2012-05-09 15:00:00 CEST
2012-05-09 15:00:08 CEST
REGULATED INFORMATION
eQ Oyj - Interim report (Q1 and Q3)
eQ PLC’S INTERIM REPORT 1 JANUARY TO 31 MARCH 2012
eQ PLC STOCK EXCHANGE RELEASE
9 May 2012 at 4:00 p.m.
eQ PLC'S INTERIM REPORT 1 JANUARY TO 31 MARCH 2012
January to March 2012 in brief
-- In the first quarter, the fee and commission income totalled EUR 2.5
million (EUR 0.9 million from 1 Jan. to 31 March 2011).
-- The Group's net investment income was EUR 1.0 million (EUR 0.4 million).
-- Operating profit was EUR 0.9 million (EUR 0.4 million).
-- Earnings per share were EUR 0.02 (EUR 0.00).
-- The interim report 1 January to 31 March 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 1-3/2012 1-3/2011 1-12/2011
------------------------------------------------------------------------
Net sales, EUR million 3.4 1.4 15.8
Operating profit, EUR million 0.9 0.4 7.2
Profit before taxes, EUR million 0.9 0.2 6.9
Profit for the period, EUR million 0.8 0.1 4.9
Earnings per share, EUR 0.02 0.00 0.15
Equity per share, EUR 1.98 1.96 2.08
Equity to assets ratio, % 93.6% 88.7% 94.1%
Interest-bearing liabilities, EUR million 0.0 4.1 0.0
Janne Larma, CEO
The year in the capital market began in a positive spirit. During the first two
months, share prices rose considerably, the margins of corporate loans fell,
and investors were willing to take greater risks. In March, share prices
started to fall, however, and this negative development continued in April.
eQ Group's operating profit of EUR 0.9 million in the first quarter was good
although a slight disappointment considering our expectations. The beginning of
the year indicated a larger number of net subscriptions within Asset Management
and greater activity in the Corporate Finance segment. The operating profit of
the Asset Management segment was, however, EUR 0.4 million and the operating
profit of the Corporate Finance segment EUR 0.1 million. The operating profit
of the Investments segment was EUR 0.9 million. The capital distributions from
investments totalled EUR 0.4 million and the distribution of profit was EUR 1.0
million. Capital calls were EUR 0.3 million.
The Group's balance sheet is in excellent shape. At the end of March, there
were no interest-bearing liabilities in the balance sheet, and the liquid
assets totalled EUR 7.7 million. The balance sheet value of private equity
investments was EUR 42.3 million.
eQ Asset Management's portfolio management has done an excellent job. During
the first months of the year, several of our funds have been among the top
funds in return comparisons, e.g. eQ Emerging Markets Dividend and eQ Asian
Opportunities, which have both been the second best funds in their categories
in 12-month comparison. This shows that we are a competitive asset manager and
can offer added value to our clients. Within asset management, we try to find
ways of renewing our offerings continuously in order to remain competitive in
future as well.
Outlook
The debt crisis in Europe continues and creates considerable uncertainty in the
capital market. At the same time, there are, however, signs of a slight turn
for the better in company outlooks and the US economy. 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 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 31 March 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 31 MARCH 2012
Result of operations and financial position from 1 January to 31 March 2012
-- The Group's fee and commission income totalled EUR 2.5 million (EUR 0.9
million from 1 Jan. to 31 March 2011).
-- The Group's net investment income increased to EUR 1.0 million (EUR 0.4
million).
-- The Group's operating profit increased to EUR 0.9 million (EUR 0.4
million).
-- Consolidated earnings after taxes were EUR 0.8 million (EUR 0.1 million).
-- Earnings per share were EUR 0.02 (EUR 0.00).
-- Equity per share was EUR 1.98 (EUR 1.96).
-- Equity to assets ratio was 93.6% (88.7%).
-- The interim report 1 January to 31 March 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 sentiment in the capital market was rather positive at the beginning of
2012. The European Central Bank allocated a considerable amount of new capital
to European banks round the turn of the year, ensuring even the weakest banks'
ability to manage their obligations, at least for the time being. The financing
package for Greece for the spring of 2012 was also completed, with help from
international creditors and the new savings decisions made by the Greek
government. Consequently, Greece was able to prevent the immediate threat of
illiquidity. As for the other countries, the media have paid a little less
attention to the debt crisis of the euro than in the autumn of 2011. Despite
this, the interest rate level of Spain rose rapidly to 6% in April, and the
market is more and more worried that Spain will be the next country to be
struck by the debt crisis. On the other hand, the national economy of the US
has grown during the first months of the year, and company results have been
good on an average. The results of European companies have also been reasonably
good compared with expectations, and there have been few result warnings in
early spring. Nokia was an exception to this. It issued a result warning in
April, and its share has fallen exceptionally rapidly.
In January and February 2012, the Finnish equity market continued to rise
rapidly. At the end of March, the HEX Cap Index stood 15.1% higher than at the
turn of the year. The other stock exchanges in Western Europe also rose
strongly, the Eurostoxx 600 Index by 8.4% during the first quarter, for
instance. MSCI World (EUR), which describes equities globally, rose by 8.1%,
and the American equity market also finished 8.1% (EUR) higher than at the
year-end. The prices of shares rose especially rapidly in emerging markets, and
the MSCI EM Total Return Net (EUR) Index that describes emerging markets rose
by 10.5%. At the beginning of April, almost all equity markets recoiled,
however, and this development was especially prominent in the markets that had
risen the most, such as the emerging markets and the Finnish equity market.
Bond market
The bond market started the year 2012 in a strong tone. The three-year
financing that the European Central Bank offered to banks in the euro zone in
December and at the end of February decreased the risk premiums of the European
problem states. The impact died away gradually, however, and the concern for
above all Spain rose once more to the surface. The interest rate difference
between Spain and Germany increased in April and reached almost the same level
as in November 2011. Not even the successful debt arrangement for Greece could
turn the market sentiment for the better. The average return of bond
investments in Europe was 4% in the first quarter. The returns of corporate
loans were especially good. The best returns came from high yield corporate
loans with a low credit rating, about 9%. Even corporate loans with a high
credit rating yielded 5%, which is the all-time best first quarter for this
asset class.
Finnish market for mutual funds
The positive sentiment in the equity market was also reflected on Finnish
investors' willingness to invest in 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 of the first quarter totalled EUR 785
million. The total assets under management by mutual funds rose to about EUR 60
billion (EUR 55 billion on 31 December 2011). This was due to above all the
positive development of the equity market, and a lot of assets were transferred
from money market funds to the equity market. Most of the assets transferred to
the Finnish equity market were allocated to funds investing in emerging
markets.
Private equity and hedge market
In the first quarter, 670 new investments were made in the global private
equity market. The number of investments was at the same level as in the
previous quarter. The transaction volume fell, however, by 20% to a little less
than USD 60 billion. This is the result of the decreasing and more expensive
availability of debt financing, above all in large corporate loan transactions.
Geographically, North America clearly stood for most of the new investments,
about USD 25 billion. The value of new investments in Europe and Asia was USD
13 billion and 11 billion, respectively.
The exit market picked up slightly. The number of exits was 230 with a total
value of USD 46 billion. The increase in volume was 23% and in value 11% from
the previous quarter. The exit market continued to suffer from market
volatility, which results from the debt crisis in the euro zone, the
unfavourable listing market and increased economic uncertainty.
The fundraising market of private equity funds continued to fall. In the first
quarter, altogether 123 funds raised USD 62 billion, which is 15% less than in
the previous quarter. Funds investing in North America stood for the major part
with USD 34 billion, down 10% from the previous quarter. Funds investing in
Europe raised USD 15 billion, which is about 25% less than in the previous
quarter, while funds investing in Asia raised altogether USD 14 billion, down
almost 10%.
The total assets of hedge funds increased by USD 50 billion dollars in the
first quarter. At the end of March, the assets totalled USD 1.75 trillion
(source: Eurekahedge). Most of the new capital was allocated to macro and bond
funds, while the capital in equity funds decreased. The number of new funds was
150 (source: Preqin).
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.
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 Group from 1 April
2011.
The consolidated net sales totalled EUR 3.4 million (EUR 1.4 million from 1
Jan. to 31 March 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 2.5
million (EUR 0.9 million). The net investment income also increased from the
comparison period to EUR 1.0 million (EUR 0.4 million). The Group's expenses
and depreciation totalled EUR 2.5 million (EUR 1.0 million). Personnel expenses
totalled EUR 1.4 million (EUR 0.3 million) and depreciation was EUR 0.3 million
(EUR 0.1 million). Other operating expenses were EUR 0.9 million (EUR 0.6
million).
The Group's operating profit was EUR 0.9 million (EUR 0.4 million). The
increase from the comparison period is due to the increasing income from
investment operations and the results of the acquired companies. The profit for
the financial period was EUR 0.8 million (EUR 0.1 million).
Business Areas
Asset Management
The eQ's 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. In the beginning of 2012, the
organisation functions as one unified asset management team, which serves its
clients in the market for equity, bond and alternative investments as well as
the private equity market.
The operating environment of the Asset Management segment has clearly improved
at the beginning of 2012. Attention has shifted from the debt crisis of the
euro zone to the macro-economic outlook of the market and the fundamentals of
the investment objects. The market continues to be nervous, however, and the
fixed-income market still reacts strongly to bad news about the poorest
countries of the euro zone.
It has been clearly easier to sell asset management services to both
individuals and institutions in 2012 than in the autumn of 2011. Clients
continue to be cautious when making new investments, however, even though
institutional investors increased the risk levels of their positions clearly.
The assets under the segment's management totalled EUR 3 577 million at the end
of March (EUR 3 519 million at the end of 2011). On 31 March 2012, the assets
managed under equity and bond investments totalled EUR 965 million (EUR 881
million) and within private equity investments, the assets under management
were EUR 2 612 million (EUR 2 639 million). Of these assets, EUR 1 103 million
(EUR 1 147 million) consisted of reporting services.
Net subscriptions in eQ Funds totalled EUR 10.5 million during the period, and
the assets managed by the funds rose to EUR 487 million (EUR 440 million on 31
Dec. 2011) by the end of March because of the increase in asset values. 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 EUR 43
million after just 12 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. The launch of the new fund was successful, and on 31
March 2012, after just a few weeks of operation, the assets under its
management totalled about EUR 9 million and the number of unit-holders was
already 118.
In the past few months, the portfolio management organisation of eQ Asset
Management has managed to assess changes in the market and the weights of
different assets classes well. As a result, the returns of the first quarter,
both for individual funds and the asset management portfolios, have as a rule
clearly exceeded comparison indices and given a good absolute return.
The Amanda V East private equity fund, managed by eQ, continued active
fundraising during the entire first quarter. 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 46 at the end of
March.
Asset Management Jan. to March 2012 Jan. to Dec. 2011
Net sales EUR 2.1 million EUR 7.6 million
Operating profit EUR 0.4 million EUR 2.2 million
Personnel 46 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 positive trend of the equity market that we saw at the beginning of the
year has taken a turn for the poorer during the past few weeks, and the debt
worries of the euro zone have again attracted more attention. The once more
increasing uncertainty continues to keep M&A and real estate transaction
processes rather long.
During the period under review, Advium acted as advisor in two transactions. In
March, Advium acted as advisor for HYY Group, as HYY Group gave up the real
estate management operations of Kaivopiha Oy. In addition, a transaction, where
Advium acted as advisor for Finntemet Oy, which together with the operative
management sold the share capital of TVI Vision Oy, a company manufacturing and
selling industrial cameras, to the Danish company JAI A/S was carried out at
the end of March.
The number of personnel (11) at Advium has not changed during 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 Jan. to March 2012 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 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.
In the period under review, the net income of eQ Plc's Investments segment
totalled EUR 1.0 million (EUR 0.4 million from 1 Jan. to 31 March 2011). At the
end of the period, the fair value of the private equity funds was EUR 42.3
million (EUR 45.2 million on 31 March 2012). As for private equity investments,
the amount of the remaining investment commitments was EUR 14.4 million (EUR
16.2 million). The investment objects returned capital in the amount of EUR 0.4
million and distributed EUR 1.0 million during the period. The largest exit in
the first quarter of 2012 was the exit of the EQT IV and EQT V funds from the
German cable television company KBW, which was sold to an industrial buyer
Liberty Global. The cash flow generated to eQ from the exit was about EUR 0.9
million. The capital calls of funds totalled EUR 0.3 million during the period.
Investments Jan. to March 2012 Jan. to Dec. 2011
Net sales EUR 1.0 million EUR 6.5 million
Operating profit EUR 0.9 million EUR 6.1 million
Personnel 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 70.9 million (EUR 73.0 million on
31 March 2011). At the end of the period, eQ Plc's shareholders' equity was EUR
66.4 million (EUR 64.7 million). During the period, the shareholders' equity
was influenced by the profit for the period of EUR 0.8 million, the change in
the fair value reserve of EUR -0.1 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 7.7 million
(EUR 5.0 million). In order to safeguard the availability of financing, the
Group has access to a credit facility. At the end of the period, the Group had
no interest-bearing liabilities. During the comparison period on 31 March 2011,
the amount of interest-bearing long-term debt was EUR 0.6 million and the
amount of interest-bearing short-term debt EUR 3.5 million. At the end of the
period, interest-free long-term debt was EUR 1.2 million (EUR 1.8 million) and
interest-free short-term debt was EUR 3.3 million (EUR 2.4 million). eQ's
equity to assets ratio was 93.6% (88.7%).
Shares and share capital
There were no changes in eQ Plc's share capital or the number of shares during
the period under review. On 31 March 2012, the share capital was EUR 11 383 873
and the number of shares 33 460 351. Each share carries one vote.
Own shares
At the end of the period, eQ Plc held 163 153 own shares. The amount
corresponds to about 0.5 per cent of the total number of shares in the company.
There were no changes in the number of own shares during the period.
Shareholders
On 6 March 2012, eQ Plc issued a flagging announcement, 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 per cent.
Ten major shareholders on 31 March 2012
Share of shares and votes, %
Fennogens Investments S.A. 10.98
Veikko Laine Oy 10.92
Berling Capital Oy 10.48
Chilla Capital S.A. 10.09
Ulkomarkkinat Oy 10.03
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 March 2012, eQ Plc had 3 235 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 65 (57 on 31 March 2011).
The Asset Management segment had 46 employees, the Corporate Finance segment 11
employees and the Investments segment one employee. Group administration had
seven employees. The personnel of the Asset Management segment comprises six
persons with fixed-term employment.
The overall salaries paid to the employees of eQ Group during the period under
review totalled EUR 1.4 million (EUR 0.3 million from 1 Jan. to 1 March 2011).
The comparison figure comprises the salaries of eQ Plc and Amanda Advisors Ltd.
The salaries of Advium Corporate Finance Ltd and eQ Asset Management Group have
been consolidated with the result of eQ Plc Group from 1 April 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 period under review, Advium Corporate Finance Ltd, which is part of
eQ Group, has acted as advisor of, e.g. Vaahto Group Plc, as the company
arranged a directed share issue including a share exchange between Vaahto and
its subsidiary AP-Tela Oy.
The following private equity fund investments made from eQ Group's own balance
sheet are expected to produce cash flow in the second or third quarter of the
year as a result of a major exit.
Fund: Target company: Expected cash flow:
IK 2000 Europris Q2 2012
PAI IV Chr.Hansen Q2 2012
Permira IV NDS Q2 2012
Gresham III Olaer Q3 2012
After the period under review at 9 May 2012, the Board of Directors of eQ Plc
decided to annul the own shares held by the company, total number of 163 153
shares.
Outlook
The debt crisis in Europe continues and creates considerable uncertainty in the
capital market. At the same time, there are, however, signs of a slight turn
for the better in company outlooks and the US economy. 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 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
1-3/12 1-3/11 1-12/11
NET SALES
Net investment income 968 434 6 482
Fee and commission income 2 466 943 9 327
Total 3 435 1 377 15 808 Operating expenses -2 218 -854 -7 709
Depreciation -302 -144 -865
Operating profit 914 378 7 234
Financial income and expenses 4 -163 -302
Profit before taxes 918 215 6 932
Income taxes -161 -81 -1 988
Minority interests - - -3
PROFIT (LOSS) FOR THE PERIOD 756 135 4 942
Other comprehensive income:
Available-for-sale financial
assets, net -82 3 955 3 432
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 674 4 089 8 374
Earnings per share, EUR 0.02 0.00 0.15
Earnings per average share, EUR 0.02 0.01 0.16
Diluted earnings per average share,
EUR 0.02 0.01 0.16
When calculating the ratio, the weighted average number of shares outstanding
has been used.
CONSOLIDATED BALANCE SHEET, EUR 1 000
31 March 31 March 31 Dec.
2012 2011 2011
ASSETS
LONG-TERM ASSETS
Tangible fixed assets 142 186 151
Intangible assets 19 025 19 771 19 318
Investments available for sale
Financial securities 49 36 49
Private equity investments 42 323 45 214 42 539
Accruals - 133 -
Deferred tax assets 69 966 79
CURRENT ASSETS
Other assets 1 306 1 330 1 056
Accrued income and advance payments 243 321 242
Investments available for sale
Financial securities 45 45 45
Cash 7 683 5 008 10 540
TOTAL ASSETS 70 886 73 012 74 020
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY 66 383 64 703 69 684
Minority interest - 34 -
LIABILITIES
NON-CURRENT LIABILITIES
Other liabilities - 576 -
Deferred tax liability 1 175 1 816 1 230
CURRENT LIABILITIES
Accounts payable and other 3 328 2 382 3 106
liabilities
Financial liabilities - 3 500 -
TOTAL LIABILITIES 4 502 8 275 4 336
TOTAL SHAREHOLDERS' EQUITY AND 70 886 73 012 74 020
LIABILITIES
CONSOLIDATED CASH FLOW STATEMENT, EUR 1 000
1-3/12 1-3/11 2011
CASH FLOW FROM OPERATIONS
Operating profit 914 378 7 234
Depreciation and write-downs 302 144 865
Transactions with no related
payment transaction 21 3 102
Investments available for sale,
change 107 816 2 643
Change in working capital
Business receivables, increase (-)
decrease (+) -203 -1 343 -809
Interest-free debt, increase (+)
decrease (-) 388 1 872 1 525
Interest-bearing debt, increase (+)
decrease (-) - -1 724 -5 800
Total change in working capital 184 -1 195 -5 083
Cash flow from operations before
financial items and taxes 1 529 147 5 761
Interests received 11 4 52
Interests paid -8 -167 -354
Taxes -394 -24 -336
CASH FLOW FROM OPERATIONS 1 139 -40 5 122
CASH FLOW FROM INVESTMENTS
Investing activities in investments - 936 669
CASH FLOW FROM FINANCING
Dividends paid -3 996 - -
Income from share issue - - 636
Purchase of own shares - - 0
CASH FLOW FROM FINANCING -3 996 0 636
INCREASE/DECREASE IN LIQUID ASSETS -2 856 896 6 428
Liquid assets on 1 Jan. 10 540 4 112 4 112
Liquid assets on 31 March 7 683 5 008 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 3 955 3 955
income
Profit (loss) for 135 135
the period
--------------------------------------------------------------------------------
Total 3 955 135 4 089
comprehensive
income
Share issue 16 381 16 381
Other changes -24 -24
--------------------------------------------------------------------------------
Shareholders' 11 384 45 995 -2 865 10 162 64 676
equity on 31
March 2011
Shareholders' 11 384 46 631 -546 12 215 69 684
equity on 1 Jan.
2012
Comprehensive -82 -82
income
Profit (loss) for 756 756
the period
--------------------------------------------------------------------------------
Total -82 756 674
comprehensive
income
Dividend -3 996 -3 996
distribution
Other changes 21 21
--------------------------------------------------------------------------------
Shareholders' 11 384 46 631 -628 8 997 66 383
equity on 31
March 2012
SEGMENT INFORMATION, EUR 1 000
1-3/12 Asset Corporat Group,
e
Managemen Finance Investment Others Elimination total
t s s
External income 2 018 448 968 - 3 435
Income from
other segments 100 - - 18 -118 -
--------------------------------------------------------------------------------
Net sales 2 118 448 968 18 -118 3 435
Operating profit 364 51 868 -370 914
Profit for the 364 51 868 -528 756
period
Long-term
assets 9 770 9 381 42 392 65 61 608
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 item
Others.
CONSOLIDATED KEY RATIOS
31 March 2012 31 March 2011
Profit (loss) for the period (EUR 1 000) 756 135
Earnings per share, EUR 0.02 0.00
Earnings per average share, EUR 0.02 0.01
Diluted earnings per average share,
EUR 0.02 0.01
Equity per share, EUR 1.98 1.96
Equity per average share, EUR *) 1.99 2.65
Return on investment, ROI % p.a. 0.3 0.1
Return on equity, ROE % p.a. 0.3 0.1
Equity to assets ratio, % 93.6 88.7
Share price at the end of period, EUR 1.90 1.79
Number of personnel at the end of period 65 57
Private equity investments to equity
ratio, % 63.8 69.9
Private equity investments and remaining
commitments to equity ratio, % 85.4 95.0
*) 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 339
Return of capital from private equity funds -446
Changes in the value of private equity funds
in fair value reserve -109
Book value of private equity funds on 31 March 2012 42 323
REMAINING COMMITMENTS
On 31 March 2012, eQ Plc's remaining commitments in private
equity funds totalled EUR 14.4 million (EUR 16.2 million on 31 March
2012). Other liabilities at the end of the period under review totalled EUR 1.4
million (EUR 0.2 on 31 March 2011).
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