eQ Plc’s half year report 2022 – eQ’s result was excellent during the six-month period

eQ Plc half year report
9 August 2022, at 8:00 A.M.

January to June 2022 in brief

• The Group's net revenue during the period was EUR 44.0 million (EUR 36.8 million from 1 Jan. to 30 June 2021).
• The Group’s net fee and commission income was EUR 43.0 million (EUR 33.2 million).
• The Group’s net investment income from own investment operations was EUR 1.1 million (EUR 3.6 million), including the return from private equity and real estate fund investments and liquid fixed income funds.
• The Group’s operating profit grew by 28% to EUR 27.1 million (EUR 21.1 million).
• The Group’s profit was EUR 21.5 million (EUR 16.9 million).
• The consolidated earnings per share were EUR 0.54 (EUR 0.43).
• The net revenue of the Asset Management segment increased by 30% to EUR 40.1 million (EUR 30.9 million) and the operating profit by 42% to EUR 26.3 million (EUR 18.5 million).
• The net revenue of the Corporate Finance segment was EUR 2.9 million (EUR 2.4 million) and the operating profit was EUR 1.0 million (EUR 0.6 million).
• The net cash flow from the Group’s own private equity and real estate fund investment operations was EUR 1.0 million (EUR 2.5 million).

April to June 2022 in brief

• In the second quarter, the Group’s net revenue totalled EUR 22.4 million (EUR 18.8 million from 1 April to 30 June 2021).
• The Group’s net fee and commission income was EUR 21.6 million (EUR 17.4 million).
• The Group’s net investment income from own investment operations was EUR 0.8 million (EUR 1.4 million), including the return from private equity and real estate fund investments and liquid fixed income funds.
• The Group’s operating profit grew by 33% to EUR 14.1 million (EUR 10.6 million).
• The Group’s profit was EUR 11.2 million (EUR 8.5 million).
• The consolidated earnings per share were EUR 0.28 (EUR 0.22).

Key ratios	1-6/22	1-6/21	Change	4-6/22	4-6/21	Change	1-12/21
Net revenue, Group, MEUR	44.0	36.8	20%	22.4	18.8	19%	78.9
Net revenue, Asset Management, MEUR	40.1	30.9	30%	20.5	16.1	27%	64.9
Net revenue, Corporate Finance, MEUR	2.9	2.4	22%	1.1	1.3	-16%	6.9
Net revenue, Investments, MEUR	1.2	3.5	-67%	0.8	1.4	-43%	7.1
Net revenue, Group administration and
Net revenue, MEUR	-0.1	0.0		0.0	0.0		0.0
Operating profit, Group, MEUR	27.1	21.1	28%	14.1	10.6	33%	47.7
Operating profit, Asset Management, MEUR	26.3	18.5	42%	13.7	9.6	42%	40.3
Operating profit, Corporate Finance, MEUR	1.0	0.6	56%	0.3	0.4	-22%	2.7
Operating profit, Investments, MEUR	1.2	3.5	-67%	0.8	1.4	-43%	7.1
Operating profit, Group administration, MEUR	-1.4	-1.4		-0.6	-0.7		-2.5
Profit for the period, MEUR	21.5	16.9	27%	11.2	8.5	33%	38.1
Key ratios	1-6/22	1-6/21	Change	4-6/22	4-6/21	Change	1-12/21
Earnings per share, EUR	0.54	0.43	25%	0.28	0.22	31%	0.97
Equity per share, EUR	1.64	1.48	11%	1.64	1.48	11%	2.02
Cost/income ratio, Group, %	38.4	42.4	-9%	36.9	43.5	-15%	39.5
Liquid assets, MEUR	22.3	25.4	-12%	22.3	25.4	-12%	56.0
Private equity and real estate fund investments, MEUR	19.0	16.7	14%	19.0	16.7	14%	18.8
Interest-bearing liabilities, MEUR	0.0	0.0	0%	0.0	0.0	0%	0.0
Assets under management excluding reporting services, EUR billion	9.3	8.6	7%	9.3	8.6	7%	9.2
Assets under management, EUR billion	12.0	10.7	13%	12.0	10.7	13%	11.6

Mikko Koskimies, CEO

The year 2022 started in a positive tone. Economies had been opened up after COVID-19 restrictions and growth outlooks were strong. Due to the supply chock caused by COVID-19, inflation had accelerated clearly, however, above all in the US.

The war in Ukraine, which begun in February 2022, and the consequent sanctions caused another supply chock, which further accelerated inflation. During the spring 2022, it became obvious that central banks in above all the US but in Europe as well are forced to begin slowing down the growth in demand and thereby curb inflation by tightening monetary policy. This means increasing interest rates and reducing central bank balance sheets simultaneously.

Due to inflation and the central bank policy, the sentiment in bond and equity markets was very weak and market fluctuations were big in the first half of 2022. Strong growth expectations were replaced by a fear for recession.

In the first half of the year, share prices fell across the board, and market volatility increased clearly. The greatest fall was seen in the S&P 500 Index in the US, which gave a -20.2% return in dollars. The dollar grew clearly stronger in the first half of the year, and in euros, S&P 500 fell by only 13.1%. The return of Helsinki Stock Exchange was -17.7% and that of MSCI Europe -13.8%. The emerging markets MSCI Index gave a return of -10.4%.

The strongly accelerating inflation and expectations of interest rate increases by central banks had serious consequences on bond markets. The emerging markets corporate loan index fell by no less than 15.8% and the high yield index by 15.3% during the first half of the year. The index returns of euro zone government bonds and investment grade corporate loans also fell unexceptionally strongly – government bonds by -12.3% and IG corporate loans by -12.2%.  

eQ’s result was excellent during the period

eQ’s result was excellent during the period under review, and the result has grown already for 33 consecutive quarters. The net revenue of the Group during the period was EUR 44.0 million and the operating profit was EUR 27.1 million. Net revenue grew by 20% and operating profit by 28% on the previous year. Above all eQ Asset Management and Advium grew strongly, while the result of the Investments segment clearly fell from the year before.

eQ Asset Management’s growth continued

eQ Asset Management’s result was once more excellent. During the period under review, the net revenue of the Asset Management segment increased by 30% to EUR 40.1 million. Operating profit grew by 42% per cent to EUR 26.3 million. The strongest growth was experienced in performance fees and the management fees of both real estate asset management and private equity asset management.

As for traditional investments, the returns of client portfolios were negative in the first half in line with the market. Of the funds that eQ manages itself, 23 gave a better return that its benchmark index, and during a three-year period the corresponding figure was 69. In discretionary asset management portfolios, the six-month returns were also negative along with the market. The returns of real estate and private equity operations were, on the other hand, excellent in the first half of the year, supporting very well the overall returns of most of our clients during the period.

As for sales, the first half of the year was excellent, above all for real estate and private equity asset management. Net subscriptions in the eQ Community Properties and Commercial Properties funds totalled EUR 147 million, and the size of the eQ Residential II Fund grew to EUR 41 million. In 2022, funds are raised to the eQ PE XIV North and eQ PE SF IV funds, which make investments in Norther Europe. Their total size already reached EUR 385 million in the closings made in June. In addition, the size of the eQ VC Fund, established at the end of October 2021, grew to EUR 71 million during the period under review. The eQ VC Fund invests in the best venture capital funds in the US.

Advium’s fee income and profit grew

Advium’s net revenue during the period under review was EUR 2.9 million (EUR 2.4 million). The operating profit was EUR 1.0 million (EUR 0.6 million).

During the period under review, the value of M&As fell globally clearly from the record year 2021 but remained at a high level in long-term comparison. In Finland, the number of M&As remained at a good level, but the number of large transactions was lower than previously. The volume of real estate transactions remained good.

During the first six months of the year, Advium acted as advisor in tree corporate transactions: the sale of Bluebird to North Alliance, the acquisition of Raksystems by Trill Impact and the sale of Akkurate to Sandvik. In real estate transactions, Advium acted as advisor when Ilmarinen, YIT and HGR Property Partners established a joint venture for the development of significant real estate portfolio and in the divestment of Espoo Hospital by the city of Espoo to LähiTapiola Yhteiskuntakiinteistöt Suomi Ky.

Net revenue of the Investments segment fell

The operating profit of the Investments segment was EUR 1.2 million (EUR 3.5 million) and the net cash flow was EUR 1.0 million (EUR 2.5 million). The balance sheet value of the private equity and real estate fund investments was EUR 19.0 million at the end of the period. eQ Plc made an investment commitment of EUR 1 million to both eQ PE XIV North and eQ Residential II funds. The value changes in the Amanda III and Amanda V private equity funds, which invest in Eastern Europe, due to the war in Ukraine had a negative impact on the value changes of investments during the period under review.

Outlook

The outlook for the financial year is still unaltered, and we expect the net revenue and operating profit of the Asset Management segment to grow from the previous year. In accordance with our disclosure policy, we do not issue profit guidance for the Corporate Finance and Investments segments.

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eQ’s half year financial report 1 Jan. to 30 June 2022 is enclosed to this release and it is also available on the company website at www.eQ.fi.

eQ Plc

Additional information:
Mikko Koskimies, CEO, tel. +358 9 6817 8799
Antti Lyytikäinen, CFO, tel. +358 9 6817 8741

Distribution: Nasdaq Helsinki, www.eQ.fi, media

eQ Group is a group of companies that concentrates on 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 12.0 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.

Attachment

• eQ Plc Half Year Financial Report 2022