2012-02-21 14:45:00 CET
2012-02-21 14:45:07 CET
REGULATED INFORMATION
eQ Oyj - Financial Statement Release
eQ PLC FINANCIAL STATEMENT RELEASE 2011 - eQ PERFORMED WELL IN 2011 AND A DIVIDEND OF 0,12 EUROS IS PROPOSED
eQ PLC STOCK EXCHANGE RELEASE
21 February 2012, at 3:45 pm
eQ PLC FINANCIAL STATEMENT RELEASE 2011 - eQ PERFORMED WELL IN 2011 AND A
DIVIDEND OF 0,12 EUROS IS PROPOSED
January to December 2011 in brief
-- The fee and commission income totalled EUR 9.3 million (EUR 4.0 million
from 1 Jan. to 31 Dec. 2010).
-- The Group's net investment income was EUR 6.5 million (EUR 1.1 million).
-- The operating profit was EUR 7.2 million (EUR 1.8 million).
-- Earnings per share were EUR 0.15 (EUR 0.04).
-- The financial statements release 1 Jan. to 31 Dec. 2011 comprises eQ Asset
Management Group and Advium Corporate Finance Ltd from 1 April 2011. The
comparison figures of the release are, therefore, not comparable.
-- Proposed dividend of EUR 0.12 per share.
Key ratios 10-12/2011 10-12/2010 1-12/2011 1-12/2010
--------------------------------------------------------------------------------
Net sales, EUR million 2,2 1,0 15,8 5,1
Operating profit, EUR million -0,3 0,2 7,2 1,8
Profit before taxes, EUR million -0,3 0,0 6,9 1,2
Profit for the period, EUR million -0,3 0,0 4,9 0,8
Earnings per share, EUR -0,01 0,001 0,15 0,04
Proposed dividend, EUR 0,12 0,00
Equity per share, EUR 2,08 1,94 2,08 1,94
Equity to assets ratio, % 94,10 % 85,90 % 94,10 % 85,90 %
Interest-bearing debts, EUR 0,0 5,8 0,0 5,8
million
Janne Larma, CEO
The year 2011 was a challenging period for asset managers. At the beginning of
the year, the equity market rose and the economic outlook was reasonable. The
euro crises, however, turned share prices to a strong fall and led to
considerable uncertainty in the capital market. Within asset management, this
could be seen as a fall in the assets under management and in the corporate
finance sector as a slow-down in corporate and real estate transactions.
Despite this, eQ Group made a profitable result in all its business segments in
2011. The operating profit of the Asset Management segment was EUR 2.2 million
in 2011 and the operating profit of the Corporate Finance segment EUR 0.7
million. When considering the market situation, we can be satisfied with the
result of both these segments. Last year, our investments yielded an especially
good result, which shows the strength of private equity investments as an asset
class, even though share prices fell markedly. The capital returns from
investments totalled EUR 8.3 million and the distribution of profit was EUR 6.8
million. The operating profit generated was EUR 6.1 million. Capital calls
during the year were EUR 6.1 million.
The Group's balance sheet is in excellent shape. At the year-end, there were no
interest-bearing liabilities in the balance sheet, and the liquid assets
totalled EUR 10,5 million. This gives us great opportunities to invest in
growth. We strongly believe that the Finnish asset management market will be
consolidated in the years to come and we believe that eQ will take part in this
consolidation.
Outlook
The trust of the market has improved markedly at the beginning of the year.
Investors have increasingly turned their focus to analysing the profitability
of companies, instead of the debt crises of the euro zone. Even though trust in
the future has improved, it is clear that the crisis will slow down the growth
of national economies in the years to come. Changes in the assets under the
Group's management and the development of the fee and commission income
correlate with the development of the capital market.
***
eQ's financial statements release for the period 1 January to 31 December 2011
is enclosed to this release and it will also be available on the company
website at www.eq.fi.
Additional information: Janne Larma, CEO, tel. +358 40 500 4366
Distribution: OMX Nordic Exchange Helsinki, www.eq.fi
eQ Group is a Finnish group of companies that specialises in asset management
and corporate finance operations. The Group offers services related to mutual
funds, private equity funds and hedge funds as well as traditional asset
management for institutions and individuals. The assets managed by the Group
total approximately EUR 3.5 billion. In addition, Advium Corporate Finance Ltd,
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 at www.eq.fi.
eQ PLC'S FINANCIAL STATEMENTS RELEASE 1 JANUARY TO 31 DECEMBER 2011
Result of operations during the period 1 October to 31 December 2011
-- The fee and commission income of the Group totalled EUR 2.5 million (EUR
1.0 million from 1 Oct. to 31 Dec. 2010).
-- The Group's net investment income was EUR -0.3 million (EUR 0.0 million).
-- The Group's operating profit was EUR -0.3 million (EUR 0.2 million).
-- Consolidated earnings after taxes were EUR -0.3 million (EUR 0.0 million).
-- Earnings per share were EUR -0.01 (EUR 0.001).
Result of operations and financial position during the period 1 January to 31
December 2011
-- The fee and commission income increased and totalled EUR 9.3 million (EUR
4.0 million from 1 Jan. to 31 Dec. 2010).
-- The Group's net investment income increased to EUR 6.5 million (EUR 1.1
million).
-- The operating profit increased to EUR 7.2 million (EUR 1.8 million).
-- Consolidated earnings after taxes were EUR 4.9 million (EUR 0.8 million).
-- The financial statements release 1 Jan. to 31 Dec. 2011 comprises eQ Asset
Management Group and Advium Corporate Finance Ltd from 1 April 2011. The
comparison figures of the release are, therefore, not comparable.
-- Earnings per share were EUR 0.15 (EUR 0.04).
-- Equity per share rose to EUR 2.08 (EUR 1.94)
-- Equity to assets ratio was 94.1% (85.9%)
Financial environment
Equity market
The year 2011 was an unexceptionally challenging period for the capital market.
In spring the market plummeted because of the political unrest in North Africa
and the earthquake in Japan, but the impacts of these events were rather
short-lived. Instead investors have fully concentrated on the debt crisis in
Europe. Above all, the challenges of euro countries have received an unforeseen
attention in global financial media, and this has had a strong impact on the
behaviour of investors. During the entire autumn, investors have concentrated
their main attention to the ability of the Greece, Italian and Spanish states
to stimulate their economies. It has been exceptionally difficult for political
decision-makers to make decisions with a long-term impact, and as a result,
several Mediterranean countries have changed their government. From time to
time, the entire euro zone's credibility and ability to function have been
viewed in a critical manner. In any case, the crisis will slow down the growth
of national economies during the next few years. It is also clear that the
crisis will reflect on the solvency of European banks, which have needed and
will need recapitalisation. The European Central Bank is also expected to take
on a more active role in the management of the crisis.
Being a geographic fringe area, the Finnish equity market dropped more than the
equity market on the average in 2011. The HEX Cap Index fell by 24.9% during
the year. Other stock exchanges in Western Europe also developed negatively,
and the Eurostoxx 600 index fell by 11.3%, whereas MSCI World (EUR), which
describes shares globally, only fell by 4.6%. The U.S. market ended up to the
same level as in the beginning of the year. MSCI EM Total Return Net (EUR),
which describes emerging markets, also fell by 15.9%.
In 2011, the market concentrated exceptionally strongly on the results of these
political processes, and less attention was paid to actually analysing the
fundamentals of different asset classes. Already in December and above all in
January 2012, financial media shifted their attention from the euro crisis to
macro-economic indicators and the results of individual companies. As a result,
the last weeks of 2011 and the first weeks of 2012 have been quite positive in
the market. Share prices have risen by about 5 to 10% almost globally.
Bond market
For bond investors, 2011 was a challenging year. Despite the debt crises of
several governments, the bond market of the euro zone gave an average annual
return of 3.3%. The best performers were government bonds issued by Germany,
which is felt to be a safe country, with an almost 10% return. As for the
countries that are in the centre of the crisis, Greece and Portugal, investors
suffered, on the other hand, from value decreases of several tens of percent,
as the increased possibility of defaults was transferred to prices. For
corporate loans, the year was twofold. Corporate loans with the highest credit
rating gave a reasonable return of about 2%, while high-yield loans with a high
risk gave a negative return of about the same size.
We experienced the most difficult time of the year in November, when the
interest rates of Spanish and Italian corporate bonds rose record high in the
secondary market, to about 7%. At the same time, these countries had clear
difficulties in the issuance of new bonds. Political decision-makers managed to
calm down the situation, however, by tightening up the budget rules of member
states and by improving support networks. The measures that the European
Central Bank took towards the end of the year in order to safeguard the bank
system also restored investors' trust in above all debt securities issued by
banks.
Finnish market for mutual funds
The uncertain economic situation was also reflected on the investments that
Finns made in mutual funds. The net subscriptions in mutual funds operating in
the Finnish market totalled EUR -1.0 billion in 2011. Redemptions followed the
movements of the investment market and increased in the second half of the
year. The largest redemptions took place in equity and corporate bond funds.
Within equity funds, redemptions took above all place in funds that make
investments in emerging markets. As investors wanted to find safe havens,
capital flowed to short-term fixed-income funds and hedge funds. At the end of
the year, the fund capital of Finnish funds totalled EUR 55 billion, which is
EUR 6 billion less than at the beginning of the year.
Private equity market
The year 2011 was very active in the European private equity market for the
first half, and the number of corporate acquisitions was about 600 in the total
value of EUR 45 billion. After summer, the fluctuations of bond and equity
markets clearly reduced activity, and in the third quarter, only 180 corporate
acquisitions were concluded, their total value being a little less than EUR 15
billion.(Source: unquote, Private Equity Barometer).
In the fundraising market, the year 2011 was the poorest year in the past ten
years. By the end of September, only EUR 170 billion of new capital had been
raised worldwide, which is only 25% of the corresponding figure for 2008. The
biggest fundraising market was once more the U.S., even though its share of the
private equity market fell. Investors were interested in emerging markets,
above all Asia and China, and their share of the fundraising market rose
markedly. (Source: Preqin)
Major events in 2011
The Annual General Meeting held on 16 March 2011 decided to approve the
transaction whereby eQ Plc (formerly Amanda Capital Plc) acquired 100% of the
shares in Advium Corporate Finance Ltd and eQ Asset Management Group Ltd as
well as a convertible bond issued by eQ Asset Management Group Ltd and
authorise the Board of Directors to decide on a share issue. On the basis of
the authorisation, the Board of Directors issued on 16 March 2011 altogether 10
302 605 new shares in eQ Plc to the shareholders of Advium and eQ Asset
Management Group as well as the holders of the convertible bond. As a result of
the execution of the share issue and combination agreement, Advium and eQ AMG
have become fully owned subsidiaries of eQ Plc.
After the subscription and registration of the issued shares, the total number
of shares issued by the company was 33 070 351. At its constituent meeting on
16 March 2011, the Board of Directors of eQ Plc appointed Janne Larma CEO of
the company, in accordance with a previous announcement.
In the second quarter of the year, the Board of Directors appointed Janne
Larma, Petter Hoffström, Lauri Lundström and Annamaija Peltonen to the Group's
management team. The Board also decided to introduce three different segments
starting from 1 April 2011, i.e. Asset Management, Corporate Finance and
Investments.
The Amanda V East private equity fund, established and managed by eQ, made its
first closing on 30 June 2011 at the size of EUR 33.0 million. The private
equity fund makes investments in growth and buyout private equity funds, which
make investments in small and midsized unlisted companies in Russia, CIS, CEE
and SEE countries. The fund is eQ's second private equity fund that makes
investments in Eastern Europe. Like its predecessor, it makes investments in
both new private equity funds and acquires their shares from the secondary
market. The fund will continue to raise funds, and the final closing will take
place by 30 June 2012.
The Extraordinary General Meeting of eQ Plc (formerly Amanda Capital Plc) held
on 22 September 2011 decided to change the company name to eQ Plc. The changeof company name was registered with the Trade Register on 10 October 2011.
The Extraordinary General Meeting also decided to consolidate the capital
structure of the company through a directed share issue by offering 390 000 new
shares to the members of the company's Board of Directors, deviating from the
pre-emptive right of present shareholders. After the subscription and
registration of the shares issued, the total number of shares issued by eQ Plc
is 33 460 351. The new shares were registered with the Trade Register on 13
October 2011.
In the last quarter of the year, the Board of Directors appointed Staffan Jåfs
to the Group's management team. From 23 November 2011, the Group's management
team consisted of the following persons: Janne Larma, Lauri Lundström, Staffan
Jåfs and Annamaija Peltonen. Lauri Lundström was appointed substitute for eQ
Plc's CEO from 23 November 2011.
Group net sales and result development
Advium Corporate Finance Ltd and eQ Asset Management Group Ltd, acquired on 16
March 2011, have had an impact on the result development of Group, as the
result of said companies are consolidated with the result of eQ Plc Group from
1 April 2011.
The consolidated net sales totalled EUR 15.8 million (EUR 5.1 million from 1
Jan. to 31 Dec. 2010). Fee and commission income increased from the comparison
period due to the acquisition of Advium Corporate Finance Ltd and eQ Asset
Management Group Ltd. The Group's fee and commission income rose to EUR 9.3
million (EUR 4.0 million). The net investment income also increased from the
comparison period to EUR 6.5 million (EUR 1.1 million), including a write-down
of EUR 0.4 million with result impact. The Group's expenses and depreciation
totalled EUR 8.6 million (EUR 3.3 million). Personnel expenses totalled EUR 4.6
million (EUR 1.3 million) and depreciation was EUR 0.9 million (EUR 0.7
million). Other operating expenses were EUR 3.1 million (EUR 1.2 million).
The Group's operating profit was EUR 7.2 million (EUR 1.8 million). The
increase from the comparison period is due to the increasing income from
investment operations and the result of the acquired companies. The operating
profit of the financial period comprises non-recurring expenses of EUR 0.3
million due to corporate acquisitions. The profit for the financial period was
EUR 4.9 million (EUR 0.8 million).
BUSINESS AREAS
The Board of Directors of eQ Plc decided to introduce three separate segments
from 1 April 2011: Asset Management, Corporate Finance and Investments.
Asset Management
The Asset Management segment was formed in 2011, as the business operations of
eQ Asset Management Group and the private equity asset management operations of
Amanda Advisors Ltd were combined. The combination of the operations in
practice started in late autumn 2011, and from the beginning of 2012, the
private equity asset management operations have become part of eQ Plc's
subsidiary eQ Asset Management Ltd, as a result of the merger of the companies.
The entire asset management segment was reorganised, and the personnel moved to
common premises. In practice, co-operation has been launched in sales, customer
relationship management, product development, and in middle and back office
functions. The change of the parent company name to eQ Plc was registered in
October, and consequently, the entire Asset Management segment uses the eQ
brand, which was revised in December.
The operating environment of the Asset Management segment was exceptionally
difficult in 2011. The major single factor that has influenced the global
capital market has been the debt crisis of the euro zone. The market has not
believed in the ability of political decision-makers to solve the debt problems
of some euro states, mainly in the south of Europe. Even though it was possible
to solve the refinancing needs of states and possibly also banks in a manner
that satisfies the market, there is a risk that heavy savings programmes are
reflected on economic growth and the business preconditions of companies in
coming years. During the first weeks of 2012, financial media have turned their
attention from the debt crisis to the macro-indicators of national economies
and the result outlook of companies, which has led to a positive development in
both the equity and bond market.
It was difficult to sell asset management services to both private individuals
and institutions during the latter part of 2011, as news about the debt crisis
dominated the media. Customers have been very cautious in making new
investments, and the risk levels of positions have been cut down in general.
The assets under the segment's management totalled EUR 3 519 million at the end
of 2011. On 31 December 2011, the assets managed under equity and bond
investments totalled EUR 881 million and within private equity investments, the
assets under management were EUR 2 639 million. Of these assets, EUR 1 147
million was covered by the reporting service.
Net subscriptions in eQ Funds totalled EUR -23 million during the year, and the
assets managed by the funds dropped to EUR 440 million because of the fall in
value. Within eQ Asset Management, the fixed-income fund that clearly gathered
the most net subscriptions was the eQ Emerging Markets Corporate Bond Fund,
which makes investments in corporate loans in emerging markets. Investors were
interested in investments outside the crisis-struck Europe, and on the other
hand, the interest rate level of corporate loans, which was higher than that of
government bonds. In addition, the Fund is the only Finnish fund product that
makes investments in this market.
The mutual fund eQ Emerging Dividend, which makes investments in dividend stock
in emerging markets, was launched in February. The investment strategy arouses
interest among institutional investors, and the fund grew evenly by EUR 23
million during the year despite the difficult market.
The Amanda V East private equity fund, established and managed by eQ, made its
first closing on 30 June 2011 at EUR 33.0 million. The private equity fund
makes investments in growth and buyout private equity funds, which make
investments in small and midsized unlisted companies in Russia, CIS, CEE and
SEE countries. The fund will continue to raise funds and it will be offered to
all customers of eQ Asset Management during the spring of 2012.
Morningstar, which makes international fund management company comparisons,
rated eQ Fund Management Company Ltd the best special equity house in Finland
in 2011, the second time in a row. In the autumn of 2011, eQ Asset Management
Ltd has also shown good results in the asset manager comparison that SFR
research institute conducted among Finnish institutional investors. eQ Asset
Management received a top grade (gold medal) in the comparison, the second year
in a row.
Asset Management Oct. to Dec. 2011 Jan. to Dec. 2011
Net sales EUR 2.2 million EUR 7.6 million
Operating profit EUR 0.5 million EUR 2.2 million
Personnel 44 44
The income statement of eQ Asset Management Group has been consolidated with
the income statement of eQ Group and the Asset Management segment from 1 April
2011.
Corporate Finance
In the Corporate Finance segment, Advium Corporate Finance acts as advisor in
mergers and acquisitions, larger real estate transactions and equity capital
markets.
The year 2011 was relatively challenging for Advium. As a result of the general
economic development and uncertainty, the market slowed down considerably in
the second half of the year. We acted as advisor in six transactions during the
calendar year.
Advium acted as advisor in, for instance, the largest real estate deal in
Finland in 2011, when Sponda Plc bough of Suomi Mutual Life Assurance Company
the Fennia block in the city centre of Helsinki at a debt-free transaction
value of EUR 122 million. We also acted as advisor in deals through which the
Partioaitta trade chain was sold to the Swedish company Fenix Outdoor and the
Finnish company Miratel Oy, which designs nurse call systems, was sold to the
Swiss company Ascom Holding AG, which provides data communication solutions.
At the end of December, the number of personnel at Advium was 11.
It is typical of corporate finance business that success fees have a
considerable impact on invoicing, due to which the result may vary considerably
from quarter to quarter.
Corporate Finance Oct. to Dec. 2011 Jan. to Dec. 2011
Net sales EUR 0.4 million EUR 2.1 million
Operating profit EUR 0.1 million EUR 0.7 million
Personnel 11 11
The income statement Advium Corporate Finance Ltd has been consolidated with
the income statement of eQ Group from 1 April 2011.
Investments
The business operations of the Investments segment consist of private equity
fund investments made from the own balance sheet of eQ Group. Additional
information on the investments of the Group can be found on the company website
at www.eq.fi.
During the financial period, the net income of eQ Plc's Investments segment
totalled EUR 6.5 million (EUR 1.1 million from 1 Jan. to 31 Dec. 2010),
including a write-down of EUR 0.4 million with result impact booked for the
last quarter. At the end of the period, the fair value of the private equity
funds was EUR 42.5 million (EUR 40.6 million). As for private equity
investments, the amount of the remaining investment commitments was EUR 14.7
million (EUR 16.7 million on 31 Dec. 2010). Private equity funds returned EUR
8.3 million and the distribution of profit was EUR 6.8 million. Capital calls
during the year were EUR 6.1 million.
In 2011, the largest exits were
-- Exit of the EQT V Fund from the security service company Securitas Direct,
which generated a cash flow of about EUR 1.7 million to eQ,
-- Exit of PAI IV from Spie, which offers HVAC services, which generated a
cash flow of EUR 2.1 million,
-- Exit of the IK 1997 Fund from Superfos, which manufactures plastic
packaging material, which generated a cash flow of EUR 0.6 million,
-- Exit of the IK 2000 Fund from Idex, a company offering energy services,
which generated a cash flow of EUR 0.3 million,
-- Exit of MB III from Medivire, which offers care and medical services, which
generated a cash flow of EUR 1.8 million.
eQ has made a decision that it will only make new investments in funds managed
by eQ in future.
Investments Oct. to Dec. 2011 Jan. to Dec. 2011
Net sales EUR -0.3 million EUR 6.5 million
Operating profit EUR -0.4 million EUR 6.1 million
Personnel 1 1
Balance sheet
The consolidated balance sheet total was EUR 74.0 million (EUR 51.5 million).
The increase from the comparison period was mainly due to the transaction
concluded on 16 March 2011.
At the end of the period, eQ Plc's shareholders' equity was EUR 69.7 million
(EUR 44.2 million). The shareholders' equity was influenced by the profit for
the financial period, the change in the fair value reserve and the transaction
executed on 16 March 2011, whereby 10 302 605 shares were issued at the price
of EUR 1.59 per share. The shareholders' equity was also influenced by the
consolidation of the company's capital structure through a directed share issue
by offering 390 000 new shares to the members of the company's Board of
Directors, deviating from the pre-emptive right of present shareholders decided
by the Extraordinary General Meeting on 22 September 2011. The subscription
price of the shares was EUR 1.63 per share.
The increase in the reserve for invested unrestricted equity by EUR 17.0
million is due to the share issue related to the transaction and the share
issue directed to the Board of Directors. The changes are specified in detail
in the tables attached to this release.
EUR 0.0 million (EUR 5.8 million) of the debt was interest-bearing short-term
debt. There are no long-term interest-bearing debts. Interest-free long-term
debt amounted to EUR 1.2 million (EUR 0.9 million) and interest-free short-term
debt totalled EUR 3.1 million (EUR 0.4 million). eQ's equity to assets ratio
was 94.1% (85.9%).
Shares and share capital
eQ Plc's number of shares increased as a result of the decision by the Annual
General Meeting, according to which eQ Plc acquired the shares of Advium
Corporate Finance Ltd and eQ Asset Management Group Ltd as well as a
convertible bond issued by eQ Asset Management Group Ltd by issuing 10 302 605
new shares at the price of EUR 1.59 per share. After the subscription and
registration of the issued shares, the total number of shares issued by eQ Plc
was 33 070 351. The increase did not influence the share capital of EUR 11 383
873.
The Extraordinary General Meeting held on 22 September 2011 decided to
consolidate the capital structure of the company through a directed share issue
by offering 390 000 new shares to the members of the company's Board of
Directors, deviating from the pre-emptive right of present shareholders. The
issued shares were subscribed for as follows:
Number of shares:
Georg Ehrnrooth 75 000
Eero Heliövaara 30 000
Ole Johansson 150 000
Jussi Seppälä 75 000
Catharina Stackelberg-Hammarén 60 000
The subscription price of the shares, EUR 1.63 per share, was entered in the
reserve for invested unrestricted equity. After the subscription and
registration of the issued shares, the total number of shares issued by eQ Plc
is 33 460 351. The increase did not influence the share capital of EUR 11 383
873. The new shares were registered with the Trade Register on 13 October 2011.
Own shares
On 30 June 2011, eQ Plc acquired 163 153 own shares at the price of EUR 1 per
share. The transaction is related to the corporate acquisition carried out on
16 March 2011, in which eQ Plc acquired the share capital of eQ Asset
Management Group Ltd and Advium Corporate Finance Ltd. As a person who was
party in the transaction terminated his employment, eQ Plc had the right, in
accordance with the terms of the transaction, to repurchase shares given as
payment. The right to repurchase own shares was granted by the Annual General
Meeting held on 14 April 2010 and the right remained valid for 18 months from
the decision date. At the end of the financial year company held 163 153 own
shares that corresponds to 0,5% of the total shares.
During the comparison period (31 December 2010), eQ Plc held no own shares at
the end of the period.
Shareholders
The ten largest shareholders as at 31 December 2011
Share of shares and votes, %
Veikko Laine Oy 10.92
Fennogens Investments S.A. 10.91
Berling Capital Oy 10.65
Ulkomarkkinat Oy 10.02
Chilla Capital S.A. 7.97
Oy Hermitage Ab 7.07
Mandatum Life Insurance Company 6.14
Oy Cevante Ab 4.24
Linnalex Ab 2.63
Louko Antti 2.24
On 31 December 2011, eQ Plc had 3 247 shareholders.
Option scheme 2010
During the financial period, the Board of Directors of the company decided to
allocate 450 000 options from the Option Scheme 2010 to Janne Larma, CEO. At
the end of the financial period, altogether 700 000 options had been allocated.
Based on the authorisation received by the Board on 14 April 2010, there were 1
300 000 unallocated options at the end of the period. During the financial
period, 200 000 options from the option scheme 2010 were returned to eQ Plc.
The terms and conditions of the option scheme have been published in a stock
exchange release of 18 August 2010, and they can be found in their entirety on
the company website at www.eq.fi.
Decisions by the Annual General Meeting
eQ Plc's (formerly Amanda Capital Plc) Annual General Meeting (AGM), held on
Wednesday 16 March 2011 in Helsinki, decided upon the following:
Confirmation of the financial statements:
eQ Plc's AGM confirmed the financial statements of the company, which included
the consolidated financial statements, Report of the Board of Directors and
auditors' report for the year 2010.
Decision in respect of the result shown on the balance sheet:
The proposal by the Board of Directors not to distribute any dividend and to
enter the parent company's result for the financial period in the profit and
loss account was confirmed.
Discharging the Board of Directors, CEO and the substitute for the CEO from
liability:
The AGM decided to discharge the members of the Board of Directors and the CEOs
from liability.
Number of Board members, election of Board members and remuneration of Board
members:
In accordance with the decision of the AGM, five members are elected to the
Board. Consequently, Ole Johansson, Georg Ehrnrooth, Eero Heliövaara, Jussi
Seppälä and Catharina Stackelberg-Hammarén were elected to the Board for a term
that will end at the close of the following Annual General Meeting. The AGM
decided that the members of the Board would receive remuneration as follows:
the Chairman of the Board will receive EUR 3 300 and the Board members EUR 1
800 per month. Travel and lodging expenses will be compensated in accordance
with the company's expense policy. The Board elected Ole Johansson Chairman of
the Board at its constituent meeting held immediately after the AGM.
Auditors:
Ernst & Young Oy, a firm of authorized public accountants, will continue as
auditor of the company, and Ulla Nykky, APA, will act as auditor with main
responsibility. The meeting decided to compensate the auditors based on
invoice.
Approval of a corporate transaction and authorising the Board of Directors to
decide on the issuance of shares:
The AGM decided to approve the transaction whereby eQ Plc acquired all shares
in Advium Corporate Finance Ltd and eQ Asset Management Group Ltd as well as
the convertible bond issues by eQ Asset Management Group Ltd, and authorised
the Board of Directors to decide on a share issue comprising no more than 10
302 605 new shares. The subscription price of a share is EUR 1.41.
The authorisation includes the right of the Board of Directors to decide on all
other terms of the share issue, including the right to decide whether the
subscription price is booked in full or in part in the reserve for invested
unrestricted equity or as an increase of the share capital, and it includes the
right to decide on a directed issue of shares. The authorisation will be used
for carrying out a corporate transaction. The authorisation does not replace
earlier authorisations, which will remain in force, and the new authorisation
is valid until 31 July 2011.
Amendment to the company's field of activity:
The meeting decided to amend the field of activity as follows: The company's
field of activity is to own and manage shares, other securities and real estate
as well as to engage in securities trading and other investment operations. The
company takes care of the centralised administrative duties of the investment
firms, fund management companies and other companies belonging to the Group.
Decisions by the Extraordinary General Meeting
eQ Plc's Extraordinary General Meeting, held on Thursday 22 September 2011 in
Helsinki, decided upon the following:
Changing the company name as follows:
“1 § The company name is eQ Oyj in Finnish, eQ Abp in Swedish and eQ Plc in
English. The domicile of the company is Helsinki.”
The EGM also decided to consolidate the capital structure of the company by
offering 390 000 new shares to the members of the Board of Directors deviating
from the present shareholders' pre-emptive right. The issued shares were
subscribed for as follows:
Number of shares
Georg Ehrnrooth 75 000
Eero Heliövaara 30 000
Ole Johansson 150 000
Jussi Seppälä 75 000
Catharina Stackelberg-Hammarén 60 000
The subscription price, EUR 1.63 per share, shall be paid by 30 September 2011
and will be entered in the reserve for invested unrestricted equity.
Personnel and organisation
At the end of the financial period, the number of personnel was 62. The Asset
Management segment had 44 employees, the Corporate Finance segment 11 employees
and the Investments segment one employee. Group administration had six
employees. The personnel of the Asset Management segment comprises ten persons
with fixed-term employment.
The overall salaries paid to the employees of eQ Group during the financial
period totalled EUR 4.6 million (EUR 1.3 million). This sum comprises the
salaries of Advium Corporate Finance Ltd and eQ Asset Management Group from 1
April to 31 December and the salaries of eQ Plc's and Amanda Advisors Ltd's
personnel from 1 January to 31 December 2011.
Major risks and short-term uncertainties
The result of the Asset Management segment depends on the development of the
assets under management, which is highly dependent of the development of the
capital market. On the other hand, the management fees of private equity funds
are based on long-term agreements that produce a stable cash flow.
Success fees, which depend on the number of mergers and acquisitions and real
estate transactions, have a considerable impact on the result of the Corporate
Finance segment. These vary considerably within one year and are dependent on
economic trends.
The risks associated with eQ Group's investment operations are the market risk,
currency risk and liquidity risk. Among these, the market risk has the greatest
impact on investments. The company's own investments are well diversified,
which means that the impact of one investment in a company, made by one
individual fund, on the yield of the investments is often small.
Corporate acquisitions
On 16 March 2011, eQ Plc acquired 100 % of the shares in Advium Corporate
Finance Ltd and eQ Asset Management Group Ltd and a convertible bond issued by
eQ Asset Management Group Ltd. The combined entity is a strong Finnish company
that specialises in the management of private equity and alternative
investments, asset management and corporate finance operations. The value of
the transaction totalled EUR 16.6 million, and it was paid by issuing 10 302
605 new shares in eQ Plc. Of the shares, 5 854 563 were allocated to the
shareholders of Advium Corporate Finance Ltd, and their purchase price was EUR
9.4 million. 3 903 042 shares were allocated to the shareholders of eQ Asset
Management Group Ltd, their purchase price being EUR 6.3 million. 545 000
shares were issued for acquiring the convertible bond issued by eQ Asset
Management Group Ltd, the purchase price being EUR 0.9 million. The purchase
price comprises a transfer tax of EUR 0.2 million.
The purchase price exceeded Advium Corporate Finance Ltd's net assets by EUR
9.3 million and the purchase price of eQ Asset Management Group Ltd exceeded
the net assets by EUR 5.2 million. As for Advium, EUR 2.0 million was allocated
to intangible assets by calculating a fair value for the Advium brand. For eQ
Asset Management Group Ltd's part, EUR 2.5 million was allocated to intangible
assets by calculating fair values for the concluded customer agreements and the
brand. A deferred tax liability allocated to these assets was recorded in the
amount of EUR 0.1 million. The remaining goodwill for Advium is EUR 7.3 million
and for eQ Asset Management Group Ltd EUR 2.9 million. The goodwill is based on
the personnel and its expertise and offers eQ the opportunity to expand its
operations to new business areas, which increases its customer base and product
selection.
Had Advium Corporate Finance and eQ Asset Management Group been consolidated
with eQ Group at the beginning of 2011, the Group's net sales had been EUR 1.6
million higher during the period under review and the result EUR 0 million
higher.
Acquired net assets and goodwill EUR million):
Advium eQ Asset Management
Cash and investments 0.5 1.3
Tangible assets 0.1 0.1
Intangible assets 0.0 0.7
Receivables 0.5 0.8
Financial liabilities -0.6 -1.4
Other liabilities -0.4 -0.4
Acquired net assets 0.1 1.0
Acquisition cost 9.4 6.3
Unallocated purchase price 9.3 5.3
Fair value of the brand 2.0 2.0
Customer agreements 0.0 0.5
Deferred tax 0.1
Goodwill 7.3 2.9
At 31 May the Group increased its holding in the investment firm Active Hedge
Advisors AHA Oy, which has offered advisory services to eQ Asset Management in
connection with the investment operations of the eQ Active Hedge Fund, from 50
to 100%. This transaction has no impact on the portfolio management of the eQ
Active Hedge Fund.
Acquired net assets and goodwill (EUR 1 000):
Cash and investments 43.7
Other liabilities 1.1
Acquired net assets 42.6
Acquisition cost 113.1
Unallocated purchase price 70.5
Goodwill 70.5
Proposal for the distribution of profit
The distributable means of the parent company on 31 December 2011 totalled EUR
51.4 million. The Board of Directors proposes to the Annual General Meeting
that a dividend of EUR 0.12 per share be paid out on the record date 16 March
2012 to shares held by others than the company. Corresponding dividend is total
of EUR 3 995 663,76. The Board proposes that the dividend payment date is 26
March 2012.
After the end of the financial period, no essential changes have taken place in
the financial position of the company. The Board of Directors feel that the
proposed distribution of profit does not endanger the liquidity of the company.
Events after the reporting period
Group Legal Counsel Juha Surve was appointed member of the management team on
21 February 2012. As of 21 February 2012, the Group's management team consists
of the following persons: Janne Larma (chairman), Staffan Jåfs, Lauri
Lundström, Annamaija Peltonen and Juha Surve.
Outlook
The trust of the market has improved markedly at the beginning of the year.
Investors have increasingly turned their focus to analysing the profitability
of companies, instead of the debt crises of the euro zone. Even though trust in
the future has improved, it is clear that the crisis will slow down the growth
of national economies in the years to come. Changes in the assets under the
Group's management and the development of the fee and commission income
correlate with the development of the capital market.
eQ Plc
Board of Directors
Tables
Principles for drawing up the report
This financial statements release has been prepared in accordance with the IAS
34 Interim Financial Reporting standard. From the beginning of the financial
period, the company has adopted certain new or revised IFRS standards and IFRIC
interpretations in the manner described in the financial statements for the
year 2010. The introduction of these new and revised standards has not,
however, yet in practice had any impact on the reported figures. For other
parts, eQ has applied the same accounting principles as in the financial
statements for the year 2010. The calculation principles and formulas of the
key ratios are unaltered, and they have been presented in the financial
statements for 2010.
The financial statement figures presented in this release are based on the
company's audited financial statements. The auditors' report has been issued on
21 February 2012.
CONSOLIDATED INCOME STATEMENT, EUR 1 000
10-12/11 10-12/10 1-12/11 1-12/10
NET SALES
Net investment income -337 43 6 482 1 136
Fee and commission income 2 511 951 9 327 3 972
Total 2 174 994 15 808 5 108
Depreciation -237 -171 -865 -710
Operating expenses -2 257 -591 -7 709 -2 570
Operating profit -321 232 7 234 1 829
Financial income and expenses 61 -196 -302 -623
Profit before taxes -260 35 6 932 1 205
Income taxes -20 -22 -1 988 -371
Minority interests - - -3 -
PROFIT (LOSS) FOR THE PERIOD -280 13 4 942 834
Other comprehensive income:
Available-for-sale financial
assets, net -760 1 045 3 432 3 407
TOTAL COMPREHENSIVE INCOME FOR THE -1 040 1 058 8 374 4 241
PERIOD
Undiluted earnings per share, EUR -0,01 0,001 0,15 0,04
Diluted earnings per share, EUR -0,01 0,001 0,16 0,04
Earnings per average share,
EUR *) -0,01 0,001 0,16 0,04
*) Weighted average number of shares outstanding during the period.
CONSOLIDATED BALANCE SHEET, EUR 1 000
31.12.2011 31.12.2010
ASSETS
LONG-TERM ASSETS
Tangible fixed assets 151 50
Intangible assets 19 318 4 574
Investments available for sale
Financial securities 49 -
Private equity investments 42 539 40 625
Deferred tax assets 79 1 684
CURRENT ASSETS
Other assets 1 056 217
Accrued income and advance payments 242 224
Investments available for sale
Financial securities 45 -
Cash 10 540 4 112
TOTAL ASSETS 74 020 51 486
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY 69 684 44 229
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liability 1 230 946
CURRENT LIABILITIES
Accounts payable and other liabilities 3 106 510
Financial liabilities - 5 800
TOTAL LIABILITIES 4 336 7 256
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 74 020 51 486
CONSOLIDATED CASH FLOW STATEMENT, EUR 1 000
2011 2010
CASH FLOW FROM OPERATIONS
Operating profit 7 234 1 829
Depreciation and write-downs 865 710
Operations without cash payment 102 -
Investments available for sale,
change 2 643 -4 752
Change in working capital
Business receivables, increase (-)
decrease (+) -809 39
Interest-free debt, increase (+)
decrease (-) 1 525 -130
Interest-bearing debt, increase (+)
decrease (-) -5 800 2 800
Total change in working capital -5 083 2 709
Cash flow from operations before
financial items and taxes 5 761 496
Interests received 52 10
Interests paid -354 -633
Taxes -336 -371
CASH FLOW FROM OPERATIONS 5 122 -498
CASH FLOW FROM INVESTMENTS
Investing activities in investments 669 15
CASH FLOW FROM INVESTMENTS 669 15
CASH FLOW FROM FINANCING
Income from share issue 636 -
Purchase of own shares 0 -31
Sale of own shares - 1 085
Other changes - -34
CASH FLOW FROM FINANCING 636 1 020
INCREASE/DECREASE IN LIQUID ASSETS 6 428 537
Liquid assets on 1 Jan. 4 112 3 575
Liquid assets on 31 Dec. 10 540 4 112
Liquid assets contain cash and bank deposits.
CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY, EUR 1 000
Share Reserve for Other Fair Retained Total
capital invested reserve value earnings
unrestricted s reserve
equity
Shareholders' 11 384 29 614 -1 769 -7 701 7 439 38 968
equity on
1 Jan. 2010
Comprehensive 881 2 526 3 407
income
Profit (loss) 834 834
for the
period
--------------------------------------------------------------------------------
Total 881 3 360 4 241
comprehensiv
e income
Purchase of 2 2
own shares
Sale of own 1 766 -681 1 085
shares
Other changes -67 -67
--------------------------------------------------------------------------------
Shareholders' 11 384 29 614 0 -6 819 10 051 44 229
equity on
31 Dec. 2010
Shareholders' 11 384 29 614 0 -6 819 10 051 44 229
equity on
1 Jan. 2011
Comprehensive 6 274 -2 841 3 432
income
Profit (loss) 4 942 4 942
for the
period
--------------------------------------------------------------------------------
Total 6 274 2 101 8 374
comprehensiv
e income
Purchase of 0 0
own shares
Share issue 17 017 17 017
Other changes 64 64
--------------------------------------------------------------------------------
Shareholders' 11 384 46 631 0 -546 12 215 69 684
equity on
31 Dec. 2011
SEGMENT INFORMATION, EUR 1 000
1-12/2011 Asset Corporat Group,
e
Managemen Finance Investment Other Elimination total
t s s
External revenue 7 226 2 101 6 482 15 808
Inter-segment 400 -400
revenue
-------------------------------------------------------------
Net sales 7 626 2 101 6 482 -400 15 808
Operating profit 2 179 707 6 082 -1 734 7 234
Profit (loss) 2 179 707 6 082 -4 026 4 942
for the period
Long-term
assets 10 063 9 384 42 618 71 62 137
The item presented in the operating profit line under Other
comprises the undivided personnel, administration and other expenses
related to Group administration and the non-recurring expenses related
to the acquisition of eQ and Advium.
The legal and consulting expenses in connection with the acquisitions
total EUR 276 000 and audit services EUR 42 000.
In addition to the above, undivided financial income and expenses as
well as taxes have been presented in line Profit (loss) for the period.
The eliminations contain the elimination of a Group-internal management
fee for eQ Plc's own investments.
CONSOLIDATED KEY RATIOS
31 Dec 2011 31 Dec 2010
Profit (loss) for the period (EUR 1 000) 4 942 834
Undiluted earnings per share, EUR 0,15 0,04
Diluted earnings per share, EUR 0,16 0,04
Earnings per average share, EUR *) 0,16 0,04
Equity per share, EUR 2,08 1,94
Equity per average share, EUR *) 2,25 1,99
Return on investment, ROI % p.a. 8,8 3,2
Return on equity, ROE % p.a. 8,7 2,0
Equity to assets ratio, % 94,1 85,9
Share price at the end of period, EUR 1,56 1,73
Number of personnel at the end of period 62 13
Private equity investments to equity
ratio, % 61,0 91,8
Private equity investments and
investment commitments to equityratio, % 82,1 129,6
*) Weighted average number of shares outstanding during the period.
CHANGE IN BOOK VALUE OF PRIVATE EQUITY FUNDS, EUR 1 000
Book value of private equity funds on 1 Jan. 2011 40 625
Draw-downs to private equity funds 6 083
Return of capital from private equity funds -8 326
Changes in the value of private equity funds
in fair value reserve 4 510
Write-down -352
Book value of private equity funds on 31 Dec. 2011 42 539
REMAINING COMMITMENTS
On 31 December 2011, eQ Plc's remaining commitments in private
equity funds stood at EUR 14.7 million (EUR 16.7 million on 31 Dec. 2010).
Other liabilities totaled EUR 1.5 million at the end of the period
under review (EUR 0.2 on 31 Dec. 2010).
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