United Bankers Plc’s Half-Year Financial Report 1 January – 30 June 2024: Strongest half-year in operating history – successful forestry strategy execution as a key driver

 

United Bankers Plc

STOCK EXCHANGE RELEASE 23 August 2024 at 09:00 EEST

 

United Bankers Plc’s Half-Year Financial Report 1 January – 30 June 2024: Strongest half-year in operating history – successful forestry strategy execution as a key driver

 

This stock exchange release is a summary of the United Bankers’ Half-Year Financial Report 1 January – 30 June 2024. The complete Half-Year Financial Report with tables is attached to this release and is also available on the company’s website at www.unitedbankers.fi.

 

The figures in this release are unaudited.

 

January–June 2024 in brief

 

• The Group’s revenue (income from operations) in the review period amounted to EUR 33.0 million (EUR 24.7 million in 1–6/2023), an increase of 33.5%.
• The Group’s adjusted EBITDA amounted to EUR 15.0 million (EUR 8.0 million in 1–6/2023), an increase of 86.5% and adjusted operating profit amounted to EUR 13.8 million (EUR 7.0 million in 1–6/2023), an increase of 97.6%.
• The Group’s operating profit for the review period amounted to EUR 13.5 million (EUR 7.0 million in 1–6/2023), an increase of 93.2% and the profit for the review period amounted to EUR 10.5 million (EUR 5.4 million in 1–6/2023), an increase of 93.5%.
• Earnings per share were EUR 0.96 (EUR 0.50 in 1–6/2023), an increase of 91.2%.
• Gross fee income from wealth management during the review period increased by 31.5% to EUR 30.9 million (EUR 23.5 million in 1–6/2023). Gross fee income from capital markets services amounted to EUR 0.6 million (EUR 0.1 million in 1–6/2023), increasing by 452.7%.
• Assets under management rose to EUR 4.8 billion (EUR 4.6 billion on 31 December 2023), increasing by 4.3% from the year-end level.
• Performance fees from funds increased significantly. This was mainly due to the sale of the partnership interests in and forest properties of UB Nordic Forest Fund II LP to the German company MEAG. United Bankers' subsidiary UB Nordic Forest Management Ltd  earned a performance fee from the sale, of which EUR 10.6 million was booked in United Bankers' net income for the review period.
• The EBITDA of the wealth management segment for the review period amounted to EUR 15.3 million (EUR 8.8 million 1–6/2023), an increase of 73.5%. The EBITDA of the Group's capital markets services business amounted to EUR 0.1 million (EUR -0.4 million 1–6/2023).
• The cost-to-income ratio amounted to 0.59 (0.71).
• The company reiterates its guidance for 2024, updated on 4 March 2024: The company estimates its adjusted operating profit to increase significantly from 2023 levels.

Key business events in brief

United Bankers' first-half result reached a record high. The main contributor to the strong performance was the sale of the partnership interests in and forest properties of UB Nordic Forest Fund II LP to MEAG, the asset management company of the German Munich Re Group, in March. United Bankers' subsidiary UB Nordic Forest Management Ltd earned a performance fee of EUR 18.0 million from the sale, of which EUR 10.6 million was booked in United Bankers' net income for the period.

United Bankers' assets under management increased from EUR 4.6 billion to EUR 4.8 billion in the first half of the year. The mainly favourable performance of funds and asset management contributed to the growth in assets under management. Net fund subscriptions remained positive at EUR 93.1 million, but the prevailing market environment slowed down sales of real asset funds, that are particularly important to the company. In contrast, sales of discretionary asset management developed strongly and more than doubled compared to the comparison period. The sale of the partnership interests in UB Nordic Forest Fund II and its forest properties reduced assets under management by EUR 134 million compared to the year-end 2023.

In May, United Bankers arranged directed share issues to the Group's employees and management, as well as to the tied agents of the United Bankers Group, and to certain holding companies of key persons acting as directors of alternative investment funds managed by the Group. The share issues attracted widespread interest and were subscribed 2.2 times in full. Almost 70 per cent of those eligible to subscribe participated in the employee issue and approximately 75 per cent of those eligible to subscribe in the tied agent issue. The participation of a total of 137 UB employees and agents demonstrates a strong commitment to United Bankers' long-term strategy and objectives.

During the spring, United Bankers' major information systems reform moved into the roll-out phase. The reform replaced the previous systems for portfolio management, custody and settlement of securities and reporting, among others, with one new system. The system project was carried out in cooperation with the Finnish software company Digia Plc. The move to a single, modern master system simplifies and streamlines the Group’s internal processes and allows for more flexible development of services such as digital services and client reporting.

 

Consolidated key figures (The figures are presented in more detail in the appendix of the Half-Year Financial Report)

	1-6/2024	1-6/2023	change-%*	1-12/2023
Key Income Statement Figures
Revenue, MEUR	33.0	24.7	33.5	52.1
Adjusted EBITDA, MEUR	15.0	8.0	86.5	19.1
Adjusted operating profit, MEUR	13.8	7.0	97.6	16.9
Adjusted operating profit, % of revenue	41.9	28.3		32.5
Operating profit, MEUR	13.5	7.0	93.2	17.0
Profit for the period, MEUR	10.5	5.4	93.5	13.8
Profitability
Return on Equity (ROE), %	35.9	27.5	30.4	27.8
Return on Assets (ROA), %	23.7	17.9	32.8	18.7
Key Balance Sheet Figures
Equity ratio, %	64.6	62.5		67.7
Capital adequacy ratio, %	27.6	24.7		24.1
Key Figures Per Share
Earnings per share, EUR	0.96	0.50	91.2	1.24
Earnings per share, EUR (diluted)	0.94	0.50	88.6	1.23
Equity per share, EUR	4.90	4.01		4.75
Distribution of funds per share**				1.00
Other Key Figures
Cost-to-income ratio	0.59	0.71		0.67
Assets under management at the end of the period, bn EUR	4.8	4.6		4.6
Number of clients at the end of the period	15,600	14,500		14,600
Personnel at the end of the period (FTE)***	163	163		160

 

* The percentage change has been calculated using the actual figures, the figures shown in the table have been rounded

** Distribution of funds for the 2023 financial period confirmed by the Annual General Meeting of Shareholders on 22 March 2024: a dividend of EUR 0.50 and an equity repayment of EUR 0.50  

*** The number of personnel stated has been converted to full-time personnel

As its key financial figures, United Bankers presents adjusted EBITDA and adjusted operating profit, which the company uses to illustrate the profitability and result of the Group’s business operations as a going concern. Adjusted key figures are used to improve comparability between reporting periods. The adjusted key figures are adjusted for the impacts of corporate transactions influencing comparability, as well as certain material non-operating items. More information on the calculation of the key figures is available in the tables section of the Half-Year Financial Report.

 

Group revenue and profit performance for January-June 2024

(comparison figures 1-6/2023)

United Bankers’ revenue (income from operations) increased during the review period by 33.5 per cent to EUR 33.0 million (EUR 24.7 million). The Group’s adjusted operating profit nearly doubled to EUR 13.8 million (EUR 7.0 million) and the adjusted operating profit margin increased to 41.9 per cent (28.3 per cent). Earnings per share increased to EUR 0.96 (EUR 0.50). Return on equity strengthened to 35.9 per cent (27.5 per cent) and the cost- to-income ratio improved to 0.59 (0.71).

The very strong profit performance and profitability improvement are mainly explained by the sale of UB Nordic Forest Fund II to the German asset management company MEAG of the Munich Re Group in March. United Bankers' subsidiary UB Nordic Forest Management Ltd earned a performance fee of EUR 18.0 million on the sale of the forest fund, of which EUR 10.6 million was booked in the Group’s net income for the period. The transaction is described in more detail in the section of the release on the development of the wealth management segment.

Total fee income from the wealth management business increased during the review period. The increase in assets under management supported the positive trend in management fees accrued from the funds. Fees accrued from discretionary asset management also increased on the comparison period. Without the above-mentioned performance fee on the sale of the forest fund, however, the fund’s performance fees were clearly below the level of the comparison period. Fee income from structured investment products also fell. The combined net income from funds and asset management accounted for as much as 97 per cent of the net fee income from the wealth management segment in the review period, and for almost 95 per cent of the Group’s net fee income. Interest margin on client assets continued to develop positively thanks to the continued high level of interest rates, contributing positively to the performance of the wealth management segment. Overall, the revenue of the Group's largest segment increased to EUR 32.2 million (EUR 24.4 million) and EBITDA to EUR 15.3 million (EUR 8.8 million) during the review period.

The level of activity in the capital markets services segment remained low as a result of the quiet M&A and IPO market in the first half of the year. Significant transactions included UB Corporate Finance Ltd acting as sole financial advisor to Optomed Plc in a directed share issue in June. Revenue in capital markets services increased from the comparison period to EUR 0.6 million (EUR 0.2 million) and EBITDA turned positive and came to EUR 0.1 million (EUR -0.4 million). The income from the Group’s own investments reported under the Other segment contributed positively to the result for the period under review.

Over the past few years, United Bankers has implemented a number of projects aimed at strengthening future growth opportunities and simplifying and streamlining operations. Projects often involve front-loaded one-off costs that are realised before growth or targeted cost savings are realised.

A new IT system was introduced in the spring following the most extensive IT system upgrade project in the Group’s history. Going forward, the focus will shift again to the new system’s potential for improving efficiency and customer experience, including through new digital services. Cost savings are also being sought through the restructuring of the Group, which came into effect at the beginning of the year. In connection with this United Bankers closed the Luxembourg branch of UB Life, reduced the number of offices and eliminated duplicate investment services authorisations through the demergers and mergers of the Group’s subsidiaries. 

As a result of the investments in growth and efficiency and general cost inflation, the Group’s costs increased in the first half of the year compared to the comparison period. Administrative costs including personnel and other administrative costs were EUR 14.5 million (EUR 13.4 million), an increase of 8.7 per cent. Personnel expenses increased in total by 9.1 per cent on the comparison period to EUR 10.6 million (EUR 9.7 million). One third of the increase relates to the notional subscription price reduction booked for the spring personnel issue. The development of fixed wages reflects the broad, albeit moderate, pay increases that were carried out in the Group in the first half of the year. The increase in variable remuneration is explained by, among other things, the effects of strong profit and share price performance on bonus provisions and the one-off bonuses related to the forest fund transaction.

Other administrative expenses increased by 7.5 per cent on the comparison period to EUR 3.9 million (EUR 3.6 million). The increase was driven by, among other things, one-off costs related to system development. The Group also continued to invest in new products, promoting international sales and developing sustainability and related reporting. Investments in employee wellbeing and job satisfaction were reflected in higher costs for training, common events and occupational health. Depreciation, amortisation and impairment increased to EUR 1.2 million (EUR 1.0 million) as a result of, among other things, the introduction of the new information system and the renovation of the premises of United Bankers' Helsinki headquarters completed last year.

The number of full-time equivalent personnel remained stable compared to the year-end and was 163 at the end of June (160 as at 31 December 2023). Of these, a total of 14 were temporary employees (10 employees). Temporary employees were used to reinforce the resources needed for the upgrade of the IT system, for example.

 

CEO’s review

Patrick Anderson

Our operating environment at the beginning of 2024 was mixed. Stock, fixed income and timberland markets were broadly speaking positive. On the other hand, the downturn in the real estate market, especially in Finland, continued in the first half of the year. With inflation and interest rates continuing to fall rapidly, however, I think it is quite likely that we are now close to reaching the bottom.

In terms of portfolio management, we did well during the period: our discretionary asset management model and the risk-adjusted returns of our fund family were strong on average. In administration, we implemented the biggest IT reform in our history. The new master system, which replaced several legacy systems, and the simplification of our corporate structure at the turn of the year will speed up and improve the efficiency of both our development work and our core business.

In alternative funds, headwinds reduced new sales from our target level especially in real estate funds, and the fall in interest rates did not yet have an impact during the first half of the year. Investor caution was particularly evident in the institutional field in Finland, Sweden and the European markets. Despite the above, net fund subscriptions were clearly positive, with UB 360 and our Private Investment Office asset management model, as well as our energy and forest funds, in particular, attracting new capital.

For United Bankers, the first half of the year was the strongest in our history in terms of key indicators. Revenue increased by 33.5 per cent to EUR 33.0 million in the first half of the year. Our adjusted operating profit increased by 97.6 per cent to EUR 13.8 million and earnings per share rose by 91.2 per cent to EUR 0.96. The cost-to-income ratio strengthened to 0.59 (0.71). In the wealth management segment, net fee income increased by 33.8 per cent to EUR 28.3 million, while EBITDA increased by 73.5 per cent to EUR 15.3 million. In the capital markets services segment, net fee income increased by 548.5 per cent to EUR 0.6 million and EBITDA increased to a profit of EUR 0.1 million.

In the first half of the year, our funds had positive net subscriptions of EUR 93.1 million and total sales of wealth management services reached EUR 273 million. Their slower development than in the past was mainly due to the difficult environment in the real estate market. Our assets under management increased by 4.3 per cent to EUR 4.8 billion. Fixed management fees for the funds increased by 3.9 per cent, with net fee income from the funds now representing as much as 87 per cent of the Group’s total net fee income.

The company’s personnel expenses increased by 9.1 per cent during the first half of the year. A significant part of the increase was due to a notional reduction in the subscription price of the personnel issue. The increase was also driven by the broad but moderate salary increases implemented in the first half of the year and the increase in variable remuneration and bonus provisions as a result of the strong performance in the first half of the year. The 7.5 per cent increase in administrative expenses is explained by the partly one-off costs related to the implementation of the new IT system and investments related in particular to sustainability work, the acceleration of international distribution and investments related to recently launched new funds.

During the spring, our sustainability work focused on the assessment, development and reporting of sustainability. Climate change mitigation remains a key theme in the development of the sustainability of our products and services. One of the main targets is to reduce the investments’ greenhouse gas emissions and increase their carbon sequestration.

Among our newest funds, the UB Forest Industry Green Growth Fund and UB Renewable Energy Fund offer the opportunity to invest in products that focus on climate change mitigation and promotion of the green transition. The UB Smart Fund, UB Finland Fund and UB Europe Real Estate Equity are examples of funds that are among the best in their peer group in terms of sustainability, according to a Morningstar comparison. During spring, UB Infra Fund and UB Short-Term Bond Fund also made it into the Five Globes category.

In early 2024, the company published the results of an assessment carried out by PRI (Principles for Responsible Investment) on the implementation of its Principles for Responsible Investment. We received the best possible 5/5 stars in all asset classes that were rated and the second best 4/5 stars in the sections on principles for responsible investment, corporate governance and strategy, and verification procedures.

Thanks to the positive development of the company’s business in the first half of the year and to strategic growth initiatives, the outlook for the near future remains stable, and there will be no change to the full-year guidance on the company’s adjusted operating profit level: as in our March guidance update, we continue to expect our adjusted operating profit to be clearly above the record level of 2023.

During the spring, we organised share issues for personnel and tied agents, the results of which demonstrate the strong commitment of our great team to our customers and our company. With the clearly oversubscribed issues, 75 per cent of the UB team are now owners of the company. UB team wants to play a long-term role in building the leading asset management firm in Northern Europe specialising in alternative investments, while being the most trusted partner for its clients. Our unique position at the intersection of responsible asset management and the forest, energy and real estate value chains is an inspiration to all of us at UB. Our team’s 54 per cent ownership of the company’s entire share capital means both continuity in the implementation of the strategy and a significant incentive to continue doing excellent work for our clients – every day of the year. Thank you to our clients, our team and our other stakeholders. We are well-placed for the future!

 

Financial guidance for 2024

The company reiterates its guidance for 2024, updated on 4 March 2024, and estimates its adjusted operating profit to increase significantly from 2023 levels.

 

Schedule for equity repayment

In accordance with the decision of the Annual General Meeting of United Bankers Plc on 22 March 2024, the company will pay an equity repayment in the autumn as part of the distribution of funds for the financial year 2023. The amount of the equity repayment will be EUR 0.50 per share. The record date for the equity repayment is 27 September 2024 and the payment date is 4 October 2024.

 

The Financial Statements Bulletin 2024

The Financial Statements Bulletin of the United Bankers Group for the financial period 2024 will be published on or about 14 February 2025 and will be available on the company’s website under the “Investors” section at www.unitedbankers.fi.

 

Press conference

Result presentation to analysts and press will be held at the company headquarters, Aleksanterinkatu 21 A, 4th floor, Helsinki on Friday 23 August 2024 at 11.30 am in Finnish. It is also possible to participate the press conference virtually. To participate in the event, please sign up in advance to [email protected].

 

For further information, please contact:

 

Patrick Anderson, CEO, United Bankers Plc
Email: [email protected]

Tel.: +358 400 244 544, +358 9 25 380 236

 

Katri Nieminen, CFO, United Bankers Plc
Email: [email protected]
Tel.: +358 50 564 4787, +358 9 25 380 349
 

Investor Relations: [email protected]

 

United Bankers in brief:

United Bankers Plc is a Finnish expert on wealth management and investment markets, established in 1986. United Bankers Group’s business segments include wealth management and capital markets services. In asset management, the Group specialises in real asset investments. United Bankers Plc is majority-owned by its key personnel and the Group employs 163 employees (FTE) and 26 agents (30 June 2024). In 2023, the United Bankers Group’s revenue totalled EUR 52.1 million and its adjusted operating profit amounted to EUR 16.9 million. The Group’s assets under management amount to approximately EUR 4.8 billion (30 June 2024). United Bankers Plc’s shares are listed on Nasdaq Helsinki Ltd. The Group companies are subject to the Finnish Financial Supervisory Authority’s supervision. For further information on United Bankers Group, please visit www.unitedbankers.fi.

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