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Kinnevik — Interim / Quarterly Report 2019
Oct 24, 2019
2935_10-q_2019-10-24_d45ed98d-0699-4e83-b37f-5a4e34aac998.pdf
Interim / Quarterly Report
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INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2019
"In the third quarter, Kinnevik took important steps in executing our strategy and we made signifcant investments in our healthcare portfolio. I am excited about the next chapter for Kinnevik and I am convinced that we have the portfolio, the team and the pipeline to execute our strategy"
Georgi Ganev, CEO of Kinnevik
SEK 92.0BN 3% NAV 30 SEPTEMBER 2019 CHANGE IN NAV Q/Q
(3)% 1 YEAR TSR 5 YEAR TSR
5%
KEY STRATEGIC HIGHLIGHTS
- Completed a sell-down of a 5% stake in Zalando, generating gross proceeds of SEK 5.9bn
- Announced the intention to distribute Kinnevik's entire Millicom shareholding to our shareholders
- Amended our shareholder remuneration policy to cease paying ordinary cash dividends in favor of paying out excess capital generated by our investment activities in the form of extraordinary dividends
INVESTMENT MANAGEMENT ACTIVITIES
- Total investments of SEK 2,108m during the quarter, whereof
- SEK 825m in connection with Livongo's IPO, increasing our ownership stake to 14%
- SEK 726m for a 10% ownership stake in VillageMD, a leading US based provider of primary care
- SEK 296m in Babylon's funding round, bringing our ownership stake to 16% on a fully diluted basis
FINANCIAL POSITION
- Net asset value of SEK 92.0bn (SEK 334 per share), up SEK 3.0bn or 3% during the quarter, primarily driven by positive share price development in Zalando and Tele2, and partially offset by weaker share price performance in GFG and Millicom
- Net debt position decreased by SEK 4.9bn to SEK 0.8bn, mainly as a consequence of the sell-down in Zalando and the extraordinary dividend from Tele2, resulting in leverage of 0.9% of Portfolio Value by the end of the quarter
ORGANISATION
• Kinnevik has appointed Erika Söderberg Johnson as Chief Financial Offcer, starting at the latest on 6 April 2020
| SEKm | 30 Sep 2019 | 30 Jun 2019 | 31 Dec 2018 | 30 Sep 2018 | |
|---|---|---|---|---|---|
| Net Asset Value | 92 010 | 89 049 | 70 503 | 78 775 | |
| Net Asset Value per share, SEK | 333.58 | 322.97 | 255.71 | 286.33 | |
| Share Price, SEK | 258.70 | 241.00 | 213.00 | 269.70 | |
| Net Debt | -825 | -5 679 | -2 887 | -4 106 | |
| SEKm | Q3 2019 | Q3 2018 | Q1-Q3 2019 | Q1-Q3 2018 | FY 2018 |
| Net Proft/Loss | 2 980 | -13 423 | 22 683 | -5 376 | -13 656 |
| Net Proft/Loss per Share, SEK | 10.75 | -48.79 | 82.13 | -19.54 | -49.58 |
| Change in Fair Value of Financial Assets | 1 949 | -13 349 | 20 886 | -6 594 | -15 184 |
| Dividends Received | 1 126 | - | 2 015 | 1 438 | 1 887 |
| Dividend Paid | - | -4 227 | -1 169 | -6 497 | -6 497 |
| Investments | 2 108 | 1 529 | 4 523 | 2 339 | 2 731 |
| Divestments | 5 908 | 312 | 5 967 | 413 | 1 610 |
Chief Executive's Review
Dear Shareholders,
In the third quarter, Kinnevik took three important steps in executing our strategy. We completed a sell-down in =DODQGR WR VWUHQJWKHQ RXU ğQDQFLDO SRVLWLRQ DQG DOORZ XV WR PDLQWDLQ RXU LQYHVWPHQW PRPHQWXP ZH DQQRXQFHG our intention to distribute our shares in Millicom entailing D VLJQLğFDQW GLVWULEXWLRQ RI YDOXH WR RXU VKDUHKROGHUV, and we amended our shareholder remuneration policy. To provide an overview of our strategic direction and present some of the exciting companies in our growth portfolio, we hosted a Capital Markets Day in Stockholm in September. It was rewarding to meet so many of our key stakeholders and present what Kinnevik is today and the exciting road that we see ahead.
OUR THIRD QUARTER RESULTS
Kinnevik's Net Asset Value increased by 3 percent to SEK 92.0bn, or SEK 334 per share in the third quarter driven by strong share price performance in Zalando and Tele2, partially offset by the decline in value in Millicom and Global Fashion Group. Post IPO, the share price of GFG has been trading poorly, but our conviction in the management team and the operational improvements in the business remains intact. In the unlisted portfolio, the fair value of Babylon more than doubled compared to the previous quarter as a result of a funding round in which Kinnevik participated. The sell-down in Zalando strengthened our balance sheet by SEK 5.9bn and we ended the quarter with a net debt position of SEK 0.8bn, corresponding to a leverage of 0.9 percent of portfolio value.
PIVOTING OUR PORTFOLIO TOWARDS GROWTH
We have been proud owners in Zalando since 2010 and due to its success, it has grown to become our largest asset. In September, we announced the divestment of a 5 percent stake in Zalando, representing 17 percent of our total shareholding in the company. The decision to divest a portion of our shareholding should be seen in the light of our ambition to maintain our own pace of investment to continue evolving our portfolio towards a larger share of private growth companies. Zalando remains our largest asset and the company continues to ft squarely with our ambition to be the leading publicly listed growth-focused investor in Europe.
Kinnevik has a long and successful history of systematically reallocating capital from companies where we believe that our tenure as owners is over into disruptive growth companies that can become the leading consumer businesses of tomorrow. The decision to distribute our shareholding in Millicom to our shareholders represents a signifcant distribution of value, some SEK 65 per Kinnevik share (as per 23 October), allowing our shareholders the option to directly partake in Millicom's future value creation and dividend yield. For Kinnevik, the distribution is a material step towards increasing our portfolio's share of capital invested in growth companies.
For a number of years, Kinnevik has aimed to pay an annual dividend growing in line with dividends received from our investee companies, mainly Millicom and Tele2, and the cash fow generated from our investment activities. In light of our signifcant distribution of value in the form of Millicom shares, and the entailing step change in our portfolio's composition, we have amended our shareholder remuneration policy. Going forward, we will cease to pay an ordinary cash dividend and instead use dividends received, primarily from Tele2, to fund and accrete our ownership in the companies we believe are tomorrow's winners in our private portfolio. Further, we will seek to return excess capital from successful exits in the form of extra dividends.
BUILDING OUR HEALTHCARE PORTFOLIO
Health is the essential, universal human need, yet the healthcare industry is failing people across the globe. Our investments in the healthcare sector are driven by the fact that technology is beginning to have a decisive impact, enabling the delivery of better care to more people at lower cost. The way we access advice, choose doctors, receive treatment and pay medical bills has already advanced in the last decade. Developments in medical science and the application of big data, machine learning, and digital delivery will accelerate the adoption curve in the sector. Technology will enable providers to practice at the top of their game, surface data insights at the right time, and expand a doctor's reach to deliver population health.
During the quarter we invested SEK 1.8bn into building our healthcare portfolio. Firstly, we invested further capital into our two frst healthcare investments, Livongo and Babylon. We have a strong conviction that these companies are only at the beginning of their respective growth journeys. Secondly, we made a new exciting investment in VillageMD, a US based provider of primary care. The company enables physicians to move towards a primary care-led, risk-bearing clinical model that produces high quality care for patients and strong economic value to physicians. VillageMD is highly complementary to our existing portfolio given its ability to infuence a population's entire healthcare spend.
CONCLUDING REMARKS
As we pivot Kinnevik towards a more growth oriented set of companies, we intend to reallocate capital more dynamically and exit a number of businesses at attractive terms as our relatively young portfolio matures. In contrast to providing a regular annual cash dividend, we aim to deliver cash returns as we release capital in successful exits. I am excited about the next chapter for Kinnevik and I am convinced that we have the portfolio, the team and the pipeline to execute our strategy.
Georgi Ganev Chief Executive Offcer
Kinnevik in summary
Kinnevik is an industry focused investment company with an entrepreneurial spirit. Our purpose is to build digital businesses that provide more and better choice. We do this by working in partnership with talented founders and management teams to create, develop and invest in fast growing businesses in developed and emerging markets. We believe in delivering both shareholder and social value by building companies that contribute positively to society. Kinnevik was founded in 1936 by the Stenbeck, Klingspor and von Horn families. Kinnevik's shares are listed on Nasdaq Stockholm's list for large cap companies under the ticker codes KINV A and KINV B.
% of Portfolio Value
PORTFOLIO COMPOSITION PORTFOLIO RETURN RATES
on fair values at the beginning and end of the respective period, includes cash and non-cash items and is calculated on a SEK gross basis.
TMT Net Cash/(Debt) Financial Services Total Portfolio
Net Asset Value
| SEKm | Fair Value 2019 30 Sep |
Fair Value 2019 30 Jun |
Fair Value 2018 31 Dec |
Fair Value 2018 30 Sep |
Total Return 2019 1 |
|---|---|---|---|---|---|
| Zalando | 29 222 | 32 335 | 17 924 | 27 187 | 96% |
| Global Fashion Group | 1 772 | 3 761 | 3 284 | 4 568 | -55% |
| Quikr | 1 703 | 1 542 | 1 643 | 1 622 | -5% |
| MatHem | 889 | 889 | - | - | - |
| Kolonial | 694 | 695 | 309 | 329 | 7% |
| TravelPerk | 531 | 460 | 223 | - | 54% |
| Omio | 492 | 464 | 443 | 445 | 11% |
| Qliro Group | 409 | 498 | 391 | 542 | 5% |
| Other 2 | 659 | 769 | 1 225 | 1 886 | -47% |
| Total E-Commerce & Marketplaces | 36 371 | 41 413 | 25 442 | 36 579 | 58% |
| Tele2 | 27 504 | 25 440 | 21 172 | 16 295 | 37% |
| Millicom | 17 972 | 19 712 | 21 169 | 19 391 | -13% |
| Com Hem | - | - | - | 4 999 | - |
| Other | 8 | 149 | 164 | 200 | -95% |
| Total TMT | 45 484 | 45 301 | 42 505 | 40 885 | 12% |
| Betterment | 1 274 | 1 213 | 1 153 | 1 156 | 10% |
| Bayport | 1 232 | 1 234 | 1 172 | 1 175 | 5% |
| Bima | 1 010 | 987 | 873 | 876 | 6% |
| Other 2 | 1 430 | 1 383 | 938 | 914 | 22% |
| Total Financial Services | 4 946 | 4 817 | 4 136 | 4 121 | 11% |
| Babylon | 2 950 | 1 225 | 500 | 511 | 237% |
| Livongo | 2 170 | 1 765 | 700 | 580 | 42% |
| VillageMD | 737 | - | - | - | 2% |
| Cedar | 206 | 195 | 142 | 142 | 9% |
| Total Healthcare | 6 063 | 3 185 | 1 342 | 1 233 | 83% |
| Other | 4 | 4 | 5 | 3 | |
| Total Portfolio Value | 92 868 | 94 720 | 73 430 | 82 821 | 31% |
| Net Cash / (Net Debt) | -825 | -5 679 | -2 887 | -4 106 | |
| Other Net Assets / (Liabilities) | -33 | 8 | -39 | 60 | |
| Total Net Asset Value | 92 010 | 89 049 | 70 503 | 78 775 | 32% |
| Net Asset Value per Share, SEK | 333.58 | 322.97 | 255.71 | 286.33 | 32% |
| Closing Price, Class B Share, SEK | 258.70 | 241.00 | 213.00 | 269.70 | 23% |
1 Includes investments and divestments.
2 For a split of the unlisted assets, see page 11.
E-Commerce & Marketplaces
Zalando is an online fashion platform for women, men and children, offering a broad assortment of shoes, apparel and accessories from around 2,000 global and local brands as well as private labels. With its local-LVHG RIIHULQJ =DODQGR DGGUHVVHV FRXQWU\ VSHFLğF FXVtomer preferences in each of its 17 European markets.
- Zalando reported Q2 2019 revenue and GMV growth of 20% and 24% respectively, with an adjusted EBIT margin of 6.4%
- The company had its strongest ever Q2 active customer growth (15%) and fastest site visit growth since 2013 (34%), contributing to the proftable growth in the quarter
- Full-year proftability outlook was raised, with adjusted EBIT expected to come in at the upper half of the initial EUR 175-225m range
QXLNU LV DQ RQOLQH FODVVLğHGV SODWIRUP RSHUDWLQJ LQ India. Headquartered in Bangalore, Quikr serves over 20 million unique monthly visitors and focuses LWV RSHUDWLRQV RQ ğYH YHUWLFDOV *RRGV &DUV %LNHV Jobs, Homes, and Services.
- Based on the frst half of its fnancial year (ending March 2020), Quikr generated just under USD 65m in annualised cash revenue at a yearly growth rate of just under 60%
- Over half of Quikr's revenue is now generated from commissions on transactions on its platform, rather than traditional classifeds listing fees
- The company has extended its transactional offering into new business lines, including offine used goods franchisee stores in smaller towns, and a staffng model within jobs
Global Fashion Group (GFG) is an online fashion destination for growth markets. GFG operates across three regions, APAC, LATAM and CIS, offering over 10,000 international and local brands across 17 countries with a combined population of close to two billion.
- GFG reported Q2 2019 NMV growth of 23% and revenue growth of 17%. The company is continuing to make progress on its path to proftability with an adjusted EBITDA margin of negative 0.9%
- Marketplace represented 19% of NMV, up from 14% in Q2 2018, cementing GFG's position as the strategic partner of choice for fashion and lifestyle brands in its markets
- Active customers grew by 15% to 12 million and NMV per active customer increased 7% to EUR 131
Go to company website > Go to company website >
41% SEK 1.8BN KINNEVIK STAKE FAIR VALUE
Qliro Group is a Nordic e-commerce group that owns the online marketplace CDON.COM, the fashion EUDQG 1HOO\ DQG WKH ğQWHFK FRPSDQ\ QOLUR RIIHULQJ ğQDQFLDO VHUYLFHV WR PHUFKDQWV DQG FRQVXPHUV
- Net sales decreased in the third quarter by 6% as CDON.COM continues its transition towards a marketplace offering. The gross margin increased by 2.6 percentage points to 29%
- Qliro Group has initiated the process to list the subsidiary Qliro on Nasdaq Stockholm's main market in the frst half of 2020. Qliro increased its loan book with 49% during the quarter to just under SEK 1.9bn
- Nelly increased sales by 7% in a generally weak market characterized by high campaign activity
SEK 409M FAIR VALUE
E-COMMERCE & MARKETPLACES
E-Commerce & Marketplaces
MatHem is Sweden's leading independent online grocery retailer, reaching more than half of all Swedish households. The offering consists of 15,000+ SKUs with particular focus on organic and local products.
- MatHem's net revenue amounted to SEK 385m in Q2 2019 and SEK 1,467m during the last twelve months, representing 13% and 23% yearly growth respectively, with growth on a yearly basis partially fuelled by MatHem's acquisition of Fruktbudet
- During the quarter, MatHem announced that Johan Lagercrantz will assume the role of CEO in December. Johan is a strong leader with extensive experience from the staffng industry and a true passion for food
Kolonial.no is the leading online grocery store in Norway, with the ambition to make grocery shopping an effortless activity that brings freedom in customers' everyday lives.
- Kolonial's revenue amounted to NOK 257m in Q2 2019 and after picking up throughout the year, growth is now at healthy levels on a monthly basis compared to the previous year
- During the quarter, Kolonial launched a partnership with Clas Ohlson, adding some 200 of Clas Ohlson's bestsellers to Kolonial's offering. The launch was highly appreciated by customers with over 10% of all baskets in September containing at least one Clas Ohlson product
KINNEVIK STAKE FAIR VALUE
38% SEK 889M
TravelPerk is the leading solution for businesses to book corporate travel online. Based in Barcelona, the company serves over 2,000 clients, offering end travellers an intuitive booking and support experience, while also providing administrators control and visibility over travel spend.
- During 2019, TravelPerk has increased its gross transaction volumes by three times compared to the same period last year, and the company now manages annual corporate travel spend of over EUR 250m
- 2019 revenues have increased by over seven times compared to last year as a result of improving monetisation, in particular from Premium user fees
KINNEVIK STAKE FAIR VALUE
24% SEK 694M
Omio is the largest multi-modal travel platform in Europe allowing consumers to book various modes of WUDQVSRUW LQFOXGLQJ WUDLQV EXVHV DQG ĠLJKWV 7KH FRPpany currently operates in 15 countries, with over 800 supply partners and over 27 million monthly users.
- In Q3 2019, Onsite Booking Volumes grew over 30% on a yearly basis despite continued impact from the rebranding initiative earlier in the year
- The company continues to optimise both its cost of sales relating to payments, and its marketing mix, with the share of mobile app having doubled in less than two years
TMT
7HOH2 RIIHUV PRELOH DQG ğ[HG FRQQHFWLYLW\ WHOHSKRQ\ data network services, TV, streaming and global IoT solutions for millions of customers in primarily Sweden and the Baltics.
- Tele2 reported revenues of SEK 6.9bn and enduser service revenue of SEK 5.1bn in Q3 2019, both fat compared to Q3 2018 on an organic basis
- Underlying EBITDA grew organically by 5% for the Group and 4% for Sweden, driven by synergies from the Com Hem merger
- The company realized an additional SEK 150m of synergies from the Com Hem integration and raised its year-end runrate target to SEK 750m
- Tele2 is on track to deliver on full-year guidance with improving trends in the Sweden Consumer segment and continued execution in the Baltics
Millicom is a provider of cable and mobile services dedicated to emerging markets in Latin America and Africa. The company offers high-speed broadband and digital lifestyle services through its principal brand Tigo.
- Millicom reported Latin American organic service revenue growth of 1%, and sustained cash fow growth with OCF (EBITDA less capex) up 10% organically during the quarter
- A record 99,000 subscribers were added to its fxed footprint, and the company also added 858,000 4G data customers
- The company strengthened its position in Panama by closing the acquisition of Cable Onda, the largest mobile operator in the country
- Millicom revised its outlook for full year organic Latin American service revenue growth from 3-5% to slightly above 2%
37% SEK 18.0BN KINNEVIK STAKE FAIR VALUE
TMT
Financial Services
%HWWHUPHQW LV WKH ODUJHVW LQGHSHQGHQW RQOLQH ğQDQFLDO advisor in the United States. The company operates a vertically integrated platform that provides fully automated, personalised advice and access to low cost, JOREDOO\ GLYHUVLğHG LQYHVWPHQW SRUWIROLRV
- Assets under management amounted to USD 19.5bn at the end of September 2019, an annual increase of 28%. Number of customers totalled over 465,000, a yearly increase of 21%
- The company introduced a cash management platform, Betterment Everyday. The product comprises two accounts: Everyday Savings, a high-yield savings vehicle, and Everyday Checking, which is expected to launch by the end of 2019
- Betterment for Advisors won the 2019 Wealth Management Industry Award for Outstanding Achievement in Digital Advisors (Robo)
%D\SRUW SURYLGHV ğQDQFLDO VROXWLRQV WR IRUPDOO\ DQG informally employed individuals in emerging markets. The company's operations span 9 countries across Africa and Latin America.
- At the end of Q3 2019, Bayport's customer base totalled just below 539,000, representing a yearly growth of c. 3%
- Bayport Mexico concluded a USD 50m facility (+USD 25m accordion) and Bayport Colombia a USD 100m facility (+USD 50m accordion)
0RQHVH ODXQFKHG LQ 6HSWHPEHU 201 DV WKH ğUVW IXOly mobile current account in the UK. Today, people from all over Europe can open a current account in minutes, free from the hidden fees and restrictions that legacy banks impose.
- New customers totalled 396,000 in the past three months bringing the total signups to over 1.6 million
- During the quarter, three new consumer plans were introduced along with a deep integration with Paypal. The company also introduced Google Pay in an additional 13 markets and launched anonymous cards
- Monese recently launched strategic partnerships with Raisin for savings and Monevo for personal loans which form the start of a signifcant push into Europe-wide savings and credit
KINNEVIK STAKE FAIR VALUE
16% SEK 374M
Milvik offers, under the brand Bima, affordable and uniquely designed life and health insurance products via mobile phones. Bima is active in 13 countries across Africa, Asia, Latin America and the Caribbean.
- At the end of September 2019, BIMA had 5.2 million active customers, representing a yearly increase of 2%
- In Q3 2019, BIMA announced partnerships with mobile wallet providers bKash and Pi Pay in Bangladesh and Cambodia, strengthening its mobile money channel and customer reach
KINNEVIK AB (Publ) Reg no 556047-9742 • Phone +46 8 562 000 00 • www.kinnevik.com
Healthcare
Babylon is a digital healthcare service company based in the United Kingdom. Combining mobile WHFK DQG DUWLğFLDO LQWHOOLJHQFH ZLWK PHGLFDO H[SHUWLVH Babylon's mission is to make healthcare more accessible and affordable for people everywhere.
- "GP at hand", the digital GP service in collaboration with the NHS, was rated Good by the Care Quality Commission and continued to grow to over 60,000 registered patients in London and Birmingham
- Pulse, the healthcare app designed for Prudential's members in Asia, launched in Malaysia over the summer
- Babylon closed the largest ever funding round in digital health globally of up to USD 500m, with a USD 400m frst close fnalized in August
Livongo is a California based consumer digital health company that empowers people with chronic conditions to live better and healthier lives. Livongo has developed a new approach for diabetes management that combines the latest technology with coaching and is expanding to more conditions.
- Livongo successfully completed its IPO in the end of July, valuing the business at a pre-money equity value of USD 2.8bn
- The company reported Q2 2019 revenues of USD 41m, growth of 156%, and enrolled 193,000 diabetes members, up 140% compared to last year
- Adjusted EBITDA amounted to negative USD 8m and the adjusted EBITDA margin to negative 20%
- Livongo was awarded its largest contract in the company's history, adding USD 50-60m revenues over the coming two years
16% SEK 3.0BN KINNEVIK STAKE FAIR VALUE
14% SEK 2.2BN KINNEVIK STAKE FAIR VALUE
VillageMD is a leading US based provider of primary care and a pioneer in the delivery of value-based care. The company transforms the healthcare experience for consumers by enabling primary care physicians to operate higher quality, risk bearing clinical models.
- The company has grown to serve more than 2,500 physicians, cares for approximately 500,000 lives and oversees over USD 3bn in total medical spend
- VillageMD entered into a partnership with Walgreens to launch state-of-the art primary care clinics next to Walgreens stores starting in the Houston area by end of 2019
- Completed a USD 100m Series B led by Kinnevik along with a returning investment from Oak HC/FT and new investments from Town Hall Ventures and Adams Street Partners
Financial review
INVESTMENT ACTIVITY
| Investee Company (SEKm) | Q3 2019 |
Q1-Q3 2019 |
|---|---|---|
| MatHem | - | 889 |
| Livongo | 825 | 825 |
| VillageMD | 726 | 726 |
| GFG | - | 632 |
| Babylon | 296 | 374 |
| Kolonial | 3 | 339 |
| Monese | - | 156 |
| Quikr | 147 | 147 |
| TravelPerk | 98 | 122 |
| Pleo | - | 85 |
| Bima | 9 | 82 |
| Cedar | - | 47 |
| Budbee | - | 46 |
| Other | 4 | 53 |
| Investments | 2 108 | 4 523 |
| Zalando | 5 876 | 5 876 |
| Other | 32 | 91 |
| Divestments | 5 908 | 5 967 |
| Net Investments | (3 800) | (1 444) |
DIVIDEND AND CAPITAL STRUCTURE
As at 30 September 2019, Kinnevik carried net debt of SEK 0.8bn, corresponding to a leverage of 0.9% of Portfolio Value.
The AGMs of Millicom, Tele2 and Kinnevik resolved on the following dividends, to be split on two payment instalments, in May and November. On 17 July, Tele2's EGM resolved on a extraordinary dividend of SEK 6 per share.
| Company (SEKm) | Paid in Q1-Q3 |
Paid in Q4 |
|
|---|---|---|---|
| Millicom* | USD 2.64 per share | 477 | 491 |
| Tele2, ordinary | SEK 4.40 per share | 413 | 413 |
| Tele2, extra | SEK 6.00 per share | 1 126 | - |
| Dividends Received | 2 015 | 904 | |
| Dividend Paid | SEK 8.25 per share | 1 169 | 1 103 |
*Millicom's second dividend tranche translated at USD/SEK of 9.83.
FINANCIAL TARGETS
Attractive Returns
Kinnevik's objective is to generate a long term total return to our shareholders in excess of our cost of capital. We aim to deliver an annual total shareholder return of 12-15% over the business cycle.
Low Leverage
Given the nature of Kinnevik's investments, our goal is to carry low leverage, not exceeding 10% of portfolio value.
Amended shareholder remuneration policy
Kinnevik has resolved to amend its shareholder remuneration policy. Kinnevik's prior objective was to pay an annual dividend growing in line with dividends received from its investee companies and the cash fow generated from its investment activities. Going forward, Kinnevik will generate shareholder returns primarily through capital appreciation, and will seek to return excess capital generated by its investments to shareholders through extra dividends.
ORGANISATION
On 1 October, it was announced that Erika Söderberg Johnson has been appointed as CFO for Kinnevik, replacing Joakim Andersson who will leave his position on 31 December. Erika Söderberg Johnson will assume her position at the latest on 6 April 2020.
EVENTS AFTER THE REPORTING PERIOD
On 8 October, Kinnevik convened an EGM to be held on Thursday 7 November to resolve on the Board's proposal to distribute Kinnevik's shareholding in Millicom to its shareholders through a share redemption plan.
Total shareholder return is calculated on the basis of shareholders reinvesting all cash dividends, dividends in kind and mandatory share redemption proceeds into the Kinnevik share.
FINANCIAL REVIEW
VALUATION OF UNLISTED FINANCIAL ASSETS
| Change in fair value and dividends received |
|||||
|---|---|---|---|---|---|
| Investment (SEKm) | Kinnevik's Ownership |
Net Invested Amount |
Fair Value 30 Sep 2019 |
Jul-Sep 2019 |
Jan-Sep 2019 |
| Budbee | 24% | 126 | 224 | - | 98 |
| Kolonial | 24% | 667 | 694 | -4 | 46 |
| MatHem | 38% | 889 | 889 | - | 0 |
| Quikr | 17% | 1 026 | 1 703 | 14 | -87 |
| Saltside | 61% | 198 | 207 | 3 | 5 |
| Omio | 6% | 443 | 492 | 28 | 49 |
| TravelPerk | 15% | 349 | 531 | -27 | 186 |
| Other | Mixed | 114 | 62 | -18 | 62 |
| Total E-Commerce & Marketplaces | 3 812 | 4 802 | -4 | 288 | |
| Total TMT | Mixed | 140 | 8 | -111 | -118 |
| Bayport 1 | 22% | 467 | 1,232 | -2 | 60 |
| Betterment | 16% | 1,065 | 1,274 | 61 | 121 |
| Bima | 36% | 339 | 1,010 | 14 | 55 |
| Bread | 13% | 307 | 331 | 19 | 33 |
| Deposit Solutions | 6% | 263 | 290 | 4 | 16 |
| Monese | 16% | 353 | 374 | 9 | 16 |
| Pleo | 13% | 152 | 350 | 5 | 198 |
| Other | Mixed | 86 | 85 | 10 | -1 |
| Total Financial Services | 3 032 | 4 946 | 120 | 498 | |
| Babylon | 16% | 804 | 2 950 | 1 429 | 2 076 |
| Cedar | 10% | 188 | 206 | 11 | 17 |
| VillageMD | 10% | 726 | 737 | 11 | 11 |
| Total Healthcare | 1 719 | 3 893 | 1 451 | 2 104 | |
| Other | Mixed | - | 4 | 3 | 3 |
| Total Unlisted Financial Assets | 8 702 | 13 653 | 1 458 | 2 775 |
1 Ownership on a fully diluted as converted basis.
FINANCIAL REVIEW
FAIR VALUES AS AT 30 SEPTEMBER 2019
At the end of September, the fair value of Kinnevik's unlisted fnancial assets amounted to a total of SEK 13,653m, to be compared with an accumulated invested amount (net after dividends received) of SEK 8,702m. The change in fair value, plus dividends received, amounted to SEK 1,458m in the quarter, as specifed in the table on the previous page.
VALUATION METHODS
Kinnevik's unlisted fnancial assets are valued using IFRS 13 and the International Private Equity and Venture Capital Valuation Guidelines, where a collective assessment is made to establish the valuation methods and points of reference that are most suitable to triangulate the fair value of each individual asset. While a valuation in a recent transaction is not applied as a valuation method as such, it typically provides an important point of reference and basis for the valuation of the asset in question, especially as it pertains to Kinnevik's younger investee companies where traditional valuation techniques are less applicable.
E-COMMERCE & MARKETPLACES
The fair value of Kinnevik's 24 percent shareholding in Budbee amounts to SEK 224m, based on a total value of Budbee's equity of SEK 938m. The valuation is based on growth-adjusted trailing and forward-looking revenue multiples of a peer group of logistics companies, and corresponds to the valuation in a funding round during Q1 2019.
The fair value of Kinnevik's 24 percent shareholding and other interest in Kolonial amounts to SEK 694m, based on a total value of Kolonial's equity of NOK 2.0bn. The valuation is based on trailing and forward-looking revenue multiples of a peer group of inventory-holding e-commerce retailers, and corresponds to the valuation in a secondary transaction during Q2 2019.
The fair value of Kinnevik's 38 percent shareholding in MatHem amounts to SEK 889m, based on a total value of MatHem's equity of SEK 2.35bn. The valuation is based on trailing and forward-looking revenue multiples of a peer group of inventory-holding e-commerce retailers, and corresponds to the valuation in a funding round during Q1 2019.
The fair value of Kinnevik's 17 percent shareholding and other interests in Quikr amounts to SEK 1,703m, based on a total value of Quikr's fully diluted equity of USD 923m. The valuation of Quikr is based on a discounted cash fow analysis as well as forward-looking revenue multiples of a peer group of emerging market online classifeds companies.
The fair value of Kinnevik's 61 percent shareholding and other interests in Saltside amounts to SEK 207m. The valuation of Saltside is based on a discounted cash fow analysis as well as forward-looking revenue multiples of a peer group of emerging market online classifeds companies.
The fair value of Kinnevik's 6 percent shareholding in Omio amounts to SEK 492m and is based on forward-looking revenue multiples of a peer group of online travel booking platforms, and corresponds to the valuation in a funding round during Q3 2018.
The fair value of Kinnevik's 15 percent shareholding in Travel-Perk amounts to SEK 531m and is based on forward-looking revenue multiples of a peer group of online travel booking platforms, and corresponds to the valuation in a funding round during Q3 2019.
FINANCIAL SERVICES
The fair value of Kinnevik's 22 percent shareholding in Bayport amounts to SEK 1,232m and is based on forwardlooking price-to-earnings multiples of a peer group of consumer fnance companies.
The fair value of Kinnevik's 16 percent shareholding in Betterment amounts to SEK 1,274m, and is based on a discounted cash fow analysis.
The fair value of Kinnevik's 36 percent shareholding in Bima amounts to SEK 1,010m, and is based on a a discounted cash fow analysis.
The fair value of Kinnevik's 13 percent shareholding in Bread amounts to SEK 331m and is based on forward-looking revenue multiples of a peer group of software, software-as-aservice, payments, and lending companies, and corresponds to the valuation in a funding round during Q3 2018.
The fair value of Kinnevik's 6 percent shareholding in Deposit Solutions amounts to SEK 290m, based on a total value of Deposit Solution's fully diluted equity of EUR 420m. The valuation is based on forward-looking revenue multiples of a peer group of software-as-a-service, software licensing, and fnancial technology companies.
The fair value of Kinnevik's 16 percent shareholding and other interest in Monese amounts to SEK 374m and is based on forward-looking revenue multiples of a peer group of fnancial brokers and subscription businesses, and corresponds to the valuation in a funding round during Q3 2018.
The fair value of Kinnevik's 13 percent shareholding in Pleo amounts to SEK 350m and is based on forward-looking revenue multiples of a peer group of software-as-a-service companies and corresponds to the valuation in a funding round during Q2 2019.
HEALTHCARE
The fair value of Kinnevik's 16 percent shareholding and other interest in Babylon amounts to SEK 2,950m, and is based on forward-looking revenue multiples of a peer group of disruptive healthcare and healthcare IT companies, and corresponds to the valuation in a funding round during Q3 2019.
The fair value of Kinnevik's 10 percent shareholding in Cedar amounts to SEK 206m, and is based on forward-looking revenue multiples of a peer group of healthcare software and analytics companies, and corresponds to the valuation in a funding round during Q2 2018.
The fair value of Kinnevik's 10 percent shareholding in VillageMD amounts to SEK 737m, and is based on forwardlooking multiples of a peer group of different types of care providers and outsourced services companies, and corresponds to the valuation in a funding round during Q3 2019.
&RQGHQVHG &RQVROLGDWHG ,QFRPH 6WDWHPHQW DQG UHSRUW FRQFHUQLQJ 7RWDO &RPSUHKHQVLYH ,QFRPH
| SEK m | Note | 2019 1 Jul 30 Sep |
2018 1 Jul 30 Sep |
2019 1 Jan 30 Sep |
2018 1 Jan 30 Sep |
2018 Full year |
|---|---|---|---|---|---|---|
| Change in fair value of fnancial assets | 4 | 1 949 | -13 349 | 20 886 | -6 594 | -15 184 |
| Dividends received | 5 | 1 126 | - | 2 015 | 1 438 | 1 887 |
| Administration costs | -120 | -60 | -259 | -189 | -339 | |
| Other operating income | 4 | 2 | 46 | 16 | 32 | |
| Other operating costs | -3 | 0 | -3 | -5 | -5 | |
| 2SHUDWLQJ SURğWORVV | 2 956 | -13 407 | 22 685 | -5 334 | -13 609 | |
| Financial net | 24 | -8 | -2 | -44 | -46 | |
| 3URğWORVV DIWHU ğQDQFLDO QHW | 2 980 | -13 415 | 22 683 | -5 378 | -13 655 | |
| Tax | 0 | 0 | 0 | 0 | -1 | |
| 1HW SURğWORVV IRU WKH SHULRG | 2 980 | -13 415 | 22 683 | -5 378 | -13 656 | |
| Net proft/loss per share before dilution | 10.80 | -48.79 | 82.26 | -19.54 | -49.58 | |
| Net proft/loss per share after dilution | 10.75 | -48.79 | 82.13 | -19.54 | -49.58 | |
| 7RWDO FRPSUHKHQVLYH LQFRPH IRU WKH SHULRG | 2 980 | -13 415 | 22 683 | -5 378 | -13 656 | |
| Outstanding shares at the end of the period | 275 829 227 | 275 130 169 | 275 829 227 | 275 130 169 | 275 717 450 | |
| Average number of shares before dilution | 275 829 227 | 275 130 169 | 275 745 394 | 275 123 164 | 275 416 805 | |
| Average number of shares after dilution | 276 305 175 | 275 537 305 | 276 185 984 | 275 553 290 | 275 818 034 |
CONSOLIDATED EARNINGS FOR THE THIRD QUARTER
The change in fair value of fnancial assets including dividends received amounted to a proft of SEK 3,075m (loss of 13,349) for the third quarter of which a proft of SEK 1,617m (loss of 13,195) was related to listed holdings and a proft of SEK 1,458m (loss of 154) was related to unlisted holdings. See note 4 and 5 for further details. The increase in administration costs is mainly explained by higher investment activities and the launch of the long-term incentive plan for 2019, resolved by the AGM, where the greater part of the cost for the subsidy for the preference shares are taken when the preference shares are received. Improved fnancial net is mainly due to exchange differences.
CONSOLIDATED EARNINGS FOR THE FIRST NINE MONTHS OF THE YEAR
The change in fair value of fnancial assets including dividends received amounted to a proft of SEK 22,901m (loss of 5,156) for the frst nine months of the year of which a proft of SEK 19,264m (loss of 5,534) was related to listed holdings and a proft of SEK 3,637m (378) was related to unlisted holdings. See note 4 och 5 for further details.
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| SEK m | Note | 2019 1 Jul 30 Sep |
2018 1 Jul 30 Sep |
2019 1 Jan 30 Sep |
2018 1 Jan 30 Sep |
2018 Full year |
|---|---|---|---|---|---|---|
| Dividends received | 5 | 1 126 | 101 | 2 015 | 1 438 | 1 887 |
| Cash fow from operations | -64 | -57 | -159 | -214 | -260 | |
| &DVK ĠRZ IURP RSHUDWLRQV EHIRUH LQWHUHVW QHW DQG LQFRPH WD[HV | 1 062 | 44 | 1 856 | 1 224 | 1 627 | |
| Interest, received | 0 | 0 | 0 | 0 | 0 | |
| Interest, paid | -5 | -19 | -42 | -48 | -48 | |
| &DVK ĠRZ IURP RSHUDWLRQV | 1 057 | 25 | 1 814 | 1 176 | 1 579 | |
| Investments in fnancial assets | -2 838 | -1 529 | -4 443 | -2 339 | -2 710 | |
| Sale of shares and other securities | 5 908 | 334 | 5 967 | 394 | 1 589 | |
| &DVK ĠRZ IURP LQYHVWLQJ DFWLYLWLHV | 3 070 | -1 195 | 1 524 | -1 945 | -1 121 | |
| Repayment of loan | -960 | - | -500 | - | - | |
| Borrowing | 560 | 1 300 | 4 370 | 1 500 | 500 | |
| Dividend paid to equity holders of the Parent company | - | - | -1 169 | -2 270 | -2 270 | |
| &DVK ĠRZ IURP ğQDQFLQJ DFWLYLWLHV | 2 070 | 1 300 | 2 701 | -770 | -1 770 | |
| &DVK ĠRZ IRU WKH SHULRG | 6 197 | 130 | 6 039 | -1 539 | -1 312 | |
| &DVK DQG VKRUW WHUP LQYHVWPHQWV RSHQLQJ EDODQFH | 328 | 129 | 486 | 1 798 | 1 798 | |
| &DVK DQG VKRUW WHUP LQYHVWPHQWV FORVLQJ EDODQFH | 6 525 | 259 | 6 525 | 259 | 486 | |
| SUPPLEMENTARY CASH FLOW INFORMATION | ||||||
| Investments in fnancial assets | 4 | -2 108 | -1 529 | -4 523 | -2 339 | -2 731 |
| Investments not paid | - | - | 100 | - | 21 | |
| Prior period investments, paid in current period | -730 | - | -20 | - | - | |
| &DVK ĠRZ IURP LQYHVWPHQWV LQ ğQDQFLDO DVVHWV | -2 838 | -1 529 | -4 443 | -2 339 | -2 710 |
&RQGHQVHG &RQVROLGDWHG %DODQFH 6KHHW
| SEK m | Note | 2019 30 Sep |
2018 30 Sep |
2018 31 'HF |
|---|---|---|---|---|
| ASSETS | ||||
| )L[HG DVVHWV | ||||
| Financial assets accounted at fair value through proft and loss | 4 | 92 868 | 82 821 | 73 430 |
| Tangible fxed assets | 51 | 55 | 54 | |
| Right of use asset | 15 | - | - | |
| Other fxed assets | 19 | 17 | 24 | |
| 7RWDO ğ[HG DVVHWV | 92 953 | 82 893 | 73 508 | |
| Other current assets | 46 | 69 | 54 | |
| Short term investments | 3 150 | - | 149 | |
| Cash and cash equivalents | 3 375 | 259 | 337 | |
| TOTAL ASSETS | 99 524 | 83 221 | 74 048 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||
| Shareholders' equity attributable to equityholders of the Parent Company | 92 010 | 78 775 | 70 503 | |
| Interest bearing liabilities, long term | 1 449 | 2 868 | 2 871 | |
| Interest bearing liabilities, short term | 5 820 | 1 500 | 500 | |
| Non interest bearing liabilities | 245 | 78 | 174 | |
| TOTAL EQUITY AND LIABILITIES | 99 524 | 83 221 | 74 048 |
.H\ 5DWLRV
| Ratio | Note | 2019 30 Sep |
2018 30 Sep |
2018 31 'HF |
|---|---|---|---|---|
| Debt/equity ratio | 0.08 | 0.06 | 0.05 | |
| Equity ratio | 92% | 95% | 95% | |
| Net debt, for the Group, including net loans to investee companies |
6 | -250 | -3 964 | -2 769 |
| Net debt, for the Group, excluding net loans to investee companies |
6 | -825 | -4 106 | -2 887 |
| Leverage, excluding net loans to investee companies | 0.9% | 5.2% | 4.1% |
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| SEK m | 2019 1 Jan 30 Sep |
2018 1 Jan 30 Sep |
2018 Full year |
|---|---|---|---|
| 2SHQLQJ EDODQFH | 70 503 | 90 633 | 90 633 |
| Proft for the period | 22 683 | -5 378 | -13 656 |
| 7RWDO FRPSUHKHQVLYH LQFRPH IRU WKH SHULRG | 22 683 | -5 378 | -13 656 |
| 7UDQVDFWLRQV ZLWK VKDUHKROGHUV | |||
| New issue | - | - | 1 |
| Effect of employee share saving programme | -7 | 17 | 22 |
| Dividend in kind | - | -4 227 | -4 227 |
| Cash dividend | -1 169 | -2 270 | -2 270 |
| &ORVLQJ EDODQFH IRU WKH SHULRG | 92 010 | 78 775 | 70 503 |
NOTES FOR THE GROUP
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NOTE 1 ACCOUNTING PRINCIPLES
The consolidated fnancial 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. Information in accordance with IAS 34, Interim Financial Reporting is provided in the notes as well as on other places in the interim report.
From 1 January 2019 Kinnevik applies IFRS 16 Leases. The transition to IFRS 16 resulted in assets and liabilities increasing by SEK15m. The accounting principles and calculation methods applied in this report are the same as those described in the 2018 Annual Report.
NOTE 2 RISK MANAGEMENT
Kinnevik has a model for risk management, which aims to identify, control and reduce risks. The identifed risks and how they are managed are reported to the Kinnevik Board of Directors on a quarterly basis.
Kinnevik's fnancing and management of fnancial risks is centralised within Kinnevik's fnance function and is conducted on the basis of a fnance policy established by the Board of Directors. Kinnevik is exposed to fnancial risks mainly in the form of changes in the value of the stock portfolio, changes in currency and interest rates, and fnancing risks. Operational risks are managed within each company with an operating business. Kinnevik is also exposed to political risks since the companies in which Kinnevik has invested have substantial operations in less developed markets in Latin America and South East Asia.
For a more detailed description of Kinnevik's risks and uncertainties, as well as risk management, refer to Note 17 for the Group in the 2018 Annual Report.
NOTE 3 RELATED PARTY TRANSACTIONS
The Annual General Meeting on 6 May 2019 resolved in line with the Board's proposal to transfer of the real property Åre Äggsjön 1:2 to an entity owned by Cristina Stenbeck, Wilhelm Klingspor and Marie Klingspor for SEK 35m. Wilhelm Klingspor and Cristina Stenbeck did not participate in the Board's handling of the transfer on market conditions.
Other related party transactions for the period are of the same character as the transactions described in the 2018 Annual Report.
NOTE 4 FINANCIAL ASSETS ACCOUNTED AT FAIR VALUE THROUGH PROFIT AND LOSS
Kinnevik's unlisted holdings are valued using IFRS 13 and the International Private Equity and Venture Capital Valuation Guidelines, where a collective assessment is made to establish the valuation methods and points of reference that are most suitable to determine the fair value of each individual asset. While a valuation in a recent transaction is not applied as a valuation method as such, it typically provides an important point of reference and basis for the valuation of the asset in question, especially as it pertains to Kinnevik's younger investee companies where traditional valuation techniques are less applicable. For new share issues, consideration is taken to if the newly issued shares have preferential rights, such as liquidation preferences to the company's assets senior to earlier issued shares. Valuation methods include forward or trailing revenue or proft multiples, or discounting future expected cash fows. When performing a valuation based on multiples, consideration is given to differences in size, historic growth, proftability and cost of capital.
The valuation process for Kinnevik's unlisted holdings is led by a valuation team independently from the respective holding's investment manager. Accuracy and reliability of fnancial information used in the valuations is ensured through continuous contacts with the management of each holding and regular reviews of their accounts. Information and opinions on applicable valuation methods are obtained periodically from investment managers and well-renowned investment banks and audit frms. The valuations are discussed with the CFO and CEO after which a proposal is discussed with the Audit Committee and the external auditors. After their scrutiny and potential adjustments, the valuations are approved by the Audit Committee and included in Kinnevik's accounts.
Below is a summary of the valuation methods applied in the accounts as per 30 September 2019:
| Company | Summary |
|---|---|
| Kolonial | ƒ Trailing and forward-looking revenue multiples of a peer group of inventory-holding e-commerce retailers, correspond ing to the valuation in a secondary transaction during the second quarter of 2019 ƒ Equity value of NOK 2.0bn |
| MatHem | ƒ Trailing and forward-looking revenue multiples of a peer group of inventory-holding e-commerce retailers, correspond ing to the valuation in a funding round during the frst quarter of 2019 ƒ Equity value of SEK 2.35bn |
| Budbee | ƒ Growth-adjusted trailing and forward-looking revenue multiples of a peer group of logistics companies, corresponding to the valuation in a funding round during the frst quarter of 2019 ƒ Equity value of SEK 938m |
| Quikr | ƒ Discounted cash fow analysis as well as forward-looking revenue multiples of a peer group of emerging market online classifeds companies ƒ Equity value of USD 923m |
| Saltside | ƒ Discounted cash fow analysis as well as forward-looking revenue multiples of a peer group of emerging market online classifeds companies |
| Omio | ƒ Forward-looking revenue multiples of a peer group of online travel booking platforms, corresponding to the valuation in a funding round during the third quarter of 2018 |
| TravelPerk | ƒ Forward-looking revenue multiples of a peer group of online travel booking platforms, corresponding to the valuation in a funding round during the third quarter of 2019 |
| Bayport | ƒ Forward-looking earnings multiples of a peer group of consumer fnance companies |
| Betterment | ƒ Discounted cash fow analysis |
| Milvik/Bima | ƒ Discounted cash fow analysis |
| Bread | ƒ Forward-looking revenue multiples of a peer group of software, software-as-a-service, payments, and lending compa nies, corresponding to the valuation in a funding round during the third quarter of 2018 |
| Deposit Solutions | ƒ Forward-looking revenue multiples of a peer group of software-as-a-service, software licensing, and fnancial technology companies ƒ Fully diluted equity value of EUR 420m |
| Monese | ƒ Forward-looking revenue multiples of a peer group of fnancial brokers and subscription businesses, corresponding to the valuation in a funding round during the third quarter of 2018 |
| Pleo | ƒ Forward-looking revenue multiples of a peer group of software-as-a-service companies, corresponding to the valuation in a funding round during the second quarter of 2019 |
| Babylon | ƒ Forward-looking revenue multiples of a peer group of disruptive healthcare and healthcare IT companies, corresponding to the valuation in a funding round during the third quarter of 2019 |
| VillageMD | ƒ Forward-looking revenue multiples of a peer group of different types of care providers and outsourced services compa nies, and corresponds to the valuation in a funding round in the third quarter of 2019 |
| Cedar | ƒ Forward-looking revenue multiples of a peer group of healthcare software and analytics companies, corresponding to the valuation in a funding round during the second quarter of 2018 |
When establishing the fair value of other fnancial 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 fnancial 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 signifcant input from data that is not observable in the market.
| &KDQJH LQ IDLU YDOXH RI ğQDQFLDO DVVHWV | 2019 1 Jul 30 Sep |
2018 1 Jul 30 Sep |
2019 1 Jan 30 Sep |
2018 1 Jan 30 Sep |
2018 Full year |
|---|---|---|---|---|---|
| Com Hem | - | 78 | - | 773 | 600 |
| Global Fashion Group | - 1 989 | - | -1 989 | - | - |
| Home24 | 2 | -235 | -251 | 431 | 53 |
| Livongo | -420 | - | -420 | - | - |
| Millicom | -1 740 | -492 | -3 197 | -1 551 | 228 |
| MTG | - | -818 | - | -419 | -419 |
| Qliro Group | -89 | -26 | 18 | -224 | -375 |
| SDS | - | 2 | - | -2 | -3 |
| Tele2 | 2 063 | 274 | 6 332 | 945 | 2 181 |
| Westwing | -100 | - | -417 | - | -269 |
| Zalando | 2 763 | -11 978 | 17 174 | -6 910 | -16 173 |
| 7RWDO /LVWHG KROGLQJV | 491 | -13 195 | 17 249 | -6 957 | -14 178 |
| Babylon | 1 429 | -9 | 2 076 | 16 | 3 |
| Bayport | -2 | -7 | 60 | 93 | 90 |
| Betterment | 61 | -7 | 121 | 92 | 89 |
| Bread | 19 | -8 | 33 | -8 | -9 |
| Budbee | - | - | 98 | - | - |
| Cedar | 11 | -1 | 17 | 1 | 1 |
| Deposit Solutions | 4 | 15 | 16 | 15 | 11 |
| Global Fashion Group | - | -479 | -155 | -671 | -1 955 |
| Home24 | - | - | - | 81 | 81 |
| Kolonial | -4 | 1 | 46 | 1 | -19 |
| Livongo | - | -4 | 1 065 | 130 | 139 |
| MatHem | - | - | - | - | - |
| Milvik/Bima | 14 | -5 | 55 | 70 | 67 |
| Monese | 9 | 10 | 16 | 11 | 5 |
| Omio | 28 | 2 | 49 | 2 | - |
| Pleo | 5 | -1 | 198 | - | -1 |
| Quikr | 14 | 47 | -87 | 264 | 285 |
| TravelPerk | -27 | - | 186 | - | -4 |
| VillageMD | 11 | - | 11 | - | - |
| Westwing | - | 243 | - | 272 | 271 |
| Other* | -113 | 49 | -169 | -6 | -59 |
| 7RWDO 8QOLVWHG KROGLQJV | 1 458 | -154 | 3 637 | 363 | -1 005 |
| Total | 1 949 | -13 349 | 20 886 | -6 594 | -15 184 |
| * Other includes i.a. Enuygun, Iroko, Karma and Zanui. |
NOTES FOR THE GROUP
| 30 September 2019 | ||||||
|---|---|---|---|---|---|---|
| Book value of financial assets | Class A shares |
Class B shares |
Capital/ Votes (%) |
2019 30 Sep |
2018 30 Sep |
2018 31 Dec |
| Com Hem | $\bar{z}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 4999 | |
| Global Fashion Group | 79 093 454 | $\overline{\phantom{a}}$ | 40.7/40.7 | 1772 | $\overline{\phantom{a}}$ | |
| Home24 | 3 111 953 | $\overline{\phantom{a}}$ | 11.8/11.8 | 101 | 730 | 352 |
| Livongo | 12 653 927 | $\overline{a}$ | 13.9/13.9 | 2 1 7 0 | $\overline{\phantom{a}}$ | |
| Millicom | 37 835 438 | 37.4/37.4 | 17 972 | 19391 | 21 169 | |
| Qliro Group | 42 613 642 | 28.5/28.5 | 409 | 542 | 391 | |
| SDS | $\sim$ | $\sim$ | 6 | |||
| Tele2 | 20 733 965 | 166 879 154 | 27.3/42.0 | 27 504 | 16 295 | 21 172 |
| Westwing | 2797139 | 13.8/13.8 | 65 | $\overline{\phantom{a}}$ | 482 | |
| Zalando | 65 297 800 | 26.4/26.4 | 29 222 | 27 181 | 17 924 | |
| Total Listed Holdings | 79 215 | 69 150 | 61490 | |||
| Babylon | 16/16 | 2 9 5 0 | 511 | 500 | ||
| Bayport | 22/22 | 1 2 3 2 | 1 1 7 5 | 1 1 7 2 | ||
| Betterment | 16/16 | 1 2 7 4 | 1 1 5 6 | 1 1 5 3 | ||
| Bread | 13/13 | 331 | 299 | 298 | ||
| Budbee | 24/24 | 224 | 80 | 80 | ||
| Cedar | 10/10 | 206 | 142 | 142 | ||
| Deposit Solutions | 6/6 | 290 | 228 | 274 | ||
| Global Fashion Group | $\sim$ $-$ | 4568 | 3 2 8 4 | |||
| Kolonial | 24/24 | 694 | 329 | 309 | ||
| Livongo | $\sim$ | $\overline{\phantom{a}}$ | 580 | 700 | ||
| MatHem | 38/38 | 889 | $\sim$ $-$ | $\sim$ | ||
| Milvik/Bima | 36/36 | 1010 | 876 | 873 | ||
| Monese | 16/16 | 374 | 208 | 202 | ||
| Omio | 6/6 | 492 | 445 | 443 | ||
| Pleo | 13/13 | 350 | 67 | 67 | ||
| Quikr | 17/17 | 1703 | 1622 | 1643 | ||
| Saltside | 61/61 | 207 | 199 | 199 | ||
| TravelPerk | 15/15 | 531 | 223 | |||
| VillageMD | 10/10 | 737 | ||||
| Westwing | $\overline{\phantom{a}}$ | $\sim$ | 751 | |||
| Other* | $\overline{\phantom{a}}$ | 159 | 435 | 377 | ||
| Total Unlisted Holdings | 13 653 | 13 671 | 11939 | |||
| Total | 92 868 | 82821 | 73 430 |
* Other includes i.a. Enuygun, Iroko, Karma and Zanui.
| ,QYHVWPHQWV LQ ğQDQFLDO DVVHWV | 2019 1 Jul 30 Sep |
2018 1 Jul 30 Sep |
2019 1 Jan 30 Sep |
2018 1 Jan 30 Sep |
2018 Full year |
|---|---|---|---|---|---|
| Babylon | 296 | 2 | 374 | 120 | 122 |
| Milvik/Bima | 9 | - | 82 | - | - |
| Bread | - | 307 | - | 307 | 307 |
| Budbee | - | - | 46 | 80 | 80 |
| Cedar | - | - | 47 | 141 | 141 |
| Deposit Solutions | - | 213 | - | 213 | 263 |
| Global Fashion Group | - | - | 632 | - | - |
| Kolonial | 3 | 328 | 339 | 328 | 328 |
| Livongo | 825 | - | 825 | 345 | 456 |
| MatHem | - | - | 889 | - | - |
| Monese | - | 174 | 156 | 197 | 197 |
| Omio | - | 443 | - | 443 | 443 |
| Pleo | - | - | 85 | 67 | 68 |
| Quikr | 147 | - | 147 | - | - |
| TravelPerk | 98 | - | 122 | - | 227 |
| VillageMD | 726 | - | 726 | - | - |
| Other | 4 | 62 | 53 | 98 | 99 |
| 7RWDO 8QOLVWHG +ROGLQJV | 2 108 | 1 529 | 4 523 | 2 339 | 2 731 |
| Total | 2 108 | 1 529 | 4 523 | 2 339 | 2 731 |
| &KDQJHV LQ XQOLVWHG DVVHWV OHYHO 3 | 2019 1 Jul 30 Sep |
2018 1 Jul 30 Sep |
2019 1 Jan 30 Sep |
2018 1 Jan 30 Sep |
2018 Full year |
|---|---|---|---|---|---|
| Opening balance | 16 471 | 12 609 | 11 939 | 11 682 | 11 682 |
| Investments | 2 108 | 1 529 | 4 523 | 2 339 | 2 731 |
| Disposals / Exit proceeds | - 33 | - 313 | - 95 | - 414 | - 419 |
| Reclassifcation | -6 351 | - | -6 351 | - 299 | -1 050 |
| Change in fair value | 1 458 | - 154 | 3 637 | 363 | -1 005 |
| &ORVLQJ EDODQFH | 13 653 | 13 671 | 13 653 | 13 671 | 11 939 |
NOTE 5 DIVIDENDS RECEIVED
| 2019 1 Jul 30 Sep |
2018 1 Jul 30 Sep |
2019 1 Jan 30 Sep |
2018 1 Jan 30 Sep |
2018 Full year |
|
|---|---|---|---|---|---|
| Millicom | - | - | 476 | 441 | 890 |
| Tele2 | 1 126 | - | 1 539 | 610 | 610 |
| MTG | - | - | - | 169 | 169 |
| Com Hem | - | - | - | 203 | 203 |
| Other | - | - | - | 15 | 15 |
| 7RWDO GLYLGHQGV UHFHLYHG | 1 126 | - | 2 015 | 1 438 | 1 887 |
| Of which ordinary cash dividends | 1 126 | - | 889 | 1 423 | 1 872 |
NOTE 6 INTEREST BEARING ASSETS AND LIABILITIES
Kinnevik's total interest bearing assets amounted to SEK 7,119m as at 30 September 2019. The total amount of interest bearing liabilities was SEK 7,269m and debt for unpaid investments was SEK 100m. Kinnevik was in a net debt position of SEK 250m as at 30 September 2019, including loans to investee companies and debt for unpaid investments (net debt SEK 2,769m as at 31 December 2018). Net debt excluding loans to portfolio companies amounted to SEK 825m.
Kinnevik's total credit facilities (including issued bonds) amounted to SEK 9,980m as at 30 September 2019 whereof SEK 6,000m related to unutilised revolving credit facilities and SEK 3,850m related to bonds.
The Group's available liquidity, including short term investments and available unutilized credit facilities, totalled SEK 9,285m as at 30 September 2019 (SEK 6,116m as at 31 December 2018).
| SEKm | 2019 30 Sep |
2018 30 Sep |
2018 31 'HF |
|---|---|---|---|
| ,QWHUHVW EHDULQJ DVVHWV | |||
| Loans to investee companies | 575 | 142 | 118 |
| Short term investments | 3 150 | - | 149 |
| Cash and cash equivalents | 3 375 | 259 | 337 |
| Other interest bearing assets | 19 | 3 | 19 |
| 7RWDO LQWHUHVW EHDULQJ DVVHWV | 7 119 | 404 | 623 |
| ,QWHUHVW EHDULQJ ORQJ WHUP OLDELOLWLHV | |||
| Corporate bonds | 1 400 | 2 850 | 2 850 |
| Accrued borrowing cost | -10 | -14 | -13 |
| Other interest bearing liabilities | 59 | 32 | 34 |
| 1 449 | 2 868 | 2 871 | |
| ,QWHUHVW EHDULQJ VKRUW WHUP OLDELOLWLHV | |||
| Corporate bonds | 2 450 | - | - |
| Commercial papers | 3 370 | 1 500 | 500 |
| 5 820 | 1 500 | 500 | |
| 7RWDO LQWHUHVW EHDULQJ OLDELOLWLHV | 7 269 | 4 368 | 3 371 |
| Net interest bearing liabilities (-) / assets (+) | -150 | -3 964 | -2 748 |
| Debt, unpaid investments/divestments | -100 | - | -21 |
| 1HW FDVK1HW GHEW? IRU WKH *URXS LQFOXGLQJ QHW ORDQV WR LQYHVWHH FRPSDQLHV | -250 | -3 964 | -2 769 |
| 1HW FDVK1HW GHEW? IRU WKH *URXS H[FOXGLQJ QHW ORDQV WR LQYHVWHH FRPSDQLHV | -825 | -4 106 | -2 887 |
The outstanding loans carry an interest rate of Stibor or similar base rate with an average margin of 0.5%. All bank loans have variable interest rates (up to 3 months) while fnancing from the capital markets vary between 1 to 12 months for the loans under the commercial paper program and 5 years fxed for the outstanding bond (as per date of issue).
As at 30 September 2019, the average remaining tenor was 2.1 years for all credit facilities including the bonds. Kinnevik had not provided any security for any of its outstanding loans.
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| SEK m | 2019 1 Jul 30 Sep |
2018 1 Jul 30 Sep |
2019 1 Jan 30 Sep |
2018 1 Jan 30 Sep |
2018 Full year |
|---|---|---|---|---|---|
| Administration costs | -114 | -55 | -233 | -176 | -316 |
| Other operating income and costs | -1 | 1 | 1 | 3 | 5 |
| 2SHUDWLQJ ORVV | -115 | -54 | -232 | -173 | -311 |
| Dividends received, external | - | - | - | 705 | 2 984 |
| Result from associated companies | - | 8 449 | - | 8 472 | 6 684 |
| Result from subsidiaries | -22 | 70 | 7 045 | 2 253 | -2 290 |
| Financial net | -35 | -3 | -65 | -25 | -43 |
| 3URğWORVV DIWHU ğQDQFLDO LWHPV | -172 | 8 462 | 6 748 | 11 232 | 7 024 |
| Group contribution | - | - | - | - | -7 |
| 3URğWORVV EHIRUH WD[HV | -172 | 8 462 | 6 748 | 11 232 | 7 017 |
| Taxes | - | - | - | - | 0 |
| 1HW SURğWORVV IRU WKH SHULRG | -172 | 8 462 | 6 748 | 11 232 | 7 017 |
| 7RWDO FRPSUHKHQVLYH LQFRPH IRU WKH SHULRG | -172 | 8 462 | 6 748 | 11 232 | 7 017 |
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| SEK m | 2019 30 Sep |
2018 30 Sep |
2018 31 'HF |
|---|---|---|---|
| ASSETS | |||
| Tangible fxed assets | 4 | 4 | 4 |
| Financial fxed assets | 68 004 | 61 463 | 62 912 |
| Long term receivables | 28 | 0 | 20 |
| Short term receivables | 23 | 13 | 38 |
| Short term investments | 3 150 | 0 | 149 |
| Cash and cash equivalents | 3 344 | 154 | 202 |
| TOTAL ASSETS | 74 553 | 61 634 | 63 325 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Equity | 56 728 | 53 576 | 51 155 |
| Provisions | 26 | 27 | 26 |
| Long term interest bearing liabilities | 1 405 | 5 983 | 2 842 |
| Short term interest bearing liabilities | 5 820 | 1 500 | 500 |
| Other short term liabilities | 10 574 | 548 | 8 802 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABLITIES | 74 553 | 61 634 | 63 325 |
The Parent Company's liquidity, including short-term investments and unutilized credit facilities, totalled SEK 9,254m (4,030) at 30 September 2019. The Parent Company's interest bearing external liabilities amounted to SEK 7,225m (5,177) on the same date. Investments in tangible fxed assets amounted to SEK 1m (0) during the period.
Distribution by class of shares on 30 September 2019 was as follow:
| 1XPEHU RI VKDUHV | 1XPEHU RI YRWHV | 3DU YDOXH 6(. 000V |
|
|---|---|---|---|
| Outstanding Class A shares, 10 votes each | 33 755 432 | 337 554 320 | 3 375 |
| Outstanding Class B shares, 1 vote each | 241 486 514 | 241 486 514 | 24 487 |
| Outstanding Class D-G shares (LTIP 2018), 1 vote each | 559 436 | 559 436 | 56 |
| Outstanding Class D-G shares (LTIP 2019), 1 vote each | 697 560 | 697 560 | 70 |
| Class B shares in own custody | 424 692 | 424 692 | 425 |
| 5HJLVWHUHG QXPEHU RI VKDUHV | 276 923 634 | 580 722 522 | 27 692 |
The total number of votes for outstanding shares amounted at 30 September 2019 to 580,297,830 excluding 424,692 class B treasury shares. A new issue of 697,560 reclassifable, sub-ordinated, incentive shares, divided into four classes, to the participants in Kinnevik's long-term share incentive plan resolved on by the 2019 AGM were registered by the Swedish Companies Registration Offce (Sw. Bolagsverket) during September 2019.
During the year 111,777 class B shares were delivered to participants in the share-based plan from 2016.
The Board has authorization to repurchase up to a maximum of 10% of all shares in the Company over 12 months, ending at the AGM of 2020. There are no convertibles or warrants in issue.
DEFINITIONS OF ALTERNATIVE PERFORMANCE MEASURES
Kinnevik applies the Esma Guidelines on Alternative Performance Measures (APM). An APM is a fnancial measure of historical or future fnancial performance, fnancial position, or cash fows, other than a fnancial measure defned or specifed in the applicable fnancial reporting framework. For Kinnevik's consolidated accounts, this typically means IFRS.
APMs are disclosed when they complement performance measures defned by IFRS. The basis for disclosed APMs are that they are used by management to evaluate the fnancial performance and in so believed to give analysts and other stakeholders valuable information. Defnitions of all APMs used are found below. Reconciliations of a selection of APMs can be found on Kinnevik's corporate website www.kinnevik.com.
APMs in Kinnevik's interim report include:
| Active customers | Number of customers having made at least one order within the last 12 months |
|---|---|
| Debt/equity ratio | Interest-bearing liabilities including interest-bearing provisions divided by share holders' equity |
| Equity ratio | Shareholders' equity including non-controlling interest as percentage of total assets |
| Gross merchandise value, GMV | Total value of all sale transactions during the period, including taxes but excluding shipping costs |
| Internal rate of return, IRR | The annual rate of return calculated in quarterly intervals on a SEK basis that renders a zero net present value of (i) fair values at the beginning and end of the respective measurement period, (ii) investments and divestments, and (iii) cash dividends and dividends in kind |
| Investments | All investments in listed and unlisted fnancial assets, including loans to portfolio companies |
| Leverage | Net debt as a percentage of portfolio value |
| Net asset value, NAV | Net value of all assets on the balance sheet, equal to the shareholders' equity |
| Net cash/(net debt) | Interest bearing receivables (excluding net outstanding receivables relating to portfolio companies), short-term investments and cash and cash equivalents less interest-bearing liabilities including interest-bearing provisions and unpaid investments/divestments |
| Net investments | The net of all investments and divestments in listed and unlisted fnancial assets |
| Net merchandise value, NMV | Gross merchandise value after actual and provisioned returns and rejections |
| Onsite volumes | The value of transactions completed on a company's own website and app |
| Portfolio value | Total book value of fxed fnancial assets accounted at fair value through proft and loss |
| Total shareholder return, TSR | Annualized total return of the Kinnevik B share on the basis of shareholders reinvesting all cash dividends, dividends in kind, and mandatory share redemption proceeds into the Kinnevik B share, before tax, on each respective ex-dividend date. The value of Kinnevik B shares held at the end of the measurement period is divided by the price of the Kinnevik B share at the beginning of the period, and the resulting total return is then recalculated as an annual rate |
EXTRAORDINARY GENERAL MEETING
An Extraordinary General Meeting will be held on Thursday 7 November 2019 at 16:00 at Convendum, Regeringsgatan 30 in Stockholm. The Extraordinary General Meeting shall resolve on the proposed distribution of Kinnevik's holding in Millicom to its shareholders through a share redemption plan.
Shareholders who wish to participate in the Extraordinary General Meeting shall be recorded in the share register maintained by Euroclear Sweden on Thursday 31 October 2019, and give notice to attend no later than Thursday 31 October 2019. Notice to attend can be made on Kinnevik's website www.kinnevik.com under the heading "General Meetings" (which can be found under the section "Governance"), by telephone to +46 (0) 771 246 400 or by post by sending a letter to Computershare AB, "Kinnevik's EGM", P.O. Box 5267, SE-102 46 Stockholm, Sweden.
KINNEVIK ANNUAL GENERAL MEETING 2020
The Annual General Meeting will be held on 11 May 2020 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, Kinnevik AB, Box 2094, SE-103 13 Stockholm, Sweden, at least seven weeks before the Annual General Meeting, in order for the proposal to be included in the notice to the meeting. Further details on how and when to register will be published in advance of the meeting.
NOMINATION COMMITTEE AHEAD OF THE 2020 ANNUAL GENERAL MEETING
In accordance with the resolution of the 2019 Annual General Meeting in Kinnevik, Cristina Stenbeck has convened a Nomination Committee comprising representatives of Kinnevik's largest shareholders in terms of voting interest. The Nomination Committee comprises Cristina Stenbeck representing Verdere S.à r.l. and Camshaft S.à r.l., Hugo Stenbeck representing AMS Sapere Aude Trust, James Anderson representing Baillie Gifford, Ramsay Brufer representing Alecta, and Marie Klingspor.
Information about the work of the Nomination Committee can be found on Kinnevik's corporate website at www.kinnevik.com.
Shareholders wishing to submit proposals to the Nomination Committee can do so in writing to [email protected] or to the Nomination Committee, Kinnevik AB, P.O. Box 2094, SE-103 13 Stockholm, Sweden.
FINANCIAL REPORTS
The year-end release for 2019 will be published on 6 February 2020. Dates for 2020 reporting:
| 17 April | Interim Report January-March 2020 |
|---|---|
| 13 July | Interim Report January-June 2020 |
| 15 October | Interim Report January-September 2020 |
Stockholm 24 October 2019
Georgi Ganev Chief Executive Offcer
This Interim Report has not been subject to specifc review by the Company's auditors.
This information is information that Kinnevik AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out below, at 08.00 CET on 24 October 2019.
For further information, visit www.kinnevik.com or contact:
Torun Litzén Director Investor Relations Phone +46 (0)70 762 00 50 Email [email protected]
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