LEVERATOR PLC INTERIM REPORT 1 JANUARY – 31 MARCH 2014

Leverator Plc     Interim Report 8 May 2014 at 11.30 a.m. EEST

LEVERATOR PLC INTERIM REPORT 1 JANUARY – 31 MARCH 2014

Business

Leverator Plc’s (Leverator) business consists of the issue of bonds and the grant of loans to CapMan Mezzanine IV L.P. mezzanine fund (CMM IV). Leverator’s result is formed by the difference between interest received from CMM IV’s loans and interest paid to bondholders. The issued bonds are listed on the Helsinki Exchanges (Nasdaq OMX Helsinki).

Bonds

Leverator has issued a serial loan with a fixed coupon interest of 8.162%. The bonds were issued in five tranches in accordance with the loan capital needed by CMM IV, and investors subscribed all five tranches according to their commitments. The final size of the bond totalled MEUR 192 on 18 June 2009. The final loan maturity is 21 June 2016. Leverator has a call option to repay the bonds or part thereof not earlier than 22 June 2009.

Leverator repaid 8.4%, equivalent of EUR 16,128,000, in accordance with the terms of the loan on 23 December 2013. The outstanding bond loan totalled EUR 96,314,112 on 31 March 2014.

Issued tranches and Leverator’s financial performance

Leverator’s turnover for the accounting period was EUR 0, because the Company’s interest earnings and interest expenses are presented as financial items in the income statement. Leverator’s operating loss was EUR 17,306 (EUR 10,202 for the review period 1 January – 31 March 2013) and financial income and expenses totalled EUR 60,196 (EUR 70,276). The result for the accounting period was EUR 34,312 (EUR 45,356).

Leverator’s solvency and risks

The security for the bonds is Leverator’s receivable from CMM IV. The security for this receivable to Leverator is CMM IV’s mezzanine loan receivables from portfolio companies as well as associated options and portfolio company shares that are possibly subscribed on the basis of those options.

Leverator’s solvency to pay the bonds’ interest and principal is based on CMM IV’s solvency to pay the loan receivable and interest to Leverator. CMM IV’s solvency is dependent on its mezzanine loan receivables from portfolio companies and on the value of associated options or shares as well as on CMM IV’s right to call the commitments and clawback of the Fund’s Limited Partners. The most significant risks or uncertainty factors in Leverator’s operations are that the portfolio companies would not be able to pay their debt to the fund, that the fund’s Limited Partners would not fulfil their obligations in accordance with fund agreement or that the fund’s solvency would be put at risk due to some other cause.

An examination of CMM IV’s solvency to manage the loan receivable to Leverator is first carried out in order to determine Leverator’s solvency.

CMM IV’s solvency 31 March 2014

* Figures by CMM IV's management company, as reported or with a discount.

** Excludes interest receivables that are outstanding or have accumulated that are not booked in the Fund's accounts because of the uncertainty whether they can be collected.                                                                

CMM IV's financial assets exceed the total loan receivables of Leverator by €7.0 million on 31 March 2014 and therefore the latter's receivable due from CMM IV presented below can be booked in full. CMM IV’s financial assets exceeded the total loan receivables of Leverator by €7.2 million on 31 December 2013 and by €10.0 million on 31 March 2013.

The values given above are reported by CMM IV’s management company. The management company’s assessment of the value appreciation of mezzanine loans and associated options and shares is based on reporting principles common to the private equity industry. These principles aim at take into account risk factors caused by the general economic environment. The amount of commitments and clawback that the fund has a right to call from the Fund’s Limited Partners is based on CMM IV’s fund agreement.

Leverator’s solvency 31 March 2014

Leverator’s solvency exceeds the balance of the bonds.

Leverator’s more detailed financial position is presented in the income statement, balance sheet, statement of changes in equity and cash flow statement in Appendix 1. There are no exceptional liabilities of Leverator or CMM IV in the knowledge of Leverator’s Board of Directors that should be considered in the above calculations.

Leverator’s ownership

The owners of Leverator Plc are CapMan Plc, Etera Mutual Pension Insurance Company, Foundation for Economic Education, Ilmarinen Mutual Pension Insurance Company, OP Life Assurance Company Ltd, Pharmacy Pension Fund, Mandatum Life Insurance Company Limited, Varma Mutual Pension Insurance Company and Yleisradio Pension Fund with equal holdings.

Leverator’s Board of Directors

On 8 May 2014 the shareholders of Leverator Plc elected the following members to the Company’s Board of Directors: Mr Tatu Hemmo, Mrs Nina Härkönen, Mr Staffan Jåfs, Mr Harri Lemmetti, Mr Olli Liitola, Mr Tommi Mäkelä, Mrs Katja Salovaara, Mr Tomi Viia, and Mr Kyösti Ylikortes. The members elected Mr Tatu Hemmo as Chairman of the Board.

Future outlook

Developments in the general market environment in the next few years may continue to cause difficulties in the ability of fund’s portfolio companies to pay interest on their mezzanine loans and repay principal to the fund in accordance with original loan terms. Restrictions in the portfolio companies’ senior loan agreements may in certain cases prevent the companies from meeting their interest payments in accordance with the original loan terms during 2014. The aforementioned issues might, in turn, weaken the fund’s ability to meet its debt to Leverator Plc in full, which would affect Leverator Plc’s solvency. It is possible that the fund’s solvency weakens further during 2014.

It is probable that Leverator Plc’s interest earnings will cover its interest payable and other expenses in 2014.

Leverator Plc will publish its Interim Report 1 January–30 June 2014 on 7 August 2014.

Helsinki 8 May 2014

LEVERATOR PLC

Board of Directors

For further information, please contact:

Olli Liitola, CEO, tel. +358 207 207 506 or mobile +358 400 605 040

DISTRIBUTION

NASDAQ OMX Helsinki

Principal media

Bondholders

www.leverator.fi

APPENDIX 1.                     Income statement, balance sheet, statement of changes in equity and cash flow statement

The Interim Report 1 January–31 March 2014 has been prepared in compliance with International Financial Reporting Standards (IFRS) and the accounting principles applied are the same as in the financial statements for 2013. The information presented is unaudited.

APPENDIX 1. Income Statement, Balance Sheet, Statement of Changes in Equity and Cash Flow Statement

         Olli Liitola          Senior Partner                    Phone: +358 207 207 506          Email: olli.liitola@capman.com