Evli Plc’s Interim Report January-March 2023
EVLI PLC STOCK EXCHANGE RELEASE ON APRIL 25, 2023, AT 2:00 PM (EET/EEST)
A FAVORABLE START TO THE YEAR - OUTLOOK UNCHANGED
- The merger with EAB Group Plc finalized according to plan and planned synergies achieved.
- Alternative investment funds continued to grow, driven by strong client demand.
- Net fund subscriptions turned positive after a challenging year.
- Incentive business continued to grow – new clients from both Finland and Sweden.
Financial performance January-March 2023 (comparison period carve-out 1-3/2022)
- Net revenue was EUR 25.7 million (EUR 23.3 million).
- Operating profit was EUR 9.4 million (EUR 9.7 million).
- Operating result of the Wealth Management and Investor Clients segment decreased to EUR 8.9 million (EUR 9.6 million).
- Operating result of the Advisory and Corporate Clients segment decreased to EUR 0.2 million (EUR 0.8 million).
- At the end of March, assets under management amounted to EUR 16.7 billion (EUR 15.8 billion) on a net basis.
- Return on equity was 22.7 percent (33.8%).
- Earnings per share, fully diluted, was EUR 0.26 (EUR 0.28).
- The ratio of recurring revenues to operational costs was 128 percent (132%).
OUTLOOK UNCHANGED
The year 2023 started in an uncertain sentiment, due to heightened interest rate and inflation fears, increased geopolitical risks and market volatility.
As a result of the acquisitions made during 2022, Evli has managed to strengthen its position in the market. With synergies from the acquisitions and non-recurring costs allocated to 2022, we estimate that the operating result will be well above the comparison period's level (EUR 30.9 million in 2022).
KEY FIGURES DESCRIBING THE GROUP’S FINANCIAL PERFORMANCE
| 1–3/2023 | Carve-out 1–3/2022 | |
| Income statement key figures | ||
| Net revenue, M€ | 25.7 | 23.3 |
| Operating profit/loss, M€ | 9.4 | 9.7 |
| Operating profit margin, % | 36.5 | 41.7 |
| Profit/loss excl. non-recurring items related to mergers and acquisitions, M€ | ||
| Profit/loss for the financial year, M€ | 7.5 | 7.7 |
| Profitability key figures | ||
| Return on equity (ROE), % | 22.7 | 33.8 |
| Return on assets (ROA), % | 8.0 | 9.2 |
| Balance sheet key figures | ||
| Equity-to-assets ratio, % | 31.7 | 26.3 |
| Key figures per share | ||
| Earnings per Share (EPS), fully diluted, € | 0.26 | 0.28 |
| Dividend per share, € | 1.15* | - |
| Equity per share, € | 4.42 | - |
| Share price at the end of the period, € | 18.20 | - |
| Other key figures | ||
| Expense ratio (operating costs to net revenue) | 0.65 | 0.59 |
| Recurring revenue ratio, %** | 128 | 132 |
| Personnel at the end of the period | 300 | 289 |
| Market value, M€ | 487.21 | - |
| *Dividend approved by the General Meeting. The dividend was paid on March 23, 2023. **The calculation formula has been changed, which has resulted in an update of the previously reported benchmark figure. In the future, discretionary bonus payments will also be included as part of the operating costs. | ||
CEO MAUNU LEHTIMÄKI
The first quarter ended on an anxious note as investors worried about bank runs and the spread of a banking crisis. The crisis started when Silicon Valley Bank (SVB) and two other American banks became insolvent and the situation quickly escalated, threatening many small and medium-sized local banks. The bailout of Credit Suisse by Swiss authorities led to the bank's AT1 bonds being written down to zero and its board and major shareholders were persuaded into a forced marriage with UBS, thus preventing the crisis from spreading globally.
SVB's difficulties, as well as those of some other banks, were the result of losses on bond investments due to rapidly rising interest rates, exacerbated by the concentration of their deposit base in a small number of large depositors. Rumours of banks’ distress spread rapidly through social media and the rapid transfer of funds through online services led to the flight of hundreds of billions of dollars from deposits in a short period of time.
In addition to banking sector concerns, the operating environment was characterised by rising consumer prices, central bank interest rate hikes, a weak global economic growth outlook, the war in Ukraine and heightened geopolitical tensions, especially between the US and China. However, the values of key asset classes - equities, government bonds and corporate bonds - rose from their year-end levels.
The general market uncertainty was also reflected in the development and performance of Evli's business areas. Group net revenue increased by ten percent to EUR 25.7 million (EUR 23.3 million), but operating profit decreased by three percent to EUR 9.4 million (EUR 9.7 million). Fee income from alternative investment products and the incentives business clearly increased, while fee income from traditional funds remained at the high level of the previous year. In contrast, fees and commission income for the Corporate Finance unit and Equity and ETF brokerage were lower than in the previous year, due to a slowdown in M&A activity and lower trading volumes.
In January-March, Evli’s return on equity was 22.7 percent (33.8%), while the ratio of recurring revenue to operational costs was 128 percent (132%). The Group’s solvency and liquidity were at an excellent level.
Net revenue in the Wealth Management and Investor Clients segment increased by five percent to EUR 20.9 million (EUR 19.9 million). Assets under management rose to EUR 16.7 billion (EUR 15.8 billion), driven by positive market developments and net subscriptions. Evli Fund Management Company’s mutual fund capital, including alternative investment products, amounted to approximately EUR 11.5 billion (EUR 11.2 billion). Net subscriptions to traditional investment funds amounted to around EUR 100 million in the start of the year, mainly in short-dated fixed income funds and corporate bond funds. Fee income from alternative investment products grew by over 80 percent and accounted for around 35 percent of total fund fees.
Net revenue in the Advisory and Corporate Clients segment decreased by seven percent to EUR 3.4 million (EUR 3.6 million). The Corporate Finance unit invoiced EUR 0.1 million (EUR 0.7 million) in the quarter. However, the unit’s mandate base is good, although tighter access to funding is making project completion more challenging than in the past. Revenues from the Incentives business increased to EUR 3.2 million (EUR 2.8 million). The company has continued to win new clients and its prospects are also good.
The key drivers of Evli's strategy, international sales and alternative investment products, developed positively overall during the quarter. Net subscriptions from international clients amounted to almost EUR 30 million, mainly in Evli's corporate bond funds. International clients accounted for 21 percent (23%) of Evli's total fund capital, including alternative investment products. Total sales of alternative investment products in the first quarter amounted to EUR 83 million (EUR 120 million). Sales were spread across a number of different funds, with Evli Private Equity I, Evli Private Equity III and Evli Infrastructure II attracting the largest subscriptions.
Responsibility is one of Evli's strategic focus areas, and Evli has continued to develop it according to plans. During the first quarter, Evli reported on the implementation of sustainability factors promoted by its equity and fixed income funds during 2022, as required by the SFDR disclosure regulation. In addition, Evli actively promoted its work on climate targets and biodiversity. As part of its human rights work, Evli continued its joint research project together with UNICEF Finland. The project aims to discover how investors can support and promote child rights.
EVLI PLC
Additional information:
Maunu Lehtimäki, CEO, Evli Plc, tel. +358 (0)50 553 3000, [email protected]
Juho Mikola, CFO, Evli Plc, tel. +358 (0)40 717 8888, [email protected]
Evli Plc
We see wealth as an engine to drive progress. We draw on our heritage, broad expertise and Nordic values to grow and manage wealth for institutions, corporations and private persons in a responsible way.
We are the best fund house and the leading asset manager in Finland* offering a broad range of services including mutual funds, asset management and capital markets services, alternative investment products, equity research, share plan design and administration as well as Corporate Finance services. Responsible investing is integrated in every investment decision and our expertise is widely acknowledged by our clients. Evli has Finland's best expertise in responsible investment**.
Evli Group employs around 300 professionals and Evli has a total of EUR 16.7 billion in client assets under management (net 3/2023). Evli Plc’s B shares are listed on Nasdaq Helsinki Ltd.
* Morningstar Awards 2023 (c). Morningstar, Inc. All Rights Reserved. Awarded to Evli for the Best Fund House in Finland. Kantar Prospera External Asset Management Finland 2015, 2016, 2017, 2018, 2019, 2021. Kantar Prospera Private Banking 2019, 2020 Finland.
** SFR Scandinavian Financial Research Institutional Investment Services Finland 2021, 2022.
Distribution: Nasdaq Helsinki, main media, www.evli.com
