Quarterly Report • Oct 24, 2014
Quarterly Report
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| 30 Sept 2014 |
30 Jun 2014 |
31 Dec 2013 |
30 Sept 2013 |
|
|---|---|---|---|---|
| Net asset value | 76 654 | 68 509 | 65 527 | 61 133 |
| NAV per share | 276.39 | 247.00 | 236.29 | 220.44 |
| Share price | 260.50 | 284.80 | 297.50 | 222.30 |
| Net cash / (net debt) | 773 | 1 253 | 2 435 | -790 |
| SEKm | 1 Jul-30 Sept 2014 | 1 Jul-30 Sept 2013 | 1 Jan-30 Sept 2014 | 1 Jan-30 Sept 2013 |
|---|---|---|---|---|
| Net profit | 8 173 | 5 622 | 12 995 | 4 171 |
| Net profit per share, SEK | 29.42 | 20.35 | 46.94 | 15.14 |
| Change in fair value of financial assets | 8 294 | 5 580 | 11 360 | -1 402 |
| Dividends received | - | 168 | 2 350 | 5 828 |
| New investments | 478 | 592 | 1 094 | 2 033 |
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 third quarter 2014 unless otherwise stated. Figures shown within brackets refer to comparable periods in 2013.
Dear Shareholders,
During the third quarter of 2014, the Kinnevik team was actively engaged in developing and executing a number of transformational transactions, and in driving operational improvement within many of our investee companies. We continued to progress on our strategy to build a select number of leading digital consumer brands, working in close partnership with our talented managers, entrepreneurs and co-investors.
In the third quarter of 2014, Kinnevik's Net Asset Value ("NAV") grew SEK 8.1bln or 12% to SEK 76.7bln. Growth in our total NAV was driven by a 36% increase in the value of our E-commerce and Marketplaces investments (which now account for 47% of our NAV), only partially offset by a 18% decline in the value of our Entertainment assets. The value of our Communication investments remained stable.
During the period, our share price decreased 9% to SEK 260, ending the quarter at a 6% discount to our reported NAV, reversing the 15% premium we had recorded at the end of the second quarter. We are pleased to report that during the first nine months of 2014, our NAV has increased 17% or SEK 11.1bln.
Despite generally weaker macroeconomic conditions in a number of our markets, during the third quarter of 2014, Kinnevik's largest investee companies continued to deliver healthy revenue growth rates.
In Millicom, the partnership with UNE has made a solid contribution recording revenue slightly ahead of expectation. Millicom' revenues increased by 9% organically, excluding UNE. Revenue maintained momentum not just in Colombia, but also in Bolivia, Guatemala and across the African businesses.
Tele2 showed strong results across the board in the third quarter, resulting from its ability to monetize a great customer experience from the mobile network. The persistent focus on LTE/4G is now paying off, with strong top and bottom line progress in the quarter.
Zalando, which reported final numbers for the first six months on August 28, 2014, saw sales increase by 29.5% and reported an EBIT-margin of 1.2%.
In Russia, reduced economic growth and a changed regulatory environment have created adverse market conditions for our media assets. Going forward, MTG's pay TV channels are likely to be impacted by new advertisement regulations, whilst the amendment to the law on mass media (which limits foreign ownership in Russian television broadcasters to 20%), might impact CTC's long term owner-
ship structure.
CDON's sales continued to display momentum in the third quarter with total growth of 21%, with healthy sales figures in all segments, particularly within Nelly, which grew by 30%. In order to launch Qliro Payment Solution in full scale, facilitate the expansion of subsidiaries, especially within Nelly, and to strengthen the balance sheet by early redemption of the convertible bond, the CDON Board has resolved to execute a preferential rights issue of approximately SEK 650m. Kinnevik will subscribe to its pro rata share of the rights issue and will guarantee the remaining part of the issue.
During the third quarter, Kinnevik invested an additional USD 15m in Quikr in the context of a total raise of USD 60m. Since our initial investment in March, Quikr has performed strongly as a result of a greater focus on content, product and branding. In addition, we acquired another SEK 237m in Global Fashion Group, GFG, (indirectly via Bigfoot) in exchange for our stake in HelloFresh and cash. This brings our interest in GFG (once the combination is completed) to 26.1%.
Rocket Internet completed three private capital increases in exchange for cash and shares in a number of successful online companies, adding Pacific Long Distance Telephone Company, United Internet and Holtzbrinck Ventures to its shareholder base.
Despite significant volatility in the equity markets, on October 1st and 2nd, Zalando and Rocket Internet successfully completed their initial public offerings. Both transactions were concluded at attractive valuations raising approximately EUR 2.0bln in combined primary capital for the two companies. Zalando concluded its initial public offering at a pre money valuation of EUR 4.9bln, compared to Kinnevik's second quarter valuation of EUR 3.9bln. Rocket Internet concluded its IPO at a pre money valuation of EUR 5.1bln, a valuation over six times higher than the one recorded on Kinnevik's accounts as of the second quarter (EUR 0.8bln).
As previously indicated in connection with our second quarter report, we have reduced and refocused our investment activity to dedicate our resources to the operational improvement of our existing companies. Year to date, we have invested SEK 1.1bln, mainly in our E-commerce and Marketplaces companies.
Kinnevik ended the quarter with a net cash position of SEK 0.8bln in the parent company. Going forward we will con-
Kinnevik is an entrepreneurial investment group focused on building digital consumer brands in four sectors: Communication, E-commerce & Marketplaces, Entertainment, and Financial Services. Approximately 49% 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, challenging businesses, that are investing heavily to build market-leading positions in a short timeframe.
* Share of Kinnevik's asset value as of 30 September 2014 (figures within brackets refer to 30 September 2013)
tinue to focus investments mainly in our current investee companies and confirm our earlier guidance of total investments for the year 2014 of approximately SEK 1.5bln. Our financial position is strong and we reiterate our commitment to our dividend policy.
We remain focused on growing our companies by investing in building value mainly through organic growth, selected investments and where possible by consolidating our market share positions. We have a unique set of assets and a dedicated team to execute on this strategy and I look forward to sharing our progress with you over the coming months.
Lorenzo Grabau CEO and President
Communication makes up 44% of Kinnevik's investments. Kinnevik's mobile companies Millicom and Tele2 have in total 66 million subscribers in 22 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.
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.
| Jul-Sept | Jan-Sept | |||||
|---|---|---|---|---|---|---|
| Key data (USD m)* | 2014 | 2013 | 2014 | 2013 | ||
| Revenue* | 1 674 | 1 383 | 4 527 | 4 089 | ||
| EBITDA* | 549 | 487 | 1 506 | 1 499 | ||
| Operating profit, EBIT* | 239 | 263 | 699 | 821 | ||
| Net profit* | 165 | -37 | 2 595 | 174 | ||
| Number of mobile subscribers (million) | 53,8 | 48,4 |
* Figures include UNE from August 2014
Millicom continued to deliver organic growth across regions and business units during the third quarter. The EBITDA margin for the third quarter was 32.8%, as Millicom continued to invest in future growth.
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.
| Jul-Sept | Jan-Sept | ||||
|---|---|---|---|---|---|
| Key data (SEK m)* | 2014 | 2013 | 2014 | 2013 | |
| Revenue | 6 584 | 6 500 | 19 079 | 19 172 | |
| EBITDA | 1 682 | 1 471 | 4 514 | 4 401 | |
| Operating profit, EBIT | 1 004 | 297 | 2 755 | 1 812 | |
| Net profit | 726 | -123 | 2 132 | 691 | |
| Number of mobile subscribers (million) | 12,1 | 12,0 |
* Figures refer to continuing operations (i.e. excluding Tele2 Norway).
Tele2's mobile end-user service revenue grew by 8% amounting to SEK 3,252m (3,008) driven by improved monetization of mobile data usage. The EBITDA margin for the third quarter was 26%.
E-commerce & Marketplaces
E-Commerce & Marketplaces makes up 47% 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.
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.
Lamoda, Dafiti, Jabong, Namshi and Zalora are fashion ecommerce companies active on emerging markets in Russia, Latin America, India, the Middle East, South East Asia and Australia. The fashion segment in e-commerce is attractive for several reasons: it is a relatively large part of the household budget, it is a sector with high gross margins, and the products offered are easy to package and ship enabling efficient logistics with attractive delivery terms and returns. It is important to improve customers' freedom of selection, and make the purchasing process simple and smooth in order to satisfy customers, which is why Kinnevik's holdings in this sector all offer leading ranges of products and logistics solutions in their respective markets.
Home24 and Westwing are e-commerce companies in the home and living segment, active in Europe, Russia, and #SB[JM 5IF HSPXUI PG POMJOF QVSDIBTJOH JO UIJT TFHNFOU JT B 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.
,JOOFWJLT IPMEJOHT JO HFOFSBM NFSDIBOEJTF -B[BEB -JOJP Jumia, and Konga, all hold market leading positions in several emerging markets in South East Asia, Latin America, and Africa. Just as in fashion e-commerce, to be successful in general merchandise it is important to increase customers' freedom of selection, and make the purchasing process TNPPUI BOE TJNQMF -B[BEB -JOJP +VNJB BOE ,POHB BMM PGfer leading delivery solutions and range of goods in their respective markets.
CDON GROUP
CDON Group is a leading e-commerce company with some of the most well-known and appreciated brands in the Nordic area.
| Jul-Sept | Jan-Sept | |||
|---|---|---|---|---|
| Key data (SEK m) | 2014 | 2013 | 2014 | 2013 |
| Revenue* | 1 121 | 929 | 3 317 | 2 888 |
| Operating profit, EBIT* | 1.5 | -17.2 | 0.6 | -25.3 |
| Net profit/loss | -4.7 | -21.1 | 12.3 | -83.1 |
* Excluding divested operations and non-recurring items.
CDON Group continued to deliver in line with the company's strategy in the third quarter, with healthy growth, underlying improvements in earning and an improvement in operating cash flow of SEK 19.5m compared to the third quarter of 2013.
Avito is the largest online classified platform in Russia in terms of visitors and number of ads, distancing itself from its competitors.
| Apr-Jun | Jan-Jun | |||
|---|---|---|---|---|
| Key data (RUR m) | 2014 | 2013 | 2014 | 2013 |
| Revenue | 1 069 | 579 | 1 921 | 976 |
| % Growth | 85% | - | 97% | - |
| EBITDA | 569 | 196 | 962 | 173 |
| % Margin | 53% | 34% | 50% | 18% |
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.
Modern Times Group MTG is a leading international entertainment broadcasting group with the largest geographical fooprint of TV- and radio operations in Europe.
| Jul-Sept | Jan-Sept | |||
|---|---|---|---|---|
| Key data (SEK m) | 2014 | 2013 | 2014 | 2013 |
| Revenue | 3 669 | 3 191 | 11 375 | 10 005 |
| Operating profit, EBIT | 329 | 289 | 1 064 | 1 321 |
| Net profit | 236 | 196 | 702 | 907 |
MTG reported sales of SEK 3,669m (3,191) in the third quarter of 2014, and displayed a 14% increase in operating income. MTG continues to invest in order to be able to monetize rising video consumption levels and become the leading digital entertainer in each of its markets.
t *O 2 UIF BEWFSUJTJOH TQFOE JO -BUJO "NFSJDB IBT CFFO slow after the football World Cup.
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.
| Jul-Sept | Jan-Sept | ||||
|---|---|---|---|---|---|
| Key data (SEK m) | 2014 | 2013 | 2014 | 2013 | |
| Revenue | 174 | 291 | 682 | 938 | |
| Operating result, EBIT | -47 | -1 | -380 | -7 | |
| Net result | -41 | -3 | -381 | -17 |
Revenue in the third quarter was SEK 174m, a decline of SEK 117m year-on-year. The revenue decline is due to the sale of the newspapers in Russia and Hong Kong, continuing negative trend in print advertising in Sweden and some slowdown in advertising spend in Latin America. The operating loss for the third quarter was SEK 47m.
The operating result for the period January to September 2014 includes impairments of goodwill and trademarks of SEK 250m as well as losses on sale of the newspapers in Hong Kong and Canada of SEK 77m.
Financial services & Other makes up 4% 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.
| SEK m | Book value 2014 30 Sept |
Fair value 2014 30 Sept |
Fair value 2014 30 Jun |
Fair value 2013 31 Dec |
Change Q3 2014 2) |
Total return Q1-Q3 2014 |
|---|---|---|---|---|---|---|
| Millicom | 21 888 | 21 888 | 23 099 | 24 215 | -1 211 | -7% |
| Tele2 | 11 808 | 11 808 | 10 650 | 9 864 | 1 158 | 26% |
| Total Communication | 33 696 | 33 696 | 33 749 | 34 079 | -53 | |
| Zalando | 15 482 | 15 482 1) | 12 481 | 12 136 | 3 001 | |
| Rocket Internet | 7 776 | 7 776 1) | 1 828 | 1 219 | 5 948 | |
| Emerging Markets Fashion (Bigfoot I, Bigfoot II) |
6 312 | 6 312 3) | 6 086 | 1 970 | 226 | |
| Home and Living (Home24, Westwing) | 1 084 | 1 084 3) | 1 068 | 896 | 16 | |
| CDON Group | 547 | 547 | 629 | 786 | -82 | -30% |
| Other E-commerce | 1 192 | 1 192 3) | 1 168 | 1 154 | 24 | |
| Avito | 2 473 | 2 473 | 2 190 | 2 196 | 283 | |
| Other Marketplaces | 880 | 1 040 3) | 906 | 541 | 134 | |
| Total E-commerce & Marketplaces | 35 746 | 35 906 | 26 356 | 20 898 | 9 550 | |
| MTG | 3 086 | 3 086 | 3 878 | 4 498 | -792 | -28% |
| Metro | 504 | 504 | 538 | 879 | -34 | |
| Net cash, Metro | 120 | 120 | 162 | 221 | -42 | |
| Other | 106 | 106 | 93 | 88 | 12 | |
| Total Entertainment | 3 816 | 3 816 | 4 671 | 5 686 | -855 | |
| Bayport | 957 | 957 | 891 | 836 | 66 | |
| Transcom | 429 | 429 | 533 | 505 | -104 | -10% |
| Black Earth Farming | 225 | 225 | 295 | 337 | -70 | -33% |
| Other | 797 | 939 | 856 | 932 | 83 | |
| Total Financial Services & Other | 2 408 | 2 550 | 2 575 | 2 610 | -25 | |
| Other interest-bearing net cash/(net debt) | 769 | 769 | 1 158 | 2 557 | -389 | |
| Debt, unpaid investments | -83 | -83 | 0 | -303 | -83 | |
| Total Equity/Net asset value | 76 352 | 76 654 | 68 509 | 65 527 | 8 145 | |
| Net asset value per share | 276.39 | 247.00 | 236.29 | 29.39 | ||
| Closing price, class B share, SEK | 260.50 | 284.80 | 297.50 | -24.30 | -10% |
1) Equivalent to EUR 21.50 per share for Zalando and EUR 39 for Rocket Internet. See further under "Valuation of unlisted assets" on page 12.
2) Including investments/divestments
3) For split see page 12.
| Past 30 years | 16% |
|---|---|
| Past 10 years | 20% |
| Past 5 years | 27% |
| Past 12 months | 21% |
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 | 7% | 12% |
| E-commerce & Marketplaces | 88% | 50% |
| Entertainment | -28% | -3% |
| Financial services & other | 28% | 19% |
| Total portfolio | 30% | 17% |
IRR is based on fair values at the beginning and end of the respective period, includes non-cash items and is calculated on a SEK basis.
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.
During the first nine months of the year, Kinnevik made SEK 1.1bln of investments. The revised guidance for investments for the full year 2014 is around SEK 1.5bln compared with the SEK 2.4bln invested in 2013. As of 30 September 2014 Kinnevik had a net cash position in the parent company of SEK 0.8bln.
As Kinnevik's investment focus is on growth assets, most of which are still not cash flow positive, going forward the growth in dividend should not be expected to be at the same rate as in previous years.
| Investment (SEK m) | Jul-Sept 2014 |
Jan-Sept 2014 |
|---|---|---|
| Bigfoot I and Lamoda | 237 | 277 |
| Avito | - | 102 |
| Quikr | 108 | 362 |
| Saltside Technologies | - | 65 |
| Yell | - | 20 |
| Other | 133 | 268 |
| Total | 478 | 1 094 |
In the third quarter, Kinnevik acquired additional shares in Bigfoot against payment partly in kind through Kinnevik's shares in HelloFresh and partly in cash through a payment of SEK 165m. Kinnevik also invested another SEK 108m into Quikr.
On 22 October Kinnevik announced that it intends to subscribe to its pro rata share (25%) of the rights issue in CDON Group AB and to guarantee the remaining part of the issue. The issue, which entails preferential rights to subscribe for new shares for the existing shareholders of CDON, will amount to approximately SEK 650m.
| UNLISTED COMPANIES | Change in fair value and dividends received 3 |
|||||
|---|---|---|---|---|---|---|
| Investment (SEK m) | Kinnevik ownership |
Accumulated net invested amount |
Fair value 30 Sept 2014 |
Jul-Sept 2014 |
Jan-Sept 2014 |
Valuation method |
| Zalando 1 | 36% | 7 916 | 15 482 | 3 001 | 3 346 | Latest transaction |
| Rocket Internet 1 | 18% | -3 077 | 7 776 | 5 948 | 7 506 | Latest transaction |
| Emerging Markets Fashion | ||||||
| Bigfoot I 1, 2 | 34% | 2 544 | 4 657 | -8 | 2 114 | Latest transaction |
| Dafiti 2 | 26% | |||||
| Lamoda 2 | 28% | |||||
| Jabong 2 | 25% | |||||
| Namshi 2 | 14% | |||||
| Bigfoot II 1, 2 | 34% | 1 149 | 1 655 | -3 | 1 002 | Latest transaction |
| Zalora Group 2 | 26% | |||||
| Zando 2 | 10% | |||||
| Jumia 2 | 10% | |||||
| Home & Living | ||||||
| Home24 2 | 21% | 791 | 803 | -2 | 124 | Sales multiple |
| Mobly 2 | 17% | |||||
| Westwing 2 | 14% | 175 | 281 | 18 | 64 | Sales multiple |
| Other E-commerce | ||||||
| BigCommerce 2 | 14% | 606 | 582 | 3 | 40 | Sales multiple |
| Lazada 2 | 11% | |||||
| Linio 2 | 9% | |||||
| Namshi 2 | 5% | |||||
| Konga 2 | 46% | 114 | 173 | 11 | 17 | Latest transaction |
| Other | Mixed | 716 | 437 | -17 | -53 | Mixed |
| Marketplaces | ||||||
| Avito | 32% | 438 | 2 473 | 283 | 175 | Sales multiple |
| Quikr | 16% | 362 | 394 | 22 | 33 | Cost |
| Saltside | 88% | 154 | 155 | - | - | Cost |
| Wimdu 2 | 29% | 367 | 367 | -1 | 7 | Sales multiple |
| Other | Mixed | 286 | 124 | 5 | 22 | Mixed |
| Total E-commerce & Marketplaces | 12 541 | 35 359 | 9 260 | 14 397 | ||
| Total E-commerce & Marketplaces excl Rocket Internet and Zalando |
7 702 | 12 101 | 311 | 3 545 | ||
| Metro | ||||||
| Other | 100% | 992 | 624 | -34 | -352 | DCF |
| Mixed | 96 | 106 | 12 | 27 | Mixed | |
| Total Entertainment | 1 088 | 730 | -22 | -325 | ||
| Bayport | 31% | 467 | 957 | 66 | 98 | Latest transaction |
| Milvik/Bima | 39% | 148 | 190 | 73 | 81 | Latest transaction |
| Rolnyvik | 100% | 174 | 250 | - | - | DCF |
| Vireo Energy | 78% | 216 | 216 | - | - | DCF |
| Other | Mixed | 376 | 188 | -6 | -95 | Mixed |
| Total Financial Services & Other | 1 381 | 1 801 | 133 | 84 | ||
| Total Unlisted Assets | 15 010 | 37 890 | 9 371 | 14 156 |
1) Accumulated net invested amount includes value of share distributions received from Rocket Internet.
2) Ownership not adjusted for employee stock option plans and employee equity at subsidiary level.
3) Including assessed value of subsidiaries, which are consolidated into the group's financial statements.
At the end of the third quarter, Kinnevik's unlisted assets (including Zalando and Rocket Internet which have been listed after the end of the reporting period) were valued at a total of SEK 37,890m, to be compared with an accumulated invested amount (net after dividends received) of SEK 15,010m. The unrealised change in fair value amounted to a profit of SEK 9,371m in the third quarter (including change of assessed value of subsidiaries when calculating net asset value), as specified in the table on previous page.
For Zalando, the valuation as per 30 September has been based on the final offering price in the IPO of EUR 21.50 per share communicated on 29 September and at which level the company issued new shares for EUR 526m (excluding potential over-allotment) before the share started to trade on the Frankfurt Stock Exchange on 1 October.
For Rocket Internet, the fair value as per 30 September has been based on the communicated price range in the ongoing Initial Public Offering. On 23 September Rocket Internet published a price range of EUR 35.50-42.50 per share with cornerstone investors having committed to purchase shares in the aggregate amount of EUR 582.5m in the IPO at the offer price. Since the final offer price was not communicated as per 30 September, Kinnevik has valued its shares in Rocket Internet at the mid-point of the communicated price range at EUR 39.00 per share.
The valuation of Bigfoot I and Bigfoot II 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 implies an average sales multiple of 3.5 for Dafiti, Jabong, Lamoda, Namshi and Zalora based on last 12 months historical sales. In beginning of September, Kinnevik entered into an agreement with Rocket Internet and other co-investors to combine the five leading fashion e-commerce companies to create a new global fashion group, Globla Fashion Group ("GFG"). For the purposes of the combination, 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 implied valuation of EUR 2.4bln in Kinnevik's accounts as per 30 September. Since the agreed transaction is all in stock and completion is subject to binding rulings by fiscal authorities and antitrust approval, it has not been used as basis for determining fair value in Kinnevik's accounts as per 30 September. Closing is expected in late 2014.
As in previous quarters, sales multiple valuations have been prepared for the companies listed in the table in the upper right corner. The sales multiples for the companies' listed peers continued to decrease during the quarter. The discount to the peer group average sales multiple applied in Kinnevik's valuation has, compared to the second quarter, been lowered for Home24 and Westwing due to improved operational performance.
| Company | 30 Sept 2014* |
30 Jun 2014* |
Adjusted multiple** |
|---|---|---|---|
| Home24 | 1.5 | 1.5 | Yes |
| Westwing | 1.5 | 1.5 | Yes |
| -B[BEB | 1.2 | 1.3 | No |
| Linio | 1.1 | 1.2 | Yes |
| Avito | 9.5 | 9.5 | No |
| Wimdu | 2.7 | 2.9 | Yes |
* Sales multiple, last 12 months historical sales.
** Sales multiple has been lowered to reflect factors such as lower profitability than peer group. See Note 5 for further details.
For Avito a continued strong sales growth compensated for a negative currency impact translating the company's sales in RUR into SEK resulting in a 13% higher equity value of SEK 7.9bln at the end of September compared to the end of June. 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 on 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 1.2bln higher as per 30 September 2014.
For Bayport and Milvik/Bima, the valuation as per 30 September has been based on transactions during the first nine months of 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 |
|---|---|---|---|---|---|
| Bigfoot I | 17 399 | 4 657 | 4 657 | - | Divdend (partly in cash) |
| Bigfoot II | 7 470 | 1 655 | 1 655 | - | Dividend (partly in cash) |
| Home24 | 4 573 | 944 | 803 | 140 | New share issue |
| Westwing | 3 241 | 453 | 281 | 172 | New share issue |
| BigCommerce | 8 347 | 836 | 582 | 254 | New share issues in operating companies |
| Avito | 11 709 | 3 681 | 2 473 | 1 208 | Secondary share transaction with management |
| Other | 13 163 | 2 044 | 1 649 | 396 | New share issues |
| Total | - | 14 272 | 12 101 | 2 170 |
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 do 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 between 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 2.2bln applied to Kinnevik's shareholdings as at 30 September 2014, of which SEK 1.2bln related to Avito.
For further information about valuation principles and assumptions, please see Note 5.
| Note | 2014 1 Jul 30 Sept |
2013 1 Jul 30 Sept |
2014 1 Jan 30 Sept |
2013 1 Jan 30 Sept |
|
|---|---|---|---|---|---|
| Change in fair value of financial assets | 5 | 8 294 | 5 580 | 11 360 | -1 402 |
| Dividends received | 6 | - | 168 | 2 350 | 5 828 |
| Revenue | 223 | 340 | 866 | 1 120 | |
| Cost of goods sold and services | -133 | -110 | -458 | -560 | |
| Selling and administration costs | -188 | -331 | -698 | -771 | |
| Share of profit/loss of associates accounted for using the equity method |
4 | 3 | 10 | 10 | |
| Other operating income | 5 | 11 | 21 | 83 | |
| Other operating expenses | -22 | -6 | -445 | -22 | |
| Operating profit/loss | 4 | 8 183 | 5 655 | 13 006 | 4 286 |
| Financial net | -7 | -27 | -9 | -89 | |
| Profit/loss after financial net | 8 176 | 5 628 | 12 997 | 4 197 | |
| Tax | -3 | -6 | -2 | -26 | |
| Net profit/loss for the period | 8 173 | 5 622 | 12 995 | 4 171 | |
| Of which attributable to: | |||||
| Equity holders of the Parent company | 8 165 | 5 646 | 13 027 | 4 203 | |
| Non-controlling interest | 8 | -24 | -32 | -32 | |
| Net profit/loss per share before dilution | 29.44 | 20.36 | 46.97 | 15.16 | |
| Net profit/loss per share after dilution | 29.42 | 20.35 | 46.94 | 15.14 | |
| Average number of shares before dilution | 277 359 896 | 277 318 298 | 277 339 097 | 277 250 787 | |
| Average number of shares after dilution | 277 496 524 | 277 628 045 | 277 539 118 | 277 563 290 |
The change in fair value of financial assets amounted to SEK 8,294m (SEK 5,748m in previous year including dividend received) for the third quarter of which a loss of SEK 1,118m (profit of 4,439) was related to listed holdings and a profit of SEK 9,412m (1,309) was related to unlisted holdings, see note 5 and 6 for further details.
The change in fair value of financial assets, including dividends received, amounted to SEK 13,710m (4,426) for the first nine months of the year of which a loss of SEK 916m (profit of 2,616) was related to listed holdings and a profit of SEK 14,626m (profit of 1,810) was related to unlisted holdings, see note 5 and 6 for further details.
Other operating expenses includes an impairment of intangible fixed assets in Metro and G3 Good Governance Group of SEK 359m due to weaker future market expectations and a negative result of SEK 77m from divestments of Metros' operations in Hong Kong and Canada.
| Note | 2014 1 Jul 30 Sept |
2013 1 Jul 30 Sept |
2014 1 Jan 30 Sept |
2013 1 Jan 30 Sept |
|
|---|---|---|---|---|---|
| Cash flow from operations | -164 | -122 | -217 | -58 | |
| Investments in shares and other securities | -296 | -1 443 | -1 138 | -1 960 | |
| Sale of shares and other securities | - | 36 | 32 | 99 | |
| Dividends received | 6 | - | 168 | 1 400 | 5 828 |
| Other | 25 | -11 | -15 | -70 | |
| Cash flow from investing activities | -271 | -1 250 | 279 | 3 897 | |
| Change in interest bearing liabilities | 10 | -452 | 41 | -1 862 | |
| Dividend paid to equityholders of the Parent Company | - | - | -1 941 | -1 803 | |
| Other | 22 | -13 | -46 | -70 | |
| Cash flow from financing activities | 32 | -465 | -1 946 | -3 735 | |
| CASH FLOW FOR THE PERIOD | -403 | -1 837 | -1 884 | 104 | |
| Cash and short term investments, opening balance | 2 486 | 2 395 | 3 967 | 454 | |
| Cash and short term investments, closing balance | 2 083 | 558 | 2 083 | 558 | |
| SUPPLEMENTARY CASH FLOW INFORMATION | |||||
| Investments in shares and other securities | -450 | -555 | -982 | -1 960 | |
| Investments in shares in subsidiaries | - | - | -7 | - | |
| Non-cash investments | 71 | - | 71 | - | |
| Current period investments, paid after period end | 83 | - | 83 | - | |
| Prior period investments, paid in current period | - | -888 | -303 | - | |
| Investments in shares and other securities | -296 | -1 443 | -1 138 | -1 960 |
| Note | 2014 30 Sept |
2013 30 Sept |
2013 31 Dec |
|
|---|---|---|---|---|
| ASSETS | ||||
| Fixed assets | ||||
| Intangible fixed assets | 371 | 954 | 805 | |
| Tangible fixed assets | 353 | 318 | 343 | |
| Financial assets accounted at fair value through profit and loss | 5 | 74 679 | 60 402 | 61 575 |
| Other fixed assets | 157 | 100 | 113 | |
| Total fixed assets | 75 560 | 61 774 | 62 836 | |
| Other current assets | 590 | 567 | 599 | |
| Short-term investments | 7 | 1 563 | 8 | 3 502 |
| Cash and cash equivalents | 7 | 520 | 550 | 465 |
| TOTAL ASSETS | 78 233 | 62 899 | 67 402 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||
| Shareholders' equity attributable to equityholders of the Parent Company |
76 352 | 60 975 | 65 276 | |
| Shareholders' equity attributable to non controlling interest | 2 | 46 | 43 | |
| Interest-bearing liabilities, long-term | 7 | 1 281 | 1 241 | 1 231 |
| Interest-bearing liabilities, short-term | 7 | 11 | 169 | 20 |
| Non interest-bearing liabilities | 587 | 468 | 832 | |
| TOTAL EQUITY AND LIABILITIES | 78 233 | 62 899 | 67 402 |
| 2014 | 2013 | 2013 | |
|---|---|---|---|
| 30 Sept | 30 Sept | 31 Dec | |
| Debt/equity ratio | 0.02 | 0.02 | 0.03 |
| Equity ratio | 98% | 97% | 97% |
| Net cash/(Net debt) including debt unpaid investments | 773 | -790 | 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 debt unpaid investments. |
| Total return | Change in market price and dividends paid assuming that shareholders have reinvested all cash divi dends and dividends in kind into the company's share. |
The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU. This statements have been prepared in accordance with NasdaqOMX's "Guidelines for preparing interim management statements" from 1 January 2014. Kinnevik will in the future prepare reports in accordance with the Annual Accounts Act and IAS 34, Interim Financial Reporting for the interim period January-June and for the full year.
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 company 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.
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.
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 interim period are of the same character as the transactions described in the 2013 Annual Report.
| 2014 2013 Jan-Sept |
Jan-Sept | |||||
|---|---|---|---|---|---|---|
| Operating subsidia ries |
Invest ment operation |
Total | Operating subsidia ries |
Invest ment operation |
Total | |
| Change in fair value of financial assets | 11 360 | 11 360 | -1 402 | -1 402 | ||
| Dividends received | 2 350 | 2 350 | 5 828 | 5 828 | ||
| Revenue | 866 | 866 | 1 115 | 5 | 1 120 | |
| Cost of goods and services sold | -458 | -458 | -560 | -560 | ||
| Selling- and administration costs | -567 | -131 | -698 | -654 | -117 | -771 |
| Share of profit/loss of associates accounted for using the equity method |
10 | 10 | 10 | 10 | ||
| Other operating income and expenses | -425 | 1 | -424 | 56 | 5 | 61 |
| Operating profit/loss | -574 | 13 580 | 13 006 | -33 | 4 319 | 4 286 |
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 359m, a negative result of SEK 77m from divestments of operations within Metro, a positive one-off effect of SEK 44m in other operating income in the first nine months 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 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 30 September 2014:
| Company | Valuation method | Valuation assumptions |
|---|---|---|
| Zalando | Latest transaction when Zalando issued shares as part of its IPO. The final of fer price in the IPO was communicated on 29 September 2014. |
EUR 4,905 pre-IPO for the entire company, corresponding to EUR 21.50 per share. |
| Rocket Internet | Latest transaction when cornerstone investors on 23 September 2014 com mitted to purchase shares in the IPO at the offer price. The final offer price had not been communicated on 30 September 2014. The shares have therefore been valued at the mid-point of the communicated price range. |
EUR 4,696m pre-IPO for the entire company, corresponding to EUR 39.00 per share. |
| Bigfoot I | Latest transaction when Rocket Internet distributed cash and shares in Big foot I and Bigfoot II to its shareholders in May 2014. |
EUR 1,468m for the entire company. |
| Company | Valuation method | Valuation assumptions |
|---|---|---|
| Bigfoot II | Latest transaction when Rocket Internet distributed cash and shares in Big foot I and Bigfoot II to its shareholders in May 2014. |
EUR 524m for the entire company. |
| Home24 and West wing |
Valuation based on sales multiples for a group of comparable companies. The peer group includes, among others, Amazon, CDON and AO World. |
Last 12 months historical sales has been multiplied with a sales multi |
| The average sales multiple for the peer group has been have been adjusted for factors such as lack of profitability and early e-commerce market (where applicable). |
ple of 1.5 for Home24 and 1.5 for Westwing. |
|
| The valuations also consider what preference the owned shares have in case of liquidation or sale of the entire company. |
||
| BigCommerce | Valuation based on sales multiples for a group of comparable companies. The peer group includes, among others, Amazon, CDON, JD.com and AO World. |
Last 12 months historical sales has been multiplied with sales multiples of 1.1 for Linio and 1.2 for Lazada. |
| The average sales multiple for the peer group has been adjusted for factors such as lack of profitability and early e-commerce market (where applicable). |
||
| For the holding company BigCommerce, the underlying operating businesses have been valued separately. |
||
| The valuations also consider what preference the owned shares have in case of liquidation or sale of the entire company. |
||
| Konga | Latest transaction. | USD 52m for the entire company. |
| Avito | Valuation based on sales multiples for a group of comparable companies. The peer group includes, among others, 58.com, Autohome and BitAuto. |
Last 12 months historical sales has been multiplied with a sales multiple of 9.5. The entire company has been valued at SEK 7.9bln. |
| Quikr | Cost. | 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 has been multiplied with a sales multiple of 2.7. |
| The average sales multiple for the peer group has been adjusted for factors such as lack of profitability. |
||
| The valuations also consider what preference 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. |
| Other portfolio com panies |
Fair value corresponds to cost. | N/A |
For the companies in the table above that are valued based on sales multiples (i.e. Home24, Westwing, BigCommerce, Avito and Wimdu), an increase in the multiple by 10% would have increased estimated fair value by SEK 308m. Similarly, a decrease in the multiple by 10% would have decreased estimated fair value by SEK 288m.
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 Jul 30 Sept |
2013 1 Jul 30 Sept |
2014 1 Jan 30 Sept |
2013 1 Jan 30 Sept |
|
|---|---|---|---|---|
| Millicom | -1 211 | 3 193 | -2 327 | 189 |
| Tele2 | 1 158 | 474 | 1 944 | -4 729 |
| Communication | -53 | 3 667 | -383 | -4 540 |
| Zalando | 3 001 | 923 | 3 346 | 1 740 |
| Rocket Internet | 5 948 | -39 | 6 556 | 188 |
| Bigfoot I with portfolio companies | -8 | -14 | 2 114 | 10 |
| Bigfoot II | -3 | -3 | 1 002 | -443 |
| Home 24 | -2 | 109 | 124 | -158 |
| Westwing | 18 | -2 | 64 | 1 |
| CDON Group | -82 | -6 | -240 | -204 |
| BigCommerce with portfolio companies | 3 | -3 | 40 | -93 |
| Konga | 11 | -1 | 17 | 21 |
| Avito | 283 | 220 | 175 | 531 |
| Quikr | 22 | - | 33 | - |
| Wimdu | -1 | -1 | 7 | 3 |
| Other | -12 | -28 | 15 | -194 |
| E-commerce & Marketplaces | 9 178 | 1 155 | 13 253 | 1 402 |
| MTG | -793 | 666 | -1 413 | 1 483 |
| Other | 13 | -1 | 23 | -16 |
| Entertainment | -780 | 665 | -1 390 | 1 467 |
| Bayport | 66 | -18 | 98 | 51 |
| Milvik/Bima | 73 | -1 | 81 | -1 |
| Seamless | -16 | 20 | -92 | 28 |
| Transcom | -104 | 29 | -76 | 94 |
| BillerudKorsnäs | - | 68 | - | 192 |
| Black Earth Farming | -70 | -5 | -112 | -98 |
| Other | - | - | -19 | 3 |
| Financial Services & Other | -51 | 93 | -120 | 269 |
| Total | 8 294 | 5 580 | 11 360 | -1 402 |
| - of which traded in an active market, level 1 |
-1 118 | 4 439 | -2 316 | -3 045 |
| - of which fair value established using valuation techniques, level 3 |
9 412 | 1 141 | 13 676 | 1 643 |
| 30 Sept 2014 listed companies |
||||||
|---|---|---|---|---|---|---|
| Class A shares |
Class B shares |
Capital/Votes | 2014 30 Sept |
2013 30 Sept |
2013 31 Dec |
|
| Millicom | 37 835 438 | - | 37.8/37.8 | 21 888 | 21 472 | 24 215 |
| Tele2 | 18 430 192 | 117 065 945 | 30.4/48.0 | 11 808 | 11 138 | 9 864 |
| Communication | 33 696 | 32 610 | 34 079 | |||
| Zalando | 36/36 | 15 482 | 11 249 | 12 136 | ||
| Rocket Internet | 18/18 | 7 776 | 1 080 | 1 219 | ||
| Bigfoot I with portfolio companies | 34/34 | 4 657 | 1 489 | 1 535 | ||
| Bigfoot II | 34/34 | 1 655 | 434 | 435 | ||
| Home 24 | 21/21 | 803 | 596 | 679 | ||
| Westwing | 14/14 | 281 | 173 | 217 | ||
| CDON Group | 24 959 410 | - | 25.1/25.1 | 547 | 589 | 786 |
| BigCommerce with portfolio companies | 14/14 | 582 | 332 | 544 | ||
| Konga | 46/46 | 173 | 63 | 156 | ||
| Avito | 32/32 | 2 473 | 1 454 | 2 196 | ||
| Quikr | 16/16 | 394 | - | - | ||
| Wimdu | 29/29 | 367 | 260 | 358 | ||
| Other | 561 | 498 | 510 | |||
| E-commerce & Marketplaces | 35 751 | 18 217 | 20 771 | |||
| MTG | 4 461 691 | 9 042 165 | 20.3/48.0 | 3 086 | 4 525 | 4 498 |
| Other | 112 | 152 | 164 | |||
| Entertainment | 3 198 | 4 677 | 4 662 | |||
| Bayport | 31/31 | 957 | 597 | 836 | ||
| Milvik/Bima | 39/39 | 190 | 48 | 46 | ||
| Seamless | 3 898 371 | - | 9.3/9.3 | 100 | 94 | 192 |
| Transcom | 247 164 416 | 163 806 834 | 33.0/39.7 | 429 | 325 | 505 |
| BillerudKorsnäs | - | - | - | - | 3 353 | - |
| Black Earth Farming | 51 811 828 | - | 24.9/24.9 | 225 | 357 | 337 |
| Other | 133 | 124 | 147 | |||
| Financial Services & Other | 2 034 | 4 898 | 2 063 | |||
| Total | 74 679 | 60 402 | 61 575 | |||
| - of which traded in an active market, level 1 |
38 083 | 41 853 | 40 397 | |||
| - of which fair value established using valuation techniques, level 3 |
36 596 | 18 549 | 21 178 |
| 2014 1 Jul 30 Sept |
2013 1 Jul 30 Sept |
2014 1 Jan 30 Sept |
2013 1 Jan 30 Sept |
|
|---|---|---|---|---|
| Zalando | - | -20 | - | 855 |
| Rocket Internet | - | 575 | - | 575 |
| Bigfoot I with portfolio companies | 237 | - | 276 | - |
| Bigfoot II | - | - | - | 169 |
| Westwing | - | - | - | 39 |
| CDON Group | - | - | - | 129 |
| BigCommerce with portfolio companies | - | - | -2 | 138 |
| Avito | - | - | 102 | - |
| Quikr | 108 | - | 362 | - |
| Wimdu | - | - | 2 | - |
| Other | 98 | - | 148 | 33 |
| E-commerce & Marketplaces | 443 | 555 | 888 | 1 938 |
| Other | - | - | - | 12 |
| Entertainment | - | - | - | 12 |
| Bayport | - | - | 23 | - |
| Milvik/Bima | - | - | 64 | 3 |
| Other | 7 | - | 7 | 7 |
| Financial Services & Other | 7 | - | 94 | 10 |
| Total investments | 450 | 555 | 982 | 1 960 |
| - of which traded in an active market, level 1 | - | - | - | 129 |
| - of which fair value established using valuation techniques, level 3 | 450 | 555 | 982 | 1 831 |
| 2014 1 Jan 30 Sept |
2013 1 Jan 30 Sept |
2013 Full year |
|
|---|---|---|---|
| Opening balance | 21 178 | 15 185 | 15 185 |
| Investments | 982 | 1 831 | 2 159 |
| Distribution of shares in Bigfoot I and Bigfoot II | 950 | - | - |
| Reclassifications | - | 49 | 49 |
| Change in fair value | 13 676 | 1 642 | 3 838 |
| Disposals | -182 | -155 | -68 |
| Exchange gain/loss and other | -8 | -3 | 15 |
| Closing balance | 36 596 | 18 549 | 21 178 |
| NOTE 6 DIVIDENDS RECEIVED |
2014 1 Jul 30 Sept |
2013 1 Jul 30 Sept |
2014 1 Jan 30 Sept |
2013 1 Jan 30 Sept |
|---|---|---|---|---|
| Millicom | - | - | 662 | 665 |
| Tele2 | - | - | 596 | 4 756 |
| MTG | - | - | 142 | 135 |
| Rocket Internet | 168 | - | 168 | |
| Rocket Internet, shares in Bigfoot I and Bigfoot II | - | - | 950 | - |
| BillerudKorsnäs | - | - | - | 104 |
| Total dividends received | - | 168 | 2 350 | 5 828 |
| Of which cash dividends | - | 168 | 1 400 | 5 660 |
| Of which ordinary cash dividends | - | - | 1 400 | 1 866 |
Kinnevik's total interest bearing assets amounted to SEK 2,148m as at 30 September 2014. The short term deposits of SEK 1,563m were split into a bank deposit of SEK 150m and Swedish money market funds with high credit quality with no restrictions on accessibility. The total amount of outstanding loans was SEK 1,292m and consequently Kinnevik was in a net cash position of SEK 856m as at 30 September 2014 (SEK 2,727m as at 31 December 2013).
Kinnevik's total credit facilities (including issued bonds) amounted to SEK 7,173m as at 30 September 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 as at 30 September 2014.
The Group's available liquidity, including short-term deposits and available unutilized credit facilities, totaled SEK 8,013m at 30 September 2014 (SEK 9,897m).
| 2014 30 Sept |
2013 30 Sept |
2013 31 Dec |
|
|---|---|---|---|
| Interest-bearing long-term assets | |||
| Other interest-bearing assets | 65 | 21 | 11 |
| 65 | 21 | 11 | |
| Interest-bearing short-term assets | |||
| Short-term investments | 1 563 | 8 | 3 502 |
| Cash and cash equivalents | 520 | 550 | 465 |
| 2 083 | 558 | 3 967 | |
| Total interest-bearing assets | 2 148 | 579 | 3 978 |
| Interest-bearing long-term liabilities | |||
| Liabilities to credit institutions | 32 | 21 | 20 |
| Capital markets issues | 1 200 | 1 200 | 1 200 |
| Accrued borrowing cost | -14 | -17 | -25 |
| Other interest-bearing liabilities | 63 | 37 | 36 |
| 1 281 | 1 241 | 1 231 | |
| Interest-bearing short-term liabilities | |||
| Liabilities to credit institutions | 11 | 20 | 20 |
| Capital markets issues | - | 149 | 0 |
| 11 | 169 | 20 | |
| Total interest-bearing liabilities | 1 292 | 1 410 | 1 251 |
| Net interest bearing assets/liabilities | 856 | -831 | 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 per 30 September 2014, the average remaining tenor was 2.4 years for all credit facilities including the bond (but excluding two unutilized extension options for one year each related to the Group's SEK 5.800m credit facility).
At 30 September 2014 Kinnevik had not provided any security for any of its outstanding loans.
KINNEVIK ANNUAL GENERAL MEETING 2015
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.
Shareholders wishing to propose candidates for election to the Board of Directors of Kinnevik should submit their proposal in writing to [email protected] or to the Company Secretary, Investment AB Kinnevik, Box 2094, SE-103 13 Stockholm, Sweden.
The year-end release for 2014 will be published on 6 February 2015.
Stockholm 24 October 2014
Lorenzo Grabau President and Chief Executive Officer
This Interim Management Statements have not been subject to specific review by the Company's auditors.
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 24 October 2014.
Investment AB Kinnevik is a leading, long-term oriented, investment company based in Sweden.
Kinnevik primarily invests in consumer centric businesses that provide innovative and value-added technology-enabled services. Our main areas of focus are the Communications, e-Commerce, Entertainment and Financial Services sectors. We own significant stakes in over 50 companies that operate in more than 80 countries across five continents, with a particular emphasis on growth markets. The Kinnevik Group employs more than 90 000 people around the world.
Kinnevik actively supports the companies in which it invests and plays an influential role on their respective Boards. Kinnevik was founded in 1936 by three Swedish families who continue to play a leadership role in the ownership of the Company and in the pursuit of its entrepreneurial ventures. 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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