2012-08-16 07:15:00 CEST
2012-08-16 07:15:07 CEST
REGULATED INFORMATION
eQ Oyj - Interim report (Q1 and Q3)
eQ PLC’S INTERIM REPORT 1 JANUARY TO 30 JUNE 2012
eQ PLC STOCK EXCHANGE RELEASE
16 August 2012 at 8:15 a.m.
eQ PLC'S INTERIM REPORT 1 JANUARY TO 30 JUNE 2012
April to June 2012 in brief
-- In the second quarter, the fee and commission income totalled EUR 2.5
million (EUR 3.3 million from 1 April to 30 June 2011).
-- The Group's net investment income was EUR 0.0 million (EUR 3.3 million).
-- The Group's operating profit was EUR 0.4 million (EUR 3.9 million).
-- Earnings per share were EUR 0.01 (EUR 0.08).
January to June 2012 in brief
-- During the period under review, the fee and commission income totalled EUR
5.0 million (EUR 4.2 million from 1 Jan. to 30 June 2011).
-- The Group's net investment income was EUR 1.0 million (EUR 3.8 million).
-- Operating profit was EUR 1.3 million (EUR 4.3 million).
-- Earnings per share were EUR 0.03 (EUR 0.09).
-- The interim report 1 January to 30 June 2012 comprises eQ Asset Management
Group and Advium Corporate Finance Ltd from 1 April 2011 as comparison
information. The comparison figures of the interim report are, therefore,
not comparable.
Key ratios 4-6/2012 4-6/2011 1-6/2012 1-6/2011 1-12/2011
Net sales, EUR million 2,5 6,6 6,0 8,0 15,8
Operating profit,
EUR million 0,4 3,9 1,3 4,3 7,2
Profit before taxes,
EUR million 0,4 3,7 1,3 4,0 6,9
Profit for the period,
EUR million 0,2 2,8 1,0 2,9 4,9
Earnings per share, EUR 0,01 0,08 0,03 0,09 0,15
Equity per share, EUR 2,05 2,05 2,05 2,05 2,08
Equity to assets ratio,% 95.1% 90.3% 95.1% 90.3% 94.1%
Interest-bearing
liabilities, EUR million 0,0 3,2 0,0 3,2 0,0
Janne Larma, CEO
The second quarter of the year was once more a very turbulent period. The
prolonged and at times markedly intensified crisis in the eurozone contributed
to a fall in share prices. At the same time, investors were again trying to
find safe havens, and the interest rates of bonds issued by solid states
continued to fall. The 12-month Euribor rate also fell to a record-low level.
In this operating environment, the business operations of both the Asset
Management and Corporate Finance segments were challenging. Both segments
remained profitable, however. The operating profit of the Asset Management
segment was EUR 0.9 million and that of the Corporate Finance segment EUR 0.2
million during the period under review, while the operating profit of the
Investments segment was EUR 0.8 million. The capital distributions from
investments totalled EUR 1.9 million and the distribution of profit was EUR 1.0
million. Capital calls totalled EUR 2.0 million. In addition, private equity
funds have announced several exits that are estimated to generate cash flow of
6.1 million during rest of the year.
The Group's balance sheet continues to be in excellent shape. At the end of
June, there were no interest-bearing liabilities in the balance sheet, and
liquid assets totalled EUR 6.0 million. The balance sheet value of private
equity investments was EUR 45.1 million.
The growth of the equity and fixed-income funds managed by eQ has been slower
than expected during the past few years. The main reasons for this have been
the high volatility of the equity market and the uncertain economic situation.
Our funds market share has remained approximately at the same level, however.
In order to be able to grow faster, we are planning the launch of new products
and inorganic growth. Our strong balance sheet gives us good opportunities for
this. I believe that by growing we will be a better partner for our clients and
a more interesting employer for our personnel.
Outlook
The debt crisis in Europe continues and creates considerable uncertainty in the
capital market. On the other hand, many of the Q2 reports of companies have
provided a positive surprise, which increases the trust in the market. We
believe that the market will continue to be volatile and that the capital
market will develop unevenly. The 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 interim report for the period 1 January to 30 June 2012 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: NASDAQ OMX 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 3.6 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 INTERIM REPORT 1 JANUARY TO 30 JUNE 2012
Result of operations from 1 April to 30 June 2012
-- The Group's fee and commission income totalled EUR 2.5 million (EUR 3.3
million).
-- The Group's net investment income was EUR 0.0 million (EUR 3.3 million).
-- The Group's operating profit was EUR 0.4 million (EUR 3.9 million).
-- Consolidated earnings after taxes were EUR 0.2 million (EUR 2.8 million).
-- Earnings per share were EUR 0.01 (EUR 0.08).
Result of operations and financial position from 1 January to 30 June 2012
-- The Group's fee and commission income totalled EUR 5.0 million (EUR 4.2
million from 1 Jan. to 30 June 2011).
-- The Group's net investment income fell to EUR 1.0 million (EUR 3.8
million).
-- The Group's operating profit was EUR 1.3 million (EUR 4.3 million).
-- Consolidated earnings after taxes were EUR 1.0 million (EUR 2.9 million).
-- Earnings per share were EUR 0.03 (EUR 0.09).
-- Equity per share was EUR 2.05 (EUR 2.05).
-- Equity to assets ratio was 95.1% (90.3%).
-- The interim report 1 January to 30 June 2012 comprises eQ Asset Management
Group and Advium Corporate Finance Ltd from 1 April 2011 as comparison
information. The comparison figures of the interim report are, therefore,
not comparable.
Financial environment
Equity market
The first months of 2012 were rather positive for the capital market. The
European Central Bank allocated a considerable amount of new capital to
European banks round the turn of the year, which made it easier for at least
the banks that suffer from solidity problems to manage their obligations. The
financing package for Greece in the early spring of 2012 was also completed
with help from international creditors, but based on the results of the first
parliamentary election in Greece in the spring, it was impossible to build a
government that would bind itself to decisions on savings. In late spring, the
capital market was also worried about the economic situation of Spain, and the
situation of above all Spanish banks has been alarming. These factors were
reflected on international equity and bond markets, which showed a strongly
negative development in April and May, compared with the good beginning of the
year. Above all fringe areas like the Finnish equity market plummeted.
A new election was held in Greece in June, and the country finally managed to
build a functioning government, which somewhat calmed down the market and
creditors. The ECB and euro states worked intensively in July in order to
stabilise the situation in Spain as well. The national economies of the US and
Asian countries have, however, grown during the first half of the year, and
company results have remained relatively good. The results of European
companies have also been reasonably good compared with expectations, and the
number of result warnings has not exceeded expectations. Nokia's situation
continues to be challenging, and the company has issued two result warnings in
2012 and told about extensive plans of cutting down the number of personnel and
expenses.
After January and February, the Finnish equity market started to fall rapidly.
At the end of June, the HEX Cap Index was in practice at the same level (+
0.2%) as at the beginning of the year, which means that the rapid increase in
valuations that took place in the first months of the year had melted away. The
positive trend in other stock exchanges in Western Europe also turned to a
fall, and the Stoxx 600 Index only rose by 5.2 per cent in the first half of
the year. The change in the MSCI World (EUR) Index, which describes equities
globally, was slightly positive (5.2%), and above all the US equities market
rose briskly (S&P 500 (EUR) 12.2%). The movements in emerging markets were once
again more rapid than in other markets, and after the fall experienced in late
spring, the change in the MSCI EM Total Return Net (EUR) Index remained at
6.8%. At the end of June and beginning of July, the trust of investors in the
ability of the euro countries and other actors to find concrete ways of
controlling the debt crisis increased.
Bond market
The bond market developed strongly in the first quarter of 2012. The three-year
financing that the European Central Bank offered to banks in the eurozone in
December and at the end of February cut down the risk premiums of the European
problem states. The impact died away gradually, however, and the returns in the
second quarter were much poorer than in the first quarter. Concerns for above
all Spain rose once more to the surface, and not even the successful debt
arrangement for Greece could turn the market sentiment for the better. In June,
the 10-year Spanish government bond rate rose above 7 per cent, which has been
regarded as the critical level, as the market feared that Spanish banks would
need additional capital. The EU summit held at the end of June managed,
however, to once more momentarily turn down interest rates in the problem
countries.
The average return of bond investments in Europe was 4.3% during the first half
of the year. The returns of corporate loans were especially good. The best
returns came from high yield corporate loans with a low credit rating, about
12%. Even corporate loans with a high credit rating gave a good return of
approximately 5.5%.
Finnish market for mutual funds
The assets managed by mutual funds operating in the Finnish market started to
rise in the first months of the year, and the net subscriptions during the
first half of the year totalled EUR 1.7 billion. The total assets under
management by mutual funds rose to about EUR 59 billion, even though the
corresponding figure at the end of March had already been EUR 60 billion (EUR
55 billion on 31 December 2011). The increase was due to above all the positive
development of the equity market in the first months of the year. A lot of
assets were transferred from money market funds to the equity market in the
first quarter. In the second quarter the movement was opposite when investors
decreased their risks and funds transferred from equity funds to fixed income
funds.
Private equity and hedge market
The fall in the European private equity market, which began in March, continued
in the second quarter. The number of investments was 202, with a value of EUR
13.7 billion. Compared with the first quarter, the fall in volume was 8 per
cent, while the value of the transactions increased by 17 per cent, as large
corporate acquisitions (more than EUR 1 billion) drove the market. Based on
investment stage, the most popular transaction type was buyouts, which were
made in the value of EUR 11.6 billion, representing 85 per cent of all
investments. Growth capital investments were made in the value of EUR 2
billion, which represents 14 per cent of the total volume. The prolonged
difficulties in getting financing for the early-stage investment market
continued, and new investments were only made in the value of EUR 100 million,
i.e. less than one per cent of the total volume.
Geographically, the UK continued to be the most active private equity market in
Europe. Investments in the German-speaking area (DACH) were six-fold compared
with the first quarter, and the value of the investments increased to EUR 3.2
billion. The debt crisis that Mediterranean countries suffer from could also be
seen in the private equity market, and there were only 11 new investments.
(Source: unquote Private Equity barometer)
Based on information from May, the total assets of hedge funds were USD 1.75
trillion (source: Eurekahedge). The figure is in practice the same as at the
end of March. Since the beginning of the year, about 350 new funds have been
launched and most of the new capital has been allocated to macro funds, equity
funds and relative value funds, whereas the capital in multi-strategy and
distressed debt funds decreased. The total capital invested in macro funds
exceeded for the first time USD 150 billion.
Major events during the period under review
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.
eQ Plc's Annual General Meeting was held on 13 March 2012. The decisions of AGM
are presented below in a separate chapter.
The eQ Emerging Markets Local Currency Credit fund was launched on 21 March
2012. The non-UCITS fund makes investments in loans issued by solid companies
operating in emerging markets in local currencies. The fund is the first
Finnish fund that makes investments in emerging market corporate loans in local
currencies.
The private equity fund Amanda V East, managed by eQ, held its second closing
on 18 May 2012 in the size of EUR 40.3 million. The fund will continue to raise
funds, and the final closing will take place by 31 December 2012.
Group net sales and result development
The comparison information presented in the interim report is not comparable,
as Advium Corporate Finance Ltd and eQ Asset Management Group Ltd, acquired on
16 March 2011, have been consolidated with the result of eQ Plc Group from 1
April 2011.
The consolidated net sales totalled EUR 6.0 million (EUR 8.0 million from 1
Jan. to 30 June 2011). 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 5.0
million (EUR 4.2 million). On the other hand, the net investment income fell
from the comparison period to EUR 1.0 million (EUR 3.8 million). The Group's
expenses and depreciation totalled EUR 4.7 million (EUR 3.7 million). Personnel
expenses totalled EUR 2.5 million (EUR 1.9 million) and depreciation was EUR
0.6 million (EUR 0.4 million). Other operating expenses were EUR 1.6 million
(EUR 1.4 million).
The Group's operating profit was EUR 1.3 million (EUR 4.3 million). The fall
from the comparison period is above all due to the decreasing income from
investment operations. The profit for the period under review was EUR 1.0
million (EUR 2.9 million).
Business Areas
Asset Management
The operating environment of the Asset Management segment has fluctuated during
the first half of 2012. Attention shifted from the debt crisis of the eurozone
to the macro-economic outlook of the market and the fundamentals of the
investment objects during the first months of the year, but mainly due to the
political crisis in Greece, the debt situation of the Spanish state and the
poorer solidity of Spanish banks, considerable nervousness returned to both the
equity and bond market in April and May. In June, the new election in Greece
and the measures taken by the euro countries calmed down the market somewhat,
but we cannot yet see any clear solution to the debt crisis or an elimination
of its impacts on the capital market.
It became momentarily easier to sell asset management services to both
individuals and institutions at the beginning of 2012, which could also be seen
in the general increase of the risk willingness of investors. As the crisis in
Greece culminated once more later in spring, and above all the exceptionally
strong plummet of the Finnish equity market in April and May, together with
Nokia's profitability problems, almost totally wiped out the willingness of
domestic investors to make new investments. In June, institutional investors
were especially cautious when making new investments due to the summer holiday
period, bearing the experiences of 2011 in mind. This was clearly reflected on
the new sales of the second quarter. The assets under the segment's management
totalled EUR 3 572 million at the end of June (EUR 3 829 million on 30 June
2011). On 30 June 2012, the assets managed under equity and bond investments
totalled EUR 938 million (EUR 1 069 million) and within private equity
investments, the assets under management were EUR 2 634 million (EUR 2 760
million). Of these assets, EUR 1 101 million (EUR 1 135 million) was covered by
the reporting service.
Net subscriptions in eQ Funds totalled EUR 23 million during the period, and
the assets managed by the funds totalled EUR 485 million at the end of June
(EUR 544 million on 30 June 2011). Within eQ Asset Management, the fund that
clearly gathered the most net subscriptions was eQ Emerging Markets Dividend,
which makes investments in dividend stock in emerging markets. At the end of
the quarter, the fund's assets totalled about EUR 45 million after a little
more than 15 months of operation.
A new fixed-income fund called eQ Emerging Market Local Currency Credit was
launched in March. It follows an entirely new investment strategy in Finland.
The fund makes investments in emerging market corporate loans in local
currencies. This means that the fund has a higher yield expectation than, e.g.
the eQ Emerging Markets Corporate Bond fund, which makes investments in
euro-denominated equities.
In the past few months, the portfolio management organisation of eQ Asset
Management has managed to assess changes in the market relatively well and
weigh the right asset classes and sectors. The pace of allocation work has been
speeded up in the spring, and we have made changes in allocations more easily
than before, but with smaller shares. The aim of this has been to better adjust
operations to the exceptionally strong external challenges that the market is
faced with at the moment. We have also informed our clients of the changes in
our views and the reasons for them more efficiently than before.
The Amanda V East private equity fund, managed by eQ, continued active
fundraising during the period under review. The fund held its second closing on
18 May 2012 in the size of EUR 40.3 million. The fund will continue to raise
funds, and the final closing will take place by 31 December 2012. The fund has
attracted a lot of interest among new clients as well. The 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 number of personnel in the Asset Management segment was 44 at the end of
June.
Asset Management 4-6/2012 4-6/2011 1-6/2012 1-6/2011 1-12/2011
Net sales,
EUR million 2.1 2.3 4.2 3.3 7.6
Operating profit,
EUR million 0.5 0.6 0.9 1.0 2.2
Personnel 44 49 44 49 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 high volatility of the equity market, the considerable increase of the debt
margins of companies and the debt crisis in the eurozone have had a negative
impact on the M&A and real estate market. The increasing uncertainty continues
to keep M&A and real estate transaction processes rather long.
In the second quarter of the year, Advium acted as advisor in three
transactions. In April, Advium acted as advisor as Uponor sold Hewing GmbH to
Retting and when Vaahto Group made a directed issue. In June, Advium acted as
advisor for Etera in the sale of a real estate owned by the Seinäjoki regional
authority.
The number of personnel at Advium was 12 at the end of the period under review.
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 4-6/2012 4-6/2011 1-6/2012 1-6/2011 1-12/2011
Net sales,
EUR million 0.5 1.1 1.0 1.1 2.1
Operating profit,
EUR million 0.2 0.6 0.2 0.6 0.7
Personnel 12 13 12 13 11
The income statement Advium Corporate Finance Ltd has been consolidated with
the income statement of eQ Group and Corporate Finance segment 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 period under review, the net income of eQ Plc's Investments segment
totalled EUR 1.0 million (EUR 3.8 million from 1 Jan. to 30 June 2011). At the
end of the period, the fair value of the private equity funds was EUR 45.1
million (EUR 43.9 million on 30 June 2011). As for private equity investments,
the amount of the remaining investment commitments was EUR 12.8 million (EUR
17.4 million). The investment objects returned capital in the amount of EUR 1.9
million (EUR 5.6 million) and distributed EUR 1.0 million (EUR 3.8 million)
during the period under review.
The largest exits in the second quarter of 2012 were the exit of the IK 2000
Fund from the Norwegian retail trade chain Europris A/S and the final exit of
the PAI IV Fund from Chr.Hansen. Europris was sold to the private equity
investor Nordic Capital and the exit generated a cash flow of about EUR 0.3
million for eQ. The final exit of the PAI IV Fund from Chr.Hansen to Novo A/S
generated a cash flow of approximately EUR 0.6 million for eQ. Chr.Hansen
develops bioscience ingredients for the food, health and animal health sector.
The capital calls of the funds totalled EUR 2.0 million (EUR 3.0 million)
during the period under review.
Investments 4-6/2012 4-6/2011 1-6/2012 1-6/2011 1-12/2011
Net sales,
EUR million 0.0 3.3 1.0 3.8 6.5
Operating profit,
EUR million -0.1 3.2 0.8 3.6 6.1
Personnel 1 1 1 1 1
eQ has made a decision that it will only make new investments in funds managed
by eQ in future.
Balance sheet
The consolidated balance sheet total was EUR 72.0 million (EUR 75.1 million on
30 June 2011). At the end of the period, eQ Plc's shareholders' equity was EUR
68.5 million (EUR 67.8 million). During the period, the shareholders' equity
was influenced by the profit for the period of EUR 1.0 million, the change in
the fair value reserve of EUR 1.8 million and the dividend payout of EUR -4.0
million. The changes are specified in detail in the tables attached to this
release.
The financial situation of the Group remained strong during the period under
review. At the end of the period, the cash in hand totalled EUR 6.0 million
(EUR 6.8 million). In order to safeguard the availability of financing, the
Group has access to a credit facility of EUR 10.0 million. At the end of the
period, the Group had no interest-bearing liabilities. At the end of the
comparison period on 30 June 2011, the amount of interest-bearing long-term
debt was EUR 3.2 million. At the end of the period, interest-free long-term
debt was EUR 1.6 million (EUR 1.7 million) and interest-free short-term debt
was EUR 1.9 million (EUR 2.4 million). eQ's equity to assets ratio was 95.1%
(90.3%).
Shares and share capital
On 9 May 2012, eQ Plc's Board of Directors decided to cancel 163 153 own shares
held by the company. The number of shares in eQ Plc was altered on 7 June 2012,
as the cancellation of the shares that the company had held was entered in the
Trade Register. After the cancellation, the number of shares is 33 297 198.
Each share carries one vote. Before the cancellation, the number of shares was
33 460 351. The cancellation did not have any impact on the company's share
capital. On 30 June 2012, the share capital was EUR 11 383 873.
Own shares
eQ Plc held no own shares at the end of the period under review on 30 June
2012. eQ Plc's Board of Directors decided on 9 May 2012 to cancel altogether
163,153 own shares held by the company, which totals about 0.5% of the
registered number of shares. The cancellation became effective on 7 June 2012
as it was entered in the Trade Register.
Shareholders
On 6 March 2012, eQ Plc issued a flagging notification, according to which
Janne Olavi Larma and Chilla Capital SA announced that they had acquired shares
in an amount that exceeded the flagging threshold of 10%. In the second quarter
of the year on 16 May 2012, eQ Plc issued a flagging notification according to
which Berling Capital Oy announced that it had transferred shares to such an
amount that it had fallen below the flagging thresholds of 10% and 5%. In
addition, eQ Plc issued a flagging notification on 16 May 2012 stating that
Fennogens Investments S.A. announced that it had acquired shares in such an
amount that the flagging threshold of 15% had been exceeded.
Shares in eQ Plc, which were deposited on the joint account set up by the
company, in total of 6,709 shares representing approximately 0.02 per cent of
all shares in the company, have been sold between 1 June and 29 June 2012 on
behalf and for the benefit of their owners and the proceeds of the sale, after
deducting costs incurred in connection with the sale and notification thereof,
have been deposited on 5 July 2012 for the benefit of the owners with the
Southern Finland's Regional State Administrative Agency (in Finnish:
Etelä-Suomen aluehallintovirasto). The shareholders have the right to receive
an amount from the deposited funds equalling their proportion of the shares
against the delivery of relevant share certificates and other possible
documents of title from the Southern Finland's Regional State Administrative
Agency. A stock exchange release regarding the arrangement was published on 5
July 2012.
Ten major shareholders on 30 June 2012
Share of shares and votes, %
Fennogens Investments S.A. 16.50
Chilla Capital S.A. 12.54
Veikko Laine Oy 10.98
Ulkomarkkinat Oy 10.12
Oy Hermitage Ab 7.10
Mandatum Life Insurance Company 6.17
Oy Cevante Ab 4.26
Fazer Jan Peter 3.20
Linnalex Ab 2.65
Louko Antti Jaakko 2.25
On 30 June 2012, eQ Plc had 3 221 shareholders.
Option scheme 2010
At the end of the period, eQ Plc had one option scheme. The option scheme is
intended as part of the incentive and commitment system of the Group's key
employees. There were no changes in the number of allocated options during the
period. At the end of the period, a total number of 700 000 options has 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. 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
The Annual General Meeting (AGM) of eQ Plc held on 13 March 2012 in Helsinki
made the following decisions.
Confirmation of the financial statements
eQ Plc's AGM confirmed the financial statement of the company, which included
the consolidated financial statements, report by the Board of Directors and the
auditor's report for the financial year 2011.
Decision in respect of the result shown on the balance sheet
The AGM confirmed the proposal by the Board of Directors that a dividend of EUR
0.12 per share be paid. The dividend was paid to shareholders who on the record
date for dividend payment, 16 March 2012, were recorded in the shareholder
register held by Euroclear Finland Ltd. The dividend payment date was 26 March
2012.
Discharge from liability to the Board of Directors, CEOs and substitutes for
the CEO
The AGM decided to grant discharge from liability to the Board of Directors,
CEOs and substitutes for the CEO.
Number of Board members, election of Board members and remuneration of Board
members
According to the decision of the AGM, five members were elected to the Board.
The following members were re-elected: Ole Johansson, Georg Ehrnrooth, Eero
Heliövaara and Jussi Seppälä. Christina Dahlblom was elected as new member. The
term of the Board members will end at the close of the following AGM. 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 costs will be compensated in accordance with
the company's expense policy. The Board appointed Ole Johansson Chairman of the
Board at its constituting meeting held immediately after the AGM.
Auditors and auditors' fees
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.
Authorising the Board of Directors to decide on the repurchase of the company's
own shares
The AGM authorised the Board of Directors to decide on the repurchase of no
more than 500 000 company shares, which can be repurchased otherwise than in
proportion to the shareholdings of the shareholders with assets from the
company's unrestricted equity. Shares will be purchased at the market price in
public trading on the NASDAQ OMX Helsinki at the time of purchase. The number
of shares corresponds to approximately 1.49 per cent of all shares in the
company. Own shares may be repurchased in order to develop the company's
capital structure, to finance or carry out corporate acquisitions or other
business transactions, or as part of the company's incentive scheme. The
repurchased shares may be held by the company, annulled or transferred further.
The Board of Directors shall decide on all other matters related to the
repurchase of own shares. The authorisation cancels all previous authorisations
to repurchase the company's own shares and is effective until the following
Annual General Meeting.
Authorising the Board of Directors to decide on the issuance of shares as well
as the issuance of special rights entitling to shares
The AGM authorised the Board of Directors to decide on a share issue or share
issues and/or the issuance of special rights entitling to shares referred to in
chapter 10 section 1 of the Limited Liability Companies' Act, comprising a
maximum of 5 000 000 shares. The amount of the authorisation corresponds to
approximately 14.94 per cent of all company shares. The authorisation is to be
used in order to finance or carry out potential corporate acquisitions or other
business transactions, to consolidate the balance sheet and financial position
of the company, to carry out the company's incentive schemes or for any other
purposes decided by the Board. Based on the authorisation, the Board shall
decide on the terms of the issuance of shares and special rights entitling to
shares referred to in chapter 10 section 1 of the Limited Liability Companies'
Act, including the recipients of the shares or special rights entitling to
shares and the amount of the consideration to be paid. Therefore, based on the
authorisation, shares or special rights entitling to shares may also be issued
in a manner that deviates from the shareholders' pre-emptive rights, as
described in the Limited Liability Companies' Act. A share issue may also be
executed without consideration, in accordance with the preconditions set out in
the Limited Liability Companies' Act. The authorisation cancels all previous
authorisations to decide on share issues, and it will be effective until the
following AGM.
Personnel and organisation
At the end of the period, the number of personnel was 64 (63 on 30 June 2011).
The Asset Management segment had 44 (43) employees, the Corporate Finance
segment 12 (13) employees and the Investments segment 1 (1) employee. Group
administration had 8 (5) employees. The personnel of the Asset Management
segment comprises nine persons with fixed-term employment and the Corporate
Finance segment two persons with fixed-term employment.
The overall salaries paid to the employees of eQ Group during the period under
review totalled EUR 2.5 million (EUR 1.9 million from 1 Jan. to 30 June 2011).
The comparison figure comprises the salaries of Advium Corporate Finance Ltd
and the eQ Asset Management Group from 1 April 2011 and the salaries of eQ Plc
and Amanda Advisors Ltd from 1 January 2011. The figures are, therefore, not
comparable.
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.
Events after the period under review
After the end of the period under review, Advium has acted as advisor in the
Corporate Finance segment for example when WPP's subsidiary JWT acquired a
majority holding in Activeark Oy, which is a full-service digital marketing
agency.
In the Investments segment, private equity funds in which eQ has made
investments have announced several exits, which have not been realised during
the period under review. If the announced exits will be carried out according
to plan, the cash flow from the exits that eQ will receive after the period
under review, in the third or fourth quarters, will be about EUR 6.1 million,
of which the distribution of profits accounts for about EUR 4.3 million.
Outlook
The debt crisis in Europe continues and creates considerable uncertainty in the
capital market. On the other hand, many of the Q2 reports of companies have
provided a positive surprise, which increases the trust in the market. We
believe that the market will continue to be volatile and that the capital
market will develop unevenly. The 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
The interim report has been prepared in accordance with the International
Financial Reporting Standards (IFRS) and the IAS 34 Interim Financial Reporting
standard approved by the EU. When preparing the interim report, eQ has applied
the same principles as in the financial statements for the year 2011, and the
calculation formulas of the key ratios have been presented in the financial
statements. As for the net investment income, eQ Group's net sales are
recognised for eQ in different quarters due to factors independent of the
company.
The interim report has not been audited.
CONSOLIDATED INCOME STATEMENT,
EUR 1 000
4-6/12 4-6/11 1-6/12 1-6/11 1-12/11
NET SALES
Net investment income 1 3 325 969 3 759 6 482
Fee and commission income 2 530 3 289 4 997 4 232 9 327
Total 2 531 6 615 5 966 7 991 15 808
Operating expenses -1 868 -2 441 -4 087 -3 295 -7 709
Depreciation -303 -244 -605 -389 -865
Operating profit 360 3 930 1 274 4 308 7 234
Financial income and expenses -6 -183 -2 -345 -302
Profit before taxes 354 3 747 1 272 3 962 6 932
Income taxes -129 -969 -290 -1 050 -1 988
Minority interests - -3 - -3 -3
PROFIT (LOSS) FOR THE PERIOD 225 2 775 982 2 910 4 942
Other comprehensive income:
Available-for-sale financial
assets, net 1 892 345 1 810 4 300 3 432
TOTAL COMPREHENSIVE INCOME FOR THE 2 117 3 121 2 791 7 210 8 374
PERIOD
Earnings per share, EUR 0.01 0.08 0.03 0.09 0.15
Earnings per average share, EUR 0.01 0.10 0.03 0.10 0.16
Diluted earnings per average share,
EUR 0.01 0.10 0.03 0.10 0.16
When calculating the ratio, the weighted average number of shares
outstanding has been used.
CONSOLIDATED BALANCE SHEET, EUR 1 000
30 June 30 June 31 December
2012 2011 2011
ASSETS
LONG-TERM ASSETS
Tangible fixed assets 135 175 151
Intangible assets 18 731 19 604 19 318
Investments available for sale
Financial securities 5 50 49
Private equity investments 45 080 43 869 42 539
Accruals - 133 -
Deferred tax assets 72 102 79
CURRENT ASSETS
Other assets 1 234 4 025 1 056
Accrued income and advance payments 706 374 242
Investments available for sale
Financial securities 93 45 45
Cash 5 969 6 751 10 540
TOTAL ASSETS 72 024 75 128 74 020
SHAREHOLDERS' EQUITY AND
LIABILITIES
SHAREHOLDERS' EQUITY 68 516 67 832 69 684
LIABILITIES
NON-CURRENT LIABILITIES
Other liabilities - 3 212 -
Deferred tax liability 1 588 1 646 1 230
CURRENT LIABILITIES
Accounts payable and other 1 920 2 438 3 106
liabilities
TOTAL LIABILITIES 3 508 7 296 4 336
TOTAL SHAREHOLDERS' EQUITY AND 72 024 75 128 74 020
LIABILITIES
CONSOLIDATED CASH FLOW STATEMENT, EUR 1 000
1-6/12 1-6/11 1-12/11
CASH FLOW FROM OPERATIONS
Operating profit 1 274 4 308 7 234
Depreciation and write-downs 605 389 865
Transactions with no related
payment transaction 37 9 102
Investments available for sale,
change -148 2 614 2 643
Change in working capital
Business receivables, increase (-)
decrease (+) -206 -4 057 -809
Interest-free debt, increase (+)
decrease (-) -1 352 1 674 1 525
Interest-bearing debt, increase (+)
decrease (-) - -2 588 -5 800
Total change in working capital -1 558 -4 971 -5 083
Cash flow from operations before
financial items and taxes 210 2 348 5 761
Interests received 13 11 52
Interests paid -15 -356 -354
Taxes -781 -200 -336
CASH FLOW FROM OPERATIONS -574 1 803 5 122
CASH FLOW FROM INVESTMENTS
Investing activities in investments -1 837 669
CASH FLOW FROM FINANCING
Dividends paid -3 996 - -
Income from share issue - - 636
Purchase of own shares - 0 0
CASH FLOW FROM FINANCING -3 996 0 636
INCREASE/DECREASE IN LIQUID ASSETS -4 571 2 639 6 428
Liquid assets on 1 Jan. 10 540 4 112 4 112
Liquid assets on 30 June 5 969 6 751 10 540
Liquid assets contain cash and bank deposits.
CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY, EUR 1 000
Share Reserve for invested Fair value Retained Total
capital unrestricted equity reserve earnings
Shareholders' 11 384 29 614 -6 819 10 051 44 229
equity on 1 Jan.
2011
Comprehensive 4 300 4 300
income
Profit (loss) for 2 910 2 910
the period
--------------------------------------------------------------------------------
Total 4 300 2 910 7 210
comprehensive
income
Share issue 16 381 16 381
Other changes 11 11
--------------------------------------------------------------------------------
Shareholders' 11 384 45 995 -2 520 12 972 67 832
equity on 30 June
2011
Shareholders' 11 384 46 631 -546 12 215 69 684
equity on 1 Jan.
2012
Comprehensive 1 810 1 810
income
Profit (loss) for 982 982
the period
--------------------------------------------------------------------------------
Total 1 810 982 2 791
comprehensive
income
Dividend -3 996 -3 996
distribution
Other changes 37 37
--------------------------------------------------------------------------------
Shareholders' 11 384 46 631 1 264 9 238 68 516
equity on 30 June
2012
SEGMENT INFORMATION, 1 000 EUR
1-6/12 Asset Corporat Group,
e
Managemen Finance Investment Other Elimination total
t s s
External income 4 024 972 969 - 5 966
Income from
other segments 200 - - 37 -237 -
--------------------------------------------------------------------------------
Net sales 4 224 972 969 37 -237 5 966
Operating profit 905 225 769 -625 1 274
Profit for the 905 225 769 -918 982
period
Long-term
assets 9 432 9 377 45 151 62 64 023
1-6/11 Asset Corporat Group,
e
Managemen Finance Investment Other Elimination total
t s s
External income 3 095 1 138 3 759 - 7 991
Income from
other segments 200 - - - -200 -
--------------------------------------------------------------------------------
Net sales 3 295 1 138 3 759 - -200 7 991
Operating profit 994 554 3 559 -801 4 308
Profit for the 994 554 3 559 -2 199 2 910
period
Long-term
assets 10 565 9 394 43 919 55 63 933
4-6/12 Asset Corporat Group,
e
Managemen Finance Investment Other Elimination total
t s s
External income 2 006 524 1 - 2 531
Income from
other segments 100 - - 18 -118 -
--------------------------------------------------------------------------------
Net sales 2 106 524 1 18 -118 2 531
Operating profit 541 173 -99 -255 360
Profit for the 541 173 -99 -390 225
period
4-6/11 Asset Corporat Group,
e
Managemen Finance Investment Other Elimination total
t s s
External income 2 151 1 138 3 325 - 6 615
Income from
other segments 100 - - - -100 -
--------------------------------------------------------------------------------
Net sales 2 251 1 138 3 325 - -100 6 615
Operating profit 580 554 3 225 -429 3 930
Profit for the 580 554 3 225 -1 583 2 775
period
1-12/11 Asset Corporat Group,
e
Managemen Finance Investment Other Elimination total
t s s
External income 7 226 2 101 6 482 - 15 808
Income from
other segments 400 - - - -400 -
--------------------------------------------------------------------------------
Net sales 7 626 2 101 6 482 -400 15 808
Operating profit 2 179 707 6 082 -1 734 7 234
Profit for the 2 179 707 6 082 -4 026 4 942
period
Long-term
assets 10 063 9 384 42 618 71 62 137
The income of the Asset Management segment from other segments
comprise the management fee income from eQ Group's own investments in private
equity funds. The corresponding expense will be allocated to the Investments
segment. Under the item Others, income from other segments comprises the
administrative services produced by Group administration to other segments.
The line operating profit under the item Others presents
the undivided personnel, administration and other expenses allocated
to Group administration. In addition to the above, undivided financial income
and expenses as well as taxes have been presented on line profit for the
period, under the item Others.
CONSOLIDATES KEY RATIOS
30 June 2012 30 June 2011
Profit (loss) for the period (EUR 1 000) 982 2 910
Earnings per share, EUR 0.03 0.09
Earnings per average share, EUR 0.03 0.10
Diluted earnings per average share, EUR 0.03 0.10
Equity per share, EUR 2.05 2.05
Equity per average share, EUR *) 2.06 2.36
Return on investment, ROI % p.a. 2.9 10.8
Return on equity, ROE % p.a. 2.8 10.4
Equity to assets ratio, % 95.1 90.3
Share price at the end of the period, EUR 1.67 1.78
Number of personnel at the end of the period 64 63
Private equity investments to equity ratio, % 65.8 64.7
Private equity investments and remaining
commitments to equity ratio, % 84.5 90.4
*) 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. 2012 42 539
Draw-downs to private equity funds 1 998
Return of capital from private equity funds -1 855
Changes in the value of private equity funds
in fair value reserve 2 397
Book value of private equity funds on 30 June 2012 45 080
REMAINING COMMITMENTS
On 30 June 2012, eQ Plc's remaining commitments in private
equity funds totalled EUR 12.8 million (EUR 17.4 million on 30 June
2011). Other liabilities at the end of the period under review totalled EUR 1.3
million (EUR 0.2 million on 30 June 2011).
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