eQ Plc’s interim report Q3 2022 – Group’s result was excellent,
Asset Management’s operating profit continued to grow
eQ Plc interim report25 October 2022 at 8:00
AM
January to September 2022 in brief
- The Group's net revenue during the period was EUR 64.2 million
(EUR 57.8 million from 1 Jan. to 30 September 2021).
- The Group’s net fee and commission income was EUR 62.8 million
(EUR 52.1 million).
- The Group’s net investment income from own investment
operations was EUR 1.4 million (EUR 5.7 million), including the
return from private equity and real estate fund investments and
liquid fixed income funds.
- The Group’s operating profit grew by 13% to EUR 39.5 million
(EUR 35.0 million).
- The Group’s profit was EUR 31.4 million (EUR 28.0
million).
- The consolidated earnings per share were EUR 0.79 (EUR
0.71).
- The net revenue of the Asset Management segment increased by
21% to EUR 58.6 million (EUR 48.5 million) and the operating profit
by 27% to EUR 38.4 million (EUR 30.2 million).
- The net revenue of the Corporate Finance segment was EUR 4.3
million (EUR 3.7 million) and the operating profit was EUR 1.5
million (EUR 1.1 million).
- The net cash flow from the Group’s own private equity and real
estate fund investment operations was EUR 2.3 million (EUR 3.7
million).
July to September 2022 in brief
- In the third quarter, the Group’s net revenue totalled EUR 20.1
million (EUR 20.9 million from 1 July to 30 September 2021).
- The Group’s net fee and commission income was EUR 19.9 million
(EUR 18.9 million).
- The Group’s net investment income from own investment
operations was EUR 0.3 million (EUR 2.1 million), including the
return from private equity and real estate fund investments and
liquid fixed income funds.
- The Group’s operating profit decreased by 11% to EUR 12.4
million (EUR 13.8 million).
- The Group’s profit was EUR 9.8 million (EUR 11.1 million).
- The consolidated earnings per share were EUR 0.24 (EUR
0.28).
Key ratios |
1-9/22 |
1-9/21 |
Change |
7-9/22 |
7-9/21 |
Change |
1-12/21 |
Net
revenue, Group, MEUR |
64.2 |
57.8 |
11% |
20.1 |
20.9 |
-4% |
78.9 |
Net revenue, Asset Management, MEUR |
58.6 |
48.5 |
21% |
18.5 |
17.6 |
5% |
64.9 |
Net revenue, Corporate Finance, MEUR |
4.3 |
3.7 |
18% |
1.4 |
1.3 |
12% |
6.9 |
Net revenue, Investments, MEUR |
1.4 |
5.5 |
-75% |
0.2 |
2.0 |
-88% |
7.1 |
Net revenue, Group administration and |
|
|
|
|
|
|
|
eliminations, MEUR |
-0.1 |
0.0 |
|
0.0 |
0.0 |
|
0.0 |
|
|
|
|
|
|
|
|
Operating profit, Group, MEUR |
39.5 |
35.0 |
13% |
12.4 |
13.8 |
-11% |
47.7 |
Operating profit, Asset Management, MEUR |
38.4 |
30.2 |
27% |
12.1 |
11.8 |
3% |
40.3 |
Operating profit, Corporate Finance, MEUR |
1.5 |
1.1 |
36% |
0.5 |
0.5 |
11% |
2.7 |
Operating profit, Investments, MEUR |
1.4 |
5.5 |
-75% |
0.2 |
2.0 |
-88% |
7.1 |
Operating profit, Group administration, MEUR |
-1.9 |
-1.9 |
|
-0.5 |
-0.4 |
|
-2.5 |
|
|
|
|
|
|
|
|
Profit for the period, MEUR |
31.4 |
28.0 |
12% |
9.8 |
11.1 |
-11% |
38.1 |
|
|
|
|
|
|
|
|
Key ratios |
1-9/22 |
1-9/21 |
Change |
7-9/22 |
7-9/21 |
Change |
1-12/21 |
Earnings
per share, EUR |
0.79 |
0.71 |
10% |
0.24 |
0.28 |
-13% |
0.97 |
Equity
per share, EUR |
1.89 |
1.76 |
7% |
1.89 |
1.76 |
7% |
2.02 |
Cost/income ratio, Group, % |
38.4 |
39.3 |
-2% |
38.3 |
33.8 |
13% |
39.5 |
|
|
|
|
|
|
|
|
Liquid
assets, MEUR |
31.6 |
40.7 |
-22% |
31.6 |
40.7 |
-22% |
56.0 |
Private
equity and real estate fund investments, MEUR |
18.0 |
17.6 |
2% |
18.0 |
17.6 |
2% |
18.8 |
Interest-bearing loans, MEUR |
0.0 |
0.0 |
0% |
0.0 |
0.0 |
0% |
0.0 |
|
|
|
|
|
|
|
|
Assets
under management excluding reporting services, EUR billion |
9.4 |
8.8 |
7% |
9.4 |
8.8 |
7% |
9.2 |
Assets under management, EUR billion |
12.3 |
11.0 |
11% |
12.3 |
11.0 |
11% |
11.6 |
Mikko Koskimies, CEO
The war in Ukraine caused the second supply shock after COVID-19
and strongly raised the price of energy in particular. This
resulted in a significant acceleration of inflation in countries in
the West. The Federal Reserve, the central bank in the US,
initiated rate increases back in early 2022 and made two increases
of 0.75 percentage points in the third quarter of 2022. The
European Central Bank (ECB) started rate increases in the third
quarter. The goal of the increase in rates is to slow down demand
and thereby inflation.
The US economy has tolerated a tightening of the monetary policy
well, and especially the country’s labour market has remained
extremely strong. In Europe the strong acceleration of inflation
and particularly the savage rise in energy prices undermine
consumers’ purchasing power and cut into private consumption. In
China inflation has not been a problem in the same way as in
Western countries, but the country’s tight pandemic policy and
restrictions have slowed down growth there. China stimulates the
economy by making investments in infrastructure, and the country’s
central bank also slightly lowered its key rate in the third
quarter.
In the stock markets the third quarter of 2022 began in a
positive atmosphere, as economic data suggested that economic
growth in the US would react to rate hikes and slow down. The
atmosphere changed in August, however, with the publication of
extremely strong employment figures in the US and the continued
fierce rise of energy prices in Europe. This caused the stock
market to fall into a decline again. From the start of 2022, US
stock exchanges have been the best Western market for euro
investors and only 11.9% in the negative, due to the strengthening
of the dollar. Stock market returns from the beginning of the year
were -17.4% in Europe and -21.0% in Finland. Emerging stock markets
saw large differences in returns between different countries. The
return measured by the emerging markets index from 1 January was
-15.4%.
Fixed income markets have experienced a similar rollercoaster as
equities both from the start of 2022 and during Q3, as expectations
of rate increases by central banks have been priced in. Returns
were exceptionally negative down the line from the beginning of the
year, between -15% and -20%.
eQ’s result was excellent during the period
eQ’s result during the period under review was excellent despite
the state of the operating environment. The net revenue of the
Group during the period was EUR 64.2 million and the operating
profit was EUR 39.5 million. Operating profit grew by 13% compared
with the previous year. eQ Asset Management in particular grew
strongly. The result of the Investments segment fell considerably
from the exceptionally strong result last year.
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 21% to EUR 58.6 million. Operating profit grew
by 27% per cent to EUR 38.4 million. The strongest growth was
experienced in performance fees and the management fees of both
real estate asset management and private equity asset management.
The assets managed by eQ Asset Management increased by 6% during
the period under review and totalled EUR 12.3 billion.
As for traditional investments, the returns of client portfolios
were negative in the nine-month period in line with the market. Of
the funds that eQ manages itself, 15% gave a better return that its
benchmark index, and during a three-year period the corresponding
figure was 77%. In discretionary asset management portfolios also,
the nine-month returns were negative along with the market. The
returns of real estate and private equity operations were, on the
other hand, excellent in the first nine months of the year,
supporting very well the overall returns of most of our clients
during the period.
As for sales, the first nine months 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 182 million, and the size of the eQ
Residential II Fund grew to EUR 46 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
410 million in the closings made in September. In addition, the
size of the eQ VC Fund, established at the end of October 2021,
grew to EUR 74 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
slightly
Advium’s net revenue during the period under review was EUR 4.3
million (EUR 3.7 million). The operating profit was EUR 1.5 million
(EUR 1.1 million).
During the period under review, the value of M&As fell
globally clearly from the record year 2021 but remained at a
relatively 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 despite a slowdown after an
extremely strong first half of the year.
During the first nine months of the year, Advium acted as
advisor in four corporate transactions: the sale of Bluebird to
North Alliance, the acquisition of Raksystems by Trillimpact, the
sale of Akkurate to Sandvik and the acquisition of Finnamyl by
Chemigate (Berner). 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. In July,
Advium acted as advisor to Cromwell European REIT in the sale of
office property in Helsinki.
Profit of the Investments segment fell
considerably
The operating profit of the Investments segment was EUR 1.4
million (EUR 5.5 million) and the net cash flow was EUR 2.3 million
(EUR 3.7 million). Operating profit fell by 75% from the
exceptionally strong comparison period. The balance sheet value of
the private equity and real estate fund investments was EUR 18.0
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.
***
eQ’s interim report 1 January to 30 September 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 8799Antti 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 12.3 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.
- eQ Plc Interim Report Q3 2022
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