eQ Plc’s financial statements release 2023 – eQ’s result for the
financial period fell
eQ Plc financial statements release
6 February 2024 at 8:00 AM
January to December 2023 in brief
- The Group's net revenue during the period was EUR 70.9 million
(EUR 77.8 million from 1 Jan. to 31 Dec. 2022). The Group’s net fee
and commission income was EUR 70.8 million (EUR 77.1 million).
- The Group’s operating profit fell by 13% to EUR 39.7 million
(EUR 45.7 million).
- The Group’s profit was EUR 31.5 million (EUR 36.3
million).
- The consolidated earnings per share were EUR 0.78 (EUR
0.91).
- The net revenue of the Asset Management segment decreased by 7%
to EUR 66.9 million (EUR 71.8 million) and the operating profit by
10% to EUR 41.4 million (EUR 45.9 million). The management fees of
the Asset Management segment grew by 1% to EUR 62.0 million (EUR
61.5 million) and the performance fees fell by 50% to EUR 5.4
million (EUR 10.8 million).
- The net revenue of the Corporate Finance segment was EUR 3.9
million (EUR 5.4 million) and the operating profit was EUR 0.7
million (EUR 1.7 million).
- The operating profit of the Investments segment was EUR -0.6
million (EUR 0.7 million).
- The net cash flow from the Group’s own private equity and real
estate fund investment operations was EUR -0.1 million (EUR 2.8
million).
- The proposed dividend is EUR 0.80 per share (EUR 1.00). The
dividend is proposed to be paid in two instalments.
October to December 2023 in brief
- In the last quarter, the Group’s net revenue totalled EUR 18.5
million (EUR 13.6 million from 1 Oct. to 31 Dec. 2022). The Group’s
net fee and commission income was EUR 19.3 million (EUR 14.3
million).
- The Group’s operating profit rose by 56% to EUR 9.8 million
(EUR 6.3 million).
- The Group’s profit was EUR 7.8 million (EUR 4.9 million).
- The consolidated earnings per share were EUR 0.19 (EUR
0.12).
Key ratios |
1-12/23 |
1-12/22 |
Change |
10-12/23 |
10-12/22 |
Change |
Net
revenue, Group, MEUR |
70.9 |
77.8 |
-9
% |
18.5 |
13.6 |
36 % |
Net revenue, Asset Management, MEUR |
66.9 |
71.8 |
-7
% |
16.6 |
13.3 |
25 % |
Net revenue, Corporate Finance, MEUR |
3.9 |
5.4 |
-27
% |
2.7 |
1.0 |
163 % |
Net revenue, Investments, MEUR |
-0.6 |
0.7 |
-187
% |
-1.0 |
-0.7 |
-35 % |
Net revenue, Group administration and
eliminations |
|
|
|
|
|
|
MEUR |
0.6 |
-0.1 |
|
0.2 |
0.0 |
|
|
|
|
|
|
|
|
Operating profit, Group, MEUR |
39.7 |
45.7 |
-13
% |
9.8 |
6.3 |
56 % |
Operating profit, Asset Management, MEUR |
41.4 |
45.9 |
-10
% |
9.7 |
7.5 |
30 % |
Operating profit, Corporate Finance, MEUR |
0.7 |
1.7 |
-62
% |
1.6 |
0.2 |
631 % |
Operating profit, Investments, MEUR |
-0.6 |
0.7 |
-187
% |
-1.0 |
-0.7 |
-35 % |
Operating profit, Group administration, MEUR |
-1.7 |
-2.6 |
|
-0.5 |
-0.7 |
|
|
|
|
|
|
|
|
Profit for the period, MEUR |
31.5 |
36.3 |
-13 % |
7.8 |
4.9 |
57 % |
|
|
|
|
|
|
|
Key ratios |
1-12/23 |
1-12/22 |
Change |
10-12/23 |
10-12/22 |
Change |
Earnings
per share, EUR |
0.78 |
0.91 |
-14
% |
0.19 |
0.12 |
55 % |
Proposal
for dividend and equity repayment per share, EUR |
0.80 |
1.00 |
-20
% |
|
|
|
Equity
per share, EUR |
1.85 |
2.02 |
-8
% |
1.85 |
2.02 |
-8 % |
Cost/income ratio, Group, % |
43.8 |
41.1 |
7
% |
47.1 |
53.7 |
-12 % |
|
|
|
|
|
|
|
Liquid
assets, MEUR |
33.4 |
43.8 |
-24
% |
33.4 |
43.8 |
-24 % |
Private
equity and real estate fund investments, MEUR |
16.6 |
16.8 |
-2
% |
16.6 |
16.8 |
-2 % |
Interest-bearing liabilities, MEUR |
0.0 |
0.0 |
0
% |
0.0 |
0.0 |
0 % |
|
|
|
|
|
|
|
Assets
under management excluding reporting services, EUR billion |
10.0 |
9.7 |
3
% |
10.0 |
9.7 |
3 % |
Assets under management, EUR billion |
12.9 |
12.6 |
3 % |
12.9 |
12.6 |
3 % |
Mikko Koskimies, CEO
Inflation was the key theme in the investment markets in 2023.
At the same time, talk continued on how much central banks should
further raise interest rates to curb inflation. Both the Federal
Reserve (Fed) in the US and the European Central Bank (ECB)
continued to raise their key interest rates during the year. In
2023 the Fed raised its key interest rate from 4.5% to 5.5% and the
ECB from 2.5% to 4.0%.
Economic growth in Europe and especially in the US withstood the
continued rise in interest rates surprisingly well. In China
inflation has not been a problem but there concerns have mostly
involved economic growth, as both private consumption and exports
have been weaker than expected.
Towards the end of the year countries in the West began to see a
slowdown in both inflation and growth, which gave the markets faith
that interest rates would be lowered during 2024. In the final
quarter of 2023 market expectations for both the speed and volume
of interest rate reductions were intensified, well indicated as
positive returns in both the fixed income and equity markets.
Throughout 2023, the best equity market was the US where the
return of the S&P 500 Index, measured in dollars, was as high
as 25.7%. The US gave a 21.4% return in euros, due to the weaker
dollar. Measured by the MSCI Index, Japanese shares returned 16.2%,
European stocks 15.8% and shares in emerging countries 6.1%. Behind
all of these came the Finnish equity market where the index return
was 0.6% in the negative. After large negative returns in 2022,
interest rates provided good returns in 2023. The European High
Yield Index returned 12.1%, IG corporate loans 8.0%, euro zone
government bonds 6.7%, and euro-denominated corporate loans in
emerging countries 5.4%.
eQ’s result for the financial period fell
eQ’s result for the financial period fell in the challenging
operating environment. The net revenue of the Group during the
period under review was EUR 70.9 million and the operating profit
was EUR 39.7 million. Operating profit fell by 13 per cent from the
previous year.
eQ Asset Management’s performance fees
declined
The management fees of eQ Asset Management grew by 1 per cent
despite the partly challenging operating environment. Performance
fees, on the other hand, fell by 50 per cent to EUR 5.4 million
from last year’s EUR 10.8 million. During the period under review,
the net revenue of the Asset Management segment fell by 7 per cent
to EUR 66.9 million. The operating profit of the period fell by 10
per cent to EUR 41.4 million. The assets managed by eQ Asset
Management grew by 3 per cent to EUR 12.9 billion during the period
under review.
Responsibility and sustainability are a key part of eQ Asset
Management’s investment activities and processes. We measure the
implementation of sustainability ourselves, but in 2023 we again
received recognition from outside parties, such as PRI, GRESB, and
professionals in the private equity sector.
In addition, Finnish institutional clients stated for the fifth
year in a row in the 2023 SFR survey that eQ Asset Management is
the most high-quality asset manager in Finland.
As for traditional interest and equity investments, the returns
of client portfolios in 2023 were excellent. Of the funds that eQ
manages itself, 69 per cent gave a better return that its benchmark
index, and during a three-year period the corresponding figure was
also 69. The returns of private equity funds were slightly positive
as well. The returns of the real estate funds were slightly
negative for the first time, on the other hand, due to an increase
of the yields resulting from the strong rise in the interest rate
level.
As for sales, the year 2023 was good especially in private
equity asset management. In 2023, private equity assets were raised
to the eQ PE XV US Fund, which makes investments in Northern
America. Its size in final closing grew to USD 283 million. In
October we also made the first closing in the eQ VC II Fund, which
makes Venture Capital investments and is the second fund in size at
USD 20 million.
Advium had a strong final quarter
During the period under review, Advium’s net revenue totalled
EUR 3.9 million (EUR 5.4 million). Operating profit was EUR 0.7
million (EUR 1.7 million).
In 2023, the value of corporate acquisitions fell world-wide
from the previous year, but a small pickup could be observed at the
end of the quarter. This was affected by the rise in share prices
late in the year and expectations of a lowering of the interest
rate level in 2024. Activity in Finnish real estate transactions
slowed down considerably in 2023, leading to a decline of more than
60 per cent in overall transaction volume compared with the
previous year. The most significant factor contributing to a
slowdown in activity is the rapid rise in interest rate levels and
weaker availability of financing.
In 2023, Advium acted as advisor in four M&A acquisitions
completed: a Fairness Opinion to Musti Group, advising Aspo Plc
regarding a minority investment by OP Suomi Infra, sale of shares
in Caverion, and advising Otava on a mandatory public offer. In
real estate transactions, Advium also acted as advisor for the
global fund manager Schroders which sold an office building in
central Turku.
The operating profit of Investments fell
The operating profit of the Investments segment was EUR -0.6
million (EUR 0.7 million), and the net cash flow was EUR -0.1
million (EUR 2.8 million). The balance sheet value of the private
equity and real estate fund investments at year end was EUR 16.6
million (EUR 16.8 million on 31 Dec. 2022). During the year, eQ Plc
made a USD 1 million investment commitment in both the eQ PE XV US
and the eQ VC II funds.
Outlook
The asset management market in Finland has grown strongly, and
eQ’s growth has outpaced the market. We estimate that the long-term
outlook for growth in the asset management market and for eQ in
Finland is still good.
For eQ’s real estate funds, 2023 was a difficult year due to an
increase of the yields resulting from a strong rise in the interest
rate level. As yields rose, values of properties clearly declined.
Also, net subscriptions in funds were negative. The limited
availability of real estate financing also contributed to a
significant decrease in real estate transactions. With regard to
the real estate funds, we expect 2024 to be a challenging year,
although the long-term outlook for growth is good. Sales of eQ’s
Private Equity products has continued to be strong, and the desire
of Finnish asset management clients to increase Private Equity
allocations in their portfolios will continue to support the growth
of eQ’s Private Equity products. We also anticipate a growth in
performance fees from 2025 onwards, due to the predicted transfer
of several Private Equity products to a performance fee stage. eQ’s
competitive position in traditional asset management products and
discretionary asset management is good thanks to excellent returns
on investments. We believe that traditional asset management has
great potential for growth in future years, considering however its
characteristic short-term variation according to market
conditions.
eQ has updated its disclosure policy and, as a rule, will not
issue a result forecast for the Asset Management segment in the
future but instead describe its outlook in a general manner.
Results in the Corporate Finance and Investments segments are
largely dependent on factors beyond the company’s control, which is
why no result forecast has been issued for these segments
before.
***
eQ’s financial statements release 1 Jan. to 31 Dec. 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 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 12.9 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 Financial Statements Release 2023
Eq Oyj (LSE:0DK7)
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