eQ PLC’S FINANCIAL STATEMENTS RELEASE 2019 – eQ’S PROFIT INCREASED BY 18 %, DISTRIBUTION PROPOSAL OF EUR 0.62 PER SHARE TO THE SHAREHOLDERS
eQ PLC FINANCIAL STATEMENTS RELEASE
6 February 2020 at 8:00 AM
eQ PLC’S FINANCIAL STATEMENTS RELEASE 2019 – eQ’S PROFIT INCREASED BY 18 %, DISTRIBUTION PROPOSAL OF EUR 0.62 PER SHARE TO THE SHAREHOLDERS
January to December 2019 in brief
- The Group's net revenue during the financial period was EUR 50.6 million (EUR 45.4 million from 1 Jan. to 31 Dec. 2018).
- The Group’s net fee and commission income was EUR 49.5 million (EUR 43.6 million).
- The Group’s net investment income from own investment operations was EUR 1.1 million (EUR 1.8 million).
- The Group’s operating profit grew by 17% to EUR 26.3 million (EUR 22.4 million).
- The Group’s profit was EUR 21.0 million (EUR 17.8 million).
- The consolidated earnings per share were EUR 0.55 (EUR 0.47).
- The net cash flow from the Group’s own private equity fund investment operations was EUR 1.7 million (EUR 3.9 million).
- The net revenue of the Asset Management segment increased by 21% to EUR 44.3 million (EUR 36.7 million) and the operating profit by 30% to EUR 25.4 million (EUR 19.5 million).
- The net revenue of the Corporate Finance segment was EUR 5.4 million (EUR 7.1 million) and the operating profit was EUR 1.9 million (EUR 3.2 million). It is typical of corporate finance business that success fees have a considerable impact on invoicing, due to which the result of the segment may vary considerably.
- Dividend proposal EUR 0.55 (EUR 0.47) and proposal for equity repayment EUR 0.07 (EUR 0.07) per share.
October to December 2019 in brief
- In the last quarter, the Group’s net revenue totalled EUR 15.6 million (EUR 14.7 million from 1 Oct. to 31 Dec. 2018).
- The Group’s net fee and commission income was EUR 15.0 million (EUR 14.6 million).
- The Group’s net investment income from own investment operations was EUR 0.6 million (EUR 0.1 million).
- The Group’s operating profit grew by 14% to EUR 8.4 million (EUR 7.4 million).
- The Group’s profit was EUR 6.7 million (EUR 5.9 million).
- The consolidated earnings per share were EUR 0.18 (EUR 0.16).
| Key ratios | 1-12/19 | 1-12/18 | Change | 10-12/19 | 10-12/18 | Change |
| Net revenue, Group, M€ | 50.6 | 45.4 | 12% | 15.6 | 14.7 | 6% |
| Net revenue, Asset Management, M€ | 44.3 | 36.7 | 21% | 12.5 | 9.8 | 27% |
| Net revenue, Corporate Finance, M€ | 5.4 | 7.1 | -24% | 2.5 | 4.8 | -48% |
| Net revenue, Investments, M€ | 0.8 | 1.8 | -56% | 0.6 | 0.2 | 196% |
| Net revenue, Group administration and | ||||||
| eliminations, M€ | 0.1 | -0.1 | 0.0 | -0.1 | ||
| Operating profit, Group, M€ | 26.3 | 22.4 | 17% | 8.4 | 7.4 | 14% |
| Operating profit, Asset Management, M€ | 25.4 | 19.5 | 30% | 7.2 | 5.1 | 41% |
| Operating profit, Corporate Finance, M€ | 1.9 | 3.2 | -40% | 1.2 | 2.8 | -57% |
| Operating profit, Investments, M€ | 0.8 | 1.8 | -56% | 0.6 | 0.2 | 196% |
| Operating profit, Group administration, M€ | -1.8 | -2.1 | -12% | -0.5 | -0.7 | -21% |
| Profit for the period, M€ | 21.0 | 17.8 | 18% | 6.7 | 5.9 | 15% |
| Key ratios | 1-12/19 | 1-12/18 | Change | 10-12/19 | 10-12/18 | Change |
| Earnings per share, € | 0.55 | 0.47 | 17% | 0.18 | 0.16 | 13% |
| Proposal for dividend and equity repayment per share, € | 0.62 | 0.54 | 15% | |||
| Equity per share, € | 1.70 | 1.65 | 3% | 1.70 | 1.65 | 3% |
| Cost/income ratio, Group, % | 48.1 | 50.5 | -5% | 46.0 | 49.8 | -8% |
| Liquid assets, M€ | 32.3 | 25.7 | 26% | 32.3 | 25.7 | 26% |
| Private equity fund investments, M€ | 16.2 | 16.9 | -4% | 16.2 | 16.9 | -4% |
| Interest-bearing loans, M€ | 0.0 | 0.0 | 0% | 0.0 | 0.0 | 0% |
| Assets under management, € billion | 11.7 | 9.5 | 23% | 11.7 | 9.5 | 23% |
Janne Larma, CEO
eQ’s result in 2019 was excellent. The Group's net revenue increased by 12% to EUR 50.6 million. The Group's operating profit was EUR 26.3 million and the profit for the period was EUR 21.0 million, growth on the previous year being 18%. The consolidated earnings per share were 55 cents as compared with 47 cents in 2018. We have managed to expand our business operations on a longer term, together with our clients. Thanks to these efforts, our profit has grown for 23 consecutive quarters. In 2019, the Group’s cost/income ratio fell for the first time below 50%, to 48.1% at year level.
eQ Asset Management’s profit growth accelerated – operating profit grew by 30%
The Group’s growth was driven by the asset management business, the operations and profit of which grew once more exceptionally well. eQ Asset Management’s net revenue grew last year by 21% and operating profit by as much as 30%. The cost/income ratio of the Asset Management segment was excellent at 42.8%.
eQ Asset Management has improved its market position year after year to become one of the leading institutional asset managers in Finland. SFR interviews approximately the 100 largest Finnish institutional asset managers annually. According to the study conducted by SFR in 2019, eQ is the second most used institutional asset manager in Finland, and what is best, investors regarded eQ as the best company in the market in their quality assessments. We are very happy to be able to offer the qualitatively best asset management service in Finland in our clients’ opinion.
The low market interest rates have contributed to the considerable increase in the demand for alternative investment products during the past few years. The growth continued last year, both internationally and in Finland.
The net subscriptions in our two real estate funds totalled EUR 317 million in 2019. Both these funds gave excellent returns last year, the eQ Care Fund 9.1% and the eQ Finnish Real Estate Fund 7.8%. At the close of the year, the fund capital of our real estate funds exceeded EUR 1.7 billion.
Growth also continued in private equity asset management. We raised altogether EUR 270 million to the eQ PE XI US and eQ Private Credit II funds. In addition, we obtained new private equity mandate clients.
We are also very pleased with the returns of our traditional asset management operations. During the past three years, 83% of all eQ funds registered in Finland that the company manages itself have surpassed their benchmark indices. The figure for 2019 is 85%. Consequently, Morningstar recognised eQ Asset Management with its "Best Fund House" award.
Advium’s commission income and profit fell
The activity level in the corporate and real estate transactions market continued to be high. Despite this, Advium’s net commission income and operating profit fell from the year before, which is partly due to last year's excellent result. Corporate finance business often depends on a few transactions, their realisation and its timing. Advium acted as advisor in twelve transactions that were finalised in 2019, for instance as financial advisor to the Boards of Kotipizza Oyj and Pöyry Plc related to the public cash tenders made on them. Advium also acted as advisor to, e.g. Starwood Capital, as it bought more than 2 000 rental apartments from Elo and OP Group.
Advium’s net revenue was EUR 5.4 million, which is 24% less than the year before. Advium’s operating profit was EUR 1.9 million, compared with previous year’s EUR 3.2 million.
The result of the Investments segment lower than the year before
Last year, the operating profit of the Investments segment was EUR 0.8 million (EUR 1.8 million from 1 Jan. to 31 Dec. 2018). The net cash flow of the segment was EUR 1.7 million (EUR 3.9 million). The market value of the private equity fund investments was EUR 16.2 million (EUR 16.9 million) at the close of the year.
Group balance sheet and dividend proposal
The Group has no interest-bearing liabilities and its balance sheet is very strong. The Group’s profit in 2019 was 55 cents per share and its cash flow was strong. Due to the strong balance sheet and capital adequacy, the Board of Directors have decided to propose to the Annual General Meeting that a dividend of 55 cents and the same equity repayment as the year before, i.e. 7 cents per share, be paid to the shareholders.
Outlook
In December, net subscriptions for EUR 76 million were made in eQ’s real estate funds. In addition, the eQ PE XII North and eQ PE SF III private equity funds raised altogether EUR 201 million in the first closings of the funds in January 2020. This is the largest sum raised to private equity funds in the first closing during eQ’s history. This only strengthens our view that the demand for alternative investment products continues to be strong.
We report now for the first time our assessment on when our own private equity funds will begin to pay a performance fee. We believe that this will make it easier for our shareholders and analysts to analyse eQ's future returns. These estimates can be found on page 31 of the financial statements release. We estimate that the Amanda IV Fund will begin to pay a performance fee towards the end of this year.
With regard to the above, we expect the net revenue and operating profit of the Asset Management segment to grow in 2020. 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. Consequently, their operating profits may vary considerably and are difficult to foresee.
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eQ’s financial statements release 1 January to 31 December 2019 is enclosed to this release and it is also available on the company website at
Additional information: Janne Larma, CEO, tel. 0
Distribution: Nasdaq Helsinki, ,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 11.7 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
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