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CapMan Plc Group’s (CapMan) turnover for the first half of 2002 was EUR 7.9 million (EUR 7.7 million 1 Jan-30 Jun 2001). Profit after financial items was EUR 2.3 million (EUR 28.5 million).

The decrease in profit resulted mainly from the fact that in the comparative period of 2001 CapMan received EUR 6.6 million in dividend for its Sampo plc shares, including imputation credit, and CapMan also recorded approximately EUR 18 million in profit from the sale of the Sampo plc shares. The Group’s profit after taxes and minority interests was EUR 1.4 million (EUR 20 million). Earnings per share on 30 June 2002 was EUR 0.02 (EUR 0.34).
CapMan’s core business is private equity fund management. The Group’s income derives from management fees received from the funds, carried interest from the funds, and a share of the result of affiliated companies. Returns on other financial assets also contribute substantially to the Group’s result.
CapMan’s Swedish acquisition Swedestart Management AB, now CapMan AB, became a wholly owned subsidiary of CapMan Plc on 18 April 2002. Swedestart’s financial figures are included in the interim report as of 1 May 2002.
The interim report is divided into two sections: the funds managed by CapMan and CapMan’s financial performance.
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 strong growth companies in the IT, telecommunications and media sectors. Life science investments were introduced to CapMan’s portfolio by the Swedish subsidiary CapMan AB, with a focus on companies specialising in medical technology.
Fund investments are carried out by the affiliated company Access Capital Partners, whose two funds invest in mid-sized buy-out, technology and life science funds throughout Europe. CapMan owns 47.5 per cent of the funds’ management company Access Capital Partners.

Substantial capital for new investments
At the end of the first half of 2002, CapMan managed/advised EUR 1,617 million (EUR 1,160 million) in capital (total commitments in the funds), of which EUR 1,089.5 million was in the funds investing directly in portfolio companies. Investments in portfolio companies by these funds at acquisition cost totalled EUR 438 million as at 30 June 2002. Of this, 71 per cent was invested in traditional companies and 29 per cent was invested in technology and life science companies. About EUR 500 million in capital commitments remains to be invested in portfolio companies.
CapMan’s affiliated company Access Capital Partners managed EUR 527,2 million in capital (EUR 460 million) at the close of the first half. Of this, EUR 257,7 million was invested/committed and EUR 269,5 million of capital remains to be invested.
Investments by the funds
The funds managed by CapMan that invest directly in portfolio companies made seven new investments and five substantial follow-on investments from January to June, investing EUR 46.8 million (EUR 60.2 million) in total.
There were four new investments during the second quarter. New investments in the technology sector included Knowledgepool Tieturi Oy, Finland’s leading IT educator and Digiscope AB, provider of consultation services within communications, interactive media and CRM. In the life science sector, the new investments were Inion Oy, specialist in biomaterials and their surgical applications and Otre AB, developer of a new technology for the sterilisation of surgical instruments. Of these, the investments in Digiscope AB and in the life science sector were made by the funds managed by CapMan AB.
In the first quarter, new investments were made in Finland’s leading staffing company Extra Personnel Services, the multi-sector family business Savcor Group and the developer of video solutions for handheld devices Hantro Products Oy.
The most significant follow-on investments during the review period were the leisure travel company Holiday Club Finland Oy, health care group Mehiläinen Oy, the developer of XML technologies Republica Oy, multimedia company Aktivist Network Oy, and accounting company chain Pretax Oy.
Exits by the funds
The most significant exit by the funds during the review period was the sale of the funds’ shares in the restaurant chain Royal-Rest Oy to MK-Rest Oy. Finnventure Fund IV and Finnmezzanine Fund II owned 43.7 per cent of the company prior to the transaction. The investment had been made in 1999.
Finnventure Fund III sold its 1.5 per cent share in Arcorus Oyj to Swedish Ratos AB in April. The fund invested in Arcorus in 1997 and made a partial exit from the company in spring 2000.
Finnventure Funds II and III exited Euran Kuluttajatuotteet Oy in June. The funds invested in the company in 1997, and their combined ownership share was 30.5 per cent.
Finnventure Funds II and III made a partial exit from the manufacturer of wood-fired heating products and fireplaces UPL Holding Oy in January. Finnventure Fund II’s portfolio company Mytek Oy, which specialised in shiitake mushroom growing and sales, filed for bankruptcy in March. Finnventure Fund III’s sub fund Alta Berkeley Nordic Partners exited from Iobox Oy in 2000. About EUR 1.2 million of the Iobox sale price was entered in the fund’s result at the end of the escrow account system in March.
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 527.2 million (EUR 460 million) of capital managed in two funds. Access Capital Fund (ACF) has EUR 250.3 million in capital committed to 20 European funds. Access Capital Fund II (ACF II) was closed after the end of the review period at the end of July with a final size of EUR 276.9 million. The fund had made 4 investments at the end of the review period.

Further information about Access Capital Partners and its fund investments can be found at Access Capital’s website
CapMan Plc
Financial performance
CapMan’s turnover during the first half of 2002 was EUR 7.9 million (EUR 7.7 million 1 Jan-30 Jun 2001). The share of the turnover from fund management fees increased to EUR 6.6 million (EUR 4.1 million). CapMan’s carried interest from exits by the funds was EUR 1.0 million (EUR 3.4 million). Finnventure Fund IV does not generate carried interest as yet, but the exit from Royal-Rest Oy brings it considerably closer to the point when CapMan will start receiving carried interest from the fund.

The share from the result of the affiliated companies for January-June remained at the same level as in 2001 and was EUR 0.1 million (EUR 0.1 million). Profit after taxes and minority interests was EUR 1.4 million (EUR 20 million). The decrease in profit resulted mainly from the fact that in the comparative period of 2001 CapMan received EUR 6.6 million in dividend for Sampo plc shares, and CapMan also recorded approximately EUR 18 million in profit from the sale of these shares. The combined effect of the dividends and the sale of the Sampo plc shares on CapMan’s profit after taxes was approximately EUR 17.5 million.
Shareholder’s equity per share on 30 June 2002 was EUR 0.68 (EUR 0.88). CapMan’s cash assets at the end of the review period totalled EUR 27.3 million. The company has no interest-bearing debt. The return on equity was 2.50 per cent (48.29 per cent).
EUR 188 million of capital in the new 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. By the end of June, seventeen investors had committed EUR 188 million in capital to the fund. Additional commitments to the fund are still expected and the fund remains open to new investors until its final closing taking place at the latest by the end of the year.
The investment strategy of CapMan Equity VII is to invest about two thirds of the capital in mid-sized buy-outs and about one third in technology companies in the IT and telecommunications sectors, with main focus on investments in Nordic companies. CapMan has committed EUR 15 million to the fund.
Swedish acquisition completed
On 1 February 2002, CapMan Plc signed an agreement to acquire the entire share capital of the Swedish venture capital company Swedestart Management AB. The value of the deal was approximately EUR 17 million. As a result of the acquisition the three owners of Swedestart became Senior Partners and shareholders of CapMan. Swedestart Management AB became a wholly owned subsidiary of CapMan Plc on 18 April 2002, and as of 1 May 2002 the company’s name is CapMan AB. In conjunction with the transaction, CapMan Plc became an investor in the Swedestart Tech KB fund, with a EUR 4.4 million commitment.
CapMan AB 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. CapMan AB has 12 employees, and its funds have to date invested in 29 companies and made 11 exits.


The companies continue integration on a Nordic level. Swedestart Tech KB fund together with Finnventure V and CapMan Equity VII funds made their first joint investment in July in Avitec AB, a player in the Swedish telecommunications sector.
Decisions by the Annual General Meeting
The Annual General Meeting of CapMan Plc held on 3 April 2002 adopted the financial statements for 2001 and discharged the members of the Board of Directors and CEO from liability. The AGM decided to distribute a dividend of EUR 0.26 per share. The Meeting decided that the Board of Directors consists of five members. Mr Lauri Koivusalo, Managing Director of LEL Employment Pension Fund, Mr Teuvo Salminen, Executive Vice President of Jaakko Pöyry Group Oyj, Mr Ari Tolppanen, CEO of CapMan Plc and Mr Vesa Vanha-Honko, Senior Partner of CapMan were elected to continue as Board members and Mr Lennart Jacobsson, Senior Partner of CapMan AB was elected as a new member. The organisation meeting held immediately after the AGM elected Lauri Koivusalo as Chairman of the Board and Vesa Vanha-Honko as Vice Chairman. PricewaterhouseCoopers Oy was elected as auditor and Mr Jan Holmberg, Authorised Public Accountant was elected as the auditor in charge.
The AGM authorised the Board of Directors to decide upon increasing the company’s share capital, regardless of the subscription rights of existing shareholders, in one lot or in instalments based on a new subscription issue or a convertible loan. A maximum of 3,500,000 new CapMan B shares can be issued in accordance with the authorisation. The AGM also authorised the Board to use the company’s distributable equity for the acquisition of a maximum of 3,500,000 own B shares. The authorisations are valid for one year from the date of the resolution.
At the end of the review period, CapMan had 63 (45) employees. There were 45 employees in Helsinki, 12 in Stockholm and 6 in Copenhagen.
Trading and share price
During the first half of 2002, a total of 11,526,581 CapMan Plc B shares with a value of EUR 30.7 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 1.92. The closing price on the first trading day 2 January 2002 was EUR 2.30 and on the last trading day 28 June 2002 it was EUR 1.95. The average price of trades was 2.67. At the end of the review period CapMan Plc had 5,945 shareholders.
The market value of CapMan Plc’s B shares was approximately EUR 132 million and the company’s total market capitalisation, including CapMan A shares, was EUR 153.4 million at the close of the first half of 2002.
Events after the close of the review period
Funds managed by CapMan
In August, Finnventure Fund V and CapMan Equity VII invested in total EUR 34.2 million in the Danish RGS90 A/S. As a result of the transaction, the funds acquired an approximately 40 per cent holding in the company. RGS90 provides versatile waste management services especially to industrial customers. The company is market leader in recycling of construction materials in Denmark and holds a strong position also in the treatment and recycling of contaminated soil and industrial waste water. Apart from Denmark, RGS90 has activities in Sweden and Norway. The company’s turnover in 2001 amounted to EUR 73 million and it employed 250 people. RGS90 is the first investment in the environmental sector for CapMan funds.
In July the funds managed by CapMan invested in Avitec AB, a player in the Swedish telecommunications sector. Avitec develops techniques to improve radio bandwidths and is the world leader in its field. In the life science sector an investment in Eutech Medical AB, which specialises in the treatment of incontinence, was made in July.
CapMan Plc
There have been no significant events after the close of the review period.
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 second half of the year, but it is still 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 technology 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 (appendix 3) are already generating carried interest. These funds have EUR 84.1 million in capital, which represents 8.3 per cent of the total capital in CapMan funds (EUR 1,019.4 million).
The portfolios of the funds that invest directly in portfolio companies, totalling EUR 438 million at acquisition cost, include both traditional manufacturing and service companies and technology companies. To date, 71 per cent of the capital invested by funds in portfolio companies is invested in traditional companies and 29 per cent in technology and life science companies. The value of the portfolios of these funds is, based on the valuation guidelines provided by the European Venture Capital Association (fair market value), EUR 496 million. 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 is well positioned to continue as an active player in the private equity market, as its funds have approximately EUR 500 million in capital for new investments.
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 September 2002 on 5 November 2002.
Helsinki 6 August 2002
Board of Directors

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