Earnings Release • Feb 6, 2015
Earnings Release
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| 31 Dec 2014 | 30 Sep 2014 | 31 Dec 2013 | |
|---|---|---|---|
| Net asset value, SEKm | 84 370 | 76 654 | 65 527 |
| Net asset value per share, SEK | 304.21 | 276.39 | 236.29 |
| Share price, SEK | 255.20 | 260.50 | 297.50 |
| Net cash in parent company, SEKm | 130 | 654 | 2 437 |
| SEKm | 1 Oct-31 Dec 2014 | 1 Oct-31 Dec 2013 | Full year 2014 | Full year 2013 |
|---|---|---|---|---|
| Net profit | 7 868 | 4 258 | 20 863 | 8 429 |
| Net profit per share, SEK | 28.33 | 15.36 | 75.27 | 30.51 |
| Change in fair value of financial assets | 8 124 | 4 454 | 19 494 | 3 052 |
| Dividends received | - | - | 2 350 | 5 828 |
| New investments | 369 | 388 | 1 463 | 2 422 |
Investment AB Kinnevik (publ) Skeppsbron 18 P.O. Box 2094 SE-103 13 Stockholm, Sweden
Reg no 556047-9742 Phone +46 8 562 000 00 Fax +46 8 20 37 74 www.kinnevik.se
The figures in this report refer to the fourth quarter 2014 unless otherwise stated. Figures shown within brackets refer to comparable period in 2013.
Dear Shareholders,
2014 was a successful year for Kinnevik during which we continued to deliver shareholder value by creating, developing and building leading digital consumer services' companies in select countries around the world. I am particularly pleased to report that during the year we grew our Net Asset Value 29% from SEK 65.5bln to SEK 84.4bln (SEK 304 per share) and paid a dividend of SEK 7.00 in May 2014, up 8% from 2013.
Our mobile companies Millicom and Tele2 continued to execute their respective strategies in the face of rapidly changing consumer behavior and the accelerating demand for digital services. MTG also continued to successfully expand its digital pay-TV platform Viaplay, although as a group it was impacted by geopolitical developments and adverse market conditions in Russia.
The successful IPOs of Zalando and Rocket Internet validated our long-term vision and operating model of investing early and with strong conviction to support companies in their business-building phase, enabling them to become self-standing public companies at the appropriate time. As of December 2014, the combined value of our interest in the two companies was over 6x the money we invested between 2009 and 2013.
Within our private investee companies, we created the world's leading emerging markets fashion e-commerce company by combining Dafiti, Jabong, Lamoda, Namshi and Zalora into Global Fashion Group, and invested in Quikr, a leading classifieds platform in India.
During 2014, we reduced the number of investee companies from 47 to 41, and invested close to SEK 1.5bln mainly in existing businesses, in line with the revised guidance provided in June 2014 of total investments between SEK 1.0-1.5bln.
During the year, we strengthened our organization to equip Kinnevik to continue building our value creation platform by creating new businesses and investing in promising new growth companies.
With over 80% of our investments now liquid, a net cash position as of December 31, 2014 of SEK 0.1bln in the parent company and ample access to credit facilities, we are well positioned to continue to deliver very attractive longterm returns whilst maintaining a prudent capital structure.
In the fourth quarter of 2014, Kinnevik's Net Asset Value ("NAV") grew SEK 7.7bln or 10% to SEK 84.4bln or SEK 304 per share. Growth in our total NAV was driven by a 18% increase in the value of our E-commerce and Marketplaces investments (which now account for 51% of our NAV), a 4% increase in the value of our Communications assets and a 3% increase in the value of our Entertainment investments.
Millicom delivered organic revenue growth of 9.4% for the year, at the top end of its guidance for 2014. Tele2 showed
the 14th consecutive quarter of mobile growth, with enduser service revenue growing 7% as a result of a continued ability to monetize customers' increasing need for mobile data.
Zalando, which reported results for the first nine months on November 26, 2014, saw sales increase by 27.7% and reported an EBIT-margin of 1% for the period. The attractiveness of Zalando's platform enabled the company to attract additional leading global brands such as Topshop and Gap to their platform. Significant progress was also made in improving the consumer interface with a material upgrade in the digital platform and express delivery rolled out across all key markets.
Rocket Internet, which reported results for the first six months on November 17, 2014 is fully focused on delivering on its strategy and noted strong growth and margin improvements across its larger companies. In addition, it participated in funding rounds for Lazada and Home24, continued to launch and build new businesses and developed its strategic partnerships.
MTG delivered on its strategic plans and is moving towards the objective of being the leading digital entertainment company in each of its major markets.
CDON Group, which changed its name to Qliro Group in the quarter, is entering into an exciting phase. The launch of the payment solution Qliro is a good example of a key initiative and it was introduced to the market in December.
During the fourth quarter, Kinnevik invested a total of SEK 342m all within our existing companies.
We invested SEK 241m in Qliro, mainly via the SEK 647m rights issue to support the launch of the Qliro payment service solution as well as to accelerate the growth plans of its key businesses. We further invested SEK 74m in Lazada as part of a Temasek-led EUR 200m round which valued the company at EUR 1bln.
For 2014, the Kinnevik Board of Directors proposes a dividend of SEK 7.25 per share, or a 3% dividend yield based on Kinnevik's December 31 2014 closing price of SEK 255.20.
In the future, we will support our efforts to deliver longterm shareholder value and total return, through annual dividends and the purchase of our own shares.
For 2015, and beyond, Kinnevik will aim to pay an annual dividend growing in line with dividends received from its investee companies and the cash flow generated from its investment activities. Kinnevik will propose share buybacks when our shares trade at a significant discount to their intrinsic value as perceived by Kinnevik and the company has net cash. We shall track NAV per share as a key metric for measuring performance.
The Board believes that this revised shareholder remuneration guideline better reflects our cash-flow profile and investment priorities going forward, and is consistent with Kinnevik's business objective to create long-term value for shareholders, and to have that value reflected in the total return on our share. Given the nature of our new investments, our goal remains to have little or no leverage in the parent company.
In 2015, we expect to make net investments (gross investments net of sale of assets) of up to SEK 1.0bln.
With its strong team, mobile communication and e-commerce/marketplaces assets, and digital lifestyle-focused investment strategy, Kinnevik is well positioned to continue delivering long-term shareholder value creation.
During 2015, our team will work hard to uncover new emerging business models and talented entrepreneurs to ensure we remain ahead of the accelerating digital transformation that is occurring all around us. At the same time, we will continue to reduce the number of investee companies that we own and seek to grow our share in the most promising ones.
We expect our larger, publicly-traded companies to continue executing on their clear strategies, driving operational efficiencies, optimizing their regional footprint, and strengthening their capital structure.
Our "Rising Ten" private companies will focus on accelerating growth, establishing themselves as even stronger leaders in their respective markets, and expanding even further across new territories.
I would like to thank the Kinnevik team for a successful year, and express my gratitude to all shareholders for your support during 2014. For 2015 and beyond, we remain committed to growing the value of our investments and to deliver returns.
Lorenzo Grabau Chief Executive Officer
Kinnevik is an entrepreneurial investment group focused on building digital consumer brands in four sectors: Communication, E-commerce & Marketplaces, Entertainment, and Financial Services. Approximately 46% of our investments by value are in the Communication and Entertainment sectors, where we own leading stakes in large, established, cash flow generating businesses. The balance of our investments is predominantly invested in the E-commerce & Marketplaces and Financial Services sectors, where we work in partnership with founders and managers to create new, fast-growing businesses, that invest significant amounts of capital to build market-leading positions in a short timeframe.
* Share of Kinnevik's asset value as of 31 December 2014 (figures within brackets refer to 31 December 2013)
Communication makes up 41% of Kinnevik's investments. Kinnevik's mobile companies Millicom and Tele2 have in total 68 million subscribers in 21 countries in Europe, CIS, Latin America, and Africa. Both Millicom and Tele2 are focusing on providing superior services as customers increasingly use their phones to access various data services.
| Oct-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|
| Key data (USD m)* | 2014 | 2013 | 2014 | 2013 | |
| Revenue | 1 860 | 1 464 | 6 386 | 5 553 | |
| EBITDA | 588 | 500 | 2 093 | 1 999 | |
| Operating profit, EBIT | 225 | 222 | 924 | 930 | |
| Net profit | 48 | 55 | 2 643 | 229 | |
| Number of mobile subscribers (million) | 56.3 | 50.1 |
* Figures include UNE subscribers from August 2014.
Millicom continued to deliver organic growth across regions and business units during the fourth quarter. The EBITDA margin for the fourth quarter was 32.8%, as Millicom continued to invest in future growth.
The Board of Millicom has decided to recommend an ordinary dividend of USD 2.64 (2.64) per share in respect of the financial year 2014.
Millicom is a leading international telecommunications and media company dedicated to providing digital lifestyle services to the emerging markets in Latin America and Africa. Millicom also offers mobile financial services, various information services, entertainment, e-commerce, lead generation, and payments.
| Oct-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|
| Key data (SEK m)* | 2014 | 2013 | 2014 | 2013 | |
| Revenue | 6 876 | 6 585 | 25 955 25 757 | ||
| EBITDA | 1 412 | 1 490 | 5 926 | 5 891 | |
| Operating profit, EBIT | 735 | 736 | 3 490 | 2 548 | |
| Net profit | 494 | 277 | 2 626 | 968 | |
| Number of mobile subscribers (million) | 12.1 | 11.5 | |||
* Figures refer to continuing operations (i.e. excluding Tele2 Norway).
Tele2's mobile end-user service revenue grew by 7% amounting to SEK 3,205m (3,006) driven by improved monetization of mobile data usage. The EBITDA margin for the fourth quarter was 21%.
The Board of Tele2 has decided to recommend an ordinary dividend of SEK 4.85 (4.40) per share in respect of the financial year 2014 and an extraordinary dividend of around SEK 10 per share representing a total amount of SEK 4.5bln following the sale of the Norwegian operations.
For more information > Tele2 is one of Europe's leading telecommunications operator offering mobile services, fixed broadband and telephony, data network services, cable TV and content services. Tele2 is focusing its strategy to become a value champion, i.e. to offer its customers the combination of low price, superior customer experience, and a challenger culture.
E-Commerce & Marketplaces makes up 51% of Kinnevik's investments. E-commerce is one of the strongest global growth trends in the world economy, and it is based on a permanent shift in consumer behaviour.
| Jul-Sep | Jan-Sep | |||
|---|---|---|---|---|
| Key data (EUR m) | 2014 | 2013 | 2014 | 2013 |
| Revenue | 501 | 404 | 1 548 | 1 212 |
| % Growth | 24% | - | 28% | - |
| Gross profit | 202 | 151 | 645 | 475 |
| EBIT* | -4 | -50 | 16 | -122 |
| % Margin* | 0.8% | -12.4% | 1.0% | -10.1% |
* EBIT excludes equity-settled share-based compensation expenses.
Zalando operates online fashion shops in 15 European markets. The company is today the largest standalone pure online fashion player by net sales in Europe. Key drivers for Zalando's success include its expertise in fashion, retail and technology.
Rocket Internet is a company that incubates and develops e-commerce and other consumer-oriented online companies.
| Key data (BRLm)* | Jul-Sep 2014 |
Jul-Sep 2013 |
Jan-Sep 2014 |
Jan-Sep 2013 |
|---|---|---|---|---|
| Revenue | 144 | 108 | 405 | 297 |
| % Growth | 33% | - | 36% | - |
| Gross profit/loss | 49 | 32 | 151 | 101 |
| % Margin | 34% | 30% | 37% | 34% |
| Operating results | -60 | -44 | -162 | -151 |
* BRL 1 = SEK 2.89 as per 31 December 2014
| Key data (INRm)* | Jul-Sep 2014 |
Jul-Sep 2013 |
Jan-Sep 2014 |
Jan-Sep 2013 |
|---|---|---|---|---|
| Revenue | 2 160 | 878 | 5 407 | 2 011 |
| % Growth | 146% | - | 169% | - |
| Gross profit/loss | -569 | -40 | -1 137 | -195 |
| % Margin | -26% | -5% | -21% | -10% |
| Operating results | -1 592 | -499 | -3 223 | -1 833 |
* INR 100 = SEK 12.30 as per 31 December 2014
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | |
|---|---|---|---|---|
| Key data (RURm)* | 2014 | 2013 | 2014 | 2013 |
| Revenue | 2 056 | 1 220 | 5 858 | 3 015 |
| % Growth | 68% | - | 94% | - |
| Gross profit/loss | 739 | 370 | 2 298 | 1 143 |
| % Margin | 36% | 30% | 39% | 38% |
| Operating results | -737 | -584 | -2 067 | -1 547 |
* RUR 100 = SEK 13.75 as per 31 December 2014
Global Fashion Group is a fashion e-commerce group operating under six brands in five regions: Latin America (Dafiti), India (Jabong), Russia & CIS (Lamoda), Middle East (Namshi), South East Asia (Zalora) and Australia (Iconic). The fashion segment in e-commerce is attractive for several reasons: it is a significant part of the household budget, maintains attractive gross margins and the products offered are easy to package and ship - enabling efficient logistics.
| Key data (AEDm)* | Jul-Sep 2014 |
Jul-Sep 2013 |
Jan-Sep 2014 |
Jan-Sep 2013 |
|---|---|---|---|---|
| Revenue | 52 | 15 | 111 | 34 |
| % Growth | 242% | - | 224% | - |
| Gross profit/loss | 29 | 7 | 60 | 17 |
| % Margin | 56% | 48% | 54% | 50% |
| Operating results | 7 | -13 | -10 | -36 |
* AED 1 = SEK 2.11 as per 31 December 2014
| Key data (EURm) | Jul-Sep 2014 |
Jul-Sep 2013 |
Jan-Sep 2014 |
Jan-Sep 2013 |
|---|---|---|---|---|
| Revenue | 46 | 22 | 105 | 66 |
| % Growth | 110% | - | 60% | - |
| Gross profit/loss | 15 | 9 | 39 | 25 |
| % Margin | 32% | 40% | 37% | 38% |
| Operating results | -17 | -8 | -34 | -33 |
| Key data (EURm) | Jul-Sep 2014 |
Jan-Sep 2014 |
|---|---|---|
| Revenue | 47 | 124 |
| Gross profit/loss | 20 | 53 |
| % Margin | 43% | 43% |
| Operating results | -16 | -44 |
Home24 and Westwing are e-commerce companies in the home and living segment, active in Europe, Russia and Brazil. The growth of online purchasing in this segment is a global trend. Home and living differs from other e-commerce segments by having a relatively lower purchase frequency, but also a higher average order value. Due to the characteristics of the products, attractive delivery solutions for customers are essential for simplifying purchases, and improving customer satisfaction. Home24 and Westwing are complementing business models, Home24 offers a wide assortment of furniture and home décor, while Westwing's inventory is carefully curated, focusing on design-conscious and predominantly female customers.
Kinnevik's holdings in general merchandise - Lazada, Linio, Jumia, and Konga - all have leading positions in several emerging markets in South East Asia, Latin America, and Africa.
| Oct-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|
| Key data (SEK m) | 2014 | 2013 | 2014 | 2013 | |
| Revenue* | 1 650 | 1 439 | 4 967 | 4 327 | |
| Operating profit, EBIT* | 8.0 | 25.0 | 8.6 | -0.3 | |
| Net profit/loss | -7.0 | 15.8 | 5.4 | -67.3 |
* Excluding divested operations and non-recurring items.
Qliro Group continued to deliver in line with the company's strategy in the fourth quarter, with healthy growth, underlying improvements in earning, and an operating cash flow amounting to SEK 86.6m.
Qliro Group is a leading e-commerce company with some of the most well-known and appreciated brands in the Nordic area.
| Jul-Sep | Jan-Sep | |||
|---|---|---|---|---|
| Key data (RUR m) | 2014 | 2013 | 2014 | 2013 |
| Revenue | 1 122 | 633 | 3 043 | 1 609 |
| % Growth | 77% | - | 89% | - |
| EBITDA | 727 | 304 | 1 688 | 477 |
| % Margin | 65% | 48% | 55% | 30% |
* RUR 100 = SEK 13.75 as per 31 December 2014
Avito is the largest online classified platform in Russia in terms of visitors and number of ads, distancing itself from its competitors.
t *O BEEJUJPO UP NBJOUBJOJOH JUT GPDVT PO VTFS FOHBHFment and brand-building, Quikr undertook a number of new product initiatives including the launch of Quikr Nxt, an instant messaging service embedded within the platform. Initial results show significantly improved user engagement and a reduction in transaction times as a result.
Quikr, Saltside, Wimdu, Foodpanda, Pricepanda, and Yell are all companies operating online marketplaces in emerging markets in Asia, Africa, CIS, and Latin America. The business model is attractive due to the high profitability that can be achieved once a market leading position has been established. A leading position creates high barriers of entry for competitors, while also improving customer experience. Economies of scale are substantial, as the model does not require the companies to hold inventory and tie up capital when growing.
Entertainment makes up 5% of Kinnevik's investments. Kinnevik's entertainment companies have operations in a total of 40 markets and has the largest broadcasting footprint in Europe in MTG, and 18.3 million daily readers in Metro. Both MTG and Metro are leading international media companies founded by Kinnevik.
| Oct-Dec | Jan-Dec | ||||
|---|---|---|---|---|---|
| Key data (SEK m) | 2014 | 2013 | 2014 | 2013 | |
| Revenue | 4 371 | 4 068 | 15 746 | 14 073 | |
| Operating profit, EBIT | 611 | 417 | 1 675 | 1 738 | |
| Net profit | 471 | 261 | 1 172 | 1 168 |
MTG reported sales of SEK 4,371m (4,068) in the fourth quarter of 2014, and displayed a 47% increase in total operating income compared to the fourth quarter 2013. The increasing organic sales performance primarily reflected the growth in the Nordic pay-TV and Nice Entertainment content businesses.
The Board of MTG has decided to recommend an ordinary dividend of SEK 11.00 (10.50) per share in respect of the financial year 2014.
Modern Times Group MTG is a leading international entertainment broadcasting group with the largest geographical fooprint of TV- and radio operations in Europe.
| Oct-Dec | Jan-Dec | |||
|---|---|---|---|---|
| Key data (SEK m) | 2014 | 2013 | 2014 | 2013 |
| Revenue | 321 | 361 | 1 003 | 1 299 |
| Operating result, EBIT | -161 | 17 | -541 | 10 |
Revenue in the fourth quarter was SEK 321m, a decline of SEK 40m year-on-year. The revenue decline is due to the sale of the newspaper in Hong Kong, ongoing print advertising market decline in Sweden and a small slowdown in the advertising spend in Latin America. The operating loss for the fourth quarter includes impairment of goodwill and trademarks, losses on sale of newspaper operations and other provisions totaling SEK 185m.
The operating result for the year includes impairment of goodwill and trademarks of SEK 330m, restructuring costs at headquarters and other provisions of SEK 40m and losses on the sale of newspaper operations of SEK 136m. Excluding these effects, EBIT for the full year would have been negative SEK 35m.
Metro is published in over 150 major cities in 23 countries across Europe, Asia, North and South America. Metro's global readership is approximately 18.3 million daily readers.
Financial services & Other makes up 3% of Kinnevik's investments. The Financial Services companies are focused on consumer-directed financial services on emerging markets in Africa, Asia, and Latin America.
Bayport provides unsecured credit and other financial services to the formally employed mass market in Africa and Latin America.
Transcom is active within outsourcing of Customer Relationship Management with 29,000 customer experience specialists at 54 contact centers across 23 countries.
Milvik offers, under the brand name Bima, affordable and uniquely designed life and health insurance products via mobile phones.
Black Earth Farming is a leading agricultural company with operations in Russia.
| Book value 2014 |
Fair value 2014 |
Fair value 2014 |
Fair value 2013 |
Change | Total return | |
|---|---|---|---|---|---|---|
| SEK m | 31 Dec | 31 Dec | 30 Sep | 31 Dec | Q4 2014 2) | 2014 |
| Millicom | 22 039 | 22 039 | 21 888 | 24 215 | 151 | -6% |
| Tele2 | 12 865 | 12 865 | 11 808 | 9 864 | 1 057 | 36% |
| Total Communication | 34 904 | 34 904 | 33 696 | 34 079 | 1 208 | 6% |
| Zalando | 19 030 | 19 030 | 15 482 | 12 136 | 3 548 | 57% |
| Rocket Internet | 10 620 | 10 620 | 7 776 | 1 219 | 2 844 | 849% |
| Global Fashion Group 1) | 6 092 | 6 092 | 5 993 | 1 889 | 99 | |
| Home and Living (incl. Home24, Westwing) | 1 305 | 1 305 3) | 1 084 | 896 | 221 | |
| Qliro Group | 737 | 737 | 547 | 786 | 190 | -37% |
| Other E-commerce 1) | 1 697 | 1 697 3) | 1 511 | 1 235 | 186 | |
| Avito | 2 298 | 2 298 | 2 473 | 2 196 | -175 | |
| Other Marketplaces | 929 | 1 075 3) | 1 040 | 541 | 35 | |
| Total E-commerce & Marketplaces | 42 708 | 42 854 | 35 906 | 20 898 | 6 948 | 98% |
| MTG | 3 358 | 3 358 | 3 086 | 4 498 | 272 | -22% |
| Metro | 321 | 321 | 504 | 879 | -183 | |
| Net cash, Metro | 140 | 140 | 120 | 221 | 19 | |
| Other | 106 | 106 | 106 | 88 | 1 | |
| Total Entertainment | 3 925 | 3 925 | 3 816 | 5 686 | 109 | -25% |
| Bayport | 1 032 | 1 032 | 957 | 836 | 75 | |
| Transcom | 494 | 494 | 429 | 505 | 65 | 0% |
| Black Earth Farming | 151 | 151 | 225 | 337 | -74 | -55% |
| Other | 832 | 880 | 1 054 | 1 052 | -174 | |
| Total Financial Services & Other | 2 509 | 2 557 | 2 665 | 2 730 | -108 | -6% |
| Net cash in the Parent Company | 130 | 130 | 654 | 2 437 | -524 | |
| Debt, unpaid investments/divestments | 0 | 0 | -83 | -303 | 83 | |
| Total Equity/Net asset value | 84 176 | 84 370 | 76 654 | 65 527 | 7 716 | |
| Net asset value per share | 304.21 | 276.39 | 236.29 | 27.82 | ||
| Closing price, class B share, SEK | 255.20 | 260.50 | 297.50 | -5.30 | -12% |
1) Comparable periods adjusted for transactions related to the merger of Global Fashion Group.
2) Including investments/divestments.
3) For split see page 14.
The Board of Directors proposes that the annual general meeting approves a dividend of SEK 7.25 per share, corresponding to an increase of 3.6%.
The boards of Directors in Millicom, Tele2 and MTG have proposed to the Annual General Meetings in May that dividends be approved according to the following:
| proposed to be paid from listed holdings | |||||||
|---|---|---|---|---|---|---|---|
| Millicom | USD 2.64 per share | 828 1) | |||||
| Tele2 | SEK 4.85 per share | 657 | |||||
| MTG | SEK 11.00 per share | 149 | |||||
| Total expected oridinary dividends to be received from listed holdings Tele2, extraordinary dividend |
1 634 1 400 2) |
||||||
| Total expected dividends | 3 034 | ||||||
| Proposed dividend to Kinnevik's shareholders | |||||||
| SEK 7.25 per share | 2 011 |
1) Based on a currency rate SEK/USD of 8.29.
2) Approximate amount of Kinnevik's share of the extraordinary dividend of SEK 4.5 bln proposed by the Board of Tele2.
During 2014 Kinnevik has received cash dividends from a number of its investee companies of SEK 1.4bln, and paid a dividend to Kinnevik's shareholders of SEK 1.9bln. As of 31 December 2014 Kinnevik had a net cash position in the parent company of SEK 0.1bln. Kinnevik aims to pay an annual dividend growing in line with dividends received from investee companies and the cashflow generated from investment activities. Kinnevik will make share buybacks when our shares trade at a significant discount to their intrinsic value, as perceived by Kinnevik, and the company has net cash.
| Investment (SEK m) | Oct-Dec 2014 |
Full year 2014 |
|---|---|---|
| Global Fashion Group | - | 277 |
| Lazada | 74 | 74 |
| Qliro Group | 241 | 241 |
| Avito | - | 102 |
| Quikr | - | 362 |
| Saltside Technologies | - | 65 |
| Yell | - | 20 |
| Other | 54 | 322 |
| Total | 369 | 1 463 |
During the year, Kinnevik made SEK 1.5bln of investments compared with the SEK 2.4bln invested in 2013.
In the fourth quarter, Kinnevik participated in Qliro Group's (former CDON Group) rights issue and bought shares in the market in a total amount of SEK 241m, and invested EUR 8m as part of a EUR 200m financing round in Lazada.
Joakim Andersson has been appointed Chief Financial Officer as of 6 February 2015. Joakim joined Kinnevik in 2001 and over the last 14 years has held a number of positions in the finance organization. In 2007, Joakim was appointed Group Treasurer. Mikael Larsson, who informed the company in December of his intention to leave Kinnevik, will remain with the company until the Annual General Meeting in May to assist with the transition.
| Change in fair value and dividends received 4 |
||||||
|---|---|---|---|---|---|---|
| Investment (SEK m) | Kinnevik ownership |
Accumulated net invested amount |
Fair value 31 Dec 2014 |
Oct-Dec 2014 |
Jan-Dec 2014 |
Valuation method |
| Global Fashion Group 1, 2 | 26% | 3 620 | 6 092 | 99 | 3 066 | Latest transaction |
| Home & Living | ||||||
| Home24 3 | 20% | 794 | 833 | 26 | 150 | Sales multiple |
| Westwing 3 | 13% | 175 | 379 | 98 | 162 | Sales multiple |
| Other | Mixed | 0 | 93 | 3 | 3 | Mixed |
| Other E-commerce | ||||||
| BigCommerce 1, 3 | 14% | 664 | 739 | 138 | 133 | Sales multiple |
| Lazada 3 | 10% | |||||
| Linio 3 | 9% | |||||
| Konga | 41% | 209 | 292 | 24 | 41 | Latest transaction |
| Other 1, 2 | Mixed | 794 | 666 | 15 | 169 | Mixed |
| Marketplaces | ||||||
| Avito | 31% | 438 | 2 298 | -175 | 0 | EBITDA multiple |
| Quikr | 16% | 362 | 425 | 31 | 64 | Latest transactions |
| Saltside | 88% | 154 | 154 | 0 | 0 | Invested amount |
| Wimdu 3 | 29% | 367 | 381 | 13 | 20 | Sales multiple |
| Other | Mixed | 229 | 115 | -10 | -1 | Mixed |
| Total E-commerce & Marketplaces | 7 806 | 12 467 | 262 | 3 807 | ||
| Metro | 100% | 992 | 461 | -163 | -515 | DCF |
| Other | Mixed | 96 | 106 | 1 | 29 | Mixed |
| Total Entertainment | 1 088 | 567 | -162 | -486 | ||
| Bayport | 31% | 467 | 1 032 | 76 | 174 | Latest transaction |
| Milvik/Bima | 39% | 84 | 206 | 15 | 96 | Latest transaction |
| Rolnyvik | 100% | 174 | 250 | 0 | 0 | DCF |
| Other | Mixed | 594 | 328 | -90 | -211 | Mixed |
| Total Financial Services & Other | 1 319 | 1 816 | 1 | 59 | ||
| Total Unlisted Assets | 10 213 | 14 850 | 101 | 3 380 |
1) Invested amount and comparable periods have been adjusted pro forma for transactions related to the merger of Global Fashion Group.
2) Accumulated net invested amount includes value of share distributions received from Rocket Internet.
3) Ownership not adjusted for employee stock option plans and employee equity at subsidiary level.
4) Including assessed value of subsidiaries, which are consolidated into the group's financial statements. Excluding change in fair value of Rocket Internet and Zalando since they were listed in beginning of October, see Note 5 for recorded change in fair value.
At the end of the year, Kinnevik's unlisted assets (from this report excluding Zalando and Rocket Internet which were listed in the beginning of October) were valued at a total of SEK 14,850m, to be compared with an accumulated invested amount (net after dividends received) of SEK 10,213m. The unrealised change in fair value amounted to a profit of SEK 101m in the fourth quarter (including change of assessed value of subsidiaries when calculating net asset value), as specified in the table on the previous page.
At the end of December, the global e-commerce group Global Fashion Group ("GFG") was established through a combination of subsidiary shares in Bigfoot I and Bigfoot II (including Dafiti, Jabong, Lamoda, Namshi and Zalora) by existing shareholders. The valuation of GFG has, as in previous quarter, been based on the implied valuations in the transaction in May where Rocket Internet made a distribution to its shareholders including both shares in Bigfoot I and Bigfoot II as well as cash. The valuation of EUR 2.4bln implies an average sales multiple of 3.5 for GFG based on the pro forma last 12 months historical sales. For the purposes of the establishment of GFG, the five companies were valued according to their last funding rounds, resulting in a valuation of EUR 2.7bln for the combined entity, or 12% above the valuation in Kinnevik's accounts as per 31 December. Since the transaction was all in stock it has not been used as basis for determining fair value in Kinnevik's accounts.
As in previous quarters, sales multiple valuations have been prepared for the companies listed in the table below. The sales multiples for the companies' listed peers have been relatively constant in comparison with the previous quarter.
| Company | 31 Dec 2014* |
30 Sep 2014* |
Adjusted multiple** |
|---|---|---|---|
| Home24 | 1.7 | 1.5 | No |
| Westwing | 1.6 | 1.5 | Yes |
| Lazada | 1.9 | 1.2 | No |
| Linio | 1.6 | 1.1 | No |
| Wimdu | 2.6 | 2.7 | Yes |
* Sales multiple, last 12 months historical sales.
** Sales multiple has been adjusted as per 31 December to reflect factors such as lower profitability than peer group. See Note 5 for further details.
As a consequence of the positive development in Home24 and Westwing, the discount to the peer group average sales multiple applied in Kinnevik's valuation 31 December 2014 has only been marginally adjusted for Westwing and left unadjusted for Home24.
Lazada and Linio, which are partly owned by the holding company BigCommerce, have initiated a conversion from a inventory based business model into a marketplace model where third party products are sold on the companies' platforms. The sales numbers for this model only include net sales, i.e. the provision that Lazada and Linio receives. Consequently, to reflect the change in business model in the valuation, sales multiples for two different peer groups have been applied in relation to the sales contribution from each of the models. The weighted average multiple applied for Lazada was 1.9 and for Linio 1.6.
The valuation of Avito has this quarter been based on EBITDA multiples for a group of comparable companies by applying a multiple of 24 on the last publicly available 12 months EBITDA figure for the company (ending on 30 September 2014). The change from previous sales multiple valuation has been possible due to the stable profitability the company has shown the last year. The valuation results in a total equity value of SEK 7.3 billion compared with SEK 7.9 billion as at 30 September 2014. The decline in value is explained by the major depreciation of the Russian Ruble (which declined by 25% against the Swedish Krona during the quarter) which however was partially offset by a continued strong performance by the company. When determining the assessed fair value of Avito, Kinnevik has considered the transaction made in Avito warrants in February 2014, but considered that the size of the trade (1.7% of the total capital in the company) has been too small to be applied to Kinnevik's shareholding in Avito. If the transaction price had been applied as fair value in Kinnevik's financial statements, the book value of Kinnevik's shareholding would have been SEK 1.4bln higher at 31 December 2014.
For Bayport and Milvik/Bima, the valuation at 31 December 2014 has been based on transactions during 2014 where the companies have raised equity from new as well as existing owners have been used as basis.
| Investment (SEK m) | Valuation in latest transaction |
Implied value Kinnevik's stake |
Fair value Kinnevik's stake |
Difference | Nature of latest transaction |
|---|---|---|---|---|---|
| Global Fashion Group | 25 772 | 6 675 | 6 092 | 582 | Merger / New share issues in operating companies |
| Home24 | 7 753 | 1 577 | 833 | 744 | New share issue |
| Westwing | 4 274 | 564 | 379 | 185 | New share issue |
| BigCommerce | 11 633 | 1 111 | 739 | 372 | New share issues in operating companies |
| Lazada | 9 115 | 874 | - | - | New share issue |
| Linio | 2 518 | 237 | - | - | New share issue |
| Avito | 11 709 | 3 681 | 2 298 | 1 383 | Secondary share transaction with management |
| Other | 17 883 | 2 964 | 2 126 | 838 | New share issues |
| Total | - | 16 573 | 12 467 | 4 105 |
A number of Kinnevik's E-commerce & Marketplaces portfolio companies have issued new shares to external investors at price levels that exceed Kinnevik's recognized assessed fair values. Since the newly issued shares have higher preference over the portfolio companies' assets in the event of liquidation or sale than Kinnevik's shares have, i.e. in case of a lower valuation of the companies in a sale or liquidation Kinnevik would not receive proceeds pro-rata to its shareholding, Kinnevik does not consider these price levels as a relevant base for assessing the fair values in the accounts.
As specified in the above table, the total difference bet-
| The Kinnevik share's average annual total return | |||
|---|---|---|---|
| Past 30 years | 16% |
|---|---|
| Past 10 years | 18% |
| Past 5 years | 23% |
| Past 12 months | -12% |
Total return is calculated on the assumption that shareholders have reinvested all cash dividends and dividends in kind into the Kinnevik share.
| Average annual return (IRR) | 1 year | 5 years |
|---|---|---|
| Communication | 6% | 10% |
| E-commerce & Marketplaces | 98% | 56% |
| Entertainment | -25% | -5% |
| Financial services & Other | -6% | 11% |
| Total portfolio | 34% | 17% |
IRR is based on fair values at the beginning and end of the respective period, includes cash and non-cash dividends and is calculated on a SEK basis.
ween fair values in Kinnevik's books and implied valuations as per the latest new share issues with higher preference than Kinnevik's shares, and other transactions, amounted to SEK 4.1bln applied to Kinnevik's shareholdings as at 31 December 2014, of which SEK 1.4bln related to Avito.
For further information about valuation principles and assumptions, please see Note 5.
| Note | 2014 1 Oct 31 Dec |
2013 1 Oct 31 Dec |
2014 1 Jul 31 Dec |
2013 1 Jul 31 Dec |
2014 Full year |
2013 Full year |
|
|---|---|---|---|---|---|---|---|
| Change in fair value of financial assets | 5 | 8 124 | 4 454 | 16 422 | 10 034 | 19 494 | 3 052 |
| Dividends received | 6 | - | - | - | 168 | 2 350 | 5 828 |
| Revenue | 379 | 421 | 602 | 761 | 1 245 | 1 541 | |
| Cost of goods sold and services | -113 | -193 | -246 | -303 | -571 | -753 | |
| Selling and administration costs | -359 | -335 | -547 | -666 | -1 057 | -1 106 | |
| Share of profit/loss of associates accounted for using the equity method |
- | 5 | - | 8 | - | 15 | |
| Other operating income | 36 | 13 | 41 | 24 | 57 | 96 | |
| Other operating expenses | -192 | -83 | -214 | -89 | -637 | -105 | |
| Operating profit/loss | 4 | 7 875 | 4 282 | 16 058 | 9 937 | 20 881 | 8 568 |
| Financial net | -18 | -25 | -25 | -52 | -27 | -114 | |
| Profit/loss after financial net | 7 857 | 4 257 | 16 033 | 9 885 | 20 854 | 8 454 | |
| Tax | 11 | 1 | 8 | -5 | 9 | -25 | |
| Net profit/loss for the period | 7 868 | 4 258 | 16 041 | 9 880 | 20 863 | 8 429 | |
| Of which attributable to: | |||||||
| Equity holders of the Parent company | 7 864 | 4 265 | 16 029 | 9 911 | 20 891 | 8 468 | |
| Non-controlling interest | 4 | -7 | 12 | -28 | -28 | -39 | |
| Net profit/loss per share before dilution | 28.36 | 15.38 | 57.79 | 35.75 | 75.33 | 30.54 | |
| Net profit/loss per share after dilution | 28.33 | 15.36 | 57.76 | 35.72 | 75.27 | 30.51 | |
| Average number of shares before dilution | 277 359 896 | 277 318 298 277 359 896 | 277 318 298 277 343 257 277 264 289 | ||||
| Average number of shares after dilution | 277 494 640 | 277 611 584 277 495 268 | 277 617 071 277 529 845 277 578 260 |
The change in fair value of financial assets amounted to SEK 8,124m (SEK 4,454m) for the fourth quarter of which SEK 7,770m (2,258) was related to listed holdings and a profit of SEK 354m (2,196) was related to unlisted holdings, see note 5 for further details.
Other operating expenses includes impairment of intangible fixed assets, losses on sale of newspaper operations and other provisions within Metro totalling SEK 187m.
The change in fair value of financial assets, including dividends received, amounted to SEK 21,844m (8,880) for the year of which SEK 6,854m (4,874) was related to listed holdings and SEK 14,990m (profit of 4,006) was related to unlisted holdings, see note 5 and 6 for further details. Zalando and Rocket Internet were listed at the beginning of October and are included in change of fair value of unlisted holdings in the first nine months of the year and thereafter in change of fair value of listed holdings.
Other operating expenses includes an impairment of intangible fixed assets in Metro and G3 Good Governance Group of SEK 449m due to weaker future market expectations, a negative result of SEK 136m from divestments of newspaper operations and SEK 32m in other provisions within Metro.
| 2014 1 Oct 31 Dec |
2013 1 Oct 31 Dec |
2014 1 Jul 31 Dec |
2013 1 Jul 31 Dec |
2014 Full year |
2013 Full year |
|
|---|---|---|---|---|---|---|
| Net profit/loss for the period | 7 868 | 4 258 | 16 041 | 9 880 | 20 863 | 8 429 |
| OTHER COMPREHENSIVE INCOME | ||||||
| Items that may be reclassified to profit and loss | ||||||
| Translation differences | -21 | 42 | -5 | 37 | 11 | 15 |
| Cash flow hedging | ||||||
| -gains/losses during the year | -9 | -10 | -18 | -11 | -47 | 11 |
| -reclassification of amounts accounted for through profit and loss |
- | - | - | - | - | - |
| Total items that will be reclassified to profit and loss | -30 | 32 | -23 | 26 | -36 | 26 |
| TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD | -30 | 32 | -23 | 26 | -36 | 26 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 7 838 | 4 290 | 16 018 | 9 906 | 20 827 | 8 455 |
| Total comprehensive income for the period attribu table to: |
||||||
| Equityholders of the Parent Company | 7 831 | 4 298 | 16 009 | 9 936 | 20 853 | 8 495 |
| Non-controlling interest | 7 | -8 | 9 | -30 | -26 | -40 |
| Note | 2014 1 Oct 31 Dec |
2013 1 Oct 31 Dec |
2014 Full year |
2013 Full year |
|
|---|---|---|---|---|---|
| Cash flow from operations | -49 | -63 | -266 | -121 | |
| Investments in shares and other securities | -443 | -128 | -1 581 | -2 088 | |
| Sale of shares and other securities | 29 | 3 795 | 61 | 3 894 | |
| Dividends received | 6 | - | - | 1 400 | 5 828 |
| Other | -12 | -37 | -27 | -107 | |
| Cash flow from investing activities | -426 | 3 630 | -147 | 7 527 | |
| Change in interest bearing liabilities | -1 | -149 | 40 | -2 011 | |
| Dividend paid to equityholders of the Parent Company | - | - | -1 941 | -1 803 | |
| Other | -13 | -9 | -59 | -79 | |
| Cash flow from financing activities | -14 | -158 | -1 960 | -3 893 | |
| CASH FLOW FOR THE PERIOD | -489 | 3 409 | -2 373 | 3 513 | |
| Cash and short term investments, opening balance | 2 486 | 558 | 3 967 | 454 | |
| Cash and short term investments, closing balance | 1 594 | 3 967 | 1 594 | 3 967 | |
| SUPPLEMENTARY CASH FLOW INFORMATION | |||||
| Investments in shares and other securities | -360 | -340 | -1 342 | -2 288 | |
| Investments in shares in subsidiaries | - | - | -7 | - | |
| Non-cash investments | - | - | 71 | - | |
| Current period investments, paid after period end | - | 212 | 0 | 200 | |
| Prior period investments, paid in current period | -83 | - | -303 | - | |
| Investments in shares and other securities | -443 | -128 | -1 581 | -2 088 |
| Note | 2014 31 Dec |
2013 31 Dec |
|
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible fixed assets | 293 | 805 | |
| Tangible fixed assets | 335 | 343 | |
| Financial assets accounted at fair value through profit and loss | 5 | 83 259 | 61 575 |
| Other fixed assets | 26 | 113 | |
| Total fixed assets | 83 913 | 62 836 | |
| Other current assets | 558 | 599 | |
| Short-term investments | 7 | 1 311 | 3 502 |
| Cash and cash equivalents | 7 | 283 | 465 |
| TOTAL ASSETS | 86 065 | 67 402 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders' equity attributable to equityholders of the Parent Company |
84 176 | 65 276 | |
| Shareholders' equity attributable to non controlling interest | 30 | 43 | |
| Interest-bearing liabilities, long-term | 7 | 1 289 | 1 231 |
| Interest-bearing liabilities, short-term | 7 | 9 | 20 |
| Non interest-bearing liabilities | 561 | 832 | |
| TOTAL EQUITY AND LIABILITIES | 86 065 | 67 402 |
| 2014 1 Jul 31 Dec |
2013 1 Jul 31 Dec |
2014 Full year |
2013 Full year |
|
|---|---|---|---|---|
| Equity, opening balance | 68 182 | 55 405 | 65 319 | 58 640 |
| Total comprehensive income for the period | 16 018 | 9 906 | 20 827 | 8 455 |
| Acquisitions from non-controlling interest | 0 | 7 | 0 | 15 |
| Contribution from non-controlling interest | 10 | 0 | 10 | 0 |
| Dividend paid to owners of non-controlling interest | -5 | -4 | -5 | -27 |
| Sale of shares, non-controlling interest | 0 | 0 | 0 | 28 |
| Dividend paid to shareholders of the Parent company | 0 | 0 | -1 941 | -1 803 |
| Effect of employee share saving programme | 1 | 5 | -4 | 11 |
| Equity, closing amount | 84 206 | 65 319 | 84 206 | 65 319 |
| Equity attributable to the shareholders of the Parent Company | 84 176 | 65 276 | 84 176 | 65 276 |
| Equity attributable to non-controlling interest | 30 | 43 | 30 | 43 |
| 2014 31 Dec |
2013 31 Dec |
|
|---|---|---|
| Debt/equity ratio | 0.02 | 0.03 |
| Equity ratio | 98% | 97% |
| Net cash/(Net debt) including debt unpaid investments | 402 | 2 435 |
| Debt/equity ratio | Interest-bearing liabilities including interest-bearing provisions divided by shareholders' equity. |
|---|---|
| Equity ratio | Shareholders' equity including non-controlling interest as percentage of total assets. |
| Net cash/(net debt) | Interest bearing receivables, short-term investments and cash and cash equivalents less interest bearing liabilities including interest-bearing provisions and net debt unpaid investments/divest ments. |
| Total return | Change in market price and dividends paid assuming that shareholders have reinvested all cash dividends and dividends in kind into the company's share. |
| Internal rate of return, IRR | Return based on fair value at the beginning and end of the respective period, includes cash di vidends and dividends in kind and is calculated on a SEK basis. |
The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU. This report was prepared in accordance with the Annual Accounts Act and IAS 34, Interim Financial Reporting.
From 2014 Kinnevik applies the three new standards; IFRS 10 Consolidated Financial Standards, IFRS 11 Joint Arrangements and IFRS 12 Disclosures of Interests in Other Entities, as well as amended IAS 27 and IAS 28. Kinnevik has made the assessment that it does not have de facto control over any of its companies where it owns less than 50% of the shares or controls less than 50% of the votes. Therefore the new standards have no effect on Kinnevik's income statement or financial position except for additional supplementary disclosures which will be included in the Annual report for 2014.
From 2014 Kinnevik has changed the format for the income statement. The changed format is assessed to give a more relevant view on Kinnevik's financial development. Comparative figures have been recalculated. Associates accounted for using the equity method have from 1 January 2014 been reclassified to Financial assets accounted at fair value through profit and loss.
The Kinnevik Group's accounting is from 2014 distributed on two accounting segments. The accounting segments are consistent with management's internal structure for controlling and monitoring the Group's operations:
tOperating subsidiaries – all the Group's operating subsidiaries.
tInvestment operation – shares and securities in all other companies, that are not subsidiaries, and other financial assets. This segment includes change in fair value of financial assets, dividends received and the administration costs of the Parent company.
Other accounting principles and calculation methods applied in this report are the same as those described in the 2013 Annual Report.
The Group's financing and management of financial risks is centralized within Kinnevik's finance function and is conducted on the basis of a Finance policy established by the Board of Directors. The Group's operational risks are primarily evaluated and managed within the particular business area and then reported to the Kinnevik Board.
The Group has established a model for risk management, the aims of which are to identify, control and reduce risks. The identified risks and how they are managed are reported to the Kinnevik Board on a quarterly basis.
Kinnevik is exposed to financial risks mainly in respect of changes in the value of the stock portfolio, changes in market interest rates, exchange rate risks, liquidity and refinancing risks and counterparty risks.
The Group is also exposed to political risks since the companies Kinnevik has invested in have a substantial part of their operations in emerging markets such as Latin America, Sub-Saharan Africa, Russia and Eastern Europe.
For a more detailed description of the Company's risks and risk management, refer to the Board of Directors' report and Note 26 of the 2013 Annual Report.
Related party transactions for the period are of the same character as the transactions described in the 2013 Annual Report.
| 2014 Full year |
2013 Full year |
|||||
|---|---|---|---|---|---|---|
| Operating subsidia ries |
Invest ment operation |
Total | Operating subsidia ries |
Invest ment operation |
Total | |
| Change in fair value of financial assets | - | 19 494 | 19 494 | - | 3 052 | 3 052 |
| Dividends received | - | 2 350 | 2 350 | - | 5 828 | 5 828 |
| Revenue | 1 225 | 20 | 1 245 | 1 533 | 8 | 1 541 |
| Cost of goods and services sold | -571 | - | -571 | -753 | - | -753 |
| Selling- and administration costs | -839 | -218 | -1 057 | -909 | -197 | -1 106 |
| Share of profit/loss of associates accounted for using the equity method |
- | - | - | 15 | - | 15 |
| Other operating income and expenses | -607 | 27 | -580 | -14 | 5 | -9 |
| Operating profit/loss | -792 | 21 673 | 20 881 | -128 | 8 696 | 8 568 |
| Financial net | -10 | -17 | -27 | -12 | -102 | -114 |
| Profit/loss before taxes | -802 | 21 656 | 20 854 | -140 | 8 594 | 8 454 |
Operating subsidiaries includes Metro, Vireo Energy, Rolnyvik, Saltside Technologies, AVI and G3 Good Governance Group.
The lower operating result within operating subsidiaries compared to previous year is mainly explained by an impairment of intangible fixed assets in Metro and G3 Good Governance Group of SEK 449m, a negative result of SEK 136m from divestments of operations within Metro, other provisions of SEK 32m, a positive one-off effect of SEK 44m in other operating income in 2013, as well as increased costs for expansion within newly established businesses.
Kinnevik's unlisted holdings are valued using IFRS 13 and the International Private Equity and Venture Capital Valuation Guidelines, whereby a collective assessment is made to establish the valuation method that is most suitable for each individual holding. Firstly, it is considered whether any recent transactions have been made at arm's length in the companies. For new share issues, consideration is taken to if the newly issued shares have better preference to the company's assets than earlier issued shares if the company is being liquidated or sold. For companies where no or few recent arm's length transactions have been performed, a valuation is conducted by applying relevant multiples to the company's historical and forecast key figures, such as sales, profit, equity, or a valuation based on future cash flows. When performing a valuation based on multiples, consideration is given to potential adjustments due to, for example, difference in size, historic growth, profitability and geographic market between the current company and the group of comparable companies.
Work to measure Kinnevik's unlisted holdings at fair value is performed by the financial department and based on financial information reported from each holding. The correctness of the financial information received is ensured through continuous contacts with management of each holding, monthly reviews of the accounts, as well as internal audits performed by auditors engaged by Kinnevik. Prior to decisions being made about the valuation method to be applied for each holding, and the most suitable peers with which to compare the holding, the financial department obtains information and views from the investment team, as well as external sources of information. Information and opinions on applicable methods and groups of comparable companies are also obtained periodically from well-renowned, valuation companies in the market. The results from the valuation is discussed firstly with the CEO and the Chairman of the Audit Committee, following which a draft is sent to all members of the Audit Committee, who each quarter analyze and discuss the outcome before it is approved at a meeting attended by the company's external auditors.
Below is a summary of the valuation methods applied in the accounts as per 31 December 2014:
| Company | Valuation method | Valuation assumptions |
|---|---|---|
| Global Fashion Group ("GFG") |
Latest transaction when Rocket Internet distributed cash and shares in Big foot I and Bigfoot II to its shareholders in May 2014. |
EUR 2,4bln for the entire company, including 100% of the subsidiaries. |
| Home24 | Valuation based on sales multiples for a group of comparable companies. The peer group includes, among others, Amazon, Zalando and AO World. |
Last 12 months historical sales Multiple: 1.7x |
| The valuation also considers the preferential rights the owned shares have in case of liquidation or sale of the entire company. |
| Company | Valuation method | Valuation assumptions |
|---|---|---|
| Westwing | Valuation based on sales multiples for a group of comparable companies. The peer group includes, among others, Amazon, Zalando and AO World. |
Last 12 months historical sales Multiple: 1.6x |
| The average sales multiple for the peer group has been reduced for factors like lower profitability and company size. |
||
| The valuation also considers the preferential rights the owned shares have in case of liquidation or sale of the entire company. |
||
| Lazada and Linio (partly owned by BigCommerce) |
Valuation baed on sales multiples, weighted for the contribution from the company's different business models - marketplace and inventory based sales - where two groups of comparable companies have been used. The peer group for the inventory based model includes, among others, Amazon, CDON, JD.com and AO World. The peer group for the marketplace model includes, among others, MercadoLibre and 58.com. |
Last 12 months historical sales Multiple: 1.9x for Lazada and 1.6x for Linio. |
| The underlying businesses of BigCommerce, have been valued on a stand alone basis. |
||
| The valuation also considers the preferential rights the owned shares have in case of liquidation or sale of the entire company. |
||
| Konga | Latest transaction where shares were directed to a new investor. | USD 92m for the entire company. |
| Avito | Valuation based on EBITDA multiples for a group of comparable companies. The peer group includes, among others, Autohome, Infoedge India and Yandex. |
12 months historical EBITDA as per 30 September 2014 (latest published numbers) Multiple: 24x |
| Quikr | Latest transactions. | Kinnevik has invested a total of USD 54m for 16% of Quikr. |
| Wimdu | Valuation based on sales multiples for a group of comparable companies. The peer group includes, among others HomeAway, Priceline, Expedia and Tripadvisor. |
Last 12 months historical sales Multiple: 2.6x |
| The average sales multiple in the peer group has been reduced for factors like lower profitability and company size. |
||
| The valuation also considers the preferential rights the owned shares have in case of liquidation or sale of the entire company. |
||
| Bayport | Latest transaction. | USD 431m for the entire company. |
| Milvik/Bima | Latest transaction. | USD 65m post-money for the entire company. |
For the companies in the table above that are valued based on multiples (i.e. Home24, Westwing, BigCommerce, Avito and Wimdu), an increase in the multiple by 10% would have increased estimated fair value by SEK 164m. Similarly, a decrease in the multiple by 10% would have decreased estimated fair value by SEK 176m.
When establishing the fair value of other financial instruments, methods that in every individual case are assumed to provide the best estimation of fair value have been used. For assets and liabilities maturing within one year, a nominal value adjusted for interest payments and premiums is assumed to provide a good approximation to fair value.
Information is provided in this note per class of financial instruments that are valued at fair value in the balance sheet, distributed in the levels stated below:
Level 1: Fair value established based on listed prices in an active market for the same instrument.
Level 2: Fair value established based on valuation techniques with observable market data, either directly (as a price) or indirectly (derived from a price) and not included in Level 1.
Level 3: Fair value established using valuation techniques, with significant input from data that is not observable in the market.
| 2014 1 Oct 31 Dec |
2013 1 Oct 31 Dec |
2014 Full year |
2013 Full year |
|
|---|---|---|---|---|
| Millicom | 151 | 2 743 | -2 176 | 2 932 |
| Tele2 | 1 057 | -1 274 | 3 001 | -6 003 |
| Communication | 1 208 | 1 469 | 825 | -3 071 |
| Zalando | 3 548 | 886 | 6 894 | 2 626 |
| Rocket Internet | 2 843 | 139 | 9 399 | 327 |
| Global Fashion Group * | 99 | 47 | 3 066 | -396 |
| Home24 | 26 | 83 | 150 | -75 |
| Westwing | 98 | 44 | 162 | 44 |
| Qliro Group | -50 | 197 | -289 | -7 |
| BigCommerce (Lazada and Linio) * | 138 | 33 | 133 | -60 |
| Konga | 24 | - | 41 | 22 |
| Avito | -175 | 742 | - | 1 273 |
| Quikr | 31 | - | 64 | - |
| Wimdu | 13 | 8 | 20 | 10 |
| Other * | 7 | 13 | 215 | -168 |
| E-commerce & Marketplaces | 6 602 | 2 192 | 19 855 | 3 596 |
| MTG | 273 | -27 | -1 140 | 1 456 |
| Other | 19 | - | 42 | -16 |
| Entertainment | 292 | - 27 | -1 098 | 1 440 |
| Bayport | 76 | 204 | 174 | 251 |
| Milvik/Bima | 15 | -3 | 96 | - 3 |
| Seamless | -55 | 99 | -147 | 127 |
| Transcom | 77 | 181 | 1 | 276 |
| BillerudKorsnäs | - | 360 | - | 552 |
| Black Earth Farming | -74 | -21 | -185 | -119 |
| Other | -17 | - | -27 | 3 |
| Financial Services & Other | 22 | 820 | -88 | 1 087 |
| Total | 8 124 | 4 454 | 19 494 | 3 052 |
| - of which traded in an active market, level 1 | 7 770 | 2 258 | 5 454 | -786 |
| - of which fair value established using valuation techniques, level 3 | 354 | 2 196 | 14 040 | 3 838 |
* Comparable periods adjusted for transactions related to the merger of Global Fashion Group.
(Publ) Reg no 556047-9742 t Phone +46 8 562 000 00 t Fax +46 8 20 37 74 t www.kinnevik.se
| 31 Dec 2014 (listed companies) |
|||||
|---|---|---|---|---|---|
| Class A shares |
Class B shares |
Capital/Votes | 2014 31 Dec |
2013 31 Dec |
|
| Millicom | 37 835 438 | - | 37.8/37.8 | 22 039 | 24 215 |
| Tele2 | 18 430 192 | 117 065 945 | 30.4/48.0 | 12 865 | 9 864 |
| Communication | 34 904 | 34 079 | |||
| Zalando | 78 427 800 | - | 32.0/32.0 | 19 030 | 12 136 |
| Rocket Internet | 21 716 964 | - | 14.2/14.2 | 10 620 | 1 219 |
| Global Fashion Group * | 26/26 | 6 092 | 1 880 | ||
| Home24 | 20/20 | 833 | 679 | ||
| Westwing | 13/13 | 379 | 217 | ||
| Qliro Group | 42 613 642 | - | 28.5/28.5 | 737 | 786 |
| BigCommerce (Lazada and Linio) * | 14/14 | 739 | 544 | ||
| Konga | 41/41 | 292 | 156 | ||
| Avito | 31/31 | 2 298 | 2 196 | ||
| Quikr | 16/16 | 425 | - | ||
| Wimdu | 29/29 | 381 | 358 | ||
| Other * | Mixed | 873 | 600 | ||
| E-commerce & Marketplaces | 42 699 | 20 771 | |||
| MTG | 4 461 691 | 9 042 165 | 20.3/48.0 | 3 358 | 4 498 |
| Other | Mixed | 208 | 164 | ||
| Entertainment | 3 566 | 4 662 | |||
| Bayport | 31/31 | 1 032 | 836 | ||
| Milvik/Bima | 39/39 | 206 | 46 | ||
| Seamless | 4 232 585 | - | 10.1/10.1 | 48 | 192 |
| Transcom | 8 306 523 | - | 31.9/31.9 | 494 | 505 |
| BillerudKorsnäs | - | - | - | - | - |
| Black Earth Farming | 51 811 828 | - | 24.9/24.9 | 151 | 337 |
| Other | 159 | 147 | |||
| Financial Services & Other | 2 090 | 2 063 | |||
| Total | 83 259 | 61 575 | |||
| - of which traded in an active market, level 1 | 69 342 | 40 397 | |||
| - of which fair value established using valuation techniques, level 3 | 13 917 | 21 178 |
* Comparable periods adjusted for transactions related to the merger of Global Fashion Group.
| 2014 1 Oct 31 Dec |
2013 1 Oct 31 Dec |
2014 Full year |
2013 Full year |
|
|---|---|---|---|---|
| Zalando | - | - | - | 855 |
| Rocket Internet | - | - | - | 576 |
| Global Fashion Group * | - | - | 276 | 169 |
| Home24 | 3 | - | 3 | - |
| Westwing | - | - | - | 38 |
| Qliro Group | 241 | - | 241 | 129 |
| BigCommerce (Lazada and Linio) * | 74 | 179 | 72 | 317 |
| Konga | - | 94 | 95 | 114 |
| Avito | - | - | 102 | - |
| Quikr | - | - | 362 | - |
| Wimdu | - | - | 2 | - |
| Other * | 39 | 17 | 92 | 20 |
| E-commerce & Marketplaces | 357 | 290 | 1 245 | 2 218 |
| Other | - | - | - | 10 |
| Entertainment | - | - | - | 10 |
| Bayport | - | 35 | 23 | 35 |
| Milvik/Bima | - | - | 64 | 3 |
| Seamless | 3 | - | 3 | - |
| Other | - | 15 | 7 | 22 |
| Financial Services & Other | 3 | 50 | 97 | 60 |
| Total investments | 360 | 340 | 1 342 | 2 288 |
| - of which traded in an active market, level 1 | 244 | - | 244 | 129 |
| - of which fair value established using valuation techniques, level 3 | 116 | 340 | 1 098 | 2 159 |
* Comparable periods adjusted for transactions related to the merger of Global Fashion Group.
| 2014 Full year |
2013 Full year |
|
|---|---|---|
| Opening balance | 21 178 | 15 185 |
| Investments | 1 098 | 2 159 |
| Distribution of shares in Bigfoot I and Bigfoot II | 950 | - |
| Reclassifications | -23 149 | 49 |
| Change in fair value | 14 040 | 3 838 |
| Disposals | -195 | - 68 |
| Exchange gain/loss and other | -5 | 15 |
| Closing balance | 13 917 | 21 178 |
| NOTE 6 DIVIDENDS RECEIVED |
2014 1 Oct 31 Dec |
2013 1 Oct 31 Dec |
2014 Full year |
2013 Full year |
|---|---|---|---|---|
| Millicom | - | - | 662 | 665 |
| Tele2 | - | - | 596 | 4 756 |
| MTG | - | - | 142 | 135 |
| Rocket Internet | - | - | 168 | |
| Rocket Internet, shares in Bigfoot I and Bigfoot II | - | - | 950 | - |
| BillerudKorsnäs | - | - | - | 104 |
| Total dividends received | - | - | 2 350 | 5 828 |
| Of which cash dividends | - | - | 1 400 | 5 660 |
| Of which ordinary cash dividends | - | - | 1 400 | 1 866 |
Kinnevik's total interest bearing assets amounted to SEK 1,700m as at 31 December 2014. The short term deposits of SEK 1,311m were split between Swedish money market funds with high credit quality with no restrictions on accessibility. The total amount of interest-bearing liabilities was SEK 1,298m and consequently Kinnevik was in a net cash position of SEK 402m as at 31 December 2014 (SEK 2,727m as at 31 December 2013).
Kinnevik's total credit facilities (including issued bonds) amounted to SEK 7,173m as at 31 December 2014 whereof SEK 5,800m related to a revolving credit facility and SEK 1,200m related to a bond. The utilization of the credit facilities was SEK 1,243m. The Group's available liquidity, including short-term deposits and available unutilized credit facilities, totaled SEK 7,524m at 31 December 2014 (SEK 9,897m).
| 2014 31 Dec |
2013 31 Dec |
|
|---|---|---|
| Interest-bearing long-term assets | ||
| Other interest-bearing assets | 106 | 11 |
| 106 | 11 | |
| Interest-bearing short-term assets | ||
| Short-term investments | 1 311 | 3 502 |
| Cash and cash equivalents | 283 | 465 |
| 1 594 | 3 967 | |
| Total interest-bearing assets | 1 700 | 3 978 |
| Interest-bearing long-term liabilities | ||
| Liabilities to credit institutions | 70 | 20 |
| Capital markets issues | 1 200 | 1 200 |
| Accrued borrowing cost | -16 | -25 |
| Other interest-bearing liabilities | 35 | 36 |
| 1 289 | 1 231 | |
| Interest-bearing short-term liabilities | ||
| Liabilities to credit institutions | 9 | 20 |
| Capital markets issues | 0 | 0 |
| 9 | 20 | |
| Total interest-bearing liabilities | 1 298 | 1 251 |
| Net interest bearing assets/liabilities | 402 | 2 727 |
The outstanding loans carry an interest rate of Stibor or similar base rate with an average margin of 1.8%. All bank loans have variable interest rates (up to 3 months) while financing from the capital markets vary between 1 to 12 months for the loans under the commercial paper program and 5 years fixed for the outstanding bond (as per date of issue).
As at 31 December 2014, the average remaining tenor was 2.9 years for all credit facilities including the bond (excluding one unutilized extension option for one year related to the Group's SEK 5.800m credit facility). As at 31 December 2014, Kinnevik had not provided any security for any of its outstanding loans.
| 2014 1 Jul 31 Dec |
2013 1 Jul 31 Dec |
2014 Full year |
2013 Full year |
|
|---|---|---|---|---|
| Revenue | 13 | 6 | 22 | 10 |
| Administration costs | -121 | -103 | -221 | -187 |
| Other operating income | 26 | 0 | 27 | 6 |
| Operating loss | -82 | -97 | -172 | -171 |
| Dividends received | 1 414 | 282 | 2 070 | 10 908 |
| Result from financial assets | -582 | 774 | -694 | -4 714 |
| Net interest income/expense | 195 | 205 | 416 | 400 |
| Profit/loss after financial items | 945 | 1 164 | 1 620 | 6 423 |
| Group contribution | -649 | -472 | -649 | -472 |
| Profit/loss before taxes | 296 | 692 | 971 | 5 951 |
| Taxes | 0 | 0 | 14 | 0 |
| Net profit/loss for the period | 296 | 692 | 985 | 5 951 |
| Total comprehensive income for the period | 296 | 692 | 985 | 5 951 |
| 2014 31 Dec |
2013 31 Dec |
|
|---|---|---|
| ASSETS | ||
| Tangible fixed assets | 3 | 4 |
| Financial fixed assets | 64 516 | 46 474 |
| Short-term receivables | 328 | 279 |
| Short-term investments | 1 284 | 3 498 |
| Cash and cash equivalents | 77 | 42 |
| TOTAL ASSETS | 66 208 | 50 297 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||
| Equity | 44 185 | 45 145 |
| Provisions | 29 | 30 |
| Long-term liabilities | 12 555 | 4 306 |
| Short-term liabilities | 9 439 | 816 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABLITIES | 66 208 | 50 297 |
The Parent Company's liquidity, including short-term investments and unutilized credit facilities, totalled SEK 7,300m at 31 December 2014 and SEK 9,470m at 31 December 2013. The Parent Company's interest bearing external liabilities amounted to SEK 1,209m (1,200) on the same dates. Investments in tangible fixed assets amounted to SEK 0m (3) during the period.
Distribution by class of shares on 31 December 2014 was as follows:
| Number of shares | Number of votes | Par value (SEK 000s) |
|
|---|---|---|---|
| Outstanding Class A shares, 10 votes each | 42 369 312 | 423 693 120 | 4 237 |
| Outstanding Class B shares, 1 vote each | 234 990 584 | 234 990 584 | 23 499 |
| Class B shares in own custody | 408 294 | 408 294 | 41 |
| Registered number of shares | 277 768 190 | 659 091 998 | 27 777 |
The total number of votes for outstanding shares in the Company amounted at 31 December 2014 to 658,683,704 excluding 408,294 class B treasury shares. During the year 41,598 Class B-shares have been delivered to participants in the long term incentive plan from 2011. The Board has authorization to repurchase a maximum of 10% of all shares in the Company. The Board has not used the authorization during 2014. There are no convertibles or warrants in issue.
We have reviewed the interim report for Investment AB Kinnevik for the period 1 January - 31 December, 2014. The Board of Directors and the President are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with ISA and other generally accepted auditing practices.
The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.
Stockholm 6 February 2015
Deloitte AB
Jan Berntsson Authorized Public Accountant
The Annual General Meeting will be held on 18 May 2015 in Stockholm. Shareholders wishing to have matters considered at the Annual General Meeting should submit their proposals in writing to [email protected] or to The Company Secretary, Investment AB Kinnevik, Box 2094, SE-103 13 Stockholm, Sweden, at least seven weeks before the Annual General Meeting, in order that the proposal may be included in the notice to the meeting. Further details on how and when to register will be published in advance of the Meeting.
In accordance with the resolution of the 2014 Annual General Meeting, Cristina Stenbeck has convened a Nomination Committee consisting of members appointed by the largest shareholders in Kinnevik that have chosen to appoint a member to the Nomination Committee. The Nomination Committee is comprised of Cristina Stenbeck, Max Stenbeck appointed by Verdere Sàrl, Wilhelm Klingspor appointed by the Klingspor family, Ramsay Brufer appointed by Alecta, James Anderson appointed by Baillie Gifford, and Edvard von Horn appointed by the von Horn family.
Information about the work of the Nomination Committee can be found on Kinnevik's corporate website at www. kinnevik.se.
The Annual Report 2014 will be released on the company's website on 30 March 2015.
Reporting dates for 2015:
| 23 April | Interim Report January-March |
|---|---|
| 22 July | Interim Report January-June |
| 23 October | Interim Report January-September |
Stockholm 6 February 2015
Board of Directors
Kinnevik discloses the information provided herein pursuant to the Securities Market Act (Sw. lagen om värdepappersmarknaden (2007:528)). The information was submitted for publication at 8.00 CET on 6 February 2015.
Kinnevik is an entrepreneurial investment group focused on building digital consumer brands in four sectors: Communication, Ecommerce & Marketplaces, Entertainment, and Financial Services. We work in partnership with talented founders and managers to create, invest in and lead fast growing digital businesses both in developed and developing countries.
Kinnevik was founded in 1936 by the Stenbeck, Klingspor and von Horn families.
Kinnevik's shares are listed on Nasdaq OMX Stockholm's list for large cap companies under the ticker codes KINV A and KINV B.
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