Quarterly Report • Jul 18, 2014
Quarterly Report
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| Past 30 years | 16% |
|---|---|
| Past 10 years | 19% |
| Past 5 years | 34% |
| Past 12 months | 70% |
Total return is calculated on the assumption that shareholders have reinvested all cash dividends and dividends in kind into the Kinnevik share.
Investment AB Kinnevik (publ) Skeppsbron 18 P.O. Roy 2094 SE-103 13 Stockholm, Sweden
Ren 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 second quarter 2014 unless otherwise stated. Figures shown within brackets refer to comparable periods in 2013.
Dear shareholders,
It is a pleasure to address you in my first quarterly report since assuming the role of CEO on May 1st. Having been a board member of Kinnevik for the past year, I took on my role with a good understanding of our unique history, key opportunities and upcoming challenges.
I have spent my first two months working closely with the Kinnevik team and with our Board to establish our strategy for the next five years and to define a clear set of priorities to execute upon. Our vision is clear: we want to build a select number of leading digital consumer brands in key markets around the world. We want to work in partnership with talented managers, entrepreneurs and other investors to build a limited number of great companies. Assuming our current asset mix, we aim to deliver 15% total return over the medium to long term.
During the second quarter of 2014, Kinnevik's Net Asset Value ("NAV") increased 4% to SEK68.5bln or SEK 247 per share. Growth in our NAV was driven by a 26% increase in the value of our E-commerce and Marketplaces investments (which now account for 39% of our NAV), partially offset by a 2% decline in the value of our Communication investments (adjusted for dividends), and by the SEK1.9bln Kinnevik dividend payment. During the period, our share price increased 19% to SEK 285, ending the quarter at a 15% premium to our reported NAV. However, if we were to apply the valuation ascribed to our private investments in the latest financing rounds the premium would have been reduced to 7% as of June 30, 2014.
On a see-through and proportionate basis, the companies we are invested in grew revenues by 10% and EBIT declined by 1% in the first six months. However, our NAV was impacted by a decline in public markets multiples.
Millicom and Tele2 delivered a solid sets of results. Millicom reported revenues growth of 7% and a 3% decline in EBITDA for the quarter as the company continued to invest in accelerating the growth of its mobile and Pay TV business. In addition to a number of key initiatives intended to strengthen the Tigo brand, Millicom together with Airtel and Zantel signed Africa's first mobile money interoperability agreement. Tele2 reported revenues and EBITDA down by approximately 1%, as a 7% growth in mobile end-user service revenues was offset by lower interconnect levels within mobile and a decline in its fixed telephony and broadband business. Following the close of the quarter, both Millicom and Tele2 made significant progress in the refocusing of their operations by announcing the sale of a number of noncore businesses.
All of our E-commerce and Marketplaces companies continued to enjoy healthy growth rates and to progress on their path to profitability. Zalando's preliminary unaudited
results indicate 26-31% revenue growth and around EBIT break-even on a total company basis for the first half of 2014. The Emerging Markets Fashion Companies continued to gain broad acceptance in their target markets and demonstrate their ability to grow revenues well above market benchmarks.
During the quarter Rocket Internet strengthened its regional presence by completing the extension of its African partnership with Millicom to include South African based MTN, and by entering into a new South East Asian joint venture with Qatar-based telecom operator Ooredoo to jointly develop online businesses in Pakistan, Myanmar, Thailand, Malaysia, Singapore, Indonesia, Vietnam, the Philippines, and Australia. In addition, Rocket Internet launched several new models including Helpling, an online platform for domestic cleaners and Spaceway, an on-demand storage service.
MTG reported net sales growth of 13% (3% organic) driven by a 7% growth in sales at its Pay TV Nordic business and by the consolidation of its three recent acquisitions in the TV production sector: DRG, Novemberfilm and Nice Entertainment. EBIT before non-recurring items grew 2% as MTG continued to invest in its FTA emerging markets businesses. MTG completed the acquisition of Trace, a leading urban contemporary music television network with significant International presence and growth potential.
Kinnevik is an entrepreneurial company focused on building best in class businesses with international potential. Following the significant investment phase of recent years, the first six months of 2014 have seen a much reduced investment activity, with total Q2 investments of only SEK 0.1bln.
During the second quarter, our teams in Stockholm and London have focused on strengthening and in some cases supporting the transformation of many of our over 40 investee companies. In addition to assessing strategic options for individual business units and identifying operational improvement opportunities, our teams have focused on establishing and monitoring a larger number of KPIs across our portfolio and on recruiting additional human resources in key functions.
In May 2014, Kinnevik transferred shares in two holding companies (Bigfoot I and Bigfoot II) into direct ownership to further strengthen our ability to work actively with the management teams of the Emerging Markets Fashion Companies. In June 2014, Rocket Internet changed its legal form to a private German stock corporation (AG) further raising its market standing and its ability to access capital.
Year to date, we have invested SEK 0.6bln, mainly in our E-commerce and Marketplaces companies. For the full year, we are revising the guidance for new investments to SEK 1.0-1.5bln in line with our objective to focus our efforts on our existing investee companies.
Kinnevik ended the quarter with a Net cash position of SEK 1.1bln in the parent company. Over the last 12 months, our shareholder base has continued to expand with the addition of a number of leading international institutional investors. We were delighted by NASDAQ OMX's decision to include Kinnevik in the OMXS30 Index as of July 1st.
As the various businesses we are invested in grow and establish themselves as stronger, independent companies, we expect them to continue expanding their shareholding base, strenghten corporate governance and potentially seek new capital in the public markets to support further growth. We remain very supportive of these developments which increase flexibility for both the investee companies and for Kinnevik.
I want to take this opportunity to invite you to our Capital Markets Day in Stockholm on September 18, where we will be describing our strategy in greater depth and introduce you to several of our companies. Further details on the event and registration forms will be available on our website at www.kinnevik.se.
We have an outstanding portfolio of growing digital brands, a unique growth markets presence, a strong balance sheet and a focused and dedicated team. I am very fortunate to have taken over as CEO at this exciting time in Kinnevik's history and look forward to working with our team to continuing to deliver superior shareholder returns.
Lorenzo Grabau CEO and President
Kinnevik is an entrepreneurial investment group focused on building digital consumer brands in four sectors: Communication, E-commerce & Marketplaces, Entertainment, and Financial Services. Approximately 57% 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.
Kinnevik's investments as of 30 June 2014 (figures within brackets refer to 30 June 2013)
| SEK m | Proportional part of | Change compared to 2013 | |||
|---|---|---|---|---|---|
| Jan-June 2014 | EBIT Revenues |
Revenues | EBIT | ||
| Communication * | 10847 | 1667 | 3% | $-9%$ | |
| E-commerce & Marketplaces | 5 2 7 7 | $-435$ | 38% | N/A | |
| Entertainment ** | 2069 | 124 | 2% | $-39%$ | |
| Financial Services & Other | 1407 | 94 | 2% | 32% | |
| Total sum of Kinnevik's proportional part | 19 601 | 450 | 10% | -1% |
The table above is a compilation of the investments' revenues and operating results reported for the first half year of 2014 multiplied by Kinnevik's ownership share at the end of the reporting period, thereby showing Kinnevik's proportional share of the companies' revenues and operating results.
Revenues and operating results reported by the companies have been translated at constant exchange rates (average rate for the first half year of 2014) from each company's reporting currency into Swedish kronor. For listed companies that have not yet reported the results for the first half year of 2014, the figures are included with one quarter's delay. For private companies that have not yet finalized the results for June 2014, the figures are based on Kinnevik's forecasted numbers
The proportional share of revenues and operating result has no connection with Kinnevik's accounting and is only additional information.
* Millicom figures pro forma to include full consolidation of Guatemala and equity accounting of Mauritius and Online.
** Metro figures excluding one-off items.
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|---|---|---|---|---|---|---|
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| Total Communication | 33 749 | 33 749 | 35 782 | 28 942 | 34 079 | |
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| ;BMBOEP | 7 971 | |||||
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| Total E-commerce & Marketplaces | 26 192 | 26 356 | 20 916 | 16 584 | 20 898 | |
| MTG | ||||||
| .FUSP | ||||||
| /FU DBTI .FUSP | ||||||
| 0UIFS | ||||||
| Total Entertainment | 4 733 | 4 733 | 5 150 | 5 014 | 5 686 | |
| #BZQPSU | ||||||
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| #JMMFSVE,PSTOÊT | ||||||
| #MBDL &BSUI 'BSNJOH | ||||||
| 0UIFS | 999 | |||||
| Total Financial Services & Other | 2 404 | 2 575 | 2 667 | 5 462 | 2 610 | |
| 0UIFS JOUFSFTUCFBSJOH OFU DBTI OFU EFCU | ||||||
| %FCU VOQBJE JOWFTUNFOUT | ||||||
| Total Equity/Net asset value | 68 174 | 68 509 | 66 183 | 55 535 | 65 527 | |
| Net asset value per share | 247.00 | 238.66 | 200.26 | 236.29 | ||
| Closing price, class B share, SEK | 284.80 | 238.90 | 171.90 | 297.50 | -2% |
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In the second quarter, Kinnevik received dividends from a number of its investee companies, and paid a dividend to Kinnevik's shareholders as per the table to the right.
DIVIDENDS AND CAPITAL STRUCTURE During the first six months of the year, Kinnevik made SEK 0.6bln of investments. The revised guidance for investments for the full year 2014 is SEK 1.0-1.5bln compared with the SEK 2.4bln invested in 2013. As of 30 June 2014 Kinnevik had a net cash position in the parent company of SEK 1.1bln.
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.
| \$BTI EJWJEFOET SFDFJWFE | 4&, N | |
|---|---|---|
| .JMMJDPN | 64% QFS TIBSF | |
| 5FMF | 4&, QFS TIBSF | |
| MTG | 4&, QFS TIBSF | |
| Total cash dividends received | 1 400 | |
Dividend paid to shareholders SEK 7.00 per share 1 941
| Change in fair value and dividends received |
|||||
|---|---|---|---|---|---|
| Investment (SEK m) | Capital/ Votes, % |
Estimated fair value |
Apr-June 2014 |
Jan-June 2014 |
|
| Millicom | 37.8/37.8 | 23 099 | $-1154$ | $-454$ | |
| Tele 2 | 30.4/48.0 | 10 650 | 379 | 1382 | |
| Total | 33749 | -775 | 928 | ||
| Return Communication | 1 vear | 5 years | |||
| Average annual return (IRR) | 21% | 17% |
Communication makes up 50% of Kinnevik's investments. Kinnevik's mobile companies Millicom and Tele2 have in total 64 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.
For more information >
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.
For more information >
| Apr-June | Jan-June | |||||
|---|---|---|---|---|---|---|
| Key data (USD m)* | 2014 | 2013 | 2014 | 2013 | ||
| Revenue | 1447 | 1357 | 2852 2706 | |||
| EBITDA | 479 | 496 | 957 | 1 012 | ||
| Operating profit, EBIT | 224 | 265 | 460 | 558 | ||
| Net profit | 243 | 66 | 2523 | 197 | ||
| Number of mobile subscribers (million) | 52.3 | 46.9 |
* Figures for 2013 are adjusted pro forma to reflect full consolidation of Guatemala and equity accounting for Mauritius and the Online segment.
Millicom continued to deliver organic growth across regions and business units during the second quarter. The EBITDA margin for the second quarter was 33%, 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.
For more information >
| Apr-June | Jan-June | |||||
|---|---|---|---|---|---|---|
| Key data (SEK m)* | 2014 | 2013 | 2014 | 2013 | ||
| Revenue | 6343 | 6424 | 12 495 12 672 | |||
| EBITDA | 1466 | 1474 | 2 825 | 2923 | ||
| Operating profit, EBIT | 787 | 772 | 1744 | 1508 | ||
| Net profit | 818 | 369 | 1401 | 809 | ||
| Number of mobile subscribers (million) | 11.9 | 11.8 |
* Figures refer to continuing operations (i.e. excluding Tele2 Norway).
Tele2's mobile end-user service revenue grew by 7% in the quarter, amounting to SEK 3,094m (2,900). This trend was driven by positive usage of mobile data, compensating less revenue from mobile voice and SMS. The EBITDA margin for the second quarter remained stable at 23%.
| Return E-commerce & Marketplaces | 1 vear | 5 vears |
|---|---|---|
| Average annual return (IRR) | 50% | 39% |
E-Commerce & Marketplaces makes up 39% 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.
Change in fair value
For more information >
| and dividends received | ||||||
|---|---|---|---|---|---|---|
| Investment (SEK m) | Kinnevik ownership |
Accumulated net invested amount |
Fair value 30 Jun 2014 |
Apr-June 2014 |
Jan-June 2014 |
Valuation method |
| Rocket Internet 1 | 24% | $-3077$ | 1828 | 1574 | 1559 | Sum of the parts |
| Zalando 1 | 36% | 7916 | 12 4 8 1 | 338 | 345 | Sales multiple |
| Emerging Markets Fashion | ||||||
| Bigfoot $1^{1,2}$ | 32% | 2 3 0 7 | 4428 | 2 1 2 1 | 2 1 2 2 | Latest transaction |
| Dafiti 2 | 25% | |||||
| Lamoda 2 | 27% | |||||
| Jabong 2 | 24% | |||||
| Namshi 2 | 13% | |||||
| Bigfoot II 1, 2 | 34% | 1149 | 1658 | 1028 | 1005 Latest transaction | |
| Zalora Group 2 | 25% | |||||
| Zando $^2$ | 10% | |||||
| Jumia 2 | 10% | |||||
| Home & Living | ||||||
| Home24 2 | 22% | 791 | 805 | 111 | 126 | Sales multiple |
| Mobly $2$ | 18% | |||||
| Westwing 2 | 14% | 175 | 263 | 44 | 46 | Sales multiple |
| Other E-commerce | ||||||
| BigCommerce 2 | 14% | 606 | 579 | 13 | 37 | Sales multiple |
| Lazada 2 | 11% | |||||
| Linio $2$ | 9% | |||||
| Namshi 2 | 5% | |||||
| Konga 2 | 46% | 114 | 162 | 6 | 6 | Latest transaction |
| Other | Mixed | 689 | 427 | 28 | $-36$ | Mixed |
| Marketplaces | ||||||
| Avito | 32% | 438 | 2 190 | $\mathbf 1$ | $-108$ | Sales multiple |
| Quikr | 16% | 254 | 265 | 11 | 11 | Latest transaction |
| Saltside | 88% | 154 | 154 | $\overline{a}$ | Cost | |
| Wimdu 2 | 29% | 367 | 368 | 8 | 8 | Sales multiple |
| Other | Mixed | 286 | 119 | 17 | 17 | Mixed |
| Total unlisted investments | 12 169 | 25 7 27 | 5 300 | 5 1 3 8 | ||
| CDON Group 3 | 25.1% | 646 | 629 | 45 | $-157$ | Market price |
| Total investments | 12815 | 26 356 | 5 3 4 5 | 4981 |
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) The value of dividends received from MTG when the shares were distributed, including share purchases and new issues ther
INVESTMENTS IN THE FIRST HALF YEAR
| *OWFTUNFOU 4&, N | "QS+VOF |
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|---|---|---|
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| Total | 132 | 514 |
In the second quarter, Kinnevik invested another SEK 65m into Saltside Technologies, a company that operates online marketplaces in a number of emerging markets, including Bangladesh, Sri Lanka and Ghana. Kinnevik also invested an additional SEK 20m (USD 3m) into Yell, a Russian marketplace company, in a new share issue totalling USD 11m.
At the end of the second quarter, investments in E-commerce & Marketplaces were valued at a total of SEK 26,356m, to be compared with an accumulated invested amount (net after dividends received) of SEK 12,815m. The unrealised change in fair value recognized in the consolidated income statement and dividends received in the second quarter amounted to a profit of SEK 5,350m (profit of SEK 5,345m including change of assessed value of subsidiaries when calculating net asset value), as specified in the table on the previous page.
In May, Rocket Internet made a distribution to its shareholders, which included both shares and cash. The distribution was delivered to Kinnevik in the form of an additional 5.5% of the shares in Bigfoot I and 4.6% of the shares in Bigfoot II. Rocket Intertnet and its three shareholders, European Founders Fund, Kinnevik and Access Industries, agreed on the transaction based on the valuation implied by the latest external funding round in each of the underlying operating companies, adjusted for the cash position on a holding company level. Considering the size of the transaction, which was made on an arm's length basis, Kinnevik is accounting for its shareholding in Bigfoot I and Bigfoot II (direct as well as remaining shares held by Rocket Internet) at the valuations implied by the transaction. As a result, a positive change in fair value of SEK 2,121m has been recorded for Kinnevik's shares in Bigfoot I and SEK 1,028m for Bigfoot II in the second quarter, in addition to the positive change in fair value recorded for the remaining shares held by Rocket Internet. The valuation of Bigfoot I and Bigfoot II corresponds to an implied sales multiple of 3.4 for Bigfoot I and 5.9 for Bigfoot II based on last 12 months historical sales.
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, following an increase during 2013. The discount to the peer group average sales multiple applied in Kinnevik's valuation has, compared to the first quarter, been lowered for Zalando due to improved profitability compared to peers and also for Home24 and Westwing due to improved operational performance.
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For Zalando the continued strong sales growth compensated for the impact from a lower sales multiple, resulting in an unchanged equity value of EUR 3.9bln in assessed fair value in Kinnevik's accounts as per 30 June 2014. The positive change in fair value of SEK 338m in the second quarter relates to positive exchange rate effect when translating the EUR denominated equity value into SEK.
Also for Avito a continued strong sales growth compensated for the impact from a lower sales multiple resulting in an unchanged equity value of SEK 6.9bln. 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 1.5bln higher as per 30 June 2014.
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| Total | 831 | 199 | |
| Implied value of Rocket Internet based on latest financing rounds in each portfolio company | 2 212 | 529 | |
| Difference between implied value per latest financing rounds and book value | 330 | ||
| Difference as per above, SEK m | 3 036 |
Rocket Internet has, as in previous quarters, been valued based on a sum-of-the-parts valuation as specified in the table above. The change in fair value of Kinnevik's shareholding in Rocket Internet of SEK 1,574m recorded in the second quarter was mainly driven by the revaluation of Rocket's stakes in Bigfoot I and Bigfoot II, as a result of the Rocket distribution described on page 8.
Rocket Internet's other assets include the more recently launched portfolio companies for which Kinnevik has not performed any sales multiple valuations. These companies have been valued at cost in Kinnevik's books given their early stage of development.
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| Total | 31 260 | 25 727 | 5 533 |
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.
The same principle has been applied in the sum-of-theparts valuation of Rocket Internet, which has resulted in a difference of SEK 3.0bln between the fair value of Rocket Internet in Kinnevik's accounts and the implied value of Rocket Internet based on the valuations in the latest external financing round in the portfolio companies.
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 5.5bln applied to Kinnevik's shareholdings as at 30 June 2014, of which SEK 1.5bln related to Avito.
For further information about valuation principles and assumptions, please see Note 5.
Kinnevik's proportional part of the unlisted companies' revenue grew by 38% year-on-year and reached SEK 2,498m $(1,815m)$ for the second quarter. Revenue growth is strongest in the second and fourth quarter which is explained by seasonal variations within the fashion industry. Due to the strong growth, short operating history and the fact that all start-up costs are taken to the P&L, many of the unlisted
companies within Kinnevik's online portfolio are still unprofitable. However, the larger companies in the portfolio are well capitalised and can afford continued investments until they reach break-even. Kinnevik's proportional part of the companies' cash position amounted to SEK 4,208m at 30 June 2014.
| SEK m | Q1 | Q2 | Q3 | Q4 | FY2012 | Q1 | Q2 | Q3 | Q4 | FY2013 | u1 2014 |
uz 2014 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 780 | 988 | 1104 | 565 | 4438 | 513 | 1 815 | 1754 | 2 3 7 9 | 7460 | 2 2 1 6 | 2498 |
| Y on Y growth | 94% | 84% | 59% | 52% | 68% | 47% | 38% | |||||
| EBIT | $-232$ | $-334$ | $-364$ | $-277$ | $-1146$ | $-348$ | $-304$ | $-328$ | $-157$ | $-1137$ | $-288$ | $-156$ |
| EBIT margin | $-30%$ | $-34%$ | $-33%$ | $-18%$ | $-27%$ | $-23%$ | $-17%$ | $-19%$ | $-7%$ | $-15%$ | $-13%$ | $-6%$ |
| Y on Y EBIT margin improvement | 7 pp | 17 pp | 14 pp | 11 pp | $12$ pp | $10$ pp | $10$ pp | |||||
| Fair value per 30 June 2014 | 25727 | |||||||||||
| Net proportional part of cash balances 30 June 2014 | 4 2 0 8 | |||||||||||
The table above is a compilation of the unlisted E-commerce & Marketplace investments' reported revenues, operating results and cash balances multiplied by Kinnevik's ownership share at the end of the reporting period, thereby showing Kinnevik's proportional share of the companies' revenues, operating results and cash balances.
Revenues and operating results reported by the companies have been translated at constant exchange rates (average rate for the first half of 2014) from each company's reporting currency into Swedish kronor. For companies that have not yet finalized the results for June 2014, the figures are based on Kinnevik's forecasted numbers.
The proportional share of revenues and operating result has no connection with Kinnevik's accounting and is only additional information.
Rocket Internet is a company that incubates and develops e-commerce and other consumer-oriented online companies. Kinnevik works closely with the management of Rocket Internet in order to foster companies and develop them into leading Internet players
For more information >
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.
For more information >
| Lamoda | Dafiti | Jabong | Namshi | Zalora** | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Key data (EUR m) * | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 |
| Revenue | 121.8 | 34.9 | 146.9 | 78.3 | 56.6 | 18.5 | 10.9 | 3.4 | 68.9 | N/A |
| % Growth | 249% | ٠ | 88% | $\overline{\phantom{a}}$ | 206% | ۰ | 221% | ۰ | N/A | |
| Gross profit/loss | 48.2 | 10.9 | 50.1 | 31.7 | $-5.8$ | $-4.9$ | 3.0 | $-0.2$ | 18.8 | N/A |
| % Margin | 40% | 31% | 34% | 41% | $-10%$ | $-26%$ | 28% | $-5%$ | 27% | $\overline{\phantom{a}}$ |
| Operating result | $-46.9$ | $-38.2$ | $-72.9$ | $-59.7$ | $-33.2$ | $-38.1$ | $-10.1$ | $-12.0$ | $-69.2$ | N/A |
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.
For more information >
** Includes Zalora in South East Asia and The Iconic in Australia
Figures based on accounts prepared in accordance with IFRS. For companies reporting in another currency than euro, the average exchange rate for 2013 has been used.
| Home24 | Westwing | |||
|---|---|---|---|---|
| Key data (EUR m) * | 2013 | 2012 | 2013 | 2012 |
| Revenue | 92.8 | 62.1 | 111.4 | 45.8 |
| % Growth | 50% | 143% | ||
| Gross profit | 36.2 | 18.1 | 44.8 | 11.8 |
| % Margin | 39% | 29% | 40% | 26% |
| Operating result | $-40.2$ | -81.1 | $-40.2$ | -62.2 |
Home24 and Westwing are e-commerce companies in the home and living segment, active in Europe, Russia, and Brazil. The growth of online purchasing in this segment is a global trend. Home and living differs from other e-commerce segments by having a relatively lower purchase frequency, but also a higher average order value. Due to the characteristics of the products, attractive delivery solutions for customers are essential for simplifying purchases, and improving customer satisfaction. Home24 and Westwing are complementing business models, Home24 offers a wide assortment of furniture and home décor, while Westwing's inventory is carefully curated, focusing on design-conscious and predominantly female customers.
For more information >
| Lazada | Linio | Jumia | ||||
|---|---|---|---|---|---|---|
| Key data (EUR m) * | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 |
| Revenue | 56.8 | N/A | 47.9 | 6.5 | 29 | N/A |
| % Growth | N/A | Ξ. | 633% | N/A | ||
| Gross profit/loss | 3.7 | N/A | 4.7 | $-0.4$ | 5.4 | N/A |
| % Margin | 6% | - | 10% | $-6%$ | 19% | |
| Operating result | $-51.3$ | N/A | -33.5 | $-14.6$ | -34.1 | N/A |
Lazada extended its footprint by launching its website and iOS and Android apps in Singapore.
Linio continued to expand geographically within Latin America by launching operations in Chile during the second quarter.
Kinnevik's holdings in general merchandise, Lazada, Linio, 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 smooth and simple. Lazada, Linio, Jumia and Konga all offer leading delivery solutions and range of goods in their respective markets.
For more information >
Avito is the largest online classified platform in Russia in terms of visitors and number of ads, distancing itself from its competitors.
For more information >
* Figures based on accounts prepared in accordance with IFRS. For companies reporting in another currency than euro, the average exchange rate for 2013 has been used.
$Q2 \cdot 2014$
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.
For more information >
CDON Group is a leading e-commerce company with some of the most well-known and appreciated brands in the Nordic area.
For more information >
| Apr-June | Jan-June | |||
|---|---|---|---|---|
| Key data (SEK m) | 2014 | 2013 | 2014 | 2013 |
| Revenue* | 1 1 1 1 | 959 | 2244 | 1 9 9 1 |
| Operating profit, EBIT* | Ω | -6 | Ω | $-10$ |
| Net profit | 21 | -45 | 17 | -62 |
* Excluding divested operations and non-recurring items.
CDON Group continued to deliver in line with the company's strategy in the second quarter, with healthy growth, underlying improvements in earnings and an improvement in operating cash flow of SEK 36.2m compared to the second quarter of 2013.
Entertainment
| and dividends received | Change in fair value | |||
|---|---|---|---|---|
| Investment (SEK m) | Capital/ Votes % |
Estimated fair value |
Apr-June 2014 |
Jan-June 2014 |
| MTG | 20.3/48.0 | 3878 | -58 | $-478$ |
| Metro | 100/100 | 762 | N/A | N/A |
| Other | 93 | З | 10 | |
| Total | 4 733 | -55 | -468 |
| Return Entertainment | 1 vear | 5 years |
|---|---|---|
| Average annual return (IRR) | $\Omega\%$ | 7% |
Entertainment makes up 7% 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.
For more information >
Modern Times Group MTG is a leading international entertainment broadcasting group with the largest geographical fooprint of TV- and radio operations in Europe.
For more information >
| Apr-June | Jan-June | |||
|---|---|---|---|---|
| Key data (SEK m) | 2014 | 2013 | 2014 | 2013 |
| Revenue | 4 109 | 3605 | 7706 | 6814 |
| Operating profit, EBIT | 434 | 578 | 735 | 1032 |
| Net profit | 307 | 376 | 466 | 710 |
MTG reported record sales of SEK $4,109$ m $(3,605)$ in the second quarter of 2014, and displayed a slight increase in operating income when excluding non-recurring costs of SEK 155m. 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.
• Metro continued focusing on the growth markets in Latin America, and the move of the headquarter functions from Stockholm and London to Latin America was completed.
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.
For more information >
| Apr-June | Jan-June | |||
|---|---|---|---|---|
| Key data (SEK m) | 2014 | 2013 | 2014 | 2013 |
| Revenue | 252 | 345 | 508 | 647 |
| Operating profit, EBIT | $-239$ | 12 | -333 | -6 |
| Net profit | -250 | 4 | -340 | $-14$ |
Revenue in the second quarter was SEK 252m, a decrease of SEK 93m year-on-year. The decline in revenue is due to the sale of the newspaper in Russia and Hong Kong as well as the weak print advertising market in Sweden. The operating loss for the quarter includes SEK 250m in costs for impairment of goodwill and trademarks. Adjusted for impairments, the operating result for the quarter was unchanged compared to the same period 2013 despite the sale of the newspapers in Russia and Hong Kong.
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When determining fair value of the unlisted companies Bayport and Milvik/Bima as per 30 June 2014, transactions where the companies have raised equity from new as well as existing owners have been used as basis. For Milvik/Bima the assessed fair value has been based on an equity valuation of the entire company of USD 40m. In the first quarter 2014 Bayport closed a new equity issue at a post-money valuation of USD 431m for the entire company, which has served as the basis for Kinnevik's valuation.
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| Note | 2014 1 Apr 30 June |
2013 1 Apr 30 June |
2014 1 Jan 30 June |
2013 1 Jan 30 June |
|
|---|---|---|---|---|---|
| Change in fair value of financial assets | 5 | 2 200 | -5 402 | 3 066 | -6 982 |
| Dividends received | 6 | 2 350 | 5 660 | 2 350 | 5 660 |
| Revenue | 309 | 410 | 643 | 780 | |
| Cost of goods sold and services | -132 | -228 | -325 | -450 | |
| Selling and administration costs | -244 | -235 | -510 | -440 | |
| Share of profit/loss of associates accounted for using the equity method |
4 | 4 | 6 | 7 | |
| Other operating income | 9 | 14 | 16 | 72 | |
| Other operating expenses | -364 | -9 | -423 | -16 | |
| Operating profit/loss | 4 | 4 132 | 214 | 4 823 | -1 369 |
| Financial net | 2 | -34 | -2 | -62 | |
| Profit/loss after financial net | 4 134 | 180 | 4 821 | -1 431 | |
| Tax | 5 | -10 | 1 | -20 | |
| Net profit/loss for the period | 4 139 | 170 | 4 822 | -1 451 | |
| Of which attributable to: | |||||
| Equity holders of the Parent company | 4 168 | 173 | 4 862 | -1 443 | |
| Non-controlling interest | -29 | -3 | -40 | -8 | |
| Net profit/loss per share before dilution | 15.03 | 0.62 | 17.53 | -5.21 | |
| Net profit/loss per share after dilution | 15.02 | 0.62 | 17.52 | -5.21 | |
| Average number of shares before dilution | 277 339 097 | 277 250 787 | 277 332 164 | 277 228 283 | |
| Average number of shares after dilution | 277 532 413 | 277 584 800 | 277 553 316 | 277 563 215 |
The change in fair value of financial assets, including dividends received, amounted to SEK 4,550m (258) for the second quarter of which a loss of SEK 775m (loss of 533) was related to listed holdings and a profit of SEK 5,325m (791) 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.
The change in fair value of financial assets, including dividends received, amounted to SEK 5,416m (loss of 1,322) for the first half year of which SEK 202m (loss of 1,824) was related to listed holdings and a profit of SEK 5,214m (502) was related to unlisted holdings, see note 5 and 6 for further details.
Other operating expenses includes, in excess of the impairment of intangible fixed assets in Metro and G3 Good Governance Group, a negative result of SEK 58m from divestments of Metros' operations in Hong Kong and Canada.
| 2014 1 Apr 30 June |
2013 1 Apr 30 June |
2014 1 Jan 30 June |
2013 1 Jan 30 June |
|
|---|---|---|---|---|
| Net profit/loss for the period | 4 139 | 170 | 4 822 | -1 451 |
| OTHER COMPREHENSIVE INCOME | ||||
| Items that will not be reclassified to profit and loss | ||||
| Items that may be reclassified to profit and loss | ||||
| Translation differences | 41 | 50 | 16 | -22 |
| Cash flow hedging | ||||
| -gains/losses during the year | -14 | 22 | -29 | 22 |
| -reclassification of amounts accounted for through profit and loss | ||||
| Tax attributable to items that will be reclassified to profit and loss | 0 | 0 | 0 | 0 |
| Total items that will be reclassified to profit and loss | 27 | 72 | -13 | 0 |
| TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD | 27 | 72 | -13 | 0 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 4 166 | 242 | 4 809 | -1 451 |
| Total comprehensive income for the period attributable to: | ||||
| Equityholders of the Parent Company | 4 193 | 241 | 4 844 | -1 441 |
| Non-controlling interest | -27 | 1 | -35 | -10 |
(Publ) Reg no 556047-9742 t Phone +46 8 562 000 00 t Fax +46 8 20 37 74 t www.kinnevik.se
| Note | 2014 1 Apr 30 June |
2013 1 Apr 30 June |
2014 1 Jan 30 June |
2013 1 Jan 30 June |
|
|---|---|---|---|---|---|
| Cash flow from operations | 44 | 31 | -53 | 64 | |
| Investments in shares and other securities | -184 | -463 | -842 | -517 | |
| Sale of shares and other securities | 37 | 0 | 32 | 63 | |
| Dividends received | 6 | 1 400 | 5 660 | 1 400 | 5 660 |
| Other | -35 | -49 | -40 | -59 | |
| Cash flow from investing activities | 1 218 | 5 148 | 550 | 5 147 | |
| Change in interest bearing liabilities | 27 | -1 366 | 31 | -1 410 | |
| Dividend paid to equityholders of the Parent Company | -1 941 | -1 803 | -1 941 | -1 803 | |
| Other | -58 | -42 | -68 | -57 | |
| Cash flow from financing activities | -1 972 | -3 211 | -1 978 | -3 270 | |
| CASH FLOW FOR THE PERIOD | -710 | 1 968 | -1 481 | 1 941 | |
| Cash and short term investments, opening balance | 3 196 | 427 | 3 967 | 454 | |
| Cash and short term investments, closing balance | 2 486 | 2 395 | 2 486 | 2 395 | |
| SUPPLEMENTARY CASH FLOW INFORMATION | |||||
| Investments in shares and other securities | -63 | -1 044 | -539 | -1 405 | |
| Acquisition of shares in subsidiaries | -7 | - | - | - | |
| Current period investments, paid after period end | 0 | 888 | 0 | 888 | |
| Prior period investments, paid in current period | -114 | -307 | -303 | 0 | |
| Investments in shares and other securities | -184 | -463 | -842 | -517 |
| Note | 2014 30 June |
2013 30 June |
2013 31 Dec |
|
|---|---|---|---|---|
| ASSETS | ||||
| Fixed assets | ||||
| Intangible fixed assets | 398 | 957 | 805 | |
| Tangible fixed assets | 355 | 316 | 343 | |
| Financial assets accounted at fair value through profit and loss | 5 | 66 011 | 54 296 | 61 575 |
| Other fixed assets | 144 | 103 | 113 | |
| Total fixed assets | 66 908 | 55 672 | 62 836 | |
| Other current assets | 570 | 575 | 599 | |
| Short-term investments | 7 | 1 763 | 1 813 | 3 502 |
| Cash and cash equivalents | 7 | 723 | 582 | 465 |
| TOTAL ASSETS | 69 964 | 58 642 | 67 402 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||
| Shareholders' equity attributable to equityholders of the Parent Company |
68 174 | 55 334 | 65 276 | |
| Shareholders' equity attributable to non controlling interest | 8 | 71 | 43 | |
| Interest-bearing liabilities, long-term | 7 | 1 264 | 1 264 | 1 231 |
| Interest-bearing liabilities, short-term | 7 | 18 | 590 | 20 |
| Non interest-bearing liabilities | 500 | 1 383 | 832 | |
| TOTAL EQUITY AND LIABILITIES | 69 964 | 58 642 | 67 402 |
| 2014 1 Jan 30 June |
2013 1 Jan 30 June |
2013 Full year |
|
|---|---|---|---|
| Equity, opening balance | 65 319 | 58 640 | 58 640 |
| Total comprehensive income for the period | 4 809 | -1 451 | 8 455 |
| Acquisitions from non-controlling interest | - | -1 | -2 |
| Contribution from non-controlling interest | - | 9 | 17 |
| Dividend paid to owners of non-controlling interest | - | -23 | -27 |
| Sale of shares, non-controlling interest | - | 28 | 28 |
| Dividend paid to shareholders of the Parent company | -1 941 | -1 803 | -1 803 |
| Effect of employee share saving programme | -5 | 6 | 11 |
| Equity, closing amount | 68 182 | 55 405 | 65 319 |
| Equity attributable to the shareholders of the Parent Company | 68 174 | 55 334 | 65 276 |
| Equity attributable to non-controlling interest | 8 | 71 | 43 |
| 2014 | 2013 | 2013 | |
|---|---|---|---|
| 30 June | 30 June | 31 Dec | |
| Debt/equity ratio | 0.02 | 0.03 | 0.03 |
| Equity ratio | 97% | 94% | 97% |
| Net cash/(Net debt) including debt unpaid investments | 1 253 | -276 | 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 statement has 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 distributed on two accounting segments - which is consistent with management's internal structure for controlling and monitoring the Group's operations - from 2014:
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 Jan-June |
||||||
|---|---|---|---|---|---|---|
| Operating subsidia ries |
Invest ment operation |
Total | Operating subsidia ries |
Invest ment operation |
Total | |
| Change in fair value of financial assets | 3 066 | 3 066 | -6 982 | -6 982 | ||
| Dividends received | 2 350 | 2 350 | 5 660 | 5 660 | ||
| Revenue | 643 | 643 | 776 | 4 | 780 | |
| Cost of goods and services sold | -325 | -325 | -450 | -450 | ||
| Selling- and administration costs | -412 | -98 | -510 | -358 | -82 | -440 |
| Share of profit/loss of associates accounted for using the equity method |
6 | 6 | 7 | 7 | ||
| Other operating income and expenses | -408 | 1 | -407 | 51 | 5 | 56 |
| Operating profit/loss | -496 | 5 319 | 4 823 | 26 | -1 395 | -1 369 |
Operating subsidiaries includes Metro, Vireo Energy, Rolnyvik, Saltside Technologies, Duego 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 58m from divestments of operations within Metro, a positive one-off effect of SEK 44m in other operating income in the first half year 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 June 2014:
| Company | Valuation method | Valuation assumptions |
|---|---|---|
| Rocket Internet | Portfolio companies valued as per below, cash balance and other assets as per Rocket financial statements. |
N/A |
| Zalando | Valuation based on sales multiples for a group of comparable companies. The peer group includes Amazon, Asos, Yoox and Zulily. |
Last 12 months historical sales has been multiplied with a sales multiple of 1.8. The entire company has been |
| The average sales multiple for the peer group has been reduced due to Zalando's lower historic profitability compared to its peers. |
valued at EUR 3.9bln. | |
| Bigfoot I | Latest transaction value. | EUR 1 468m for the entire company. |
| Company | Valuation method | Valuation assumptions |
|---|---|---|
| Bigfoot II | Latest transaction value. | 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 och AO World. |
Last 12 months historical sales has been multiplied with a sales multiple |
| The average sales multiple for the peer group has been reduced to reflect factors such as lack of profitability and early e-commerce market. |
of 1.5 for Home24 and 1.5 for West wing. |
|
| 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 1.2 for Linio and 1.3 for Lazada. |
| The average sales multiple for the peer group has been reduced to reflect factors such as lack of profitability and early e-commerce market. |
||
| For the holding company BigCommerce, the underlying operating busines ses 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 value. | 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 6.9bln. |
| Quikr | Latest transaction value. | USD 240m for the entire company. |
| 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 2.9. |
| The average sales multiple for the peer group has been reduced to reflect factors such as lack of profitability and early e-commerce market. |
||
| The valuations also consider what preference the owned shares have in case of liquidation or sale of the entire company. |
||
| Bayport | Latest transaction value. | USD 431m for the entire company. |
| Milvik/Bima | Latest transaction value. | USD 40m 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. Zalando and Avito as well as direct and indirect ownership in Home24, Westwing, BigCommerce, and Wimdu), an increase in the multiple by 10% would have increased estimated fair value by SEK 1,470m. Similarly, a decrease in the multiple by 10% would have decreased estimated fair value by SEK 1,495m.
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 Apr 30 June |
2013 1 Apr 30 June |
2014 1 Jan 30 June |
2013 1 Jan 30 June |
|
|---|---|---|---|---|
| Millicom | -1 816 | -1 396 | -1 116 | -3 004 |
| Tele2 | -217 | -4 702 | 786 | -5 203 |
| Communication | -2 033 | -6 098 | -330 | -8 207 |
| Rocket Internet | 623 | 209 | 608 | 227 |
| Zalando | 338 | 1 020 | 345 | 817 |
| Bigfoot I with portfolio companies | 2 121 | 72 | 2 122 | 24 |
| Bigfoot II | 1 028 | -288 | 1 005 | -440 |
| Home 24 | 111 | -243 | 126 | -267 |
| Westwing | 44 | 8 | 46 | 3 |
| CDON Group | 45 | -150 | -157 | -198 |
| BigCommerce with portfolio companies | 13 | -81 | 37 | -90 |
| Konga | 6 | - | 6 | 22 |
| Avito | 1 | 184 | -108 | 311 |
| Quikr | 11 | - | 11 | - |
| Wimdu | 8 | 15 | 8 | 4 |
| Other | 51 | -149 | 27 | -166 |
| E-commerce & Marketplaces | 4 400 | 597 | 4 075 | 247 |
| MTG | -200 | 362 | -620 | 817 |
| Other | 3 | - | 10 | -15 |
| Entertainment | -197 | 362 | -610 | 802 |
| Bayport | 31 | 44 | 32 | 69 |
| Milvik/Bima | 4 | - | 8 | - |
| Seamless | -8 | -17 | -76 | 8 |
| Transcom | 24 | -62 | 28 | 65 |
| BillerudKorsnäs | - | 36 | - | 124 |
| Black Earth Farming | -2 | -264 | -41 | -93 |
| Other | -19 | - | -20 | 3 |
| Financial Services & Other | 30 | -263 | -69 | 176 |
| Total | 2 200 | -5 402 | 3 066 | -6 982 |
| - of which traded in an active market, level 1 |
-2 175 | -6 193 | -1 198 | -7 484 |
| - of which fair value established using valuation techniques, level 3 |
4 375 | 791 | 4 264 | 502 |
| 30 June 2014 listed companies |
|||||
|---|---|---|---|---|---|
| Class A shares |
Class B shares |
2014 30 June |
2013 30 June |
2013 31 Dec |
|
| Millicom | 37 835 438 | - | 23 099 | 18 278 | 24 215 |
| Tele2 | 18 430 192 | 117 065 945 | 10 650 | 10 664 | 9 864 |
| Communication | 33 749 | 28 942 | 34 079 | ||
| Rocket Internet | 1 828 | 2 919 | 1 219 | ||
| Zalando | 12 481 | 7 972 | 12 136 | ||
| Bigfoot I with portfolio companies | 4 428 | 1 503 | 1 535 | ||
| Bigfoot II | 1 658 | 438 | 435 | ||
| Home 24 | 805 | 487 | 679 | ||
| Westwing | 263 | 175 | 217 | ||
| CDON Group | 24 959 410 | - | 629 | 594 | 786 |
| BigCommerce with portfolio companies | 579 | 334 | 544 | ||
| Konga | 162 | 64 | 156 | ||
| Avito | 2 190 | 1 235 | 2 196 | ||
| Quikr | 265 | - | - | ||
| Wimdu | 368 | 263 | 358 | ||
| Other | 546 | 518 | 510 | ||
| E-commerce & Marketplaces | 26 202 | 16 502 | 20 771 | ||
| MTG | 4 461 691 | 9 042 165 | 3 878 | 3 859 | 4 498 |
| Other | 100 | 154 | 164 | ||
| Entertainment | 3 978 | 4 013 | 4 662 | ||
| Bayport | 891 | 650 | 836 | ||
| Milvik/Bima | 118 | 49 | 46 | ||
| Seamless | 3 898 371 | - | 116 | 73 | 192 |
| Transcom | 247 164 416 | 163 806 834 | 533 | 296 | 505 |
| BillerudKorsnäs | - | - | - | 3 286 | - |
| Black Earth Farming | 51 811 828 | - | 295 | 363 | 337 |
| Other | 129 | 122 | 147 | ||
| Financial Services & Other | 2 082 | 4 839 | 2 063 | ||
| Total | 66 011 | 54 296 | 61 575 | ||
| - of which traded in an active market, level 1 |
39 200 | 37 413 | 40 397 | ||
| - of which fair value established using valuation techniques, level 3 |
26 811 | 16 883 | 21 178 |
| 2014 1 Apr 30 June |
2013 1 Apr 30 June |
2014 1 Jan 30 June |
2013 1 Jan 30 June |
|
|---|---|---|---|---|
| Zalando | - | 876 | - | 876 |
| Bigfoot I with portfolio companies | 8 | - | 39 | - |
| Bigfoot II | - | - | - | 169 |
| Westwing | - | 14 | - | 38 |
| CDON Group | - | 129 | - | 129 |
| BigCommerce with portfolio companies | - | - | -2 | 138 |
| Konga | - | - | - | 20 |
| Avito | 4 | - | 102 | - |
| Quikr | - | - | 254 | - |
| Wimdu | 2 | - | 2 | - |
| Other | 49 | 12 | 50 | 13 |
| E-commerce & Marketplaces | 63 | 1 031 | 445 | 1 383 |
| Other | - | 12 | - | 12 |
| Entertainment | - | 12 | - | 12 |
| Bayport | - | - | 23 | - |
| Milvik/Bima | - | - | 64 | 3 |
| Other | - | 1 | - | 7 |
| Financial Services & Other | - | 1 | 87 | 10 |
| Total investments | 63 | 1 044 | 532 | 1 405 |
| - of which traded in an active market, level 1 | - | 129 | - | 129 |
| - of which fair value established using valuation techniques, level 3 | 63 | 915 | 532 | 1 276 |
| 2014 1 Jan 30 June |
2013 1 Jan 30 June |
2013 Full year |
|
|---|---|---|---|
| Opening balance | 21 178 | 15 185 | 15 185 |
| Investments | 532 | 1 276 | 2 159 |
| Distribution of shares in Bigfoot I and Bigfoot II | 950 | - | - |
| Reclassifications | - | 49 | 49 |
| Change in fair value | 4 264 | 502 | 3 838 |
| Disposals | -111 | -120 | -68 |
| Exchange gain/loss and other | -2 | -9 | 15 |
| Closing balance | 26 811 | 16 883 | 21 178 |
| 1 Apr 30 June |
2013 1 Apr 30 June |
2014 1 Jan 30 June |
2013 1 Jan 30 June |
|
|---|---|---|---|---|
| Millicom | 662 | 665 | 662 | 665 |
| Tele2 | 596 | 4 756 | 596 | 4 756 |
| MTG | 142 | 135 | 142 | 135 |
| Rocket Internet, shares in Bigfoot I and Bigfoot II | 950 | - | 950 | - |
| BillerudKorsnäs | - | 104 | - | 104 |
| Total dividends received | 2 350 | 5 660 | 2 350 | 5 660 |
| Of which ordinary cash dividends | 1 400 | 1 866 | 1 400 | 1 866 |
Kinnevik's total interest bearing assets amounted to SEK 2,535m as at 30 June 2014. The greater part of the short term deposits of SEK 1,763m were made in Swedish money market funds with high credit quality with no restrictions on accessibility. The total amount of outstanding loans was SEK 1,307m and consequently Kinnevik was in a net cash position of SEK 1,253m as at 30 June 2014 (SEK 2,727m as at 31 December 2013).
Kinnevik's total credit facilities (including issued bonds) amounted to SEK 7,175m as at 30 June 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 1,307m as at 30 June 2014.
The Group's available liquidity, including short-term deposits and available credit facilities, totaled SEK 8,418m at 30 June 2014 (SEK 9,897m at 31 December 2013).
| 2014 30 June |
2013 30 June |
2013 31 Dec |
|
|---|---|---|---|
| Interest-bearing long-term assets | |||
| Other interest-bearing assets | 49 | 22 | 11 |
| 49 | 22 | 11 | |
| Interest-bearing short-term assets | |||
| Short-term investments | 1 763 | 1813 | 3 502 |
| Cash and cash equivalents | 723 | 582 | 465 |
| 2 486 | 2 395 | 3 967 | |
| Total interest-bearing assets | 2 535 | 2 417 | 3 978 |
| Interest-bearing long-term liabilities | |||
| Liabilities to credit institutions | 30 | 47 | 20 |
| Capital markets issues | 1 200 | 1 200 | 1 200 |
| Accrued borrowing cost | -18 | -20 | -25 |
| Other interest-bearing liabilities | 52 | 37 | 36 |
| 1 264 | 1 264 | 1 231 | |
| Interest-bearing short-term liabilities | |||
| Liabilities to credit institutions | 18 | 1 | 20 |
| Capital markets issues | 0 | 589 | 0 |
| 18 | 590 | 20 | |
| Total interest-bearing liabilities | 1 282 | 1 854 | 1 251 |
| Net interest bearing assets/liabilities | 1 253 | 563 | 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 June 2014, the average remaining tenor was 2.6 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 June 2014 the Group had not provided any security for any of its outstanding loans.
| 2014 1 Jan 30 June |
2013 1 Jan 30 June |
|
|---|---|---|
| Revenue | 9 | 4 |
| Administration costs | -100 | -84 |
| Other operating income | 1 | 6 |
| Operating loss | -90 | -74 |
| Dividends received | 656 | 10 626 |
| Result from financial assets | -112 | -5 488 |
| Net interest income/expense | 221 | 195 |
| Profit/loss before taxes | 675 | 5 259 |
| Tax | 14 | 0 |
| Net profit/loss for the period | 689 | 5 259 |
| 2014 30 June |
2013 30 June |
2013 31 Dec |
|
|---|---|---|---|
| ASSETS | |||
| Tangible fixed assets | 4 | 4 | 4 |
| Financial fixed assets | 50 155 | 46 251 | 46 474 |
| Short-term receivables | 37 | 738 | 279 |
| Short-term investments | 1 722 | 1 797 | 3 498 |
| Cash and cash equivalents | 439 | 5 | 42 |
| TOTAL ASSETS | 52 357 | 48 795 | 50 297 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Equity | 43 888 | 44 448 | 45 145 |
| Provisions | 30 | 31 | 30 |
| Long-term liabilities | 8 317 | 3 327 | 4 306 |
| Short-term liabilities | 122 | 989 | 816 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABLITIES | 52 357 | 48 795 | 50 297 |
The Parent Company's liquidity, including short-term investments and unutilized credit facilities, totalled SEK 8,091m at 30 June 2014 and SEK 9,470m at 31 December 2013. The Parent Company's interest bearing external liabilities amounted to SEK 1,200m (1,200) on the same dates.
Investments in tangible fixed assets amounted to SEK 0m (2) during the period.
Distribution by class of shares on 30 June 2014 was as follows:
| Number of shares | Number of votes | Par value (SEK 000s) |
|
|---|---|---|---|
| Outstanding Class A shares, 10 votes each | 42 369 312 | 423 693 120 | 4 237 |
| Outstanding Class B shares, 1 vote each | 234 990 584 | 234 990 584 | 23 499 |
| Class B shares in own custody | 408 294 | 408 294 | 41 |
| Registered number of shares | 277 768 190 | 659 091 998 | 27 777 |
The total number of votes for outstanding shares in the Company amounted at 30 June 2014 to 658,683,704 excluding 408,294 class B treasury shares. During June 41,598 Class B-shares have been delivered to participants in the long term incentive plan from 2011. The Board has authorization to repurchase a maximum of 10% of all shares in the Company. The Board has not used the authorization during the first half of 2014. There are no convertibles or warrants in issue.
The Board of Directors and the CEO certify that this undersigned six month interim report provides a true and fair overview of the Parent Company and Group's operations, financial position and performance for the period, and describes the material risks and uncertainties facing the Parent Company and other companies in the Group.
Stockholm, 18 July 2014
Cristina Stenbeck Dame Amelia Fawcett Vigo Carlund Chairman of the Board Deputy Chairman of the Board Member of the Board
Member of the Board Member of the Board Member of the Board
Tom Boardman Wilhelm Klingspor Erik Mitteregger
John Shakeshaft Lorenzo Grabau Member of the Board CEO and President
We have reviewed the interim report for Investment AB Kinnevik for the period January 1 - June 30, 2014. The Board of Directors and the President are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with ISA and other generally accepted auditing practices.
The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.
Stockholm 18 July 2014
Deloitte AB
Jan Berntsson Authorized Public Accountant
| Reporting dates for 2014: | |
|---|---|
| 24 October | Interim Management Statement January- |
| September | |
| February 2015 | Year-end release 2014 |
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 18 July 2014.
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