eQ Plc’s half year report 2023 – eQ’s profit for the period fell
eQ Plc half year financial report8 August 2023
at 8:00 AM
eQ Plc’s half year report 2023 – eQ’s profit for the
period fell
January to June 2023 in brief
- The Group's net revenue during the period was EUR 35.7 million
(EUR 44.0 million from 1 Jan. to 30 June 2022). The Group’s net fee
and commission income was EUR 35.2 million (EUR 43.0 million).
- The Group’s operating profit fell by 27 per cent to EUR 19.8
million (EUR 27.1 million).
- The Group’s profit was EUR 15.7 million (EUR 21.5
million).
- The consolidated earnings per share were EUR 0.39 (EUR
0.54).
- The net revenue of the Asset Management segment fell by 14 per
cent to EUR 34.4 million (EUR 40.1 million) and the operating
profit by 19 per cent to EUR 21.2 million (EUR 26.3 million). The
management fees of the Asset Management segment grew by 5 per cent
to EUR 31.3 million (EUR 29.9 million) and the performance fees
fell by 68 per cent to EUR 3.3 million (EUR 10.4 million).
- The net revenue of the Corporate Finance segment was EUR 0.9
million (EUR 2.9 million) and the operating profit was EUR -0.7
million (EUR 1.0 million).
- The operating profit of the Investments segment was EUR 0.1
million (EUR 1.2 million).
- The net cash flow from the Group’s own private equity and real
estate fund investment operations was EUR -0.2 million (EUR 1.0
million).
April to June 2023 in brief
- In the second quarter, the Group’s net revenue totalled EUR
18.0 million (EUR 22.4 million from 1 April to 30 June 2022). The
Group’s net fee and commission income was EUR 17.8 million (EUR
21.6 million).
- The Group’s operating profit fell by 30 per cent to EUR 9.8
million (EUR 14.1 million).
- The Group’s profit was EUR 7.8 million (EUR 11.2 million).
- The consolidated earnings per share were EUR 0.19 (EUR
0.28).
Key ratios |
1-6/23 |
1-6/22 |
Change |
4-6/23 |
4-6/22 |
Change |
1-12/22 |
Net
revenue, Group, MEUR |
35.7 |
44.0 |
-19% |
18.0 |
22.4 |
-20% |
77.8 |
Net revenue, Asset Management, MEUR |
34.4 |
40.1 |
-14% |
17.3 |
20.5 |
-16% |
71.8 |
Net revenue, Corporate Finance, MEUR |
0.9 |
2.9 |
-70% |
0.4 |
1.1 |
-62% |
5.4 |
Net revenue, Investments, MEUR |
0.1 |
1.2 |
-88
% |
0.2 |
0.8 |
-71% |
0.7 |
Net revenue, Group administration and |
|
|
|
|
|
|
|
eliminations, MEUR |
0.3 |
-0.1 |
|
0.0 |
0.0 |
|
-0.1 |
|
|
|
|
|
|
|
|
Operating profit, Group, MEUR |
19.8 |
27.1 |
-27% |
9.8 |
14.1 |
-30% |
45.7 |
Operating profit, Asset Management, MEUR |
21.2 |
26.3 |
-19% |
10.5 |
13.7 |
-23% |
45.9 |
Operating profit, Corporate Finance, MEUR |
-0.7 |
1.0 |
-168% |
-0.3 |
0.3 |
-205% |
1.7 |
Operating profit, Investments, MEUR |
0.1 |
1.2 |
-88
% |
0.2 |
0.8 |
-71% |
0.7 |
Operating profit, Group administration, MEUR |
-0.9 |
-1.4 |
|
-0.6 |
-0.6 |
|
-2.6 |
|
|
|
|
|
|
|
|
Profit for the period, MEUR |
15.7 |
21.5 |
-27 % |
7.8 |
11.2 |
-30% |
36.3 |
|
|
|
|
|
|
|
|
Key ratios |
1-6/23 |
1-6/22 |
Change |
4-6/23 |
4-6/22 |
Change |
1-12/22 |
Earnings
per share, EUR |
0.39 |
0.54 |
-28% |
0.19 |
0.28 |
-32% |
0.91 |
Equity
per share, EUR |
1.44 |
1.64 |
-12% |
1.44 |
1.64 |
-12% |
2.02 |
Cost/income ratio, Group, % |
44.4 |
38.4 |
16% |
45.3 |
36.9 |
23% |
41.1 |
|
|
|
|
|
|
|
|
Liquid
assets, MEUR |
12.8 |
22.3 |
-43% |
12.8 |
22.3 |
-43% |
43.8 |
Private
equity and real estate fund investments, MEUR |
17.3 |
19.0 |
-9% |
17.3 |
19.0 |
-9% |
16.8 |
Interest-bearing liabilities, MEUR |
0.0 |
0.0 |
0% |
0.0 |
0.0 |
0% |
0.0 |
|
|
|
|
|
|
|
|
Assets
under management excluding reporting services, EUR billion |
9.9 |
9.3 |
7% |
9.9 |
9.3 |
7% |
9.7 |
Assets under management, EUR billion |
12.8 |
12.0 |
7% |
12.8 |
12.0 |
7% |
12.6 |
Mikko Koskimies, CEO
The central themes of the first half of 2023 were inflation and
the pressure to raise central bank rates as well as the problems of
banks. Bank fears began from the smallest banks in the US and
spread momentarily to Europe as well. The quick reaction of central
banks and above all the stricter regulations that had already been
introduced in Europe calmed down the market rapidly, however.
Inflation remained high, but the price of energy already began to
cut down inflation. The central banks in both the US and Europe
continued with interest rate rises during the first half of the
year. The Fed no longer raised its key interest rate in June 2023
but stated that it would follow up the impacts that the already
made rises would have on the economy. The ECB, on the other hand,
raised interest rates by 0.25 per cent in June as well, and the
market expect that interest rates would still increase by at least
0.25 per cent.
Despite the interest rate increases, economic growth continued
in both the US and Europe, and particularly the employment
situation remained strong in both areas. In China, economic growth
picked up as COVID restrictions were removed, but private
consumption has remained weaker that hoped. The growth of Chinese
exports has also been a disappointment, as Western countries have
tried to cut down their dependence on China.
As a whole, the equities market gave a very good return.
Regional differences were large, however, and above all in the US,
the share prices of some AI-related companies went up sharply. This
also gave a boost to the Taiwanese stock exchange, for instance.
The largest price rise during the six-month period was seen in the
US, where share prices measured by the S&P 500 Index rose by no
less than 16.6 per cent calculated in dollars and by 14.1 per cent
in euros. Share prices rose by 11.1 per cent in Europe, by 10.5 per
cent in Japan and by 2.6 per cent in emerging markets. The Finnish
stock exchange fell by 2.8 per cent, on the other hand.
Fixed income investments gave a good return during the first
half. The best return came from Euro High Yield loans, which gave a
return of 4.4 per cent at index level. Euro government bonds gave a
2.1 per cent return and Euro IG loans a 2.0 per cent return.
Emerging market euro-hedged corporate loans gave a 1.6 per cent
return.
eQ’s profit for the period fell
eQ’s profit for the period fell in the challenging operating
environment. The net revenue of the Group during the period under
review was EUR 35.7 million and the operating profit was EUR 19.8
million. Operating profit fell by 27 per cent from the previous
year.
The growth of eQ Asset Management’s management fees
continued
The management fees of eQ Asset Management grew 5 percent
despite the weak operating environment. Performance fees, on the
other hand, fell by 68 cent from last year’s EUR 10.4 million to
EUR 3.3 million. During the period under review, the net revenue of
the Asset Management segment fell by 14 per cent to EUR 34.4
million. The operating profit of the period fell by 19 per cent to
EUR 21.2 million. The assets managed by eQ Asset Management grew by
2 cent to EUR 12.8 billion during the period under review.
As for traditional investments, the returns of client portfolios
were positive in the first half in line with the market. Of the
funds that eQ manages itself, 77 per cent surpassed their benchmark
indices, and during a three-year period the corresponding figure
was no less than 85 per cent. The returns of the discretionary
asset management portfolios were also positive in the first half in
line with the market. The returns of private equity funds were
slightly positive during the six-month period. The returns of the
real estate funds were slightly negative for the first time, on the
other hand, due to the increase of the yields resulting from the
strong increase in the interest rate level.
As for sales, the beginning of 2023 was good in private equity
asset management. In 2023, private equity assets are raised to the
eQ PE XV US fund, which makes investments in Northern America. In
the third closing, which took place in June, its size already grew
to USD 263 million.
Advium had a quiet beginning of the year
Advium’s net revenue during the period under review was EUR 0.9
million (EUR 2.9 million) and operating profit EUR -0.7 million
(EUR 1.0 million).
During the period, the value of corporate acquisitions fell
clearly from the year before globally. The value of real estate
transactions in Finland was EUR 1.4 billion during the half-year
period, which is about 70 per cent less than the year before.
Towards the end of the second quarter, activity increased in the
real estate market. There are several processes going on in the
market, but their realisation is uncertain.
During the period under review, Advium acted as advisor in one
assignment: Otava’s mandatory public offer for shares in Alma Media
Corporation.
The operating profit of Investments fell
The operating profit of the Investments segment was EUR 0.1
million (EUR 1.2 million) and the net cash flow was EUR -0.2
million (EUR 1.0 million). The balance sheet value of the private
equity and real estate fund investments was EUR 17.3 million at the
end of the period (EUR 16.8 million on 31 Dec. 2022). At the
beginning of the year, eQ Plc made a USD 1 million investment
commitment in the eQ PE XV US Fund.
Outlook
As for sales, the year 2022 was very good for eQ Asset
Management. In June 2023, the eQ PE XV US private equity fund grew
to USD 263 million in its third closing. This strengthens our view
that demand will continue to be strong among investor, above all
for private equity investment products. The returns of real estate
funds are linked to the development of yields. Due to the rise of
the yields, no performance fee is expected to accrue from the real
estate funds from the year 2023. The performance fees of private
equity funds will, on the other hand, be at the same level due to
the catch up accrual.
Consequently, we expect the net revenue and operating profit of
the Asset Management segment in 2023 to be at the same level as
last year. 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 on
factors that are not dependent on the company. Therefore, their
operating profits may vary considerably and are difficult to
foresee.
***
eQ’s interim report 1 January to 30 June 2023 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 specialising in
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 individuals. The assets managed by the Group
total approximately EUR 12.8 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 Half Year Financial Report 2023
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