eQ Plc financial statements release
4 February 2025 at 8:00 AM
January to December 2024 in brief
- During the period under review, the Group's net revenue totalled EUR 65.6 million (EUR 70.9 million from 1 Jan. to 31 Dec. 2023). The Group's net fee and commission income was EUR 63.8 million (EUR 70.8 million).
- The Group's operating profit fell by 13% to EUR 34.5 million (EUR 39.7 million).
- The Group's profit was EUR 27.4 million (EUR 31.5 million).
- The consolidated earnings per share were EUR 0.66 (EUR 0.78).
- The net revenue of the Asset Management segment decreased by 13% to EUR 58.5 million (EUR 66.9 million) and the operating profit by 19% to EUR 33.7 million (EUR 41.4 million). The management fees of the Asset Management segment fell by 10% to EUR 55.6 million (EUR 62.0 million) and the performance fees fell by 35% to EUR 3.6 million (EUR 5.4 million). During the review period, the assets managed by eQ Asset Management grew by 4% to EUR 13.4 billion (EUR 12.9 billion on 31 Dec. 2023).
- The net revenue of the Corporate Finance segment was EUR 5.3 million (EUR 3.9 million) and the operating profit was EUR 1.5 million (EUR 0.7 million).
- The operating profit of the Investments segment was EUR 1.1 million (EUR -0.6 million).
- The net cash flow from the Group's own private equity and real estate fund investment operations was EUR 0.8 million (EUR -0.1 million).
- The proposed dividend is EUR 0.66 (EUR 0.80) per share.
- In the last quarter, the Group's net revenue totalled EUR 14.8 million (EUR 18.5 million from 1 Oct. to 31 Dec. 2023). The Group's net fee and commission income was EUR 14.0 million (EUR 19.3 million).
- The Group's operating profit fell by 29% to EUR 6.9 million (EUR 9.8 million).
- The Group's profit was EUR 5.5 million (EUR 7.8 million).
- The consolidated earnings per share were EUR 0.13 (EUR 0.19).
- In the final quarter the net revenue of the Asset Management segment decreased by 22% to EUR 13.0 million (EUR 16.6 million) and the operating profit by 29% to EUR 6.9 million (EUR 9.7 million). The decrease in operating profit in the final quarter of the year was affected by the write-down of one Private Equity fund's accrued performance fee (EUR 1.8 million).
| Key ratios | 1-12/24 | 1-12/23 | Change | 10-12/24 | 10-12/23 | Change |
| Net revenue, Group, MEUR | 65,6 | 70,9 | -7 % | 14,8 | 18,5 | -20 % |
| Net revenue, Asset Management, MEUR | 58,5 | 66,9 | -13 % | 13,0 | 16,6 | -22 % |
| Net revenue, Corporate Finance, MEUR | 5,3 | 3,9 | 34 % | 1,0 | 2,7 | -63% |
| Net revenue, Investments, MEUR | 1,1 | -0,6 | 287 % | 0,6 | -1,0 | 164 % |
| Net revenue, Group administration and eliminations | ||||||
| Net revenue, MEUR | 0,8 | 0,6 | 0,1 | 0,2 | ||
| Operating profit, Group, MEUR | 34,5 | 39,7 | -13 % | 6,9 | 9,8 | -29% |
| Operating profit, Asset Management, MEUR | 33,7 | 41,4 | -19 % | 6,9 | 9,7 | -29% |
| Operating profit, Corporate Finance, MEUR | 1,5 | 0,7 | 125 % | 0,0 | 1,6 | -97 % |
| Operating profit, Investments, MEUR | 1,1 | -0,6 | 287 % | 0,6 | -1,0 | 164 % |
| Operating profit, Group administration, MEUR | -1,8 | -1,7 | -0,6 | -0,5 | ||
| Profit for the period, MEUR | 27,4 | 31,5 | -13 % | 5,5 | 7,8 | -29% |
| Key ratios | 1-12/24 | 1-12/23 | Change | 10-12/24 | 10-12/23 | Change |
| Earnings per share, EUR | 0,66 | 0,78 | -14 % | 0,13 | 0,19 | -30% |
| Proposed dividend per share, EUR | 0,66 | 0,80 | -18% | |||
| Equity per share, EUR | 1,77 | 1,85 | -4 % | 1,77 | 1,85 | -4 % |
| Cost/income ratio, Group, % | 47,4 | 43,8 | 8 % | 53,3 | 47,1 | 13 % |
| Liquid assets, MEUR | 17,0 | 33,4 | -49 % | 17,0 | 33,4 | -49 % |
| Private equity and real estate fund investments, MEUR | 17,0 | 16,6 | 3 % | 17,0 | 16,6 | 3 % |
| Interest-bearing loans, MEUR | 0,0 | 0,0 | 0 % | 0,0 | 0,0 | 0 % |
| Assets under management excluding reporting services, EUR billion | 10,4 | 10,0 | 4 % | 10,4 | 10,0 | 4 % |
| Assets under management, EUR billion | 13,4 | 12,9 | 4 % | 13,4 | 12,9 | 4 % |
The global economy has been rather sluggish during 2024, and economic growth in the euro area in particular has been modest. During the year, the European Central Bank cut its key interest and deposit rates four times, with the deposit rate standing at 3.0% at the end of the year. Europe's core inflation and inflation outlook have fallen, and the European economy is expected to recover rather slowly, leading markets to expect deposit rates to fall to around 2% in 2025. On the other hand, in the US, the economy is growing and performing well, and inflation is not expected to fall significantly. For these reasons, interest rates in the US are significantly higher than in Europe.
Policy easements made by central banks and economic growth in the US in particular set the stage for a strong stock market in 2024. The strong rise in the US (33%) boosted the indices tracking global developed markets (27%). The positive performance of emerging markets (15%) was boosted by the China's rise in the second half of the year. In Europe, stock price indices rose less (9%), and Nordic share prices fell slightly.
In the interest rate markets, returns were positive, both for short-term interest rates and long-term interest rates. High Yield Corporate Bonds were the best performers last year, returning over eight per cent.
eQ's result for the financial period fell
The net revenue of the Group during the period under review was EUR 65.6 million and the operating profit was EUR 34.5 million. Net revenue fell by 7% and operating profit by 13% from the previous year.
eQ Asset Management's profit fell, assets under management increased
During the period under review, the net revenue of the Asset Management segment fell by 13 per cent to EUR 58.5 million. The decrease in net revenue, EUR 8.4 million, is explained by real estate asset management's lower management fees compared to the previous year. In contrast, management fee income from both traditional and Private Equity asset management increased from last year, by 6% for traditional and 8% for Private Equity. During the review period, eQ Asset Management's operating profit fell by 19 per cent to EUR 33.7 million. In addition to the above-mentioned factors, the decrease in operating profit was affected by a write-down of EUR 1.8 million on the accrued performance fee of one Private Equity fund.
As for sales, the year 2024 was good in private equity asset management. In 2024, Private Equity funds were raised to the eQ PE XVI North fund investing in Northern Europe and the eQ PE SF V and eQ VC II funds. We raised over EUR 360 million in these three funds, which is an excellent result. For traditional asset management, assets under management increased by almost EUR 300 million, or 8%, compared to the end of 2023. In real estate asset management, the challenging market situation contributed to a decrease of over EUR 200 million in assets under management.
eQ focuses more and more on sustainability every year and it is a key part of our investment activities. We received excellent marks, including in the PRI assessment, where we outperformed our peer group and received full five stars in five sections. In addition, in the GRESB survey of the real estate sector, both our real estate funds performed better than both the overall respondents and the eQ peer group averages. eQ Community Properties even came out on top of its peer group.
eQ Asset Management usage rose in the 2024 SFR survey and 68% of the 100 or so largest institutional investors in Finland use eQ's services. In alternative investments - real estate and private equity in eQ's case - eQ was by far the most used asset manager. eQ's quality rating declined in 2024, which the study attributes primarily to weaker investment returns in the real estate segment. Our goal is to rise back to the forefront of quality.
The Financial Supervisory Authority (FIN-FSA) conducted an inspection of eQ Fund Management Company, and we received the inspection report last year. The FIN-FSA's job description includes conducting inspections at intervals and the inspection was part of FIN-FSA's normal operations. It had been more than ten years since eQ's previous inspection. The report raised observations that we have reviewed in good cooperation with FIN-FSA and all necessary actions have been implemented over the last year. I dare to say that inspections of this type are useful for both operations and for cooperation with authorities.
Advium's profit grew
Advium managed to increase its net revenue, despite a decrease in the number of mergers and acquisitions in Finland compared to the previous year and very low activity in the real estate market. During the period under review, Advium's net revenue totalled EUR 5.3 million (EUR 3.9 million). Operating profit was EUR 1.5 million (EUR 0.7 million).
During 2024, Advium acted as advisor in four published M&A transactions and one published real estate transaction. Two of these were public offers, when offers were made for Purmo Group and Innofactor. Advium also advised Aspo Plc on its minority investment in OP Infra Suomi and Forcit on its agreement to acquire part of Orica's Finnish and Swedish businesses.
Investment profit and cash flow increased
The operating profit of the Investments segment rose from last year and was EUR 1.1 million (EUR -0.6 million). Net cash flow was EUR 0.8 million (EUR -0.1 million). The balance sheet value of the private equity and real estate fund investments at year end was EUR 17.0 million (EUR 16.6 million on 31 Dec. 2023). During the year, eQ Plc made a USD 1 million investment commitment in the eQ PE XVI fund.
Changes in eQ's management
Mikko Koskimies, CEO of eQ Plc and Managing Director of eQ Asset Management Ltd, left these positions at the end of October 2024 due to a serious illness. Koskimies passed away in November. Mikko was a valued colleague and a dear friend. We will all miss Mikko.
Tero Estovirta, deputy Managing Director of eQ Asset Management Ltd, was appointed Managing Director of eQ Asset Management Ltd and member of the eQ Group's management team at the end of October.
During the review period, Jacob af Forselles was appointed as the Managing Director of Advium Corporate Finance Ltd and as a member to eQ Group's Management Team. He started in his position at the beginning of August.
Outlook
The difficult market situation in the Finnish real estate market continued in 2024. Our assessment is that the real estate market levelled off towards the end of the year and that yield requirements generally stopped rising in the final quarter of the year. However, market liquidity remained at a very low level. The real estate market in general remains challenging. In several Finnish open-ended real estate funds, redemptions have not been completed on time and investors have had to wait for their money. Funds for redemption payments are mainly raised by selling properties and, as the transaction market remains quiet, redemption payments have had to be postponed. Lower interest rates and economic growth are having a positive impact on the real estate market. The market expects interest rates in Europe to continue to fall and the economy to gradually start to recover. If these estimates materialise, we expect 2025 to be a better year for the real estate market than 2024.
Due to the current situation, eQ's real estate fund management fees are expected to decrease in 2025 compared to the previous year.
Sales of eQ's Private Equity products has continued to be strong, and we believe that Finnish asset management clients will increase the Private Equity allocations in their portfolios in the coming years. We estimate that eQ's Private Equity fees will increase in 2025 compared to last year. The exit market for private equity funds was quieter than expected in 2024. As a result, the timing of Private Equity performance fees accruing to eQ has moved forward. Performance fees are expected to increase from 2026 onwards, with a number of private equity products expected to move into the performance fee phase.
In traditional asset management, we believe we have a good market position. The development of fees is largely dependent on market development.
***
eQ's financial statements release 1 Jan. to 31 Dec. 2024 is enclosed to this release and it is also available on the company website at www.eQ.fi.
eQ Plc
Additional information:
Janne Larma, acting CEO, tel. +358 9 6817 8920
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 13.4 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.
Attachment
