eQ Plc’s half year report 2021 – eQ Group's operating profit grew by 81%
eQ Plc half year report
10 August 2021 at 8:00 AM
January to June 2021 in brief
- The Group's net revenue during the period was EUR 36.8 million (EUR 23.9 million from 1 Jan. to 30 June 2020).
- The Group’s net fee and commission income was EUR 33.2 million (EUR 24.3 million).
- The Group’s net investment income from own investment operations was EUR 3.6 million (EUR -0.4 million), including the return from private equity and real estate fund investments and liquid fixed income funds.
- The Group’s operating profit grew by 81% to EUR 21.1 million (EUR 11.7 million).
- The Group’s profit was EUR 16.9 million (EUR 9.4 million).
- The consolidated earnings per share were EUR 0.43 (EUR 0.24).
- The net revenue of the Asset Management segment increased by 36% to EUR 30.9 million (EUR 22.7 million) and the operating profit by 42% to EUR 18.5 million (EUR 13.0 million).
- The net revenue of the Corporate Finance segment was EUR 2.4 million (EUR 1.7 million) and the operating profit was EUR 0.6 million (EUR 0.3 million).
- The net cash flow from the Group’s own private equity and real estate fund investment operations was EUR 2.5 million (EUR -0.2 million).
April to June 2021 in brief
- In the second quarter, the Group’s net revenue totalled EUR 18.8 million (EUR 11.9 million from 1 April to 30 June 2020).
- The Group’s net fee and commission income was EUR 17.4 million (EUR 12.7 million).
- The Group’s net investment income from own investment operations was EUR 1.4 million (EUR -0.8 million), including the return from private equity and real estate fund investments and liquid fixed income funds.
- The Group’s operating profit grew by 87% to EUR 10.6 million (EUR 5.7 million).
- The Group’s profit was EUR 8.5 million (EUR 4.6 million).
- The consolidated earnings per share were EUR 0.22 (EUR 0.12).
| Key ratios | 1-6/21 | 1-6/20 | Change | 4-6/21 | 4-6/20 | Change | 1-12/20 |
| Net revenue, Group, M€ | 36.8 | 23.9 | 54% | 18.8 | 11.9 | 58% | 56.7 |
| Net revenue, Asset Management, M€ | 30.9 | 22.7 | 36% | 16.1 | 11.4 | 41% | 52.8 |
| Net revenue, Corporate Finance, M€ | 2.4 | 1.7 | 39% | 1.3 | 1.3 | 4% | 4.1 |
| Net revenue, Investments, M€ | 3.5 | -0.4 | 1090% | 1.4 | -1.0 | 238% | -0.1 |
| Net revenue, Group administration | |||||||
| and eliminations, M€ | 0.0 | -0.2 | 0.0 | 0.2 | 0.0 | ||
| Operating profit, Group, M€ | 21.1 | 11.7 | 81% | 10.6 | 5.7 | 87% | 30.8 |
| Operating profit, Asset Management, M€ | 18.5 | 13.0 | 42% | 9.6 | 6.6 | 45% | 32.1 |
| Operating profit, Corporate Finance, M€ | 0.6 | 0.3 | 91% | 0.4 | 0.4 | -19% | 1.1 |
| Operating profit, Investments, M€ | 3.5 | -0.4 | 1090% | 1.4 | -1.0 | 238% | -0.1 |
| Operating profit, Group administration, M€ | -1.4 | -1.3 | -0.7 | -0.4 | -2.4 | ||
| Profit for the period, M€ | 16.9 | 9.4 | 80% | 8.5 | 4.6 | 84% | 24.6 |
| Key ratios | 1-6/21 | 1-6/20 | Change | 4-6/21 | 4-6/20 | Change | 1-12/20 |
| Earnings per share, € | 0.43 | 0.24 | 76% | 0,22 | 0,12 | 83 % | 0.64 |
| Equity per share, € | 1.48 | 1.33 | 11% | 1,48 | 1,33 | 11 % | 1.74 |
| Cost/income ratio, Group, % | 42.4 | 51.0 | -17% | 43,5 | 52,3 | -17 % | 45.6 |
| Liquid assets, M€ | 25.4 | 13.8 | 84% | 25,4 | 13,8 | 84 % | 36.3 |
| Private equity and real estate fund investments, M€ | 16.7 | 16.1 | 4% | 16,7 | 16,1 | 4 % | 15.7 |
| Interest-bearing loans, M€ | 0.0 | 0.0 | 0% | 0,0 | 0,0 | 0 % | 0.0 |
| Assets under management excluding reporting services, € billion | 8.6 | 7.0 | 23% | 8,6 | 7,0 | 23 % | 7.5 |
| Assets under management, € billion | 10.7 | 8.5 | 26% | 10,7 | 8,5 | 26 % | 9.0 |
Mikko Koskimies, CEO
COVID-19 started to spread in Western countries in the second quarter of 2020, which lead to an extensive closing-down of economies. This year, the sentiment has been different. Vaccination coverage has improved rapidly, and the global economy has begun to recover at huge speed. In Q1 2021, the GDP growth in Europe still remained negative, but in the US, it was already clearly positive. In Q2, IMF published a 6% prognosis for global economic growth in the whole year 2021.
The equity market welcomed the information about accelerating growth. At the same time, worries arouse on whether growth would speed up inflation and force actors to cut down monetary stimulus more rapidly than planned. There was upward pressure on above all long-term interest rates in the US, as annual inflation increased to no less than 5%. The message of central banks was clear, however: accelerating inflation is regarded as a temporary phenomenon related to economic recovery that does not require rapid reactions from central banks. Despite strong recovery, the new US president is launching large additional stimulus packages.
In the first half, equity market returns were very good, the return of the global index being almost 17%. Small-caps have even given clearly better returns than this. The fear for inflation raised interest rates, and the interest returns of euro government bonds and interest grade loans were negative in the first half. High yield loans, on the other hand, benefited from the narrowing of the interest rate spread and gave a return of almost 3% since the beginning of the year.
eQ’s growth very strong
eQ’s growth was very strong in the first half. The net revenue of the Group during the period under review was EUR 36.8 million and the operating profit EUR 21.1 million. Net revenue grew by 54% and operating profit by as much as 81% on the previous year.
eQ Asset Management’s growth accelerated
eQ Asset Management’s result was once more excellent. The net revenue of eQ Asset Management increased by 36% on the first half of the previous year to EUR 30.9 million. The operating profit grew by 42% to EUR 18.5 million. The management fees of traditional asset management as well as performance fees experienced the strongest growth. Part of the performance fees accrued from Amanda IV -private equity fund at the end of the reporting period.
The returns of client portfolios were excellent during the first half. No less than 85% of the funds that eQ manages itself gave better returns that their benchmark indices, and during a three-year period the corresponding figure was 75%. Within the discretionary asset management portfolios, both absolute and relative returns were also exceptionally good. The excellent returns from traditional asset management were complemented by the good real estate and private equity returns.
The first half was also very good with regard to sales, above all for real estate and private equity asset management. Net subscriptions in the eQ Community Properties and Commercial Properties Funds were almost EUR 160 million, and the size of the eQ Residential Fund grew to its target of EUR 100 million. The investment operations of the fund also advanced well. In 2021, private equity assets are raised to the eQ PE XIII US Fund, which already reached a record size of USD 293 million in its June closing. The assets raised to the US PE funds since 2015 total almost USD 700 million. In addition, we have launched three new private equity asset management programmes at the beginning of the year, and the size of two old, renewed programmes has grown markedly.
During the period under review, we made some amendments to the rules of the eQ real estate funds, which entered into force on 15 April. At the same time, we changed the name of the popular eQ Care Fund to eQ Community Properties Fund to better correspond to the use of the properties owned by the fund.
Advium’s fee income and profit grew
Advium’s net revenue was EUR 2.4 million (EUR 1.7 million) and operating profit EUR 0.6 million (EUR 0.3 million) during the period under review.
During the six-month period, Advium acted as advisor in five transactions. In addition, Advium acted as advisor in two transactions that were published in July. Of these seven transactions, two were real estate transactions and five M&As. In the major transactions, Advium acted as financial advisor to Alma Media, Berner and Rettig.
In the first half of the year, the value of M&As continued to grow globally to an all-time high. The M&A activity was high in Finland as well. The volumes of real estate transactions have not grown in the same manner as those of M&As.
The operating profit of the Investments segment excellent
The operating profit of the Investments segment was EUR 3.5 million (EUR -0,4 million) and the net cash flow was EUR 2.5 million. The balance sheet value of the private equity and real estate fund investments was EUR 16.7 million at the end of June. eQ Plc made an investment commitment of USD 1 million to the eQ PE XIII US private equity fund in January. The considerable increase the M&A activity of unlisted companies had a positive impact on the portfolio’s cash flow, value changes and realised profits.
Outlook
The strong market development during the first half supports eQ’s business operations.
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.
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eQ’s half year financial report 1 January to 30 June 2021 is enclosed to this release and it is also available on the company website at
eQ Plc
Additional information:
Mikko Koskimies, CEO, tel. 9
Antti Lyytikäinen, CFO, tel. 1
Distribution: Nasdaq Helsinki, , 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 10.7 billion. Advium Corporate Finance, which is part of the Group, offers services related to mergers and acquisitions, real estate transactions and equity capital markets.
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