Annual Report
2020
Table of contents
CapMan in brief 3
Highlights in 2020 5
CapMan impact 9
Our operating model 10
CapMan’s investment
and service teams 12
CEO’s review 15
CapMan’s sustainable
investment framework 17
Sustainable investment
at CapMan 18
Corporate Governance Statement 20
Board of Directors 27
CapMan Management Group 29
Report of the Board of Directors 32
Key figures 39
Key figures - CapMan Group 41
Fees and carry 42
Investment business 43
Calculation of key ratios 44
Financial Statements 45
Group Statement of
Comprehensive Income (IFRS) 46
Group Balance Sheet (IFRS) 47
Group Statement of
Changes in Equity (IFRS) 48
Group Cash Flow Statement (IFRS) 49
Notes to the Consolidated
Financial Statements 50
Parent Company
Income Statement (FAS) 88
Parent Company Balance Sheet (FAS)
89
Parent Company
Cash Flow Statement (FAS) 90
Notes to the Parent Company
Financial Statements (FAS) 91
Signatures to the Report of
the Board of Directors
and Financial Statements 98
Auditor’s Report 99
Shares and shareholders 103
Information for shareholders 105
CAPMAN ANNUAL REPORT 2020 • GROUP
2
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
+30
YEARS OF PRIVATE
MARKET EXPERIENCE
115
COMPANIES
AND ASSETS
A+
SUSTAINABILITY
RATING FROM PRI FOR ALL
INVESTMENT AREAS
€3.8
billion
IN ASSETS
UNDER MANAGEMENT
CapMan in brief
CapMan is a leading Nordic private asset expert with an active
approach to value creation. As one of the Nordic private equity
pioneers, we have developed hundreds of companies and real
estate assets and created substantial value in these businesses
and assets over the past 30 years. Our objective is to provide
attractive returns and innovative solutions to investors. We
have a broad presence in the unlisted market through our
local and specialised teams. Our investment strategies cover
Private Equity, Real Estate and Infra. We also have a growing
service business that includes procurement services, wealth
management, and analysis, reporting and back office services.
Altogether, CapMan employs around 150 people in Helsinki,
Stockholm, Copenhagen, London and Luxembourg. We are a
public company listed on Nasdaq Helsinki since 2001 and a
signatory of the UN Principles for Responsible Investment (PRI)
since 2012.
We invest actively in private
markets across investment
strategies for the enrichment
of society.
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
150
CAPMANIANS
40%
36-45 YEARS OLD
70%
IN HELSINKI
13%
IN STOCKHOLM
17%
IN OTHER OFFICES
53%
JOINED DURING THE NEW
STRATEGY (2017 AND AFTER)
80
WORK SATISFACTION
IN AVERAGE (0–100)
63%
MEN
37%
WOMEN
42%
BELOW 36
18%
OVER 45
MANAGEMENT COMPANY BUSINESS SERVICE BUSINESS INVESTMENT BUSINESS
The truly Nordic
real estate investor
Significant minority
investor
Investor in
turnaround stories
Specialist Nordic
private debt investor
Nordic mid-market
infrastructure
investor
Nordic pioneer in
majority
investments
Balance sheet
Procurement service
Client-centric wealth advisory
Portfolio analytics, reporting
and back office
EMPLOYEES
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
0
2
20
Highlights
A year flanked by the Covid-19 pandemic
In general, CapMan has navigated the Cov-
id-19 pandemic well. The pandemic mainly
impacted our business through changes in
fair values of investments. Fair values de-
creased as the pandemic began but recovered
well by the end of the year.
Impact on management fees was moderate
and we established new funds according to
plan.
No new funds transferred to carry during
2020. The increased uncertainty, impact
on value creation in the portfolio as well as
delayed exit processes may have delayed or
impeded the transfer of funds to carry, as
well as impacted the magnitude and timing of
potential carried interest.
Transaction-based service fees depend on
the general market sentiment and are there-
fore more prone to be impacted by general
market sentiment. Recurring service fees grew
as planned.
New growth fund closed at €97 million
CapMan Growth established a new €97 million growth fund
which makes significant minority investments in growth stage
companies with ambitious growth and expansion goals. The
growth fund attracted great interest within investors, and
the fund exceeded its original target size. The new fund is
looking to invest in fast growing companies and has attracted
some of the most successful Finnish entrepreneurs to back
it. The first investments from the new fund are Neural DSP, a
sound processing technology leader, and Unikie, a software
technology developer of autonomous vehicles.
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
CaPS expanded to the Baltic
CapMan Procurement Services CaPS
accelerated the international expansion of
its operations by introducing its procure-
ment service concept in the Baltic region
through CaPS Baltics, a joint venture
together with the leading Baltic private
equity fund manager BaltCap. The geo-
graphic expansion follows the introduction
of CaPS in Sweden and provides services
for over 40 BaltCap portfolio companies as
well as existing CaPS member companies
with operations in the Baltic region.
Several exits from
the real estate fund
CapMan Real Estate made several success-
ful exits during the year. Påsen 1, a 10,000
sqm multi-let office building in central
Stockholm was sold to Fabege. The area
has experienced rapid development and
growth in the past few years and as a result,
the rental values have risen significantly.
Grundtvighus, a total of 9,787 sqm of leas-
able space in central Copenhagen was sold
to Johan Gedda. The exit took place a little
over two years after the initial investment.
Hämeentie 15, an office building located in
the Sörnäinen district of Helsinki, was sold
to Swedish real estate company Castellum.
During the ownership, CapMan has com-
pleted an extensive refurbishment of the
property and transformed it to fit with the
neighbourhood’s profile.
In addition to the exits, CapMan Nordic
Real Estate II signed an agreement with the
Swedish Police to lease in excess of 30,000
sqm of space in Eskilstuna, Sweden.
CapMan will now develop a modern police
station at the property, which will be ready
in 2024.
The issuance of a
€50 million bond
In December, CapMan issued a €50 million
senior bond that matures in 2025. The
new bond extends the average maturity of
CapMan’s debt portfolio and is part of its
efficient management. The proceeds from
the Notes offering have been used to refi-
nance certain existing indebtedness of the
company, including funding the purchase
of a part of the company’s existing notes
by way of a tender offer. The new notes
support the company’s growth and provides
improved opportunities to meet our
commitments and it lengthens the average
maturity of the loan portfolio.
CapMan Real Estate established the
largest fund in the company’s history
CapMan Real Estate has established the third Nordic value-
add real estate fund, CapMan Nordic Real Estate III. The fund
has raised €535 million of equity commitments from Nordic,
European, and North American institutional investors, with
more than 70% of commitments coming from outside the
Nordics. Following strong investor demand, the fund is the
largest fund in CapMan’s operating history to date. In line with
its predecessor funds, CMNRE III invests mainly in transitional
offices and select residential strategies in capital cities as well
as in other major growth centres in Sweden, Finland, Denmark
and Norway.
Growth portolio companies
and entrepreneurs awarded
The portfolio companies of CapMan Growth
gained recognition in various entrepreneur
awards during the year. Kustaa Poutiainen,
founder of Picosun was one of four entre-
preneurs awarded Entrepreneur of the Year,
and Douglas Castro, founder of Neural
DSP Technologies, received the Young
Entrepreneur of the year award in prestig-
ious Finnish entrepreneurship awards by
Suomen Yrittäjät ry. The Finnish Software
and E-business Association chose Esko
Mertsalmi, CEO of Unikie, as the Software
Entrepreneur of the Year 2020.
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
New infrastructure assets to
the portfolio
CapMan Infra acquired three new
assets during the year. The acquisi-
tion of Nydalen Energi, the provider
of environmentally friendly district
heating and cooling in the fast growing
Nydalen area in Oslo, marked the Cap-
Man Nordic Infrastructure I fund’s first
core energy investment. Valokuitunen,
a joint venture between CapMan Infra
and Telia Company, was launched
in April. Valokuitunen will invest up
to €300 million in fibre networks in
Finland and focuses on rolling-out
fibre networks in growth centres and
surrounding areas in Finland. Thirdly,
CapMan Infra acquired the district
heating business in the city of Loviisa,
on the southern coast of Finland, from
Porvoon Energia. Porvoon Energia’s
district heating business produces
and distributes heat to residential,
commercial and public properties in
the city of Loviisa.
CapMan Infra assets under
management increase to €360
million
CapMan Infra has broadened and inter-
nationalised its investor base through a
syndicated transaction in one of its portfolio
companies and additional commitments
closed in CapMan Nordic Infrastructure I.
Total assets under management for CapMan
Infra have increased to approx. €360 million
and the investor base has become distinctly
global with nearly half of the capital coming
outside of the Nordic countries from
Europe, North America and Asia.
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150
CapMan Real Estate offered rent
reprieve due to the pandemic
The Covid-19 pandemic closed restaurants and cafes for two
months in spring. CapMan Real Estate decided not to collect
rent from the months during which the entrepreneurs will not
have the possibility to continue their operations normally due to
the legislation. The rent reprieve applied to the restaurants and
other foodservice businesses that are tenants in the CapMan’s
fully owned, Finnish business premises. The rent reprieve was
well-received by tenants, which had suffered from the decline
in customer flows alreade before the government-imposed
lockdown.
CapMan Buyout XI closed
its first investment
CapMan Buyout’s fund CapMan
Buyout XI invested in leading in-
dustrial software solutions provider
PDSVISION with the goal to support
the accelerated growth and expan-
sion of the company. The investment
is the first of the CapMan Buyout XI
fund, which was established in 2019.
In addition to the new investment,
CapMan Buyout also successfully
exited INR (Iconic Nordic Rooms).
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Reorganising the service business
During the year, we reorganised our investor-focused service
offering in order to provide a comprehensive offering to a
broad range of investors that wish to increase their access to
private markets and obtain an unbiased view of their wealth.
JAY Solutions became an independent business, offering its
customers technology-driven reporting, analytics and back
office services. We also established CapMan Wealth Services –
a business that offers comprehensive wealth advisory services
covering both listed and unlisted markets to family offices,
smaller institutional investors and high net-worth individuals.
Going forward, CapMan’s Service business includes wealth
advisory business CapMan Wealth Services, reporting service
JAY Solutions and procurement service CaPS.
Special Situation
was established as a
new investment area
We broadened our
investment business
and established CapMan
Special Situations, which
invests in underperforming
or non-core businesses and
supports them through
financial restructuring and
operational turnaround.
The experienced invest-
ment professionals and
operational advisors in the
CapMan Special Situations
team partner closely with
the portfolio company
management, owners
and banks to enable the
companies to transform.
Antti Uusitalo, Tuomas
Rinne, and Jari Vikiö, were
appointed Partners for the
new investment area.
CapMan for Good
CapMan for Good is a foundation that supports causes and
projects that work to improve the well-being of people and
society. The purpose of CapMan for Good is to support entre-
preneurship, education and other activities in order to increase
well-being in disadvantaged parts of society. CapMan for Good
worked together with CaPS’s network to raise €95,000 for the
Tukikummit Foundation in 2020 for the benefit of children
and young people to continue with hobbies and have access to
study material. CapMan for Good is also a partner of Eskilstuna
United community-driven initiative Ronjabollen, which provides
young girls in the Eskilstuna region, many with an immigrant
background, with an opportunity to develop skills and self-
esteem through football. Further, the foundation is launching a
mentorship programme for small businesses and entrepreneurs.
Learn more: www.capmanforgood.org
www.tukikummit.fi
A+ rating from PRI
Our work in improving
responsible investment
processes and activities was
recognised and is reflected
in our PRI Assessment
Scorecard. CapMan received
top A+ scores from PRI for
all of our investment areas
and the score A for respon-
sible investment strategy in
2020. The ratings are based
on PRI’s assessment of our
annual transparency report.
Read more under
www.capman.com/company/
sustainable-investments/
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
CapMan impact
RESOURCES
+30 years of experience
Founded in 1989, share listed on Nasdaq Helsinki since 2001
250 LPs as customers
High customer satisfaction: On average, 73% of Nordic Real
estate and Growth investors have invested in at least two funds.
48% of AUM is outside Nordics
M€ 175
investment capital from balance sheet
150 employees
Employee satisfaction and engagement at high levels:
80/100 and 75/100 respectively
MEGATRENDS
1. Private assets are a growing market
2. Broader investor base looking to access
private markets
3. Diversification and a multi strategy approach
4. Private asset returns have outperformed other
asset classes
M€ 3,800
Assets under management
APPROACH IMPACT
CapMan is a leading Nordic
private asset expert with an active
approach to value creation
OUTCOMES
• Returns for 10 million pensioners
• 15,000 employees in aggregate in portfolio
companies
• 40,000 MT CO
2
reduced in Infra assets p.a.
MISSION STATEMENT
We build value
for the enrichment
of society
VALUES
Active Ownership ,
Dedication, High Ethics
ACTIVITIES ARE ANCHORED IN KEY SDGs
DRIVERS
MGMT company
and Service
business growth
>10%
KEY FINANCIAL OBJECTIVES
ROE
>20%
Equity ratio
>60%
Annually
growing
dividend
2017–2020 average
11%
• Fee profitability
• Investment returns
• Carried interest
58%
• Strong balance
sheet
• Good liquidity
14 ¢
• BoD proposal to
the AGM
• Growth for 8
consecutive years
BUSINESS AREAS
Private Equity
• Growth
• Buyout
• Special Situations
• Credit
Real Estate
Services
• CapMan
Wealth Advisory
• JAY Solutions
• CaPS
Infrastructure
SELECTION OF KEY SUSTAINABILITY IMPACTS
Growth
SDG 8
Growing
revenues and
jobs
Diversity
SDG 8
Board and
management
group
composition
follow-up
GHG
emissions
SDG 7, 13
Emissions
follow-up in
Infra portfolio
Sustainable
communities
SDG 11
Utilisation
of existing
building stock
Anti-bribery
& corruption
SDG 16
Stringent
AML and KYC
processes
f o r G ood
EARNINGS STREAMS
Management fees and
fees from services
Returns and fair value
changes of own investments
Carried
interest
16%
• Profitable fee
growth
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Our operating model
CapMan manages funds that invest in unlisted
companies, real estate and infrastructure.
Our customers are mainly pension funds,
insurance companies and other institutional
investors with a long investment horizon. A
growing part of our investor base comes from
outside the Nordics.
A longer term investment
horizon
A private assets investor is generally a me-
dium-term owner whose ownership horizon
typically includes driving change in the target
company. CapMan raises capital from insti-
tutional investors, or limited partners (LPs),
to establish private equity funds, from which
the equity is invested in target companies in
accordance with the fund strategy. CapMan
manages and develops the portfolio compa-
nies or assets for an average of 4–7 years,
after which they are sold to another industrial
owner or investor, or they are listed. Part of
our capital under management is in evergreen
funds and mandates that are managed on a
long-term basis.
In addition, CapMan offers services focused
on private equity investing and growth
company needs. With these services and
through our expertise and networks, such
institutional investors, who traditionally have
CapMan is a private markets pioneer in
the Nordics driven by our values: active
ownership, commitment and high ethics.
Together, we build value for the enrichment
of society.
not invested in the asset class, can also
access private equity solutions that match
their profile and investment horizon. As we
know the business well, we can also provide
centralised procurement services that allow
companies in our network to manage their
procurement easily and cost-effectively.
In addition to its fund investors, Cap-
Man also invests its own funds in the funds
it manages. The return on this capital is
reflected in CapMan’s result either as changes
in fair values or as realised returns.
Tailwinds from megatrends
International megatrends support our
development. Investors are now increas-
ingly seeking returns from alternative asset
classes, and private equity has historically
outperformed listed asset classes. Unlisted
investment products are a growing market.
The wider investor base is willing to invest in
unlisted properties. The unlisted market is
becoming more diverse, and private equity
concepts are being used more commonly
in various asset classes than before. The
unlisted market includes not only the acqui-
sition of control in unlisted companies, but
also minority investments, debt investments,
special situations, real estate investments and
general investments.
TYÖNUMERO 20
LPs per location
■ Finland 44%
■ Other Nordics 8%
■ Other Europe 30%
■ North America 14%
■ Asia 2%
■ Others 2%
TYÖNUMERO 21
LPs per type
■ Pension funds 53%
■ Fund of funds 12%
■ Insurance companies 6%
■ Corporate investors 6%
■ Government agencies 6%
■ CapMan 5%
■ Trusts 4%
■ Family offices & private individuals 1%
■ Others 8%
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
TYÖNUMERO 23
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Assets under management (M€)
■
Private Equity ■ Real Estate ■ Infra
314
448
329
638
624
1,004
978
1,049
1,342
1,335
1,390
1,776
1,357
1,849
1,427
1,787
1,436
1,625
1,434
1,677
1,440
1,602
1,490
1,469
1,489
1,338
1,464
1,284
1,415
1,178
1,624
944
1,896
973
1,931
293
203
4,000
3,000
2,000
1,000
0
998
2,440
357
Our long-term financial goals reflect our
company’s strategic direction and the outlook
described above. The combined growth
objective for the Management Company and
Service businesses is more than 10 per cent
p.a. on average. The objective for return on
equity is more than 20 per cent p.a. on aver-
age. CapMan’s equity ratio target is more than
60 per cent. CapMan’s objective is to pay an
annually increasing dividend to our sharehold-
ers. The good financial position and strong
balance sheet support this goal. CapMan has
increased its distribution per share every year
since 2012.
3.8
€ BILLION ASSETS UNDER
MANAGEMENT IN FUNDS
AND MANDATES
A broad social impact
The social impact of our operations is
extensive. By growing our portfolio compa-
nies, we create new jobs and contribute to
new innovations. By investing in infrastructure
and real estate, we improve the environment
and everyday life of communities. We also
enable investments in more sustainable and
climate-friendly technology. The returns of our
funds contribute to e.g. the assets of pension
funds and thereby strengthen their solidity
and ability to cover pension liabilities.
Through our foundation CapMan for Good,
we aim to support positive developments
at the grassroots level in the Nordics. The
foundation supports projects that improve
the quality of life of the recipient and support
social well-being. The foundation was founded
in 2019 and has supported, among other
things, the activities of the Tukikummit ry
association and the free time activities and
involvement of girls living in the Swedish
suburbs. In addition, the foundation launched
a mentoring programme that aims to help
small businesses and entrepreneurs identify
growth bottlenecks.
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
CapMan’s investment and service teams
INFRASTRUCTURE
REAL ESTATE
CapMan Real Estate executes both val-
ue add and income-focused investment
strategies across all major property sec-
tors in Sweden, Finland, Denmark and
Norway. The team’s value-add funds seek to acquire transitional
properties in the most liquid Nordic markets where an asset can
be enhanced by active asset management such as redevelop-
ment, change of use, or repositioning. The income-focused funds
and mandates seek well-located, high quality investments that
generate attractive risk-adjusted returns for our investors across
market cycles. CapMan’s Nordic Real Estate operations include
40 real estate investment professionals across five countries.
CapMan’s real estate funds hold approx. 80 assets. The funds
made five new investments and seven exits in 2020.
CapMan Infra invests in energy, trans-
portation and telecommunications
infrastructure across the Nordics.
CapMan Infra is a dedicated and active
owner to drive operational improvements and offers tailored
solutions to local infrastructure asset owners in the Nordic
countries. The team of nine infrastructure professionals is
based in Helsinki and Stockholm. The first fund by CapMan
Infra was established in 2018 and has made four investments
to date. The team also manages two investment mandates.
TYÖNUMERO 14
CapMan –
All employees
■ Women 37%
■ Men 63%
TYÖNUMERO 15
CapManians –
Management Group
■ Women 30%
■ Men 70%
TYÖNUMERO 24
CapManians –
Investment professionals
■ Women 19%
■ Men 81%
CapMan manages funds and mandates
investing in private assets across
investment areas.
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
CapMan Buyout makes majority invest-
ments in mid-sized unlisted companies
in the Nordic countries. The team’s 12
investment professionals are based in
Helsinki and Stockholm. The team manages Buyout funds
and looks for interesting growth stories, niche market leaders,
winning company cultures and passionate entrepreneurs.
Buyout is a generalist investor – the prospects to grow into a
best-in-class company is the differentiating factor instead of
industry or sector. CapMan Buyout funds hold 10 portfolio
companies. The funds made one new investment and two exits
in 2020.
CapMan Growth makes significant
minority investments in Nordic growth
stage companies that have ambitious
growth and expansion goals. As active
investors, the team works closely with management and owners
to help realize their growth ambitions. Through its funds,
CapMan Growth can provide capital for recruiting, M&A and
other growth initiatives. In addition, the funds can acquire shares
from owners helping realize some value from their business
while maintaining control. The funds managed by CapMan
Growth have invested in 13 companies. The fund made two new
investments in 2020.
CapMan’s Credit investment
strategy includes two private debt
funds managed by Nest Capital, an
independent partnership of CapMan
Group. The funds provide private debt, mainly in the form of
mezzanine, to small and medium-sized companies across the
Nordic countries. Nest Capital’s funds include total commit-
ments of €200 million and eight portfolio companies as of 31
December 2020.
CapMan Special Situations pursues
event-driven investment situations by
providing flexible capital solutions
and strong operational capability to
deliver step-change improvements in
performance. The team specializes in demanding strategic and
operational turnarounds, financial restructurings, and corporate
carve-outs in which executional certainty can be assured with
substantial value creation and controlled risks. The focus is on
mid-sized private and public companies that are headquartered
in Finland. CapMan Special Situations is CapMan’s newest
investment area that was launched in 2020.
PRIVATE EQUITY AND CREDIT
TYÖNUMERO 16
CapManians –
By geography
■ Finland 77%
■ Sweden 15%
■ Denmark 4%
■ UK 3%
■ Luxembourg 1%
TYÖNUMERO 17
CapManians –
By age
■ Under 25yr 4%
■ 26–35yr 37%
■ 36–45yr 40%
■ 46–55yr 13%
■ Over 55yr 5%
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
CaPS (CapMan Procurement Services) is
a service driving down costs on non-strate-
gic products and services for our member
companies in Finland, Sweden and the
Baltics. CaPS combines the procurement of
our members and review and address their
indirect spend in order to achieve significant
savings. Each year, more than 200 member
companies use our procurement services.
CapMan Wealth Services offers comprehen-
sive wealth advisory services. The team serves
mainly family offices, institutional investors
and high net worth individuals and provides
bespoke access to the best product solutions
covering both private and public markets.
JAY Solutions offers its customers analyt-
ics and reporting services. The proprietary
platform visualises a portfolio’s wealth at a
given moment and provides clients with an
objective, reliable and up-to-date view of their
entire wealth, regardless of asset location
and type. The team also provides back office
services as needed.
SERVICE BUSINESS
CapMan serves investors that
want to access the best private
and public market solutions
as well as growing companies
that want to improve their
operations through efficient
procurement.
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
CEO’s review
On track despite pandemic curveball
Last January, our plans were clear. We
intended to continue on our strong growth
path, increase the profitability of recurring
income, actively make new investments, and
build sustainable value in our portfolio, with
the intention to also realise carried interest
from funds. However, the year turned out to
be very different than expected. Suddenly,
work equalled remote work without physical
meetings, and international fundraising took
place in a world where planes remained on
the ground. At the same time, our organi-
sation leaped on digitalisation as our teams
transitioned to hybrid forms of remote work.
During the year, 15 new CapManians started
their employment from their home offices and
have since become integrated in the CapMan
family.
We succeeded in our goals
Considering the circumstances, we succeed-
ed well in the goals we set at the beginning
of the year. Last year, we raised over €800
million in new capital to our eight funds and
mandates, and our assets under management
reached a new record at €4 billion. The profit-
The year 2020 will go
down in history as a year of
contrasts, also for CapMan.
Although the Covid-19
pandemic threw an
unexpected curveball, we
succeeded in growing our
assets under management
as well as our management
fees, launching new
products and creating value
in our investments.
CAPMAN ANNUAL REPORT 2020 • GROUP
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
ability of our management fees and fees from
services improved, and we made over ten new
investments into our funds. Our total share
return was clearly positive in 2020.
Strong year in fundraising
The successful fundraising indicates that our
concept works. The Nordic Real Estate III fund
will, at significantly exceeding €500 million,
become the largest fund in CapMan’s history
to date. The fund continues the success of
the preceding Nordic Real Estate funds and
has both internationalised and diversified our
investor base. Our Real Estate team is the
largest one in the Nordics.
In addition, our Growth team took major
steps during the year. In the summer, CapMan
Growth established its second growth fund,
which raised close to €100 million. The fund
exceeded its original target size as well as the
size of the previous Growth fund. The fund
attracted a lot of interest among investors,
which reflects the Growth team’s successful
strategy. The team has already made two
investments in line with the strategy into Finn-
ish growth companies, whose development we
are excited to follow in the coming years.
Growth from new teams
The assets under management of CapMan
Infra increased to almost €400 million with
the completion of the first fund’s fundraising
and the investments made by new investors
in individual assets. In three years, CapMan
Infra has grown from a one-person venture to
a team of ten with operations in Finland and
Sweden. The team completed three new in-
vestments last year and the fund has invested
70% of its target size.
We also made new initiatives during 2020
by launching CapMan Special Situations, an
investment area that pursues event-driven
investment situations by providing flexible
capital solutions and strong operational capa-
bility to deliver step change improvements in
performance. Currently, there is no other local
private equity investor in Finland specialising
in similar situations.
New power in the service
business
Services have been an integral part of our
business for several years already. At the end
of 2020, we had two new service organisa-
tions focusing on investors’ needs: CapMan
Wealth Services and JAY Solutions. CapMan
Wealth Services offers comprehensive wealth
advisory services covering both listed and
unlisted markets. JAY Solutions, which has
grown from JAM Advisor’s analytics and
reporting business, offers technology-driven
reporting, analytics and back office services
across the financial services industry. At the
same time CaPS has continued its growth
and internationalisation. The procurement
service concept was launched in the Baltics in
We have learned that sometimes plans need to be
altered rapidly, but if the business is on a sound
foundation and the goals are clear, even challenging
circumstances are not obstructing success.
collaboration with BaltCap. We expect rapid
growth in our service business in the coming
years as the restructurings and investments
of 2020 start to pay off.
The exceptional year affected
valuations
The value creation work has been challenging
in many portfolio assets in these exceptional
circumstances. Due to the COVID-19 pandem-
ic at the beginning of the year, the fair values
of our investments decreased significantly.
However, valuation levels have recovered since
the beginning of the year, and after three
consecutive upward quarters, changes in
the fair values of our own investments were
positive for the full year.
Last year provided an abundance of
new insights. We have learned that some-
times plans need to be altered rapidly, but
if the business is on a sound foundation
and the goals are clear, even challenging
circumstances are not obstructing success.
The year ahead will reinforce this approach
as we continue to apply the lessons learned
during the pandemic and the new opportuni-
ties it creates. In 2021, with the recovery of a
good acquisition market, we will focus espe-
cially on strong value creation in our current
investments as well as on exits and new
investments. Fundraising in key investment
areas continues and our goal is to bring new
products to the market. Succeeding in these
goals should correlate with strong returns to
shareholders.
Joakim Frimodig
CEO
CAPMAN ANNUAL REPORT 2020 • GROUP
16
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
We follow the Principles of Responsible
Investing in our investment operations.
We also take into account UN Sustainable
Development Goals that are relevant
for a particular investment strategy or
fund. We further co-operate with NGOs
and networks that promote responsible
investment and business practices.
CapMan for Good is a foundation
founded by CapMan in 2019. The
foundation supports causes and
projects that work to improve the
well-being of people and society.
We are a community-oriented
foundation and we want to drive
change for the better in the Nor-
dic region.
PRI is a network of international
investors that concretise the Prin-
ciples for Responsible Investment
through co-operation. CapMan
became a signatory already in
2012.
Level 20 is a non-profit organ-
isation founded in 2015 and
headquartered in London. The
purpose of the organisation is to
increase awareness of diversity
and inclusion topics within the
private equity industry. More
than 40 international private
equity firms support Level 20.
CapMan is one of founding mem-
bers of its Nordic chapter.
f o r G ood
CapMan’s sustainable
investment framework
VALUES
PRINCIPLES
POLICY
SDGs
FUNDS
KPIs
6 principles
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CAPMAN ANNUAL REPORT 2020 • GROUP
17
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Sustainable investment
at CapMan
CapMan is an active investor
in growing businesses, real
estate and infrastructure in
the Nordic countries. As active
owners, funds managed by
CapMan can drive change on
a broad scale. Our governing
principle is to add to the
enrichment of society. This
applies to returns from our
investments but also to how we
make these returns and what
the compound effects are for a
broad group of stakeholders.
Our investment activities are
rooted in our values.
Beneficiaries of private
assets value creation
Who benefits from private assets? We manage
almost €4 billion in assets on behalf of
institutional investors. The returns from our
funds contribute to the well-being of more
than 10 million pension beneficiaries around
the world. Our activity also shapes the Nordic
communities where we invest. At the end of
2020, CapMan’s portfolio companies em-
ployed an aggregate of approx. 15,000 peo-
ple and our real estate assets housed approx.
3,000 tenants. The funding and expertise
provided helps companies grow, launch new
products, innovate and add meaningful jobs
to society. Through our real asset investment
areas we invest into communities and services
to help them and their residents prosper.
Functioning private assets markets that are
driven by active value creation benefits the
society as a whole.
CAPMAN ANNUAL REPORT 2020 • GROUP
18
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
During the past year, we have continued
to develop our approach to sustainable
investing by going over processes, gathering
data, conducting materiality analysis and
defining where we can make a real difference.
We are aware that we still have a lot of work
ahead of us. In addition to specific actions
taken in individual investments, we consider
the network effect from working together
with LPs, advisors and potential buyers of
portfolio companies and assets. Our activity
has far-reaching impact on the society, and
therefore how things are done is of equal
importance to what is accomplished.
Our approach
CapMan became a signatory of the Princi-
ples of Responsible Investing in 2012. The
six principles are guiding us throughout the
investment process. Our PRI scorecard based
on the latest available assessment of our
2020 report provided us with an A+ score for
private equity, infrastructure and real estate
and an A score for responsible investment
strategy and governance. The latest PRI
Transparency Report is available on PRI’s and
CapMan’s web pages.
We integrate ESG criteria throughout the in-
vestment process from sourcing and screening
of investments to due diligence and making
the investment. Sustainability is also part of
the overall value creation process. We have
identified several Sustainable Development
Goals as well as separate targets as central to
the investment areas where we are active. We
further develop KPIs and publish a selection in
our annual Sustainable Investment Snapshot.
Sustainability governance
CapMan Plc has been a public company
since 2001. We follow the Finnish Corporate
Governance Code. We also follow national
and EU level public company regulation on
transparency. We have implemented compli-
ance procedures and processes in our fund
management operations to prevent money
laundering and fraud. The identities of all
investors in CapMan funds are verified and the
source of their funds are identified. CapMan
Plc’s Management Group has joint responsi-
bility for sustainable investment practices on
a Group level. The Management Group has
established a dedicated sustainable invest-
ment working group with representatives
from investment areas, including Real Estate,
Buyout, Infra and Growth, as well as service
teams. The purpose of the working group is
to share information as well as develop and
follow up on joint policies and best practices
for implementing sustainable investing at
CapMan. Every investment area has a desig-
nated investment professional responsible for
implementing sustainable investment con-
siderations in the corresponding funds and
portfolios and work together with case teams,
asset management and portfolio company
management to identify risks and opportuni-
ties related to ESG.
Learn more about our approach and KPIs in
our Sustainable Investment Snapshot
www.capman.com/sustainable-investments/
Net impact profile
CapMan has applied the methodology of The Upright Project, a
Finnish start-up, to evaluate the net impact of its Private Equity,
Credit and Infra funds. CapMan’s net impact profile is based
on the products and services provided by the companies in the
funds. The model utilises scientific articles and machine learn-
ing to analyse how companies impact the environment, health
of people, society and creation and distribution of knowledge.
This information is summarised as a net impact score. Cap-
Man’s net impact score is +1.3. based on the portfolio as of 31
December 2020 (in comparison, Nasdaq’s net impact score is
+1.0). Generating taxes, creating jobs and contributing to soci-
etal infrastructure are the main positive impacts of CapMan’s
portfolio.
Learn more: www.uprightproject.com
CAPMAN ANNUAL REPORT 2020 • GROUP
19
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
CapMan Plc –
Corporate Governance Statement 2020
CapMan Plc (“CapMan”) complies with the
Finnish Corporate Governance Code 2020
for listed companies issued by the Securities
Market Association which entered into force
on 1 January 2020 (the “Code”). CapMan
complies with all of the recommendation of
the Code. This Corporate Governance State-
ment (the “Statement”) has been prepared
in compliance with the Code’s Corporate
Governance reporting guidelines, it has been
reviewed by the Audit Committee of CapMan’s
Board of Directors (the “Board”) and it is
issued separate from the report by the Board.
CapMan’s corporate governance model
also follows the Finnish laws, the articles of
association of the company and the rules and
directions of Nasdaq Helsinki Ltd.
The Code is publicly available on the
website of the Securities Market Association
at www.cgfinland.fi/en. For further information
regarding CapMan’s corporate governance,
please visit the company’s website at
https://www.capman.com/shareholders/
governance/
1 CapMan’s governance
model
CapMan is a Finnish limited liability company
headquartered in Helsinki, Finland. The par-
ent company CapMan Plc and its subsidiaries
form CapMan group. CapMan’s shares are
publicly listed in Nasdaq Helsinki. CapMan’s
governance model consists of the general
meeting of shareholders, the Board of Direc-
tors and the CEO. In the operative manage-
ment of the company the CEO is assisted by
the management group.
2 General Meeting of the
shareholders and the Articles
of Association
The highest decision-making power at Cap-
Man is held by the General Meeting of the
shareholders. Among other things, the Gen-
eral Meeting adopts the financial statements,
decides on distribution of assets based on the
proposal of the Board of Directors, elects the
members of the Board of Directors and the
auditor, decides on the discharge from liability
and on amendments to the Articles of Associ-
ation. The notice to the General Meeting, the
documents to be presented and the proposals
for the General Meeting are published on the
company’s website and, if needed, as a stock
exchange release three weeks prior to the
General Meeting at the latest.
In 2020 CapMan’s annual general meeting
was held on 11 March in Helsinki. In total 159
shareholders attended the meeting repre-
senting 30.8% of the registered share capital
and voting rights. All but one members of the
Board, the CEO and the auditor in charge were
present at the meeting. All of the decisions of
the general meeting were taken without voting.
The decisions are available on the company’s
website at https://www.capman.com/
shareholders/general-meetings/
CapMan’s Articles of Association and mate-
rial related to the General Meeting are available
on the company’s website at the address:
https://www.capman.com/shareholders/
governance/
3 Shareholders’ Nomination
Board
CapMan Plc’s 2018 AGM decided to establish
a Shareholders’ Nomination Board to prepare
future proposals concerning the election and
remuneration of the members of the Board
of Directors to the General Meeting. The AGM
also adopted a Charter for the Nomination
Board. The Shareholders’ Nomination Board
shall serve until further notice. The term of
office of the members of the Shareholders’
Nomination Board expires annually after the
new Shareholders’ Nomination Board has
been nominated.
The Shareholders’ Nomination Board
consists of representatives nominated by the
four largest shareholders of the company
and the Chairman of CapMan Plc’s Board of
Directors, serving as an expert member. As an
expert member the Chairman of the Board of
Directors of CapMan Plc does not take part
in the decision-making of the Shareholders’
Nomination Board.
The following members were nominated
to the Shareholders’ Nomination Board in
September 2020: Stefan Björkman (Managing
Director of Föreningen Konstsamfundet r.f.,
representative of Silvertärnan Ab) (Chairman
of the Nomination Board), Mikko Mursula
(Chief Investment Officer of Ilmarinen Mutual
Pension Insurance Company), Ari Tolppanen
(Chairman of the Board of Oy Inventiainvest
Ab) and Mikko Kalervo Laakkonen. Addition-
ally, Andreas Tallberg, the Chairman of the
Board of Directors of CapMan Plc, served
as the expert member on the Shareholders’
Nomination Board.
The Nomination Board convened two times
in 2020. The Nomination Board conducted an
evaluation of the Board work, discussed, in
particular the size, composition and diversity
of the Board of Directors and the areas of ex-
pertise that are deemed most beneficial for the
company. The Nomination Board also reviewed
the remuneration of the Board and gave its
proposals to the Annual General Meeting on 25
January 2021. The proposals were published
as a stock exchange release.
The Charter of the Shareholders’ Nomina-
tion Board is available on CapMan’s website at:
www.capman.com/shareholders/governance/
nomination-board/
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
20
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
4 Board of Directors
4.1 Composition of the Board of
Directors
All members of the Board are elected yearly
by the Annual General Meeting. There is no
specific order for the appointment of Board
members in the articles of association.
According to the articles of association, the
Board comprises at least three and at most
nine members, who do not have deputies.
Members are elected for a term of office,
which starts at the close of the Annual Gen-
eral Meeting at which they were elected and
ends at the close of the Annual General Meet-
ing following their election. The Board elects a
Chairman and a vice Chairman from among
its members. The Shareholders’ Nomination
Board makes the proposals on the com-
position of the Board of Directors and the
remuneration for the Board and Committee
Members to the Annual General Meeting. The
Shareholders’ Nomination Board’s proposals
are typically published as a separate stock
exchange release and are also included in the
notice to convene the Annual General Meeting.
The Annual General Meeting held on 11
March 2020 elected seven members to the
Board of Directors. Ms. Catarina Fagerholm,
Mr. Eero Heliövaara, Ms. Mammu Kaario, Mr.
Olli Liitola, Mr Peter Ramsay and Mr. Andreas
Tallberg were re-elected to the Board. Mr.
Johan Hammarén was elected to the Board
of Directors as a new member and he was
present at the meeting. At its organizing
meeting 11 March 2020, the Board elected
from among its members Andreas Tallberg as
its Chair and Mammu Kaario as vice Chair.
The biographical details of the Board mem-
bers are presented in the table on page 22.
4.2 Diversity of the Board of
Directors
The company values that its Board mem-
bers’ have diverse backgrounds taking into
account the competencies that are relevant
for CapMan’s business, such as know-how of
the financial sector. The aim is that the Board
consists of representatives of both genders
and different age groups, that the Board
members have versatile educational and pro-
fessional backgrounds and that the Board of
Directors as a whole has sufficient experience
on an international operating environment.
The company considers that the com-
position of its Board is in its current form
sufficiently aligned with the objectives set for
the diversity of the Board composition. In
2020 both genders were represented in the
Board (29% female, 71% male), the members
were between 51 and 67 years of age, their
educational backgrounds were relevant to the
company’s operations, and they had experi-
ence on both international and local operating
environments.
4.3 Independence of the Board
members
The majority of the Board must be inde-
pendent from the company. At least two of
the members that are independent from the
company shall also be independent of the
company’s significant shareholders.
The Board has in its organizing meeting on
11 March 2020 assessed its members’ inde-
pendence of the company and of its significant
shareholders. According to the assessment
Catarina Fagerholm, Eero Heliövaara, Peter
Ramsay, Mammu Kaario and Andreas Tallberg
were independent of both the company and
its significant shareholders. Olli Liitola was
independent of the company’s significant share-
holders but non-independent of the company,
since he has been employed by the company
until 2017. Johan Hammarén was non-inde-
pendent of company’s significant shareholder
Silvertärnan Ab through board membership,
and non-independent of the company due to his
employment with a group company until 2019.
Shares and share-based rights of each
Board member and corporations over which
he/she exercises control in the company and
its group companies are presented in the table
on page 22.
4.4 Duties and responsibilities of
the Board
Under the Finnish Companies Act and
CapMan’s articles of association, the Board
is responsible for the administration of the
company and the proper organisation of its
operations. The Board is also responsible for
the appropriate arrangement of the control
of the company’s accounts and finances. The
Board has confirmed a written charter for its
work, which describes the main tasks and du-
ties, working principles and meeting practices
of the Board, and an annual self-evaluation of
the Board’s operations and working methods.
In accordance with the charter, the main
duties of the Board were:
•
to convene the General Meetings of share-
holders
•
to appoint and dismiss the CEO
•
to supervise management
•
to approve strategic and financial objec-
tives
•
to approve the budget
•
to decide on the establishment of new
CapMan funds and the level of CapMan’s
own commitments therein
•
to decide on fund investments to other
than CapMan funds exceeding EUR 5
million and direct investments exceeding
EUR 5 million
•
to decide on any major changes in the
business portfolio
•
to ensure that the company has a proper
organisation
•
to ensure the proper operation of the man-
agement system
•
to approve annual financial statements and
interim reports
•
to ensure that the supervision of the
accounting and financial management is
properly organised
•
to ensure that the business of the group
complies with relevant rules and regulations
•
to approve the principles of corporate gov-
ernance, internal control, risk management
and other essential policies and practices
•
to decide on the CEO’s remuneration and
on the remuneration policy to be followed
for other executives and CapMan’s key
employees
•
to confirm the central duties and operating
principles of the Board committees
The Chairman of the Board ensures and mon-
itors that the Board fulfils the tasks appointed
to it under legislation and by the company’s
articles of association.
4.5 Work of the Board in 2020
In 2020, the Board of Directors met eight
times. The Board had seven meetings in the
composition as elected by the 2020 AGM and
one meeting in the composition as elected by
the 2019 AGM.
The table on page 22 presents Board mem-
bers’ attendance at the meetings in 2020.
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
21
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
Board of Directors in 2020
Name Personal information
Shares andshare-based rights as of
31 Dec 2020
Attendance
at the Board
meetings
Attendance at
the Committee
meetings
Andreas
Tallberg
Chairman of the Board since 15 March 2017
Member of the Board since 2017
Born: 1963
Education: M.Sc. (Econ.).
Main occupation: CEO of Oy G.W. Sohlberg Ab
Chairman of the Remuneration Committee
Expert member of the Shareholders’ Nomination Board
Independent of the company and significant shareholders
804,530 8/8
Remuneration
Committee:
2/2
Nomination
Board:
2/2
Catarina
Fagerholm
Member of the board since 2018
Born: 1963
Education: M. Sc. (Econ.)
Main occupation: Board professional
Member of the Audit and Remuneration
Committees
Independent of the company and significant shareholders
73,011 8/8
Audit
committee:
5/5
Remuneration
Committee:
2/2
Eero
Heliövaara
Member of the board since 2018
Born: 1956
Education: M.Sc. (Eng.), M.Sc. (Business Admin.)
Main occupation: Board professional
Member of the Remuneration Committee
Independent of the company and significant Shareholders
92,000 8/8
Remuneration
Committee:
2/2
Mammu
Kaario
Member of the Board since 2017
Born 1963
Education: LL.M., MBA
Main occupation: Board professional
Chairman of the Audit Committee
Independent of the company and significant Shareholders
38,071 8/8
Audit
Committee:
5/5
Peter
Ramsay
Member of the Board since 2019
Born: 1967
Education: M. Sc. (Econ.)
Main occupation: CFO and chief investment director of veikko Laine Group
Member of the Audit Committee
Independent of the company and significant shareholders
10,000 8/8
Audit
Committee:
5/5
Olli
Liitola
Member of the Board since 2019.
Born: 1957
Education: M.Sc. (Tech.).
Main occupation: Board professional
Independent of significant shareholders and non-independent of the company
2,150,000 8/8
Johan
Hammarén*
Member of the Board since 2020
Born: 1969
Education: LL.M., Bachelor of Science (Econ.)
Main occupation: Managing Director, Oy Hammarén & Co Ab, board professional
Non-independent of the significant shareholders and non-independent of the
company
0 7/7
*) Was elected as a new member at the AGM held on 11 March 2020
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
22
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
5 Board Committees
The Board may establish Committees to ensure
efficient preparation of the matters under its
responsibility. The Committees are established,
and their members are elected from among
the members of the Board in the Board’s
organizing meeting to be held after the AGM for
the same term as the Board. The Committees
shall consist of at least three members. The
charters for each committee shall be confirmed
by the Board. The Chairs of the committees
report to the following Board meeting on the
topics discussed in the committee meetings.
Also, the materials presented, and the minutes
of the committee meetings are delivered to
the Board for information. The committees do
not have autonomous decision-making power,
but the Board makes the decisions within its
competence collectively.
In its organizing meeting held on 11 March
2020, CapMan’s Board of Directors established
an Audit and Remuneration Committee.
5.1 Audit Committee
The Audit Committee has been established to
improve the efficient preparation of matters per-
taining to financial reporting and supervision.
The duties of the Audit Committee included:
•
monitoring the financial position of the
Company
•
monitoring and assessment of the financial
reporting process
•
supervising the financial reporting process
•
monitoring and assessment of the compa-
ny’s internal control and risk management
systems and compliance processes
•
monitoring and assessment of the most
significant financial and tax risks
•
review of the Company’s Corporate Govern-
ment Statement
•
monitoring the statutory audit of the finan-
cial statements and consolidated financial
statements
•
evaluating the independence of the statu-
tory auditor or audit company, particularly
the provision of related services
•
other communications with the auditor
•
preparing the proposal for resolution on the
election of the auditor
•
defining the principles concerning the mon-
itoring and assessment of related party
transactions
•
monitoring and assessment of the process-
es and risks relating to IT security
•
evaluation of the use and presentation of
alternative performance measures
•
monitoring and assessment of any special
issues allocated by the Board and falling
within the competence of the audit com-
mittee.
The Board has in its organizing meeting on 11
March 2020 elected Mammu Kaario (chair-
man), Catarina Fagerholm and Peter Ramsay
as members of the Audit Committee. In 2020,
the Committee met five times. The table on
page 22 presents the Committee members’
attendance at the meetings.
All members of the Audit Committee were
independent of the company and its signifi-
cant shareholders. All members of the Audit
Committee are experienced in demanding
positions in financial administration and
business management and they hold degrees
suitable for Audit Committee members.
All members of the Remuneration Commit-
tee are independent of the company and its
significant shareholders.
6 Chief Executive Officer
(CEO)
In 2020, CapMan’s CEO was Joakim Frimodig
(born 1978, BA (Oxon)). Frimodig’s shares
and share-based rights and those of the cor-
porations over which he exercises control are
presented in the table on page 24.
The Board elects the company’s CEO.
The CEO’s service terms and conditions
are specified in writing in the CEO’s service
contract, which is approved by the Board. The
CEO manages and supervises the company’s
business operations according to the Finnish
Companies Act and in compliance with the
instructions and authorisations issued by
the Board. The CEO shall see to it that the
accounts of the company are in compliance
with the law and that its financial affairs have
been arranged in a reliable manner. Generally,
the CEO is independently responsible for the
operational activities of the company and for
day-to-day decisions on business activities
and the implementation of these decisions.
The CEO appoints the heads of business
areas. The Board approves the recruitment of
the CEO’s immediate subordinates. The CEO
cannot be elected as Chairman of the Board.
5.2 Remuneration Committee
The Remuneration Committee has been estab-
lished to improve the efficient preparation of
matters pertaining to the remuneration and
appointment of the CEO and the rest of the
management team as well as the remuner-
ation policy covering the company’s other
personnel.
The main duties of the Remuneration Com-
mittee in accordance with the charter were
to assist the Board by preparing the Board
decisions concerning:
•
CEO appointment and remuneration
•
company management team’s remuner-
ation principles generally and individual
situations as required
•
company’s overall principles for total
compensation structure.
The Committee further contributed to:
•
securing the objectivity and transparency
of the decision-making regarding remuner-
ation issues in the company
•
the systematic alignment of remuneration
principles and practice with company strat-
egy and its long-term and short-term goals
•
the appointment of the management team
of the company.
In addition to the abovementioned tasks,
the Remuneration Committee prepared the
company’s Remuneration Policy and Remu-
neration Report for governing bodies.
The Board has in its organizing meeting
on 11 March 2020 elected Andreas Tallberg
(Chairman), Catarina Fagerholm and Eero
Heliövaara as members of the Remuneration
Committee. The Committee convened twice
in in 2020. The table on page 22 presents
the Committee members’ attendance at the
meetings.
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
23
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
7 Management Group
The main tasks of the Management Group
consist of
(i) coordination of team strategy, fund-
raising, resources as well as marketing
and brand issues,
(ii) implementation of decisions by the Board
and the CEO/Management Group,
(
iii
) givin g input by providing information for
the decision-making and participating in
discussion, and
(iv) spreading information within the teams as
agreed in the Management Group.
The composition of the Management
Group, responsibilities and the shares and
share-based rights of the members of the
Management Group and of the corporations
over which they exercise control in the end of
the financial year of 2020 are presented in
the table on page 24.
8 Internal control and risk
management
The aim of CapMan’s internal control and risk
management is to ensure that the company’s
operations are efficient, appropriate, reliable
and in compliance with regulation, and that
risks associated with the company’s business
and objectives are identified and appropri-
ately monitored and managed. The group’s
internal control system is an essential part of
the group’s management system and consists
of organization structure, policies, process-
es, working instructions, allocation of tasks
and responsibilities, approval authorizations,
manual and automated controls, monitoring
reports and reviews. The Board and the CEO
are responsible for the internal control and
the risk management but the internal control
is conducted on all levels of the organiza-
tion, in all business and support functions.
Each employee is individually responsible for
the compliance of policies and instructions
and for reporting the faults and malpractice
to his/her supervisor or other designated
persons.
9 Internal control and risk
management pertaining to
the financial reporting
The internal control and risk management
pertaining to the financial reporting process
is part of CapMan’s overall internal control
framework. The key roles and responsibilities
for internal control and risk management have
been defined in the group’s internal guide-
lines which are approved and updated by the
management and/or the Board of Directors
of the company.
CapMan’s internal control and risk
management concerning financial reporting
is designed to provide inter alia reasonable
assurance concerning the reliability, compre-
hensiveness and timeliness of the financial
reporting and the preparation of financial
statements in accordance with applicable
laws and regulations, generally accepted
accounting principles and other requirements
for listed companies. The objective is also to
promote ethical values, good corporate gov-
ernance and risk management practices and
to ensure the compliance with laws, regulation
and CapMan’s internal policies.
9.1 General description of the
financial reporting process
CapMan’s operating model is based on
having a local presence in Finland, Sweden,
Denmark, Luxembourg and the UK, and
operating the organisation across nation-
al borders. CapMan’s subsidiaries in six
countries report their results on a monthly or
quarterly basis to the parent company. The
bookkeeping function is mainly outsourced.
Financial information is assembled,
Management Group in 2020
Name Responsibilities Personal information
Shares and share-based rights on
31 Dec 2020
Joakim Frimodig
CEO Born: 1978
Education: BA (Oxon)
Shares: 1,015,500*
Anna Berglind
Head of People and Culture Born: 1974
Education: M.Sc. (Soc.)
Shares: 140,940
Niko Haavisto
CFO Born: 1972
Education: M. Sc. (Business)
Shares: 499,510
Christian Borgström
Head of CapMan Wealth Services Born: 1971
Education: M.Sc. (Econ.)
Shares: 843,000
Pia Kåll
Head of CapMan Buyout Born: 1980
Education: M.Sc. (Tech.)
Shares: 100,200
Maximilian Marschan
Head of CaPS Born: 1974
Education: M.Sc. (Econ.)
Shares:109,700
2016A-options: 25,000
Mika Matikainen
Head of CapMan Real Estate Born: 1975
Education: M. Sc. (Econ),
M.Soc.Sc
Shares: 113,850
Juha Mikkola
Head of CapMan Growth Equity Born: 1961
Education: M.Sc. (Econ.)
Shares: 188,312
Ville Poukka
Head of CapMan Infra Born: 1981
Education: M.Sc. (Econ)
Shares: 131,466
Mari Simula
Head of Fund Investor Relations Born: 1982
Education: M.Sc. (Tech.)
Shares: 297,392
* In addition, Joakim Frimodig’s holding company Boldhold Oy is a minority owner in Silvertärnan Ab, which owns 10.37% of all shares in CapMan Plc
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
24
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
captured, analysed, and distributed in accord-
ance with existing processes and procedures.
The group has a common reporting and con-
solidation system that facilitates compliance
with a set of common control requirements.
The monthly accounting entries of the most
significant subsidiaries are transferred to the
Group’s reporting system on an entry-by-entry
level. The other subsidiaries submit their fig-
ures either monthly or quarterly to the group
accounting to be inserted to the group report-
ing system for consolidation. The reported
figures are reviewed in subsidiaries as well
as in group accounting. Group accounting
also monitors the balance sheet and income
statement items by analytically reviewing
the figures. The consolidated accounts of
CapMan are prepared in compliance with
International Financial Reporting Standards
(IFRS) as adopted by the EU.
9.2 Control and risk management
of the financial reporting process
The Board has the overall responsibility for
the proper arrangement of internal control
and risk management over financial reporting.
The Board has appointed the Audit Commit-
tee to undertake the more specific tasks in
relation to financial reporting process control
such as monitoring the financial statements
reporting process, the supervision of the fi-
nancial reporting process and monitoring the
efficiency of the company’s internal control.
The Audit Committee also reviews regularly
the main features of the internal control and
risk management systems pertaining to the
financial reporting process.
The management of the group is responsi-
ble for the implementation of internal control
and risk management processes and for as-
certaining their operational effectiveness. The
management is also responsible for ensuring
that the company’s accounting practices
comply with laws and regulations and that the
company’s financial matters are managed in a
reliable and consistent manner.
The CEO leads the risk management
process by defining and allocating respon-
sibility areas. The CEO has nominated the
group’s CFO as risk manager to be in charge
of coordinating the overall risk management
process. The risk manager reports to the
Audit Committee on matters concerning
internal control and risk management. The
management has allocated responsibility for
establishing more specific internal control pol-
icies and procedures to personnel in charge
of different functions. The group’s manage-
ment and accounting departments possess
appropriate levels of authority and responsi-
bility to facilitate effective internal control over
financial reporting.
9.3 Risk assessment and control
activities
Risks related to the financial reporting
process are identified through the objectives
of financial reporting. The risk assessment
process is designed to identify financial
reporting risks and to determine how these
risks should be managed. Control activities
based on risk assessments are determined for
all levels of the organisation. These activities
include guidelines and instructions, approvals,
authorisations, verifications, reconciliations,
analytical reviews, and segregation of duties.
In the annual strategy process of the
group, the identified risks are reviewed, the
risk management control activities are audit-
ed and effects of potential new identified risks
on the strategy are evaluated. The objectives
and responsibilities of the risk management
process as well as the determination of the
risk-appetite were updated during 2020.
9.4 Information and
communication pertaining to the
financial reporting
CapMan has defined the roles and responsi-
bilities pertaining to financial reporting as a
part of the group’s information and com-
munication practices. External and internal
information regarding financial reporting and
its internal control is gathered systematical-
ly, and relevant information on the group’s
transactions is provided to the management.
Up-to-date information relevant for the finan-
cial reporting is presented in a timely manner
to the relevant functions such as the Board
and management group. All external commu-
nications are carried out in accordance with
the group disclosure policy, which is available
on the company’s website: www.capman.com/
shareholders/statements-policies/ disclosure/
9.5 The organisation and
monitoring of internal control
activities
To ensure the effectiveness of internal control
pertaining to financial reporting, monitoring
activities are conducted at all levels of the
organisation. Monitoring is performed through
ongoing follow-up activities, separate evalua-
tions or a combination of the two. Separate
internal audit assignments are initiated by
the Board or management. The scope and
frequency of separate evaluations depend
primarily on the assessment of risks and the
effectiveness of ongoing monitoring proce-
dures. Internal control deficiencies are report-
ed to the management, and serious matters
to the Audit Committee and the Board.
Group accounting performs monthly
consistency checks of income statement
and balance sheet for subsidiaries and
business areas. The group accounting team
also conducts management fee and cost
analysis, quarterly fair value change checks,
impairment and cash flow checks as well as
control of IFRS changes. The Audit Commit-
tee and the Board regularly review group-level
financial reports, including comparison of
actual figures with prior periods and budgets,
other forecasts, monthly cash flow estimates
and covenant levels. In addition, the Audit
Committee monitors in more detail, among
others, the reporting process (including the
management’s discretionary evaluations), risk
management, internal control and audit.
The monitoring team, which is independent
from the investment teams, is responsible for
the quarterly valuation process, monitoring
and forecasting fair value movements and
preparing the models for and calculating
carried interest income for the funds under
the management of the Group.
CapMan’s subsidiaries holding a license to
act as alternative investment fund manager
or investment firm granted by the Finnish
Financial Supervisory Authority, have separate
risk management and internal audit functions
as required by applicable laws.
The compliance function oversees that the
operations of the CapMan Group comply with
regulation and that the group companies will
adopt the relevant new regulations promptly.
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
25
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
10 Other information
10.1 Procedures related to insider
administration
CapMan complies with the Market Abuse
Regulation’s (“MAR”, 596/2014) rules on
managers’ transactions and insider manage-
ment and the guidelines for insiders issued by
Nasdaq Helsinki. In addition, CapMan has its
own internal policy regarding insider manage-
ment, which is partly stricter than the general
insider rules. The Group’s Compliance Officer
is responsible for insider administration and
shall e.g. monitor that employees comply
with insider rules and trading restrictions,
maintain project-specific insider lists, arrange
internal trainings for employees on insider
rules and on disclosure responsibilities of
listed companies.
CapMan maintains an internal, non-public
list on managers and persons closely associ-
ated with them, which are, according to MAR,
obliged to disclose all transactions made
with financial instruments issued by CapMan.
CapMan has determined the members of
the Board of Directors and the Management
Group (including the CEO) as managers de-
fined in the MAR (hereinafter “Manager(s)”).
Each Manager has been instructed to inform
the persons closely associated with them
about the obligation to disclose transactions.
CapMan publishes a release on each transac-
tion which has been executed by a Manager
or his/her closely associated person with the
financial instruments issued by CapMan in
case the total value of all transactions of this
person exceeds EUR 5,000 within a calendar
year. The total holding of CapMan’s shares
and share-based rights of each Manager is
annually published as a part of the Annual
Report.
CapMan maintains project-specific insider
lists for the projects, as set out in MAR, which
may have a significant effect on the prices of
the financial instruments issued by CapMan.
These project-specific insider lists are drafted
and maintained in accordance with the MAR
and CapMan’s internal policies and are
established following a decision to delay the
disclosure of inside information. The persons
added to the project-specific list and all other
persons that possess inside information relat-
ed to CapMan, are not permitted to trade in
financial instruments issued by CapMan. Prior
to trading in CapMan’s financial instruments,
each manager, employee or other person is
always obliged to personally assess whether
he/she is in the possession of inside informa-
tion related to CapMan.
CapMan’s Managers (as described above)
or employees are not permitted to trade in
financial instruments issued by CapMan
during a closed period of 30 calendar days
prior to the publication of CapMan’s interim
reports, half year financial report or financial
statements bulletin (closed period). The pub-
lication dates are announced annually over a
stock exchange release. CapMan’s Managers
and employees have been instructed to inform
their closely associated persons regarding
closed periods and trading restrictions on
CapMan’s financial instruments during the
closed period. According to the internal trad-
ing pre-approval procedure, the Managers and
the employees of CapMan Group are obliged
to request a written pre-approval from the
Compliance Officer before trading in financial
instruments issued by CapMan.
10.2 Principles regarding Related
Party Transactions
The company does not customarily enter into
transactions with its related parties which
would be significant for the company and
deviate from the ordinary course of business
or would be conducted in deviation from
customary market terms. Possible significant
and out of ordinary transaction deviating
from market terms would be discussed in the
Board meeting. The Board also confirms the
company’s principles regarding related party
transactions. The related party transactions
are monitored by the financial administra-
tion and the legal function as part of the
company’s customary reporting and control
processes and the related parties are instruct-
ed of the related party matters. The company
maintains a list of its related parties and their
acts are reported in the financial statements.
Significant related-party transaction are pub-
lished as needed.
10.3 Audit fees
Ernst & Young Oy, authorised public account-
ants, acted as auditor of the company in
2020. Ms. Ulla Nykky, APA, acted as the lead
auditor. The audit fees paid to the audi-
tor amounted to 283,000 euros (249,000
euros in 2019) and the fees related to other
non-audit related services amounted to
28,000 euros (107,000 euros in 2019).
10.4 Internal audit
Taking into account the nature and extent of
the company’s business CapMan has not con-
sidered it necessary to organise internal audit
as a separate function. The internal audit of
the licensed operation has been outsourced
to an external service provider. CapMan has in
recent years increased the number of person-
nel in compliance and risk management func-
tions in order to ensure that the operations
comply with laws and regulations and that the
risks are identified, monitored and managed
appropriately.
Helsinki, 3 February 2021
CAPMAN PLC
Board of Directors
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
26
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
Andreas Tallberg
Chairman of the Board of Directors
Education: M.Sc. (Econ.)
At CapMan since: Chairman of the Board of
Directors since 2017
Holdings in CapMan Plc (31 December 2020):
804,530 shares
Board Committees: Remuneration Committee
(Chairman)
Main Occupation: Chairman and CEO, Oy G.W.
Sohlberg AB
Key Board Memberships: CapMan Plc (Chairman),
Nissala Oy (Chairman), Mehiläinen (Chairman),
Parmaco Oy (Chairman), Realia Group (Chairman),
Rothschild Nordic AB (Member of the Board), Altor
(Senior Advisor)
Andreas Tallberg has served as the CEO of Finnish
investment company Oy G.W. Sohlberg Ab since
2007. He is a Senior Adviser at Rothschild & Co.
Between 1996 and 2006 he was a senior partner
at EQT. Before this, he has worked in business
development for Nokia Corporation, Wilson Sporting
Goods and Amer Group. Tallberg also has extensive
experience from board work. He has been Chairman
of the Board of Glaston Oyj, Detection Technology
Oyj, Staffpoint, Perlos Oyj, TG Group and Wulff Oyj.
Tallberg was also the Deputy Chairman of the Board
of Lite-On Mobile and a member of the Board of
Directors at Handelsbanken Finland Branch.
Catarina Fagerholm
Member of the Board of Directors
Education: M.Sc. (Econ.)
At CapMan since: Member of the Board of Directors
since 2018
Holdings in CapMan Plc (31 December 2020):
73,011 shares
Board Committees: Audit Committee,
Remuneration Committee
Main Occupation: Board professional
Key Board Memberships: Attendo Abp,
CapMan Plc, Restel Oy
Catarina Fagerholm served as CEO for Instru
Optiikka Ltd from 2007 to 2018. She was Member
of the Board, Deputy Chairman of the Board in Altia
Oy between 2008 and 2015. She was Member of
the Board in Kaupan liitto during 2013–2018 and
Atasun Optik during 2012–2014. During 1998–2006
she was CEO of BSH Kodinkoneet Ltd (Finland and
Baltics) as well as member of the Management
Group in BSH Hausgeräte Northern Europe. Between
1996–1998 Fagerholm was Country and Brand
Director in Electrolux/AEG (Finland, Russia, Baltics).
She has had several managerial positions in Amer
Group Ltd in 1987–1996.
Mammu Kaario
Deputy Chairman of the Board of Directors
Education: LL.M., MBA
At CapMan since: Member of the Board of Directors
since 2017
Holdings in CapMan Plc (31 December 2020):
38,071 shares
Board Committees: Audit Committee (Chairman)
Main Occupation: Board professional
Key Board Memberships: CapMan Plc (Deputy
Chairman), Ponsse Oyj, Aspo Oyj, Robit Oyj, Lapti
Oy, Gofore Oy, NordicID
Mammu Kaario has more than 25 years of
experience from the finance industry. She was CEO
of Partnera Oy between 2016 and 2017 and an
investment manager at Korona Invest between 2011
and 2016. Further, Kaario was a partner at Unicus
Ltd between 2005 and 2010 and has held several
financial advisory positions between 2004 and 2010.
Before this, Kaario was an investment banker for 15
years at Conventum Oyj, among others.
Board of
Directors
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
27
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
Olli Liitola
Member of the Board of Directors
Education: M.Sc. (Eng.)
At CapMan since: Member of the Board of Directors
since 2019
Holdings in CapMan Plc (31 December 2020):
2,150,000 shares
Main Occupation: Board professional
Key Board Memberships: CapMan Plc, Bright Group
Oy, Harvia Group Plc (Chairman),
Olli Liitola has over 25 years of experience in private
equity. Liitola has worked at CapMan since 1991
and has acted in several management positions at
CapMan Group, among others as CFO and Senior
Partner. Liitola has extensive experience in board
work. He has acted as Chairman of the Board at
Lunawood Oy, Puulämpö Yhtiöt Oy and PPTH-
Norden Oy and been a Member of the Board at
Pretax Oy and NICE Entertainment Group Oy.
Johan Hammarén
Member of the Board of Directors
Education: LL.M, BSc. (Econ.)
At CapMan since: Member of the Board of Directors
since 2020
Holdings in CapMan Plc (31 December 2020): –
Main Occupation: CEO, Oy Hammarén & Co Ab,
Board professional
Key Board Memberships: CapMan Plc, Fondia
Oyj, Aktia Bank Oyj, Silvertärnan Ab, Pieni Kirahvi
Oy Ab (Kanniston Leipomo), Naava Group Oy,
Livränteanstalten Hereditas Ab, Smartblock Oy, Oy
Hammarén & Co Ab
Johan Hammarén is CEO of Oy Hammarén & Co
Ab. He is one of the founders of JAM Advisors and
served in several management positions in the
company between 2012 and 2018. Prior to JAM
Advisors, he was one of the founders of Fondia
Oyj where he had several management positions in
2006–2012. Hammarén served in different legal
roles in Nokia between 2000 and 2006.
Eero Heliövaara
Member of the Board of Directors
Education: M.Sc. (Eng.), M.Sc. (Business Admin.)
At CapMan since: Member of the Board of Directors
since 2018
Holdings in CapMan Plc (31 December 2020): 92,000
shares
Board Committees: Remuneration Committee
Main Occupation: Board professional
Key Board Memberships: CapMan Plc, Sitowise Oy
(Chairman), YIT Oyj (Chairman), Finnish Foundation of
Economic Education, Lympha Touch Ltd, Foundation
of the Finnish Cancer Institute, Saastamoinen
Foundation, DIF — Directors Institute of Finland
Eero Heliövaara was Director General in the Prime
Minister´s Office during 2013–2017. During
2010–2012 Heliövaara served as Board professional
and angel investor. He was President and CEO in
SRv Group Plc during 2006–2009. In 2001–2005
he was President and CEO of Pohjola Group Plc.
In 1998–2001 he was Executive vice President and
Chief Investment Officer in Mutual Pension Insurance
Company Ilmarinen. He worked as Managing Director
of Merita Asset Management Ltd during 1996–1998
and as First vice President in Merita Pankki, Private
Banking in 1994–1996. During 1991–1994 Heliövaara
served as Managing Director of Union Bank of
Luxembourg International S.A. In 1987–1991, he
served as Managing Director of Arctos Capital Ltd,
Financial Director of Spontel Ltd in 1985–1987 and as
Financial Analyst in Industrialisation Fund of Finland
Ltd during 1982–1985.
Peter Ramsay
Member of the Board of Directors
Education: M.Sc. (Econ.)
At CapMan since: Member of the Board of Directors
since 2019
Holdings in CapMan Plc (31 December 2020):
10,000 shares
Board Committees: Audit Committee
Main Occupation: CFO and Chief Investment Officer,
veikko Laine Group
Key Board Memberships: CapMan Plc, Puro Finance
Oy (Chairman)
Peter Ramsay has over 30 years of experience in
the finance industry. He has acted Chief Investment
Officer at veikko Laine Oy Group since 2014. In
2013–2014 he acted as Chief Investment Officer
at FIM varainhoito Group and as CEO at FIM Plc
during 2011–2013. Ramsay served as CEO at Avenir
Rahastoyhtiö Oy during 2000–2011. In 1995–2000
he worked in several management positions at
Enskilda Securities (SEB AB) and during 1990–1995
in many positions at Alfred Berg Fondkommission
AB and at Opstock Pankkiiriliike Oy.
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
28
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
Joakim Frimodig
CEO
Education: BA, Oxon
At CapMan since: 2016
Holdings in CapMan Plc (31 December 2020):
1,015,500 shares directly*
*In addition, Joakim Frimodig’s holding company
Boldhold Oy is a minority owner in Silvertärnan Ab,
which owns 10.37% of all shares in CapMan Plc
Joakim Frimodig has been the CEO of CapMan since
September 2017 and a Management Group member
since 2016. He joined CapMan from Summa
Capital, where he worked for the past 12 years, most
recently as Deputy Managing Partner. Prior to that,
he worked for Alfred Berg and ABN Amro Corporate
Finance.
Anna Berglind
Head of People and Culture
Education: M.Sc. (Soc.), Certified Business Coach
At CapMan since: 2018
Holdings in CapMan Plc (31 December 2020):
140,940 shares
Anna Berglind has been Head of People and
Culture and member of the Management Group in
CapMan from August 2018. Before joining CapMan,
she was vice President, Human Resources during
2013–2018 and HR Manager during 2010–2013 at
Mandatum Life.
CapMan
Management
Group
Christian Borgström
Managing Partner, CapMan Wealth Services
Education: M.Sc. (Econ.)
At CapMan since: 2019
Holdings in CapMan Plc (31 December 2020):
843,000 shares
Christian Borgström is the Managing Partner of
CapMan Wealth Services. He has more than 25
years of working experience on financial markets
working with asset management as well as corporate
analysis tasks both in Finland and abroad.
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
29
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
Maximilian Marschan
Managing Partner, CaPS
Education: M.Sc. (Econ.)
At CapMan since: 2009
Holdings in CapMan Plc (31 December 2020):
109,700 shares, 25,000 2016 options
Maximilian Marschan is the founder of CaPS
and is responsible for the overall management of
CaPS. Prior to joining CapMan in 2009, Maximilian
has managed different sales and procurement
organisations for more than 10 years both in Finland
and abroad.
Niko Haavisto
CFO
Education: M.Sc. (Business)
At CapMan since: 2010
Holdings in CapMan Plc (31 December 2020):
499,510 shares
Niko Haavisto has been CapMan’s CFO since
2010. Prior to joining CapMan he worked for
Oriola-KD Corporation as Director of Financial
Control and Planning. Before that he worked
as financial controller at GE Healthcare
Finland and as Authorised Public Auditor at
PricewaterhouseCoopers.
Pia Kåll
Managing Partner, Buyout
Education: M.Sc. (Eng.)
At CapMan since: 2016
Holdings in CapMan Plc (31 December 2020):
100,200 shares
Pia Kåll joined CapMan Buyout in 2016 as a partner
and was designated managing partner in 2017
and joined CapMan Management group. Before
joining CapMan, Kåll was on the Executive Board
of Outotec, where she was responsible for Strategy,
M&A, Marketing and Operational Excellence.
Previously she worked at McKinsey&Company as a
management consultant in 2006–2013.
Mika Matikainen
Managing Partner, Real Estate
Education: M.Sc. (Econ.), M.Sc. (Soc.)
At CapMan since: 2006
Holdings in CapMan Plc (31 December 2020):
113,850 shares
Mika Matikainen joined CapMan Real Estate in 2006,
one year after the inception of the team. He became
the head of CapMan Real Estate and a management
group member of CapMan in 2010. Since then,
Matikainen has been responsible for the expansion
of CapMan Real Estate from a local Finnish player
into a pan-Nordic asset manager. Prior to CapMan,
he worked for UBS Investment Bank in London.
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
30
REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
Ville Poukka
Managing Partner, Infra
Education: M.Sc. (Econ.)
At CapMan since: 2017
Holdings in CapMan Plc (31 December 2020):
131,466 shares
ville Poukka has 15 years of experience in
investment banking and private equity. Poukka has
extensive and unique track record of energy and
infrastructure transactions. During his career, he has
worked as leading advisor and originator in several
infrastructure transactions across Nordic and Baltic
countries. Before CapMan Poukka worked at Danske
Bank as Managing Director and was responsible
for Nordic Energy and Infrastructure sector team in
M&A advisory.
Mari Simula
Head of Fund Investor Relations
Education: M.Sc. (Eng.)
At CapMan since: 2007
Holdings in CapMan Plc (31 December 2020):
297,392 shares
Mari Simula has held several roles at CapMan
since 2007 and before her current position, she
worked as a Partner at Scala Fund Advisory. Simula
has long experience from fund investor relations,
fundraising, as well as business development and
strategy projects within the private assets industry.
In her current role, she is responsible for group-
level fundraising and fund investor relations. Prior
to joining CapMan, she did research on the private
equity industry at the Research Institute of the
Finnish Economy, Etla.
Juha Mikkola
Managing Partner, Growth
Education: B.Sci, MBA
At CapMan since: 2017
Holdings in CapMan Plc (31 December 2020):
188,312 shares
Juha Mikkola has over 25 years of experience in
private equity. During his career he has raised
several private equity funds and helped build dozens
of successful companies. Before heading the
Growth team at CapMan, Mikkola was responsible
for successfully managing Norvestia’s Growth
investments since 2011. Prior to that, he was
a partner at Eqvitec. He has also been involved
in starting the operations of Finland Industry
Investment Ltd.
CAPMAN ANNUAL REPORT 2020 • CORPORATE GOvERNANCE
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REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP CORPORATE GOVERNANCE
CAPMAN ANNUAL REPORT 2020 • REPORT Of ThE BOARd Of diRECTORs
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Report of the Board of Directors
Group turnover and result in 2020
CapMan Group’s turnover totalled MEUR 43.0 in the financial
year spanning 1 January–31 december 2020 (1 January–31
december 2019: MEUR 49.0). The 12 per cent decrease in
turnover was mainly due to lower carried interest income as
well as lower transaction-based service fees compared to the
comparison year. Recurring fees of the Management Company
and service business grew by 16 per cent in total.
Operating expenses were MEUR 35.1 (MEUR 41.8) in total.
Personnel expenses, including incidentals, were MEUR 22.0
(MEUR 23.5). depreciations and amortisations were MEUR 1.5
(MEUR 5.6). Other operating expenses amounted to MEUR 9.7
(MEUR 12.1) and reflect cost savings realised during the year
2020. Operating expenses also included additional expenses
related to the termination of the 2018 performance share plan,
expenses related to the reorganisation of the service business
and the establishment of special situations as a new invest-
ment area – MEUR 1.7 in total. The comparison period includ-
ed expenses of MEUR 5.7 mainly related to the impairment of
goodwill related to CapMan’s Russia business, the acquisition
of JAM Advisors and donations, which were reported as items
affecting comparability.
fair value changes of investments were MEUR +4.4 (MEUR
+12.3) for 2020. fair values of investments recovered after
April 2020 following the sharp decline in the beginning of the
year brought on mainly by the global Covid-19 pandemic. The
accelerated improvement in the fourth quarter of the year was
due to positive fair value changes in funds on a broad scale.
The Group’s operating profit was MEUR 12.3 (MEUR 19.4).
Operating profit excluding items affecting comparability was
MEUR 12.3 (MEUR 25.0).
financial income and expenses amounted to MEUR -3.1
(MEUR -1.8). Profit before taxes was MEUR 9.2 (MEUR 17.6)
and profit after taxes was MEUR 6.3 (MEUR 15.9).
diluted earnings per share were 3.3 cents (9.0 cents).
diluted earnings per share excluding items affecting compara-
bility were 3.3 cents (11.6 cents).
Turnover, operating profit and results per segment are
described in the Notes to the financial statements in section 2
segment information.
Management Company business
Turnover generated by the Management Company business for
the year totalled MEUR 30.9 (MEUR 32.8), a decrease of 6 per
cent mainly due to lower carried interest income compared to
the comparison year.
Management fees were MEUR 28.9 (MEUR 24.7), growth
was 17 per cent. several new funds contributed favourably to
management fees for the period. full contribution to manage-
ment fees from the newest CapMan Growth ii and CapMan
Nordic Real Estate iii funds will be visible in 2021. At the same
time, management fees decreased in older funds as part of the
funds’ normal life cycle. Of the turnover, 97 per cent was based
on long term contracts (79 per cent during the comparison
period).
Carried interest income for the review period totalled MEUR
0.9 and was received mainly from Access Capital funds. in the
comparison period, carried interest was MEUR 6.9 mainly due
to the sale of assets from the previous hotels real estate fund
to the new hotels real estate fund.
Operating expenses of the Management Company business
amounted to MEUR 21.9 (MEUR 26.8). Operating profit of
the Management Company business was MEUR 9.1 (MEUR
6.0), while profit for the year was MEUR 7.1 (MEUR 5.3). The
expenses for the comparison period included the impairment
of the goodwill of the Russia business, which was reported as
an item affecting comparability.
Service business
Turnover generated by service business totalled MEUR 11.4
(MEUR 15.7) and the 28 per cent decrease year-over-year
was mainly due to lower transaction-based fees in the second
and third quarter compared to the corresponding period last
year. Losses from negative exchange rate effects on long-term
dollar-denominated receivables were also included in service
business turnover.
The service business was reorganised in the third quarter of
the year and starting from August 2020, its service entities are
CapMan Wealth services (previously wealth advisory services
provided by JAM Advisors and scala’s investor services), JAY solu-
tions (previously JAM Advisors’ reporting and analytics business)
and procurement service CaPs. Recurring service fees increased
during the review period. JAM Advisors was consolidated as of 27
february 2019. Of the turnover, 79 per cent was based on long
term contracts (50 per cent during the comparison period).
Operating expenses of the service business amounted to
MEUR 6.4 (MEUR 6.9). The operating profit of the service
business was MEUR 5.0 (MEUR 9.1). The profit for the year was
MEUR 4.0 (MEUR 7.3).
Investment business
Change in fair value of investments was MEUR +4.4 in 2020
(MEUR +12.3 in 2019). Valuations increased in general over the
second, third and fourth quarters following a decrease in the
beginning of the year mainly due to the Covid-19 pandemic. fair
values increased overall during the second and third quarter of
the year. The positive development accelerated in the last quar-
ter of the year due to strong development of funds.
Operating expenses of the investment Business were MEUR
0.4 for the review period (MEUR 2.0).
Operating profit for the investment business was MEUR
4.0 (MEUR 10.2). Comparable operating profit was MEUR 4.0
(MEUR 10.4). Profit for the investment business was MEUR 0.8
(MEUR 8.0).
CAPMAN ANNUAL REPORT 2020 • REPORT Of ThE BOARd Of diRECTORs
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Table 1: CapMan’s investments booked at fair
value as at 31 December 2020
Fair value 31 December 2020 (MEUR)
fund investments 116.1
Other long-term investments 0.2
Market portfolio 0.3
Total 116.6
fair value of fund investments was MEUR 116.1 on 31
december 2020 (31 december 2019: MEUR 115.9). fair value
changes of fund investments were MEUR +7.1 in 2020 (MEUR
+9.7), representing a 5.6 per cent increase in value (2019: +9.5
per cent). The positive change in the fair value of fund invest-
ments was mainly due to the generally positive development
in funds across the board after April 2020. fair values have
increased especially in the last quarter of the year.
CapMan invested a total of MEUR 17.9 in 2020 (MEUR
38.0). CapMan received distributions from funds totalling
MEUR 24.7 (MEUR 17.5). The amount of remaining commit-
ments that have not yet been called totalled MEUR 109.1 as
at 31 december 2020 (31 december 2019: MEUR 103.8) and
include commitments to the newest Buyout, infra, Real Estate
and Growth funds.
The fair value change of other long-term investments was
MEUR -2.5 (MEUR +0.2) during the year mainly due to the
write-down of one asset.
The fair value of CapMan’s remaining market portfolio was
MEUR 0.3 on 31 december 2020 (31 december 2019: MEUR
10.8) and consisted of listed stocks.
investments in portfolio companies are valued at fair value
in accordance with the international Private Equity and Venture
Capital Valuation Guidelines (iPEVG). fair values of invest-
ments, sensitivity analysis by investment area and remaining
commitments are presented in sections 29 and 32.
Balance sheet and financial position as
at December 2020
CapMan’s balance sheet totalled MEUR 218.8 as at 31
december 2020 (31 december 2020: MEUR 216.5). Non-
current assets amounted to MEUR 146.4 (MEUR 151.3), of
which goodwill totalled MEUR 15.3 (MEUR 15.3). Goodwill was
written down in the end of 2019 following an impairment of the
CapMan Russia business.
As at 31 december 2020, fund investments booked at fair
value totalled MEUR 116.1 (MEUR 115.9 as at 31 december
2019).
Other financial assets booked at fair value were MEUR 0.2
(MEUR 2.7).
Long-term receivables amounted to MEUR 9.1 (MEUR 9.4).
Current assets amounted to MEUR 72.3 (MEUR 65.2). finan-
cial assets booked at fair value, i.e. current investments, were
MEUR 0.3 (MEUR 10.8) and included the market portfolio. Cash
in hand and at banks amounted to MEUR 58.0 (MEUR 43.7).
CapMan’s interest-bearing debt amounted to MEUR 25.5 as
at 31 december 2020 (MEUR 9.3). CapMan drew MEUR 20 of
its long-term credit facility and issued a MEUR 50 senior bond in
2020. With the proceeds from the bond, CapMan repaid MEUR
18.5 million of its senior bond issued in 2018 and the drawn
long-term credit facility. CapMan’s total interest-bearing debt as
at 31 december 2020 is outlined in Table 2.
CapMan Plc’s bond and long-term credit facility include
financing covenants, which are conditional on the company’s
equity ratio and net gearing ratio. CapMan honoured all
Table 2: CapMan’s interest bearing debt
Debt amount 31
Dec 2020 (MEUR) Matures latest Annual interest (%)
Debt amount 31
Dec 2019 (MEUR)
senior bond (issued in 2018) 31.5 Q2 2023 4.13% 50
senior bond (issued in 2020) 50 Q4 2025 4.00% -
Long-term credit facility (drawn/available) 0/40 Q2 2022 2.00% 0/40
covenants as at 31 december 2020.
Trade and other payables totalled MEUR 11.1 on 31
december 2020 (31 december 2019: MEUR 20.2).
The Group’s cash flow from operations totalled MEUR -11.9
for 2020 (MEUR -0.4). The larger negative net cash flow from
operations compared to the comparison year included MEUR
-7.4 in repayment of carried interest (clawback) and MEUR
-3.0 in withholding taxes related to the execution of the 2018
performance share plan, among others. CapMan receives
management fees from funds semi-annually, in January and
July, which is shown under working capital in the cash flow
statement. Cash flow from investments totalled MEUR +17.5
(MEUR +16.9) and includes, inter alia, investments and repaid
capital received by the Group, including the disposal of the
market portfolio.
Cash flow before financing totalled MEUR +5.6 (MEUR
+16.5) and reflects the development in the Management
Company business, service business and investment business.
Cash flow from financing was MEUR +8.8 (MEUR -27.4) and
included the issue of the 2020 senior bond, the partial repay-
ment of the 2018 senior bond and the distribution of dividends
and equity repayment.
Capital under management as at
31 December 2020
CAPMAN ANNUAL REPORT 2020 • REPORT Of ThE BOARd Of diRECTORs
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Key figures 31 December 2020
CapMan’s return on equity was 5.2 per cent on 31 december
2020 (31 december 2019: 12.7 per cent) and return on invest-
ment 6.3 per cent (10.5 per cent). Comparable return on equity
was 5.2 per cent (16.0 per cent) and comparable return on
investment was 6.3 per cent (13.5 per cent). Equity ratio was
51.9 per cent (59.9 per cent).
According to the CapMan’s long-term financial targets, the
target level for the company’s return on equity is on average
over 20 per cent. The objective for the equity ratio is more than
60 per cent.
Table 4: CapMan’s key figures
31.12.2020 31.12.2019
Earnings per share, cents 3.3 9.2
diluted, cents 3.3 9.0
Adjusted earnings per share,
diluted, cents 3.3 11.6
shareholders' equity / share,
cents 72.7 85.1
share issue adjusted number
of shares, avg. 155,796,829 152,154,735
Return on equity, % 5.2 12.7
Return on equity, comparable,
% 5.2 16.0
Return on investment, % 6.3 10.5
Return on investment,
comparable, % 6.3 13.5
Equity ratio, % 51.9 59.9
Net gearing, % 22.5 7.2
Proposal of the Board of Directors regarding
distribution of funds
CapMan Plc’s objective is to distribute an annually growing
dividend to shareholders. CapMan Plc’s Board of directors
will propose to the Annual General Meeting (AGM) to be
held on 17 March 2021 that a total of EUR 0.14 per share
would be paid to shareholders, equivalent of a total of MEUR
21.9, from distributable funds for 2020. The distribution of
funds would be divided in a dividend of EUR 0.02 per share,
equivalent to a total of approx. MEUR 3.1 as well as an
equity repayment of EUR 0.12 per share to be returned from
the invested unrestricted equity fund, equivalent to a total of
approx. MEUR 18.8. CapMan’s distributable funds amounted
to MEUR 72.2 on 31 december 2020. The dividend and
equity repayment would be paid in two equal instalments six
months apart.
Andreas Tallberg, Chairman of the Board of
CapMan
“CapMan’s Board of directors proposes that a total of 14 cents
per share of dividends and equity repayments be paid out for
2020. in line with increasingly frequent market practice, we
propose that the distribution is to be executed in two instal-
ments starting from the year 2021. CapMan’s objective is to
pay an annually increasing dividend to its shareholders and
the company grows its distribution to shareholders for eight
consecutive years following this proposal.”
Capital under management refers to the remaining investment
capacity, mainly equity, of funds and capital already invested at
acquisition cost or at fair value, when referring to mandates and
the hotels real estate fund. Capital under management is calcu-
lated based on the capital, which forms the basis for manage-
ment fees, and includes primarily equity without accounting for
the funds’ debt. Capital increases as fundraising for new funds
progresses or as investments are executed under investment
mandates and declines as exits are completed.
Capital under management was MEUR 3,827 as at 31
december 2020 (31 december 2019: MEUR 3,245). The
increase in capital under management was mainly due to the
establishment and commitments to CapMan Nordic Real Estate
iii and CapMan Growth ii funds, as well as the expansion of
the real estate mandate. The debt for the new hotels real estate
fund has been included in capital under management in line
with the previous hotels RE fund. Capital under management
per fund type is displayed in Table 3.
Table 3: Capital under management
(incl. funds and mandates)
31.12.2020
(MEUR)
31.12.2019
(MEUR)
Real Estate 2,440 1,931
Private Equity & Credit 998 973
infra 357 293
Other 32 48
Total capital under manage-
ment (incl. Hotels II fund debt) 3,827 3,245
CAPMAN ANNUAL REPORT 2020 • REPORT Of ThE BOARd Of diRECTORs
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
CapMan Plc’s Board of Directors and
Management Group
The members of CapMan Plc’s Board of directors as of the
end of 2020 were Andreas Tallberg (Chairman), Mammu Kaario
(deputy Chairman), Catarina fagerholm, Johan hammarén,
Eero heliövaara, Olli Liitola and Peter Ramsay.
The members of CapMan Plc’s Management Group as of
the end of 2020 were Joakim frimodig (CEO), Niko haavisto
(CfO), Anna Berglind (head of People and Culture), Christian
Borgström (Managing Partner, CapMan Wealth services),
Pia Kåll (Managing Partner, Buyout), Maximilian Marschan
(Managing Partner, CaPs), Mika Matikainen (Managing Partner,
Real Estate), Juha Mikkola (Managing Partner, Growth), Ville
Poukka (Managing Partner, infra) and Mari simula (director,
fund investor Relations).
Publication of the Financial Statements
and the Report of the Board of Directors,
and the Annual General Meeting for 2021
CapMan Group’s financial statements and the Report of the
Board of directors for 2020 will be published as part of the
company’s Annual Report for 2020 in february 2021 during
week 8. CapMan Plc’s 2021 AGM will be held on Wednesday 17
March 2021 at 10:00 a.m. in helsinki.
The Notice to the Annual General Meeting and other propos-
als of the Board of directors to the Annual General Meeting are
published by 23 february 2021 the latest.
Complete financial statements, as required under the terms
of the finnish Companies Act, will be available on CapMan’s
website by 23 february 2021 the latest.
Corporate Governance Statement
CapMan Plc’s Corporate Governance statement will be
published separately from the Report of the Board of directors
as part of the company’s Annual Report for 2020 during
week 8 and will be available on the company’s website by 23
february 2021 the latest.
Decisions of the 2020 Annual General
Meeting
Decisions of the AGM regarding distribution of
funds
CapMan’s 2020 Annual General Meeting (AGM) decided in
accordance with the proposal of the Board of directors, that
a dividend of EUR 0.04 per share and an equity repayment of
EUR 0.09 per share be paid from the distributable profits and
the invested unrestricted equity fund of the company, EUR 0.13
per share in total. The dividend and equity repayment were
paid on 20 March 2020. decisions regarding the distribution
of funds have been described in greater detail in the stock ex-
change releases on the decisions taken by the General Meetings
issued on 11 March 2020.
Decisions of the AGM regarding the composition
of the Board
The 2020 AGM decided that the Board of directors comprises
seven members. Mr. Andreas Tallberg, Ms. Catarina fagerholm,
Mr. Johan hammarén, Mr. Eero heliövaara, Ms. Mammu Kaario,
Mr. Olli Liitola and Mr. Peter Ramsay were elected members of
the Board of directors for a term of office expiring at the end
of the next Annual General Meeting. The Board composition
and remuneration have been described in greater detail in the
stock exchange releases regarding the decisions of the AGM
and the organisational meeting of the Board issued on 11
March 2020.
Authorisations given to the Board by the AGM
The 2020 AGM authorised the Board of directors to decide on
the repurchase and/or on the acceptance as pledges of the
company’s shares. The number of shares concerned shall not
exceed 14,000,000, which corresponds to approx. 9.09 per
cent of all shares in the company.
The AGM also authorised the Board to decide on the
issuance of shares and other special rights entitling to
shares. The number of shares to be issued shall not exceed
14,000,000 shares, which corresponds to approx. 9.09 per
cent of all shares in the company.
The authorisation shall remain in force until the end of the
following AGM and 30 June 2021 at the latest.
further details on these authorisations can be found in the
stock exchange release on the decisions taken by the AGM issued
on 11 March 2020.
Shares and shareholders
Shares and share capital
There were no changes in CapMan’s share capital during the
review period.
share capital totalled EUR 771,586.98 as at 31 december
2020. CapMan had 156,458,970 shares outstanding as at
31 december 2020 (153,754,648 shares as at 31 december
2019). CapMan issued 2,002,208 shares in a directed share
issue without payment to implement the share payments of its
Performance share Plan 2018.
All shares generate equal voting rights (one vote per share)
and rights to a dividend and other distribution to shareholders.
CapMan Plc’s shares are included in the finnish book-entry
system.
Company shares
As at 31 december 2020, CapMan Plc held a total of 26,299
CapMan shares, representing 0.02 % of shares and voting
rights. The market value of own shares held by CapMan was
EUR 61,013 as at 31 december 2020 (31 december 2019:
EUR 62,066). No changes occurred in the number of own
shares held by CapMan Plc during the review period.
CAPMAN ANNUAL REPORT 2020 • REPORT Of ThE BOARd Of diRECTORs
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Trading and market capitalisation
CapMan Plc’s shares closed at EUR 2.32 on 31 december
2020 (31 december 2019: EUR 2.36). The trade-weighted
average price for the review period was EUR 2.13 (EUR 1.85).
The highest price paid was EUR 2.89 (EUR 2.36) and the lowest
EUR 1.49 (EUR 1.48). The number of CapMan Plc shares
traded totalled 56.6 million (41.5 million), valued at MEUR
120.5 (MEUR 76.6).
The market capitalisation of CapMan Plc shares as at 31
december 2020 was MEUR 362.2 (31 december 2019: MEUR
361.9).
Shareholders
The number of CapMan Plc shareholders increased by 26
per cent from the corresponding period last year and totalled
25,075 as at 31 december 2020 (31 december 2019: 19,936).
There were no flagging notices issued during 2020.
As at 31 december 2020, Members of the Board of
directors and the CEO owned, directly or indirectly as benefi-
ciary holders, a total of 4,183,112 shares, which represented
2.7 per cent of all shares and votes.
details on CapMan Plc’s owners by sector and size, together
with the company’s major shareholders, nominee-registered
shares, and redemption obligation clauses covering company
shares are presented in section 23 share capital and shares.
Personnel
CapMan employed 146 people on average in 2020 (2019
average: 147), of whom 112 (110) worked in finland and the
remainder in the other Nordic countries, Luxembourg and the
United Kingdom. A breakdown of personnel by country is pre-
sented in section 6 Employee benefit expenses. As of 31 decem-
ber 2019, CapMan no-longer had employees based in Russia.
Compensation schemes
CapMan’s compensation scheme consists of short-term and
long-term compensation schemes.
The short-term scheme covers all CapMan employees, ex-
cluding CEO and CfO of the company, and its central objective
is earnings per share, for which the Board of directors has set
a minimum target.
The long-term scheme of CapMan consists of an investment
based long-term share-based incentive plan (Performance
share Plan) for key employees.
in the investment based long-term share-based incentive
plan the participants are committed to shareholder value
creation by investing a significant amount into the CapMan Plc
share. The investment-based long-term incentive plan includes
one performance period. The performance period commenced
on 1 April 2020 and ends on 31 March 2023. The participants
may earn a performance-based reward from the performance
period. The prerequisite for receiving reward on the basis of
the plan is that a participant acquires company’s shares or
allocates previously owned company’s shares up to the number
determined by the Board of directors. The performance-based
reward from the plan is based on the company share’s Total
shareholder Return (TsR) and on a participant’s employment
or service upon reward payment. The rewards from the Plan
will be paid fully in the company’s shares in 2023. The Board
shall resolve whether new shares or existing shares held by
the Company are given as reward. The target group of the Plan
consists of approximately 20 people, including the members of
the Management Group. following the new Performance share
Plan, CapMan’s Board of directors decided to shorten the per-
formance period of the investment-based long-term incentive
plan launched in 2018 by one year and correspondingly reduce
the reward amount from the 2018 plan by one-third.
As of 31 december 2020, CapMan Plc had one stock option
programme, stock Option Programme 2016, in place as part
of its incentive and commitment arrangements for key person-
nel. following the long-term incentive plan, CapMan will not
grant new options from the option plan 2016.
More information about the share-based incentive plan
and the terms of the option programmes can be found on
CapMan’s website at www.capman.com. Additional information
about compensation schemes is presented in section 30 share-
based payments.
Other significant events in 2020
in december, CapMan issued a EUR 50 million senior bond that
matures in 2025. The new bond extends the average maturity of
CapMan’s debt portfolio and is part of its efficient management.
The proceeds from the Notes offering have been used to refinance
certain existing indebtedness of the Company, including funding
the repurchase of a part of the Company’s existing notes by way
of a tender offer.
CapMan has terminated the CapMan Real Estate i Ky fund
and returned MEUR 7.4 to its investors in 2020 in accordance
with a clawback liability related to the fund. The realisation of
this clawback liability had a minor positive effect on CapMan’s
result for 2020 (MEUR 0.3). CapMan has no further clawback
provisions related to the repayment of its carried interest.
CapMan infra syndicated the investment of CapMan Nordic
infrastructure i fund in Norled, resulting in a decrease of the
fund’s share of the asset. CapMan received approx. MEUR
50 in co-investments in the asset from three international
institutional investors and CapMan remains as asset manager.
The fund reached a final close of approx. MEUR 190 in October
and CapMan infra’s assets under management reached approx.
MEUR 360 in total including mandates and club deals.
in August, CapMan established CapMan Nordic Real Estate
iii fund, which has raised MEUR 535 as of January 2021. in
line with its predecessor funds, CapMan Nordic Real Estate iii
makes value-add investments in office, necessity-driven retail
and select residential real estate in the Nordics.
in July, CapMan established CapMan Growth ii fund, which
reached a final close of MEUR 97. The fund exceeded its target
size. in line with its predecessor fund, CapMan Growth ii makes
minority investments in growing Nordic companies.
CapMan has reorganised its service business and establishes
CapMan Wealth services, a new service area that offers wealth
advisory services related to the listed and unlisted market to
family offices, smaller institutions and high net worth individ-
uals. CapMan Wealth services will partially replace the wealth
advisory services offered by JAM Advisors as well as investor-
focused services provided by scala. in June, the analytics and
reporting arm of JAM Advisors was launched as an inde-
pendent service provider called JAY solutions. Going forward,
CAPMAN ANNUAL REPORT 2020 • REPORT Of ThE BOARd Of diRECTORs
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
CapMan’s service business includes wealth advisory business
CapMan Wealth services, reporting service JAY solutions and
procurement service CaPs.
CapMan established CapMan special situations, an invest-
ment area focused on investing in underperforming or non-core
businesses and supports them through financial restructuring
and operational turnaround.
Christian Borgström, Managing Partner of JAM Advisors
and Maximilian Marschan, Managing Partner of CaPs, were
appointed members of CapMan Plc’s Management Group as of
1 february 2020.
Events after the end of the financial year
There were no significant events after the end of the financial year.
Significant risks and short-term
uncertainties
General risks
Private equity investment is generally subject to a risk of
non-liquid investments, among others, which means uncertain-
ty of the realisation of any increase in value, a risk concerning
general economic development and market situation and a
risk concerning the economy and political situation of target
countries. The most significant short-term risk is the Covid-19
pandemic and related restrictions, which impact the general
market development and therefore also CapMan’s business.
Risks related to CapMan’s business are detailed below.
Market risks
investment operations carried out by CapMan are subject to
general market risk. Market values can change, for example, be-
cause of fluctuations in the equity, fixed income, currency and
real estate markets. Changes in market values impact the result
of CapMan through the appreciations of its investment assets.
Changes in the equity markets influence the valuation of
unlisted portfolio companies because the valuation methods
used by funds include the share values of suitable listed com-
panies. Economic uncertainty may have a direct impact on the
success of the funds administered by CapMan, on the success
of CapMan’s investment activities, and also on the assets
available for investment or solvency of the current and potential
investors of the funds.
Risks related to the success of the business
The business operations of the CapMan Group have a material
risk of failure regarding the establishment of new private equity
funds and their fundraising. successful fundraising is important
to management fees and creates opportunities for receiving
carried interest income in the future. for example, poor perfor-
mance of investments made by funds managed by CapMan,
increasing competition or reasons that are independent of
CapMan may make it more difficult to raise funds from new or
current investors in the future.
Gaining new customers or the launch of new investment
areas, products or service businesses may also fail, which
may prevent or hamper the realisation of CapMan’s growth
objectives.
Risks related to fair value changes in portfolio
companies, real estate or infrastructure
investments
The values of portfolio companies can vary positively or nega-
tively within short periods if changes occur in the peer group or
in the interest in the company of potential buyers. As a result
of exit processes, significant return is typically realised on
successful investments also in the short term as the exit price
is based on strategic value and synergies created for the buyer,
and not directly on peer group multiples.
The fair values of real estate and infrastructure investments
may also vary between review periods based on changes in,
inter alia, demand, capacity, condition or exit process. The
variations are typically smaller compared to the variations in
the fair value of portfolio companies.
Risks related to carried interest and
performance-based income
The timing of exits and the magnitude of the potential carried
interest income is difficult to foretell. The transaction-based
fees of Wealth services may also vary significantly from period
to period.
Group companies managing a fund may in certain circum-
stances, pursuant to the terms of the fund agreement, have
to return carried interest income they have received (so-called
clawback). The obligation to return carried interest income ap-
plies typically when, according to the final distribution of funds,
the carried interest income received by the fund management
company exceeds the carried interest it is entitled to when the
fund expires.
CapMan recognises revenue from carried interest, to the
extent carried interest is based on realised cash flows and
repayment risk is estimated to be very low, CapMan is entitled
to carried interest, a confirmation on the amount has been
received and CapMan is relatively close to receiving it in cash.
Returned carried interest income based on clawback conditions
would in turn have a negative impact on CapMan’s result as a
potential clawback provision may not be sufficient.
Risks related to the availability or cost of
financing
The company’s financing agreements include financing cove-
nants and other conditions. Violation of covenants related to
financing agreements and a failure to fulfil other contractual
terms may cause the cost of financing to increase significantly
and even jeopardise continued financing for CapMan.
An unforeseen decrease in inbound cashflow for CapMan or
a faster than expected realisation of commitments could have
a negative impact on CapMan’s liquidity, which in turn would
increase the need for additional financing and result in higher
financing costs or force the company to dispose of its invest-
ments at suboptimal prices.
CAPMAN ANNUAL REPORT 2020 • REPORT Of ThE BOARd Of diRECTORs
38
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Risks related to the change in the regulatory
environment
Changes in the securities markets regulation, significant
domestic or international tax regulation or practice and regula-
tion generally applicable to business operations, or measures
and actions by authorities or requirements set by authorities,
or in the manner in which such laws, regulations and actions
are implemented or interpreted, as well as the application
and implementation of new laws and regulations, may have a
significant effect on CapMan’s business operations.
The impact of Covid-19 on CapMan’s business
The Covid-19 pandemic impacts CapMan’s business through,
among others, the following earnings streams:
Management fees: Management fees per fund are determined
at the establishment of a fund and are paid to the management
company, i.e. CapMan, twice per year based on the original
fund size, including commitments, over the fund’s investment
period (generally five years) following which management fees
are determined based on the at-cost value of the underlying
portfolio. These fees are long-term and highly predictable, and
we see little volatility in the near/mid future.
future management fees are affected mainly by new funds
raising and exits from existing funds. if ongoing fundraising
projects are postponed or delayed, management fee growth
prospects may be affected. Exits following the end of the
investment period reduces the aggregate at-cost price of the
remaining portfolio, on which management fees are based. if
exits are delayed due to increased uncertainty in the market,
management fees remain stable.
Carried interest income: The increased uncertainty, the impact
on value creation in the portfolio and delays in exit processes
may impact the timing and magnitude of funds to generate
carried interest, but it is too soon to tell what the impact will be.
CapMan does not provide guidance regarding carried interest.
Service fees: The impact of the Covid-19 pandemic on fees
from long-term service contracts is limited for the time being.
Transaction-based fees are more susceptible to market risk and
are therefore more volatile.
Investment business income: investment business income is
defined in the income statement as the change in fair value
of investments and consists of both realised and unrealised
changes. The impact has been hardest felt in the Private Equity
portfolio, although what the full short and mid-term impact will
be is difficult to determine. Because unlisted assets are valued
less frequently than listed assets, the impact of short-term
market shocks and volatility is in general less pronounced in
these asset classes compared to the listed market. however,
the effects may in turn take longer to process and the return to
so-called normal levels may be further along for unlisted assets.
Real Estate and infra funds have defensive characteristics and
may therefore perform better compared to other asset classes
in this market. The tenant base of real estate assets has an
impact on how susceptible their valuation is to the Covid-19
pandemic.
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 10 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 60 per cent.
Outlook estimate for 2021
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 2021. Our objective is to
improve the aggregate profitability of Management Company
and service businesses. These estimations do not include possi-
ble 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 compa-
nies 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 2021.
items affecting comparability are described in Note 2
together with segment information.
helsinki, 4 february 2021
CAPMAN PLC
Board of directors
CAPMAN ANNUAL REPORT 2020 • KEY fiGUREs
39
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Key Performance Indicators for CapMan Group
M€ 2016 2017 2018 2019 2020
Turnover
1)
26.7 31.1 33.5 49.0 43.0
Management fees 20.9 19.6 22.1 24.9 29.0
sale of services 5.7 7.1 10.3 17.2 13.1
Carried interest 0.0 4.4 1.0 6.9 0.9
Other operating income 0.1 0.0 0.0 0.0 0.1
Operating expenses -30.7 -33 -29.1 -41.8 -35.1
fair value gains/losses of investments
1)
22.6 21.3 7.6 12.2 4.4
Operating profit 18.7 19.5 12.0 19.4 12.3
Operating profit, comparable 14.5 23.9 12.0 25.0 12.3
financial income and expenses -3.1 -3.2 -2.7 -1.8 -3.1
share of the income of investments accounted for using the equity method 0.0 -0.1 0.0 0.0 0.0
Profit before taxes 15.6 16.2 9.3 17.6 9.2
Profit for the financial year 15.3 15.5 8.5 15.9 6.3
Return on equity (ROE), %
2)
14.7 11.5 6.8 12.7 5.2
Return on equity (ROE), comparable, %
2)
9.5 14.5 6.8 16.0 5.2
Return on investment (ROi), % 10.9 10.1 6.7 10.5 6.3
Return on investment (ROi), comparable, % 8.4 12.4 6.7 13.5 6.3
Equity ratio, % 56.6 60.0 58.7 59.9 51.9
Net gearing, % 14.5 19.4 4.3 7.2 22.5
dividends and return of capital paid
3)
13.0 16.1 17.7 20.0 21.9
Personnel (at year-end 2016, in average 2017–20) 108 113 117 148 146
1)
As of January 1, 2019, CapMan changed its accounting policy regarding classification of dividend and interest income from financial assets held for trading (“market portfolio”), and the figures for the comparison periods have been
restated. dividend and interest income from market portfolio previously included in turnover has been transferred to item fair value changes of investments.
2)
CapMan has changed the calculation of Return on equity (ROE) in 2019. Return on equity is calculated as profit for the period divided by average total equity (incl. non-controlling interests). Previously, ROE was calculated as profit
attributable to equity holders of the parent divided by average equity attributable to equity holders of the parent. The figures for the comparison periods have been restated accordingly.
3)
Proposal of the Board of directors to the Annual General Meeting for year 2020.
Key figures
CAPMAN ANNUAL REPORT 2020 • KEY fiGUREs
40
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Key Ratios Per Share
M€ 2016 2017 2018 2019 2020
Earnings per share, cents
1)
16.2 10.4 5.5 9.2 3.3
diluted earnings per share, cents
1)
16.1 10.2 5.4 9.0 3.3
Comparable diluted earnings per share, centsä
1)
11.2 13.0 5.4 11.6 3.3
shareholders’ equity/share, cents 98.6 87.3 82.6 85.1 72.7
dividend/share, cents
2)
9.0 11.0 12.0 13.0 14.0
dividend/earnings, %
2)
80.4 105.8 218.2 141.3 424.2
Average share issue adjusted number of shares during the financial year (‘000) 88,383 145,179 146,522 152,155 155,797
share issue adjusted number of shares at year-end (‘000) 143,313 145,626 147,142 153,755 156,459
Number of shares outstanding (‘000) 143,287 145,600 147,116 153,728 156,433
Own shares (‘000) 26 26 26 26 26
1)
Under ifRs, the EUR 15 million (2011–2012: EUR 29 million, 2013–2015: EUR 15 million) hybrid bond was included in equity, also when calculating equity per share. The interest on the hybrid bond (net of tax) for the financial year was
deducted when calculating earnings per share. The hybrid bond was redeemed in 2017, and therefore it does no longer have an impact on equity or earnings per share as of 2018.
2)
Proposal of the Board of directors to the Annual General Meeting for year 2020.
CAPMAN ANNUAL REPORT 2020 • KEY fiGUREs
41
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Key figures - CapMan Group
50
40
30
20
10
0
2016 2017 2018 20202019
TYÖNUMERO 1
Turnover and comparable operating
profit, M€
26.7
31.1
14.5
23.9
12.0
25.0
33.5
49.0
■ Turnover ■ Comparable operating profit
43.0
12.3
TYÖNUMERO 2
2016 2017 2018 20202019
Comparable earnings/share and
dividend/share
*
, €
*
CapMan’s objective is to distribute an annually
growing dividend to its shareholders. The Board
of Directors propose that a total distribution of
EUR 0.14/share to be paid for 2020.
0.11
0.13
0.05
0.09
0.11
0.12 0.12
0.03
0.13
0.14
■ Comparable earnings/share
■ Dividend/share
0.20
0.15
0.10
0.05
0.00
20
15
10
5
0
TYÖNUMERO 3
2016 2017 2018 20202019
Comparable ROI and ROE, %
■ Comparable Return on Equity (ROE)
■ Comparable Return on Investment (ROI)
9.5
14.5
6.8
8.4
12.4
6.7
13.5
6.3
16.0
5.2
60
50
40
30
20
10
0
2016 2017 2018 2020
2019
TYÖNUMERO 4
Equity ratio, %
51.9
56.6
60.0 58.7 59.9
CAPMAN ANNUAL REPORT 2020 • KEY fiGUREs
42
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Fees and carry
50
40
30
20
10
0
2016 2017 2018 2020
2019
TYÖNUMERO 5
Fees from Management Company
business and Services*, M€
26.6
26.2
31.9
41.6
*
Includes fee income from Management Company
and Service Business for 2017–2020 and fee
income on Group level for 2016.
41.4
16
12
8
4
0
2016 2017 2018 2020
2019
TYÖNUMERO 6
Comparable fee-based profitability*,
M€
13.2
*
Comparable operating profit of Management
Company and Service Business excl. carried
interest. Figure for 2016, preceding the change
in reportable segments, is based on comparable
operating profit on group level, excluding carried
interest income and Investment Business.
-0.6
3.0
6.2
12.4
12
10
8
6
4
2
0
2016 2017 2018 2020
2019
Comparable carried interest
income, M€
0.9
2.3
4.5
6.9
1.0
CAPMAN ANNUAL REPORT 2020 • KEY fiGUREs
43
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Investment business
50
40
30
20
10
0
TYÖNUMERO 10
Investments
in external
PE funds
Infra Growth OthersRussia Market
portfolio
Investments and commitments by type, M€
■ Investments by type ■ Remaining commitments
XX.X
3.6
3.6
4.4
1.1
1.1
19.5
19.5
16.4
14.0
13.9
17.9
29.8
0.3
Maneq
funds
1.6
0.6
Real Estate
12.3
39.3
Credit
2.6
1.5
Buyout
7.2
38.9
100
80
60
40
20
0
TYÖNUMERO 22
Allocation of long-term investments from balance sheet and undrawn commitments (%)*
■ Buyout ■ Real Estate ■ Russia ■ Credit ■ Growth Equity ■ Infrastructure ■ External Fund investments ■ Maneq ■ Other
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
*
The table shows the allocation of fund investments from balance sheet from 2010 onwards as well as undrawn commitments as of 31 December 2020.
2020
37%
11%
13%
18%
17%
6%
34%
12%
14%
17%
250
200
150
100
50
0
TYÖNUMERO 8
2016 2017 2018 20202019
Investments and commitments, M€
■ Investments at fair value
■ Remaining commitments
181.0
169.3
126.6
129.4
116.6
36.5
67.1
98.0
103.8
109.1
25
20
15
10
5
0
2016 2017 2018 2020
2019
TYÖNUMERO 9
Comparable result impact of own
investments, M€
12.8
19.1
10.4
6.5
4.0
50
40
30
20
10
0
TYÖNUMERO 10
Investments
in external
PE funds
Infra Growth OthersRussia Market
portfolio
Investments and commitments by type, M€
■
Investments by type ■ Remaining commitments
XX.X
3.63.6
4.4
1.11.1
19.519.5
16.4
14.0
13.9
17.9
29.8
0.3
Maneq
funds
1.6
0.6
Real Estate
12.3
39.3
Credit
2.6
1.5
Buyout
7.2
38.9
100
80
60
40
20
0
TYÖNUMERO 22
Allocation of long-term investments from balance sheet and undrawn commitments (%)*
■
Buyout ■ Real Estate ■ Russia ■ Credit ■ Growth Equity ■ Infrastructure ■ External Fund investments ■ Maneq ■ Other
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
*
The table shows the allocation of fund investments from balance sheet from 2010 onwards as well as undrawn commitments as of 31 December 2020.
2020
37%
11%
13%
18%
17%
6%
34%
12%
14%
17%
100
80
60
40
20
0
TYÖNUMERO 22
Allocation of long-term investments from balance sheet and undrawn commitments (%)*
■ Buyout ■ Real Estate ■ Russia ■ Credit ■ Growth Equity ■ Infrastructure ■ External Fund investments ■ Maneq ■ Other
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
*
The table shows the allocation of fund investments from balance sheet from 2010 onwards as well as undrawn commitments as of 31 December 2020.
2020
37%
11%
13%
18%
17%
6%
34%
12%
14%
17%
CAPMAN ANNUAL REPORT 2020 • KEY fiGUREs
44
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Calculation of key ratios
*Return on equity
(ROE), %
=
Profit / loss
x 100
shareholders’ equity (average)
Return on
investment (ROi), %
=
Profit / loss + income taxes + interest expense
and other financial expenses
x 100
Balance sheet total – non-interest bearing debts
(average)
Equity ratio, % =
Total shareholders’ equity
x 100
Balance sheet total – advances received
Net gearing, % =
Net interest-bearing liabilities
x 100
shareholders’ equity
Earnings per share
(EPs)
=
Profit/loss for the financial year – hybrid loan interest
share issue adjusted number of shares (average)
shareholders’
equity per share
=
shareholders’ equity
share issue adjusted number of shares
at the end of the financial year
dividend per share =
dividend paid in the financial year
share issue adjusted number of shares
at the end of the financial year
dividend per
earnings, %
=
dividend/share
Earnings/share
x 100
* CapMan has changed the calculation of Return on equity (ROE) in 2019. Return on equity is calculated as annualised profit for the period divided by average total equity (incl. non-controlling interests). Previously, ROE
was calculated as annualised profit attributable to equity holders of the parent divided by average equity attributable to equity holders of the parent. The figures for the comparison periods have been restated accordingly.
CAPMAN ANNUAL REPORT 2020 • fiNANCiAL sTATEMENTs
45
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Group statement of Comprehensive income (ifRs) ............46
Group Balance sheet (ifRs) ...............................................47
Group statement of Changes in Equity (ifRs) .....................48
Group Cash flow statement (ifRs) .....................................49
Notes to the Consolidated financial statements .................50
1. Accounting policies ............................................... 50
2. segment information ............................................57
3. Acquisitions ..........................................................59
4. Turnover ...............................................................59
5. Other operating income ........................................60
6. Employee benefit expenses ...................................60
7. depreciation .........................................................60
8. Other operating expenses .....................................61
9. Adjustments to cash flow statement
and total cash outflow for leases ...........................61
10. fair value gains/losses of investments ..................61
11. finance income and costs .....................................62
12. income taxes ........................................................62
13. Earnings per share ...............................................63
14. Tangible assets .....................................................63
15. Goodwill ...............................................................64
16. Other intangible assets .........................................64
17. investments at fair value through profit or loss ......65
18. Receivables - Non-current .....................................66
19. deferred tax assets and liabilities .........................67
20. Trade and other receivables ..................................68
21. financial assets at fair value through profit or loss 68
22. Cash and cash equivalents ....................................69
23. share capital and shares ......................................69
24. interest-bearing loans and
borrowings – Non-current ......................................71
25. Other non-current liabilities ..................................71
26. Trade and other payables – Current ....................... 71
27. interest-bearing loans and borrowings – Current ...71
28. financial assets and liabilities ..............................72
29. Commitments and contingent liabilities ................73
30. share-based payments .........................................74
31. Related party disclosures ......................................77
32. financial risk management ...................................79
Parent Company income statement (fAs) ........................... 88
Parent Company Balance sheet (fAs) .................................89
Parent Company Cash flow statement (fAs) ....................... 90
Notes to the Parent Company financial statements (fAs) ...91
signatures to the Report of the Board of directors
and financial statements ...................................................98
Auditor’s report (Translation of the finnish original) ............99
shares and shareholders ..................................................103
information for shareholders ............................................105
Financial Statements
CAPMAN ANNUAL REPORT 2020 • GROUP STATEMENT OF COMPREHENSIVE INCOME (IFRS)
46
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
1 000 EUR Note 2020 2019
Management fees 28,995 24,851
Sale of services 13,122 17,211
Carried interest 873 6,910
Turnover 2, 4 42,989 48,972
Other operating income 5 97 6
Employee benefit expenses 6 -23,916 -24,184
Depreciation and impairment 7 -1,503 -5,583
Other operating expenses 8 -9,728 -12,069
Fair value gains/losses of investments 10 4,398 12,250
Operating profit 12,339 19,392
Financial income and expenses 11 -3,120 -1,783
Profit before taxes 9,219 17,609
Income taxes 12 -2,941 -1,731
Profit for the financial year 6,278 15,878
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Translation difference 100 -62
Total comprehensive income 6,378 15,816
Profit attributable to:
Equity holders of the Company 5,142 13,963
Non-controlling interest 1,136 1,915
Total comprehensive income attributable to:
Equity holders of the Company 5,242 13,901
Non-controlling interest 1,136 1,915
Earnings per share for profit attributable to the equity holders of the Company:
Earnings per share (basic), cents 13 3.3 9.2
Earnings per share (diluted), cents 13 3.3 9.0
The Notes are an integral part of the Financial Statements.
Group Statement of Comprehensive Income (IFRS)
CAPMAN ANNUAL REPORT 2020 • GROUP BALANCE SHEET (IFRS)
47
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
1 000 EUR Note 31 Dec 2020 31 Dec 2019
ASSETS
Non-current assets
Tangible assets 14 2,619 3,428
Goodwill 15 15,314 15,314
Other intangible assets 16 725 797
Investments at fair value through profit and loss 17
Investments in funds 116,066 115,918
Other financial assets 191 2,731
Receivables 18 9,084 9,395
Deferred tax assets 19 2,439 3,726
Current assets
Trade and other receivables 20 14,017 10,792
Financial assets at fair value through profit and loss 21 312 10,768
Cash and bank 22 58,002 43,665
Total assets 218,768 216,534
1 000 EUR Note 31 Dec 2020 31 Dec 2019
EQUITY AND LIABILITIES
Capital attributable to the Company’s equity holders
23
Share capital 772 772
Share premium account 38,968 38,968
Other reserves 71,416 84,823
Translation difference -247 -348
Retained earnings 1,616 3,218
Total capital attributable to the Company’s equity
holders
Non-controlling interests 742 2,100
Total equity 113,266 129,533
Non-current liabilities
Deferred tax liabilities 19 2,703 2,156
Interest-bearing loans and borrowings 24 82,612 52,003
Other non-current liabilities 25 6,936 7,274
Current liabilities
Trade and other payables 26 11,075 20,159
Interest-bearing loans and borrowings 27 908 939
Current income tax liabilities 1,269 4,469
Total liabilities 105,502 87,000
Total equity and liabilities 218,768 216,534
Group Balance Sheet (IFRS)
The Notes are an integral part of the Financial Statements.
CAPMAN ANNUAL REPORT 2020 • GROUP STATEMENT OF CHANGES IN EQUITY (IFRS)
48
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Attributable to the equity holders of the Company
1 000 EUR Note Share capital
Share
premium account Other reserves
Translation
difference Retained earnings Total
Non-
controlling
interests
Equity on 1 January 2019 23 772 38,968 83,812 -286 -2,728 120,537 433
Profit for the year 13,963 13,963 1,915
Other comprehensive income for the year
Currency translation differences -61 -61
Total comprehensive income for the year -61 13,963 13,901 1,915
Share issue 9,027 9,027
Equity investment of non-controlling inter-
ests 397 397 418
Share subscriptions with options 1,130 1,130
Options and Performance Share Plan 732 732
Dividends and return of capital -9,146 -9,146 -18,291 -668
Equity on 31 December 2019 23 772 38,968 84,823 -348 3,218 127,433 2,100
Profit for the year 5,142 5,142 1,136
Other comprehensive income for the year
Currency translation differences 100 100
Total comprehensive income for the year 100 5,142 5,242 1,136
Share subscriptions with options 447 447
Performance Share Plan -994 -994
Dividends and return of capital -13,854 -6,282 -20,136 -1,708
Transactions with non-controlling interests 532 532 -786
Equity on 31 December 2020 23 772 38,968 71,416 -247 1,616 112,524 742
The Notes are an integral part of the Financial Statements.
Group Statement of Changes in Equity (IFRS)
CAPMAN ANNUAL REPORT 2020 • GROUP CASH FLOW STATEMENT (IFRS)
49
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Group Cash Flow Statement (IFRS)
1 000 EUR Note 2020 2019
Cash flow from operations
Profit for the financial year 6,278 15,878
Adjustments on cash flow statement 9 5,009 -6,540
Change in working capital:
Change in current non-interest-bearing
receivables
1)
-3,169 -3,812
Change in current trade payables and other
non-interest-bearing liabilities -12,551 1,308
Interest paid -3,197 -2,643
Taxes paid -4,277 -4,553
Cash flow from operations -11,907 -363
Cash flow from investing activities
Acquisition of subsidiaries -255 -540
Proceeds from sale of subsidiaries
2)
Investments in tangible and intangible assets -389 -561
Investments at fair value through profit and loss 17,670 12,390
Long-term loan receivables granted -410 -3,034
Receivables from long-term receivables 673 2,594
Interest received 166 158
Cash flow from investing activities 17,461 16,907
1 000 EUR Note 2020 2019
Cash flow from financing activities
Share issue 447 1,542
Proceeds from borrowings 69,724 130
Repayment of long-term loan 27 -38,590 -10,000
Payment of lease liabilities -942 -924
Dividends paid and return of capital -21,854 -18,958
Cash flow from other financing items 0 787
Cash flow from financing activities 8,784 -27,423
Change in cash and cash equivalents 14,337 -10,879
Cash and cash equivalents at start of year 43,665 54,544
Cash and cash equivalents at end of year 22 58,002 43,665
1)
Includes carried interest recognised in the income statement during the period and received after the end of the
reporting period.
2)
Gain on sale of subsidiaries is included in turnover of the Consolidated Statement of Comprehensive Income, on
line item Carried interest
The Notes are an integral part of the Financial Statements.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
50
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Notes to the Consolidated Financial Statements
Group information
The funds managed by CapMan make investments in Nordic
and Russian companies and in real estate and infrastructure
assets in the Nordic countries. The service business includes
private equity advisory and fundraising services to fund
managers, wealth management and analysis and reporting
services, and procurement services to companies. Through its
investment business, CapMan invests in the private equity asset
class, mainly in its own funds, and listed markets in a diversi-
fied manner.
The parent company of the Group is CapMan Plc and
is domiciled in Helsinki , with a registered office address at
The Consolidated Financial Statements may be viewed online
at www.capman.com, or a hard copy is available from the office
of the parent company.
The Consolidated Financial Statements for 2020 have been
approved for publication by CapMan Plc’s Board of Directors
on February 3, 2021. Pursuant to the Finnish Companies Act,
shareholders may adopt or reject the financial statements and
make decisions on amendments to them at the Annual General
Meeting.
1. Accounting policies
Basis of preparation
The Group’s financial statements have been prepared in accord-
ance with International Financial Reporting Standards (IFRS)
in force at December 31, 2020 as adopted by the European
Union. International Financial Reporting Standards, referred to
in the Finnish Accounting Act and in ordinances issued based
on the provisions of this Act, are standards and their interpre-
tations adopted in accordance with the procedure laid down
in regulation (EC) No 1606/2002 of the European Parliament
and of the Council. The notes to the consolidated financial
statements have been prepared in accordance with the Finnish
accounting standards as and where they supplement IFRS
requirements.
The preparation of financial statements in conformity with
IFRS requires the Group’s management to make estimates and
assumptions when applying CapMan’s accounting principles,
and these are presented in more detail under ‘Use of esti-
mates’.
The Consolidated Financial Statements have been pre-
pared under the historical cost convention, except for financial
assets and liabilities valued at fair value through profit or loss.
The information in the Consolidated Financial Statements is
presented in thousands of euros. Figures in the accounts have
been rounded and consequently the sum of individual figures
can deviate from the presented sum figure.
New and amended standards applied in
financial year ended
As from January 1, 2020, the Group has applied the following
amended standards that have come into effect:
•
Amendments to IFRS 3 Business Combinations. The objec-
tive of the amendments is to clarify the definition of a busi-
ness with a view to facilitating its practical implementation.
•
Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate
Benchmark Reform. The amendments provide temporary
and narrow exemptions to the hedge accounting require-
ments.
•
Amendments to IAS 1 and IAS 8: Definition of Material. The
aim of the amendments is at improving the way financial
information is communicated to users of the financial
statements. Amendments clarify the definition of ‘material’
to make it easier for companies to make materiality judge-
ments and to enhance the relevance of the disclosures in the
notes to the financial statements.
•
Amendments to References to the Conceptual Framework
in IFRS Standards. The objective of the amendments is to
update existing references in several standards and interpre-
tations to previous frameworks with references to the revised
conceptual framework.
Amended standards had no impact on the consolidated
financial statements.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Adoption of new and amended standards
and interpretations applicable in future
financial years
The Group has not yet adopted the following new and amended
standards and interpretations already issued by the IASB. The
Group will adopt them as of the effective date or, if the date is
other than the first day of the financial year, from the beginning
of the subsequent financial year.
These amendments have been endorsed for use by the
European Union:
•
Amendment to IFRS 16 Leases, Covid 19-Related Rent
Concessions (effective for financial years beginning on or
after June 1, 2020). The amendment provides optional,
temporary Covid-19 related operational relief for lessees
benefitting from lease payments holidays without undermin-
ing the relevance and usefulness of financial information
reported by companies.
These amended standards are not expected to have an impact
on the Group’s financial statements
Consolidation principles
As CapMan has determined it meets the definition of an
investment entity, its subsidiaries are classified either as
operating subsidiaries, that are considered to be an extension
of the Parent’s operations, and as such, they are consolidated
or investment entity subsidiaries, that are fair valued through
profit or loss. The types of subsidiaries and their treatment in
CapMan’s consolidated accounts are as follows:
•
Subsidiaries that provide fund management services (fund
managers) or manage direct investments are considered to
be an extension of the Parent’s business and as such, they
are consolidated;
•
Subsidiaries that provide fund management services (fund
managers) and which also hold direct investments in the
funds are consolidated and the investments in the funds are
fair valued through profit or loss;
•
Subsidiaries that provide fund investment advisory services
(advisors) are considered to be an extension of the Parent’s
business and as such, they are consolidated;
•
Investment entity subsidiaries (CapMan Fund Investments
SICAV-SIF), through which CapMan makes its own fund
investments, are valued at fair value through profit or loss.
Significant judgment applied by management in the
preparation of the consolidated financial statements –
investment entity basis
CapMan qualifies as an investment entity as defined by IFRS
10, because the corner stone of its business purpose is to
obtain capital from investors to its closed-end private equity
funds and to provide investment management services to those
funds to gain both capital appreciation and investment income.
Direct investments represent a relatively small part compared
to total assets under management. CapMan obtains funds from
many external investors for investment purposes. Documented
exit strategies exist for each fund’s portfolio investments. Each
fund’s portfolio investments and the real estate investments
are fair valued and such fair value information is provided both
to the fund investors on reporting date and also for CapMan’s
internal management reporting purposes. In addition, manage-
ment has assessed that the following characteristics further
support investment entity categorization: CapMan holds several
investments itself in the funds, investments in the funds are
held by several investors, the investors are not related parties
and the investments are held mostly in form of equity.
Significant judgment applied by management in the
preparation of the consolidated financial statements –
control over funds
One of the most significant judgments management made in
preparing the Company’s consolidated financial statements is
the determination that Company does not have control over
the funds under its management. Control is presumed to exist
when a parent has power over the investee, has exposure to
variable returns from the fund and is able to use its power to
affect the level of returns.
CapMan manages the funds against management fee
received from the investors on the basis of the investment
management mandate negotiated with the investors and it also
makes direct investments in the funds under its management.
Accordingly, CapMan was required to determine, whether it is
acting primarily as a principal or as an agent in exercising its
power over the funds.
In the investment management mandate the investors
have set detailed instructions in all circumstances relating to
the management of the fund limiting the actual influence of
the general partner at very low. In general, having a qualified
majority, investors have a right to replace the general partner
and/or fund manager. The remuneration CapMan is entitled
to is commensurate with the services it provides and corre-
sponds to remuneration customarily present in arrangements
for similar services on an arm’s length basis. CapMan’s direct
investment (typically between of 1% to 5%) in the funds and
thus the share of the variability of the returns compared with
the other investors is relatively small. As an investor in the fund
CapMan has no representation nor voting rights as it has been
specifically excluded in the investment management mandate.
Therefore, management has concluded that despite it
from formal perspective exercises power over the funds by
controlling the general partner of the fund, its actual opera-
tional ability is limited in the investment management mandate
in a manner that the general partner is considers to act as an
agent. Furthermore, CapMan’s exposure to variable returns
from the fund and its power to affect the level of returns is very
low for the reasons described above. Therefore, CapMan has
determined that it does not have control over the funds under
its management.
Subsidiaries
Subsidiaries are consolidated using the acquisition method. All
intercompany transactions are eliminated in the Consolidated
Financial Statements. Profit or loss, together with all other
comprehensive income-related items, are booked to the owners
of the parent company or owners not holding a controlling
interest in the companies concerned. Non-controlling interests
are presented in the Consolidated Balance Sheet under equity
separately from equity attributable to the owners of the parent
company.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
52
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Subsidiaries and businesses acquired during the year are
consolidated from the date on which the Group acquires a
controlling interest, and in the case of companies and busi-
nesses divested by the Group during the financial year up to the
date on which CapMan’s controlling interest expires.
Associates
An associated company is an entity in which the Group has sig-
nificant influence but does not hold a controlling interest. This
is generally defined as existing when the Group holds, either di-
rectly or indirectly, more than 20% of a company’s voting rights.
Associated companies have been consolidated in accord-
ance with the equity method. Under this, the investment in an
associated company is carried in the balance sheet at cost plus
post-acquisition changes in the Group’s share of the company’s
net assets, less any impairment value. If the Group’s share of
the loss incurred by an associated company exceeds the book
value of its investment, the investment is booked at zero in the
balance sheet, and losses exceeding book value are not com-
bined unless the Group is committed to meeting the obligations
of the company concerned. The Group’s share of the profit
recorded by an associated company during the financial year in
accordance with its holding in the company is presented as a
separate item in the income statement after operating profit.
Segment reporting
Operating segments are reported in accordance with internal
reporting presented to the chief operating decision maker.
The latter is responsible for allocating resources to operating
segments and evaluating their performance and is defined as
the Group’s Management Group, which is responsible for taking
strategic decisions affecting CapMan.
Translation differences
The result and financial position of each of the Group’s
business units are measured in the currency of the primary
economic environment for that unit (‘functional currency’).
The Consolidated Financial Statements are presented in
euros, which is the functional and presentation currency of the
Group’s parent company.
Transactions in foreign currencies have been recorded in the
parent company’s functional currency at the rates of exchange
prevailing on the date of the transactions; in practice a reason-
able approximation of the actual rate of exchange on the date
of the transaction is often used. Foreign exchange differences
for operating business items are recorded in the appropriate
income statement account before operating profit and, for
financial items, are recorded in financial income and expenses.
The Group’s foreign currency items have not been hedged.
In the consolidated financial statements, the income state-
ments of subsidiaries that use a functional currency other
than the euro are translated into euros using the average rates
for the accounting period. Their balance sheets are translated
using the closing rate on the balance sheet date. All resulting
exchange differences are recognised in other comprehensive
income. Translation differences caused by changes in exchange
rates for the cumulative shareholders’ equity of foreign subsidi-
aries have been recognised in other comprehensive income.
Tangible assets
Tangible assets have been reported in the balance sheet at their
acquisition value less depreciation according to plan. Assets are
depreciated on a straight-line basis over their estimated useful
lives.
The estimated useful lives are as follows:
Machinery and equipment 4–5 years
Other long-term expenditure 4–5 years
The residual values and useful lives of assets are reviewed on
every balance sheet date and adjusted to reflect changes in the
expected economic benefits where necessary.
Tangible assets include right-of-use assets measured in
accordance with IFRS 16, which are disclosed in the notes.
More information on these items is included in chapter Leases
of Accounting Policies.
Intangible assets
Goodwill
Goodwill acquired in a business merger is booked as the sum
paid for a holding, the holding held by owners with a non-con-
trolling interest, and the holding previously owned that, when
combined, exceeds the fair value of the net assets of the
acquisition. Write-offs are not made against goodwill, and
possible impairment of goodwill is tested annually. Goodwill
is measured as the original acquisition cost less accumulated
impairment. The goodwill acquired during a merger is booked
against the units or groups of units responsible for generating
the cash flow used for testing impairment. Every unit or group
of units for which goodwill is booked represents the lowest level
of the organisation at which goodwill is monitored internally
for management purposes. Goodwill is monitored at operating
segment level.
Other intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Intangible assets are recognised in the
balance sheet only if the cost of the asset can be measured
reliably and if it is probable that the future economic benefits
attributable to the asset will flow to the Group.
Agreements and trademarks acquired in business mergers
are booked at fair value at the time of acquisition. As they
have a limited life, they are booked in the balance sheet at
acquisition cost minus accumulated write-offs. IT systems are
expensed on the basis of the costs associated with acquiring
and installing the software concerned. Depreciation is spread
across the financial life of the relevant software licences.
Impairment is tested whenever there is an indication that the
book value of intangible assets may exceed the recoverable
amount of these assets.
The estimated useful lives are:
Agreements and trademarks 10 years
Other intangible assets 3–5 years
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
53
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Impairment of assets
The Group reviews all assets for indications that their value may
be impaired on each balance sheet date. If such indication is
found to exist, the recoverable amount of the asset in question
is estimated. The recoverable amount for goodwill is measured
annually independent of indications of impairment.
The need for impairment is assessed on the level of
cash-generating units, in other words at the smallest identifia-
ble group of assets that is largely independent of other units
and cash inflows from other assets. The recoverable amount
is the fair value of an asset, less costs to sell or value in use.
Value in use refers to the expected future net cash flow projec-
tions, which are discounted to the present value, received from
the asset in question or the cash-generating unit. The discount
rate used in measuring value in use is the rate that reflects
current market assessments of the time value of money and
the risks specific to the asset. Impairment is recorded in the
income statement as an expense. The recoverable amount for
financial assets is either the fair value or the present value of
expected future cash flows discounted by the initial effective
interest rate.
An impairment loss is recognised whenever the recoverable
amount of an asset is below the carrying amount, and it is rec-
ognised in the income statement immediately. An impairment
loss of a cash-generating unit is first allocated to reduce the
carrying amount of any goodwill allocated to the cash-generat-
ing unit and then to reduce the carrying amounts of the other
assets of the unit pro rata. An impairment loss is reversed
if there is an indication that an impairment loss may have
decreased and the carrying amount of the asset has changed
from the recognition date of the impairment loss.
The increased carrying amount due to reversal cannot
exceed what the depreciated historical cost would have been
if the impairment had not been recognised. Reversal of an
impairment loss for goodwill is prohibited. The carrying amount
of goodwill is reviewed for impairment annually or more fre-
quently if there is an indication that goodwill may be impaired,
due to events and circumstances that may increase the proba-
bility of impairment.
Financial assets
The Group’s financial assets have been classified into the
following categories:
1) financial assets at fair value through profit or loss
2) financial assets at amortised cost
Investments in equity instruments are always measured at fair
value through profit or loss. Classification of debt instruments,
such as trade and loan receivables, is based on the business
model for managing and for the contractual cash flow char-
acteristics of these financial assets. Debt instruments of the
Management Company Business and Service Business are
classified as financial assets at amortised cost, because they
are held solely in order to collect contractual cash flows, which
are solely payments of principal and interest. Current debt
instruments, included in the market portfolio of the Investment
Business, are classified as at fair value through profit or loss,
because they are held for trading. Non-current debt instruments
included in the Investment Business are held for both selling
purposes and collecting contractual cash flows (principal and
interest), and the Group designates these assets as measured
at fair value through profit or loss, in order to reduce inconsist-
ency with regards to recognizing gains and losses of financial
assets within the Investment Business, because the Group as
an investment entity manages and monitors the performance
of these investments based on fair values according to group’s
investment strategy.
Transaction costs are reported in the initial cost of finan-
cial assets, excluding items valued at fair value through profit
or loss. All purchases and sales of financial instruments are
recognised on the trade date. An asset is eligible for derecog-
nition and removed from the balance sheet when the Group
has transferred the contractual rights to receive the cash flows
or when it has substantially transferred all of the risks and
rewards of ownership of the asset outside the Group. Financial
assets are classified as current if they have been acquired for
trading purposes or fall due within 12 months.
Financial assets at fair value through profit or loss
Fair value through profit or loss class comprises of financial as-
sets that are equity instruments or acquired as held for trading,
in which case they can be either equity or debt instruments.
Debt instruments are also classified to this class, if they are
held for both selling purposes and collecting contractual cash
flows and which CapMan as an investment entity designates
as financial assets at fair value through profit or loss at initial
recognition in order to reduce inconsistency with regards to
recognizing gains and losses of financial assets within the
Investment Business.
Fund investments, investments in joint ventures and other
investments in non-current assets are classified as financial
assets at fair value through profit or loss and their fair value
change is presented on the line item ”Fair value changes of
investments” in the statement of comprehensive income.
Fair value information of the non-current fund investments is
provided quarterly to Company’s management and to other
investors in the investment funds management by CapMan. The
valuation of CapMan’s funds’ investment is based on Interna-
tional Private Equity and Venture Capital Valuation Guidelines
(IPEVG) and IFRS 13.
Investments in listed shares, funds and interest-bearing se-
curities as well as those derivative instruments that do not meet
the hedge accounting criteria or for which hedge accounting is
not applied in current assets are held for trading and therefore
classified as at fair value through profit or loss. Listed shares
and derivative contracts in current assets are measured at fair
value by the last trade price on active markets on the balance
sheet date. The fair value of current investments in funds is
determined as the funds’ net asset value at the balance sheet
date. The fair value of current investments in interest-bear-
ing securities is based on the last trade price on the balance
sheet date or, in an illiquid market, on values determined by
the counterparty. The change in fair value of current financial
assets measured at fair value through profit or loss as well as
dividend and interest income from short-term investments in
listed shares and interest-bearing securities are presented on
the line item ”Fair value changes of investments” in the state-
ment of comprehensive income.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
54
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Financial assets at amortised cost
Financial assets at amortised cost mainly include non-in-
terest-bearing trade receivables and interest-bearing loan
receivables of the Management Company Business and Service
Business. These financial assets are held solely in order to
collect contractual cash flows, and whose payments are fixed
or determinable and which are not quoted in an active market.
They are included in current assets, except for maturities great-
er than 12 months after the end of the reporting period, which
are classified as non-current assets.
Expected credit loss of the trade receivables is evaluated by
using the simplified approach allowed by IFRS 9, under which
a provision matrix is maintained, based on the historical credit
losses and forward-looking information regarding general eco-
nomic indicators. In addition, materially overdue receivables are
evaluated on a client basis.
Expected credit losses of loan receivables is evaluated based
on the general approach under IFRS 9. The group evaluates
the credit risk of the borrowers by estimating the delay of the
repayments and borrower’s future economic development.
Depending on the estimated credit risk the group measures the
loss allowance at an amount equal to 12-month expected credit
losses or lifetime expected credit losses. Inputs used for the
measurement of expected credit losses include, among others,
available statistics on default risk based on credit risk rating
grades and the historical credit losses the group has incurred.
Credit risk of a loan receivable is assumed low on initial
recognition in case the contractual payments of principal and
interest are dependent on the cash proceeds the borrower
receives from the underlying investments. In these cases, the
borrower is considered to have a strong capacity to meet its
contractual cash flow obligations in the near term. It is consid-
ered that there has been a significant increase in the credit risk,
if the contractual payments have become more than 30 days
past due, and a default event has occurred, if the payment is
more than 90 days past due, unless resulting from an adminis-
trative oversight.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise
cash in banks and in hand, together with liquid short-term de-
posits. Cash assets have a maximum maturity of three months.
Dividend payment and repayment of capital
Payment of dividends and repayment of capital is decided in
the Annual General Meeting. The dividend payment and repay-
ment of capital proposed to the Annual General Meeting by the
Board of Directors is not subtracted from distributable funds
until approved by the Annual General Meeting.
Financial liabilities
Financial liabilities largely consist of loans from financial insti-
tutions and leasing liabilities. Financial liabilities are initially
recognised at fair value. Transaction costs are reported in the
initial book value of the financial liability. Financial liabilities
are subsequently carried at amortized cost using the effective
interest method. Financial liabilities are reported in non-current
and current liabilities.
Leases
Group’s lease agreements are mainly related to facilities,
company cars and IT equipment. Group applies the exemptions
allowed by the standard on lease contracts for which the lease
term ends within 12 months as of the initial application, and
lease contracts for which the underlying asset is of low value.
Exemptions are applicable to some of the leased premises,
such as office hotels, and to all laptops, printers and copying
machines, among others. These lease payments are recognised
as an expense in the income statement on a straight-line basis.
Other lease agreements are recognised as right-of-use assets
and lease liabilities in the balance sheet. These agreements
include long-term lease agreements of facilities and company
cars. Right-of-use assets are included in tangible assets and the
related lease liabilities are included in non-current and current
interest-bearing financial liabilities.
CapMan Group does not act as a lessor.
Provisions
Provisions are recognised in the balance sheet when the Group
has a current obligation (legal or constructive) as a result of a
past event, and it is probable that an outflow will be required to
settle the obligation and a reliable estimate of the outflow can
be made.
The Group’s provisions are evaluated on the closing date and
are adjusted to match the best estimate of their size on the
day in question. Changes are booked in the same entry in the
income statement as the original provision.
Employee benefits
Pension obligations
The defined contribution pension plan is a pension plan in
accordance with the local regulations and practices of its
business domiciles. Payments made to these plans are charged
to the income statement in the financial period to which they
relate. Pension cover has been arranged through insurance
policies provided by external pension institutions.
Share-based payments
The fair value of stock options is assessed on the date they are
granted and are expensed in equal instalments in the income
statement over the vesting period of the rights concerned. An
evaluation of how many options will generate an entitlement
to shares is made at the end of every reporting period. Fair
value is determined using the Black-Scholes pricing model. The
terms of the stock option programs are presented in Section
30. Share-based payments.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
55
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Revenue recognition
Revenue from contracts with customers is recognised by first
allocating the transaction price to performance obligations, and
when the performance obligation is satisfied by transferring the
control of the underlying service to the customer, the revenue re-
lated to this performance obligation is recognised. Performance
obligation can be satisfied either at a point in time or over time.
Management fees
As a fund manager, CapMan receives management fees during a
fund’s entire period of operations. Management fee is a variable
consideration and is typically based on the fund’s original size
during its investment period, which is usually five years. There-
after the fee is typically based on the acquisition cost of the
fund’s remaining portfolio. Annual management fees are usually
0.5-2.0% of a fund’s total commitments, depending whether
the fund is a real estate fund, a mezzanine fund, or an equity
fund. In the case of real estate funds, management fees are also
paid on committed debt capital. The average management fee
percentage paid by CapMan-managed funds is approx. 1%.
Management fees paid by the funds are recognised as income
over time, because the fund management service is the only per-
formance obligation in the contract and it is satisfied over time.
Sale of services
CapMan’s service business includes wealth management and
analysis, reporting and back office services to institutional
clients, foundations, family offices and wealthy private clients.
It also includes fund advisory and fund management services
to external funds. Service business also includes fees from
CapMan Procurement services (CaPS). Fee from a service is
recognised over time, when the service is provided and the
control is transferred to the customer, except for success and
transaction fees, which are recognised as income at a point in
time, because the underlying performance obligation is satis-
fied and the control of the related service is transferred to the
customer at a point in time.
Some of the contracts with customers related to the service
business includes a significant financing component. When
determining the transaction price in these cases, the promised
amount of consideration is adjusted for the effects of the time
value of money and customer’s credit characteristics.
Carried interest income
Carried interest refers to the distribution of the profits of a
successful private equity fund among fund investors and the
fund manager responsible for the fund’s investment activities.
In practice, carried interest means a share of a fund’s cash flow
received by the fund manager after the fund has transferred to
carry.
The recipients of carried interest in the private equity industry
are typically the investment professionals responsible for a
fund’s investment activities. In CapMan’s case, carried interest
is split between CapMan Plc and funds’ investment teams. The
table of funds published in CapMan’s Annaul Reports details
CapMan Plc’s share of a fund’s cash flow if it is in carry.
CapMan applies a principle where funds transfer to carry and
carried interest income are based on realised cash flows, not on
a calculated and as yet unrealised return. As the level of carried
interest income varies, depending on the timing of exits and the
stage at which funds are in their life cycle, predicting future levels
of carried interest is difficult.
To transfer to carry, a fund must return its paid-in capital
to investors and pay a preferential annual return on this. The
preferential annual return is known as a hurdle rate, which is typ-
ically set between 7–10% IRR p.a. When a fund has transferred
to carry, the remainder of its cash flows is distributed between
investors and the fund manager. Investors typically receive 80%
of the cash flows and the fund manager 20%. When a fund is
generating carried interest, the fund manager receives carried
interest income from all of the fund’s cash flows, even if an exit
is made at below the original acquisition cost.
Revenue from carried interest is recognised when a fund has
transferred to carry and to the extent carried interest is based
on realised cash flows and management has estimated it being
highly probable that there is no risk of repayment of carried
interest back to the fund. Carried interest is recognised when
CapMan is entitled to it by the reporting date, a confirmation on
the amount has been received and CapMan is relatively close to
receiving it in cash.
Potential repayment risk of carried interest to the funds
(clawback)
Potential repayment risk to the funds (clawback) is considered
when assessing whether revenue recognition criteria have been
fulfilled. Clawback risk relates to a situation when, in conjunc-
tion with the liquidation of a fund, it is recognised that the Gen-
eral Partner has received more carried interest than agreed in
the fund agreement. These situations can occur, for example, if
there are recallable distributions or if representations and war-
ranties have been given by the vendor in the sale and purchase
agreement when the fund is towards the end of its lifecycle.
Potential repayment risk to the funds (clawback) is estimated
by the management at each reporting date. The management
judgment includes significant estimates relating to investment
exit timing, exit probability and realisable fair value. The claw-
back risk is measured by using the expected value method, i.e.
by calculating a probability weighted average of estimated alter-
native investment exit outcomes. The clawback is an adjustment
to the related revenue recognised and is included in the current
accrued liabilities in the consolidated balance sheet.
Income taxes
Tax expenses in the consolidated income statement comprise
taxes on taxable income and changes in deferred taxes for the
financial period. Taxes are booked in the income statement
unless they relate to other areas of comprehensive income or
directly to items booked as equity. In these cases, taxes are
booked to either other comprehensive income or directly to
equity. Taxes on taxable income for the financial period are
calculated on the basis of the tax rate in force for the country
in question. Taxes are adjusted on the basis of deferred income
tax assets and liabilities from previous financial periods, if
applicable. The Group’s taxes have been recognised during the
financial year using the average expected tax rate.
Deferred taxes are calculated on temporary differences
between the carrying amount and the tax base. Deferred taxes
have only been recognised to the extent that it is probable that
taxable profit will be available against which the deductible
temporary differences can be utilised. The largest temporary
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
56
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
differences arise from the valuation of investments at fair value.
Deferred taxes are not recognised for non-tax deductible amor-
tisation of goodwill. Deferred taxes have been measured at the
statutory tax rates enacted by the balance sheet date and that
are expected to apply when the related deferred tax is realised.
Items affecting comparability and alternative
performance measures
CapMan uses alternative performance measures, such as
Adjusted operating profit, to denote the financial performance
of its business and to improve the comparability between differ-
ent periods. Alternative performance measures do not replace
performance measures in accordance with the IFRS and are
reported in addition to such measures. Alternative performance
measures, as such are presented, are derived from perfor-
mance measures as reported in accordance with the IFRS by
adding or deducting the items affecting comparability and they
will be nominated as adjusted.
Items affecting comparability are, among others, material
items related to mergers and acquisitions or major develop-
ment projects, material gains or losses related to the acqui-
sition or disposals of business units, material gains or losses
related to the acquisition or disposal of intangible assets, mate-
rial expenses related to decisions by authorities and material
gains or losses related to reassessment of potential repayment
risk to the funds.
Use of estimates
The preparation of the financial statements in conformity
with IFRS standards requires Group management to make
estimates and assumptions in applying CapMan’s account-
ing principles. These estimates and assumptions have an
impact on the reported amounts of assets and liabilities and
disclosure of contingent liabilities in the balance sheet of the
financial statements and on the reported amounts of income
and expenses during the reporting period. Estimates have a
substantial impact on the Group’s operating result. Estimates
and assumptions have been used in assessing the impairment
of goodwill, the fair value of fund investments, the impairment
testing of intangible and tangible assets, in determining useful
economic lives and expected credit losses, and in reporting
deferred taxes, among others.
Valuation of fund investments
The determination of the fair value of fund investments using
the International Private Equity and Venture Capital Valuation
Guidelines (IPEVG) takes into account a range of factors,
including the price at which an investment was acquired, the
nature of the investment, local market conditions, trading val-
ues on public exchanges for comparable securities, current and
projected operating performance, and financing transactions
subsequent to the acquisition of the investment. These valua-
tion methodologies involve a significant degree of management
judgment. Because there is significant uncertainty in the valu-
ation of, or in the stability of, the value of illiquid investments,
the fair values of such investments as reflected in a fund’s net
asset value do not necessarily reflect the prices that would
actually be obtained when such investments are realised.
Valuation of fund investments is described in more detail in
the Note 32.
Valuation of other investments
The fair value of growth equity investments is determined
quarterly by using valuation methods according to IPEVG and
IFRS 13. The valuations are based on forecasted cash flows or
peer group multiples. In estimating fair value of an investment,
a method that is the most appropriate in light of the facts, na-
ture and circumstances of the investment is applied. External
valuations are made at least once a year to verify the fair values
of growth equity investments.
Goodwill impairment test
Goodwill impairment test is performed annually. The most
significant assumptions related to the recoverable amount are
turnover growth, operating margin, discount rate and terminal
growth rate. Turnover growth and operating margin estimates
are based on the current cost structure and turnover generated
by the current customer base. Turnover is expected to grow
to the extent that can be reasonably supported by the current
personnel and other resources. This means such additional
turnover and costs included in the business plan that are relat-
ed to future expansion – and expected to be mainly visible as
new customers and increased headcount – have been removed
from the cash flow forecasts when preparing the goodwill
impairment test.
Goodwill impairment test is described in more detail in the
Note 15.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
2. Segment information
CapMan has three operating segments: the Management company business, Service business and
Investments business.
In its Management Company business, CapMan manages private equity funds that are invested
by its partnership-based investment teams. Investments are Nordic and Russian mainly unlisted
companies and Nordic real estate and infrastructure assets. CapMan raises capital for the funds
from Nordic and international investors. Income from the Management company business is
derived from fees and carried interest received from funds. The fees include management fees
related to CapMan’s position as a fund management company and fees from other services closely
related to fund management.
In the Service business, CapMan offers procurement services to companies in Finland, Sweden
and the Baltics, through CapMan Procurement Services (CaPS) and wealth advisory services
related to the listed and unlisted market to family offices, smaller institutions and high net worth
individuals through CapMan Wealth Services, and technology-based analytics, reporting and back
office services through JAY Solutions. Service business was reorganised in 2020, when former
investor-focused services provided by Scala Fund Advisory and wealth advisory services provided
by JAM Advisors were partially replaced by CapMan Wealth Services. Scala Fund Advisory offered
private equity advisory and fundraising services to private equity fund managers. In conjunction
with the reorganisation, businesses and brands of Scala Fund Advisory and JAM Advisors were
discontinued as such, and thereafter income from the Services business include fees from Cap-
Man Procurement Services (CaPS), wealth advisory services (CapMan Wealth Services), as well as
analytics and reporting services (JAY Solutions).
Through its Investment business, CapMan invests from its own balance sheet in the private
equity asset class and listed markets in a diversified manner. Income in this business segment
is generated by changes in the fair value of investments and realised returns following exits and
periodic returns, such as interest and dividends.
Other includes the corporate functions not allocated to operating segments. These functions
include part of the activities of group accounting, corporate communications, group management
and costs related to share-based payment. Other also includes the eliminations of the interseg-
ment transactions.
2020
EUR 1,000
Management
company
business
Service
business
Investment
business
Other Total
Management fees 28,857 137 28,995
Service fees 1,204 11,222 696 13,122
Carried interest 873 873
Turnover, external 30,934 11,359 696 42,989
Other operating income 8 90 97
Personnel expenses, of which -12,864 -4,096 -338 -6,618 -23,916
Salaries and bonuses -12,864 -4,096 -338 -4,699 -21,997
Share-based payment -1,919 -1,919
Depreciation and amortisation -616 -637 -249 -1,503
Other operating expenses -5,610 -1,533 -88 -2,496 -9,728
Internal service fees -2,765 -158 -15 2,939
Fair value changes of investments 4,398 4,398
Operating profit 9,086 5,024 3,958 -5,729 12,339
Financial items -3,120 -3,120
Income taxes -2,014 -996 68 -2,941
Profit for the period 7,072 4,028 838 -5,661 6,278
Earnings per share, cents 3.3
Earnings per share, diluted, cents 3.3
Non-current assets 5,522 28,530 116,261 -3,999 146,314
Geographical distribution of
turnover:
Finland 20,159
Other countries 22,830
Total 42,989
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
58
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
2019
EUR 1,000
Management
company
business
Service
business
Investment
business
Other Total
Management fees 24,684 167 24,851
Sale of services 1,188 15,530 493 17,211
Carried interest 6,910 6,910
Turnover, external 32,782 15,697 493 48,972
Turnover, internal 302 -302
Other operating income 1 12 -7 6
Personnel expenses, of which -13,586 -3,823 -241 -6,534 -24,184
Salaries and bonuses -13,586 -3,823 -241 -5,803 -23,453
Share-based payment -731 -731
Depreciation and amortisation -618 -471 -264 -1,353
Impairment -4,230 -4,230
Other operating expenses -4,732 -2,397 -1,097 -3,843 -12,069
Internal service fees -3,638 -227 -688 4,553
Fair value changes of investments 12,250 12,250
Operating profit 5,979 9,094 10,224 -5,904 19,392
Items impacting comparability
Acquisition related expenses 1,126 1,126
Donations 200 97 297
Impairment of goodwill 4,230 4,230
Items impacting comparability,
total 4,230 200 1,223 5,653
Adjusted operating profit 10,209 9 ,094 10,424 -4,681 25,045
Financial items -1,783 -1,783
Income taxes -633 -1,819 -461 1,181 -1,731
Profit for the period 5,347 7,275 7,980 -4,724 15,878
EUR 1,000
Management
company
business
Service
business
Investment
business
Other Total
Items impacting comparability
Acquisition related expenses 991 991
Donations 200 97 297
Impairment of goodwill and
other writedowns 2,821 2,821
Items impacting comparability,
total 2,821 200 1,088 4,108
Adjusted profit for the period 8,167 7,275 8,180 -3,636 19,987
Earnings per share, cents 9.2
Items impacting comparability,
cents 2.7
Adjusted earnings per share,
cents 11.9
Earnings per share, diluted,
cents 9.0
Items impacting comparability,
cents 2.6
Adjusted earnings per share,
diluted, cents 11.6
Non-current assets 19,908 13,827 128,970 -11,397 151,309
Geographical distribution of
turnover:
Finland 29,430
Other countries 19,542
Total 48,972
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
3. Acquisitions
2020
In 2020, there were no acquisitions.
2019
Acquisition of JAM Advisors
On February 27, 2019, CapMan acquired 60 per cent of JAM Advisors Oy (“JAM Advisors”), a
reporting, analysis and wealth management company. The purchase price was paid by executing
a directed issue of 5,110,000 new CapMan shares to the owners of JAM Advisors, having a fair
value of EUR 9.0 million. The goodwill arising from the acquisition was EUR 14,8 million. CapMan
has a call option and the sellers have a put option for the remaining 40 per cent non-controlling
interest. Due to the equivalent option arrangement, no profit or loss is attributed to non-controlling
interests and no non-controlling interest is presented separately within consolidated equity.
The acquisition provided CapMan with a new technologically advanced service and wealth man-
agement business and opportunities to expand into new customer segments. JAM Advisors serves
mainly domestic institutional investors, foundations, family offices and high-net-worth individuals
and serves as their advisor.
As of the acquisition date, February 27, 2019, JAM Advisors has been consolidated into CapMan’s
consolidated financial statements in full and reported as part of CapMan’s reportable segment
Service Business.
2020
EUR 1,000
Management
company
business
Service
business
Investment
business Other Total
Timing of revenue recognition:
Services transferred over time 30,061 8,966 696 39,724
Services transferred at a point
in time 873 2,393 3,266
Revenue from customer con-
tracts, external 30,934 11,359 696 42,989
2019
EUR 1,000
Management
company
business
Service
business
Investment
business Other Total
Timing of revenue recognition:
Services transferred over time 25,872 7,882 493 34,248
Services transferred at a point
in time 6,910 7,814 14,724
Revenue from customer con-
tracts, external 32,782 15,697 493 48,972
4. Turnover
Revenue from contracts with customers include management fees, service fees and carried inter-
est.
In addition to the segment information (see Note 2), information presented here depict how
the nature, amount, timing and uncertainty of revenue are affected by economic factors and how
this disaggregation reconciles with the revenue of each reportable segment. Management and
service fee as well as carried interest in the Management company business is primarily related to
long-term contracts. Management and service fee is typically recorded over time, whereas carried
interest is recognised at a point in time. Revenue from the Service business is mainly based on
short-term contracts and includes both success fees recognised at a point in time and service fees
recognised over time.
The below table disaggregates timing of revenue recognition by reportable segment into services
transferred over time and at a point in time. The below table also reconciles revenue from customer
contracts to external turnover by reportable segment.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
5. Other operating income
EUR 1,000 2020 2019
Other items 97 6
Total 97 6
6. Employee benefit expenses
EUR 1,000 2020 2019
Salaries and wages 18,815 20,515
Pension expenses - defined contribution plans 2,669 2,892
Share-based payments 1,919 731
Other personnel expenses 513 46
Total 23,916 24,184
Remuneration of the management is presented in Note 31. Related party disclosures.
Cost for the stock options granted and investment-based incentive plan is based on the fair
value of the instrument. The counter-entry to the expenses recognised in the income statement is
in retained earnings, and thus has no effect on total equity. More information on the share-based
payments is disclosed in Note 30.
Average number of people employed
2020 2019
By country
Finland 112 110
Sweden 22 20
Denmark 6 5
Russia 0 8
Luxembourg 2 1
United Kingdom 4 3
In total 146 147
7. Depreciation
EUR 1,000 2020 2019
Depreciation by asset type
Intangible assets
Other intangible assets 481 349
Total 481 349
Tangible assets
Machinery and equipment 64 37
Right-of-use assets, buildings (IFRS 16) 894 913
Right-of-use assets, machinery and equipment
(IFRS 16) 64 54
Total 1,022 1,004
Total depreciation 1,504 1,353
Impairment by asset type
Goodwill 0 4,230
Total impairments 0 4,230
2020 2019
By segment
Management company business 75 75
Service business 36 35
Investment business and other 35 37
In total 146 147
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
8. Other operating expenses
EUR 1,000 2020 2019
Included in other operating expenses:
Other personnel expenses 775 1 323
Office expenses 529 761
Travelling and entertainment 391 1,578
External services 5,813 5,485
Other operating expenses 2,220 2,921
Total 9,728 12,068
Short-term lease expense (IFRS 16) 295 354
Expense for leases of low-value assets (IFRS 16) 98 144
Audit fees
Ernst & Young chain of companies:
EUR 1,000 2020 2019
Audit fees 283 249
Tax advices 8 19
Other fees and services 20 88
Total 312 356
Non-audit services performed by Ernst & Young in 2020 was 28 (2019: 107) thousand euros in
total. The services consisted of tax advisory services amounting to 8 (19) thousand euros, and
other services amounting to 20 (88) thousand euros.
9. Adjustments to cash flow statement and total cash outflow
for leases
EUR 1,000 2020 2019
Personnel expenses 1,919 731
Depreciation, amortisation and write-downs 1,503 5,583
Unrealized fair value gains/losses of investments -4,398 -12,250
Gain on sale of subsidiaries 0 -4,762
Finance income and costs 3,120 1,783
Costs related to acquisitions 0 459
Taxes 2,941 1,731
Other adjustments -75 184
Total 5,009 -6,540
Total cash outflow for leases (IFRS 16) -1,008 -999
10. Fair value gains/losses of investments
EUR 1,000 2020 2019
Investments at fair value through profit and loss
Investments in funds 7,036 9,707
Growth equity investments 0 2
Market portfolio -124 2,408
Investments in joint ventures 15 -32
Other investments* -2,529 165
Total 4,398 12,250
* Includes a net loss of EUR 2.5 million (net gain of EUR 0.2 million in 2019) from financial assets designated at
fair value through profit or loss.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
11. Finance income and costs
EUR 1,000 2020 2019
Finance income
Interest income from loan receivables 271 372
Other interest income 4 4
Exchange gains 0 217
Change in fair value of financial liabilities 338 520
Total 613 1,113
Finance costs
Interest expenses for loans -2,684 -2,175
Change of expected credit losses -101 -3
Other interest and finance expenses -607 -367
Interest expense of lease liabilities (IFRS 16) -66 -74
Exchange losses -274 -277
Total -3,732 -2,896
12. Income taxes
EUR 1,000 2020 2019
Current income tax 1,743 4,801
Taxes for previous years -631 -135
Deferred taxes
Temporary differences 1,829 -2,935
Total 2,941 1,731
Income tax reconcilliation
Profit before taxes 9,219 17,609
Tax calculated at the domestic corporation tax rate of
20% 1,844 3,522
Effect of different tax rates outside Finland 7 29
Tax exempt income -189 -1,285
Non-deductible expenses* 49 145
Performance share plan* -131 146
Unrecognized tax assets on tax losses and use of
previously unrecognised tax losses 2,537 146
Taxes for previous years -631 -150
Impairment of goodwill 0 846
Other direct taxes 0 1
Reassesment of deferred tax liabilities -573 0
Other differences 28 -1,669
Income taxes in the Group Income Statement 2,941 1,731
* Previous year balances adjusted.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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13. Earnings per share
Basic earnings per share is calculated by dividing the distributable retained profit for the financial
year by the average share issue adjusted number of shares, excluding shares that have been
purchased by the Company and are presented as the Company’s own shares. Diluted earnings per
share is calculated by adjusting the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive potential ordinary shares.
2020 2019
Profit attributable to the equity holders of the
Company, € ('000) 5,142 13,963
Profit applied to calculate diluted earnings per share 5,142 13,963
Weighted average number of shares ('000) 155,797 152,155
Treasury shares ('000) -26 -26
Weighted average number of shares ('000) 155,771 152,128
Effect of share-based incentive plans ('000) 1,344 3,004
Weighted average number of shares adjusted for the
effect of dilution ('000) 157,114 155,132
Earnings per share (basic), cents 3.3 9.2
Earnings per share (diluted), cents 3.3 9.0
14. Tangible assets
EUR 1,000 2020 2019
Machinery and equipment
Acquisition cost at 1 January 2,389 2,225
Additions 13 141
Acquisitions 0 36
Translation difference 1 0
Disposals -14 -13
Acquisition cost at 31 December 2,389 2,389
Accumulated depreciation at 1 January -2,036 -2,028
Depreciation for the financial year -82 -8
Accumulated depreciation at 31 December -2,118 -2,036
Book value on 31 December 271 353
Right-of-use assets
Machinery and equipment (IFRS 16)
Additions 42 747
Depreciations -64 -54
Book value on 31 December 44 66
Leased premises (IFRS 16)
Additions 190 98
Depreciations -894 -913
Book value on 31 December 2,281 2,985
Other tangible assets
Acquisition cost at 1 January 24 120
Additions 0 1
Disposals -1 -97
Book value on 31 December 23 24
Tangible assets total 2,619 3,428
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
15. Goodwill
EUR 1,000 2020 2019
Acquisition cost at 1 January 28,009 13,169
Additions 0 14,840
Acquisition cost at 31 December 28,009 28,009
Accumulated impairment at 1 January -12,695 -8,465
Impairment 0 -4,230
Accumulated impairment at 31 December -12,695 -12,695
Book value on 31 December 15,314 15,314
Impairment test
Goodwill is tested for impairment at least annually and has been allocated to the cash-generating
units as follows:
EUR 1,000 2020 2019
CapMan Wealth Services and JAY Solutions
(formerly JAM Advisors) 14,840 14,840
Other 474 474
Total 15,314 15,314
In 2019, a reporting, analysis and wealth management company, JAM Advisors Oy, was acquired
and constituted a new cash generating unit. Goodwill arising from the acquisition totalled EUR
14.8 million. During 2020, JAM Advisors was divided into two business units, CapMan Wealth
Services and JAY Solutions, which constitute a group of cash generating units, on which goodwill is
allocated for impairment test purposes.
Recoverable amount of the group of cash generating units of CapMan Wealth Services and
JAY Solutions is based on value-in-use using five-year discounted cash flow projections based on
a business plan approved by the management. Future cash flows arising from additional turnover
generated by increased personnel, and thus extending the operations and enhancing the perfor-
mance, have been excluded from the cash flow projections applied in the impairment test. Cash
flows for the period extending over the planning period are calculated using the terminal value
method. Key assumptions applied in the impairment test are (value for the comparison period
in parenthesis): pre-tax discount rate 11.0% (10.3%), average turnover growth 12.5% (12.0%),
average EBIT margin 34% (35%) and terminal growth rate 0.8% (1.0%).
Based on the impairment test, goodwill allocated to the group of cash-generating units
comprising CapMan Wealth Services and JAY Solutions was not impaired. Of key assumptions,
recoverable amount is most sensitive to changes in turnover growth and average EBIT margin
during the explicit forecasting period (5 years), and to account for the increased risk incorporated
in the cash flow forecasts, a sligthly higher discount rate and a slightly lower terminal growth rate
has been applied compared to the impairment test performed in the previous year. Based on the
sensitivity analysis, if turnover growth during the explicit forecasting period would be 3.0 percent-
age points lower or EBIT margin 11 percentage points lower, recoverable amount of the group
of cash- generating units would equal its carrying amount. At the moment, recoverable amount
exceeds carrying amount by EUR 5.7 million, and no reasonably possible change in any of the
other key assumptions would lead to impairment.
In the year ended December 31, 2019, goodwill allocated to the Management of Russian funds
was impaired and written off, which resulted in an impairment loss of EUR 4.2 million recognised
on the line item Depreciation and impairment in the consolidated income statement. Impairment
test was based on fair value less costs of disposal, due to signed term sheet related to the sale
of business. No other goodwill impairment losses were recorded in the year ended December 31,
2019.
16. Other intangible assets
EUR 1,000 2020 2019
Acquisition cost at 1 January 6,371 5,330
Additions 391 377
Acquisitions 0 664
Acquisition cost at 31 December 6,762 6,371
Accumulated depreciation at 1 January -5,574 -5,245
Depreciation for the financial year -463 -329
Accumulated depreciation at 31 December -6,037 -5,574
Book value on 31 December 725 797
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
65
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
17. Investments at fair value through profit or loss
Investments in funds
EUR 1,000 2020 2019
Investments in funds at 1 January 115,918 80,583
Additions 17,869 38,037
Distributions -24,746 -17,542
Fair value gains/losses of investments 7,131 9,692
Transfers -106 5,148
Investments in funds at 31 December 116,066 115,918
Investments in funds by investment area at the end
of period
Buyout 7,244 9,580
Credit 2,672 2,590
Russia 4,363 4,257
Real Estate 39,408 40,043
Other investment areas 16,172 18,869
Funds of funds 137 192
External private equity funds 29,658 22,787
Infra 16,412 17,600
Total 116,066 115,918
Investments in funds include the subsidiary, CapMan Fund Investments SICAV-SIF, with a fair value
of EUR 72.8 million.
Other financial assets
EUR 1,000 2020 2019
Other investments at 1 January 2,731 2,548
Additions 6 0
Fair value gains/losses of investments -2,546 183
Other investments at 31 December 191 2,731
Investments in joint ventures
EUR 1,000 2020 2019
Investments in joint ventures at 1 January 4,470
Additions 144
Fair value gains/losses of investments -32
Transfers -4,582
Investments in joint ventures at 31 December 0
Nature of investments in joint ventures
During the financial year 2019, joint ventures Maneq Investment Luxembourg S.à.r.l., Maneq 2004
AB and Yewtree Holding AB have been liquidated.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
18. Receivables - Non-current
EUR 1,000 2020 2019
Trade receivables 6,148 6,119
Loan receivables 2,827 3,203
Interest receivables 109 73
Total 9,084 9,395
Non-current trade receivables are related to Scala’s fundraising and advisory services. Because of
the significant financing component related to these receivables, the promised amount of consid-
eration has been adjusted for the effects of the time value of money and the credit characteristics
of the customer. However, no contract assets are related to these customer contracts, as the
Group’s right to the amount of consideration is unconditional and subject only to the passage of
time.
Loan receivables include EUR 1.6 million from Norum Russia Co-Investment Ltd, EUR 0.4
million from NEP Priedvidza S.a.r.l., EUR 0.4 million from NRE Cream Oy, EUR 0.4 million from
Buyout X Guernsey Ltd, EUR 0.2 million from CapMan Russia Team Guernsey Ltd and EUR 0.3
million related to other co-investments.
Loan receivables do not include credit-impaired financial assets. Allowance for expected credit
losses of loan receivables is presented below separately for portion measured at an amount equal
to 12-month and lifetime expected credit losses. Loss allowance measured at an amount equal to
lifetime expected credit losses are wholly related to such loan receivables for which credit risk has
increased significantly since initial recognition.
EUR 1,000 2020 2019
Loan receivables, gross 2,947 3,221
Loss allowance, 12-month ECL* -3 -18
Loss allowance, lifetime ECL* -117
Loan receivables, net 2,827 3,203
* ECL = expected credit losses
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
19. Deferred tax assets and liabilities
Changes in deferred taxes during 2020:
EUR 1,000 31.12.2019
Charged to
Income Statement
Translation
difference Charged in equity 31.12.2020
Deferred tax assets
Accrued differences 3,726 -1,288 0 0 2,438
Total 3,726 -1,288 0 0 2,438
Deferred tax liabilities
Accrued differences 974 -335 4 0 643
Unrealised fair value changes 1,182 877 2,059
Total 2,156 542 4 0 2,702
Changes in deferred taxes during 2019:
EUR 1,000 31.12.2018
Charged to
Income Statement
Translation
difference Charged in equity 31.12.2019
Deferred tax assets
Accrued differences 2,026 1,697 3 0 3,726
Total 2,026 1,697 3 0 3,726
Deferred tax liabilities
Accrued differences 1,452 -648 -3 173 974
Unrealised fair value changes 1,833 -651 1,182
Total 3,285 -1,299 -3 173 2,156
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
20. Trade and other receivables
EUR 1 ,000 2020 2019
Trade receivables 6,267 3,437
Loan receivables 251 125
Accrued income 1,480 2,196
Other receivables 6,019 5,034
Total 14,017 10,792
Loss allowance for the expected credit losses of trade receivables, based on a provision matrix,
is presented below.
EUR 1 ,000 2020 2019
Trade receivables, gross 6,323 3,456
Loss allowance -56 -18
Trade receivables, net 6,267 3,437
Expected credit losses of other receivables measured at amortised cost is insignificant, and other
receivables at amortised cost do not contain credit-impaired items.
With regards to contracts with customers, the Group’s right to the amount of consideration
is unconditional. Therefore, they are presented as receivables and no separate contract asset is
presented.
Loan receivables include mainly current loan receivables from related parties and other
employees.
Accrued income includes mainly prepayments.
Other receivables mainly include unvoiced sale of services, costs to be re-invoiced, income tax
receivables and receivables related to sold financial assets.
Trade and other receivables by currency at end of year
Trade and other receivables
Amount in
foreign currency
Amount
in euros Proportion
EUR 14,460 63%
USD 8,751 7,132 31%
SEK 13,084 1,304 6%
GBP 157 175 1%
DKK 225 30 0%
21. Financial assets at fair value through profit or loss
EUR 1 ,000 2020 2019
Financial assets held for trading 312 10,768
Total 312 10,768
Financial assets held for trading include investments to listed shares. Listed shares are measured
at fair value by the last trade price on active markets on the balance sheet date. Their fair value
amounted to EUR 0.3 million as at December 31, 2020.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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22. Cash and cash equivalents
EUR 1,000 2020 2019
Bank accounts 58,002 43,665
Total 58,002 43,665
Cash and cash equivalents only includes bank accounts. EUR 2.0 million of bank account balances
is related to the launch of a new hotel real estate fund and is not available for use by the group.
23. Share capital and shares
1,000 Shares
Number of
A shares
Number of
B shares Total
At 1 January 2019 147,116 147,116
Share subscriptions with options 1,502 1,502
Share subscription 5,110 5,110
At 31 December 2019 153,728 153,728
Share subscriptions with options 702 702
Share subscription, direct share
issue without payment 2,002 2,002
At 31 December 2020 156,433 156,433
EUR 1,000
Share
capital
Share
premium
account
Other
reserves Total
At 1 January 2019 772 38,968 83,812 123,552
Share subscriptions with options 1,130 1,130
Share subscription, direct share issue 9,027 9,027
Repayment of capital -9,146 -9,146
At 31 December 2019 772 38,968 84,823 124,563
Share subscriptions with options 447 447
Repayment of capital -13,854 -13,854
At 31 December 2020 772 38,968 71,416 111,156
Other reserves
During the financial year, shares subscribed with option rights were recorded to and repaid
capital was deducted from unrestricted equity fund. In conjunction with the termination of the
performance share plan 2018, 2,002,208 shares were granted in a directed share issue without
payment. During the comparison year, shares subscribed with option rights as well as shares
subscribed in a direct share issue related to an acquisition were recorded to unrestricted equity
fund, and repaid capital was deducted from unrestricted equity fund.
The stock option programs and share-based incentive plans are presented in Table 30.
Share-based payments.
Translation difference
The foreign currency translation reserve includes translation differences arising from currency
conversion in the closing of the books for foreign units.
Dividends paid and proposal for profit distribution and repayment of capital
A dividend of EUR 0.04 per share and a repayment of invested unrestricted equity fund of EUR
0.09 per share, totalling EUR 20.0 million, was paid to the shareholders for the financial year
2019. Dividend and repayment of equity were paid on March 20, 2020.
The Board of Directors will propose to the Annual General Meeting to be held on 17 March
2021 that a dividend of EUR 0.02 per share would be paid to shareholders, equivalent to a total
of approx. EUR 3.1 million, and a repayment of invested unrestricted equity fund of EUR 0.12
per share, equivalent to a total of approx. EUR 18.8 million, would be paid to the shareholders.
The aggregate amount of proposed dividends and repayment of invested unrestriced equity fund
would be approx. EUR 21.9 million, and it is proposed to be paid in two equal instalments six
months apart.
Redemption obligation clause
A shareholder whose share of the entire share capital or the voting rights of the Company reaches
or exceeds 33.3% or 50% has, at the request of other shareholders, the obligation to redeem his
or her shares and related securities in accordance with the Articles of Association of CapMan Plc.
Ownership and voting rights agreements
As at 31 December 2020 CapMan Plc had no knowledge of agreements or arrangements, related
to the Company’s ownership and voting rights, that were apt to have substantial impact on the
share value of CapMan Plc.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Distribution of shareholdings by number of shares and sector as
at 31 December 2020
Shareholding
Number of
Owners %
Number of
shares %
1–1,000 15,535 61.86 5,877,515 3.76
1,001–10,000 8,261 32.90 26,581,707 16.99
10,001–100,000 1,164 4.64 28,987,345 18.53
100,001–500,000 87 0.35 16,701,584 10.67
500,001–1,000,000 12 0.05 9,184,135 5.87
1,000,001– 16 0.06 63,227,751 40.41
Anonymous ownership 37 0.15 5,898,933 3.77
Total 25,112 99.95 156,458,970 100.00
of which Nominee registered 0.05 9,039,704 5.78
On the book-entry register joint
account 0.00 18,709 0.01
Sector
Number of shares
and votes
%
Finnish Private Individuals 78,571,060 50.22
Other 47,330,833 30.25
Pension & Insurance 18,547,485 11.85
Fund company 4,853,208 3.10
Foundation 1,231,152 0.79
Treasury Shares 26,299 0.02
Anonymous ownership 5,898,933 3.77
Total 156,458,970 100.00
of which Nominee registered 9,039,704 5.78
On the book-entry register joint account 18,709 0.01
Source: EuroClear Finland Ltd, as at 31 December 2020. Figures are based on the total number of shares
156,458,970 and total number of shareholders 25,112. CapMan Plc had 26,299 shares as at 31 December 2020.
CapMan’s largest shareholders as at 31 December 2020
Number of shares
and votes
Proportion of
shares, %
Silvertärnan Ab 16,226,519 10.40
Keskinäinen Eläkevakuutusyhtiö Ilmarinen 10,318,326 6.60
Mikko Laakkonen 6,378,320 4.10
OY Inventiainvest AB 4,723,703 3.00
Keskinäinen työeläkevakuutusyhtiö Varma 3,675,215 2.30
Kyösti Kakkonen 3,289,502 2.10
Vesasco Oy 3,088,469 2.00
Valtion Eläkerahasto 2,500,000 1.60
Nordea Rahastot 2,197,417 1.40
Momea Invest Oy 2,150,000 1.40
Total 54,547,471 34.90
Nominee registered 9,039,704 5.78
Shareholdings of management 6,607,482 4.22
CapMan has not received any flagging notifications during year 2020. An up-date information of
all flagging notifications can be found at
www.capman.com
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
24. Interest-bearing loans and borrowings – Non-current
EUR 1,000 2020 2019
Senior bonds 81,116 49,718
Lease liabilities (IFRS 16) 1,496 2,285
Total 82,612 52,003
In December 2020, CapMan issued unsecured notes in the aggregate principal amount of EUR
50 million and redeemed EUR 18.5 million of its EUR 50 million bond issued in April 2018, after
which the remaining balance of the latter amounts to EUR 31.5 million. The new bond issued in
2020 will mature on December 9, 2025 and carry a fixed annual interest of 4.000% paid annually.
The bond issued in 2018 will mature on April 16, 2023 and carry a fixed annual interest of
4.125% paid semi-annually. Both loan agreements include covenants related to equity ratio.
25. Other non-current liabilities
EUR 1,000 2020 2019
Acquisition related liabilities 6,769 7,107
Other liabilities 167 167
Total 6,936 7,274
Acquisition related liabilities consists of call and put options, which are measured at fair value
through profit or loss. The change of fair value is recorded as finance income.
26. Trade and other payables – Current
EUR 1,000 2020 2019
Trade payables 1,027 1,123
Advance payments received 343 292
Accrued expenses 6,204 15,542
Other liabilities 3,501 3,202
Total 11,075 20,159
The maturity of trade payables is normal terms of trade and don’t include overdue payments.
Advance payments received are liabilities based on customer contracts.
Accrued expenses included a clawback liability (2019: EUR 7.7 million) relating to potential
repayment of carried interest to CapMan Real Estate I Fund. Liability was related to the exit
in 2007. This was paid during 2020. The other significant items in accrued expenses relate to
accrued salaries and social benefit expenses.
Trade and other liabilities by currency at end of year
Trade and other liabilities
Amount in
foreign currency Amount in euros Proportion
EUR 9,186 83%
SEK 11,485 1,145 10%
GBP 139 154 1%
DKK 4,386 590 5%
27. Interest-bearing loans and borrowings – Current
EUR 1,000 2020 2019
Short-term bank facility 130
Lease liabilities (IFRS 16) 888 809
Liabilities to non-controlling interests 20
Total 908 939
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
28. Financial assets and liabilities
Financial assets 2020
EUR 1,000 Note
Balance
sheet value Fair value
Investments at fair value through
profit or loss
Investments in funds 17 116,066 116,066
Other financial assets* 17 191 191
Loan receivables 18 2,827 2,827
Trade and other receivables 20 20,165 20,165
Financial assets at fair value 21 312 312
Cash and bank 22 58,002 58,002
Total 197,563 197,563
* Other financial assets consists of financial assets that are specifically classified as investments at fair value
through profit and loss
Financial assets 2019
EUR 1,000 Note
Balance
sheet value Fair value
Investments at fair value through
profit or loss
Investments in funds 17 115,918 115,918
Other financial assets* 17 2,731 2,731
Loan receivables 18 3,203 3,203
Trade and other receivables 20 16,911 16,911
Financial assets at fair value 21 10,768 10,768
Cash and bank 22 43,665 43,665
Total 193,196 193,196
* Other financial assets consists of financial assets that are specifically classified as investments at fair value
through profit and loss
Financial liabilities 2020
EUR 1,000 Note
Balance
sheet value Fair value
Non-current liabilities 24 82,612 82,612
Non-current operative liabilities 25 6,936 6,936
Trade and other liabilities 26 11,075 11,075
Current liabilities 908 908
Total 101,531 101,531
Financial liabilities 2019
EUR 1,000 Note
Balance
sheet value Fair value
Non-current liabilities 24 52,003 52,003
Non-current operative liabilities 25 7,107 7,107
Trade and other liabilities 26 20,159 20,159
Current liabilities 939 939
Total 80,208 80,208
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Net debt
EUR 1,000 2020 2019
Cash and cash equivalents 58,002 43,665
Borrowings - repayable within one year -908 -939
Borrowings - repayable after one year -82,612 -52,003
Net debt -25,518 -9,277
Cash and cash equivalents 58,002 43,665
Gross debt - variable interest rates -2,384 -3,224
Gross debt - fixed interest rates -81,136 -49,718
Net debt -25,518 -9,277
Changes in liabilities arising from financing activities
EUR 1,000 1.1.2020 Cash flows Other changes 31.12.2020
Non-current loans and borrowings 49,718 31,398 81,116
Non-current lease liabilities 2,285 -789 1,496
Current loans and borrowings 130 -110 20
Current lease liabilities 809 -153 232 888
Total 52,942 30,346 232 83,520
EUR 1,000 1.1.2019
Lease
liability
transfer
(adoption of
IFRS 16) Cash flows Other changes 31.12.2019
Non-current loans and
borrowings 49,705 13 49,718
Non-current lease
liabilities 3,058 -926 153 2,285
Current loans and
borrowings 9,989 -9,870 11 130
Current lease
liabilities 807 2 809
Total 59,694 3,865 -10,781 164 52,942
29. Commitments and contingent liabilities
Reconciliation of lease commitments
EUR 1,000 2020 2019
Operating lease commitments as at 31 December 2019 3,437
Less:
Commitments relating to short-term leases -63
Commitments relating to leases of low-value assets -33
Weighted average incremental borrowing rate 1.95%
Discounted operating lease commitments
at 1 January 2020 3,172
Lease liabilities as at 1 January 2020 3,172
Securities and other contingent liabilities
EUR 1,000 2020 2019
Contingencies for own commitment
Collateral 500 500
Business mortgage 60,000 60,000
Other contingent liabilities 2,271 2,280
Remaining commitments to funds by investment area
Buyout 38,895 39,451
Credit 1,476 1,485
Russia 1,117 1,114
Real Estate 12,330 4,249
Other investment areas 3,556 4,199
Funds of funds 246 551
Growth Equity 14,021 12,221
Infra 19,506 18,019
External private equity funds 17,913 22,496
Total 109,061 103,785
CapMan estimates that EUR 75-85 million of the remaining commitments will be called
in the next 4 years, particularly due to unused investment capacity of the older funds.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
30. Share-based payments
As at the balance sheet date, CapMan has an investment based long-term share-based incentive
plan and one stock option program, the stock option program 2016. These programs are used to
commit key individuals and executives to the company and reinforce the alignment of interests of
key individuals and executives and CapMan shareholders. In the investment based long-term share-
based incentive plan the participants are committed to shareholder value creation by investing a
significant amount into the CapMan Plc share.
In February 2020, CapMan Board decided to shorten the performance period of the invest-
ment-based long-term incentive plan 2018–21, launched in 2018, by one year and correspond-
ingly reduced the reward amount by one-third. In conjunction with this, the remaining and not yet
expensed portion of the plan’s fair value - earlier allocated to the vesting period and adjusted by
forfeiture rate - was recognised as an expense in the consolidated income statement. At the same
time, forfeiture rate was adjusted to equal the realised participation rate, which resulted in an EUR
0.3 million expense, and the total cost impact of the termination of the plan 2018-21 amounted
to EUR 1.4 million for the financial year ended December 31, 2020. The share rewards granted
totalled 3,807,000 shares, of which 2,002,208 shares were paid in company’s newly issued shares
and the remainder was paid in cash to cover the arising withholding tax liabilities. The fair value
of the shares withheld and paid in cash to cover withholding tax liabilities amounted to EUR 3.0
million and was debited directly to retained earnings in equity.
In conjunction with terminating the earlier incentive plan, CapMan Board resolved to establish
a new performance share plan 2020–2023 for CapMan Group management, as well as selected
Group key employees. The new investment-based long-term incentive plan includes one perfor-
mance period. The performance period commenced on 1 April 2020 and will end on 31 March
2023. The participants may earn a performance-based reward from the performance period. The
prerequisite for receiving reward on the basis of the plan is that a participant acquires company’s
shares or allocates previously owned company’s shares up to the number determined by the Board
of Directors. The performance-based reward from the plan is based on the company share’s Total
Shareholder Return (TSR) and on a participant’s employment or service upon reward payment.
The rewards from the Plan will be paid fully in the company’s shares in 2023 and the plan is thus
equity-settled. The Board shall resolve whether new Shares or existing Shares held by the Company
are given as reward. The target group of the Plan consists of approximately 20 people, including
the members of the Management Group.
The fair value of the investment-based incentive plan 2020–2023 has been measured at the
grant date and is expensed on a straight-line basis over the vesting period. The fair value has been
calculated by applying a Monte-Carlo simulation, where the model inputs have included share
price at the grant date, expected annualised volatility over the tenure of the program, risk-free
interest rate, expected dividends and expected share rewards to be granted on different target
share price levels. The model simulates share price development during the performance period
and the resulting share rewards to be granted after reaching the share price levels defined in the
conditions of the plan. In addition, forfeiture rate has been incorporated into the measurement of
the fair value as a decreasing factor.
The fair value of the stock option programs has been measured at the grant date and is
expensed on a straight-line basis over the vesting period. Fair value of options at the grant date is
determined in accordance with the Black&Scholes option pricing model.
The total expense recognised for the period arising from share-based payment transactions
amounted to EUR 1.9 million. There were no liabilities arising from share-based payment
transactions. As at the balance sheet date, based on the closing price of CapMan’s share, it is
estimated that for the Share plan 2020–2023, the shares to be withheld and paid in cash to cover
withholding tax liabilities will amount to EUR 2.4 million.
Key information on the incentive-based incentive plan and stock option programs is presented
in the following tables.
Investment-based incentive plans
Share plan
2018–2021 2020–2023
Grant date 27.4.2018 16.4.2020
Vesting period starts 27.4.2018 16.4.2020
Vesting period ends 11.3.2020 31.8.2023
Maximum number of share rewards granted during the period - 4,095,000
Maximum number of share rewards at the end of the financial
year 5,498,000 4,095,000
Share rewards granted at the end of the plan 3,807,000 -
Grant date share price, EUR 1.5872 1.764
Share price at the end of the period, EUR - 2.315
Assumption for the Total Shareholder Return, per annum 8% -
Expected annualised volatility - 27%
Assumed risk-free interest rate - 0%
Present value of the expected dividends, EUR 0.33 0.45
Forfeiture rate assumption - 10%
Increase in fair value of share premiums granted during the
period 0.3 2.5
Fair value of the plan, EUR million 2.6 2.5
Expense recorded during the financial year, EUR million 1.4 0.5
Cumulative expense recorded for the plan, EUR million 2.6 0.5
Future cash payment related to withholding taxes,
EUR million* -3.0 -2.4
Number of participants in the plan 17 18
* Estimated for Share plan 2020–2023
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Stock option programs effective during the financial year
Stock option program 2013 Stock option program 2016
Stock option 2013C Stock option 2016A Stock option 2016B Stock option 2016C
Stock options, number 1,410,000 1,410,000 1,410,000 1,410,000
Entitlement to subscribe for B shares 1,410,000 1,410,000 1,410,000 1,410,000
Share subscription period begins 1.5.2018 1.5.2019 1.5.2020 1.5.2021
Share subscription period ends 30.4.2020 30.4.2021 30.4.2022 30.4.2023
Share subscription price Trade volume weighted
average price of the B share on
the Nasdaq OMX Helsinki
1.4.–31.5.2015 with an addition
of ten (10) per cent less
dividends i.e. €0.60
Trade volume weighted
average price of the B share on
the Nasdaq OMX Helsinki
1.4.–31.5.2016 with an addition
of ten (10) per cent less
dividends i.e. €0.59
Trade volume weighted
average price of the B share on
the Nasdaq OMX Helsinki
1.4.–31.5.2017 with an
addition of ten (10) per cent
less dividends
Trade volume weighted
average price of the B share on
the Nasdaq OMX Helsinki
1.4.–31.5.2018 with an
addition of ten (10) per cent
less dividends
Assumptions used in the Black&Scholes model
Expected volatility 20.5% 21.56% - -
Risk-free interest 0.0% 0.0% - -
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Changes in option rights during the financial year
Stock option 2013C Stock option 2016A
Initial amount of option rights, pcs 1,410,000 1,410,000
Amount of granted option rights, pcs 1,277,291 673,958
Outstanding at the beginning of the reporting period, pcs 562,541 281,673
Changes during the period:
Granted 0 0
Exercised 562,541 135,800
Weighted average subscription price, € 0.69 0.59
Weighted-average share price during the subsicription
period in the financial year 2.21 2.13
Outstanding at the end of the reporting period, pcs 0 145,873
Exercised by the end of the reporting period, pcs 1,277,291 528,085
Option rights, % of shares and votes, if all outstanding
granted stock options would be exercised 0.0% 0.1%
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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31. Related party disclosures
Group companies
Group
ownership
of shares,
%
Parent
company
ownership
of shares,
%
CapMan Plc , parent company Finland
CapMan Capital Management Oy Finland 100% 100%
CapMan Sweden AB Sweden 100% 100%
CapMan AB Sweden 100% 100%
CapMan (Guernsey) Limited Guernsey 100% 100%
CapMan Mezzanine (Guernsey) Limited Guernsey 100% 100%
CapMan (Guernsey) Buyout VIII GP Limited Guernsey 100% 100%
CapMan (Sweden) Buyout VIII GP AB Sweden 100% 100%
CapMan Classic GP Oy Finland 100% 100%
CapMan Real Estate Oy Finland 100% 100%
Dividum Oy Finland 100% 100%
CapMan RE I GP Oy Finland 100% 100%
CapMan RE II GP Oy Finland 100% 100%
CapMan (Guernsey) Life Science IV GP Limited Guernsey 100% 100%
CapMan (Guernsey) Technology 2007 GP Limited Guernsey 100% 100%
CapMan (Sweden) Technology Fund 2007 GP AB Sweden 100% 100%
CapMan Private Equity Advisors Limited Cyprus 100% 100%
CapMan (Guernsey) Russia GP Limited Guernsey 100% 100%
CapMan (Guernsey) Investment Limited Guernsey 100% 100%
CapMan (Guernsey) Buyout IX GP Limited Guernsey 100% 100%
CapMan Fund Investments SICAV-SIF Luxembourg 100% 100%
CapMan Mezzanine V Manager S.A. Luxembourg 100% 100%
CapMan (Guernsey) Buyout X GP Limited Guernsey 100% 100%
CapMan (Guernsey) Russia II GP Limited Guernsey 100% 100%
Maneq 2012 AB Sweden 100% 100%
CapMan Nordic Real Estate Manager S.A. Luxembourg 100% 100%
CapMan Buyout X GP Oy Finland 100% 100%
CapMan Endowment GP Oy Finland 100% 100%
CapMan Collection Oy Finland 100% 100%
CapMan Real Estate UK Limited United Kingdom 100%
Group companies
Group
ownership
of shares,
%
Parent
company
ownership
of shares,
%
Nest Capital 2015 GP Oy Finland 100% 100%
Dividum AB Sweden 100%
Valo Advisors Oy Finland 100% 100%
Valo Fund Management Oy Finland 100%
Kokoelmakeskus GP Oy Finland 100% 100%
Norventures Oy Finland 100% 100%
CapMan Growth Equity Oy Finland 100% 100%
CapMan Real Estate Manager S.A. Luxembourg 100% 100%
CapMan Infra Management Oy Finland 65% 65%
CapMan Infra Lux Management S.á.r.l. Luxembourg 65%
CapMan Growth Equity 2017 GP Oy Finland 100% 100%
Scala Fund Advisory Oy Finland 100% 100%
CapMan Nordic Infrastructure Manager S.á.r.l. Luxembourg 100% 100%
CapMan Infra Lynx GP Oy Finland 65%
CapMan Buyout XI GP S.á.r.l Luxembourg 100% 100%
CapMan AIFM Oy Finland 100% 100%
Nest Capital III GP Oy Finland 100% 100%
CapMan Procurement Services (CaPS) Oy Finland 95% 95%
CapMan Buyout Management Oy Finland 60% 60%
CapMan Hotels II Holding GP Oy Finland 100% 100%
JAY Solutions Oy Finland 60% 60%
CapMan Wealth Services Oy Finland 60% 60%
CapMan Growth Equity II GP Oy Finland 100% 100%
CapMan Special Situations GP Oy Finland 100% 100%
CapMan Special Situations Oy Finland 100% 100%
Nest Capital Management AB Sweden 100% 100%
CM III Feeder GP S.á.r.l. Luxembourg 100% 100%
CaPS Baltic OÜ Estonia 60%
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Transactions with related parties
In 2020, CapMan has recorded fees, totalling EUR 2,800 (2019: EUR 12,000), for financial and
legal services to Momea Invest Oy, a controlled entity of Olli Liitola, member of the Board of
Directors of CapMan Plc. Also, CapMan has recorded fees of EUR 12,000 (2019: EUR 12,000)
for consultancy services to Heliocabala Oy, a controller entity of Eero Heliövaara, member of the
Board of Directors of CapMan Plc.
Commitments to related parties
EUR 1,000 2020 2019
Commitments to Maneq funds 643 643
Management remuneration
EUR 1,000 2020 2019
CEO Joakim Frimodig
Salaries and other short-term employee benefits 362 358
Pension costs 62 66
Additional pension costs 36 38
Share-based payments 668 251
Total 1,128 713
Management group excl. CEO
Salaries and other short-term employee benefits 1,976 1,683
Share-based payments 942 331
Total 2,919 2,014
Remuneration and fees
EUR 1,000 2020 2019
Andreas Tallberg 70 67
Ari Tolppanen until March 12, 2019 11
Peter Ramsay as of March 13, 2019 44 33
Mammu Kaario 55 54
Catarina Fagerholm 46 44
Eero Heliövaara 44 43
Olli Liitola as of March 13, 2019 42 33
Johan Hammarén as of March 11, 2020 33
Total 334 285
Management remuneration includes members of the board, CEO and management group.
The CEO has a mutual notice period of six months and he will be entitled to a severance fee of
12 months’ salary, if his employment is terminated by the company.
The CEO and some of the Management Group members are covered by additional defined
contribution based pension insurance. The retirement age of the CEO is 63 years.
The Management Group members have allocated a total of 745,000 shares (690,000 shares in
2019) to the investment based long term incentive plan. The Management Group members were
not granted any stock options. The stock options granted to the management earlier are subject to
the same terms as for stock options granted to employees.
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32. Financial risk management
The purpose of financial risk management is to ensure that the Group has adequate and effective-
ly utilised financing as regards the nature and scope of the Group’s business. The objective is to
minimise the impact of negative market development on the Group with consideration for cost-
efficiency. The financial risk management has been centralised and the Group’s CFO is responsible
for financial risk management and control.
The policy of the management is to constantly monitor cash flow forecasts and the Group’s
liquidity position on behalf of all Group companies. In addition, the Group’s principles for liquidity
management include rolling 12-month loan covenant assessments. The loan covenants are related
to equity ratio and net gearing. During the financial year all the loan covenants have been fullfilled.
The Group has a Monitoring team, which monitors the performance and the price risk of the in-
vestment portfolio (financial assets entered at fair value through profit and loss) independently and
objectively of the investment teams. The Monitoring team is responsible for reviewing the monthly
reporting and forecasts for portfolio companies. Valuation proposals made by the case investment
professionals are examined by the Monitoring team and subsequently approved by the Valuation
Committee, which comprises the Chairman of the Investee Committee, the Group CFO and Heads
of investment teams.
a) Liquidity risk
Cash inflow from operating activities consists of predictable management fees, fees from the
Service Business, partially based on long-term contracts and partially transaction-based, and
volatile carried interest income. Cash outflow from operating activities consists of payment of
fixed costs, interests and taxes, which are relatively well predictable in the short term. Liquidity
management is also significantly impacted by the timing of the capital calls to the funds and
proceeds from fund investments, which is difficult to predict. Therefore, the Group maintains a
sufficient liquidity in order to fulfill its commitments, which are more difficult to predict. Cash
from financing activities consist of proceeds from and repayment of borrowings, and payment of
dividends and return of capital.
Management fees received from the funds and majority of fees from the Service Business
are based on long-term agreements and are targeted to cover the operational expenses of the
Group. Management fees and majority of fees from the Service Business are quite reliably
predictable for the coming 12 months. However, part of of the fees from the Service Business are
transaction-based and thus more difficult to forecast.
The timing and receipt of carried interest generated by the funds is uncertain and will con-
tribute to the volatility of the results. Changes in investment and exit activity levels may have a
significant impact on cash flows of the Group. A single investment or exit may change the cash
flow situation completely and the exact timing of the cash flow is difficult to predict. Group compa-
nies managing a fund may in certain circumstances, pursuant to the terms of the fund agreement,
have to return carried interest income they have received (so-called clawback). The obligation to
return carried interest income applies typically when, according to the final distribution of funds,
the carried interest income received by the fund management company exceeds the carried
interest it is entitled to when the fund expires.
The CapMan Real Estate I fund was transferred into carry in 2007, and from the EUR 27.4
million of carried interest paid, EUR 6.4 million was not recognised in the revenue but recorded
as a liability to cover potential clawback risk. The clawback risk was reassessed regularly and the
related liability was increased to EUR 7.7 million by December 31, 2019. During the financial
year 2020, the fund disposed of its last investment, after which part of the carried interest was
returned to the fund. The recognised liability was sufficient to cover the returned carried interest,
and CapMan has no clawback liabilities recorded at the balance sheet date.
CapMan has made commitments to the funds it manages. As at December 31, 2020, the
undrawn commitments to the funds amounted to EUR 109.1 million (103.8) and the financing
capacity available (cash and third party financing facilities) amounted to EUR 98.0 million (83.7).
In December 2020, CapMan issued unsecured notes in the aggregate principal amount of EUR
50 million and redeemed EUR 18.5 million of its EUR 50 million bond issued in April 2018, after
which the remaining balance of the latter amounts to EUR 31.5 million. The new bond issued in
2020 will mature on December 9, 2025 and carry a fixed annual interest of 4.000% paid annu-
ally. The bond issued in 2018 will mature on April 16, 2023 and carry a fixed annual interest of
4.125% paid semi-annually. Both loan agreements include covenants related to equity ratio.
During the previous financial year CapMan repaid a EUR 10 million multi-issuer bond
guaranteed by Garantia Insurance Company Ltd.
At the end of the financial year, CapMan has an unused long-term credit facility which was
raised from EUR 20 million to EUR 40 million during the previous financial year. CapMan has used
the credit facility during the financial year, but at the end of the financial year, the credit facility is
not in use. The long-term credit facility agreement include covenants related to both equity ratio
and net gearing.
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Maturity analysis
31.12.2020
EUR 1,000
Due within
3 months
Due between
3 and 12 months
Due between
1 and 3 years
Due between
3 and 5 years Due later
Bonds 31,520 50,000
Accounts payable 1,027
Interests, bonds 3,300 5,950 4,000
Company acquisitions liabilities 6,769
Commitments to funds 4,417 10,819 8,971 84,211
Commitments to Maneq funds 643
Lease liabilities (IFRS 16) 237 672 1,434 40
31.12.2019
EUR 1,000
Due within
3 months
Due between
3 and 12 months
Due between
1 and 3 years
Due between
3 and 5 years Due later
Bonds 49,718
Accounts payable 1,123
Interests, bonds 2,062 5,155
Company acquisitions liabilities 7,107
Commitments to funds 3,836 12,506 902 86,541
Commitments to Maneq funds 643
Clawback 7,692
Lease liabilities (IFRS 16) 226 675 2,109 38
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
b) Interest rate risk
At the end of the financial year, interest-bearing liabilities have a fixed interest rate. Exposure
to interest rate risk arises principally from the long-term credit facility of EUR 40 million with a
floating interest rate. This facility was used during the financial year. However, during the time
when the reference rate of the credit facility is negative, as it was in 2020, its effective interest rate
will in practice equal the agreed margin.
The senior bond issued in December 2020 has an annual coupon rate of 4.000% paid annually,
and the senior bond issued in April 2018 has an annual coupon rate of 4.125% paid semi-annually.
Loans according to interest rate
EUR 1,000 2020 2019
Floating rate 0 130
Fixed rate 81,136 49,718
Total 81,136 49,848
c) Credit risk
Group’s credit risks relate to trade, loan and other receivables recognised at amortised cost. The
maximum credit loss of these receivables is the carrying amount of the receivable in question.
There are no collaterals relating to the receivables and there have been no credit losses in the past.
More information on the expected credit losses of receivables is presented in notes 18 and 20.
Group has guaranteed a credit facility for a bank, used by a group company, whose related
credit risk is deemed low. Group’s loan commitments are related to co-investment loans granted
to team entities, which they use in order to make co-investments to funds managed by the Group.
Their credit risk is deemed low, as the repayment is usually subject to distributions received from
the funds.
d) Currency risk
Changes in exchange rates, particularly between the US dollar and and the euro, impact the
company’s performance, since a part of group’s fund investments and non-current accounts
receivables are in US dollar. Any strengthening/weakening of the dollar against the euro would
improve/weaken the fair values gains or US dollar fund investments and revenue related to US
dollar non-current accounts receivables. The group also has assets in Swedish kronos therefore the
changes in exchange rates between the US dollar and the euro has also an impact to Group result.
CapMan has subsidiaries outside of the Eurozone, and their equity is exposed to movements
in foreign currency exchange rates. However, the Group does not hedge currency as the impact of
exposure to currency movements on equity is relatively small. The group is not exposed to signifi-
cant currency risks, because Group companies operate in their primary domestic markets.
As at December 31, 2020, 86% of the Group’s financial assets were in euros, 10% in US dollars
3% in Swedish krona and 1% in other currencies. The following table presents the fair values of
the foreign currency denominated financial assets.
Financial assets denominated in foreign currencies, in euros
EUR 1,000 SEK USD
Other
currencies Total
2020 5,101 19,796 2,396 27,293
2019 8,893 17,194 1,371 27,458
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
e) Capital management
Group’s aim is to have an efficient capital structure that allows the company to manage its ongoing
obligations and that the business has the prerequisites for operating normally. The Return on
equity (ROE) and the Equity ratio are the means for monitoring capital structure.
The long-term targets and dividend policy of the Group have been confirmed by the Board of
Directors of CapMan Plc. The targets are based on profitability (ROE) and balance sheet. The
return on equity target is more than 20 per cent p.a. on average, and target for Equity ratio at least
60%. The company’s objective is to pay an annually increasing dividend to its shareholders.
At the balance sheet date, CapMan has two fixed-rate unsecured senior bonds outstanding, of
which EUR 50 million will mature on December 9, 2025 and EUR 31.5 million will mature on April
16, 2023. In addition, CapMan has a long-term credit facility of EUR 40 million available until
June 6, 2022, which was not in use at the balance sheet date.
The long-term credit facility agreement and senior bond agreeements include financial
covenants related to both equity ratio and net gearing.
EUR 1,000 2020 2019
Interest-bearing loans 83,520 52,942
Cash and cash equivalents -58,002 -43,665
Net debt 25,518 9,277
Equity 113,266 129,533
Net gearing 22.5% 7.2%
Return on equity 5.2% 12.7%
Equity ratio 51.9% 59.9%
f) Price risk of the investments in funds
Investments in funds
The investments in funds are valued using the International Private Equity and Venture Capital
Valuation Guidelines. According to these guidelines, the fair values are generally derived by
multiplying key performance metrics of the investee company (e.g., EBITDA) by the relevant
valuation multiple (e.g., price/equity ratio) observed for comparable publicly traded companies
or transactions. Changes in valuation multiples can lead to significant changes in fair values
depending on the leverage ratio of the investee company.
Financial assets held for trading
In its operations the Group is exposed to market risks arising from price fluctuations of its finan-
cial assets held for trading. Performance is affected by economic developments and share price
movements both in Finland and abroad. CapMan has liqudated its financial assets held for trading.
At period end CapMan had EUR 0.3 million in financial assets held for trading which were public
listed shares. Due to this the market risk relating to financial assets held for trading has decreased
and CapMan is not currently hedging its investments.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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g) Determining fair values
Fair value hierarchy of financial assets measured at fair value
at 31 December 2020
EUR 1,000 Fair value Level 1 Level 2 Level 3
Investments in funds 116,066 951 0 115,117
Other non-current investments 191 166 0 25
Current financial assets at
FVTPL* 312 312 0 0
* fair value through profit or loss
The different levels have been defined as follows:
Level 1 Quoted prices (unjusted) in active markets for identical assets.
Level 2 Other than quoted prices included within Level 1 that are observable for the asset,
either directly (that is, as price) or indirectly (that is, derived from prices).
Level 2 assets measured at fair value consist of investments for which the quoted
price is available from markets that are not active. CapMan has measured level 2
investments using the last trading price of the reporting period end.
Level 3 The asset that is not based on observable market data.
Non-current investments at fair value through profit or loss
EUR 1,000 Level 1 Level 2 Level 3 Total
Investments in funds
at Jan 1 738 115,180 115,180
Additions 17,869 17,869
Distributions -24,746 -24,746
Fair value gains/losses 7,131 7,131
Transfers 213 -319 -106
at the end of period 951 115,115 116,066
Other investments
at Jan 1 166 2,565 2,731
Additions 6 6
Disposals 166 -166 0 0
Fair value gains/losses -2,546 -2,546
at the end of period 166 0 25 191
During reporting period the investments in CapMan Technology 2007, CapMan Life Science IV and
CapMan Equity VII have been reclassified from Level 3 to Level 1.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Fair value hierarchy of financial assets measured at fair value
at 31 December 2019
EUR 1,000 Fair value Level 1 Level 2 Level 3
Investments in funds 115,918 738 0 115,180
Other non-current investments 2,731 0 166 2,565
Current financial assets at
FVTPL* 10,768 2,681 8,087 0
* fair value through profit or loss.
The different levels have been defined as follows:
Level 1 Quoted prices (unjusted) in active markets for identical assets.
Level 2 Other than quoted prices included within Level 1 that are observable for the asset,
either directly (that is, as price) or indirectly (that is, derived from prices).
Level 2 assets measured at fair value consist of investments for which the quoted
price is available from markets that are not active. CapMan has measured level 2
investments using the last trading price of the reporting period end.
Level 3 The asset that is not based on observable market data.
Non-current investments at fair value through profit or loss
EUR 1,000 Level 1 Level 2 Level 3 Total
Investments in funds
at Jan 1 80,582 80,582
Additions 38,038 38,038
Distributions -17,542 -17,542
Fair value gains/losses 9,692 9,692
Transfers 738 4,410 5,148
at the end of period 738 115,180 115,918
Other investments
at Jan 1 166 2,382 2,548
Additions 0
Disposals 0 0
Transfers 0 0
Fair value gains/losses 183 183
at the end of period 166 2,565 2,731
Investments in joint ventures
at Jan 1 4,471 4,471
Additions 144 144
Disposals -4,581 -4,581
Distributions 0 0
Fair value gains/losses -34 -34
at the end of period 0 0
During reporting period the cash of the subsidiary CapMan Fund Investments SICAV-SIF was trans-
ferred from Level 3 to Level 1.
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Sensitivity analysis of Level 3 investments at 31 December 2020
Investment area
Fair Value MEUR,
31.12.2020 Valuation methodology Unobservable inputs
Used input value
(weighted average)
Change in
input value Fair value sensitivity
Growth 13.9 Peer group
Peer group earnings multiples EV/EBITDA 2020 13.9x +/- 10% +/- 1.6 MEUR
Discount to peer
group multiples 24% +/- 10% -/+ 0.6 MEUR
Buyout 7.2 Peer group
Peer group earnings multiples EV/EBITDA 2020 11.5x +/- 10% + 2.1 / -2.3 MEUR
Discount to peer group
multiples 21% +/- 10% -/+ 0.5 MEUR
Real Estate 39.3
Valuation by an
independent valuer
Infra 16.4
Discounted
cash flows
Terminal value EV/EBITDA 15.9x +/- 5% +/- 1.8 MEUR
Discount rate; market rate
and risk premium 12% +/- 100 bps - 1.0 / + 1.1 MEUR
Russia 4.4 Peer group
Peer group earnings multiples EV/EBITDA 2020 10.7x +/- 10% +/- 0.4 MEUR
Discount rate; market rate
and risk premium 41% +/- 10% -/+ 0.3 MEUR
Credit 2.6
Discounted
cash flows
Discount rate; market rate
and risk premium
9% +/- 100 bps
- 0.1 MEUR / value increase
based on a change in the
discount rate is not booked
Investments in external PE funds 29.8
Reports from PE fund
management company
Investments in Maneqs 1.6 Peer group
Peer group earnings multiples EV/EBITDA 2020 8.1x +/- 10% + 0.2 /- 0.1 MEUR
Discount to peer group
multiples 22% +/- 10% - 0.0 / + 0.1 MEUR
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Sensitivity analysis of Level 3 investments at 31 December 2019
Investment area
Fair Value MEUR,
31.12.2019 Valuation methodology Unobservable inputs
Used input value
(weighted average)
Change in
input value Fair value sensitivity
Growth 16.1 Peer group
Peer group earnings multiples EV/EBITDA 2019 12.2x +/- 10% +/- 1.6 MEUR
Discount to peer
group multiples 20% +/- 10% -/+ 0.4 MEUR
Buyout 9.6 Peer group
Peer group earnings multiples EV/EBITDA 2019 8.9x +/- 10% + 2.3 MEUR / - 2.1 MEUR
Discount to peer group
multiples 22% +/- 10% - 0.7 MEUR /+ 0.6 MEUR
Real Estate 40.0
Valuation by an
independent valuer
Infra 17.6
Discounted
cash flows
Discount rate; market rate
and risk premium
12% +/- 10% - 0.8 MEUR / + 0.9 MEUR
Russia 4.3 Peer group
Peer group earnings multiples EV/EBITDA 2019 11.4x +/- 10% +/- 0.4 MEUR
Discount to peer
group multiples 36% +/- 10% -/+ 0.2 MEUR
Credit 2.6
Discounted
cash flows
Discount rate; market rate
and risk premium
10% +/- 10%
- 0.1 MEUR / value increase
based on a change in the
discount rate is not booked
Funds of funds 0.2
Reports from PE fund
management company
Other investment areas 0.8
Discounted
cash flows
Discount rate; market rate
and risk premium
6% +/- 10%
- 0.0 MEUR / value
increase based on a
change in the discount
rate is not booked
Investments in external PE funds 22.8
Reports from PE fund
management company
Maneq-investments 3.7 Peer group
Peer group earnings multiples EV/EBITDA 2019 8.7x +/- 10% +/- 0.4 MEUR
Discount to peer group
multiples 22% +/- 10% -/+ 0.1 MEUR
CAPMAN ANNUAL REPORT 2020 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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CapMan has made some investments also in funds that are not managed by CapMan Group com-
panies. The fair values of these investments in CapMan’s balance sheet are based on the valua-
tions by the respective fund managers. No separate sensitivity analysis is prepared by CapMan for
these investments.
The changes in the peer group earnings multiples and the peer group discounts are typically op-
posite to each other. Therefore, if the peer group multiples increase, a higher discount is typically
applied. Because of this, a change in the peer group multiples may not in full be reflected in the
fair values of the fund investments.
The valuations are based on euro. If portfolio company’s reporting currency is other than euro,
P&L items used in the basis of valuation are converted applying the average foreign exchange rate
for corresponding year and the balance sheet items are converted applying the rate at the time of
reporting. Changes in the foreign exchange rates, in CapMan’s estimate, have no significant direct
impact on the fair values calculated by peer group multiples during the reporting period.
The valuation of CapMan funds’ investment is based on international valuation guidelines that
are widely used and accepted within the industry and among investors. CapMan always aims at
valuing funds’ investments at their actual value. Fair value is the best estimate of the price that
would be received by selling an asset in an orderly transaction between market participants on the
measurement date.
Determining the fair value of fund investments for funds investing in portfolio companies is
carried out using International Private Equity and Venture Capital Valuation Guidelines (IPEVG).
In estimating fair value for an investment, CapMan applies a technique or techniques that is/are
appropriate in light of the nature, facts, and circumstances of the investment in the context of
the total investment portfolio. In doing this, current market data and several inputs, including the
nature of the investment, local market conditions, trading values on public exchanges for compa-
rable securities, current and projected operating performance, and the financial situation of the
investment, are evaluated and combined with market participant assumptions. In selecting the
appropriate valuation technique for each particular investment, consideration of those specific
terms of the investment that may impact its fair value is required.
Different methodologies may be considered. The most applied methodologies at CapMan
include the price of recent investments, which is typically applied in the case of new investments,
and the earnings multiple valuation technique, whereby public peer group multiples are used to
estimate the value of a particular investment. CapMan always applies a discount to peer group
multiples, due to e.g. limited liquidity of the investments. Due to the qualitative nature of the valu-
ation methodologies, the fair values are to a considerable degree based on CapMan’s judgment.
The Group has a Monitoring team, which monitors the performance and the price risk of the
investment portfolio (financial assets entered at fair value through profit or loss) independently and
objectively of the investment teams. The Monitoring team is responsible for reviewing the monthly
reporting and forecasts for portfolio companies. Valuation proposals made by the case investment
professionals are examined by the Monitoring team and subsequently reviewed and decided by
the Valuation Committee, which comprises the Group CFO, Head of Monitoring team and either
Risk Manager of the relevant fund or Head of the relevant investment team. The portfolio company
valuations are reviewed in the Valuation Committee on a quarterly basis. The valuations are back
tested against realised exit valuations, and the results of such back testing are reported to the
Audit Committee annually.
Investments in real estate are valued at fair value based on appraisals made by independent
external experts, who follow International Valuation Standards (IVS). The method most appropriate
to the use of the property is always applied, or a combination of such methods. For the most part,
the valuation methodology applied is the discounted cash flow method, which is based on signifi-
cant unobservable inputs. These inputs include the following:
Future rental cash inflows Based on the actual location, type and quality of the prop-
erties and supported by the terms of any existing lease,
other contracts or external evidence such as current market
rents for similar properties;
Discount rates Reflecting current market assessments of the uncertainty
in the amount and timing of cash flows;
Estimated vacancy rates Based on current and expected future market conditions
after expiry of any current lease;
Property operating expenses Including necessary investments to maintain functionality of
the property for its expected useful life;
Capitalisation rates Based on actual location size and quality of the properties
and taking into account market data at the valuation date;
Terminal value Taking into account assumptions regarding maintenance
costs , vacancy rates and market rents.
In the exceptional market situation caused by the COVID-19 pandemic, the increased volatility in
the publicly traded peer group market prices, exceptionally uncertain financial situation and future
outlook of portfolio companies and properties as well as the fluctuating market capitalisation
rates increase the uncertainty inherent in the valuations substantially compared with a normal
situation. Due to the current pandemic situation, management’s judgement is reflected in invest-
ment recorded at fair value, so that, for example, the discounts rate applied to valuations based on
peer group multiples have increased. In addition, the earnings and cash flow forecasts of investee
companies have generally been revised downwards, if this has been justified due to pandemic situ-
ation. For real estate properties, in addition to revised cash flow projections the independent exter-
nal appraisers have increased the discount rates especially concerning hotel and retail properties.
CAPMAN ANNUAL REPORT 2020 • PARENT COMPANy INCOME STATEMENT (FAS)
88
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
EUR Note 1.1.–31.12.2020 1.1.–31.12.2019
Turnover 1 13,146,627.47 37,952,487.50
Other operating income 2 0.00 5 427 368.52
Raw materials and services 3 -10,309,664.21 -27,531,107.71
Employee benefit expenses 4 -6,209,226.78 -5,344,773.84
Depreciation 5 -82,396.99 -57,628.65
Other operating expenses 6 -3,296,505.56 -3,811,613.54
Operating loss -6,751,166.07 6,634,732.28
Finance income and costs 7 4,277,339.27 -561,211.57
Profit before appropriations and taxes -2,473,826.80 6,073,520.71
Appropriations 8 5,405,000.00 2,893,704.00
Income taxes -31,434.15 -2,288,730.17
Loss for the financial year 2,899,739.05 6,678,494.54
Parent Company Income Statement (FAS)
CAPMAN ANNUAL REPORT 2020 • PARENT COMPANy BALANCE ShEET (FAS)
89
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
EUR Note 31.12.2020 31.12.2019
ASSETS
Non-current assets
Intangible assets 9 92,537.36 130,428.53
Tangible assets 10 184,055.95 215,449.35
Investments 11
Shares in subsidiaries 117,885,122.13 120,247,203.02
Investments in associated companies 34,211.38 118,820.05
Other investments 12,446,125.49 12,615,700.44
Investments total 130,365,459.00 132,981,723.51
Non-current assets, total 130,642,052.31 133,327,601.39
Current assets
Inventories 12 312,181.99 10,570,009.20
Long-term receivables 13 3,619,196.64 4,015,779.69
Short-term receivables 14 30,352,127.62 22,734,785.28
Cash and bank 37,076,738.94 26,921,979.93
Current assets, total 71,360,245.19 64,242,554.10
Total assets 202,002,297.50 197,570,155.49
Parent Company Balance Sheet (FAS)
EUR Note 31.12.2020 31.12.2019
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders' equity 15
Share capital 771,586.98 771,586.98
Share premium account 38,968,186.24 38,968,186.24
Invested unrestricted shareholders' equity 68,369,002.56 81,776,241.45
Retained earnings 921,542.99 400,446.53
Profit for the financial year 2,899,739.05 6,678,494.54
Shareholders' equity, total 111,930,057.82 128,594,955.74
Liabilities
Non-current liabilities 16 82,654,621.87 51,214,709.10
Current liabilities 17 7,417,617.81 17,760,490.65
Liabilities, total 90,072,239.68 68,975,199.75
Total shareholders' equity and liabilities 202,002,297.50 197,570,155.49
CAPMAN ANNUAL REPORT 2020 • PARENT COMPANy CASh FLOw STATEMENT (FAS)
90
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
EUR 1.1.–31.12.2020 1.1.–31.12.2019
Cash flow from operations
Profit before extraordinary items -2,473,827 6,073,521
Finance income and costs -4,277,339 561,212
Adjustments to cash flow statement
Depreciation, amortisation and impairment 82,397 154,567
Depreciation of merger loss 592,576 4,201,107
Gain on sale of subsidiary shares 0 -5,427,369
Other non-monetary items 0 96,938
Change in net working capital
Change in current assets, non-interest-bearing -931,272 16,009,464
Change in inventories 9,665,251 23,084,340
Change in current liabilities, non-interest-bearing -526,697 -115,090
Interest paid -4,463,232 -2,367,519
Interest received 386,988 126,487
Dividends received 9,396,712 10,800,536
Direct taxes paid -2,227,740 -3,871,864
Cash flow from operations 5,223,817 49,326,328
Cash flow from investments
Acquisition of subsidiaries 0 -1,500,000
Cash of a dissolved or merged subsidiary 0 1,677,096
Investments in subsidiaries -11,141,978 -33,664,149
Sale of subsidiary shares 6,847 5,941,857
Capital reduction of subsidiaries 10,537,212 5 838,000
Investments in tangible and intangible assets -13,112 -143,051
Investments in other placements, net 185,032 161,084
Loan receivables granted -7,209,893 -9,339,248
Repayment of loan receivables 4,269,415 1,346,539
Cash flow from investments -3,366,477 -29,681,872
Parent Company Cash Flow Statement (FAS)
EUR 1.1.–31.12.2020 1.1.–31.12.2019
Cash flow from financing activities
Share issue 446,907 1,129,571
Repayment of capital -13,854,146 -9,154,232
Proceeds from long-term borrowings 49,723,500
Repayment of long-term borrowings -18,480,000 -10,000,000
Proceeds from short-term borrowings 20,000,000 6,073,724
Repayment of short-term borrowings -24,148,946 -13,845,724
Dividends paid -6,154,943 -9,135,636
Change in group liabilities -1,528,656 697,712
Group contributions received 2,293,704 0
Cash flow from financing activities 8,297,420 -34,234,586
Change in cash and cash equivalents 10,154,760 -14,590,129
Cash and cash equivalents at beginning of year 26,921,980 41,512,109
Cash and cash equivalents at end of year 37,076,740 26,921,980
CAPMAN ANNUAL REPORT 2020 • NOTES TO ThE PARENT COMPANy FINANCIAL STATEMENTS (FAS)
91
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Notes to the Parent Company Financial Statements (FAS)
Basis of preparation for parent company financial
statements
CapMan Plc’s financial statements for 2020 have been
prepared in accordance with the Finnish Accounting Act.
Foreign currency translation
Transactions in foreign currencies have been recorded at the
rates of exchange prevailing at the date of the transaction.
Foreign currency denominated receivables and payables are
recorded at the rates of exchange prevailing at the closing date
of the review period.
Investments
Investments are valued at acquisition cost. If the probable
future income from the investment is permanently lower
than the value at acquisition cost excluding depreciation, the
difference is recognised as an expense.
Intangible and tangible assets
Intangible and tangible assets are valued at cost less accu-
mulated depreciation and amortisation according to the plan,
except for assets having an indefinite useful life.
Inventories
Inventories are stated at the lower of cost and net realizable
value. Cost is determined on a first-in first-out (FIFO) basis.
Listed shares, other securities, funds and bonds are measured
at the lower of cost and fair value. Unlisted shares and holdings
are recognized at lower of cost and probable realizable value.
Receivables
Receivables comprise receivables from Group companies and
associated companies, trade receivables, accrued income and
other receivables. Receivables are recorded at nominal value,
however no higher than at probable value. Receivables are clas-
sified as non-current assets if the maturity exceeds 12 months.
Non-current liabilities
The financial risk management of CapMan Group is central-
ised with the parent company. The financial risk management
principles are provided in the Notes to the Group financial
statements under 32. Financial risk management.
Senior bonds maturing later than one year after the balance
sheet date are recorded as non-current liabilities at nominal
value.
Leases
Lease payments are recognised as other expenses. The remain-
ing commitments under each lease are provided in the Notes
section under “Commitments”.
Provisions
Provisions are recognised as expenses in case the parent
company has an obligation that will not result in comparable
income or losses that are deemed apparent.
Pensions
Statutory pension expenditures are recognised as expenses
at the year of accrual. Pensions have been arranged through
insurance policies of external pension institutions.
Revenue
Revenue includes the sale of services to subsidiaries and
revenue from the sale of securities, dividends and other similar
income from securities classified as inventories. Revenue from
services is recognised, when the service is delivered.
Income taxes
Income taxes are recognised based on Finnish tax law. Deferred
taxes are calculated on temporary differences between the
carrying amount and the tax base. Deferred taxes have been
measured at the statutory tax rates that have been enacted
by the balance sheet date and are expected to apply when the
related deferred tax is realised.
Appropriations
Appropriations in the income statement consist of possible
given and received group contributions and possible depre-
ciation in excess of plan, and in the balance sheet, possible
accumulated depreciation in excess of plan.
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
1. Turnover by area
EUR 2020 2019
Sale of services
Finland 1,451,407 3,580,299
Foreign 1,311,576 3,780,779
Sale of securities in inventories 10,383,645 30,591,409
Total 13,146,627 37,952,488
2. Other operating income
EUR 2020 2019
Gain on sale of subsidiary shares 0 5,427,369
Total 0 5,427,369
3. Raw materials and services
EUR 2020 2019
Purchases during the period 0 -245,661
Change in inventories -9,717,088 -23,084,340
Depreciation of the merger loss* -592,576 -4,201,107
Total -10,309,664 -27,531,108
* Norvestia Plc, subsidiary of CapMan Plc, merged to CapMan Plc on March 1, 2018. Item includes the depreciation
of the merger loss allocated to the carrying amount of the received securities in inventories.
4. Personnel
EUR 2020 2019
Salaries and wages 5,394,823 4,511,685
Pension expenses 589,399 734,670
Other personnel expenses 225,004 98,419
Total 6,209,227 5,344,774
Management remuneration
Salaries and other remuneration of the CEO
Joakim Frimodig 1,415,321 376,060
Board members 334,266 292,781
Average number of employees 36 39
Management remuneration is presented in the Group Financial Statements Table 31.
Related party disclosures.
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
5. Depreciation
EUR 2020 2019
Depreciation according to plan
Other long-term expenditure 37,891 37,891
Machinery and equipment 44,506 19,737
Total 82,397 57,629
6. Other operating expenses
EUR 2020 2019
Other personnel expenses 185,820 481,631
Office expenses 459,593 602,900
Travelling and entertainment 105,779 205,543
External services 1,833,840 2,082,451
Internal services 559,379 0
Other operating expenses 152,094 439,088
Total 3,296,505 3,811,614
Audit fees
Audit 98,061 92,656
Tax advices 0 53,047
Other fees and services 7,300 41,465
Total 105,361 187,169
7. Finance income and costs
EUR 2020 2019
Dividend income
Group companies 8,782,604 9,800,536
Associated companies 614,108 0
Total 9,396,712 9 800,536
Other interest and finance income
Group companies 891,641 394,827
Others 230,692 539,256
Total 1,122,333 934,082
Interest and other finance costs
Impairment of shares and interests -2,029,152 -8,112,627
Depreciation of the merger loss* 0 -294,304
Group companies -93,816 -203,858
Others -4,118,737 -2,685,041
Total -6,241,705 -11,295,829
Finance income and costs total 4,277,339 -561,212
* Norvestia Plc, subsidiary of CapMan Plc, merged to CapMan Plc on March 1, 2018. Item includes the depreciation
of the merger loss allocated to the carrying amount of the received shares in subsidiaries.
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
8. Appropriations
EUR 2020 2019
Group contributions received 5,405,000 2,893,704
9. Intangible assets
EUR 2020 2019
Intangible rights
Acquisition cost at 1 January 828,188 828,188
Acquisition cost at 31 December 828,188 828,188
Accumulated depreciation at 1 January -828,188 -828,188
Accumulated depreciation at 31 December -828,188 -828,188
Book value on 31 December 0 0
Other long-term expenditure
Acquisition cost at 1 January 2,622,692 2,622,692
Acquisition cost at 31 December 2,622,692 2,622,692
Accumulated depreciation at 1 January -2,492,264 -2,454,373
Depreciation for the financial period -37,891 -37,891
Accumulated depreciation at 31 December -2,530,155 -2,492,264
Book value on 31 December 92,537 130,428
Intangible rights total 92,537 130,428
10. Tangible assets
EUR 2020 2019
Machinery and equipment
Acquisition cost at 1 January 1,198,587 1,055,535
Additions 13,112 143,051
Acquisition cost at 31 December 1,211,699 1,198,587
Accumulated depreciation at 1 January -1,005,877 -986,139
Depreciation for the financial period -44,506 -19,737
Accumulated depreciation at 31 December -1,050,383 -1,005,877
Book value on 31 December 161,316 192,710
Other tangible assets
Acquisition cost at 1 January 22,739 119,677
Disposals 0 -96,938
Book value on 31 December 22,739 22,739
Tangible assets total 184,055 215,449
CAPMAN ANNUAL REPORT 2020 • NOTES TO ThE PARENT COMPANy FINANCIAL STATEMENTS (FAS)
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
11. Investments
EUR 2020 2019
Shares in subsidiaries
Acquisition cost at 1 January 119,207,203 89,793,613
Additions 11,141,978 45,596,708
Depreciation of the merger loss* 0 -294,304
Disposals -11,544,059 -8,842,369
Impairments -1,960,000 -7,046,445
Acquisition cost at 31 December 116,845 122 119,207,203
Shares in associated companies
Acquisition cost at 1 January 118,820 1,108,701
Disposals -84,609 -989,881
Acquisition cost at 31 December 34,211 118,820
Shares, other
Acquisition cost at 1 January 12,615,700 10,681,614
Additions 30,224 7,352,244
Disposals -7,573 -5,418,158
Impairment -192,226 0
Acquisition cost at 31 December 12,446,125 12,615,700
Investments total 129,325,458 131,941,723
* Norvestia Plc, subsidiary of CapMan Plc, merged to CapMan Plc on March 1, 2018. Merger loss is partially allocat-
ed to the carrying amount of the received shares in subsidiaries..
The subsidiaries and the associated companies are presented in the Notes to the Consolidated
Financial Statements, Table 31. Related party disclosures.
12. Inventories
EUR 2020 2019
Shares in listed companies 312,182 3,869
Bonds 0 7,747,500
Funds 0 2,226,064
Merger loss* 0 592,576
Inventories, total 312,182 10,570,009
Market value of financial assets in inventories 312,182 10,767,926
Difference 0 197,917
* Norvestia Plc, subsidiary of CapMan Plc, merged to CapMan Plc on March 1, 2018.
Merger loss is partially allocated to the carrying amount of the received securities in inventories.
13. Long-term receivables
EUR 2020 2019
Receivables from Group companies
Capital loan receivables 1,040,000 1,040,000
Loan receivables 587,535 561,362
Other loan receivables 2,818,662 3,135,418
Accounts receivable 213,000 319,000
Long-term receivables total 4,659,197 5,055,780
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
14. Short-term receivables
EUR 2020 2019
Receivables from Group companies
Accounts receivable 0 50,741
Dividend receivables 322,270 0
Accrued income 0 6,725
Loan receivables 20,129,297 17,341,045
Other receivables 7,474,444 3,913,108
Total 27,926,011 21,311,618
Accounts receivable 673,977 121,759
Loan receivables 37,571 7,451
Other receivables 1,149,042 169,432
Accrued income 565,527 1,124,524
Short-term receivables total 30,352,128 22,734,785
15. Shareholders’ equity
EUR 2020 2019
Share capital at 1 January 771,587 771,587
Share capital at 31 December 771,587 771,587
Share premium account at 1 January 38,968,186 38,968,186
Share premium account at 31 December 38,968,186 38,968,186
Invested unrestricted shareholders' equity at 1 January 81,776,241 80,766,423
Invested unrestricted shareholders' equity, additions 0 9,034,480
Invested unrestricted shareholders' equity, disposals -13,854,146 -9,154,232
Share subscriptions with options 446,907 1,129,570
Invested unrestricted shareholders' equity at
31 December 68,369,002 81,776,241
Retained earnings at 1 January 7,078,941 9,546,107
Dividend payment -6,157,398 -9,145,660
Retained earnings at 31 December 921,543 400,447
Profit for the financial year 2,899,739 6,678,495
Shareholders' equity, total 111,930,058 128,594,956
Calculation of distributable funds
EUR 2020 2019
Retained earnings 921,543 400,447
Profit for the financial year 2,899,739 6,678,495
Invested unrestricted shareholders' equity 68,369,002 81,776,241
Total 72,190,285 88,855,182
CapMan Plc’s share capital is divided as follows:
Number of shares 2020 2019
Series B share (1 vote/share) 156,458,970 153,754,648
CAPMAN ANNUAL REPORT 2020 • NOTES TO ThE PARENT COMPANy FINANCIAL STATEMENTS (FAS)
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16. Non-current liabilities
EUR 2020 2019
Senior bond 81,132,735 49,748,000
Other non-current liabilities 1,521,887 1,466,709
Non-current liabilities total 82,654,622 51,214,709
17. Current liabilities
EUR 2020 2019
Accounts payable 428,345 134,771
Liabilities to Group companies
Pohjola Bank plc; Group account 3,553,922 5,082,578
Accounts receivable 298,443 0
Accounts payable 71,085 8,270
Other liabilities 861,054 5,810,000
Accrued interests 40,074 1,384,903
Accrued expenses 89,537 85,229
Total 4,914,115 12,370,979
Other liabilities 920,061 965,710
Accrued expenses 1,155,097 4,289,031
Current liabilities total 7,417,618 17,760,491
18. Contingent liabilities
Leasing agreements
EUR 2020 2019
Operating lease commitments
within one year 83,179 31,875
After one but not more than five years 60,738 5,819
Total 143,917 37,694
Other hire purchase commitments
within one year 525,151 520,388
After one but not more than five years 1,619,215 2,081,551
After five years
Total 2,144,366 2,601,939
Securities and other contingent liabilities
EUR 2020 2019
Contingencies for own commitment
Enterprise mortgages 60,000,000 60,000,000
Investment commitments to Maneq funds 643,372 643,372
Investment commitments to other funds 246,478 78,691
Other contingent liabilities 2,240,880 2,250,000
Total 63,130,730 62,972,063
Contingencies for subsidiaries' commitments
Guarantees as security for subsidiaries' commitments 500,000 500,000
Total 500,000 500,000
CAPMAN ANNUAL REPORT 2020 • SIGNATURES TO THE REPORT OF THE BOARD OF DIRECTORS AND FINANCIAL JA TILINPÄÄTÖKSEN ALLEKIRJOITUKSET
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Signatures to the Report of the Board of Directors and Financial Statements
Andreas Tallberg Mammu Kaario
Chairman
Catarina Fagerholm Eero Heliövaara
Olli Liitola Peter Ramsay
Joakim Frimodig Johan Hammarén
CEO
The Auditor’s Note
Our report has been issued today.
Helsinki 2021
Ernst & Young Oy
Audit firm
Ulla Nykky,
Authorised Public Accountant
CAPMAN ANNUAL REPORT 2020 • AUDITOR’S REPORT
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Auditor’s Report (Translation of the Finnish original)
To the Annual General Meeting of CapMan Plc
Report on the Audit of the Financial
Statements
Opinion
We have audited the financial statements of CapMan Plc
(business identity code 0922445-7) for the year ended 31
December, 2020. The financial statements comprise the
consolidated balance sheet, statement of comprehensive
income, statement of changes in equity, statement of cash
flows and notes, including a summary of significant accounting
policies, as well as the parent company’s balance sheet, income
statement, statement of cash flows and notes.
In our opinion
•
the consolidated financial statements give a true and fair
view of the group’s financial position as well as its financial
performance and its cash flows in accordance with Interna-
tional Financial Reporting Standards (IFRS) as adopted by
the EU.
•
the financial statements give a true and fair view of the
parent company’s financial performance and financial posi-
tion in accordance with the laws and regulations governing
the preparation of financial statements in Finland and
comply with statutory requirements.
Our opinion is consistent with the additional report submitted
to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing
practice in Finland. Our responsibilities under good auditing
practice are further described in the Auditor’s Responsibilities for
the Audit of Financial Statements section of our report
We are independent of the parent company and of the group
companies in accordance with the ethical requirements that are
applicable in Finland and are relevant to our audit, and we have
fulfilled our ot her ethical responsibilities in accordance with
these requirements.
In our best knowledge and understanding, the non-audit
services that we have provided to the parent company and
group companies are in compliance with laws and regulations
applicable in Finland regarding these services, and we have not
provided any prohibited non-audit services referred to in Article
5(1) of regulation (EU) 537/2014. The non-audit services that
we have provided have been disclosed in note 8 to the consoli-
dated financial statements.
We believe that the audit evidence we have obtained is suffi-
cient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
financial statements of the current period. These matters were
addressed in the context of our audit of the financial state-
ments as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
We have fulfilled the responsibilities described in the
Auditor’s responsibilities for the audit of the financial statements
section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures
designed to respond to our assessment of the risks of material
misstatement of the financial statements. The results of our
audit procedures, including the procedures performed to ad-
dress the matters below, provide the basis for our audit opinion
on the accompanying financial statements.
We have also addressed the risk of management override of
internal controls. This includes consideration of whether there
was evidence of management bias that represented a risk of
material misstatement due to fraud.
CAPMAN ANNUAL REPORT 2020 • AUDITOR’S REPORT
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Key Audit Matter
How our audit addressed
the Key Audit Matter
Revenue recognition
We refer to the accounting policies in the
financial statements and the Note 4.
CapMan’s turnover in consolidated group
accounts amounted to 43,0 million euros.
It consists of management fees, sale of
services and carried interest income.
The timing of revenue recognition can be
judgmental as revenue may be recognized
either over time or at the point in time de-
pending on the circumstances and provided
services. The assessment of recognized
revenue includes management assumptions
and estimates.
Revenue recognition was determined to be
a key audit matter and a significant risk of
material misstatement referred to in EU
Regulation No 537/2014 point (c) of Article
10(2) in respect of its timely recognition
and at a proper amount.
Our audit procedures to address the risk
of material misstatement included, among
other things, assessing that the revenue
recognition principles comply to applicable
accounting standards. We also identified
and tested key controls relating to revenue
recognition.
We tested the sales cutoff with analytical
procedures. We supplemented our proce-
dures with test of details on a transaction
level in a random basis in order to ensure
that the revenue has been recognized in a
correct accounting period and it’s based on
the corresponding agreements.
In addition, we also assessed the adequacy
of disclosures relating to the fee and com-
mission income of the group.
Key Audit Matter
How our audit addressed
the Key Audit Matter
Valuation of non-liquid investments
We refer to the accounting policies in the
financial statements and the Notes 17 and 32.
The Group’s investment portfolio
31.12.2020 amounts to 116,2 million eu-
ros. The investment portfolio includes main-
ly investments to the funds managed by
CapMan group companies. Determining the
fair value of funds and direct investments
to portfolio companies is carried out using
International Private Equity and Venture
Capital valuation guidelines (IPEV) and IFRS
and the fair values are based on estimated
cash-flows or peer-group multiples. Fair
value measurement includes subjective
estimations by management, specifically in
areas where fair value is based on a model
based valuation. Valuation techniques for
private equity funds involve setting various
assumptions regarding pricing factors. The
use of different valuation techniques and as-
sumptions could lead to different estimates
of fair value.
Valuation of non-liquid investments was
determined to be a key audit matter and a
significant risk of material misstatement
referred to in EU Regulation No 537/2014
point (c) of Article 10(2).
Our audit procedures to address the risk of
material misstatement relating to valuation
of non-liquid investments included, among
others, identifying and testing the controls
in place over recording fair values of non-
liquid investment.
We performed additional procedures for ar-
eas of higher risk and estimation, involving
our valuation specialists.
Our audit procedures included:
•
Developing an understanding of the
private equity and real estate portfolios.
•
Reviewing the price of recent transactions
and investments.
•
Assessing assumptions used in the valua-
tions and corroborating that the valuation
appropriately reflects the risks of the
portfolios.
•
Comparing the assumptions against
established policies and determining if
they have been applied appropriately.
•
Reviewing and assessing the valuations
determined by CapMan or other party.
•
Verifying that the International Private
Equity and Venture Capital Valuation
Guidelines and valuation methodology
of IFRS have been applied correctly.
In addition, we also assessed the adequacy
of disclosures relating to the non-liquid
investments.
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CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Key Audit Matter
How our audit addressed
the Key Audit Matter
Valuation of goodwill
We refer to the accounting policies in the
financial statements and the Note 15.
As of balance sheet date 31 December
2020, the value of goodwill amounted to
15,3 million euros representing 7,0 % of the
total assets and 13,6 % of the total equity.
The valuation of goodwill is based on man-
agement’s estimate about the value-in-use
calculations of the cash generating units.
There are number of underlying assump-
tions used to determine the value-in-use,
including the revenue growth, EBITDA and
discount rate applied on net cash-flows.
Estimated value-in-use may vary signifi-
cantly when the underlying assumptions
are changed and the changes in above-
mentioned individual assumptions may
result in an impairment of goodwill.
Valuation of goodwill was determined to
be a key audit matter because the assess-
ment process is judgmental, it is based on
assumptions relating to market or economic
conditions extending to the future, and
because of the significance of the goodwill
to the financial statements.
Our audit procedures regarding the val-
uation of goodwill included involving EY
valuation specialists to assist us in evaluat-
ing methodologies, impairment calculations
and underlying assumptions applied by the
management in the impairment testing.
In evaluation of methodologies, we com-
pared the principles applied by the manage-
ment in the impairment tests to the require-
ments set in IAS 36 Impairment of assets
standard and ensured the mathematical
accuracy of the impairment calculations.
We assessed the historical accuracy of
managements’ estimations and compared
the key assumptions applied by the manage-
ment in impairment tests to
•
approved budgets and long-term
forecasts,
•
information available in external sources,
as well as
•
our independently calculated industry
averages such as weighted average cost of
capital used in discounting the cashflows.
We also assessed the sufficiency of the dis-
closures as well as whether the disclosures
about the sensitivity of the impairment
assessment are appropriate.
Responsibilities of the Board of Directors and the
Managing Director for the Financial Statements
The Board of Directors and the Managing Director are respon-
sible for the preparation of consolidated financial statements
that give a true and fair view in accordance with International
Financial Reporting Standards (IFRS) as adopted by the EU,
and of financial statements that give a true and fair view in
accordance with the laws and regulations governing the
preparation of financial statements in Finland and comply
with statutory requirements. The Board of Directors and the
Managing Director are also responsible for such internal control
as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Board of Directors
and the Managing Director are responsible for assessing the
parent company’s and the group’s ability to continue as going
concern, disclosing, as applicable, matters relating to going
concern and using the going concern basis of accounting. The
financial statements are prepared using the going concern
basis of accounting unless there is an intention to liquidate the
parent company or the group or cease operations, or there is
no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the
Financial Statements
Our objectives are to obtain reasonable assurance on whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assur-
ance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with good auditing practice
will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they could reasonably
be expected to influence the economic decisions of users taken
on the basis of the financial statements.
As part of an audit in accordance with good auditing prac-
tice, we exercise professional judgment and maintain profes-
sional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal control.
•
Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the parent company’s or the
group’s internal control.
CAPMAN ANNUAL REPORT 2020 • AUDITOR’S REPORT
102
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
•
Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
•
Conclude on the appropriateness of the Board of Directors’
and the Managing Director’s use of the going concern basis of
accounting and based on the audit evidence obtained, wheth-
er a material uncertainty exists related to events or conditions
that may cast significant doubt on the parent company’s
or the group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclo-
sures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the
parent company or the group to cease to continue as a going
concern.
•
Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions
and events so that the financial statements give a true and
fair view.
•
Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the group to express an opinion on the consolidated
financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical require-
ments regarding independence, and communicate with them
all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most sig-
nificance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in ex-
tremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse conse-
quences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
We were appointed as auditors by the Annual General Meeting
on March 14th, 2018 and our appointment represents a total
period of uninterrupted engagement of three years.
Other information
The Board of Directors and the Managing Director are responsi-
ble for the other information. The other information comprises
the report of the Board of Directors but does not include the
financial statements and our auditor’s report thereon. We have
obtained the report of the Board of Directors prior to the date
of this auditor’s report, and the Annual Report is expected to
be made available to us after that date.
Our opinion on the financial statements does not cover the
other information.
In connection with our audit of the financial statements,
our responsibility is to read the other information identified
above and, in doing so, consider whether the other information
is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be
materially misstated. With respect to report of the Board of
Directors, our responsibility also includes considering wheth-
er the report of the Board of Directors has been prepared in
accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board
of Directors is consistent with the information in the financial
statements and the report of the Board of Directors has
been prepared in accordance with the applicable laws and
regulations.
If, based on the work we have performed on the other
information that we obtained prior to the date of this auditor’s
report, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Helsinki February 3
rd
, 2021
Ernst & Young Oy
Authorized Public Accountant Firm
Ulla Nykky
Authorized Public Accountant
CAPMAN ANNUAL REPORT 2020 • ShARES ANd ShAREhOLdERS
103
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
400
300
200
100
0
2016 2017 2018 2020
2019
TYÖNUMERO 12
Market capitalisation, M€
362
179
179
258
217
362
Shares and shareholders
CapMan is a Nordic listed private assets management and
investment company. The parent company CapMan Plc’s share
has been listed on the helsinki Stock Exchange (Nasdaq helsin-
ki) since 2001. CapMan had 25,075 shareholders as of the end
of 2020.
CapMan shares
CapMan’s shares are quoted on the main list of Nasdaq
helsinki. All shares generate equal voting rights and rights to a
dividend and other distribution to shareholders. CapMan had
a total of 156,458,970 shares as of 31 december 2020. Cap-
Man’s shares are included in the book-etry securities register
and have no nominal value. CapMan’s share capital as of 31
december 2020 was 771,586.98.
Nominee-registered shareholders
CapMan Plc’s foreign shareholders can register their hold-
ings in nominee-registered book-entry accounts, for which a
custodian is registered in the company’s list of share-holders
rather than the ultimate owner. Foreign and nominee-registered
shareholders held a total of 5% of CapMan’s shares as of the
end of 2020. A breakdown by sector and size of holding can be
found on the Notes to the Financial Statements.
Dividend policy and dividend
payable for 2020
CapMan’s objective is to pay an annually increasing dividend
to its shareholders. The Board of directors will propose to the
Annual General Meeting that a distribution of €0.14 per share
be paid to shareholders.
IR contacts
CapMan’s IR contacts are the joint responsibility of the CEO,
the CFO and the Communications and IR director. The compa-
ny observes a two-week silent period prior to publication of its
interim reports and financial statements, during which it does
not comment on the company’s financial performance or future
prospects.
Read more
www.capman.com/shareholders/
TYÖNUMERO 11
Holding and voting rights by
shareholder class
■ Management and employees of
CapMan 4.3%
■ Nominee registered shareholders
and other foreign ownership
(non-Finnish owners) 5.1%
■ Finnish institutions
and households 90.6%
CAPMAN ANNUAL REPORT 2020 • ShARES ANd ShAREhOLdERS
104
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
130
120
110
100
90
80
70
60
TYÖNUMERO 13
Jan Feb Mar Apr May Jun Jul Aug Sep Oct DecNov
Share price and index development in 2020
■
CapMan Plc ■ CapMan Plc total return ■ OMX Helsinki CAP PI ■ OMX Helsinki CAP GI
CAPMAN ANNUAL REPORT 2020 • INFORMATION FOR ShAREhOLdERS
105
CORPORATE GOVERNANCE REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTSGROUP
Information for shareholders
Annual General Meeting 2021
CapMan Plc’s Annual General Meeting 2020 will be held
on Wednesday 17 March 2021 at 10.00 a.m. EET at at the
CapMan Group head Office at the address Ludviginkatu 6
00130 helsinki. All shareholders registered with the company’s
list of shareholders maintained by Euroclear Finland Oy on
Friday 5 March 2021 are entitled to attend.
In order to curb the spread of the Covid-19 pandemic, the
General Meeting will be organized without shareholders’ and
their proxy representatives’ presence at the General Meeting
venue. Shareholders can participate in the General Meeting and
use their shareholder rights only by voting in advance (either
personally or through a proxy representative), by submitting
counterproposals in advance and by asking questions in
advance in the manner described below. Proxy representatives
must also vote in advance in the manner described below. For
further instructions, please see our website
www.capman.com/shareholders/general-meetings/
Dividend and equity repayment
The Board of directors proposes to the AGM that a total of EUR
0.14 per share would be paid to shareholders from distribut-
able funds for 2020 equivalent of a total of MEUR 21.9, from
distributable funds for 2020. The distribution of funds would
be divided in a dividend of EUR 0.02 per share, equivalent to
a total of approx. MEUR 3.1 as well as an equity repayment of
EUR 0.12 per share to be returned from the invested unrestrict-
ed equity fund, equivalent to a total of approx. MEUR 18.8.
CapMan’s distributable funds amounted to MEUR 72.2 on 31
december 2020. The dividend and equity repayment would be
paid in two equal instalments six months apart.
CapMan Plc’s financial reporting in 2021
CapMan Plc will publish one half-year report and two interim
reports during 2021:
•
Interim Report for the period 1 January–31 March 2021
29 April 2021
•
half-Year Financial Report for the period 1 January–30 June
2021 5 August 2021
•
Interim Report for the period 1 January–30 September 2021
27 October 2021
Financial reports are published in Finnish and English. The com-
pany’s Annual Reports, Interim Reports, and stock exchange
releases and press releases can be obtained electronically at the
company’s website www.capman.com. The company’s website
also includes other IR material.
Please subscribe to CapMan’s publications by joinig the mailing list.
Analysts following CapMan Plc
Evli Jerker Salokivi, tel. +358 (0)45 133 2229
Inderes Sauli Vilén, tel. +358 (0)44 025 8908
Nordea Pauli Lohi, tel. +358 (0)45 134 7790
Svante Kokfors, tel. +358 (0)9 5300 5337
OP Kim Gorschelnik, tel. +358 (0)10 252 4351
WWW.CAPMAN.COM