INTERIM REPORT OF NORVESTIA FOR JANUARY–MARCH 2017
April 21, 2017 --
Helsinki, Finland, 2017-04-21 11:30 CEST (GLOBE NEWSWIRE) --
Norvestia Oyj Interim Report 21 April 2017 at 12:30
INTERIM REPORT OF NORVESTIA FOR JANUARY–MARCH 2017
In January–March 2017, the result of the Group amounted to EUR 7.8 million (EUR 4.1 million in the same period previous year).
Earnings per share was EUR 0.51 (0.27).
Investment income was EUR 10.2 million (5.4).
Net Asset Value (dividend-adjusted) increased during the period by 6.3% (2.4%).
No dividend was distributed for 2016 (EUR 4.14 per share for 2015).
REDEMPTION PROCEEDINGS COMMENCED IN NORVESTIA’S SHARES
In January CapMan Plc submitted an application to the Redemption Committee of the Finnish Central Chamber of Commerce to commence arbitration proceedings for the redemption of Norvestia’s minority shares. CapMan holds 92.5% of Norvestia’s shares. CapMan announced that it will offer in this compulsory redemption proceeding EUR 7.14 per share in cash to Norvestia’s minority shareholders. The final redemption price will be determined by the Arbitral Tribunal designated by the Redemption Committee of the Finnish Central Chamber of Commerce. The decision of the Arbitral Tribunal is expected in the fall at the latest. The Helsinki District Court has appointed Olli Rautiainen (MSc (Econ.), LL.M.) to act as a special representative to look after the interests of Norvestia’s minority shareholders. 12 April 2017 the Board of Directors resolved to apply for the delisting of Norvestia’s shares.
2017 began positively on the capital markets. Almost all of the world’s core stock markets rose during the first quarter of the year. The OMX Helsinki CAP Yield Index, which measures the development of the Helsinki stock exchange, rose by 4.4% and the S&P 500 Index, which describes the development of the US stock exchange, by 5.5%. The positive tone on the stock market has now continued since the November 2016 presidential elections in the US. The value of the OMX Helsinki CAP Yield Index, for example, has risen by over 12% since the elections and the S&P 500 Index by slightly more.
Last months’ increase in share prices came as a surprise to many investors, as share prices had already risen to historical highs. Countering these record highs is the low interest rate level which has prevailed for many years, and which, together with the support purchases of the European Central Bank (ECB), funnels assets into the stock markets. In addition to positive company result expectations there are many other factors behind the rise of the stock market, one of the most important being the lack of reasonable low-risk investment alternatives.
The promises of the US president Donald Trump to reduce taxation, increase industrial support and make America great again have also pleased investors. However, the new president has come to realize that making changes in a political system such as the US is not easy. This was demonstrated when his health reform bill failed to pass the senate. An interesting question is how long the positive tone of the stock market will continue if Donald Trump’s government does not succeed in making its promised reforms in taxation and in other matters.
Growth forecasts for the Finnish economy have been revised upwards in recent weeks. According to the latest predictions, the Finnish economy will grow by 1.3% this year and by 1.5% next year. This revised forecast is based mainly on the long-awaited recovery in global trade. The global economy is forecast to grow by 3.7% this year, which would be the fastest growth since 2011.
Index yields on various exchanges for the first three months of 2017 were as follows:
|Finland/OMX Helsinki Index||3.0%|
|Finland/OMX Helsinki CAP Yield Index||4.4%|
|Sweden/OMX Stockholm Index||5.3%|
|Denmark/OMX Copenhagen Index||4.6%|
|USA/Nasdaq Composite Index||9.8%|
|USA/S&P 500 Index||5.5%|
|Bloomberg European 500 Index||5.3%|
|MSCI World Index||5.9%|
|Japan/Nikkei 225 Index||-1.1%|
| || |
|Norvestia’s share price (dividend-adjusted)||-1.5%|
|Norvestia’s Net Asset Value (dividend-adjusted)||6.3%|
Norvestia’s twofold investment strategy consists of market investments and Growth Equity. Market investments are made primarily in Nordic listed shares, funds and bonds. Growth Equity investments are made in unlisted companies, growth-oriented listed companies and private equity funds.
Norvestia’s investments excluding cash and other liquid assets were 91% (94%) of total assets at the end of March. The fair value breakdown of the investments was as follows:
| || ||31/3/2017|| ||31/3/2016|
|Listed shares and share funds*||63.8||50.4||87.4||50.5|
|Growth Equity portfolio||34.9||27.6||41.6||24.1|
|Bonds and bond funds||12.7||10.0||17.3||10.0|
|Cash and other liquid assets||11.8||9.3||11.0||6.4|
* of which share funds EUR 7.0 million (13.8).
85.0% of the Group’s assets were in euros, 8.7% in Swedish krona, 6.1% in US dollars and 0.2% in other currencies.
During the first quarter of the year Norvestia was a net seller. Shares with strong dividend yields in particular were added to the portfolio in March. The company hedged its investments by selling Euro Stoxx Index futures.
In February Norvestia sold its ownership in the rapidly growing Idean Enterprises Oy to the global IT services Group Capgemini. The exit had a significant positive effect on Norvestia’s cash flow in the first quarter. Norvestia invested in Idean in 2014 and owned 24.8% of the company.
Investments in unlisted companies belong to Norvestia’s Growth Equity portfolio, which is administered by Norvestia’s subsidiary Norvestia Industries Oy. The aim of Norvestia’s Growth Equity activities is to find interesting companies with strong growth potential, the long-term and active development of which can yield significant increases in value and thereby return to Norvestia’s shareholders. In accordance with its investment strategy, Norvestia aims to find target companies that operate in sufficiently large markets and have the opportunity to take advantage of their service and solution innovations both in Finland and internationally.
Norvestia invests in minority shares or can be in the majority together with another investor. At the end of March 2017, the Growth Equity portfolio consisted of six unlisted companies: Aste Holding which offers media production and consulting, Coronaria which offers health care and wellbeing services, Fluido which offers cloud services consulting, Digital Workforce Services which offers robotic process automation services, Polystar Instruments which develops telecommunications business intelligence software solutions and Touhula Varhaiskasvatus which offers early childhood and preschool education. The total fair value of the interests in these companies amounted to EUR 25.1 million.
Growth Equity also includes investments in private equity funds. Norvestia has committed itself to investing EUR 2.0 million in the Amanda V East private equity fund, of which EUR 1.5 million is now invested; approximately EUR 5.0 million (USD 5.5 million) in Hamilton Lane PE Fund IX, of which EUR 1.2 million is now invested; EUR 2.0 million in Lifeline Ventures Fund I, of which EUR 1.7 million is now invested; EUR 5.0 million in Lifeline Ventures Fund III, of which EUR 0.6 million is now invested and EUR 3.0 million in Open Ocean Fund 2015, of which EUR 0.5 million is now invested. In addition, Norvestia has invested EUR 0.1 million in Lifeline Ventures Fund III AB. The total fair value of these fund investments amounted to EUR 6.8 million.
The situation on the capital markets is difficult to assess. The surest forecast is that the interest level in those euro countries considered risk free will remain low during 2017.
The larger unknowns, the significance of which is difficult to forecast, will be the various elections in the Eurozone. The Eurozone survived its first test of the year in March. In the Dutch parliamentary elections, the populist party which had been considered strong, fared much worse than expected. The next test will be on 23 April when the first round of the French presidential elections will be held. This election will indicate whether the strong anti-EU sentiment among European voters, recently demonstrated in the Brexit voting, continues, or whether the Dutch election result indicates an increase in support for the EU. Parliamentary elections will be held later this year in both Germany and Italy. The results of these elections will be significant for the future of the entire EU.
Norvestia’s near-future prospects will be guided by the ongoing CapMan Plc’s redemption proceedings of Norvestia shares. With respect to CapMan’s redemption proceedings Norvestia’s Board of Directors has applied for the removal of Norvestia’s share from the Helsinki stock exchange. It is likely that Norvestia’s stock exchange listing will end during the second quarter of the year. After this, Norvestia shares will no longer be tradable on the Helsinki stock exchange, and Norvestia’s journey as a stock exchange listed company will end.
|Earnings per share, EUR||0.51||0.27||1.24|
| || || || |
|Equity ratio, %||91.9||92.4||88.6|
|Shareholders’ equity per share, EUR||8.64||10.52||8.13|
|Net Asset Value per share, EUR||8.64||10.52||8.13|
|Net Asset Value, EUR million||132.4||161.1||124.6|
|Share price, EUR||7.30||7.93||7.41|
|Number of shares||15,316,560||15,316,560||15,316,560|
This stock exchange release is a summary of Norvestia's January-March 2017 Interim Report. The full Interim Report including tables is attached to this release and available on Norvestia’s website at www.norvestia.fi/reports.
The interim financial information is unaudited.
Helsinki, 21 April 2017
Board of Directors
Additional information: Juha Kasanen, Managing Director, Tel. +358-9-6226 380