas. The CEO has nominated the group’s COO as risk manager to be in charge of coordinating the overall risk management process. The risk manager reports to the Audit and Risk Committee on matters concerning internal control and risk management. The management has allocated responsibility for establishing more specific internal control policies and 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.
9.3 Risk assessment and control activities
Risks related to the financial reporting process are identified through the objectives of financial reporting. The risk assessment process is designed to identify financial reporting risks and to determine how these risks should be managed. The risk assessment process also considers sustainability risks that relates to material financial outcomes. Control activities based on risk assessments are determined for all levels of the organisation. These activities include guidelines and instructions, approvals, ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 20 authorisations, verifications, reconciliations, analytical reviews, and segregation of duties. In the annual risk assessment process of the group, the identified risks are reviewed, the risk management control activities are mapped and the effects of potential new identified risks are evaluated. The objectives and responsibilities of the risk management process as well as the determination of the risk-appetite were reviewed during 2023.
9.4 Information and communication pertaining to the financial reporting
CapMan has defined the roles and responsibilities pertaining to financial reporting as a part of the group’s information and communication practices. External and internal information regarding financial reporting and its internal control is gathered systematically, and relevant information on the group’s transactions is provided to the management. Up-to-date information relevant for the financial reporting is presented in a timely manner to the relevant functions such as the Board and the Management Group. All external communications are carried out in accordance with the group disclosure policy, which is available on the company’s website: capman.com/shareholders/governance/policies/
9.5 The organisation and monitoring of internal control activities
To ensure the effectiveness of internal control pertaining to financial reporting, monitoring activities are conducted at all levels of the organisation. Monitoring is performed through ongoing follow-up activities, separate evaluations or a combination of the two. Separate internal audit assignments are initiated by the Board or management. The scope and frequency of separate evaluations depend primarily on the assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control deficiencies are reported to the management, and serious matters to the Audit and Risk Committee and the Board. Group accounting performs monthly consistency checks of income statement and balance sheet for subsidiaries and business areas. The group accounting team also conducts management fee and cost analysis, quarterly fair value change checks, impairment and cash flow checks as well as control of IFRS and other applicable regulatory changes. The Audit and Risk Committee and the Board regularly review group-level financial reports, including comparison of actual figures with prior periods and budgets, other forecasts, monthly cash flow estimates and covenant levels. In addition, the Audit and Risk Committee monitors in more detail, among others, the reporting process (including the management’s discretionary evaluations), risk management, internal control and audit. The Risk and Valuations team, which is independent from the investment teams, is responsible for the quarterly valuation process, monitoring and forecasting fair value movements and preparing the models for and calculating carried interest income for the funds under the management of the Group. CapMan’s subsidiaries holding a license to act as alternative investment fund manager or investment firm granted by the Finnish Financial Supervisory Authority, have separate risk management and internal audit functions as required by applicable laws. The compliance function oversees that the operations of the CapMan group comply with regulation and that the group companies will adopt the relevant new regulations promptly.
10. Other information
10.1 Procedures related to insider administration
CapMan complies with the Market Abuse Regulation’s (“MAR”, 596/2014) rules on managers’ transactions and insider management and the guidelines for insiders issued by Nasdaq Helsinki. In addition, CapMan has its own internal policy regarding insider management. The group’s compliance function is responsible for insider administration and shall e.g. monitor that employees comply with insider rules and trading restrictions, maintain project-specific insider lists, arrange internal trainings for employees on insider rules and on disclosure responsibilities of listed companies. CapMan maintains an internal, non-public list on managers and persons closely associated with them, which are, according to MAR, obliged to disclose all transactions made with financial instruments issued by CapMan. CapMan has determined the members of the Board and the Management Group (including the CEO) as managers defined in the MAR (hereinafter “Manager(s)”). Each Manager has been instructed to inform the persons closely associated with them about the obligation to disclose transactions. CapMan publishes a release on each transaction which has been executed by a Manager or his/her closely associated person with the financial instruments issued by CapMan in case the total value of all transactions of this person exceeds EUR 5,000 within a calendar year. The total holding of CapMan’s shares and share-based rights of each Manager is annually published as a part of the Annual Report. CapMan maintains project-specific insider lists for the projects, as set out in MAR, which may have a significant effect on the prices of the financial instruments issued by CapMan. These project-specific insider lists are drafted and maintained in accordance with the MAR and CapMan’s internal policies and are established following a decision to delay the disclosure of inside information. The persons added to the project-specific list and other persons who possess inside information related to CapMan, are advised not to trade in financial instruments issued by CapMan. Prior to trading in CapMan’s financial instruments, each manager and employee is obliged to personally assess whether he/she is in the possession of inside information related to CapMan. CapMan’s Managers (as defined above) or employees who ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT 21 receive financial information related to CapMan Plc are not permitted to trade in financial instruments issued by CapMan during a closed period of 30 calendar days prior to the publication of CapMan’s interim reports, half year financial report or financial statements bulletin (closed period). The publication dates are announced annually over a stock exchange release. CapMan’s Managers and employees have been instructed to inform their closely associated persons regarding closed periods and trading restrictions on CapMan’s financial instruments during the closed period. According to the internal trading pre-approval procedure, the Managers of CapMan group are obliged to request a written pre-approval from the group’s compliance function before trading in financial instruments issued by CapMan.
10.2 Whistleblowing
CapMan has a whistleblowing channel for personnel which offers a possibility to alert CapMan about suspicions of misconduct in confidence and/or anonymously. The channel is available on the company’s intranet. During 2023, one whistleblowing report was received. The report was processed in accordance with the company’s whistleblowing process. In February 2023, CapMan also introduced an external whistleblowing channel on the company’s website for all stakeholders. Both internal and external channels help CapMan to promote responsible business practices. Reporting through the channels is secured and reports may be submitted anonymously.
10.3 Principles regarding Related Party Transactions
The company does not customarily enter into transactions with its related parties which would be significant for the company and deviate from the ordinary course of business or would be conducted in deviation from customary market terms. Possible significant and out of ordinary transaction deviating from market terms would be discussed in the Board meeting. The Board also confirms the company’s principles regarding related party transactions. The related party transactions are monitored by the financial administration and the legal function as part of the company’s customary reporting and control processes and the relevant persons are instructed of the related party matters. The company maintains a list of its related parties and related-party transactions are reported in the financial statements, and significant related-party transactions published as stock exchange releases, in accordance with applicable rules and regulations.# 10.4 Audit fees
Ernst & Young Oy, authorised public accountants, acted as auditor of the company in 2023. Ms. Kristina Sandin, APA, acted as the lead auditor. The audit fees paid to the auditor amounted to 371,000 euros (361,000 euros 2022) and the fees related to other non-audit related services amounted to 90,000 euros (12,000 in 2022).
10.5 Internal audit
Taking into account the nature and extent of the company’s business, CapMan has not considered it necessary to organise internal audit as a separate function. The internal audit of the licensed operations has been outsourced to an external service provider.
ANNUAL REPORT 2023 CORPORATE GOVERNANCE STATEMENT
22 Report of the Board of Directors
We govern by our values
Report of the Board of Directors
CONTENTS
We build better managed and financially stable organisations to contribute to overall economic wellbeing
Report of the Board of Directors .. 23
Shares and shareholders ........ 31
Calculation of Key Ratios ....... 32
Key figures .................. 33
24 Report of the Board of Directors
Group turnover and result in 1–12 2023
CapMan Group’s turnover totalled MEUR 59.4 in the period spanning 1 January–31 December 2023 (1 January–31 December 2022: MEUR 67.5). The 12 per cent decrease in turnover was due to lower carried interest income and lower service income compared to 2022. Management fees remained at level with 2022. Expenses were MEUR 48.6 (MEUR 51.0) in total and consisted of material and services, personnel expenses, depreciations and amortisations, and other operating expenses. The decrease in expenses was mainly due to lower salaries and compensation while other expenses remained at level with the comparison period. Expenses related to material and services were MEUR 1.9 (MEUR 1.0). Personnel expenses, including employer contributions, were MEUR 33.9 (MEUR 34.6). Depreciations and amortisations were MEUR 1.5 (MEUR 4.2). Other operating expenses amounted to MEUR 11.4 (MEUR 11.2). Operating expenses less items affecting comparability were MEUR 46.6 (MEUR 48.4). Fair value changes of investments were MEUR –6.1 (MEUR +36.5) in 2023. The Group’s operating profit was MEUR 4.7 (MEUR 53.1). The decrease from the comparison year was mainly due to negative fair value changes. Operating profit less items affecting comparability was MEUR 6.7 (MEUR 55.7). Comparable fee profit increased from the comparison period and was MEUR 9.7 (MEUR 9.5), growth 2 per cent. Financial income and expenses amounted to MEUR –0.7 (MEUR –5.5) and decreased due to a revaluation of a redemption liability relating to a minority share of a subsidiary. Expenses in the comparison year also included a MEUR 1.2 write-down of loan receivables from an investment team operating in Russia and formerly part of CapMan Group. Profit before taxes was MEUR 4.0 (MEUR 47.6) and profit after taxes was MEUR 3.4 (MEUR 41.0). Diluted earnings per share were 0.8 cents (24.8 cents). Comparable diluted earnings per share were 1.9 cents (26.4 cents). A quarterly breakdown of turnover and profit, together with turnover, operating profit/loss, and profit/loss by segment for the period as well as items affecting comparability are described in the Notes to the Financial Statements in section 2 Segment information.
Management Company business
Turnover generated by the Management Company business totalled MEUR 48.2 in 2023 (MEUR 55.9). The decrease was mainly due to lower carried interest income compared to the previous year. Fee income was MEUR 45.1 (MEUR 46.2). New capital in funds and investment programmes raised in 2023, as well as other asset management services, contributed favourably to fee income. The negative development was due to the decrease in real estate fund administration service fees. Carried interest in 2023 was MEUR 3.1 (MEUR 9.6) mainly due to exits from the CapMan Growth Equity 2017 fund. In the comparison year, CapMan received carried interest income mainly from the CapMan Growth Equity 2017 and CapMan Nordic Real Estate funds, which transferred to carry during 2022. Of the turnover, 92 per cent was income based on long-term contracts booked over time (82 per cent). Operating expenses of the Management Company business amounted to MEUR 36.0 (MEUR 33.6). Operating expenses excluding items affecting comparability amounted to MEUR 34.6 (MEUR 33.6). Operating profit of the Management Company business was MEUR 12.2 (MEUR 22.3). Comparable operating profit was MEUR 13.7 (MEUR 22.3). The decrease was mainly due to lower carried interest income during the year.
Service business
Turnover generated by Service business totalled MEUR 10.6 (MEUR 11.1), a 5 per cent decrease due to the sale of JAY Solutions, which was completed on 1 February 2023. The Service business segment includes procurement service CaPS, which grew by 17 per cent (27 per cent) during 2023. Material and service fees from CaPS’s license business amounted to MEUR 1.9 (MEUR 1.0). Operating expenses of the Service business were MEUR 2.8 (MEUR 7.7). Operating expenses excluding items affecting comparability were MEUR 2.8 (MEUR 5.1). The operating profit of the Service business was MEUR 6.0 (MEUR 3.0). Comparable operating profit of the Service business was MEUR 6.0 (MEUR 5.6), growth 8 per cent.
Investment business
Fair value of fund investments was MEUR 158.9 on 31 December 2023 (31 December 2022: MEUR 169.1). Fair value changes were mainly driven by fund investments and were MEUR –6.1 (MEUR +36.5) in 2023, corresponding to a 3.4 per cent decrease in value (1 January–31 December 2022: +25.3 per cent). CapMan’s own funds developed on average positively over 2023 especially due to the strong development of Private Equity and Infra funds. The development of Real Estate funds was on average negative, due to an unfavourable market situation. Overall, fair value changes were negative due to the negative fair value development of external, predominantly venture capital funds. CapMan invested a total of MEUR 18.1 in its funds in 2023 (MEUR 29.3). CapMan received distributions from funds totalling MEUR 17.6 (MEUR 27.6). The amount of remaining commitments that have yet to be called totalled MEUR 85.2 as at 31 December 2023 (31 December 2022: MEUR 89.1). Capital calls, distributions and remaining commitments are detailed in the Notes to the Financial Statements in Section 17 Investments at fair value through profit and loss.
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Balance sheet and financial position as at 31 December 2023
CapMan’s balance sheet totalled MEUR 241.5 as at 31 December 2023 (31 December 2022: MEUR 270.5). Non-current assets amounted to MEUR 179.9 (MEUR 188.4), of which goodwill totalled MEUR 7.9 (MEUR 7.9). As at 31 December 2023, fund investments at fair value totalled MEUR 158.9 (MEUR 169.1 as at 31 December 2022). Other financial assets at fair value were MEUR 0.5 (MEUR 0.4). Long-term receivables amounted to MEUR 6.5 (MEUR 5.5). Current assets amounted to MEUR 61.7 (MEUR 76.4). Cash in hand and at banks amounted to MEUR 41.0 (MEUR 55.6). CapMan’s interest-bearing net debt amounted to MEUR 52.8 as at 31 December 2023 (MEUR 37.4). CapMan’s total interest-bearing debt as at 31 December 2023 is outlined in Table 1. CapMan’s bonds and long-term credit facility include financing covenants, which are conditional on the company’s equity ratio and net gearing ratio. CapMan honoured all covenants as at 31 December 2023. The senior bond issued in 2022 is linked to sustainability targets, which CapMan achieved in April 2023. Trade and other payables totalled MEUR 24.2 on 31 December 2023 (31 December 2022: MEUR 18.4).
The Group’s cash flow from operations totalled MEUR +12.1 in 2023 (MEUR +6.0). Higher fee profit and changes in working capital contributed to the comparably larger inflows of cash from operations. CapMan receives management fees from funds semi-annually, in January and July, which is shown under working capital in the cash flow statement. Cash flow from investments totalled MEUR +3.5 (MEUR +2.4) and includes, inter alia, investments and repaid capital received by the Group. CapMan makes investments mainly through its investment company and its investments and cash on hand are classified as fund investments. Cash flow before financing totalled MEUR +15.5 (MEUR +8.5) and reflects the development in the Management Company business, Service business and Investment business. Cash flow from financing was MEUR –30.3 (MEUR –18.0) and included the payment of dividends and equity repayment.
Sustainability
CapMan’s vision is to become the most responsible private assets company in the Nordics. A strategic objective is to integrate sustainability into all operations and implement it in the product offering, fundraising, investment activities, fund management, services and the development of personnel and work environment, among others.
Progress on environmental targets
During 2023, CapMan has made progress with its climate targets in line with the Science Based Targets initiative. CapMan has set to achieve net zero emissions by 2040. The target was established at the end of 2023.# ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS
9 percent of the eligible Private Equity & Infra portfolio companies have set science-based targets for reducing greenhouse gas emissions. Emission reduction plans have been developed for real estate properties and their emission reductions will be published later in the first quarter of the year in accordance with the Science Based Targets initiative. CapMan has launched a project to assess the dependencies, impacts, risks, and opportunities related to nature in portfolio companies and properties where environmental aspects are considered essential. As part of the nature-positive approach, CapMan has adopted the WWF Green Office environmental management system with the aim of certifying four CapMan offices in 2024.
Progress on social targets
CapMan’s employee well-being has remained high with an eNPS of 51, above the target level of 50. Employee participation was measured for the first time in 2023 and was 81 on a scale of 1–100. A policy promoting diversity, equity, and inclusion (DEI) was implemented and an internal DEI working group was established. A comprehensive assessment and analysis of human rights risks in CapMan’s and value chains’ operations was carried out to identify and correct any deficiencies. Although no serious violations or deficiencies were found, corrective action has been taken based on the analysis. CapMan has set medium- and long-term percentage targets for gender diversity, including for appointments to the Management Group and Partner level. By 2025, a maximum of 70% of appointments to the Management Group and investment teams will be of one gender (if there are multiple appointments). The long-term goal (2033) is that the Management Group will consist of no more than 60% of one gender and that the proportion of female partners will be at least 20%.
Table 1: CapMan’s interest bearing debt
| Debt amount 31 Dec 2023 (MEUR) | Matures latest | Annual interest (%) | Debt amount 31 Dec 2022 (MEUR) |
|---|---|---|---|
| Senior bond (issued in 2020) | Q4 2025 | 4.00% | 50.0 |
| Senior bond (issued in 2022) | Q2 2027 | 4.50% | 40.0 |
| Long-term credit facility (drawn/available) | Q3 2024 | Reference rate + 1.75- 2.70% | 0/20.0 |
ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 26
return on investment was 3.0 per cent (24.2 per cent). Equity ratio was 47.8 per cent (52.7 per cent). According to CapMan’s long-term financial targets, the target level for the company’s return on equity is on average over 20 per cent. The objective for the equity ratio is more than 50 per cent.
Table 3: CapMan’s key figures
| 31.12.23 | 31.12.22 | |
|---|---|---|
| Earnings per share, cents | 0.8 | 25.1 |
| Diluted earnings per share, cents | 0.8 | 24.8 |
| Comparable diluted earnings per share, cents | 1.9 | 26.4 |
| Shareholders' equity / share, cents | 72.6 | 90.2 |
| Share issue adjusted number of shares, avg. | 158,573,903 | 157,560,284 |
| Return on equity, % | 2.6 | 30.5 |
| Return on equity, comparable, % | 4.0 | 32.4 |
| Return on investment, % | 2.1 | 23.1 |
| Return on investment, comparable, % | 3.0 | 24.2 |
| Equity ratio, % | 47.8 | 52.7 |
| Net gearing, % | 45.9 | 26.3 |
Proposal of the Board of Directors regarding distribution of funds
CapMan’s updated distribution policy is to pay sustainable distributions that grow over time. CapMan’s objective is to distribute at least 70 per cent of the Group’s profit attributable to equity holders of the company excluding the impact of fair value changes, subject to the distributable funds of the parent company. The Board of Directors’ resolution proposal to the Annual General Meeting (AGM) to be held on 27 March 2024 is a combined proposal of a dividend distribution and an authorisation for the Board of Directors to decide on distribution of an additional dividend. The Board of Directors expects the overall dividend distribution to be EUR 0.10 per share for 2023.
Assets under management as at 31 December 2023
Assets under management refers to the remaining investment capacity, mainly equity, of funds and capital already invested at acquisition cost or at fair value, when referring to mandates and open-ended funds. Assets under management is calculated based on the capital, which forms the basis for management fees, and includes primarily equity without accounting for the funds’ debt. Assets increase as fundraising for new funds progresses or as investments are executed under investment mandates and declines as exits are completed. In addition, changes in fair values impact the assessment of assets under management of open-ended funds as well as wealth management. Assets under management was MEUR 5,005 as at 31 December 2023 (31 December 2022: MEUR 5,039). A total of MEUR 391 in new assets was raised across all investment areas. The growth in assets under management was constrained by completed exits, negative fair value changes in open-ended real estate funds and occasional redemptions. Assets under management per fund type is displayed in Table 2.
Table 2: Assets under management (incl. funds and mandates)
| 31.12.23 (MEUR) | 31.12.22 (MEUR) | |
|---|---|---|
| Real Estate | 2,933 | 3,187 |
| Private Equity & Credit | 1,022 | 933 |
| Infra | 562 | 442 |
| Wealth Management | 488 | 478 |
| Total assets under management | 5,005 | 5,039 |
Key figures 31 December 2023
CapMan’s return on equity was 2.6 per cent on 31 December 2023 (31 December 2022: 30.5 per cent) and the comparable return on equity was 4.0 per cent (32.4 percent). Return on investment was 2.1 per cent (23.1 per cent) and the comparable return on investment was 3.0 per cent (24.2 per cent). Equity ratio was 47.8 per cent (52.7 per cent).
The Board of Directors proposes to the AGM that a dividend in the total amount of EUR 0.06 per share would be paid for 2023. The payment date would be 9 April 2024. The Board of Directors further proposes to the AGM that the Board of Directors be authorised to decide on an additional dividend in the maximum amount of EUR 0.04 per share. The authorisation would be effective until the end of the next Annual General Meeting. The Board of Directors intends to resolve on the additional dividend in its meeting scheduled for 18 September 2024. CapMan’s distributable funds amounted to MEUR 37.5 on 31 December 2023.
Publication of the Financial Statements and the Report of the Board of Directors, and the Annual General Meeting for 2024
CapMan Group’s Financial Statements and the Report of the Board of Directors for 2023 will be published as part of the company’s Annual Report for 2023 in February 2024 during week 10. CapMan Plc’s 2024 Annual General Meeting (AGM) will be held on Wednesday 27 March 2024 at 10:00 a.m. in Helsinki. The Notice to the Annual General Meeting and other proposals of the Board of Directors to the Annual General Meeting are published by 6 March 2024 the latest. Complete financial statements, as required under the terms of the Finnish Companies Act, will be available on CapMan’s website by 6 March 2024 the latest.
Corporate Governance Statement
CapMan Plc’s Corporate Governance Statement will be published separately from the Report of the Board of Directors as part of the company’s Annual Report for 2023 during week 10 and will be available on the company’s website by 6 March 2024 the latest.
ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 27
Authorisations given to the Board by the AGM
The 2023 AGM authorised the Board of Directors to decide on the repurchase and/or on the acceptance as pledges of the company’s shares. The number of own shares to be repurchased and/or accepted as pledge on the basis of the authorisation shall not exceed 14,000,000 shares in total, which on the day of the AGM corresponded to approximately 8.86 per cent of all shares in the company. Only the unrestricted equity of the company can be used to repurchase own shares on the basis of the authorisation. The AGM also authorised the Board to decide on the issuance of shares and other special rights entitling to shares. The number of shares to be issued on the basis of the authorisation shall not exceed 14,000,000 shares in total, which on the day of the AGM corresponded to approximately 8.86 per cent of all shares in the company. The authorisation shall remain in force until the following AGM and 30 June 2024 at the latest. Further details on these authorisations can be found in the stock exchange release on the decisions taken by the AGM issued on 15 March 2023.
Shares and shareholders
Shares and share capital
There were no changes in CapMan’s share capital during 2023. Share capital totalled EUR 771,586.98 as at 31 December 2023. CapMan had 158,849,387 shares outstanding as at 31 December 2023 (158,054,968 shares as at 31 December 2022). All shares generate equal voting rights (one vote per share) and rights to a dividend and other distribution to shareholders. CapMan Plc’s shares are included in the Finnish book-entry system.
Company shares
As at 31 December 2023, CapMan Plc held a total of 26,299 CapMan shares, representing 0.02 % of shares and voting rights. The market value of own shares held by CapMan was EUR 60,225 as at 31 December 2023 (31 December 2022: EUR
Decisions of the 2023 Annual General Meeting
Decisions of the AGM regarding distribution of funds
CapMan’s 2023 AGM decided, in accordance with the proposal of the Board of Directors, that a dividend of EUR 0.08 per share, equivalent to a total of approx. MEUR 12.6 as well as an equity repayment of EUR 0.09 per share to be returned from the invested unrestricted equity fund, equivalent to a total of approx. MEUR 14.2, would be paid to shareholders. In total, EUR 0.17 per share would be paid to shareholders, equivalent of a total of MEUR 26.9, from distributable funds for 2022. The dividend and equity repayment is paid in two instalments six months apart. The first instalment of EUR 0.09 per share was paid on 24 March 2023 and the second instalment of EUR 0.08 per share was paid on 22 September 2023. Decisions regarding the distribution of funds have been described in greater detail in the stock exchange releases on the decisions taken by the General Meetings issued on 15 March 2023 and 13 September 2023.# REPORT OF THE BOARD OF DIRECTORS
Decisions of the AGM regarding the composition of the Board
The 2023 AGM decided that the Board of Directors comprises six members. Mr. Joakim Frimodig, Mr. Johan Bygge, Ms. Catarina Fagerholm, Mr. Johan Hammarén, Ms. Mammu Kaario and Mr. Olli Liitola were elected as members of the Board of Directors for a term of office expiring at the end of the next Annual General Meeting. The Board composition and remuneration have been described in greater detail in the stock exchange releases regarding the decisions of the AGM and the organisational meeting of the Board issued on 15 March 2023.
Amendment of the Articles of Association
The Annual General Meeting decided that Article 10 of the Articles of Association be amended to enable holding a general meeting entirely without a meeting venue as a so-called remote meeting in addition to the company’s domicile Helsinki. The change has been described in greater detail in the stock exchange release regarding the decisions of the AGM issued on 15 March 2023.
Trading and market capitalisation
CapMan Plc’s shares closed at EUR 2.29 on 31 December 2023 (31 December 2022: EUR 2.71). The trade-weighted average price for 2023 was EUR 2.49 (EUR 2.66). The highest price paid was EUR 3.09 (EUR 3.19) and the lowest EUR 1.92 (EUR 2.22). The number of CapMan Plc shares traded totalled 22.2 million (36.2 million), valued at MEUR 55.2 (MEUR 96.4). The market capitalisation of CapMan Plc shares as at 31 December 2023 was MEUR 363.8 (31 December 2022: MEUR 427.5).
Shareholders
The number of CapMan Plc shareholders increased by 2 per cent from the comparison period and totalled 31,157 as at 31 December 2023 (31 December 2022: 30,608). There were no flagging notifications in 2023. As of 31 December 2023, the Board of Directors and Management Group owned 4,166,990 CapMan shares in total either directly or through controlling interest companies, which corresponded to 2.6 per cent of all shares and votes outstanding. Details on CapMan Plc’s owners by sector and size, together with the company’s major shareholders, nominee-registered shares, and redemption obligation clauses covering company shares are presented in Section 23 Share capital and shares.
Personnel
CapMan employed 183 people on average in 2023 (1 January–31 December 2022 average: 186), of whom 133 (141) worked in Finland and the remainder in the other Nordic countries, Luxembourg and the United Kingdom. A breakdown of personnel by country is presented in the Section 5 Employee benefit expenses. The decrease in employees was due to the disposal of JAY Solutions completed in the beginning of February. The number of employees has increased in other functions. JAY Solutions accounted for an average of 2 (20) persons during 2023.
ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 28
Remuneration and incentives
CapMan’s remuneration scheme consists of short-term and long-term incentive schemes. The short-term scheme covers all CapMan employees, excluding the CEO of the company, and its central objective is earnings development, for which the Board of Directors has set a minimum target. CapMan had two long-term schemes consisting of investment based long-term share-based incentive plans (Performance Share Plan) for key employees, of which one was terminated during 2023. In the investment based long-term share-based incentive plans the participants are committed to shareholder value creation by investing a significant amount in CapMan Plc shares.
CapMan’s 2020 investment-based long-term incentive plan included one performance period that commenced on 1 April 2020 and ended on 31 March 2023. An early payment of the vested reward shares from the 2020 incentive plan was conducted in April 2022 to facilitate participants’ investment into the new 2022 investment-based long-term incentive plan. Irrespective of the early payment, the 2020 plan remained in force until the end of its performance period on 31 March 2023 and the thereby following payment of incentives in line with the original terms. The rewards from the plan were paid in full with company shares.
CapMan’s 2022 investment-based long-term incentive plan includes three performance periods that commenced on 1 April 2022 and end on 31 March 2023, 2024 and 2025, respectively. The participants may earn a performance-based reward from each of the performance periods and a matching reward from the 2022–2025 period. The rewards from the plan will be paid fully in company shares in 2024, 2025 and 2026. The aim of the 2022 investment-based long-term incentive plan is to align remuneration with CapMan’s sustainability agenda, to retain the plan participants in the company’s service, and to offer them a competitive reward plan based on owning, earning and accumulating the company’s shares. The prerequisite for receiving a reward on the basis of the plans is that a participant acquires company’s shares or allocates previously owned company’s shares up to the number determined by the Board of Directors. The performance-based reward from the plans is based on the company share’s Total Shareholder Return, the achievement of sustainability targets and on a participant’s employment or service upon reward payment. The Board shall resolve whether new shares or existing shares held by the company are given as reward. The target group of the plans consists of approximately 20 people, including the members of the Management Group. Additional information about remuneration schemes is presented in Section 30 Share-based payments.
Other significant events in 2023
Pia Kåll started as the CEO of CapMan Plc on 15 March 2023. The company’s previous CEO Joakim Frimodig was elected to the Board of Directors by the 2023 Annual General Meeting and serves as full-time Chair of the Board of Directors starting from 15 March 2023.
In February 2023, CapMan Plc and non-controlling share-holders of JAY Solutions sold their share of CapMan’s subsidiary JAY Solutions to Swedish Bas Invest AB.
In April 2023, CapMan resolved on a directed share issue of 794,419 new shares as payment of the vested reward shares from the 2020 incentive plan to CapMan Group management and selected key employees. The new shares were registered with the Trade Register on 4 May 2023.
In May 2023, CapMan Growth Equity 2017 fund sold its share in Coronaria. The fund is in carry and the transaction generated carried interest for CapMan.
In September 2023, Mika Koskinen became the new Managing Partner of CapMan Wealth Services and a member of the CapMan Plc Management Group. Christian Borgström stepped down from the Management Group and remains a Senior Partner in the company. In September, Johan Pålsson announced his resignation as Managing Partner of CapMan Buyout as he will take on new responsibilities outside of CapMan.
Fundraising continued in several funds open for new commit- ments. Most commitments were raised for CapMan Nordic Infrastructure II fund, which reached MEUR 272 at the end of 2023. CapMan established a new CapMan Social Real Estate fund at the end of 2023, which stands at MEUR 55 following an initial investment. The fund continues fundraising targeting EUR 500 million of equity commitments and total investment capacity of nearly EUR 1 billion over the coming years.
In October 2023, CapMan updated its distribution policy. CapMan’s updated distribution policy is to pay sustainable distributions that grow over time.
In December, CapMan announced an acquisition of Dasos Capital Oy and an expansion into natural capital. The acquisition is expected to close during the first half of 2024. The debt free purchase price is EUR 35 million. In addition, CapMan has committed to paying an additional earn-out consideration of a maximum EUR 5 million based on incurred management fee turnover in 2025 and 2026. The equity price for Dasos’ shares is paid in shares of CapMan by a directed share issue and a cash consideration.
Events after 31 December 2023
In January 2024, an Extraordinary General Meeting of share- holders resolved in accordance with the Board of Directors’ proposal that the Board of Directors be authorised to decide to issue a maximum of 20,000,000 new shares by way of a directed share issue in deviation from the shareholders’ pre-emp- tive right. The shares to be issued under the authorisation would be directed to the current shareholders of Dasos Capital Oy in proportion to the number of Dasos Capital Oy shares sold by them to CapMan. The directed share issue is expected to be realised in the first half of 2024 in conjunction to the closing of the acquisition. The completion of the acquisition is also conditional on, among others, the approval by the Finnish Competition and Consumer Authority. The approval was obtained in February 2024.
ANNUAL REPORT 2023 REPORT OF THE BOARD OF DIRECTORS 29
Significant risks and short-term uncertainties
CapMan faces many different risks and uncertainties which, if realised, could affect its strategic direction, financial position, earnings, operations and reputation. Assessment and manage- ment of risks is an integral part of CapMan’s ability to conduct its operations in a successful manner. CapMan classifies risks according to various categories and identifies principal risks for each category. CapMan performs an annual review of the risk environment at the end of the financial year and reports on any material developments quarterly. An annual risk assessment and risk descriptions is presented on the website under https:// capman.com/shareholders/risks/.
A summary of risks is presented in Table 4.
Table 4: Risk classification and principal risks
| Risk classification | Principal risks |
|---|---|
| 1. Strategic risks | • Failure to achieve strategic or performance targets • Failure to select the correct strategy in a competitive environment • Failure to recruit and retain key personnel • Failure to scale the business |
| 2. | |
| ## REPORT OF THE BOARD OF DIRECTORS |
Risk Factors
- Financial risks
- Poor financial performance
- Insufficient liquidity position
- Failure to obtain financing
- Market risks
- Interest rate, inflation and asset valuation volatility
- Changes in customer preferences
- Fluctuations of the transaction market
- Failure in fundraising
- Operational risks
- Cyber threats and system errors
- Inadequate or failed processes or controls
- Corruption, fraud or criminal behaviour
- Mistakes
- Regulatory risks
- Adverse changes in the regulatory environment
- Sustainability risks
- Failure to invest in sustainable assets and ESG related incidents or lack of appropriate ESG approach in portfolio companies
- Unreasonable increase in costs to comply with sustainability and reporting requirements
- Reputational risk
- Negative public perception
Long-term financial objectives
CapMan’s distribution policy is to pay sustainable distributions that grow over time. CapMan’s objective is to distribute at least 70 per cent of the Group’s profit attributable to equity holders of the company excluding the impact of fair value changes, subject to the distributable funds of the parent company. In addition, CapMan may pay out distributions accrued from investment operations, taking into consideration foreseen cash requirements for future investments.
The combined growth objective for the Management Company and Service businesses is more than 15 per cent p.a. on average. The objective for return on equity is more than 20 per cent p.a. on average. CapMan’s equity ratio target is more than 50 per cent. CapMan expects to achieve these financial objectives gradually and key figures are expected to show fluctuations on an annual basis considering the nature of the business.
Outlook estimate for 2024
CapMan’s objective is to improve results in the long term, taking into consideration annual fluctuations related to the nature of the business. Carried interest income from funds managed by CapMan and the return on CapMan’s investments have a substantial impact on CapMan’s overall result. In addition to asset-specific development and exits from assets, various factors outside of the portfolio’s and CapMan’s control influence fair value development of CapMan’s overall investments, as well as the magnitude and timing of carried interest. For these reasons, CapMan does not provide numeric estimates for 2024.
CapMan estimates assets under management to grow in 2024. The company estimates fee profit also to grow in 2024. These estimations do not include possible items affecting comparability.
Helsinki, 6 February 2024
CAPMAN PLC
Board of Directors
ANNUAL REPORT 2023
REPORT OF THE BOARD OF DIRECTORS
30
CapMan’s largest shareholders as at 31 December 2023
| Number of shares and votes | Proportion of shares,% |
|---|---|
| Silvertärnan Ab | 22,680,519 |
| Keskinäinen Eläkevakuutusyhtiö Ilmarinen | 8,672,000 |
| Mikko Laakkonen | 6,834,635 |
| Keskinäinen työeläkevakuutusyhtiö Varma | 3,675,215 |
| Joensuun Kauppa ja Kone Oy | 3,296,466 |
| Vesasco Oy | 3,088,469 |
| Valtion Eläkerahasto | 2,500,000 |
| Sijoitusrahasto Danske Invest Suomi Osake | 2,053,200 |
| Hannu Laakkonen | 1,992,742 |
| Laine Capital Oy | 1,523,348 |
| Total | 56,316,594 |
| Nominee registered | 5,839,642 |
| Shareholdings of management | 4,166,990 |
CapMan has not received any flagging notifications during year 2023. An up-date information of all flagging notifications can be found at www.capman.com
Distribution of shareholdings by number of shares and sector as at 31 December 2023
| Shareholding | Number of Owners | % | Number of shares | % |
|---|---|---|---|---|
| 1–100 | 5,628 | 18.07% | 263,808 | 0.17% |
| 101–1,000 | 14,546 | 46.71% | 6,951,201 | 4.38% |
| 1,001–10,000 | 9,641 | 30.96% | 30,204,150 | 19.01% |
| 10,001–100,000 | 1,218 | 3.91% | 28,663,417 | 18.04% |
| 100,001–1,000,000 | 90 | 0.29% | 22,823,938 | 14.37% |
| 1,000 001– | 17 | 0.05% | 69,942,873 | 44.03% |
| Total | 31,140 | 100.00% | 158,849,387 | 100.00% |
| of which Nominee registered | 5,839,642 | 3.68% | ||
| On the book-entry register joint account | 18,709 | 0.01% |
| Sector | Number of shares and votes | % |
|---|---|---|
| Finnish Private Individuals | 81,810,277 | 51.50% |
| Other | 45,794,206 | 28.83% |
| Pension & Insurance | 19,381,177 | 12.20% |
| Fund company | 6,260,493 | 3.94% |
| Foundation | 1,516,438 | 0.95% |
| Treasury Shares | 26,299 | 0.02% |
| Anonymous ownership | 4,060,497 | 2.56% |
| Total | 158,849,387 | 100.00% |
| of which Nominee registered | 5,839,642 | 3.68% |
| On the book-entry register joint account | 18,709 | 0.01% |
Source: EuroClear Finland Ltd, as at 31 December 2023. Figures are based on the total number of shares 158,849,387 and total number of shareholders 31,140. CapMan Plc had 26,299 shares as at 31 December 2023.
Shares and shareholders
ANNUAL REPORT 2023
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31
Calculation of Key Ratios
- Adjusted Operating profit (or Operating profit, comparable) = Operating profit – items impacting comparability
- Adjusted profit for the financial year = Profit for the financial year – items impacting comparability
- Fee profit = Adjusted operating profit – carried interest – fair value gains/losses of investments
- Return on equity (ROE), % = Profit for the financial year (incl. non-controlling interest) × 100 / Shareholders’ equity (average, incl. non-controlling interest)
- Return on equity (ROE), comparable, % = Adjusted profit for the financial year (incl. non-controlling interest) × 100 / Shareholders’ equity (average, incl. non-controlling interest)
- Return on investment (ROI), % = Profit for the financial year + income taxes + financial income and expenses × 100 / Total shareholders’ equity + interest-bearing debt (average)
- Return on investment (ROI), % = Adjusted profit for the financial year + income taxes + financial income and expenses × 100 / Total shareholders’ equity + interest-bearing debt (average)
- Equity ratio, % = Total shareholders’ equity × 100 / Balance sheet total – advances received
- Net gearing, % = Net interest-bearing liabilities × 100 / Shareholders’ equity
- Earnings per share (EPS) = Profit/loss for the financial year attributable to the equity holders of the parent company / Share issue adjusted number of shares (average)
- Adjusted earnings per share (EPS) = Profit/loss for the financial year attributable to the equity holders of the parent company – items impacting comparability / Share issue adjusted number of shares (average)
- Shareholders’ equity per share = Shareholders’ equity attributable to the equity holders of the parent company / Undiluted number of shares at the end of the financial year
- Dividend and return of equity per share = Dividend and return of equity per share
- Dividend per earnings, % = Dividend and return of equity per share × 100 / Earnings per share
ANNUAL REPORT 2023
REPORT OF THE BOARD OF DIRECTORS
32
Key Performance Indicators for CapMan Group
| MEUR | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Turnover | 49.0 | 43.0 | 52.8 | 67.5 | 59.4 |
| Management fees | 24.9 | 29.0 | 36.6 | 38.8 | 39.0 |
| Sale of services | 17.2 | 13.1 | 13.3 | 19.1 | 17.2 |
| Carried interest | 6.9 | 0.9 | 2.9 | 9.6 | 3.1 |
| Other operating income | 0.0 | 0.1 | 0.0 | 0.0 | 0.1 |
| Materials and services | –1.0 | –1.9 | |||
| Operating expenses | –41.8 | –35.1 | –42.1 | –50.0 | –46.8 |
| Fair value gains/losses of investments | 12.2 | 4.4 | 33.9 | 36.5 | –6.1 |
| Operating profit | 19.4 | 12.3 | 44.6 | 53.1 | 4.7 |
| Operating profit, comparable | 25.0 | 12.3 | 44.6 | 55.7 | 6.7 |
| Financial income and expenses | –1.8 | –3.1 | –4.0 | –5.5 | –0.7 |
| Profit before taxes | 17.6 | 9.2 | 40.6 | 47.6 | 4.0 |
| Profit for the financial year | 15.9 | 6.3 | 35.4 | 41.0 | 3.4 |
| Return on equity (ROE), % | 12.7 | 5.2 | 29.4 | 30.5 | 2.6 |
| Return on equity (ROE), comparable, % | 16.0 | 5.2 | 29.4 | 32.4 | 4.0 |
| Return on investment (ROI), % | 10.5 | 6.3 | 21.2 | 23.1 | 2.1 |
| Return on investment (ROI), comparable, % | 13.5 | 6.3 | 21.2 | 24.2 | 3.0 |
| Equity ratio, % | 59.9 | 51.9 | 53.3 | 52.7 | 47.8 |
| Net gearing, % | 7.2 | 22.5 | 14.0 | 26.3 | 45.9 |
| Dividends and return of capital paid 1) | 20.0 | 21.9 | 23.6 | 26.9 | 15.9 |
| Personnel | 148 | 146 | 161 | 186 | 183 |
1) Proposal of the Board of Directors to the Annual General Meeting for the financial year 2023.
Key figures
ANNUAL REPORT 2023
REPORT OF THE BOARD OF DIRECTORS
33
Key Ratios Per Share
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Earnings per share, cents | 9.2 | 3.3 | 21.9 | 25.1 | 0.8 |
| Diluted earnings per share, cents | 9.0 | 3.3 | 21.4 | 24.8 | 0.8 |
| Comparable diluted earnings per share, cents | 11.6 | 3.3 | 21.4 | 26.4 | 1.9 |
| Shareholders’ equity/share, cents | 85.1 | 72.7 | 81.4 | 90.2 | 72.6 |
| Dividend/share, cents 1) | 13.0 | 14.0 | 15.0 | 17.0 | 10.0 |
| Dividend/earnings, % 1) | 141.3 | 424.2 | 68.5 | 67.7 | 1,250.0 |
| Average share issue adjusted number of shares during the financial year (’000) | 152,155 | 155,797 | 156,580 | 157,560 | 158,574 |
| Share issue adjusted number of shares at year-end (’000) | 153,755 | 156,459 | 156,617 | 158,055 | 158,849 |
| Number of shares outstanding (’000) | 153,728 | 156,433 | 156,591 | 158,029 | 158,823 |
| Own shares (’000) | 26 | 26 | 26 | 26 | 26 |
1) Proposal of the Board of Directors to the Annual General Meeting for the financial year 2023.
ANNUAL REPORT 2023
REPORT OF THE BOARD OF DIRECTORS
34
We manage our assets with long-term care
Financial Statements
35
Financial Statements
Group Statement of Comprehensive Income (IFRS) ........................... 37
Group Balance Sheet (IFRS) ......................................................... 38
Group Statement of Changes in Equity (IFRS) ............................... 39
Group Cash Flow Statement (IFRS) ................................................ 40
Notes to the Consolidated Financial Statements ............................. 41
- Accounting policies ............................................... 41
- Segment information ............................................. 47
- Turnover ........................................................ 50
- Other operating income ........................................... 50
- Employee benefit expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
- Depreciation ..................................................... 51
- Other operating expenses .......................................... 51
- Adjustments to cash flow statement and total cash outflow for leases ..... 52
- Fair value gains/losses of investments ............................... 52
- Finance income and costs ........................................ 52
11.# ANNUAL REPORT 2023 FINANCIAL STATEMENTS
Group Statement of Comprehensive Income (IFRS)
| 1,000 EUR | Note | 2023 | 2022 |
|---|---|---|---|
| Management fees | 39,034 | 38,847 | |
| Sale of services | 17,204 | 19,072 | |
| Carried interest | 3,126 | 9,613 | |
| Turnover | 2, 3 | 59,364 | 67,532 |
| Material and services | –1,856 | –985 | |
| Other operating income | 4 | 79 | 2 |
| Employee benefit expenses | 5 | –33,921 | –34,571 |
| Depreciation and impairment | 6 | –1,491 | –4,180 |
| Other operating expenses | 7 | –11,362 | –11,236 |
| Fair value gains/losses of investments | 9 | –6,115 | 36,547 |
| Operating profit | 4,697 | 53,108 | |
| Financial income and expenses | 10 | –687 | –5,475 |
| Profit before taxes | 4,010 | 47,633 | |
| Income taxes | 11 | –618 | –6,585 |
| Profit for the financial year | 3,392 | 41,049 | |
| Other comprehensive income: | |||
| Items that may be subsequently reclassified to profit or loss | |||
| Translation difference | 11 | –295 | |
| Total comprehensive income | 3,403 | 40,754 |
Profit attributable to:
Equity holders of the Company | | 1,346 | 39,616
Non-controlling interest | | 2,047 | 1,433
Total comprehensive income attributable to:
Equity holders of the Company | | 1,356 | 39,321
Non-controlling interest | | 2,047 | 1,433
Earnings per share for profit attributable to the equity holders of the Company:
Earnings per share (basic), cents | 12 | 0.8 | 25.1
Earnings per share (diluted), cents | 12 | 0.8 | 24.8
The Notes are an integral part of the Financial Statements.
Group Balance Sheet (IFRS)
| 1,000 EUR | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Tangible assets | 14 | 4,142 | 3,571 |
| Goodwill | 15 | 7,886 | 7,886 |
| Other intangible assets | 16 | 10 | 100 |
| Investments at fair value through profit and loss | 17 | ||
| Investments in funds | 158,907 | 169,063 | |
| Other financial assets | 508 | 434 | |
| Receivables | 18 | 6,525 | 5,545 |
| Deferred tax assets | 19 | 1,896 | 1,790 |
| 179,874 | 188,389 | ||
| Current assets | |||
| Trade and other receivables | 20 | 20,382 | 20,718 |
| Financial assets at fair value through profit and loss | 21 | 275 | 65 |
| Cash and bank | 22 | 41,017 | 55,571 |
| 61,674 | 76,353 | ||
| Assets held for sale | 13 | 0 | 5,769 |
| Total assets | 241,547 | 270,512 |
| 1,000 EUR | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Capital attributable to the Company’s equity holders | 23 | ||
| Share capital | 772 | 772 | |
| Share premium account | 38,968 | 38,968 | |
| Other reserves | 21,114 | 35,425 | |
| Translation difference | –570 | –582 | |
| Retained earnings | 52,914 | 65,473 | |
| 113,197 | 140,056 | ||
| Non-controlling interests | 1,928 | 2,088 | |
| Total equity | 115,125 | 142,144 | |
| Non-current liabilities | |||
| Deferred tax liabilities | 19 | 5,991 | 8,418 |
| Interest-bearing loans and borrowings | 24 | 92,470 | 91,854 |
| Other non-current liabilities | 25 | 484 | 7,343 |
| 98,945 | 107,615 | ||
| Current liabilities | |||
| Trade and other payables | 26 | 24,155 | 18,446 |
| Interest-bearing loans and borrowings | 27 | 1,386 | 1,112 |
| Current income tax liabilities | 1,936 | 478 | |
| 27,477 | 20,036 | ||
| Liabilities associated with assets held for sale | 13 | 0 | 717 |
| Total liabilities | 126,422 | 128,367 | |
| Total equity and liabilities | 241,547 | 270,512 |
The Notes are an integral part of the Financial Statements.
Group Statement of Changes in Equity (IFRS)
| 1,000 EUR | Note | Share capital | Share premium account | Other reserves | Translation difference | Retained earnings | Total | Non-controlling interests | Equity |
|---|---|---|---|---|---|---|---|---|---|
| Equity on 1 January 2022 | 23 | 772 | 38,968 | 52,718 | –286 | 33,607 | 125,778 | 1,616 | 127,394 |
| Profit for the year | 39,616 | 39,616 | 1,433 | 41,049 | |||||
| Other comprehensive income for the year | |||||||||
| Currency translation differences | 11 | –295 | –295 | –295 | |||||
| Total comprehensive income for the year | –295 | 39,616 | 39,321 | 1,433 | 40,754 | ||||
| Performance Share Plan | –1,126 | –1,126 | –1,126 | ||||||
| Dividends and return of capital | –17,297 | –17,297 | –6,755 | –24,052 | |||||
| Transactions with non-controlling interests | 4 | 131 | 131 | ||||||
| Equity on 31 December 2022 | 23 | 772 | 38,968 | 35,425 | –582 | 65,473 | 140,056 | 2,088 | 142,144 |
| Profit for the year | 1,346 | 1,346 | 2,047 | 3,393 | |||||
| Other comprehensive income for the year | |||||||||
| Currency translation differences | 11 | 11 | 11 | 11 | |||||
| Total comprehensive income for the year | 11 | 1,346 | 1,357 | 2,047 | 3,404 | ||||
| Performance Share Plan | –1,148 | –1,148 | –1,148 | ||||||
| Dividends and return of capital | –14,312 | –14,312 | –12,819 | –27,131 | |||||
| Transactions with non-controlling interests | 62 | 62 | –163 | ||||||
| Equity on 31 December 2023 | 23 | 772 | 38,968 | 21,114 | –570 | 52,914 | 113,197 | 1,928 | 115,125 |
The Notes are an integral part of the Financial Statements.
Group Cash Flow Statement (IFRS)
| 1,000 EUR | Note | 2023 | 2022 |
|---|---|---|---|
| Cash flow from operations | |||
| Profit for the financial year | 3,392 | 41,049 | |
| Adjustments on cash flow statement | 8 | 9,666 | –17,632 |
| Change in working capital: | |||
| Change in current non-interest-bearing receivables | 6,319 | –8,054 | |
| Change in current trade payables and other non-interest- bearing liabilities | –263 | –2,215 | |
| Interest paid | –4,373 | –3,955 | |
| Taxes paid | –2,658 | –3,149 | |
| Cash flow from operations | 12,084 | 6,044 | |
| Cash flow from investing activities | |||
| Acquisition of subsidiaries | –207 | 0 | |
| Proceeds from sale of subsidiaries | 4,202 | 322 | |
| Investments in tangible and intangible assets | –26 | –333 | |
| Investments at fair value through profit and loss | 172 | 3,039 | |
| Long-term loan receivables granted | –1,522 | –844 | |
| Receivables from long-term receivables | 47 | 175 | |
| Interest received | 786 | 83 | |
| Cash flow from investing activities | 3,452 | 2,441 |
| 1,000 EUR | Note | 2023 | 2022 |
|---|---|---|---|
| Cash flow from financing activities | |||
| Proceeds from borrowings | 28 | 11 | 39,791 |
| Repayment of long-term loan | 28 | –31,520 | |
| Payment of lease liabilities | –1,165 | –1,189 | |
| Dividends paid and return of capital | –29,194 | –25,073 | |
| Cash flow from financing activities | –30,317 | –17,992 | |
| Change in cash and cash equivalents | –14,782 | –9,507 | |
| Cash and cash equivalents at start of year | 55,944 | 65,207 | |
| Translation difference | –146 | 244 | |
| Cash and cash equivalents at end of year | 22 | 41,017 | 55,944 |
The Notes are an integral part of the Financial Statements.
Notes to the Consolidated Financial Statements
Group information
CapMan’s business comprise of private equity fund management and advisory services, as well as investment business. In the Management Company Business, the funds managed by CapMan make investments in Nordic companies and in real estate and infrastructure assets in the Nordic countries. The Management Company Business also includes the wealth services offered to smaller investors. The Service Business is consisted of procurement services to companies. Through its investment business, CapMan invests in the private equity asset class, mainly in its own funds, but also selectively in funds managed by external fund managers. The parent company of the Group is CapMan Plc and is domiciled in Helsinki, with a registered office address at Ludviginkatu 6, 00130 Helsinki, Finland. The Consolidated Financial Statements may be viewed online at www.capman.com, or a hard copy is available from the office of the parent company. The Consolidated Financial Statements for 2023 have been approved for publication by CapMan Plc’s Board of Directors on February 6, 2024. Pursuant to the Finnish Companies Act, shareholders may adopt or reject the financial statements and make decisions on amendments to them at the Annual General Meeting.
1. Accounting policies
Basis of preparation
The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) in force at December 31, 2023 as adopted by the European Union. International Financial Reporting Standards, referred to in the Finnish Accounting Act and in ordinances issued based on the provisions of this Act, are standards and their interpretations adopted in accordance with the procedure laid down in regulation (EC) No 1606/2002 of the European Parliament and of the Council. The notes to the consolidated financial statements have been prepared in accordance with the Finnish accounting standards as and where they supplement IFRS requirements. The preparation of financial statements in conformity with IFRS requires the Group’s management to make estimates and assumptions when applying CapMan’s accounting principles, and these are presented in more detail under ’Use of estimates’.# FINANCIAL STATEMENTS
Basis of Preparation
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 Consolidated Financial Statements is presented in thousands of euros. Figures in the accounts have been rounded and consequently the sum of individual figures can deviate from the presented sum figure.
New and amended standards and interpretations applied in financial year ended:
The Group has applied the following amended standards and interpretations that have come into effect as of January 1, 2023.
- Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
- Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies
- Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates
The above-mentioned amendments had no material impact on the consolidated financial statements, but due to amendments to IAS 1, the Group has added a section describing the impact of climate change related risks to Group’s financial statements in Note 32 Financial risk management.
Adoption of new and amended standards and interpretations applicable in future financial years:
The Group has not yet adopted the new and amended standards and interpretations already issued by the IASB, such as amendments to IAS 1 and IFRS 16. The Group will adopt them as of the effective date or, if the date is other than the first day of the financial year, from the beginning of the subsequent financial year. The Group, however, does not expect these amendments to have a material impact on the Group’s financial statements.
Consolidation principles
As CapMan has determined it meets the definition of an investment entity, its subsidiaries are classified either as operating subsidiaries, that are considered to be an extension of the Parent’s operations, and as such, they are consolidated or investment entity subsidiaries, that are fair valued through profit or loss. The types of subsidiaries and their treatment in CapMan’s consolidated accounts are as follows:
- Subsidiaries that provide fund management services (fund managers) or manage direct investments are considered to be an extension of the Parent’s business and as such, they are consolidated;
- Subsidiaries that provide fund management services (fund managers) and which also hold direct investments in the funds are consolidated and the investments in the funds are fair valued through profit or loss;
- Subsidiaries that provide fund investment advisory services (advisors) are considered to be an extension of the Parent’s business and as such, they are consolidated;
- Investment entity subsidiaries (CapMan Fund Investments SICAV-SIF), through which CapMan makes its own fund investments, are valued at fair value through profit or loss.
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 41
Significant judgment applied by management in the preparation of the consolidated financial statements – investment entity basis
CapMan qualifies as an investment entity as defined by IFRS 10, because the cornerstone of its business purpose is to obtain capital from investors to its closed-end private equity funds and to provide investment management services to those funds to gain both capital appreciation and investment income. Direct investments represent a relatively small part compared to total assets under management. CapMan obtains funds from many external investors for investment purposes. Documented exit strategies exist for each fund’s portfolio investments. Each fund’s portfolio investments and the real estate investments are fair valued and such fair value information is provided both to the fund investors on reporting date and also for CapMan’s internal management reporting purposes. In addition, management has assessed that the following characteristics further support investment entity categorization: CapMan holds several investments itself in the funds, investments in the funds are held by several investors, the investors are not related parties and the investments are held mostly in form of equity.
Significant judgment applied by management in the preparation of the consolidated financial statements – control over funds
One of the most significant judgments management made in preparing the Company’s consolidated financial statements is the determination that Company does not have control over the funds under its management. Control is presumed to exist when a parent has power over the investee, has exposure to variable returns from the fund and is able to use its power to affect the level of returns. CapMan manages the funds against management fee received from the investors on the basis of the investment management mandate negotiated with the investors and it also makes direct investments in the funds under its management. Accordingly, CapMan was required to determine, whether it is acting primarily as a principal or as an agent in exercising its power over the funds. In the investment management mandate the investors have set detailed instructions in all circumstances relating to the management of the fund limiting the actual influence of the general partner at very low. In general, having a qualified majority, investors have a right to replace the general partner and/or fund manager. The remuneration CapMan is entitled to is commensurate with the services it provides and corresponds to remuneration customarily present in arrangements for similar services on an arm’s length basis. CapMan’s direct investment (typically between of 1% to 5%) in the funds and thus the share of the variability of the returns compared with the other investors is relatively small. As an investor in the fund CapMan has no representation nor voting rights as it has been specifically excluded in the investment management mandate. Therefore, management has concluded that despite it from formal perspective exercises power over the funds by controlling the general partner of the fund, its actual operational ability is limited in the investment management mandate in a manner that the general partner is considered to act as an agent. Furthermore, CapMan’s exposure to variable returns from the fund and its power to affect the level of returns is very low for the reasons described above. Therefore, CapMan has determined that it does not have control over the funds under its management.
Subsidiaries
Subsidiaries are consolidated using the acquisition method. All intercompany transactions are eliminated in the Consolidated Financial Statements. Profit or loss, together with all other comprehensive income-related items, are booked to the owners of the parent company or owners not holding a controlling interest in the companies concerned. Non-controlling interests are presented in the Consolidated Balance Sheet under equity separately from equity attributable to the owners of the parent company. Subsidiaries and businesses acquired during the year are consolidated from the date on which the Group acquires a controlling interest, and in the case of companies and businesses divested by the Group during the financial year up to the date on which CapMan’s controlling interest expires.
Associates
An associated company is an entity in which the Group has significant influence but does not hold a controlling interest. This is generally defined as existing when the Group holds, either directly or indirectly, more than 20% of a company’s voting rights. Associated companies have been consolidated in accordance with the equity method. Under this, the investment in an associated company is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of the company’s net assets, less any impairment value. If the Group’s share of the loss incurred by an associated company exceeds the book value of its investment, the investment is booked at zero in the balance sheet, and losses exceeding book value are not combined unless the Group is committed to meeting the obligations of the company concerned. The Group’s share of the profit recorded by an associated company during the financial year in accordance with its holding in the company is presented as a separate item in the income statement after operating profit.
Segment reporting
Operating segments are reported in accordance with internal reporting presented to the chief operating decision maker. The latter is responsible for allocating resources to operating segments and evaluating their performance and is defined as the Group’s Management Group, which is responsible for taking strategic decisions affecting CapMan.
Translation differences
The result and financial position of each of the Group’s business units are measured in the currency of the primary economic environment for that unit (’functional currency’). The Consolidated Financial Statements are presented in euros, which is the functional and presentation currency of the Group’s parent company. Transactions in foreign currencies have been recorded in the parent company’s functional currency at the rates of exchange prevailing on the date of the transactions; in practice a reasonable approximation of the actual rate of exchange on the date of the transaction is often used. Foreign exchange differences for
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 42
operating business items are recorded in the appropriate income statement account before operating profit and, for financial items, are recorded in financial income and expenses. The Group’s foreign currency items have not been hedged. In the consolidated financial statements, the income statements of subsidiaries that use a functional currency other than the euro are translated into euros using the average rates for the accounting period.Their balance sheets are translated using the closing rate on the balance sheet date. All resulting exchange differences are recognised in other comprehensive income. Translation differences caused by changes in exchange rates for the cumulative shareholders’ equity of foreign subsidiaries have been recognised in other comprehensive income.
Tangible assets
Tangible assets have been reported in the balance sheet at their acquisition value less depreciation according to plan. Assets are depreciated on a straight-line basis over their estimated useful lives. The estimated useful lives are as follows:
- Machinery and equipment 4–5 years
- Other long-term expenditure 4–5 years
The residual values and useful lives of assets are reviewed on every balance sheet date and adjusted to reflect changes in the expected economic benefits where necessary. Tangible assets include right-of-use assets measured in accordance with IFRS 16, which are disclosed in the notes. More information on these items is included in chapter Leases of Accounting Policies.
Intangible assets
Goodwill
Goodwill acquired in a business merger is booked as the sum paid for a holding, the holding held by owners with a non-controlling interest, and the holding previously owned that, when combined, exceeds the fair value of the net assets of the acquisition. Write-offs are not made against goodwill, and possible impairment of goodwill is tested annually. Goodwill is measured as the original acquisition cost less accumulated impairment. The goodwill acquired during a merger is booked against the units or groups of units responsible for generating the cash flow used for testing impairment. Every unit or group of units for which goodwill is booked represents the lowest level of the organisation at which goodwill is monitored internally for management purposes. Goodwill is monitored at operating segment level.
Other intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets are recognised in the balance sheet only if the cost of the asset can be measured reliably and if it is probable that the future economic benefits attributable to the asset will flow to the Group. Agreements and trademarks acquired in business mergers are booked at fair value at the time of acquisition. As they have a limited life, they are booked in the balance sheet at acquisition cost minus accumulated write-offs. IT systems are expensed on the basis of the costs associated with acquiring and installing the software concerned. Depreciation is spread across the financial life of the relevant software licences. Impairment is tested whenever there is an indication that the book value of intangible assets may exceed the recoverable amount of these assets. The estimated useful lives are:
- Agreements and trademarks 5–10 years
- Other intangible assets 3–5 years
Impairment of assets
The Group reviews all assets for indications that their value may be impaired on each balance sheet date. If such indication is found to exist, the recoverable amount of the asset in question is estimated. The recoverable amount for goodwill is measured annually independent of indications of impairment. The need for impairment is assessed on the level of cash-gen- erating units, in other words at the smallest identifiable group of assets that is largely independent of other units and cash inflows from other assets. The recoverable amount is the fair value of an asset, less costs to sell or value in use. Value in use refers to the expected future net cash flow projections, which are discounted to the present value, received from the asset in question or the cash-generating unit. The discount rate used in measuring value in use is the rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment is recorded in the income statement as an expense. The recoverable amount for financial assets is either the fair value or the present value of expected future cash flows discounted by the initial effective interest rate . An impairment loss is recognised whenever the recoverable amount of an asset is below the carrying amount, and it is recognised in the income statement immediately. An impairment loss of a cash-generating unit is first allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then to reduce the carrying amounts of the other assets of the unit pro rata. An impairment loss is reversed if there is an indication that an impairment loss may have decreased and the carrying amount of the asset has changed from the recognition date of the impairment loss. The increased carrying amount due to reversal cannot exceed what the depreciated historical cost would have been if the impairment had not been recognised. Reversal of an impairment loss for goodwill is prohibited. The carrying amount of goodwill is reviewed for impairment annually or more frequently if there is an indication that goodwill may be impaired, due to events and circumstances that may increase the probability of impairment.
Financial assets
The Group’s financial assets have been classified into the following categories:
- financial assets at fair value through profit or loss
- financial assets at amortised cost
Investments in equity instruments are always measured at fair value through profit or loss. Classification of debt instruments, such as trade and loan receivables, is based on the business model for managing and for the contractual cash flow characteristics of these financial assets. Debt instruments of the Management Company Business and Service Business are classified as financial assets at amortised cost, because they are held solely in order to collect contractual cash flows, which are solely payments of principal and interest. Liquid current ANNUAL REPORT 2023 FINANCIAL STATEMENTS 43 debt instruments, such as investments to interest funds, made primarily for cash management purposes, are recognised at fair value through profit or loss. Non-current debt instruments included in the Investment Business are held for both selling purposes and collecting contractual cash flows (principal and interest), and the Group designates these assets as measured at fair value through profit or loss, in order to reduce inconsistency with regards to recognizing gains and losses of financial assets within the Investment Business, because the Group as an investment entity manages and monitors the performance of these investments based on fair values according to group’s investment strategy. Transaction costs are reported in the initial cost of financial assets, excluding items valued at fair value through profit or loss. All purchases and sales of financial instruments are recognised on the trade date. An asset is eligible for derecognition and removed from the balance sheet when the Group has transferred the contractual rights to receive the cash flows or when it has substantially transferred all of the risks and rewards of ownership of the asset outside the Group. Financial assets are classified as current if they have been acquired for trading purposes or fall due within 12 months.
Financial assets at fair value through profit or loss
Fair value through profit or loss class comprises of financial assets that are equity instruments or acquired as held for trading, in which case they can be either equity or debt instruments or derivative instruments. Debt instruments are also classified to this class, if they are held for both selling purposes and collecting contractual cash flows and which CapMan as an investment entity designates as financial assets at fair value through profit or loss at initial recognition in order to reduce inconsistency with regards to recognizing gains and losses of financial assets within the Investment Business. Fund investments and other investments in non-current assets are classified as financial assets at fair value through profit or loss and their fair value change is presented on the line item “Fair value changes of investments” in the statement of comprehensive income. Fair value information of the non-current fund investments is provided quarterly to Company’s management and to other investors in the investment funds management by CapMan. The valuation of CapMan’s funds’ investment is based on International Private Equity and Venture Capital Valuation Guidelines (IPEVG) and IFRS 13. Investments in listed shares, funds and interest-bearing 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 measured at fair value through profit or loss. Listed shares and derivative contracts in current assets are measured at fair value by the last trade price on active markets on the balance sheet date. The fair value of current investments in funds is determined as the funds’ net asset value at the balance sheet date. The fair value of current investments in interest-bearing securities is based on the last trade price on the balance sheet date or, in an illiquid market, on values determined by the counterparty. The change in fair value of current financial assets measured at fair value through profit or loss as well as dividend and interest income from short-term investments in listed shares and interest-bearing securities are presented on the line item “Fair value changes of investments” in the statement of comprehen- sive income, except for derivative instruments, which are used for a fair value hedge purpose. In these cases, the effectively hedging component of the derivative instrument’s fair value change is recognised in the same line item as the hedged item’s change in the statement of comprehensive income, and the remainder of the derivative’s fair value change is recognised as a financing cost.# CapMan uses derivative instruments, such as foreign currency forward contracts, to hedge against currency changes of foreign currency denominated trade receivables, but does not apply hedge accounting to these derivatives. In these cases, the change of fair value of the derivative instrument that offsets an equal change of the foreign currency denominated trade receivable, being the hedged item, is recognised on the same line item as the change of the hedge item, i.e. in turnover.
Financial assets at amortised cost
Financial assets at amortised cost mainly include non-interest-bearing trade receivables and interest-bearing loan receivables of the Management Company Business and Service Business. These financial assets are held solely in order to collect contractual cash flows, and whose payments are fixed or 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 reporting period, which are classified as non-current assets.
Expected credit loss of the trade receivables is evaluated by using the simplified approach allowed by IFRS 9, under which a provision matrix is maintained, based on the historical credit losses and forward-looking information regarding general economic indicators. In addition, materially overdue receivables are evaluated on a client basis. Expected credit losses of loan receivables is evaluated based on the general approach under IFRS 9. The group evaluates the credit risk of the borrowers by estimating the delay of the repayments and borrower’s future economic development. Depending on the estimated credit risk the group measures the loss allowance at an amount equal to 12-month expected credit losses or lifetime expected credit losses. Inputs used for the measurement of expected credit losses include, among others, available statistics on default risk based on credit risk rating grades and the historical credit losses the group has incurred. Credit risk of a loan receivable is assumed low on initial 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 become more than 30 days past due, and a default event has occurred, if the payment is more than 90 days past due, unless resulting from an administrative oversight.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash in banks and in hand, as well as liquid short-term deposits such as investments to money market funds. Cash assets have a maximum maturity of three months.
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 44
Non-current assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continued use. The recognition criteria are regarded to be met when a sale is highly probable, the asset (or a disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary, the management is committed to the plan to sell the asset and the sale is expected to take place within one year from the date of classification. As from the classification date, a non-current asset (or a disposal group) held for sale is measured at the lower of its carrying amount and fair value less costs of disposal. Once classified as held for sale, intangible and tangible assets are no longer amortised nor depreciated.
Dividend payment and repayment of capital
Payment of dividends and repayment of capital is decided in the Annual General Meeting. The dividend payment and repayment of capital proposed to the Annual General Meeting by the Board of Directors is not subtracted from distributable funds until approved by the Annual General Meeting.
Financial liabilities
Financial liabilities largely consist of loans from financial institutions, leasing liabilities and derivate liabilities. Financial liabilities are initially recognised at fair value. Transaction costs are reported in the initial book value of the financial liability. Financial liabilities, except for derivative liabilities, are subsequently carried at amortized cost using the effective interest method. Derivative liabilities are measured at fair value through profit or loss. Financial liabilities are reported in non-current and current liabilities.
Leases
Group’s lease agreements are mainly related to facilities, company cars and IT equipment. Group applies the exemptions allowed by the standard on lease contracts for which the lease term ends within 12 months as of the initial application, and lease contracts for which the underlying asset is of low value. Exemptions are applicable to some of the leased premises, such as office hotels, and to all laptops, printers and copying machines, among others. These lease payments are recognised as an expense in the income statement on a straight-line basis. Other lease agreements are recognised as right-of-use assets and lease liabilities in the balance sheet. These agreements include long-term lease agreements of facilities and company cars. Right-of-use assets are included in tangible assets and the related lease liabilities are included in non-current and current interest-bearing financial liabilities. CapMan Group does not act as a lessor.
Provisions
Provisions are recognised in the balance sheet when the Group has a current obligation (legal or constructive) as a result of a past event, and it is probable that an outflow will be required to settle the obligation and a reliable estimate of the outflow can be made. The Group’s provisions are evaluated on the closing date and are adjusted to match the best estimate of their size on the day in question. Changes are booked in the same entry in the income statement as the original provision.
Employee benefits
Pension obligations
The defined contribution pension plan is a pension plan in accordance with the local regulations and practices of its business domiciles. Payments made to these plans are charged to the income statement in the financial period to which they relate. Pension cover has been arranged through insurance policies provided by external pension institutions.
Share-based payments
The fair value of the share-based long-term incentive plan is measured at the grant date based on the starting share price of the plan, its assumed development during the vesting period, forfeiture rate and estimated dividends to be paid during the vesting period. The fair value is expensed on a straight-line basis over the vesting period. The accumulated amount expensed is adjusted, should the forfeiture rate change or should shares allocated to the plan be sold during the vesting period. The fair value of stock options is assessed on the date they are granted and are expensed in equal installments in the income statement over the vesting period of the rights concerned. An evaluation of how many options will generate an entitlement to shares is made at the end of every reporting period. Fair value is determined using the Black-Scholes pricing model. The terms of the stock option programs are presented in Note 30. Share-based payments.
Revenue recognition
Revenue from contracts with customers is recognised by first allocating the transaction price to performance obligations, and when the performance obligation is satisfied by transferring the control of the underlying service to the customer, the revenue related to this performance obligation is recognised. Performance obligation can be satisfied either at a point in time or over time.
Management fees and service fees in the Management Company Business
As a fund manager, CapMan receives management fees during a fund’s entire period of operations. Management fee is a variable consideration and is typically based on the fund’s original size during its investment period, which is usually five years. Thereafter the fee is typically based on the acquisition cost of the fund’s remaining portfolio. Annual management fees are usually 0.5–2.0% of a fund’s total commitments, depending whether the fund is a real estate fund, a mezzanine fund, or an equity fund. In the case of real estate funds, management fees are also paid on committed debt capital. The average management fee percentage paid by CapMan-managed funds is approx. 1%. Management fees paid by the funds are recognised as income over time, because the fund management service is the only performance obligation in the contract and it is satisfied over time. Management company business also includes wealth management services to institutional clients, foundations, family
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 45
offices and wealthy private clients. Fees from these services are recognised over time, when the service is provided and the control is transferred to the customer, except for success and transaction fees, which are recognised as income at a point in time, because the underlying performance obligation is satisfied and the control of the related service is transferred to the customer at a point in time.
Fees in the Service Business
CapMan’s Service Business includes procurement services provided by CapMan Procurement services (CaPS). Until February 1, 2023, Service business also included JAY Solutions, which offered reporting and back office services to investors. Fee from these services are primarily recognised over time. Some of the contracts with customers related to the fundraising services earlier included in the Service Business includes a significant financing component.When determining the transaction price in these cases, the promised amount of consideration is adjusted for the effects of the time value of money and customer’s credit characteristics.
Carried interest income
Carried interest refers to the distribution of the profits of a successful private equity fund among fund investors and the fund manager responsible for the fund’s investment activities. In practice, carried interest means a share of a fund’s cash flow received by the fund manager after the fund has transferred to carry. The recipients of carried interest in the private equity industry are typically the investment professionals responsible for a fund’s investment activities. In CapMan’s case, carried interest is split between CapMan Plc and funds’ investment teams. CapMan applies a principle where funds transfer to carry and carried interest income are based on realised cash flows, not on a calculated and as yet unrealised return. As the level of carried interest income varies, depending on the timing of exits and the stage at which funds are in their life cycle, predicting future levels of carried interest is difficult. To transfer to carry, a fund must return its paid-in capital to investors and pay a preferential annual return on this. The preferential annual return is known as a hurdle rate, which is typically set between 7–10% IRR p.a. When a fund has transferred to carry, the remainder of its cash flows is distributed between investors and the fund manager. Investors typically receive 80% of the cash flows and the fund manager 20%. When a fund is generating carried interest, the fund manager receives carried interest income from all of the fund’s cash flows, even if an exit is made at below the original acquisition cost. Revenue from carried interest is recognised when a fund has transferred to carry and to the extent carried interest is based on realised cash flows and management has estimated it being highly probable that there is no risk of repayment of carried interest back to the fund. Carried interest is recognised when CapMan is entitled to it by the reporting date, a confirmation on the amount has been received and CapMan is relatively close to receiving it in cash.
Potential repayment risk of carried interest to the funds (clawback)
Potential repayment risk to the funds (clawback) is considered when assessing whether revenue recognition criteria have been fulfilled. Clawback risk relates to a situation when, in conjunction with the liquidation of a fund, it is recognised that the General Partner has received more carried interest than agreed in the fund agreement. These situations can occur, for example, if there are recallable distributions or if representations and warranties have been given by the vendor in the sale and purchase 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 consolidated balance sheet.
Income taxes
Tax expenses in the consolidated income statement comprise taxes on taxable income and changes in deferred taxes for the financial period. Taxes are booked in the income statement unless they relate to other areas of comprehensive income or directly to items booked as equity. In these cases, taxes are booked to either other comprehensive income or directly to equity. Taxes on taxable income for the financial period are calculated on the basis of the tax rate in force for the country in question. Taxes are adjusted on the basis of deferred income tax assets and liabilities from previous financial periods, if applicable. The Group’s taxes have been recognised during the financial year using the average expected tax rate. Deferred taxes are calculated on temporary differences between the carrying amount and the tax base. Deferred taxes have only been recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. The largest temporary differences arise from the valuation of investments at fair value. Deferred taxes are not recognised for non-tax deductible 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.
Items affecting comparability and alternative performance measures
CapMan uses alternative performance measures, such as adjusted operating profit (or ’comparable operating profit’, having the same meaning), to denote the financial performance of its business and to improve the comparability between different periods. Alternative performance measures, as such are presented, are derived from performance measures as reported in accordance with the IFRS by adding or deducting the items affecting comparability and they will be nominated as adjusted. Such alternative performance measures are, for example, adjusted operating profit, adjusted profit for the period, and adjusted earnings per share. In addition, CapMan discloses alternative performance measures that have been derived from the beforementioned adjusted performance measures by further adding or deducting some income statement items that have been adjusted to exclude possible items impacting comparability. This kind of alternative performance measure is fee profit, which is adjusted operating profit or loss deducted with carried interest and fair value changes of investments. Items affecting comparability are, among others, material items related to mergers and acquisitions, such as amortisation and impairment of intangible assets recognised in the purchase price allocation, or costs related to major development projects, such as reorganisation costs. Items impacting comparability include also material gains or losses related to the acquisition or disposals of business units, material gains or losses related to the acquisition or disposal of intangible assets, material expenses related to decisions by authorities and material gains or losses related to reassessment of potential repayment risk to the funds. Items affecting comparability and alternative key figures are presented under the Segment information in the Note 2.
Use of estimates
The preparation of the financial statements in conformity with IFRS standards requires Group management to make estimates and assumptions in applying CapMan’s accounting principles. These estimates and assumptions have an impact on the reported amounts of assets and liabilities and disclosure of contingent liabilities in the balance sheet of the financial 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 determining useful economic lives and expected credit losses, and in reporting deferred taxes, among others.
Valuation of fund investments
The determination of the fair value of fund investments using the International Private Equity and Venture Capital Valuation Guidelines (IPEVG) takes into account a range of factors, including the price at which an investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and financing transactions subsequent to the acquisition of the investment. These valuation methodologies involve a significant degree of management judgment. Because there is significant uncertainty in the 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 obtained when such investments are realised. Valuation of fund investments is described in more detail in the Note 32.
Valuation of other investments
The fair value of growth equity investments is determined quarterly by using valuation methods according to IPEVG and IFRS 13. The valuations are based on forecasted cash flows or peer group multiples. In estimating fair value of an investment, a method that is the most appropriate in light of the facts, nature and circumstances of the investment is applied. External valuations are made at least once a year to verify the fair values of growth equity investments.
Goodwill impairment test
Goodwill impairment test is performed annually. The most significant assumptions related to the recoverable amount are turnover growth, operating margin, discount rate and terminal growth rate. Turnover growth and operating margin estimates are based on the current cost structure and turnover generated by the current customer base. Turnover is expected to grow to the extent that can be reasonably supported by the current personnel and other resources. This means such additional turnover and costs included in the business plan that are related to future expansion – and expected to be mainly visible as new customers and increased headcount – have been removed from the cash flow forecasts when preparing the goodwill impairment test. Goodwill impairment test is described in more detail in the Note 15.# Segment information
CapMan has three operating segments: the Management company business, Service business and Investments business. In the Management Company business, CapMan manages private equity funds and offers wealth advisory services. Private equity funds are invested by its partnership-based investment teams. Investments are mainly Nordic unlisted companies, real estate and infrastructure assets. CapMan raises capital for the funds from Nordic and international investors. CapMan Wealth Services offer comprehensive wealth advisory services related to the listed and unlisted market to smaller investors, such as family offices, smaller institutions and high net worth individuals. Income from the Management company business is derived from fee income and carried interest received from funds. The fee income include management fees related to CapMan’s position as a fund management company, fees from other services closely related to fund management and fees from wealth advisory services. In the Service business, CapMan offers procurement services and distributes software licenses to companies in Finland, Sweden and the Baltics, through CapMan Procurement Services (CaPS). Until February 1, 2023, Service business also included JAY Solutions, which offered reporting and back office services to investors. Through its Investment business, CapMan invests from its own balance sheet in the private equity asset class and mainly to its own funds. Income in this business segment is generated by changes in the fair value of investments and realised returns following exits and periodic returns, such as interest and dividends. Other includes the corporate functions not allocated to operating segments. These functions include part of the activities of group accounting, corporate communications, group management and costs related to share-based payment. Other also includes the eliminations of the intersegment transactions.
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 47
2023 EUR 1,000
| Management company business | Service business | Investment business | Other | Total | |
|---|---|---|---|---|---|
| Fee income | 45,108 | 10,606 | 524 | 56,238 | |
| Carried interest | 3,126 | 3,126 | |||
| Turnover, external | 48,234 | 10,606 | 524 | 59,364 | |
| Turnover, internal | 3 | 44 | –46 | ||
| Materials and services | –1,856 | –1,856 | |||
| Other operating income | 60 | 19 | 79 | ||
| Personnel expenses, of which | –23,548 | –1,899 | –346 | –8,129 | –33,921 |
| Salaries and bonuses | –23,548 | –1,899 | –346 | –7,160 | –32,952 |
| Share-based payment | –970 | –970 | |||
| Depreciation, amortisation and impairment | –1,048 | –127 | –14 | –302 | –1,491 |
| Other operating expenses | –6,648 | –637 | –139 | –3,938 | –11,362 |
| Internal service fees | –4,781 | –143 | 4,923 | ||
| Fair value changes of investments | –6,115 | –6,115 | |||
| Operating profit | 12,212 | 6,048 | –6,614 | –6,949 | 4,697 |
| Items impacting comparability: | |||||
| Reorganisation costs | 1,466 | 12 | 1,478 | ||
| Acquisition related expenses | 566 | 566 | |||
| Items impacting comparability, total | 1,466 | 577 | 2,043 | ||
| Adjusted operating profit | 13,678 | 6,048 | –6,614 | –6,372 | 6,740 |
| Financial items | –687 | ||||
| Income taxes | –618 | ||||
| Profit for the financial year | 3,392 |
2023 EUR 1,000
| Management company business | Service business | Investment business | Other | Total | |
|---|---|---|---|---|---|
| Items impacting comparability: | |||||
| Reorganisation costs | 1,179 | ||||
| Acquisition related expenses | 566 | ||||
| Items impacting comparability, total | 1,744 | ||||
| Adjusted profit for the financial year | 5,137 | ||||
| Earnings per share, cents | 0.8 | ||||
| Items impacting comparability, cents | 1.1 | ||||
| Adjusted earnings per share, cents | 1.9 | ||||
| Earnings per share, diluted, cents | 0.8 | ||||
| Items impacting comparability, cents | 1.1 | ||||
| Adjusted earnings per share, diluted, cents | 1.9 |
Fee profit:
| Operating profit (loss) | 6,740 |
| Less: Carried interest | –3,126 |
| Fair value changes of investments | 6,115 |
| Fee profit | 9,729 |
Geographical distribution of turnover:
| Finland | 30,868 |
| Other countries | 28,496 |
| Total | 59,364 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 48
2022
| Management company business | Service business | Investment business | Other | Total | |
|---|---|---|---|---|---|
| Fee income | 46,249 | 11,117 | 553 | 57,919 | |
| Items impacting comparability: | |||||
| Carried interest | 9,613 | 9,613 | |||
| Goodwill impairment | 2,600 | 2,600 | |||
| Turnover | 55,861 | 11,117 | 553 | 67,532 | |
| Items impacting comparability, total | 2,600 | 2,600 | |||
| Turnover, internal | 83 | 534 | –617 | ||
| Adjusted profit for the financial year | 43,649 | ||||
| Materials and services | –985 | –985 | |||
| Earnings per share, cents | 25.1 | ||||
| Other operating income | 2 | 2 | |||
| Items impacting comparability, cents | 1.7 | ||||
| Personnel expenses, of which | –21,414 | –3,331 | –459 | –9,368 | –34,571 |
| Salaries and bonuses | –21,414 | –3,331 | –459 | –6,641 | –31,844 |
| Adjusted earnings per share, cents | 26.8 | ||||
| Share-based payment | –2,727 | –2,727 | |||
| Depreciation, amortisation and | |||||
| impairment | –947 | –2,978 | –10 | –245 | –4,180 |
| Earnings per share, diluted, cents | 24.8 | ||||
| Other operating expenses | –6,652 | –1,114 | –364 | –3,106 | –11,236 |
| Items impacting comparability, cents | 1.6 | ||||
| Internal service fees | –4,620 | –231 | 4,851 | ||
| Adjusted earnings per share, diluted, cents | 26.4 | ||||
| Fair value changes of investments | 36,547 | 36,547 | |||
| Operating profit | 22,312 | 3,015 | 35,714 | –7,932 | 53,108 |
| Items impacting comparability: | |||||
| Goodwill impairment | 2,600 | 2,600 | |||
| Items impacting comparability, total | 2,600 | 2,600 | |||
| Adjusted operating profit | 22,312 | 5,615 | 35,714 | –7,932 | 55,708 |
| Financial items | –5,475 | ||||
| Income taxes | –6,585 | ||||
| Profit for the financial year | 41,049 |
Fee profit:
| Operating profit (loss) | 55,708 |
| Less: Carried interest | –9,613 |
| Fair value changes of investments | –36,547 |
| Fee profit | 9,548 |
Geographical distribution of turnover:
| Finland | 38,032 |
| Other countries | 29,500 |
| Total | 67,532 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 49
3. Turnover
Revenue from contracts with customers include management fees, service fees and carried interest. Management company business revenue is primarily related to long-term contracts. Management fees are typically recorded over time, whereas service fees include both transaction fees recorded at a point in time and other service fees, such as fees from wealth and asset management services, recorded over time. Carried interest is recognised at a point in time. Revenue from the Service business is based on both long-term and short-term contracts and includes solely fees recognised over time. Segment information disclosed in Note 2 provides more information on the businesses included in each reportable segment. The below table disaggregates the revenue into management fees, fees from services and carried interest, as well as timing of revenue recognition by reportable segment.
2023
| Management company business | Service business | Investment business | Other | Total | |
|---|---|---|---|---|---|
| EUR 1,000 | |||||
| Management fees | 39,034 | 39,034 | |||
| Service fees | 6,074 | 10,606 | 524 | 17,204 | |
| Carried interest | 3,126 | 3,126 | |||
| Revenue from customer contracts, external | 48,234 | 10,606 | 524 | 59,364 | |
| Timing of Services transferred over time revenue recognition: | 44,445 | 10,606 | 524 | 55,576 | |
| Services transferred at a point in time | 3,788 | 3,788 | |||
| Revenue from customer contracts, external | 48,234 | 10,606 | 524 | 59,364 |
2022
| Management company business | Service business | Investment business | Other | Total | |
|---|---|---|---|---|---|
| EUR 1,000 | |||||
| Management fees | 38,847 | 38,847 | |||
| Service fees | 7,401 | 11,117 | 553 | 19,072 | |
| Carried interest | 9,613 | 9,613 | |||
| Revenue from customer contracts, external | 55,861 | 11,117 | 553 | 67,532 | |
| Timing of Services transferred over time revenue recognition: | 45,622 | 11,117 | 553 | 57,293 | |
| Services transferred at a point in time | 10,239 | 10,239 | |||
| Revenue from customer contracts, external | 55,861 | 11,117 | 553 | 67,532 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 50
4. Other operating income
| 2023 | 2022 | |
|---|---|---|
| Other items | 79 | 2 |
| Total | 79 | 2 |
5. Employee benefit expenses
| EUR 1,000 | 2023 | 2022 | |
|---|---|---|---|
| Salaries and wages | 27,893 | 27,170 | |
| Pension expenses – defined contribution plans | 3,966 | 3,894 | |
| Share-based payments | 970 | 2,727 | |
| Other personnel expenses | 1,092 | 780 | |
| Total | 33,921 | 34,571 |
Remuneration of the management is presented in Note 31. Related party disclosures. Cost for the share-based payments is based on the fair value of the instrument. The counter-entry to the expenses recognised in the income statement is in retained earnings, and thus has no effect on total equity. More information on the share-based payments is disclosed in Note 30.
Average number of people employed
| By country | 2023 | 2022 |
|---|---|---|
| Finland | 133 | 141 |
| Sweden | 28 | 25 |
| Denmark | 10 | 8 |
| Norway | 2 | 2 |
| Luxembourg | 3 | 2 |
| United Kingdom | 7 | 7 |
| In total | 183 | 186 |
| By segment | 2023 | 2022 |
|---|---|---|
| Management company business | 119 | 109 |
| Service business | 13 | 30 |
| Investment business and other | 51 | 46 |
| In total | 183 | 186 |
6. Depreciation
| EUR 1,000 | 2023 | 2022 | |
|---|---|---|---|
| Depreciation by asset type | |||
| Intangible assets | |||
| Other intangible assets | 96 | 396 | |
| Total | 96 | 396 | |
| Tangible assets | |||
| Machinery and equipment | 87 | 73 | |
| Right-of-use assets, buildings (IFRS 16) | 1,297 | 1097 | |
| Right-of-use assets, machinery and equipment (IFRS 16) | 11 | 14 | |
| Total | 1,395 | 1,184 | |
| Total depreciation | 1,491 | 1,580 |
| Impairment by asset type | |||
|---|---|---|---|
| Goodwill | 0 | 2,600 | |
| Total impairments | 0 | 2,600 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 51
7. Other operating expenses
| EUR 1,000 | 2023 | 2022 | |
|---|---|---|---|
| Included in other operating expenses: | |||
| Other personnel expenses | 1,359 | 1,474 | |
| Office expenses | 650 | 539 | |
| Travelling and entertainment | 1,297 | 1,218 | |
| External services | 6,081 | 5,551 | |
| Other operating expenses | 1,975 | 2,454 | |
| Total | 11,362 | 11,236 | |
| Short-term lease expense (IFRS 16) | 96 | 97 | |
| Expense for leases of low-value assets (IFRS 16) | 173 | 190 |
Audit fees
| Ernst & Young chain of companies: | EUR 1,000 | 2023 | 2022 |
|---|---|---|---|
| Audit fees | 371 | 361 | |
| Tax advisory services | 57 | 0 | |
| Other fees and services | 33 | 12 | |
| Total | 461 | 373 |
Non-audit services performed by Ernst & Young in 2023 were 90 thousand euros (2022: 12 thousand euros in total) and included 57 (0) thousand euros of tax advisory services and 33 (12) thousand euros of other fees and services in total.
8. Adjustments to cash flow statement and total cash outflow for leases
| EUR 1,000 | 2023 | 2022 | |
|---|---|---|---|
| Personnel expenses | 970 | 2,727 | |
| Depreciation, amortisation and write-downs | 1,491 | 4,180 | |
| Fair value gains/losses of investments | 6,115 | –36,547 | |
| Finance income and costs | 687 | 5,475 | |
| Costs related to acquisitions | –71 | ||
| Taxes | 618 | 6,585 | |
| Other adjustments | –144 | –52 | |
| Total | 9,666 | –17,632 | |
| Total cash outflow for leases (IFRS 16) | –1,333 | –1,263 |
9.# Fair value gains/losses of investments
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Investments at fair value through profit and loss | ||
| Investments in funds | –6,115 | 36,547 |
| Total | –6,115 | 36,547 |
10. Finance income and costs
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Finance income | ||
| Interest income from loan receivables | 1,036 | 104 |
| Exchange gains | 30 | 491 |
| Change in fair value of financial liabilities | 3,122 | 250 |
| Total | 4,188 | 845 |
| Finance costs | ||
| Interest expenses for loans | –3,814 | –4,139 |
| Change of expected credit losses | –68 | –1,670 |
| Other interest and finance expenses | –570 | –437 |
| Interest expense of lease liabilities (IFRS 16) | –168 | –74 |
| Exchange losses | –254 | – |
| Total | –4,874 | – 6,320 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 52
11. Income taxes
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Current income tax | 3,049 | 2,611 |
| Taxes for previous years | 101 | 131 |
| Deferred taxes | ||
| Temporary differences | –2,532 | 3,842 |
| Total | 618 | 6,584 |
Income tax reconciliation
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Profit before taxes | 4,010 | 47,633 |
| Tax calculated at the domestic corporation tax rate of 20% | 802 | 9,527 |
| Effect of different tax rates outside Finland | 92 | 78 |
| Tax exempt income | –1,195 | –4,622 |
| Performance share plan | –230 | –225 |
| Goodwill impairment | 0 | 520 |
| Ohter non-deductible expenses | 161 | 690 |
| Unrecognized tax assets on tax losses and use of previously unrecognised tax losses | 931 | 599 |
| Taxes for previous years | 101 | 131 |
| Other differences | –44 | –113 |
| Income taxes in the Group Income Statement | 618 | 6,585 |
12. Earnings per share
Undiluted earnings per share is calculated by dividing the distributable retained profit for the financial year by the average share issue adjusted number of shares, excluding shares that have been purchased by the Company and are presented as the Company’s own shares. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.
| 2023 | 2022 | |
|---|---|---|
| Profit attributable to the equity holders of the Company, EUR 1,000 | 1,346 | 39,616 |
| Profit applied to calculate diluted earnings per share | 1,346 | 39,616 |
| Weighted average number of shares (’000) | 158,574 | 157,560 |
| Treasury shares (’000) | –26 | –26 |
| Weighted average number of shares (’000) | 158,548 | 157,534 |
| Effect of share-based incentive plans (’000) | 1,184 | 2,170 |
| Weighted average number of shares adjusted for the effect of dilution (’000) | 159,731 | 159,704 |
| Earnings per share (basic), cents | 0.8 | 25.1 |
| Earnings per share (diluted), cents | 0.8 | 24.8 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 53
13. Assets held for sale
During the financial year, CapMan Plc and the non-controlling shareholders of JAY Solutions Oy, subsidiary of CapMan Plc, sold their ownership of JAY Solutions Oy to Bas Invest AB and to the management of JAY Solutions Oy. The transaction was closed on February 1, 2023. The sale had a very minor impact on CapMan’s result due to impairment loss written during the previous year 2022. CapMan had an ownership interest of 60% in JAY Solutions Oy, but the subsidiary was consolidated in full without separating non-controlling interest because of a symmetric option arrangement. Resulting from the sale after the closing of the previous financial year, CapMan classified assets and liabilities related to JAY Solutions Oy as non-current assets held for sale on December 31, 2022. In conjunction with this, CapMan valued these net assets to the lower of their carrying amount and their fair value less costs on disposal and resulting from this, recorded an impairment loss of EUR 2.6 million to goodwill allocated to JAY Solutions in the financial year 2022 (see Note 15 for details). Impairment loss was reported under reportable segment Service Business (see Note 2), where JAY Solutions’ assets and liabilities held for sale were included. The sale of shares had an insignificant impact on CapMan’s EBIT in 2022 and did not either have a significant impact on CapMan’s operating profit or financial position in 2023. Assets and liabilities related to JAY Solutions Oy were classified as held for sale and disclosed separately in the Consolidated Balance Sheet as at December 31, 2022. The carrying amounts of those assets and liabilities are presented in the below table. As at December 31, 2023, CapMan did not have any assets held for sale.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Goodwill | 4,828 | |
| Other non-current assets | 134 | |
| Current assets | 807 | |
| Assets held for sale | – | 5,769 |
| Current liabilities | 717 | |
| Liabilities associated with assets held for sale | – | 717 |
14. Tangible assets
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Machinery and equipment | ||
| Acquisition cost at 1 January | 2,498 | 2,347 |
| Additions | 22 | 168 |
| Transfer to assets held for sale | 0 | –8 |
| Translation difference | 1 | –9 |
| Acquisition cost at 31 December | 2,521 | 2,498 |
| Accumulated depreciation at 1 January | –2,246 | –2,183 |
| Depreciation for the financial year | –87 | –73 |
| Transfer to assets held for sale | 0 | 3 |
| Translation difference | –1 | 7 |
| Accumulated depreciation at 31 December | –2,334 | –2,246 |
| Book value on 31 December | 187 | 252 |
| Right-of-use assets | ||
| Machinery and equipment (IFRS 16) | ||
| Additions | 0 | 0 |
| Depreciations | –11 | –14 |
| Book value on 31 December | 0 | 10 |
| Leased premises (IFRS 16) | ||
| Additions | 1,944 | 2,840 |
| Depreciations | –1,297 | –1,097 |
| Book value on 31 December | 3,932 | 3,285 |
| Other tangible assets | ||
| Acquisition cost at 1 January | 23 | 23 |
| Book value on 31 December | 23 | 23 |
| Tangible assets total | 4,142 | 3,571 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 54
15. Goodwill
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Acquisition cost at 1 January | 20,581 | 28,009 |
| Transfer to assets held for sale | 0 | –7,428 |
| Acquisition cost at 31 December | 20,581 | 20,581 |
| Accumulated impairment at 1 January | –12,695 | –12,695 |
| Impairment | 0 | –2,600 |
| Transfer to assets held for sale | 0 | 2,600 |
| Accumulated impairment at 31 December | –12,695 | –12,695 |
| Book value on 31 December | 7,886 | 7,886 |
Impairment test
Goodwill is tested for impairment at least annually and has been allocated to the cash-generating units as follows:
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| CapMan Wealth Services | 7,412 | 7,412 |
| JAY Solutions | 4,828 | |
| Other | 474 | 474 |
| Total | 7,886 | 12,714 |
JAY Solutions
During the financial year, on February 1, 2023, CapMan disposed of JAY Solutions. Therefore, JAY Solutions was classified as an asset held for sale as at December 31, 2022, and its recoverable amount was based on fair value less costs of disposal in the goodwill impairment test. Because the expected selling price of JAY Solutions’s shares less their disposal costs was lower than its carrying amount as at December 31, 2022, an impairment loss of EUR 2.6 million was recorded and reported on the line item Depreciation, amortisation and impairment in the consolidated income statement and in reportable segment Service Business (see Note 2). The fair value of JAY Solutions was classified in the fair value hierarchy level 1, as it was based on the selling price agreed in the Share Purchase Agreement.
CapMan Wealth Services
Recoverable amount of CapMan Wealth Services is based on value-in-use using five-year discounted cash flow projections based on a business plan approved by the management. Future cash flows arising from additional turnover generated by increased personnel, and thus extending the operations and enhancing the performance, have been excluded from the cash flow projections applied in the impairment test. Cash flows for the period extending over the planning period are calculated using the terminal value method. Based on the impairment test, goodwill allocated to CapMan Wealth Services was not impaired. Key assumptions applied in the impairment test based on value-in-use are set forth in the table below:
| 2023 | 2022 | |
|---|---|---|
| Pre-tax discount rate | 16.8% | 17.8% |
| Average turnover growth | 18.0% | 20.8% |
| Average EBIT margin | 35.2% | 50.6% |
| Terminal growth rate | 1.0% | 1.0% |
Discount rate takes into account listed domestic asset and wealth managers as a benchmark group. Cost of equity includes risk premiums for Finland and company size. As a risk-free rate, a reference rate of Finnish 10-year government bonds has been applied. The risk premium specific for Finland and risk-free interest rate have slightly decreased during the financial year, which has resulted in a 1 percentage point lower discount rate for 2023 than for 2022. Based on the impairment test, goodwill allocated to CapMan Wealth Services is not impaired. Of key assumptions applied in this year’s impairment test, recoverable amount is most sensitive to changes in turnover growth during the explicit forecasting period (5 years). Based on the sensitivity analysis, if turnover growth during the explicit forecasting period would be 12 percentage points lower, or alternatively, if average EBIT margin would be 14 percentage points lower, recoverable amount would equal the carrying amount of the respective cash-generating unit. At the moment, recoverable amount exceeds carrying amount by EUR 12 million, and no reasonably possible change in any of the other key assumptions would lead to impairment.
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 55
16. Other intangible assets
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Acquisition cost at 1 January | 6,616 | 6,944 |
| Additions | 16 | 166 |
| Transfers | 0 | 0 |
| Transfer to assets held for sale | –16 | –494 |
| Acquisition cost at 31 December | 6,616 | 6,616 |
| Accumulated depreciation at 1 January | –6,516 | –6,484 |
| Depreciation for the financial year | –96 | –396 |
| Transfer to assets held for sale | 7 | 364 |
| Accumulated depreciation at 31 December | –6,605 | –6,516 |
| Book value on 31 December | 10 | 100 |
17.# FINANCIAL STATEMENTS
18. Receivables – Non-current
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Trade receivables | 4,134 | 5,188 |
| Loan receivables | 2,307 | 263 |
| Other receivables | 84 | 83 |
| Accrued income | 0 | 12 |
| Total | 6,525 | 5,545 |
Non-current trade receivables are related to previously offered fundraising and advisory services. Because of the significant financing component related to these receivables, the promised amount of consideration has been adjusted for the effects of the time value of money and the credit characteristics of the customer. However, no contract assets are related to these customer contracts, as the Group’s right to the amount of consideration is unconditional and subject only to the passage of time.
Loan receivables primarily include loans granted to investment teams for co-investments. Allowance for expected credit losses of loan receivables is presented below separately for portion measured at an amount equal to 12-month and lifetime expected credit losses. As at December 31, 2023 and 2022, loss allowance measured at an amount equal to lifetime expected credit losses is fully related to credit-impaired loan receivables from entities controlled by the former or current investment teams, and granted for making co-investments in funds managed by CapMan. The most significant credit-impaired loan receivables are from entities controlled by the former CapMan Russia investment team. CapMan has determined these loan receivables being credit-impaired, because the underlying funds have filed for liquidation and it seems not probable that the loans and accrued interests would be repaid to CapMan in full. The other credit-impaired loan receivables are related to loans granted to making co-investments to such funds, whose carry potential is estimated to be low, and therefore, CapMan has determined it seems not probable that the borrowing entity would repay these loans and accrued interests in full.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Loan receivables, gross | 3,909 | 1,848 |
| Loss allowance, 12-month ECL* | –22 | –4 |
| Loss allowance, lifetime ECL* | –1,581 | –1,581 |
| Loan receivables, net | 2,307 | 263 |
- ECL = expected credit losses
Other non-currrent receivables include primarily rental deposits.
19. Deferred tax assets and liabilities
Changes in deferred taxes during 2023:
Charged to Income | Translation | Charged in
EUR 1,000 | 12/31/2022 | Statement | difference | equity | 12/31/2023
---|---|---|---|---|---
Deferred tax assets | | | | |
Accrued differences | 1,790 | 106 | 0 | 0 | 1,896
Total | 1,790 | 106 | 0 | 0 | 1,896
Deferred tax liabilities | | | | |
Accrued differences | 1,261 | –1,113 | 0 | 0 | 148
Unrealised fair value changes | 7,157 | –1,314 | 0 | 0 | 5,843
Total | 8,418 | –2,427 | 0 | 0 | 5,991
Changes in deferred taxes during 2022:
Charged to Income | Translation | Charged in
EUR 1,000 | 12/31/2021 | Statement | difference | equity | 12/31/2022
---|---|---|---|---|---
Deferred tax assets | | | | |
Accrued differences | 1,836 | –46 | 0 | 0 | 1,790
Total | 1,836 | –46 | 0 | 0 | 1,790
Deferred tax liabilities | | | | |
Accrued differences | 582 | 684 | –5 | 0 | 1,261
Unrealised fair value changes | 4,045 | 3,112 | 0 | 0 | 7,157
Total | 4,627 | 3,796 | –5 | 0 | 8,418
20. Trade and other receivables
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Trade receivables | 8,875 | 8,661 |
| Loan receivables | 815 | 815 |
| Accrued income | 1,839 | 1,648 |
| Other receivables | 8,853 | 9,593 |
| Total | 20,382 | 20,717 |
Loss allowance for the expected credit losses of trade receivables, based on a provision matrix, is presented below.
| 2023 | 2022 | |
|---|---|---|
| Trade receivables, gross | 9,007 | 8,770 |
| Loss allowance | –132 | –109 |
| Trade receivables, net | 8,875 | 8,661 |
Expected credit losses of other receivables measured at amortised cost is insignificant, and other receivables at amortised cost do not contain credit-impaired items. With regards to contracts with customers, the Group’s right to the amount of consideration is unconditional. Therefore, they are presented as receivables and no separate contract asset is presented.
Loan receivables include mainly current loan receivables from related parties and other employees. Accrued income includes mainly prepayments. Other receivables mainly include unvoiced sale of services, costs to be re-invoiced, income tax receivables and receivables related to sold financial assets.
Trade and other receivables by currency at end of year
| Amount in foreign currency | EUR | proportion |
|---|---|---|
| Trade and other receivables | EUR | |
| EUR | 19,459 | 72% |
| USD | 5,808 | 5,256 |
| SEK | 9,186 | 828 |
| GBP | 62 | 71 |
| DKK | 9,494 | 1,274 |
| NOK | 215 | 19 |
21. Financial assets at fair value through profit or loss
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Derivate assets | 116 | 65 |
| Interest rate funds | 159 | 0 |
| Total | 275 | 65 |
Fair value of derivative instruments | |
Foreign exchange forwards | 116 | 65
Total | 116 | 65
Nominal value of derivative instruments | |
Foreign exchange forwards | 5,320 | 6,327
Total | 5,320 | 6,327
Financial assets at fair value through profit or loss include derivative assets and short-term investments made for cash management purposes in interest rate funds. CapMan uses short-term derivative instruments to hedge against currency changes in foreign currency denominated trade receivables. CapMan does not apply hedge accounting to derivative instruments and derivatives are initially measured at costs and thereafter to fair value at the end of the reporting period. Fair values of derivatives are based on market values or values derived from market values at the end of the reporting period (fair value hierarchy level 2). Translation difference incurred to foreign currency denominated trade receivables is recognised to turnover and that fair value change of the derivative instrument that is effectively hedging the underlying trade receivable, is recorded to turnover and the remainder of the derivative’s fair value change is recorded to financial expenses. In the comparison period, no derivative instruments were used.
22. Cash and cash equivalents
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Bank accounts | 40,144 | 55,571 |
| Money market funds | 872 | 0 |
| Total | 41,017 | 55,571 |
Cash and cash equivalents include bank accounts and short-term investments made to money market funds for cash management purposes. EUR 2.0 million of bank account balances is related to the launch of a new hotel real estate fund in 2019 and is not available for use by the group.
Because of some assets classified as asset held for sale as at December 31, 2022 (see Note 13), below reconciles the cash and cash equivalents reported in the balance sheet to the cash and cash equivalents reported in the cash flow statement:
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Cash and cash equivalents in the balance sheet | 41,017 | 55,571 |
| Cash and cash equivalents related to assets held for sale | 0 | 373 |
| Cash and cash equivalents in the cash flow statement | 41,017 | 55,944 |
Other reserves
During the financial year, in conjunction with the final reward payment of the performance share plan 2022–23, a total of 794,419 shares were issued in a directed share issue without payment. During previous financial year, in conjunction with a partial reward payment of performance share plan 2020–23, a total of 1,437,675 shares were issued in a directed share issue without payment. During the current and previous financial year, repaid capital was deducted from the unrestricted equity fund. Share-based incentive plans are presented in Note 30. Share-based payments.
Translation difference
The foreign currency translation reserve includes translation differences arising from currency conversion in the closing of the books for foreign units.
Dividends paid and proposal for profit distribution and repayment of capital
For the financial year 2022, dividend and repayment of invested unrestricted equity fund amounted to EUR 0.17 per share or EUR 26,9 million in total. Dividend and equity repayment was paid in two instalments, the first of which, amounting to EUR 14.2 million, was paid on March 24, 2023, and the second of which, amounting to EUR 12.7 million, was paid on September 22, 2023. The first instalment included a dividend of EUR 0.04 per share and an equity repayment of EUR 0.05 per share. The second instalment included a dividend of EUR 0.04 per share and an equity repayment of EUR 0.04 per share.
As at December 31, 2023, CapMan Plc’s distributable funds amounted to approximately EUR 37.5 million. The Board of Directors’ resolution proposal to the General Meeting is a combined proposal of a dividend distribution and an authorisation for the Board of Directors to decide on distribution of an additional dividend. The Board of Directors expects the overall dividend distribution to be EUR 0.10 per share for the financial period ended 31 December 2023. The Board of Directors proposes to the General Meeting that a dividend in the total amount of EUR 0.06 per share would be paid for the financial period that ended on 31 December 2023 based on the balance sheet adopted for 2023. The dividend would be paid to a shareholder who on the record date of the payment, 2 April 2024, is registered as a shareholder in the shareholders’ register of the Company maintained by Euroclear Finland Oy. The payment date would be 9 April 2024.The Board of Directors further proposes to the General Meeting that the Board of Directors be authorised to decide on an additional dividend in the maximum amount of EUR 0.04 per share. The authorisation would be effective until the end of the next Annual General Meeting. The Board of Directors intends to resolve on the additional dividend in its meeting scheduled for 18 September 2024.
Redemption obligation clause
A shareholder whose share of the entire share capital or the voting rights of the Company reaches or exceeds 33.3% or 50% has, at the request of other shareholders, the obligation to redeem his or her shares and related securities in accordance with the Articles of Association of CapMan Plc.
23. Share capital and shares
| Number of B 1000 shares | Total |
|---|---|
| At 1 January 2022 | 156,591 |
| Directed share issue without payment | 1,438 |
| At 31 December 2022 | 158,029 |
| Directed share issue without payment | 794 |
| At 31 December 2023 | 158,823 |
| Share capital account | Share premium Other EUR 1,000 | reserves | Total |
|---|---|---|---|
| At 1 January 2022 | 772 | 38,968 | 52,718 |
| Repayment of capital | –17,297 | ||
| Other changes | 4 | ||
| At 31 December 2022 | 772 | 38,968 | 35,425 |
| Repayment of capital | –14,311 | ||
| At 31 December 2023 | 772 | 38,968 | 21,114 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 59
24. Interest-bearing loans and borrowings – Non-current
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Senior bonds | 89,750 | 89,650 |
| Lease liabilities (IFRS 16) | 2,720 | 2,204 |
| Total | 92,470 | 91,854 |
In the previous financial year 2022, CapMan issued unsecured sustainability-linked notes in the aggregate principal amount of EUR 40 million. The notes will mature on April 13, 2027 and carry a fixed annual interest of 4.5%. In conjunction with this, CapMan redemeed the remaining EUR 31.5 million of its notes issued in 2018. CapMan also has unsecured notes in the aggregate principal amount of EUR 50 million issued in December 2020, which will mature on December 9, 2025 and carry a fixed annual interest of 4.0% paid annually. Both loan agreements include covenants related to equity ratio.
25. Other non-current liabilities
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Acquisition related liabilities | 0 | 6,933 |
| Other liabilities | 484 | 410 |
| Total | 484 | 7,343 |
In the previous year, acquisition related liabilities consists of call and put options, which were measured at fair value through profit or loss. The change of fair value was recorded as finance income or expense.
26. Trade and other payables – Current
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Trade payables | 2,101 | 1,167 |
| Advance payments received | 761 | 571 |
| Accrued expenses | 14,178 | 12,994 |
| Acquisition related liabilities | 3,842 | 0 |
| Other liabilities | 3,274 | 3,714 |
| Total | 24,155 | 18,446 |
The maturity of trade payables is normal terms of trade and don’t include overdue payments. Advance payments received are liabilities based on customer contracts. The most significant items in accrued expenses relate to accrued salaries and social benefit expenses. Acquisition related liabilities consists of a symmetric put and call option arrangement made with the non-controlling interest of a subsidiary, which is measured at fair value through profit or loss. The change of fair value is recorded as finance income or expense. In the previous year, this financial liability was included in other non-current liabilities.
| Trade and other liabilities by currency at end of year | Amount in foreign currency | Amount in euros | Proportion |
|---|---|---|---|
| EUR | 19,726 | 82% | |
| SEK | 32,121 | 2,895 | 12% |
| GBP | 559 | 644 | 3% |
| DKK | 5,551 | 745 | 3% |
| NOK | 1,636 | 146 | 1% |
27. Interest-bearing loans and borrowings – Current
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Short-term bank facility | ||
| Lease liabilities (IFRS 16) | 1,323 | 1,060 |
| Liabilities to non-controlling interests | 63 | 52 |
| Total | 1,386 | 1,112 |
Ownership and voting rights agreements
As at 31 December 2023 CapMan Plc had no knowledge of agreements or arrangements, related to the Company’s ownership and voting rights, that were apt to have substantial impact on the share value of CapMan Plc.
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 60
28. Financial assets and liabilities
Financial assets
EUR 1,000 | Note | Balance sheet value | Fair value |
| :---------------------------------------- | :--- | :------------------ | :--------- |
| 2023 | | | |
| Investments at fair value through profit or loss | | | |
| Investments in funds | 17 | 158,907 | 158,907 |
| Other financial assets | 17 | 508 | 508 |
| Loan receivables | 18 | 3,122 | 3,122 |
| Trade and other receivables | 18, 20 | 23,788 | 23,788 |
| Financial assets at fair value | 21 | 275 | 275 |
| Cash and bank | 22 | 41,017 | 41,017 |
| Total | | 227,617 | 227,617* |
| * Other financial assets consists of financial assets that are specifically classified as investments at fair value through profit and loss | | | |
Financial assets
EUR 1,000 | 2022 |
| :---------------------------------------- | :----- |
| Investments at fair value through profit or loss | |
| Investments in funds | 169,063 |
| Other financial assets | 434 |
| Loan receivables | 1,078 |
| Trade and other receivables | 25,185 |
| Financial assets at fair value | 65 |
| Cash and bank | 55,571 |
| Total | 251,396* |
| * Other financial assets consists of financial assets that are specifically classified as investments at fair value through profit and loss | |
Financial liabilities
EUR 1,000 | Note | Balance sheet value | Fair value |
| :---------------------------------------- | :--- | :------------------ | :--------- |
| 2023 | | | |
| Non-current liabilities | 24 | 92,470 | 92,470 |
| Non-current operative liabilities | 25 | 484 | 484 |
| Trade and other liabilities | 26 | 24,154 | 24,154 |
| Current liabilities | 27 | 1,386 | 1,386 |
| Total | | 118,494 | 118,494 |
Financial liabilities
EUR 1,000 | 2022 |
| :---------------------------------------- | :----- |
| Non-current liabilities | 91,854 |
| Non-current operative liabilities | 7,343 |
| Trade and other liabilities | 18,446 |
| Current liabilities | 1,112 |
| Total | 118,755 |
Net debt
| | 2023 | 2022 |
| :------------ | :-------- | :-------- |
| Cash and cash equivalents | 41,017 | 55,571 |
| Borrowings – repayable within one year | –1,386 | –1,112 |
| Borrowings – repayable after one year | –92,470 | –91,854 |
| Net debt | –52,839 | –37,395 |
| Cash and cash equivalents | 41,017 | 55,571 |
| Gross debt – variable interest rates | –4,106 | –3,196 |
| Gross debt – fixed interest rates | –89,750 | –89,770 |
| Net debt | –52,839 | –37,395 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 61
Changes in liabilities arising from financing activities
| EUR 1,000 | January 1, 2023 | Cash flows | Other changes | December 31, 2023 |
| :----------------------------- | :-------------- | :--------- | :------------ | :---------------- |
| Non-current loans and borrowings | 89,650 | 0 | 100 | 89,750 |
| Non-current lease liabilities | 2,204 | –1,159 | 1,675 | 2,720 |
| Current loans and borrowings | 52 | 11 | | 63 |
| Current lease liabilities | 1,060 | –5 | 268 | 1,323 |
| Total | 92,966 | –1,154 | 2,044 | 93,856 |
Liabilities associated with assets held for sale
| EUR 1,000 | January 1, 2022 | Cash flows | Other changes | December 31, 2022 |
| :----------------------------- | :-------------- | :--------- | :------------ | :---------------- |
| Non-current loans and borrowings | 81,354 | 8,259 | –120 | 157 | 89,650 |
| Non-current lease liabilities | 683 | –1,125 | 2,646 | 2,204 |
| Current loans and borrowings | 40 | 12 | | 52 |
| Current lease liabilities | 930 | –64 | 194 | 1,060 |
| Total | 83,007 | 7,082 | –120 | 2,997 | 92,966 |
29. Commitments and contingent liabilities
| Securities and other contingent liabilities | EUR 1,000 | 2023 | 2022 |
|---|---|---|---|
| Contingencies for own commitment | |||
| Business mortgage | 60,000 | 60,000 | |
| Other contingent liabilities | 1,239 | 2,062 |
Remaining commitments to funds
| Remaining commitments to funds by investment area | 2023 | 2022 |
| :------------------------------------------------ | :----- | :----- |
| Buyout | 17,942 | 25,273 |
| Credit | 3,127 | 4,768 |
| Russia | 1,066 | 1,066 |
| Real Estate | 5,916 | 7,577 |
| Other investment areas | 1,489 | 2,181 |
| Funds of funds | 245 | 245 |
| Growth Equity | 19,243 | 11,171 |
| Infra | 10,151 | 12,127 |
| Special Situations | 4,507 | 4,853 |
| CapMan Wealth Services funds | 15,511 | 13,868 |
| External private equity funds | 3,703 | 4,665 |
| External Veture Capital funds | 2,290 | 1,316 |
| Total | 85,190 | 89,110 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 62
30. Share-based payments
As at the balance sheet date, CapMan has one investment based long-term share-based incentive plan “Share plan 2022–25” in force. The program “Share plan 2020–23” has ended and the rewards have been paid during the financial year. Share-based incentive plans are used to commit key individuals and executives to the company and reinforce the alignment of interests of key individuals and executives and CapMan shareholders. In the investment based long-term share-based incentive plan the participants are committed to shareholder value creation by investing a significant amount into the CapMan Plc share.
The investment-based long-term incentive plan 2020–23 included one performance period. The performance period commenced on 1 April 2020 and ended on 31 March 2023. The participants might earn a performance-based reward from the performance period. The prerequisite for receiving reward on the basis of the plan was that a participant acquired company’s shares or allocated previously owned company’s shares up to the number determined by the Board of Directors. The perfor- mance-based reward from the plan was based on the company share’s Total Shareholder Return (TSR) and on a participant’s employment or service upon reward payment. An early payment of the vested reward shares was conducted in April 2022, but irrespective of this, the plan remained in force until the end of its performance period on 31 March 2023 in line with the original terms. The early payment and the change in the forfeiture rate resulted in an EUR 1.1 million additional expense for 2022 and EUR 0.7 million increase in the plan’s fair value. The rest of the rewards were paid in 2023 and the expense of the program in year 2023 totaled EUR 0.2 million. The plan was equity-settled by nature and while the participants earned a certain gross amount of reward shares, which was divided into portion paid in shares and portion paid in cash to cover the withholding tax consequences. The Board resolved to issue new shares to pay out the portion of the reward paid in shares.
The investment-based long-term incentive plan 2022–25 includes three performance periods. The performance period commenced on 1 April 2022 and ends on 31 March 2023, 2024 and 2025, respectively. The participants may earn a perfor- mance-based reward from each of the performance periods and a matching reward from the 2022–2025 period. The rewards from the plan will be paid in 2024, 2025 and 2026.## 30. Share-Based Payments
The aim of the plan is to align remuneration with CapMan’s sustainability agenda, to retain the plan participants in the company’s service, and to offer them a competitive reward plan based on owning, earning and accumulating the company’s shares. The prerequisite for receiving reward on the basis of the plan is that a participant acquires company’s shares or allocates previously owned company’s shares up to the number determined by the Board of Directors. The performance-based reward from the plan is based on the company share’s Total Shareholder Return (TSR) and on a participant’s employment or service upon reward payment. The plan is equity-settled by nature and while the participants earn a certain gross amount of reward shares, it can be partially paid in cash to cover the withholding tax consequences. The Board shall resolve whether new Shares or existing Shares held by the Company are given as reward. The target group of the Plan consists of 22 persons, including the members of the Management Group. The fair value of the investment-based incentive plans has been measured at the grant date and is expensed on a straight-line basis over the vesting period. The fair value has been calculated by applying a Monte-Carlo simulation, where the model inputs have included share price at the grant date, expected annualised volatility over the tenure of the program, risk-free interest rate, expected dividends and expected share rewards to be granted on different target share price levels. The model simulates share price development during the performance period and the resulting share rewards to be granted after reaching the share price levels defined in the conditions of the plan. In addition, lack of marketability due to the lock-up period as well as forfeiture rate have been incorporated into the measurement of the fair value as decreasing factors. The total expense recognised for the period arising from share-based payment transactions amounted to EUR 1.0 million (EUR 2.7 million). There were no liabilities arising from share-based payment transactions. As at the balance sheet date, based on the closing price of CapMan’s share, it is estimated that for the Share plan 2022–25, the shares to be withheld and paid in cash to cover withholding tax liabilities will amount to EUR 1.0 million. Key information on the investment-based incentive plans is presented in the below table.
Share plan | Share plan | Investment-based incentive plans
---|---|---|
| | 2020–2023 | 2022–2025
Grant date | 16.4.2020 | 13.4.2022
Vesting period starts | 16.4.2020 | 13.4.2022, 13.4.2024, 13.4.2025
Vesting period ends | 31.8.2023 | 13.4.2026
Grant date share price, EUR | 1.764 | 2.420
Share price at the end of the period, EUR | 2.29 | 2.29
Expected annualised volatility | 27% | 26%
Assumed risk-free interest rate | 0.0% | 1.0%
Present value of the expected dividends, EUR | 0.45 | 0.63
Forfeiture rate assumption | 0% | 0%
Increase in fair value of share premiums granted during the period | 0.0 | –0.3
Fair value of the plan, EUR million | 3.4 | 3.0
Expense recorded during the financial year, EUR million | 0.2 | 0.8
Cumulative expense recorded for the plan, EUR million | 3.4 | 1.6
Future cash payment related to withholding taxes, EUR million | – | –1.0
Number of participants in the plan at the balance sheet date | 0 | 22
| Share plan | Share plan |
|---|---|
| Changes in the number of share rewards during the period | 2020–2023 |
| Outstanding in the beginning of the period 1.1.2022 | 1,485,000 |
| Granted | 0 |
| Forfeited | 0 |
| Exercised | 1,485,000 |
| Expired | 0 |
| Exercised at the end of the period 31.12.2022 | 4,402,500 |
| Outstanding at the end of the period 31.12.2022 | 0 |
31. Related party disclosures
Parent company ownership of Group companies
| Parent company | Group companies | ownership of shares, % | Parent company | Group companies | ownership of shares, % |
|---|---|---|---|---|---|
| CapMan Plc, parent company | Finland | CapMan Infra Management Oy | Finland | 60% | |
| CapMan Capital Management Oy | Finland | 100% | |||
| CapMan Infra Lux Management S.á.r.l. | Luxembourg | 60% | |||
| CapMan Sweden AB | Sweden | 100% | |||
| CapMan Growth Equity 2017 GP Oy | Finland | 100% | |||
| CapMan AB | Sweden | 100% | |||
| CapMan Nordic Infrastructure Manager S.á.r.l. | Luxembourg | 100% | |||
| CapMan (Guernsey) Limited | Guernsey | 100% | |||
| CapMan Infra Lynx GP Oy | Finland | 60% | |||
| CapMan (Guernsey) Buyout VIII GP Limited | Guernsey | 100% | |||
| CapMan Buyout XI GP S.á.r.l | Luxembourg | 100% | |||
| CapMan (Sweden) Buyout VIII GP AB | Sweden | 100% | |||
| CapMan AIFM Oy | Finland | 100% | |||
| CapMan Classic GP Oy | Finland | 100% | |||
| Nest Capital III GP Oy | Finland | 100% | |||
| CapMan Real Estate Oy | Finland | 100% | |||
| CapMan Procurement Services (CaPS) Oy | Finland | 93% | |||
| Dividum Oy | Finland | 100% | |||
| CapMan Buyout Management Oy | Finland | 100% | |||
| RG Invest Oy | Finland | 100% | |||
| CapMan Hotels II Holding GP Oy | Finland | 100% | |||
| CapMan RE II GP Oy | Finland | 100% | |||
| CapMan Wealth Services Oy | Finland | 60% | |||
| CapMan (Guernsey) Life Science IV GP Limited | Guernsey | 100% | |||
| CapMan Growth Equity II GP Oy | Finland | 100% | |||
| CapMan (Guernsey) Technology 2007 GP Limited | Guernsey | 100% | |||
| CapMan Special Situations GP Oy | Finland | 100% | |||
| CapMan (Sweden) Technology Fund 2007 GP AB | Sweden | 100% | |||
| CapMan Special Situations Oy | Finland | 65% | |||
| CapMan Private Equity Advisors Limited | Cyprus | 100% | |||
| Nest Capital Management AB | Sweden | 100% | |||
| RG Growth (Guernsey) GP Ltd | Guernsey | 100% | |||
| CM III Feeder GP S.á.r.l. | Luxembourg | 100% | |||
| CapMan (Guernsey) Investment Limited | Guernsey | 100% | |||
| CaPS Baltic OÜ | Estonia | 56% | |||
| CapMan (Guernsey) Buyout IX GP Limited | Guernsey | 100% | |||
| Maneq 2010 AB | Sweden | 86% | |||
| CapMan Fund Investments SICAV-SIF | Luxembourg | 100% | |||
| Maneq 2005 AB | Sweden | 100% | |||
| CapMan (Guernsey) Buyout X GP Limited | Guernsey | 100% | |||
| CapMan Residential Manager SA | Luxembourg | 60% | |||
| RG Growth (Guernsey) II GP Ltd | Guernsey | 100% | |||
| CMRF Feeder GP S.á.r.l. | Luxembourg | 60% | |||
| Maneq 2012 AB | Sweden | 100% | |||
| CMRF Advisors Oy | Finland | 60% | |||
| CapMan Nordic Real Estate Manager S.A. | Luxembourg | 100% | |||
| CM Nordic Gems GP Oy | Finland | 100% | |||
| CapMan Buyout X GP Oy | Finland | 100% | |||
| CMH II Feeder GP Sarl | Luxemburg | 100% | |||
| CapMan Endowment GP Oy | Finland | 100% | |||
| CapMan Nordic Infrastructure II Manager S.á.r.l. | Luxemburg | 100% | |||
| CapMan Real Estate UK Limited | United Kingdom | 100% | |||
| CMNPI GP II Sarl | Luxemburg | 100% | |||
| Nest Capital 2015 GP Oy | Finland | 100% | |||
| CapMan Growth Equity III GP Oy | Finland | 100% | |||
| Kokoelmakeskus GP Oy | Finland | 100% | |||
| CapMan Growth Management Oy | Finland | 65% | |||
| CapMan Growth Equity Oy | Finland | 100% | |||
| Exmo Solutions OÜ | Estonia | 56% | |||
| CapMan Real Estate Manager S.A. | Luxembourg | 100% |
Group companies ownership of shares, %
| Group companies | Foreign branches | ownership of shares, % |
|---|---|---|
| CapMan Real Estate Oy | Denmark, filial av CapMan AB, Sverige | 100% |
| CapMan Real Estate Oy, filial i Norge | Norway | 100% |
| CapMan Procurement Services (CaPS) Oy, filial i Sverige | Sweden | 93% |
| CapMan Buyout Management Oy, filial i Sverige | Sweden | 100% |
| CapMan Infra Management Oy, filial i Sverige | Sweden | 60% |
Transactions with related parties
In 2023, CapMan recorded fees, totalling approximately EUR 7 thousand, for financial and legal services to Momea Invest Oy, a controlled entity of Olli Liitola, member of the Board of Directors of CapMan Plc. In the previous financial year 2023, CapMan issued a long-term loan of EUR 210 thousand with a fixed interest rate to Äkäs Capital Oy, a controlled entity of Maximilian Marschan, member of the Management Group. Äkäs Capital Oy used the loan to purchase an additional 1.5% ownership share in CapMan Procurement Services (CaPS) Oy, a subsidiary of CapMan Plc.
| Receivables from and liabilities to related parties | EUR 1,000 | |
|---|---|---|
| 2023 | 2022 | |
| Loan receivables, non-current, from related parties | 242 | 235 |
| Capital loan liability to related parties | 120 |
| Commitments to related parties | EUR 1,000 | |
|---|---|---|
| 2023 | 2022 | |
| Loan commitments | 98 | 112 |
Management remuneration
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| CEO Pia Kåll | ||
| Salaries and other short-term employee benefits | 351 | |
| Pension costs | 62 | |
| Additional pension costs | 35 | |
| Share-based payments | 181 | |
| Total | 630 | |
| CEO Joakim Frimodig | ||
| Salaries and other short-term employee benefits | 130 | 453 |
| Pension costs | 23 | 80 |
| Additional pension costs | 13 | 45 |
| Share-based payments | –68 | 793 |
| Total | 98 | 1,371 |
| Management group excl. CEO | ||
| Salaries and other short-term employee benefits | 2,886 | 3,483 |
| Share-based payments | 585 | 1,106 |
| Total | 3,472 | 4,590 |
Remuneration and fees of the Board of Directors
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Joakim Frimodig as of March 15, 2023 | 291 | |
| Andreas Tallberg until March 15, 2023 | 16 | 69 |
| Johan Bygge | 44 | 44 |
| Mammu Kaario | 55 | 55 |
| Catarina Fagerholm | 45 | 45 |
| Eero Heliövaara until March 16, 2022 | 11 | |
| Olli Liitola | 43 | 42 |
| Johan Hammarén | 42 | 42 |
| Yhteensä | 537 | 309 |
Management remuneration includes members of the board, CEO and management group. The CEO has a mutual notice period of six months and he will be entitled to a severance fee of 12 months’ salary, if his employment is terminated by the company. The CEO and some of the Management Group members are covered by additional defined contribution based pension insurance. The retirement age of the CEO is 63 years. The Management Group members, incl. CEO, have allocated a total of 780,000 shares (740,000 shares in 2022) to the investment-based long-term incentive plan 2022–25. The program PSP 2020–23 has ended and at the end of the previous financial year, the Management Group members had allocated a total of 660,000 shares to this plan. The Management Group members were not granted any stock options during the current or previous financial year. The Management Group and other employees have similar terms in the investment-based long-term incentive plans and stock options granted earlier (see Note 30).
32.# Financial risk management
The purpose of financial risk management is to ensure that the Group has adequate and effectively utilised financing as regards the nature and scope of the Group’s business. The objective is to minimise the impact of negative market development on the Group with consideration for cost efficiency. The financial risk management has been centralised and the Group’s CFO is responsible for financial risk management and control. The management constantly monitors cash flow forecasts and the Group’s liquidity position on behalf of all Group companies. In addition, the Group’s principles for liquidity management include rolling 12-month loan covenant assessments. The loan covenants are related to equity ratio and net gearing. During the financial year all the loan covenants have been fullfilled. The Group has a Risk and Valuation team, which monitors the performance and the price risk of the investment portfolio (financial assets measured at fair value through profit or loss) independently and objectively of the investment teams. The Risk and Valuation team is responsible for reviewing the monthly reporting and forecasts for portfolio companies. Valuation proposals are examined by the Risk and Valuation team and subsequently reviewed and decided by the Valuation Committee, which comprises at least Valuation Controller, Risk Manager and at least one CapMan AIF Manager’s Board of Directors. The portfolio company valuations are reviewed in the Valuation Committee on a quarterly basis. The valuations are back tested against realised exit valuations, and the results of such back testing are reported to the Audit Committee annually.
a) Liquidity risk
Cash inflow from operating activities consists of predictable management fees and fees from the Service Business, as well as transaction-based fees and carried interest income, which are more difficult to predict. Cash outflow from operating activities consists of payment of fixed costs, interests and taxes, which are relatively well predictable in the short term. Liquidity management is also significantly impacted by the timing of the capital calls to the funds and proceeds from fund investments, which is difficult to predict. Therefore, the Group maintains a sufficient liquidity in order to fulfill its commitments, which are more difficult to predict. Cash from financing activities consist of proceeds from and repayment of borrowings, and payment of dividends and return of capital. Management fees received from the funds and majority of fees from the Service Business are based on long-term agreements and are targeted to cover the operational expenses of the Group. Management fees and majority of fees from the Service Business are quite reliably predictable for the coming 12 months. However, part of of the fees from the Service Business are transaction-based and thus more difficult to forecast. The timing and receipt of carried interest generated by the funds is uncertain and will contribute to the volatility of the results. Changes in investment and exit activity levels may have a significant impact on cash flows of the Group. A single investment or exit may change the cash flow situation completely and the exact timing of the cash flow is difficult to predict. Group companies managing
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 67
a fund may in certain circumstances, pursuant to the terms of the fund agreement, have to return carried interest income they have received (so-called clawback). The obligation to return carried interest income applies typically when, according to the final distribution of funds, the carried interest income received by the fund management company exceeds the carried interest it is entitled to when the fund expires. CapMan has no clawback liabilities recorded at the balance sheet date. CapMan has made commitments to the funds it manages. As at December 31, 2023, the undrawn commitments to the funds amounted to EUR 85.2 (89.1) million and the financing capacity available (cash available for use and third party financing facilities) amounted to EUR 59.2 (74.5) million. The cash available includes the cash of CapMan Fund Investments SICAV-SIF EUR 0.1 million (0.8) which is reported in fund investments in the group balance sheet. In the previous financial year, on April 13, 2022, CapMan issued unsecured sustainability-linked notes in the aggregate principal amount of EUR 40 million. The notes will mature on April 13, 2027 and carry a fixed annual interest of 4.5%. In conjunction with this, CapMan redemeed the remaining EUR 31.5 million of its notes issued in 2018. These notes carried a fixed annual interest of 4.125% that was paid semi-annually. CapMan also has unsecured notes in the aggregate principal amount of EUR 50 million issued in December 2020, which will mature on December 9, 2025 and carry a fixed annual interest of 4.0% paid annually. Both loan agreements include covenants related to equity ratio. At the end of the financial year, CapMan has an unused long-term credit facility of EUR 20 million. CapMan has not used the credit facility during the financial year or the previous year. The long-term credit facility agreement includes a covenant related to net gearing.
Maturity analysis
| Due between 31 December 2023, 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 | 50,000 | 40,000 | |||
| Accounts payable | 2,101 | ||||
| Interests, bonds | 3,800 | 5,474 | 503 | ||
| Company acquisitions liabilities | 3,842 | ||||
| Commitments to funds | 4,194 | 11,371 | 6,187 | 13,151 | |
| Lease liabilities (IFRS 16) | 308 | 882 | 2,852 |
Maturity analysis
| Due between 31 December 2022, 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 | 50,000 | 40,000 | |||
| Accounts payable | 1,167 | ||||
| Interests, bonds | 3,800 | 7,474 | 2,303 | ||
| Company acquisitions liabilities | 6,933 | ||||
| Commitments to funds | 0 | 11,544 | 6,779 | 590 | 70,198 |
| Lease liabilities (IFRS 16) | 323 | 976 | 1,089 | 876 |
b) Interest rate risk
At the end of the financial year, interest-bearing liabilities carry a fixed interest rate. Exposure to interest rate risk arises principally from the long-term credit facility of EUR 20 million with a floating interest rate. This facility was not used during the financial year or the previous year. The interest rate of the credit facility is the aggregate of the reference rate (Euribor) and the margin, which is dependent on the Group’s net gearing and is in the range of 1.75% to 2.70%. The sustainability-linked senior bond issued in April 2022 carry initially an annual coupon rate of 4.500% paid annually. Failure to fulfill the agreed sustainability-linked targets by the end of 2023 would have increased the interest rate by 0.500%-points, at maximum, for the remainder of the loan term, but CapMan succeeded in fulfilling the sustainability-linked conditions and thus, the interest rate will remain at 4.500% for the remainder of the loan term. The senior bond issued in December 2020 carry a coupon rate of 4.000% p.a., which is paid once a year.
Loans according to interest rate
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Floating rate | 0 | 0 |
| Fixed rate | 89,750 | 89,770 |
| Total | 89,750 | 89,770 |
c) Credit risk
Group’s credit risks relate to trade, loan and other receivables recognised at amortised cost. The maximum credit loss of these receivables is the carrying amount of the receivable in question. There are no collaterals relating to the receivables. CapMan has some credit-impaired co-investment loan receivables from entities controlled by the former or current investment teams. Co-investment loans are determined to be credit-impaired, if the expected distributions from the underlying fund would not enable full repayment of the loan to CapMan. Events triggering an evaluation to determine, if a loan receivable is credit-impaired, are typically decreased or lost carry potential or decreased fair
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 68
value of the underlying fund’s remaining investments or fund filing for liquidation. More information on the expected credit losses of receivables is presented in notes 18 and 20. Group’s loan commitments are related to co-investment loans granted to team entities, which they use in order to make co-investments to funds managed by the Group. Apart from credit-impaired loan receivables, credit risk of loan commitments is deemed low, when the repayment is subject to distributions received from the fund and the fund is capable of making distributions equaling or exceeding the needed cash for repaying the loans and accrued interests.
d) Currency risk
Changes in exchange rates, particularly between the US dollar and and the euro, impact the compa- ny’s performance, since a part of group’s fund investments and non-current accounts receivables are in US dollar. Any strengthening/weakening of the dollar against the euro would improve/weaken the fair value gains or US dollar fund investments and revenue related to US dollar nominated account receivables. CapMan has started to hedge its US dollar nominated account receivables against changes in exchange rates as of December 2022, and therefore, hedging will have a full impact as of 2023. The group does not, however, apply hedge accounting to the derivative instruments used for hedging purposes. CapMan has subsidiaries outside of the Eurozone, and their equity is exposed to movements in foreign currency exchange rates. However, the Group does not hedge currency as the impact of exposure to currency movements on equity is relatively small. As at December 31, 2023, 87% of the Group’s financial assets were in euros, 12% in US dollars 1% in Swedish krona and 1% in other currencies. The following table presents the fair values of the foreign currency denominated financial assets.# Financial Statements
Notes to the Consolidated Financial Statements
18. Risks and principles for financial reporting (cont.)
e) Capital management
Group’s aim is to have an efficient capital structure that allows the company to manage its ongoing obligations and that the business has the prerequisites for operating normally. The Return on equity (ROE) and the Equity ratio are the means for monitoring capital structure. The long-term financial targets of the Group have been confirmed by the Board of Directors of CapMan Plc. The financial targets are based on growth, profitability and balance sheet.
The combined growth objective for the Management Company and Service businesses is more than 15 per cent p.a. on average. The objective for return on equity is more than 20 per cent p.a. on average. CapMan’s equity ratio target is more than 50 per cent.
The distribution policy was updated during the financial year by the Board of Directors of CapMan Plc. CapMan’s objective is to distribute at least 70 per cent of the Group’s profit attributable to equity holders of the company excluding the impact of fair value changes, subject to the distributable funds of the parent company. In addition, CapMan may pay out distributions accrued from investment operations, taking into consideration foreseen cash requirements for future investments. Previously, CapMan’s policy was to pay an annually increasing dividend to its shareholders.
At the balance sheet date, CapMan has two unsecured senior bonds outstanding, of which the sustainability-linked unsecured bond of EUR 40 million, with initially fixed interest rate, will mature on April 13, 2027 and the other unsecured bond of EUR 50 million, with fixed interest rate, will mature on December 9, 2025. In addition, CapMan has a long-term credit facility of EUR 20 million available until August 5, 2024, which was not in use at the balance sheet date. The long-term credit facility agreement and senior bond agreements include financial covenants related to both equity ratio and net gearing.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Interest-bearing loans | 93,856 | 92,966 |
| Cash and cash equivalents | –41,017 | –55,571 |
| Net debt | 52,839 | 37,395 |
| Equity | 115,125 | 142,144 |
| Net gearing | 45.9% | 26.3% |
| Return on equity | 2.6% | 30.5% |
| Equity ratio | 47.8% | 52.7% |
f) Price risk of the investments in funds
The investments in funds are valued using the International Private Equity and Venture Capital Valuation Guidelines. According to these guidelines, the fair values are generally derived by 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.
g) Climate related risks
The Group has assessed the impact of climate-related matters and whether climate related risks could be expected to result in material adjustments in the Group’s financial statements. The Group is committed to Science Based Targets and climate net zero target and has established short-term, mid-term and long-term sustainability targets for CapMan Group as well as for its investment areas. The Group’s largest assets consist of financial assets, and more precisely, of its own and external fund investments valued at fair value. Therefore, potential climate-related risks are primarily associated with CapMan’s own fund investments, managed by CapMan’s investment professionals, and with external fund investments. CapMan’s commitment to climate net zero, combined with the valuation process described earlier, can therefore be seen taking sufficiently into account climate-related matters impacting the fair value of the underlying portfolio companies, real estate properties and other holdings owned by CapMan’s own funds. Fair value of external fund investments is based on external fund managers’ valuations and no climate-related adjustments are made by CapMan. However, the Group sees that the industries, in which the portfolio companies of the external fund investments operate, are not materially subject to climate related risks with regards to their fair valuation.
h) Determining fair values
Fair value hierarchy of financial assets measured at fair value at 31 December 2023
| EUR 1,000 | Fair value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Investments in funds | 158,907 | 980 | 0 | 157,927 |
| Other non-current investments | 508 | 482 | 0 | 25 |
| Current financial assets at FVTPL* | 275 | 116 | 159 | 0 |
* fair value through profit or loss
The different levels have been defined as follows:
Level 1 – Quoted prices (unjusted) in active markets for identical assets.
Level 2 – Other than quoted prices included within Level 1 that are observable for the asset, either directly (that is, as price) or indirectly (that is, derived from prices).
Level 3 – The asset that is not based on observable market data .
Non-current investments at fair value through profit or loss
| EUR 1,000 | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Investments in funds | ||||
| at Jan 1 | 1,197 | 167,866 | 169,063 | |
| Additions | 18,097 | 18,097 | ||
| Distributions | –17,615 | –17,615 | ||
| Disposals | –3,975 | –3,975 | ||
| Fair value gains/losses | –5,926 | –5,926 | ||
| Transfers* | –217 | –520 | –737 | |
| at the end of period | 980 | 157,927 | 158,907 | |
| Other investments | ||||
| at Jan 1 | 408 | 0 | 25 | 433 |
| Additions | 46 | 46 | ||
| Fair value gains/losses | 28 | 28 | ||
| at the end of period | 482 | 0 | 25 | 508 |
* Includes the change of cash and cash equivalents of the subsidiary CapMan Fund Investments SICAV-SIF, classified as fund investments,
Fair value hierarchy of financial assets measured at fair value at 31 December 2022
| EUR 1,000 | Fair value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Investments in funds | 169,063 | 1,197 | 0 | 167,866 |
| Other non-current investments | 434 | 408 | 0 | 25 |
| Current financial assets at FVTPL* | 65 | 0 | 65 | 0 |
* fair value through profit or loss
The different levels have been defined as follows:
Level 1 – Quoted prices (unjusted) in active markets for identical assets
Level 2 – Other than quoted prices included within Level 1 that are observable for the asset, either directly (that is, as price) or indirectly (that is, derived from prices)
Level 3 – The asset that is not based on observable market data
Non-current investments at fair value through profit or loss
| EUR 1,000 | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Investments in funds | ||||
| at Jan 1 | 236 | 129,776 | 130,012 | |
| Additions | 29,313 | 29,313 | ||
| Distributions | –27,600 | –27,600 | ||
| Disposals | –1 | –1 | ||
| Fair value gains/losses | 36,685 | 36,685 | ||
| Transfers* | 961 | –307 | 654 | |
| at the end of period | 1197 | 167,866 | 169,063 | |
| Other investments | ||||
| at Jan 1 | 368 | 0 | 25 | 393 |
| Additions | 45 | 45 | ||
| Fair value gains/losses | –5 | –5 | ||
| at the end of period | 408 | 0 | 25 | 434 |
* Includes the change of cash and cash equivalents of the subsidiary CapMan Fund Investments SICAV-SIF, classified as fund investments,
Sensitivity analysis of Level 3 investments at 31 December 2023
| Investment area | Fair value MEUR, 31.12.2023 | Valuation methodology | Unobservable inputs (weighted average) | Change in input value | Fair value sensitivity |
|---|---|---|---|---|---|
| Growth Equity | 15.2 | Peer group earnings multiples | EV/EBITDA 2023,11.2× | +/– 10% | +/– 0.8 MEUR |
| Peer group Discount to multiples | 22% | +/– 10% | –/+ 0.3 MEUR | ||
| Buyout | 28.3 | Peer group earnings multiples | EV/EBITDA 2023,6.5× | +/– 10% | +/– 3.7 MEUR |
| Peer group Discount to multiples | 11% | +/– 10% | –/+ 0.9 MEUR | ||
| Real Estate | 40.4 | Valuation by an independent valuer | FX rate EUR/SEK 11.0960 | +/–1% | –/+ 0.1 MEUR |
| EUR/DKK 7.4529 | +/–1% | +/– 0.1 MEUR | |||
| EUR/NOK 11.2405 | +/–1% | +/– 0.0 MEUR | |||
| Infrastructure | 10.1 | Terminal value | EV/EBITDA 15.1× | +/– 5% | +/– 1.1 MEUR |
| Discounted cash flows | Discount rate; market rate and risk premium | 13% | +/– 100 bps | ||
| Credit | 6.0 | Discounted cash flows | Discount rate; market rate and risk premium | 10% | +/– 100 bps |
| value change based on a risk premium change in the discount rate is not booked | |||||
| Special Situations | 3.1 | Peer group earnings multiples | EV/EBITDA 2023,7.4× | +/– 10% | +/– 0.2 MEUR |
| Peer group Discount to multiples | 28% | +/– 10% | –/+ 0.1 MEUR | ||
| Investments in funds-of-funds | 16.0 | Reports from PE fund management company | |||
| Investments in external venture capital funds | 38.7 | Reports from PE fund management company |
Sensitivity analysis of Level 3 investments at 31 December 2022
| Investment area | Fair Value MEUR, 31 Dec 2022 | Valuation methodology | Unobservable inputs (weighted average) | Change in input value | Fair value sensitivity |
|---|---|---|---|---|---|
| Growth | 18.7 | Peer group earnings multiples | EV/EBITDA 2022,9.3× | +/– 10% | +/– 1.3 MEUR |
| Peer group Discount to multiples | 24% | +/– 10% | –/+ 0.5 MEUR | ||
| Buyout | 26.1 | Peer group earnings multiples | EV/EBITDA 2022,7.4× | +/– 10% | +/– 2.3 MEUR |
| Peer group Discount to multiples | 16% | +/– 10% | –/+ 0.6 MEUR | ||
| Real Estate | 44.0 | Valuation by an independent valuer | FX rate EUR/SEK 11.1218 | +/–1% | –/+ 0.1 MEUR |
| EUR/DKK 7.4365 | +/–1% | +/– 0.1 MEUR | |||
| EUR/NOK 10.5138 | +/–1% | +/– 0.0 MEUR | |||
| Infrastructure | 13.1 | Terminal value | EV/EBITDA 17.1× | +/– 5% | +/– 1.0 MEUR |
| Discounted cash flows | Discount rate; market rate and risk premium | 15% | +/– 100 bps | ||
| Credit | 4.3 | Discounted cash flows | Discount rate; market rate and risk premium | 10% | +/– 100 bps |
| value change based on a risk premium change in the discount rate is not booked | |||||
| Special Situations | 2.9 | Peer group earnings multiples | EV/EBITDA 2022,7.6× | +/– 10% | +/– 0.2 MEUR |
| Peer group Discount to multiples | 23% | +/– 10% | –/+ 0.0 MEUR | ||
| Investments in funds-of-funds | 16.5 | Reports from PE fund management company | |||
| Investments in external venture capital funds | 42.5 | Reports from PE fund management company | Company level negative and adjustment for the reported possible ajustment by CapMan | 14% | +/– 10% |
CapMan has made some investments also in funds that are not managed by CapMan Group# ANNUAL REPORT 2023 FINANCIAL STATEMENTS
33. Events after the financial year
CapMan signed on 21 December 2023 an agreement on the acquisition of all the shares of Dasos Capital Oy (“Dasos”) from the company’s current shareholders. Dasos is a leading timberland and natural capital investment asset manager in Europe and a significant player globally. The acquisition will expand CapMan’s activities into natural capital and timberland investments and will bring several opportunities to expand and develop Natural Capital as a new investment area through its offering in the form of other natural capital and impact products. In 2022, Dasos Group’s adjusted turnover was EUR 4.5 million and operating profit was EUR 2.2 million. Operating profit for 2023 is projected at approximately EUR 2.7 million. The acquisition is estimated to expand CapMan’s fee-generating assets under management by approximately EUR 630 million.
The acquisition is intended to be completed during the first half of 2024, following the comple- tion of the conditions precedent. The equity price paid at closing equals the enterprise value of EUR 35 million adjusted with net debt/cash at closing and certain customary post-closing adjustments (the “Purchase Price”). CapMan intends to pay the Purchase Price by a directed share issue to the current shareholders of Dasos (the “Share Issue”) and with a cash component, which amounts to a maximum of approximately 9 per cent of the Purchase Price. The subscription price for the shares issued in the Share Issue is agreed at EUR 2.0938 per share, and the total number of issued shares is estimated at 18.3 million. The Purchase Price is now anticipated to be approximately EUR 41.6 million at closing. In addition, CapMan has committed to paying an additional earn-out consider- ation of a maximum EUR 5 million based on management fee turnover incurred in 2025 and 2026, payable when the management fees of the funds managed by Dasos exceed certain limits. The additional consideration will be paid later in 2026 and 2027 in CapMan’s shares.
On the balance sheet date, the completion of the acquisition was subject to CapMan’s Extraordinary General Meeting held on January 18, 2024, authorising the Board of Directors to resolve on the issuance of new shares, and also conditional on the approvals by the Finnish Competition and Consumer Authority and the Finnish Financial Supervisory Authority as well as consents from certain investors of certain funds managed by Dasos. CapMan Extraordinary General Meeting authorised the Board of Directors to resolve on the issuance of new shares, and the Finnish Competition and Consumer Authority approved the transaction in the beginning of February 2024. On February 6, 2024, being the date when the financial statements were authorised for issue, the completion of the acquisition was still conditional on the approvals by the Finnish Financial Supervisory Authority as well as consents from certain investors of certain funds managed by Dasos.
Parent Company Income Statement (FAS)
| EUR | Note | 1.1.–31.12.2023 | 1.1.–31.12.2022 |
|---|---|---|---|
| Turnover | 1 | 6,815,795.44 | 5,263,341.70 |
| Other operating income | 2 | –142,640.32 | 1,083,303.07 |
| Raw materials and services | 3 | 0.00 | 0.00 |
| Employee benefit expenses | 4 | –6,300,619.64 | –9,132,098.80 |
| Depreciation | 5 | –97,783.34 | –99,398.53 |
| Other operating expenses | 6 | –4,049,856.25 | –4,041,336.19 |
| Operating loss | –3,775,104.11 | –6,926,188.75 | |
| Finance income and costs | 7 | 19,364,289.83 | 19,344,116.96 |
| Profit before appropriations and taxes | 15,589,185.72 | 12,417,928.21 | |
| Appropriations | 8 | 3,129,500.00 | 0.00 |
| Income taxes | –944.21 | 0.00 | |
| Loss for the financial year | 18,717,741.51 | 12,417,928.21 |
Parent Company Balance Sheet (FAS)
| EUR | Note | 31.12.2023 | 31.12.2022 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 9 | 6,886.40 | 41,656.94 |
| Tangible assets | 10 | 151,822.57 | 205,785.37 |
| Investments | 11 | ||
| Shares in subsidiaries | 126,199,336.83 | 127,798,504.09 | |
| Investments in associated companies | 34,211.38 | 34,211.38 | |
| Other investments | 10,593,627.04 | 10,559,049.01 | |
| Other receivables 1) | 6,294,849.42 | 6,727,077.34 | |
| Investments total | 143,122,024.67 | 145,118,841.82 | |
| Non-current assets, total | 143,280,733.64 | 145,366,284.13 | |
| Current assets | |||
| Short-term receivables | 12 | 24,489,032.09 | 21,059,643.21 |
| Investments | 13 | 1,000,000.00 | 0.00 |
| Cash and bank | 22,056,494.29 | 25,218,756.17 | |
| Current assets, total | 47,545,526.38 | 46,278,399.38 | |
| Total assets | 190,826,260.02 | 191,644,683.51 |
| EUR | Note | 31.12.2023 | 31.12.2022 |
|---|---|---|---|
| SHAREHOLDERS’ EQUITY AND LIABILITIES | |||
| Shareholders’ equity | 14 | ||
| Share capital | 771,586.98 | 771,586.98 |
Parent Company Balance Sheet (FAS)
| EUR | 31.12.2023 | 31.12.2022 | |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Intangible assets | 6,886 | 41,657 | |
| Tangible assets | 151,821 | 205,784 | |
| Investments | |||
| Subsidiaries | 89,480,165 | 89,480,165 | |
| Other placements | 1,580,237 | 2,580,000 | |
| Total investments | 91,060,402 | 92,060,165 | |
| Receivables | |||
| Long-term receivables | 1,884,559 | 747,291 | |
| Other receivables | 0 | 34,771 | |
| Total receivables | 1,884,559 | 782,062 | |
| Total non-current assets | 93,103,668 | 93,089,668 | |
| Current assets | |||
| Current receivables | |||
| Trade receivables | 11,979 | 50,658 | |
| Receivables from Group companies | 15,270,728 | 6,918,046 | |
| Other receivables | 3,839,356 | 1,481,394 | |
| Accrued income | 1,681,573 | 1,363,881 | |
| Total current receivables | 20,803,636 | 9,813,979 | |
| Inventories | 0 | 0 | |
| Financial assets at fair value | 0 | 0 | |
| Cash and cash equivalents | 22,056,494 | 25,218,755 | |
| Total current assets | 42,860,130 | 35,032,734 | |
| Total assets | 135,963,798 | 128,122,402 | |
| --- | |||
| Shareholders’ equity and liabilities | |||
| Shareholders’ equity | |||
| Share capital | 150,000 | 150,000 | |
| Share premium account | 38,968,186 | 38,968,186 | |
| Invested unrestricted shareholders’ equity | 18,119,799 | 32,374,156 | |
| Retained earnings | 688,394 | 944,536 | |
| Profit for the financial year | 18,717,741 | 12,417,928 | |
| Shareholders’ equity, total | 76,644,120 | 84,854,806 | |
| --- | |||
| Liabilities | |||
| Non-current liabilities | |||
| Bonds | 91,432,514 | 91,283,773 | |
| Total non-current liabilities | 91,432,514 | 91,283,773 | |
| Current liabilities | |||
| Bonds | 22,128,037 | 14,884,515 | |
| Total current liabilities | 22,128,037 | 14,884,515 | |
| Total liabilities | 113,560,551 | 106,168,289 | |
| --- | |||
| Total shareholders’ equity and liabilities | 190,204,671 | 191,023,095 |
1) Long-term receivables have been reclassified from current assets to non-current assets and figures for the comparison period have been adjusted accordingly.
ANNUAL REPORT 2023
FINANCIAL STATEMENTS 77
Parent Company Cash Flow Statement (FAS)
| EUR | 1.1.–31.12.2023 | 1.1.–31.12.2022 | |
|---|---|---|---|
| Liiketoiminnan rahavirrat | |||
| Profit before extraordinary items | 15,589,186 | 12,417,928 | |
| Finance income and costs | –19,364,290 | –19,344,117 | |
| Adjustments to cash flow statement | |||
| Depreciation, amortisation and impairment | 97,783 | 99,399 | |
| Gain on sale of subsidiary shares | 0 | –1,433,384 | |
| Change in net working capital | |||
| Change in current assets, non-interest-bearing | 611,149 | 1,126,446 | |
| Change in current liabilities, non-interest-bearing | –144,400 | –808,489 | |
| Interest paid | –4,436,439 | –3,312,011 | |
| Interest received | 729,394 | 230,135 | |
| Dividends received | 22,603,554 | 22,966,087 | |
| Direct taxes paid | –34,717 | 0 | |
| Cash flow from operations | 15,651,220 | 11,941,994 |
Cash flow from investments | | |
Acquisition of subsidiaries | | –206,874 | 0
Cash of a dissolved or merged subsidiary | | 160,000 | 765,825
Investments in subsidiaries | | –7,987,603 | –17,234,994
Sale of subsidiary shares | | 3,789,444 | 321,702
Repayment of capital from subsidiaries | | 4,898,789 | 428,957
Investments in tangible and intangible assets | | –9,050 | –111,038
Investments in other placements, net | | –999,707 | –25,383
Loan receivables granted | | –1,992,287 | –1,470,139
Repayment of loan receivables | | 2,381,031 | 1,118,426
Cash flow from investments | | 33,743 | –16,206,644
| EUR | 1.1.–31.12.2023 | 1.1.–31.12.2022 | |
|---|---|---|---|
| Cash flow from financing activities | |||
| Repayment of capital | –14,254,357 | –17,296,893 | |
| Proceeds from long-term borrowings | 0 | 39,778,500 | |
| Repayment of long-term borrowings | 0 | –31,520,000 | |
| Dividends paid | –12,671,736 | –6,288,998 | |
| Change in group liabilities | 7,482,742 | 4,302,718 | |
| Group contributions received | 742,000 | 7,807,936 | |
| Cash flow from financing activities | –18,701,351 | –3,216,737 |
Change in cash and cash equivalents | | –3,016,388 | –7,481,388
Cash and cash equivalents at beginning of year | | 25,218,755 | 32,456,355
Translation difference | | –145,873 | 243,789
Cash and cash equivalents at end of year | | 22,056,494 | 25,218,755
ANNUAL REPORT 2023
FINANCIAL STATEMENTS 78
Basis of preparation for parent company financial statements
CapMan Plc’s financial statements for 2023 have been prepared in accordance with the Finnish Accounting Act.
Foreign currency translation
Transactions in foreign currencies have been recorded at the rates of exchange prevailing at the date of the transaction. Foreign currency denominated receivables and payables are recorded at the rates of exchange prevailing at the closing date of the review period.
Investments
Investments are valued at acquisition cost. If the probable future income from the investment is permanently lower than the value at acquisition cost excluding depreciation, the difference is recognised as an expense.
Intangible and tangible assets
Intangible and tangible assets are valued at cost less accumulated depreciation and amortisation according to the plan, except for assets having an indefinite useful life.
Receivables
Receivables comprise receivables from Group companies and associated companies, trade receivables, accrued income and other receivables. Receivables are recorded at nominal value, however no higher than at probable value. Receivables are classified as non-current assets if the maturity exceeds 12 months.
Financial risk management and derivative instruments
The financial risk management of CapMan Group is centralised with the parent company. The financial risk management principles are provided in the Notes to the Group financial statements under 32. Financial risk management. CapMan Plc uses derivative instruments, such as foreign exchange forwards, to hedge against currency changes incurred to its certain and significant foreign currency denominated trade receivables. Derivative instruments are measured at the lower of their cost or market value.
Non-current liabilities
Senior bonds maturing later than one year after the balance sheet date are recorded as non-current liabilities at nominal value.
Current liabilities
Bonds maturing within one year are presented as current liabilities and measured at their nominal value. Derivative liabilities are measured at fair value.
Leases
Lease payments are recognised as other expenses. The remaining commitments under each lease are provided in the Notes section under “Commitments”.
Provisions
Provisions are recognised as expenses in case the parent company has an obligation that will not result in comparable income or losses that are deemed apparent.
Pensions
Statutory pension expenditures are recognised as expenses at the year of accrual. Pensions have been arranged through insurance policies of external pension institutions.
Revenue
Revenue includes the sale of services to subsidiaries and revenue from the sale of securities, dividends and other similar income from securities classified as inventories. Revenue from services is recognised, when the service is delivered.
Income taxes
Income taxes are recognised based on Finnish tax law. Deferred taxes are calculated on temporary differences between the carrying amount and the tax base. Deferred taxes have been measured at the statutory tax rates that have been enacted by the balance sheet date and are expected to apply when the related deferred tax is realised.
Appropriations
Appropriations in the income statement consist of possible given and received group contributions and possible depreciation in excess of plan, and in the balance sheet, possible accumulated depreciation in excess of plan.
ANNUAL REPORT 2023
FINANCIAL STATEMENTS 79
1. Turnover by area
| EUR | 2023 | 2022 | |
|---|---|---|---|
| Sale of services | |||
| Finland | 1,106,945 | 1,998,491 | |
| Foreign | 5,708,850 | 3,264,850 | |
| Total | 6,815,795 | 5,263,342 |
2. Other operating income
| EUR | 2023 | 2022 | |
|---|---|---|---|
| Turnover translation difference | –185,905 | –370,371 | |
| Gain on sale of subsidiary shares | 43,249 | 1,453,658 | |
| Other operating income | 16 | 16 | |
| Total | –142,640 | 1,083,303 |
3. Raw materials and services
| EUR | 2023 | 2022 | |
|---|---|---|---|
| Change in inventories | 0 | 0 | |
| Total | 0 | 0 |
4. Personnel
| EUR | 2023 | 2022 | |
|---|---|---|---|
| Salaries and wages | 5,497,998 | 8,224,832 | |
| Pension expenses | 664,920 | 814,879 | |
| Other personnel expenses | 137,702 | 92,388 | |
| Total | 6,300,620 | 9,132,099 |
Management remuneration
Salaries and other remuneration of the CEO
Joakim Frimodig (1.1.–15.3.2023) | | 922,804 | 1,741,618
Pia Kåll (15.3.–31.12.2023) | | 350,036 | 0
Board members | | 535,560 | 318,996
Average number of employees | | 35 | 33
Management remuneration is presented in the Group Financial Statements Table 31. Related party disclosures.
5. Depreciation
| EUR | 2023 | 2022 | |
|---|---|---|---|
| Depreciation according to plan | |||
| Other long-term expenditure | 34,771 | 52,586 | |
| Machinery and equipment | 63,013 | 46,813 | |
| Total | 97,784 | 99,399 |
ANNUAL REPORT 2023
FINANCIAL STATEMENTS 80
6. Other operating expenses
| EUR | 2023 | 2022 | |
|---|---|---|---|
| Other personnel expenses | 189,400 | 354,313 | |
| Office expenses | 114,449 | 331,262 | |
| Travelling and entertainment | 348,374 | 315,634 | |
| External services | 2,201,296 | 1,884,903 | |
| Internal services | 1,044,488 | 873,811 | |
| Other operating expenses | 151,849 | 281,413 | |
| Total | 4,049,856 | 4,041,336 |
Audit fees
Audit | | 115,738 | 107,021
Other fees and services | | 0 | 18,564
Total | | 115,738 | 125,585
7. Finance income and costs
| EUR | 2023 | 2022 | |
|---|---|---|---|
| Dividend income | |||
| Group companies | 21,231,776 | 22,966,087 | |
| Total | 21,231,776 | 22,966,087 |
Other interest and finance income | | |
Group companies | | 2,297,813 | 720,139
Others | | 797,787 | 857,581
Total | | 3,095,600 | 1,577,721
Interest and other finance costs | | |
Impairment of shares and interests | | –215,411 | 336,851
Write-down of receivables | | –11,338 | –1,184,363
Group companies | | –350,580 | 0
Others | | –4,385,755 | –4,352,178
Total | | –4,963,084 | –5,199,691
Finance income and costs total | | 19,364,292 | 19,344,117
8. Appropriations
| EUR | 2023 | 2022 | |
|---|---|---|---|
| Group contributions received | 3,129,500 | 0 |
9. Intangible assets
| EUR | 2023 | 2022 | |
|---|---|---|---|
| Intangible rights | |||
| Acquisition cost at 1 January | 828,188 | 828,188 | |
| Acquisition cost at 31 December | 828,188 | 828,188 | |
| Accumulated depreciation at 1 January | –828,188 | –828,188 | |
| Accumulated depreciation at 31 December | –828,188 | –828,188 | |
| Book value on 31 December | 0 | 0 |
Other long-term expenditure | | |
Acquisition cost at 1 January | | 2,677,518 | 2,677,518
Additions | | 0 | 0
Acquisition cost at 31 December | | 2,677,518 | 2,677,518
Accumulated depreciation at 1 January | | –2,635,861 | –2,583,275
Depreciation for the financial period | | –34,771 | –52,586
Accumulated depreciation at 31 December | | –2,670,632 | –2,635,861
Book value on 31 December | | 6,886 | 41,657
Intangible rights total | | 6,886 | 41,657
ANNUAL REPORT 2023
FINANCIAL STATEMENTS 81
10. Tangible assets
| EUR | 2023 | 2022 | |
|---|---|---|---|
| Machinery and equipment | |||
| Acquisition cost at 1 January | 1,327,023 | 1,215,985 | |
| Additions | 9,050 | 111,038 | |
| Acquisition cost at 31 December | 1,336,073 | 1,327,023 | |
| Accumulated depreciation at 1 January | –1,143,978 | –1,097,165 | |
| Depreciation for the financial period | –63,013 | –46,813 | |
| Accumulated depreciation at 31 December | –1,206,991 | –1,143,978 | |
| Book value on 31 December | 129,082 | 183,045 |
Other tangible assets | | |
Acquisition cost at 1 January | | 22,739 | 22,739
Book value on 31 December | | 22,739 | 22,739
Tangible assets total | | 151,821 | 205,784
11.# ANNUAL REPORT 2023 FINANCIAL STATEMENTS 82
12. Short-term receivables
| EUR | 2023 | 2022 |
|---|---|---|
| Receivables from Group companies | ||
| Accounts receivable | 353,428 | 0 |
| Accrued income | 24,062 | 145 |
| Dividend receivables | 0 | 256,320 |
| Loan receivables | 14,039,759 | 14,289,759 |
| Other receivables | 6,978,048 | 3,497,576 |
| Total | 21,395,297 | 18,043,800 |
| Accounts receivable | 1,575,041 | 1,435,601 |
| Loan receivables | 848,039 | 808,530 |
| Other receivables | 166,525 | 330,845 |
| Accrued income | 504,130 | 440,868 |
| Short-term receivables total | 24,489,032 | 21,059,643 |
13. Investments
| EUR | 2023 | 2022 |
|---|---|---|
| Acquisition cost at 1 January | 0 | 0 |
| Additions | 1,000,000 | 0 |
| Acquisition cost at 31 December | 1,000,000 | 0 |
| Investments, total | 1,000,000 | 0 |
14. Shareholders’ equity
| EUR | 2023 | 2022 |
|---|---|---|
| Share capital at 1 January | 771,587 | 771,587 |
| Share capital at 31 December | 771,587 | 771,587 |
| Share premium account at 1 January | 38,968,186 | 38,968,186 |
| Share premium account at 31 December | 38,968,186 | 38,968,186 |
| Invested unrestricted shareholders’ equity at 1 January | 32,374,157 | 49,671,050 |
| Invested unrestricted shareholders’ equity, disposals | –14,254,357 | –17,296,893 |
| Invested unrestricted shareholders’ equity at 31 December | 18,119,800 | 32,374,157 |
| Retained earnings at 1 January | 13,362,464 | 7,236,929 |
| Dividend payment | –12,674,070 | –6,292,393 |
| Retained earnings at 31 December | 688,394 | 944,536 |
| Profit for the financial year | 18,717,742 | 12,417,928 |
| Shareholders’ equity, total | 77,265,709 | 85,476,394 |
Calculation of distributable funds
| 2023 | 2022 | |
|---|---|---|
| Retained earnings | 688,394 | 944,536 |
| Profit for the financial year | 18,717,742 | 12,417,928 |
| Invested unrestricted shareholders’ equity | 18,119,800 | 32,374,157 |
| Total | 37,525,936 | 45,736,621 |
CapMan Plc’s share capital is divided as follows:
| 2023 Number of shares | 2022 Number of shares | |
|---|---|---|
| Series B share (1 vote/share) | 158,849,387 | 158,054,968 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 83
15. Non-current liabilities
| EUR | 2023 | 2022 |
|---|---|---|
| Senior bonds | 89,750,033 | 89,650,433 |
| Other non-current liabilities | 1,682,481 | 1,633,340 |
| Non-current liabilities total | 91,432,514 | 91,283,774 |
16. Current liabilities
| EUR | 2023 | 2022 |
|---|---|---|
| Accounts payable | 466,074 | 146,661 |
| Liabilities to Group companies | ||
| Group account at OP Yrityspankki Plc | 18,038,256 | 10,555,514 |
| Accounts receivable | 0 | 68,382 |
| Accounts payable | 86,827 | 8,543 |
| Other liabilities | 166,354 | 114,736 |
| Accrued expenses | 108,003 | 89,537 |
| Total | 18,399,440 | 10,836,712 |
| Other liabilities | 903,279 | 926,408 |
| Accrued expenses | 2,359,243 | 2,974,734 |
| Current liabilities total | 22,128,036 | 14,884,515 |
17. Contingent liabilities
| EUR | 2023 | 2022 |
|---|---|---|
| Leasing agreements | ||
| Operating lease commitments | ||
| Within one year | 135,226 | 211,124 |
| After one but not more than five years | 66,654 | 97,088 |
| Total | 201,880 | 308,212 |
| Other hire purchase commitments | ||
| Within one year | 757,008 | 703,098 |
| After one but not more than five years | 1,577,100 | 58,592 |
| Total | 2,334,108 | 761,690 |
| Securities and other contingent liabilities | ||
| Contingencies for own commitment | ||
| Enterprise mortgages | 60,000,000 | 60,000,000 |
| Investment commitments to other funds | 1,003,556 | 250,740 |
| Other contingent liabilities | 1,204,663 | 2,044,288 |
| Total | 62,208,219 | 62,295,028 |
| Contingencies for subsidiaries’ commitments | ||
| Investment commitments | 207,656 | 207,656 |
| Total | 207,656 | 207,656 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 84
18. Derivative instruments
| EUR | 2023 | 2022 |
|---|---|---|
| Nominal amount of derivatives | ||
| Foreign exchange forwards | 5,319,743 | 6,327,027 |
| Total | 5,319,743 | 6,327,027 |
| Fair value of derivatives | ||
| Foreign exchange forwards | 116,491 | 64,927 |
| Total | 116,491 | 64,927 |
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 85
Helsinki 6.2.2024
Joakim Frimodig
Chairman
Mammu Kaario
Catarina Fagerholm
Johan Hammarén
Olli Liitola
Johan Bygge
Pia Kåll
CEO
The Auditor’s Note
Our report has been issued today.
Helsinki 6.2.2024
Ernst & Young Oy
Audit firm
Kristina Sandin
Authorised Public Accountant
Signatures to the Report of the Board of Directors and Financial Statements
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 86
To the Annual General Meeting of CapMan Plc
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of CapMan Plc (business identity code 0922445-7) for the year ended 31 December, 2023. The financial statements comprise the consolidated balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including material accounting policy information, as well as the parent company’s balance sheet, income statement, statement of cash flows and notes.
In our opinion
- the consolidated financial statements give a true and fair view of the group’s financial position as well as its financial performance and its cash flows in accordance with IFRS Accounting Standards as adopted by the EU.
- the financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit and Risk Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements. In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note 7 to the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud.
Auditor’s report (Translation of the Finnish original)
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 87
| Key Audit Matter | How our audit addressed the Key Audit Matter |
|---|---|
| Revenue recognition We refer to the accounting policies in the financial statements and the Note 3. CapMan’s turnover in consolidated group accounts amounted to 59,4 million euros. It consists of management fees, sale of services and carried interest income. The timing of revenue recognition can be judgmental as revenue may be recognized either over time or at the point in time depending on the circumstances and provided services. The assessment of recognized revenue includes management assumptions and estimates. Revenue recognition was determined to be a key audit matter and a significant risk of material misstatement referred to in EU Regulation No 537/2014 point (c) of Article 10(2) in respect of its timely recognition and at a proper amount. | Our audit procedures to address the risk of material misstatement included, among other things, assessing that the revenue recognition principles comply to applicable accounting standards, assessing the process for recognizing revenue and identifying controls relating to revenue recognition. We examined sales cutoff with analytical procedures. We supplemented our procedures with test of details on a random basis in order to ensure that the revenue has been recognized in a correct accounting period and it’s based on the corresponding agreements.# ANNUAL REPORT 2023 FINANCIAL STATEMENTS 88 |
Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company’s and the group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant 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 matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
We were appointed as auditors by the Annual General Meeting on March 14, 2018 and our appointment represents a total period of uninterrupted engagement of six years.
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 89
Other information
The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual report but does not include the financial statements and our auditor’s report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor’s report, and the Annual Report is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially 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 consistent 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 misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.# Helsinki February 6, 2024
Ernst & Young Oy
Authorized Public Accountant Firm
Kristina Sandin
Authorized Public Accountant
ANNUAL REPORT 2023 FINANCIAL STATEMENTS 90
To the Board of Directors of CapMan Oyj
We have performed a reasonable assurance engagement on the iXBRL tagging of the consolidated financial statements included in the digital files CapManPlc-2023-12-31-fi.zip of CapMan Oyj (business identity code: 0922445-7) for the financial year 1.1.–31.12.2023 to ensure that the financial statements are marked/tagged with iXBRL in accordance with the requirements of Article 4 of EU Commission Delegated Regulation (EU) 2018/815 (ESEF RTS).
Responsibilities of the Board of Directors and Managing Director
The Board of Directors and Managing Director are responsible for the preparation of the Report of Board of Directors and financial statements (ESEF financial statements) that comply with the ESESF RTS. This responsibility includes:
- Preparation of ESEF-financial statements in accordance with Article 3 of ESEF RTS
- Tagging the primary financial statements, notes to the financial statements and the entity identifier information in the consolidated financial statements included within the ESEF-financial statements by using the iXBRL mark ups in accordance with Article 4 of ESEF RTS
- Ensuring consistency between ESEF financial statements and audited financial statements.
The Board of Directors and Managing Director are also respon- sible for such internal control as they determine is necessary to enable the preparation of ESEF financial statements in accordance the requirements of ESEF RTS.
Auditor’s Independence and Quality Management
We are independent of the company in accordance with the ethical requirements that are applicable in Finland and are relevant to the engagement we have performed, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The firm applies International Standard on Quality Management (ISQM) 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
Auditor’s Responsibilities
In accordance with the Engagement Letter we will express an opinion on whether the electronic tagging of the consolidated financial statements complies in all material respects with the Article 4 of ESEF RTS. We have conducted a reasonable assurance engagement in accordance with International Standard on Assurance Engagements ISAE 3000. The engagement includes procedures to obtain evidence on:
- whether the tagging of the primary financial statements in the consolidated financial statements complies in all material respects with Article 4 of the ESEF RTS
- whether the tagging of the notes to the financial statements and the entity identifier information in the consolidated financial statements complies in all material respects with Article 4 of the ESEF RTS
- whether the ESEF-financial statements are consistent with the audited financial statements.
The nature, timing and extent of the procedures selected depend on the auditor’s judgement including the assessment of risk of material departures from requirements sets out in the ESEF RTS, whether due to fraud or error. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our statement.
Opinion
In our opinion the tagging of the primary financial statements, notes to the financial statements and the entity identifier information in the consolidated financial statements included in the ESEF financial statements CapManPlc-2023-12-31-fi.zip of CapMan Oyj for the year ended 1.1.–31.12.2023 complies in all material respects with the requirements of ESEF RTS. Our audit opinion on the consolidated financial statements of CapMan Oyj for the year ended 1.1.–31.12.2023 is included in our Independent Auditor’s Report dated 6.2.2024. In this report, we do not express an audit opinion any other assurance on the consolidated financial statements.
Helsinki 1.3.2024
Ernst & Young Oy
Authorized Public Accountant Firm
Kristina Sandin
KHT
Independent Auditor’s Report on CapMan Oyj’s ESEF-Consolidated Financial Statements
(Translation of the Finnish original)