eQ PLC FINANCIAL STATEMENTS RELEASE
7 February 2019, at 8:00 AM
January to December 2018 in brief
- The Group's net revenue during the financial period was EUR 45.4 million (EUR 40.7 million from 1 Jan. to 31 Dec. 2017).
- The Group’s net fee and commission income was EUR 43.6 million (EUR 38.9 million).
- The Group’s net investment income from own investment operations was EUR 1.8 million (EUR 1.7 million).
- The Group’s operating profit grew by 12% to EUR 22.4 million (EUR 20.1 million).
- The Group’s profit was EUR 17.8 million (EUR 15.9 million).
- The consolidated earnings per share were EUR 0.47 (EUR 0.43).
- The net cash flow from the Group’s own private equity fund investment operations was EUR 3.9 million (EUR 1.9 million).
- The net revenue of the Asset Management segment increased by 8% to EUR 36.7 million (EUR 33.9 million) and the operating profit by 8% to EUR 19.5 million (EUR 18.0 million).
- The net revenue of the Corporate Finance segment increased by 35% to EUR 7.1 million (EUR 5.2 million) and the operating profit by 61% to EUR 3.2 million (EUR 2.0 million).
- Dividend proposal EUR 0.47 (EUR 0.43) and proposal for equity repayment EUR 0.07 (EUR 0.07) per share.
October to December 2018 in brief
- In the last quarter, the Group’s net revenue totalled EUR 14.7 million (EUR 13.9 million from 1 Oct. to 31 Dec. 2017).
- The Group’s net fee and commission income was EUR 14.6 million (EUR 13.0 million).
- The Group’s net investment income from own investment operations was EUR 0.1 million (EUR 0.9 million).
- The Group’s operating profit was EUR 7.4 million (EUR 7.3 million).
- The Group’s profit was EUR 5.9 million (EUR 5.8 million).
- The consolidated earnings per share were EUR 0.16 (EUR 0.16).
| Key ratios | 1-12/18 | 1-12/17 | Change % | 10-12/18 | 10-12/17 | Change % |
| Net revenue, Group, M€ | 45.4 | 40.7 | 12% | 14.7 | 13.9 | 6% |
| Net revenue, Asset Management, M€ | 36.7 | 33.9 | 8% | 9.8 | 10.5 | -6% |
| Net revenue, Corporate Finance, M€ | 7.1 | 5.2 | 35% | 4.8 | 2.6 | 87% |
| Net revenue, Investments, M€ | 1.8 | 1.4 | 28% | 0.2 | 0.8 | -76% |
| Net revenue, Group administration and | ||||||
| eliminations, M€ | -0.1 | 0.1 | -0.1 | 0.1 | ||
| Operating profit, Group, M€ | 22.4 | 20.1 | 12% | 7.4 | 7.3 | 1% |
| Operating profit, Asset Management, M€ | 19.5 | 18.0 | 8% | 5.1 | 5.6 | -10% |
| Operating profit, Corporate Finance, M€ | 3.2 | 2.0 | 61% | 2.8 | 1.3 | 120% |
| Operating profit, Investments, M€ | 1.8 | 1.4 | 28% | 0.2 | 0.8 | -76% |
| Operating profit, Group administration, M€ | -2.1 | -1.3 | 58% | -0.7 | -0.4 | 64% |
| Profit for the period, M€ | 17.8 | 15.9 | 12% | 5.9 | 5.8 | 1% |
| Earnings per share, € | 0.47 | 0.43 | 10% | 0.16 | 0.16 | 3% |
| Proposal for dividend and equity repayment per share, € | 0.54 | 0.50 | 8% | |||
| Equity per share, € | 1.65 | 1.67 | -1% | 1.65 | 1.67 | -1% |
| Cost/income ratio, Group, % | 50.5 | 50.5 | 0% | 49.8 | 47.5 | 5% |
| Liquid assets, M€ | 25.7 | 24.7 | 4% | 25.7 | 24.7 | 4% |
| Private equity fund investments, M€ | 16.9 | 18.8 | -10% | 16.9 | 18.8 | -10% |
| Interest-bearing liabilities, M€ | 0.0 | 0.0 | 0% | 0.0 | 0.0 | 0% |
| Assets under management, € billion | 9.5 | 8.4 | 12% | 9.5 | 8.4 | 12% |
Janne Larma, CEO
I am very pleased with eQ´s year. In 2018, eQ’s result was excellent and the profits of all segments increased on the previous year. We managed to increase our net revenue by 12% to EUR 45.4 million and our operating profit to EUR 22.4 million. The Group’s profit for the financial period increased by 12% to EUR 17.8 million, i.e. 47 cents per share. eQ Group’s profit has grown for 19 consecutive quarters.
The Group’s balance sheet remains very strong. The market value of eQ’s own private equity fund investments totalled EUR 16.9 million and liquid assets amounted to EUR 25.7 million at the close of the year. The Group has no interest-bearing liabilities.
eQ Asset Management’s income and profit grew despite the challenging market situation
eQ Asset Management was able to increase its fee and commission income by 8% to EUR 36.7 million. The profitability of the segment improved, and the operating profit grew by 8% to EUR 19.5 million. eQ Asset Management grew faster than the market due to, above all, the good sales of real estate funds and private equity products. eQ’s real estate funds gathered EUR 367 million of new net subscriptions in 2018 and offered an extremely competitive return in the present market situation. Private equity asset management also grew last year, and we gathered two new funds with a total size of EUR 310 million. The management fees of real estate and private equity asset management grew by 39% last year and stood for 69% of the segment's net fee and commission income. The fee and commission income of traditional asset management fell by 3% last year, mainly due to the market fluctuations.
eQ has improved its position year after year as one of the leading institutional asset managers in Finland. According to a study by SFR, we were already the second most used institutional asset manager in Finland last year. According to the study, 63% of the largest Finnish institutional investors used eQ’s services in 2018, an increase by 8 percentage points on the previous year.
Advium had an excellent year
eQ’s corporate finance unit Advium had a very successful year in 2018. Advium acted as advisor in 12 finalised transactions last year, and its net revenue increased by 35% to EUR 7.1 million. The operating profit of Advium increased by 60% to EUR 3.2 million. Advium maintained its strong position in large real estate transactions and was chosen the best Finnish investment bank in the real estate sector, already for the twelfth time, in an enquiry by the distinguished Euromoney magazine.
Advium acted as advisor, for instance to the owners of T2H, a leading Finnish housing constructor, as it was sold to a Finnish consortium of investors. Advium also acted as advisor to Kotipizza Oyj and Pöyry Plc, as public takeover bids were made on them. In the real estate segment, Advium acted as advisor as Berfin Oy, the investment company of the Berner family, sold Berner Ltd’s former head office in the city centre of Helsinki and as Marimekko sold its head office in Herttoniemi in Helsinki to a fund managed by OP Group, for instance.
The Investments segment made a higher profit than the year before
The operating profit of the Investments segment increased by 28% on the previous year to EUR 1.8 million (EUR 1.4 million in 2017). The net cash flow of investments was significantly higher than the year before, i.e. EUR 3.9 million (EUR 1.9 million in 2017). The market value of the private equity fund investments was EUR 16.9 million at the close of the year.
Dividend proposal and outlook
The Board of Directors’ dividend proposal for 2018 is 47 cents per share, and in addition, the Board proposes an equity repayment of 7 cents per share.
We expect that the net revenue and operating profit of the Asset Management segment will grow in 2019. We further estimate that the management fees of real estate and private equity asset management will grow on the previous year. The amount of performance fees is also estimated to grow. We believe that one of the private equity funds managed by eQ will reach the hurdle rate and begin to pay a performance fee during the second half of the year. As a result, we expect the profit of the Asset Management segment to grow clearly more than in 2018. Performance fees are dependent of the market development and, therefore, estimating them at the beginning of the year contains a greater risk.
In accordance with our disclosure policy, we do not issue profit guidance for the Corporate Finance and Investments segments. The results of these segments are highly dependent of factors that are not dependent of the company. Consequently, their operating profits may vary considerably and are difficult to foresee.
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eQ’s financial statements release 1 January to 31 December 2018 is enclosed to this release and it is also available on the company website at www.eQ.fi.
Additional information: Janne Larma, CEO, tel. +358 9 6817 8920
Distribution: Nasdaq Helsinki, www.eQ.fi, media
eQ Group is a Finnish group of companies that concentrates on responsible asset management and corporate finance business. eQ Asset Management offers a wide range of asset management services (including private equity funds and real estate asset management) for institutions and private individuals. The assets managed by the Group total approximately EUR 9.5 billion. Advium Corporate Finance, which is part of the Group, offers services related to mergers and acquisitions, real estate transactions and equity capital markets.
More information about the Group is available on our website www.eQ.fi.
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