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CapMan Plc Group’s (CapMan) turnover for the first quarter of 2002 was EUR 3.3 million (EUR 5.4 million 1 Jan-31 Mar 2001). Profit after financial items was EUR 0.9 million (EUR 3.4 million). The Group’s profit after taxes and minority interests was EUR 0.7 million (EUR 2.3 million). Earnings per share on 31 March 2002 was EUR 0.01 (EUR 0.05). Large quarterly carried interest fluctuations are typical of private equity investment, as illustrated in the attached quarterly results (appendix 2).

CapMan’s core business is private equity fund management. The Group’s income derives from management fees received from the funds, carried interest and a share of the result of affiliated companies. Returns on other financial assets also have a substantial effect on the Group’s result.

The interim report is divided into two sections: the funds managed by CapMan and CapMan’s financial performance for the review period.

Funds managed by CapMan

Investments by CapMan funds are divided into direct investments in portfolio companies and fund investments. Direct investments include mid-sized buy-outs, technology investments and investments in the life science sector in Finland, Sweden and Denmark. Buy-outs are made in manufacturing, service and retail industries while technology investments focus on companies undergoing strong growth in the IT, telecommunications and media sectors. Following the acquisition of the Swedish venture capital company Swedestart Management AB, the funds managed by CapMan also invest in the life science sector with a focus on companies that specialise in medical technology.

Fund investments are carried out throughout Europe by the affiliated company Access Capital Partners, whose two funds invest in mid-sized buy-out and technology funds.

Substantial capital in new investments

At the end of the first quarter CapMan managed/advised EUR 1,344 million of capital, of which EUR 870 million was in the funds investing directly in portfolio companies. Investments in portfolio companies by the funds at acquisition cost totalled EUR 394.2 million at the end of the review period. Of the capital invested in portfolio companies 76 per cent was invested in traditional companies and 24 per cent was invested in technology companies. Approximately EUR 400 million remains to be invested.

The figures do not include the capital managed by the Danish subsidiary CapMan Invest A/S (EUR 35.4 million) or the funds managed by Swedish CapMan AB, formerly Swedestart Management AB (EUR 160 million). The two Danish funds are at the end stage

of their lifecycle with only three companies remaining in the portfolio. Swedestart Management AB became a wholly owned subsidiary of CapMan after the end of the review period on 18 April 2002.

CapMan’s affiliated company Access Capital Partners managed EUR 474 million in capital at the close of the first quarter. Of this, EUR 254.8 million was committed in the investee funds and EUR 219.2 million of capital remains to be invested.

Investments by the funds on the rise

The funds managed by CapMan made three new investments and two substantial follow-on investments from January to March, investing EUR 32.7 million (EUR 23 million) in total.

The new investments in traditional companies were in Finland’s leading staffing company Extra Personnel Services and the multi-sector family business Savcor Group, of which the latter was implemented as a mezzanine loan. The new investment in the technology sector was in the developer of video solutions for handheld devices Hantro Products Oy. The most significant follow-on investments in the first quarter were in multimedia company Aktivist Network Oy and the developer and producer of e- and m-business enabling XML technologies Republica Oy.

Exits by the funds

During the first quarter, Finnventure Funds II and III exited in part from the manufacturer of wood-fired heating products and fireplaces UPL Holding Oy, which repaid the bulk of its convertible loan. Finnventure Fund II’s portfolio company Mytek Oy, a specialist in shiitake mushroom growing, filed for bankruptcy in March. Finnventure III’s subfund Alta Berkeley Nordic Partners exited from Iobox Oy in 2000. Part of the proceeds from the sale of Iobox Oy in 2000, approximately EUR 1.2 million, was entered as profit to the fund during the review period after the proceeds were released from the

escrow account.

Information on the funds managed by CapMan and their portfolio companies can be found by visiting CapMan’s website

European fund investments

CapMan Plc’s affiliated company Access Capital Partners is one of Europe’s leading fund of funds, with EUR 474 million of capital managed in two funds. Access Capital Fund (ACF) has EUR 250 million

in capital committed to 19 European funds. Access Capital Fund II (ACF II) has EUR 224 million in capital and had committed to 3 funds at the end of the review period. Further commitments in ACF II will be raised and the final size of the fund will be determined by the end of June 2002. CapMan Plc’s investment commitment in ACF II is EUR 10 million.

Further information about Access Capital Partners and its fund investments can be found at Access Capital’s website


Financial performance

CapMan’s turnover during the first quarter of 2002 was EUR 3.3 million (EUR 5.4 million 1 Jan-31 Mar 2001). The share of the turnover from management fees increased compared to the comparative period in 2001 and was EUR 2.7 million (EUR 2.0 million). CapMan’s share of carried interest from exits by the funds decreased and was EUR 0.3 million (EUR 3.3 million). The share from affiliated companies for January-March was EUR 0.1 million (EUR 37,000). Profit after taxes and minority interests was EUR 0.7 million (EUR 2.3 million).

The decrease in profit resulted from reduced carried interest. In the comparative period of 2001 CapMan made a profitable exit from Marli Group.

Shareholders’ equity per share on 31 March 2002 was EUR 0.93 (EUR 0.18). The return on shareholders’ equity was 1.1 per cent (15.3 per cent). CapMan’s cash assets at the end of the review period were EUR 54 million. The company has no interest-bearing debt.

A new Nordic equity fund

In autumn 2001 CapMan began to raise a new Nordic equity fund, CapMan Equity VII. The fund is CapMan’s seventh equity fund and at the first closing on 31 January 2002 it had commitments totalling EUR 166 million. Additional commitments to the fund are expected and the aim is to determine the final size of the fund by the end of June 2002. However, this time limit may be extended as none of the potential new investors have made any definite commitments.

The new fund will focus on investments in Nordic companies. Its investment strategy will be to invest two thirds of the capital in mid-sized buy-outs and one third in technology companies in the

IT and telecommunications sectors. CapMan Plc has committed EUR 15 million to the fund.

Operations expand into Sweden

On 1 February 2002, CapMan Plc undersigned an agreement to acquire the entire share capital of the Swedish venture capital company Swedestart Management AB. The sale price was about EUR 17 million, comprised of

a cash payment and a directed share issue to Swedestart’s three owners. CapMan Plc issued 4,500,000 new CapMan B shares, representing a total ownership share of 5.9 per cent of CapMan Plc. As a result of the acquisition the three owners of Swedestart became Senior Partners of CapMan. Swedestart Management AB became a wholly owned subsidiary of CapMan Plc on 18 April 2002. Following the acquisition, CapMan’s share capital increased by EUR 45,000 to EUR 756,946.30, including all share series, and the number of B shares increased to 67,694,630. The new shares were traded on the Helsinki Stock Exchange on 22 April 2002.

Swedestart is one of Sweden’s most experienced and successful venture capital companies. The company manages four funds with about EUR 160 million in total capital. The funds were established in 1995 (Swedestart I), 1998 (Swedestart II) and 2000 (Swedestart Tech and Swedestart Life Science). As part of the deal, CapMan will begin to receive 4-20 per cent of the carried interest generated by the Swedestart II fund. CapMan’s share of the carried interest will depend on the success of future exits. The fund is fully invested. Additionally, CapMan will receive 12 per cent of the carried interest generated by the Swedestart Tech fund and 10 per cent of the carried interest generated by the Swedestart Life Science fund. The aforementioned two funds are new and have so far invested only in a few companies.

Swedestart has 12 employees of whom 8 form the investment team. A specialised buy-out team is being recruited in Sweden. The funds managed by Swedestart have invested in 24 companies and exited from 11 companies to date. The track records of the funds are outstanding. As of January 2002, the net annual IRR for the Swedestart I fund was over 40 per cent and for the Swedestart II fund over 180 per cent.

The companies began an integration process as soon as the acquisition had been announced. Nordic cooperation in the identification of new investments and exit alternatives will become closer and strengthen CapMan’s position in Nordic private equity investment markets. More information about the acquisition can be found in the stock exchange release dated 1 February 2002 at


At the end of the review period, CapMan had 45 (43) employees in Helsinki and the subsidiary CapMan Invest A/S had 5 employees in Denmark. In addition, CapMan Capital Management Ltd had four Senior Advisors as consultants in Helsinki.

Trading and share price

During the review period, a total of 8,450,954 CapMan Plc B shares with a value of EUR 23 million were traded on the Helsinki Stock Exchange. The share’s highest trading price was EUR 2.90 and the lowest trading price was EUR 2.30. The closing price on the first trading day 2 January 2002 was EUR 2.30 and on the last trading day 27 March 2002 it was EUR 2.77. The average price of trades was EUR 2.73. At the end of the review period CapMan Plc had 5,689 shareholders.

The market value of CapMan’s B shares was approximately EUR 178 million and the company’s total market capitalisation, including CapMan A shares, was approximately EUR 200 million at the close of the first quarter.

Significant changes in ownership structure

On 26 March 2002, CapMan Plc received notice that Fennogens S.A’s ownership share in CapMan Plc had fallen below 5 per cent of CapMan’s total shares and voting rights.

Annual General Meeting

The Annual General Meeting of CapMan Plc was held on 3 April 2002. The Meeting adopted the 2001 financial statements and discharged the Board of Directors and CEO from liability for the accounts. The Meeting concurred with the proposal of the Board of Directors to distribute a dividend of EUR 0.26 per share. Five members were elected to the Board: Lauri Koivusalo, Managing Director of LEL Employment Pension Fund, Teuvo Salminen, Executive Vice President of Jaakko Pöyry Group Oyj, Ari Tolppanen, CEO of CapMan Plc and Vesa Vanha-Honko, Senior Partner of CapMan will continue as Board members. Lennart Jacobsson, Senior Partner of CapMan’s Swedish acquisition Swedestart Management AB was elected to the Board as a new member. Lauri Koivusalo was elected Chairman of the Board and Vesa Vanha-Honko was elected Vice Chairman. PricewaterhouseCoopers Oy was elected as auditor with Jan Holmberg, Authorised Public Accountant as auditor in charge.

Authorisations of the Board

The AGM authorised the Board of Directors to resolve upon an increase

in the company’s share capital, regardless of the subscription rights of existing shareholders, in one or more share issues or by convertible loans. Under the authorisation the company’s share capital can be raised by a maximum of EUR 35,000.00, such that a maximum of 3,500,000 new B shares at a nominal value of EUR 0.01 are issued in one or more stages via share issues or convertible bonds. The resolution is valid until 3 April 2003.

The 4,500,000 new B shares issued in the acquisition of Swedestart Management AB are included in the resolution adopted by the

Extraordinary General Meeting of CapMan Plc on 31 May 2001, which authorised the Board to issue a maximum of 7,000,000 new B shares.

To date, 5,630,000 shares have been issued from this resolution and it remains valid until 31 May 2002.

The AGM on 3 April 2002 authorised the Board to resolve upon the purchase of a maximum of 3,500,000 of the company’s own B shares using the company’s distributable equity. Following repurchase, the total nominal value or voting rights of the shares owned by the company, including its subsidiaries, cannot exceed 5 per cent of the company’s total share capital or voting rights, including all shares. The resolution remains valid until 3 April 2003.

The AGM cancelled the authorisation on the purchase and sale of own company shares dated 31 May 2001, as the resolution had not been used.

Events after the close of the review period

Funds managed by CapMan

The funds managed by CapMan together with the operative management acquired the entire share capital of Finland’s largest IT educator KnowledgePool Tieturi Oy from ICL Plc in April. In the acquisition, the funds managed by CapMan acquired 85 per cent of the company’s shares and the management of Tieturi received 15 per cent.

In April LPG Innovations Oy, which is partly owned by the funds managed by CapMan, sold its business to Yomi Applications Oy. As a result of the sale, LPG Innovations Oy’s products, customer agreements and product rights transfer to Yomi Applications Oy.

The effect of the sale on the value development of the funds managed by CapMan will be determined at the finalisation of the sale and depends on the development of LPG’s international business. The sale does not have an effect on the company’s ownership structure.

The funds managed by CapMan sold their 1.5 per cent ownership share

of Arcorus Oyj (formerly GSH International Oyj) to Swedish Ratos AB in April. CapMan’s Finnventure Fund III invested in Arcorus Oyj in 1997. A partial exit from the company was made in spring 2000.


Finnventure Fund III, which had invested in Arcorus Oyj, is already generating carried interest. CapMan’s carried interest from the aforementioned exit is approximately EUR 0.2 million.

Outlook for 2002

Funds managed by CapMan

CapMan’s acquisitions in Denmark and Sweden increase recognition and strengthen its position as one of the leading private equity investors in the Nordic countries. They also increase the attractiveness of CapMan among companies seeking private equity investors and the number of suitable targets for CapMan’s investment strategy. CapMan will continue to implement its investment strategy on a Nordic level with a focus on mid-sized buy-outs, IT and telecommunications technology investments and life science companies specialising in medical technology.

The foundation for value creation of CapMan’s portfolio companies is organic growth or mergers and acquisitions, improved profitability and cash flows and sophisticated financing structures. CapMan aims to secure a strategic market position for its portfolio companies that will arouse the interest of industrial buyers and stock markets alike. CapMan actively evaluates the optimal time and method of exit, depending on the development stage of the portfolio company and the prevailing market conditions. Profitable exits from portfolio companies are not solely dependent on the stock market. A viable alternative to public listing is a trade sale to an industrial buyer.


CapMan’s objective is to well cover its expenses with the management fees paid by the funds. CapMan’s 2002 result will largely depend on any significant exits from portfolio companies owned by funds already generating carried interest. Exit possibilities are being evaluated and negotiations are underway in several portfolio companies. CapMan expects that there will be exits from portfolio companies during the year, but it is too early to estimate their effect on the 2002 result.

We believe that private equity investment will continue to show growth also in the future. Private equity investments in Europe represent 0.38 per cent of gross domestic product, while the comparative figure for the United States is 1.03 per cent of GDP. Consolidation will continue in both traditional and technology sectors and the privatisation of state-owned companies will increase. An increasing number of family businesses are turning to private equity investors to finance their management successions. In addition, growth in CapMan’s Nordic home market will be supported by substantial investments in the research and development activities within the telecommunication sector and increasing entrepreneurial activity.

Private equity funds have long lifespan, usually 10 years. Private equity fund management companies begin to receive carried interest after the investors have regained their investment in addition to a preferred annual return, usually 6-8 per cent. Carried interest is typically 20 to 25 per cent of the fund’s cash flow through exits from its portfolio companies. Four of the funds managed by CapMan are already generating carried interest. These funds have EUR 84.1 million in capital, which represents 9.7 per cent of the total capital in CapMan funds investing directly in portfolio companies (EUR 870 million).

The portfolios of the funds that invest directly in investee companies, totalling EUR 394.2 million at acquisition cost, include both traditional manufacturing and service companies and technology companies. To date, 76 per cent of the capital invested by funds in portfolio companies is invested in traditional companies and 24 per cent in technology companies. The value of these funds is, based on the valuation guidelines provided by the European Venture Capital Association (fair market value), EUR 466 million. The breakdown by fund can be found in appendix 3. Several of the portfolio companies offer substantial upside potential. The portfolios also include companies both in traditional industries and technology sector with clearly higher risk levels than at the time of investment.

CapMan has substantial investment potential with approximately EUR 500 million in capital for new investments, including the new funds managed by the Swedish subsidiary.

The affiliated company Access Capital is in a similar position. Its funds have abundant capital available for new fund investments.

CapMan Plc will publish its interim report for the period

1 January – 30 June 2002 on Tuesday 6 August 2002.

Helsinki 7 May 2002


Board of Directors

The full report including tables can be downloaded from the following link.