CapMan Plc 1–9 2022 Interim Report

CapMan Plc Stock Exchange Release / Interim Report
27 October 2022 at 8:00 a.m. EEST

CapMan Plc 1–9 2022 Interim Report

Results and significant events in 1–9 2022:

• Group turnover was MEUR 47.8 1 January–30 September 2022 (MEUR 38.1 1 January–30 September 2021) and increased by 26 per cent.
• Operating profit was MEUR 45.6 (MEUR 32.4) and increased by 41 per cent.
• Management Company business turnover was MEUR 38.8 (MEUR 31.9). Operating profit was MEUR 14.7 (MEUR 10.0).
• Service business turnover was MEUR 8.8 (MEUR 6.2). Operating profit was MEUR 4.9 (MEUR 3.0).
• Investment business operating profit was MEUR 32.0 (MEUR 23.1).
• Diluted earnings per share were 22.0 cents (15.8 cents).
• Capital under management was EUR 4.9 billion on 30 September 2022 and increased by MEUR 586 from 30 September 2021.

This stock exchange release is a summary of CapMan Plc’s Interim Report for the period 1 January–30 September 2022. The complete report is available in pdf-format as an attachment to this release and on the company’s website at https://www.capman.com/shareholders/financial-reports/.

CEO’s comment:

“CapMan achieved record results and the company is operationally and financially stronger than ever. The weakened market outlook and increased uncertainty have so far had a limited effect on CapMan’s performance. The turnover for the first nine months of 2022 was MEUR 48, growth of 26 per cent from the first nine months last year and the operating profit was MEUR 46, growth of 41 per cent from last year’s record levels. The profitability of all business segments improved from last year. Performance in 2022 has exceeded all our long-term financial objectives.

Assets under management were EUR 4.9 billion at the end of the third quarter of 2022 and increased by approx. 14 per cent over the last twelve months. We have already raised more than MEUR 500 in new capital year-to-date. Investor demand has remained favourable despite the increased uncertainty prevalent in the market.

Fee-based profitability is stable and predictable and has continued its steady growth over several years to reach a new record level at the end of the third quarter. Growth in the first nine months of 2022 was 35 per cent from last year’s comparable figures due to growing management fees and the well-developing Service business. We expect fee-based profitability to improve significantly over the coming years.

The share of carried interest as part of our earnings mix demonstrates notable growth. Funds in carry have several assets remaining where exit processes are ongoing and that generate carry when exits are completed. In addition, many other funds are close to carry and we expect some of them to start generating carry in the next 12 months.

The fair value changes of investments from our balance sheet were an impressive MEUR +32 in the first nine months of 2022 as a result of successful long-term value creation. Recent market development has had a negative impact on fair values through lower valuation benchmarks. However, this has been more than offset by strong operational performance in several portfolio companies and many successful exits. The resulting fair value changes have thus been distinctly net-positive. Approx. 30 per cent of capital raised in our funds is dry powder yet to be deployed and we foresee several attractive investment opportunities in the prevailing market conditions.

Our balance sheet and liquidity are strong. At the end of the third quarter of 2022, our equity ratio exceeded 50 per cent and liquid assets were close to MEUR 60. CapMan’s objective is to pay an annually increasing dividend. The recent result development and growth expectations support this objective.

Following our updated strategy, we have placed sustainability at the core of our operations. Our vision is to be the most responsible private assets company in the Nordics. We have performed very well in responsible investment assessments during the last year and for example many of our Real Estate and Infra funds reporting under the GRESB framework have improved their results compared to last year and one is a frontrunner in its peer group. We constantly develop tools that promote sustainable investment and value creation and expand our investment policies and guidelines and continue to measure our impact. We also monitor ESG-targets established for our activities and will report on how we meet these targets for 2022 for the first time.

Overall, I am very pleased with CapMan’s performance in the first nine months of the year. We progressed as planned with our central fundraising and value creation projects and in executing on our strategic and operational agenda. The long-term growth outlook for our business is strong and this is reflected in our updated strategy launched in September. Our objective is to double our assets under management in five years. This ambitious objective focuses on a combination of strong organic growth and M&A and is based on the attractive fundamentals of the private assets market and CapMan’s strong position. Considering the long-term growth outlook, we have raised our growth objective from 10 to 15 per cent.

Short term, we foresee a slowdown of transaction activity as well as fundraising due to increased general market uncertainty. Regardless of some isolated impacts, we are confident in our ability to grow and to generate attractive long-term returns for our customers and shareholders over business cycles.”

Sincerely,

Joakim Frimodig

CEO, CapMan Plc

Key figures

Financial objectives

CapMan’s objective is to pay an annually increasing dividend to its shareholders.

The combined growth objective for the Management Company and Service businesses is more than 15 per cent p.a. on average. The objective for return on equity is more than 20 per cent p.a. on average. CapMan’s equity ratio target is more than 50 per cent.

CapMan maintains outlook estimate for 2022

CapMan expects to achieve these financial objectives gradually and key figures are expected to show fluctuation on an annual basis considering the nature of the business. CapMan estimates capital under management to continue growing in 2022. Our objective is to improve the aggregate profitability of the Management Company and Service businesses. These estimations do not include possible items affecting comparability.

Carried interest income from funds managed by CapMan and the return on CapMan’s investments have a substantial impact on CapMan’s overall result. In addition to portfolio company and asset-specific development and exits from portfolio companies and assets, various factors outside of the portfolio’s and CapMan’s control influence fair value development of CapMan’s overall investments, as well as the magnitude and timing of carried interest.

CapMan’s objective is to improve results in the longer term, taking into consideration annual fluctuations related to the nature of the business. For these and other above-mentioned reasons, CapMan does not provide numeric estimates for 2022.

Result webcast today at 9.30 a.m. EEST

CapMan’s management will present the result for the review period in a webcast to be held at 9.30 a.m. EEST. Please access the webcast at https://capman.videosync.fi/2022-q3-results/. The conference will be held in English. A replay of the webcast will be available on the company’s website after the event.

Helsinki, 27 October 2022

CAPMAN PLC
Board of Directors

Further information:
Atte Rissanen, CFO, CapMan Plc, tel. +358 50 040 5732

Distribution:
Nasdaq Helsinki Ltd
Principal media
www.capman.com

Appendix: CapMan Plc 1-9 2022 Interim Report

About CapMan

CapMan is a leading Nordic private asset expert with an active approach to value creation. As one of the private equity pioneers in the Nordics we have built value in unlisted businesses, real estate, and infrastructure for over three decades. With over €4.9 billion in assets under management, our objective is to provide attractive returns and innovative solutions to investors. We are dedicated to set science-based targets to reduce our greenhouse gas emissions in line with the Paris Agreement. We have a broad presence in the unlisted market through our local and specialised teams. Our investment strategies cover minority and majority investments in portfolio companies and real estate, and infrastructure assets. We also provide wealth management solutions. Our service business includes procurement and analysis, reporting and back office services. Altogether, CapMan employs approximately 180 professionals in Helsinki, Stockholm, Copenhagen, Oslo, London and Luxembourg. We are listed on Nasdaq Helsinki since 2001. Read more at www.capman.com.