eQ PLC’S INTERIM REPORT Q3 2020 – eQ GROUP'S RESULT DEVELOPMENT CONTINUED TO BE STRONG

eQ Oyj
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eQ PLC INTERIM REPORT
27 October 2020 at 8:00 AM

eQ PLC’S INTERIM REPORT Q3 2020 – eQ GROUP'S RESULT DEVELOPMENT CONTINUED TO BE STRONG

January to September 2020 in brief

  • During the period under review, the Group's net revenue totalled EUR 36.6 million (EUR 35.0 million from 1 Jan. to 30 Sept. 2019).

  • The Group’s net fee and commission income was EUR 37.3 million (EUR 34.5 million).

  • The Group’s net investment income from own investment operations was EUR -0.6 million (EUR 0.5 million), including the return from private equity and real estate fund investments and liquid fixed income funds.

  • The Group’s operating profit grew by 8% to EUR 19.2 million (EUR 17.9 million).

  • The Group’s profit was EUR 15.4 million (EUR 14.3 million).

  • The consolidated earnings per share were EUR 0.40 (EUR 0.38).

  • The net cash flow from the Group’s own private equity and real estate fund investment operations was EUR -0.2 million (EUR 0.8 million).

  • The net revenue of the Asset Management segment increased by 9% to EUR 34.6 million (EUR 31.8 million) and the operating profit by 14% to EUR 20.8 million (EUR 18.2 million).

  • The net revenue of the Corporate Finance segment was EUR 2.7 million (EUR 2.9 million) and the operating profit was EUR 0.7 million (EUR 0.8 million).

July to September 2020 in brief

  • In the third quarter, the Group’s net revenue totalled EUR 12.7 million (EUR 12.1 million from 1 July to 30 Sept. 2019).

  • The Group’s net fee and commission income was EUR 12.9 million (EUR 12.0 million).

  • The Group’s net investment income from own investment operations was EUR -0.2 million (EUR 0.1 million), including the return from private equity and real estate fund investments and liquid fixed income funds.

  • The Group’s operating profit was EUR 7.5 million (EUR 6.9 million).

  • The Group’s profit was EUR 6.0 million (EUR 5.5 million).

  • The consolidated earnings per share were EUR 0.16 (EUR 0.15).

Key ratios

1-9/20

1-9/19

Change

7-9/20

7-9/19

Change

1-12/19

Net revenue, Group, M€

36.6

35.0

5%

12.7

12.1

5%

50.6

Net revenue, Asset Management, M€

34.6

31.8

9%

11.9

10.9

9%

44.3

Net revenue, Corporate Finance, M€

2.7

2.9

-5%

1.0

1.1

-7%

5.4

Net revenue, Investments, M€

-0.7

0.2

-406%

-0.3

0.1

-527%

0.8

Net revenue, Group administration and

eliminations, M€

-0.1

0.1

0.1

0.0

0.1

Operating profit, Group, M€

19.2

17.9

8%

7.5

6.9

9%

26.3

Operating profit, Asset Management, M€

20.8

18.2

14%

7.8

6.8

14%

25.4

Operating profit, Corporate Finance, M€

0.7

0.8

-8%

0.4

0.4

-10%

1.9

Operating profit, Investments, M€

-0.7

0.2

-406%

-0.3

0.1

-527%

0.8

Operating profit, Group administration, M€

-1.6

-1.3

-0.3

-0.4

-1.8

Profit for the period, M€

15.4

14.3

8%

6.0

5.5

9%

21.0

Key ratios

1-9/20

1-9/19

Change

7-9/20

7-9/19

Change

1-12/19

Earnings per share, €

0.40

0.38

7%

0.16

0.15

8%

0.55

Equity per share, €

1.50

1.52

-1%

1.50

1.52

-1%

1.70

Cost/income ratio, Group, %

47.3

48.9

-3%

40.9

42.9

-5%

48.1

Liquid assets, M€

23.0

18.8

22%

23.0

18.8

22%

32.3

Private equity and real estate fund investments, M€

15.8

16.4

-4%

15.8

16.4

-4%

16.2

Interest-bearing loans, M€

0.0

0.0

0%

0.0

0.0

0%

0.0

Assets under management excluding reporting services, € billion

7.2

6.3

14%

7.2

6.3

14%

6.8

Assets under management total, € billion

8.7

11.2

-23%

8.7

11.2

-23%

11.7

Janne Larma, CEO

The Group’s result development continued to be strong despite the challenging market environment. eQ Group’s operating profit has grown for 26 consecutive quarters. During the first nine months of the year, the net revenue of the Group grew by 5% to EUR 36.6 million and the operating profit by 8% to EUR 19.2 million. The Group’s profit increased to EUR 15.4 million (EUR 14.3 million from 1 Jan. to 30 Sept. 2019).

The growth of eQ Asset Management’s management fees and operating profit continued

Growth of eQ Asset Management’s fee and commission income has still been driven by real estate and private equity asset management, the fee and commission income of which grew by 20% on the previous year. Within eQ’s real estate asset management, subscriptions started to grow in the second half. Subscriptions were made for more than EUR 50 million, EUR 33 million of which in open-end real estate funds and EUR 18 million in a residential fund for professional investors. Within private equity asset management, we will continue to raise assets to the eQ PE SF III and eQ PE XII North funds and begin the fund raising to our latest eQ Private Credit III fund during the last months of the year. The present market situation and market outlook continue to favour alternative investments, such as real estate and private equity investments. The management fee income from traditional asset management was at the previous year’s level.

eQ Asset Management’s excellent profit growth continued. The net revenue of the Asset Management segment increased by 9% to EUR 34.6 million and the operating profit grew by 14% to EUR 20.8 million. The cost/income ratio of the Asset Management segment has continued to fall and was 39.8% during the first nine months.

Advium’s result at previous year’s level

In the Corporate Finance segment, Advium has acted as advisor in six finalised transactions during the nine-month period. In the third quarter, Advium acted as advisor to Cargotec, for instance, as the Boards of Cargotec and Konecranes will propose to the shareholders a merger that will result in a global leader of sustainable material flows.

During the nine-month period, Advium’s income and profit were at the previous year’s level. Advium’s net revenue during the period under review was EUR 2.7 million (EUR 2.9 million from 1 Jan. to 30 Sept. 2019). The operating profit was EUR 0.7 million (EUR 0.8 million).

Advium’s order stock continues to be good, but the challenging operating environment still slows down project completion. The market situation has improved since the second quarter, however, but it has not yet returned to the activity level of 2019. Great variations in fee income per quarter are typical of corporate finance operations.

The result of the Investments segment lower than last year

The operating profit of the Investments segment fell from last year. The operating profit of the segment was EUR 0.7 million negative (EUR 0.2 million). The negative result results from negative value changes and the low profit distributions from funds. During the period under review, the net cash flow from investments was EUR 0.2 million (EUR 0.8 million). The fair value of private equity and real estate fund investment was EUR 15.8 million at the end of September (EUR 16.2 million on 31 Dec. 2019).

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. After the period under review, the eQ Care Fund signed an agreement on divesting 55 properties for about EUR 222 million. The deal is expected to materialise this year. As a result of the deal, the Care Fund will accrue a performance fee this year. Therefore, we estimate that the performance fees of the Asset Management segment in 2020 will be at the same level as last year. There are still uncertainties related to this, however. The Amanda IV private equity fund will not accrue a performance fee in 2020.

***

eQ’s interim report 1 January to 30 September 2020 is enclosed to this release and it is also available on the company website at www.eQ.fi.

Additional information: Janne Larma, CEO, tel. +358 9 6817 8920

Distribution: Nasdaq Helsinki, www.eQ.fi,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 8.7 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 www.eQ.fi.

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