2011-11-23 15:00:00 CET
2011-11-23 15:00:10 CET
REGULATED INFORMATION
Amanda Capital - Interim report (Q1 and Q3)
eQ PLC'S INTERIM REPORT 1 JANUARY TO 30 SEPTEMBER 2011
eQ PLC STOCK EXCHANGE RELEASE
23 November 2011, at 4:00 p.m.
eQ ACHIEVED A GOOD RESULT DESPITE DIFFICULT MARKET CONDITIONS
July to September 2011 in brief
-- In the third quarter, the fee and commission income totalled EUR 2.6
million (EUR 1.0 million from 1 July to 30 Sept. 2010).
-- The Group's net investment income was EUR 3.1 million (EUR 0.5 million).
-- The Group's operating profit was EUR 3.2 million (EUR 0.7 million).
-- Earnings per share were EUR 0.07 (EUR 0.02).
-- The interim report 1 Jan. to 30 Sept. 2011 comprises eQ Asset Management
Group and Advium Corporate Finance Ltd from 1 April 2011. The comparison
figures of the interim report are, therefore, not comparable.
-- The name of the Group's parent company was changed to eQ Plc.
January to September 2011 in brief
-- The fee and commission income totalled EUR 6.8 million (EUR 3.0 million).
-- The Group's net investment income was EUR 6.8 million (EUR 1.1 million).
-- The operating profit was EUR 7.6 million (EUR 1.6 million).
-- Earnings per share were EUR 0.16 (EUR 0.04).
Key ratios 7-9/2011 7-9/2010 1-9/2011 1-9/2010 1-12/2010
-------------------------------------------------------------------------
Net sales, EUR million 5.6 1.5 13.6 4.1 5.1
Operating profit, 3.2 0.7 7.6 1.6 1.8
EUR million
Profit before taxes, 3.2 0.6 7.2 1.2 1.2
EUR million
Profit for the period, 2.3 0.4 5.2 0.8 0.8
EUR million
Earnings per share, 0.07 0.02 0.16 0.04 0.04
EUR
Equity per share, EUR 2.07 1.85 2.07 1.85 1.94
Equity to assets 93.6% 85.5% 93.6% 85.5% 85.9%
ratio, %
Janne Larma, CEO
”The third quarter of the year was an especially challenging time for asset
managers. The assets under management decreased as share prices plummeted,
which had a negative impact on the result development. Despite the difficult
market situation, eQ Group achieved a strong result even in the third quarter.
The Group's operating profit was EUR 3.2 million. The Asset Management segment
also made a profitable result.
The change of the parent company name to eQ Plc was registered at the beginning
of October. The company decided that the entire Asset Management segment would
use the eQ brand in future. eQ is a well-known and strong brand in the finance
sector. eQ is often associated with reliability, progress and long experience.
We want to be a asset manager that offers its clients innovative investment
opportunities.
Our aim is to grow, both organically and through acquisitions. We believe that
the Finnish asset management sector both needs and wishes to consolidate
itself. We aim at increasing the assets under management considerably in the
next few years. The Group's balance sheet offers excellent opportunities for
growth. At the end of September, the Group's shareholders' equity totalled EUR
69.2 million and the equity to assets ratio exceeded 90%. In addition, the
Group's cash assets totalled EUR 11.0 million and there were no
interest-bearing debt at the end of September. This is a good starting point
for building growth for eQ Group”.
Outlook
In November, it continues to be exceptionally difficult to predict capital
market development in the near future. Share prices rose clearly in October,
after the crash that we saw in early autumn, but the political and economic
situation in Europe, which continues to be unstable, drives the market more
strongly than the result development of companies or national economic
indicators. The changes in the assets under management and the development of
fee and commission income of eQ Group correlate with the development of the
capital markets.
***
eQ's interim report for the period January to September 2011 is enclosed to
this release and 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 3.7 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 the following websites: www.eq.fi
and www.advium.fi.
eQ PLC'S INTERIM REPORT 1 JANUARY TO 30 SEPTEMBER 2011
Result of operations during the period 1 July to 30 September 2011
-- The Group's fee and commission income totalled EUR 2.6 million (EUR 1.0
million).
-- The Group's net investment income was EUR 3.1 million (EUR 0.5 million).
-- The Group's operating profit was EUR 3.2 million (EUR 0.7 million).
-- Consolidated earnings after taxes were EUR 2.3 million (EUR 0.4 million).
-- Earnings per share were EUR 0.07 (EUR 0.02).
Result of operations and financial position during the period 1 January to 30
September 2011
-- The Group's fee and commission income increased to EUR 6.8 million (EUR 3.0
million from 1 Jan. to 30 Sept. 2010).
-- The Group's net investment income increased to EUR 6.8 million (EUR 1.1
million).
-- The Group's operating profit grew to EUR 7.6 million (EUR 1.6 million).
-- Consolidated earnings after taxes were EUR 5.2 million (EUR 0.8 million).
-- The interim report 1 Jan. to 30 Sept. 2011 comprises eQ Asset Management
Group and Advium Corporate Finance Ltd from 1 April 2011. The comparison
figures of the interim report are, therefore, not comparable.
-- Earnings per share were EUR
0.16 (EUR 0.04).
-- Equity per share rose to EUR 2.07 (EUR 1.85).
-- Equity to assets ratio was 93.6% (85.5%).
Financial environment
Equity market
The year 2011 has been an unexceptionally restless time in the capital markets.
The political unrest in North Africa and the earthquake in Japan did not have a
long-lived effect on the on the markets. Instead, investors have fully
concentrated on the debt crises in Europe and America and their impacts on the
development of world economy. The political crisis in the US concerning the
raising of the debt ceiling that we saw last summer increased further the
nervousness of the market. In the autumn, investors have concentrated their
attention to the measures taken in order to stimulate Greece and other
economies within the euro zone, mainly in the Mediterranean area. The market
has not been convinced of the ability of political decision-makers to solve the
debt crises of certain countries rapidly. The entire euro zone's credibility
and ability to function in future have been viewed in a critical manner. It is
already clear that the crisis will slow down the growth of national economies
during the next few years. Politicians are expected to make difficult decisions
that can provide long-term stimulation to national economies. It is also clear
that the equity of certain banks must be raised through share issues. The
market now focuses exceptionally strongly on the results of these political
processes, while less attention is given to actually analysing the fundamentals
of different asset classes.
Almost the entire year has been challenging in the international equity market.
The equity markets of geographic fringe areas have dropped more than other
markets. The Finnish equity market almost crashed in August and September, and
the HEX Cap Index has fallen by -29.9% from the beginning of the year to the
end of October. At the end of September and in October, the fall in share
prices has stopped, and the market has been looking for a new course, even
though the main attention is still directed to solving the debt crisis. In
October, we have even seen some improvement in the market, even though trading
volumes have been lower than usual in different market places. In the US, the
third-quarter results of companies have been better than expected. At the end
of October, the valuation of the global and European equity market is, however,
still at a clearly lower level than at the beginning of 2011 (MSCI World -14.7%
and Stoxx -18.0%).
Bond market
In the autumn, the debt crisis of euro zone states has affected the bond market
in a twofold manner. The government bonds of Germany and other states that were
considered as safe became more expensive, as investors were looking for a safe
haven. The government bonds of the euro zone gave investors a good yield of
about four per cent during the first part of the year. On the other hand, the
development of corporate loans and above all bank debt securities was weaker,
as the market felt that credit risks had increased. However, corporate loans
with a good credit rating still gave, as a whole, a 0.7% positive yield. High
yield corporate loans with a high risk suffered the most, and their yield was
about 6% negative during the first part of the year.
Finnish market for mutual funds
The uncertain economic situation was also seen in investments made in Finnish
mutual funds. The net subscriptions in mutual funds operating in the Finnish
market totalled EUR -601 million from January to September, and only in
September, net redemptions totalled EUR 402 million. At the end of September,
the fund capital of Finnish funds was EUR 54 billion, which is EUR 6 billion
less than at the beginning of the year.
Private equity market
The activity of the European private equity market fell clearly in the third
quarter. The number of investments fell by 36% and their overall value by 49%
from the previous quarter. Calculated from the beginning of the year, the
activity was still 24% higher than in 2010. In the third quarter, the total
number of investments made in Europe was 187 and their overall value was EUR
14.9 billion. Since the beginning of the year, investments have been made in
the total value of EUR 58.3 billion, which is 15% more than during the
corresponding period 2010.
In the third quarter, altogether 96 buyout investments, i.e. corporate
acquisitions, were made, which is 25% less than in the second quarter, when the
total number of deals was 127. The total value of the deals was EUR 13.8
billion, which is 49% less than in the previous quarter, when it was EUR 27.8
billion. Value wise, the drop was the greatest in the segment of large
corporate acquisitions (EUR 1 billion +). In this segment, only three corporate
acquisitions were concluded at the total value of EUR 4 billion. In the second
quarter, the number of deals was 8, their total value being EUR 11.5 billion.
The volume drop was the greatest in the segment of small and medium-sized
companies (EUR 100 to 1 000 million), which was down 40% from the second
quarter (Source: Arle Partners).
Hedge market
Net subscriptions in global hedge funds did not turn negative until September,
after a long positive period. Thus, in North America, for instance, the longest
recorded period of positive net subscriptions, which lasted no less than 19
months, now ended. The assets in hedge funds totalled EUR 1.76 billion at the
end of September (source: Eurekahedge). At index level, the yield difference
between hedge funds and the equity market was +11 percentage points in the
third quarter (Hedge Fund Research Index Conservative vs. MSCI World local TR).
Major events from January to September 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 the 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 collect means, 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 EGM 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.
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 13.6 million (EUR 4.1 million from 1
Jan. to 30 Sept. 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 6.8
million (EUR 3.0 million). The net investment income also increased from the
comparison period to EUR 6.8 million (EUR 1.1 million). The Group's expenses
and depreciation totalled EUR 6.1 million (EUR 2.5 million). Personnel expenses
totalled EUR 3.3 million (EUR 1.0 million) and depreciation accounted for EUR
0.6 million (EUR 0.5 million). Other operating expenses were EUR 2.2 million
(EUR 1.0 million).
The Group's operating profit was EUR 7.6 million (EUR 1.6 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 period under review comprises non-recurring expenses of EUR 0.3
million due to corporate acquisitions. The profit for the period under review
was EUR 5.2 million (EUR 0.8 million).
BUSINESS AREAS
The Board of Directors of eQ Plc has decided to introduce three separate
segments from 1 April 2011: Asset Management, Corporate Finance and
Investments.
Asset Management
The Asset Management segment consists of the business operations of eQ Asset
Management Group and the asset management, investment advice, management and
reporting services related to Amanda Advisors Ltd's private equity investments.
The planning of the combination of operations has proceeded well during the
first part of the year, and the operations were combined in practice in
November 2011, when the personnel moved to common premises and the company
launched a new, common website. In practice, co-operation will increase in
sales, the management of customer relations, product development, middle and
back office functions as well as in financial administration and marketing
communications. The change of the parent company name to eQ Plc was registered
in October, and the entire Asset Management segment will use the eQ brand in
future.
The operating environment of the Asset Management segment has been
exceptionally challenging in 2011. The major single factor that has influenced
the global capital markets 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. This may lead to a recession in
Europe and other parts of the world as well. It has been much more difficult to
analyse the development of the equity and bond market based on traditional
fundamentals than in a normal situation.
It has been difficult to sell asset management services to both private
individuals and institutions since summer, as news about the debt crisis have
dominated the media. Customers have been very cautious in making new
investments, and the risk levels of positions have in general been cut down.
The assets under the segment's management fell to EUR 3 680 million between
January and September (EUR 3.829 million 30 June 2011). On 30 September 2011,
the assets managed under equity and bond investments totalled EUR 869 million
(EUR 1.069 million 30 June 2011) and within private equity investments, the
commitments under management were EUR 2 811 million (EUR 2.760 million 30 June
2011) (original investment commitments).
The net subscriptions in eQ Funds totalled EUR -14 million during the period
under review, and the assets managed by the funds dropped to EUR 424 million
because of the fall in value during the first part of the year.
The mutual fund eQ Emerging Dividend, which makes investments in dividend
yielding stocks in emerging markets, was launched in February. The investment
strategy arouses interest among institutional investors. The fund has gathered
more than EUR 11 million in capital at the end of September and more than EUR
19 million at the end of October.
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 collect means and it will be offered
to all customers of eQ Asset Management during the autumn and in 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 has conducted among Finnish institutional investors.
Asset Management July to Sept. 2011 Jan. to Sept. 2011
Net sales EUR 2.2 million EUR 5.4 million
Operating profit EUR 0.6 million EUR 1.6 million
Personnel 46 46
The income statement of eQ Asset Management Group has been consolidated in 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, large real estate transactions and equity capital
markets.
The turbulence of the financial market has increased during the period under
review, and uncertainty about the closing of transactions has increased
considerably.
In the third quarter, Advium acted as advisor in two transactions. Advium acted
as advisor for the seller, when a fund managed by the private equity investor
Sentica Partners and the operative management sold Miratel Oy, which designs
nurse call systems, to the Swiss company Ascom Holding AG. In addition, Advium
acted as advisor for the seller, when Lahden Teollisuusseura sold the hotel
facilities of Hotel Lahden Seurahuone to Osuuskauppa Hämeenmaa.
At the end of September, the number of personnel at Advium was 10.
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 July to Sept. 2011 Jan. to Sept.
2011
Net sales EUR 0.6 million EUR 1.7
million
Operating profit EUR 0.1 million EUR 0.6
million
Personnel 10 10
The income statement of Advium Corporate Finance Ltd has been consolidated in
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 period under review, the net income of eQ Plc's Investments segment
totalled EUR 6.8 million (EUR 1.1 million from 1 Jan. to 30 Sept. 2010). At the
end of the period under review, the fair value of the private equity funds was
EUR 41.2 million (EUR 37.9 million). As for private equity investments, the
amount of the remaining investment commitments was EUR 16.3 million (EUR 16.5
million on 30 Sept. 2010). During the period under review, private equity funds
called in a total of EUR 4.2 million and returned EUR 7.2 million.
In the third quarter, exits generated a cash flow of EUR 4.5 million to the
private equity fund portfolio. The largest exits were the exit of the EQT V
fund from the security service company Securitas Direct, which generated a cash
flow of EUR 1.7 million for eQ, and the exit of PAI IV from Spie, a company
offering HVAC services, which generated EUR 2.1 million for eQ.
eQ has made a decision that it will only make new investments in funds managed
by eQ in future.
Investments July to Sept. 2011 Jan. to Sept.
2011
Net sales EUR 3.1 million EUR 6.8
million
Operating profit EUR 3.0 million EUR 6.5
million
Personnel 1 1
Balance sheet
The consolidated balance sheet total was EUR 73.9 million (EUR 49.2 million).
The increase from the comparison period was mainly due to the transaction
concluded on 16 March 2011 and the positive development of the market values of
private equity fund investments.
At the end of the period under review, eQ Plc's shareholders' equity was EUR
69.2 million (EUR 42.1 million). The shareholders' equity was influenced by the
profit for the period of EUR 5.2 million and the change in the fair value
reserve of EUR 2.7 million, in total EUR 7.9 million, as well as 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 decide by the Extraordinary General Meeting held 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 5.2 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 0.8 million) and interest-free short-term
debt totalled EUR 3.5 million (EUR 0.8 million). eQ's equity to assets ratio
was 93.6% (85.5%).
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. 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
Ole Johansson 150 000
Jussi Seppälä 75 000
Catharina Stackelberg-Hammarén 60 000
Eero Heliövaara 30 000
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. 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.
During the comparison period (30 September 2010), eQ Plc held at the end of the
period under review a total of 475 707 own shares acquired for hedging the
share-based incentive plan and 108 060 shares acquired based on authorisations
by Annual General Meetings.
Shareholders
The ten largest shareholders as at 30 September 2011
Share of shares and votes, %
Veikko Laine Oy 11.05
Fennogens Investments S.A. 11.04
Berling Capital Oy 10.77
Ulkomarkkinat Oy 10.12
Chilla Capital S.A. 8.06
Oy Hermitage Ab 7.15
Mandatum Life Insurance Company 6.21
Oy Cevante Ab 4.29
Linnalex Ab 2.67
Louko Antti 2.26
On 30 September 2011, eQ Plc had 3 258 shareholders.
Option scheme 2010
During the period under review, 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 period, a total of 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 under review. During the period
under review, 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
Ole Johansson 150 000
Jussi Seppälä 75 000
Catharina Stackelberg-Hammarén 60 000
Eero Heliövaara 30 000
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 period under review, the number of personnel was 63. The
Asset Management segment had 46 employees, the Corporate Finance segment 10
employees and the Investments segment 1 employee. Group administration had 6
employees. The personnel of the Asset Management segment comprises eleven
persons with fixed-term employment.
The overall salaries paid to the employees of eQ Group during the period under
review totalled EUR 3.3 million (EUR 1.0 million). This sum comprises the
salaries of Advium Corporate Finance Ltd and eQ Asset Management Group from 1
April to 30 September and the salaries of eQ Plc's and Amanda Advisors Ltd's
personnel from 1 January to 30 September 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 the 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.
Acquired net assets and goodwill at preliminary values (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 5.2
Fair value of the brand 2.0 2.0
Customer agreements 0.0 0.5
Deferred tax 0.1
Goodwill 7.3 2.8
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 at preliminary values (EUR 1 000):
Cash and investments 43.7
Other liabilities 1.1
Acquired net assets 42.6
Acquisition cost 100.0
Unallocated purchase price 57.4
Customer agreements 57.4
Events after the reporting period
After the period under review, eQ Plc's CFO Petter Hoffström has been granted
sick leave and he has decided to leave the company. His duties will be divided
temporarily between the members of the Group management team. The company has
started to look for a new CFO.
From 23 November 2011, the Group's management team consists of the following
persons: Janne Larma, Lauri Lundström, Staffan Jåfs and Annamaija Peltonen.
Lauri Lundström was appointed as substitute for the eQ Plc CEO starting from 23
November 2011.
Outlook
In November, it continues to be exceptionally difficult to predict capital
market development in the near future. Share prices rose clearly in October,
after the crash that we saw in early autumn, but the political and economic
situation in Europe, which continues to be unstable, drives the market more
strongly than the result development of companies or national economic
indicators. The changes in the assets under management and the development of
fee and commission income of eQ Group correlate with the development of the
capital markets.
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 2010, 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
7-9/11 7-9/10 1-9/11 1-9/10 1-12/10
NET SALES
Net investment income 3 059 466 6 818 1 093 1 136
Fee and commission income 2 584 994 6 816 3 021 3 972
Total 5 643 1 460 13 634 4 114 5 108
Depreciation -239 -172 -628 -538 -710
Operating expenses -2 156 -566 -5 451 -1 980 -2 570
Operating profit 3 247 723 7 555 1 597 1 829
Financial income and expenses -17 -160 -363 -427 -623
Profit before taxes 3 230 563 7 192 1 170 1 205
Income taxes -918 -151 -1 968 -349 -371
Minority interests - - -3 - -
PROFIT (LOSS) FOR THE PERIOD 2 312 412 5 222 821 834
Other comprehensive income:
Available-for-sale financial
assets, net -1 627 752 2 673 2 362 3 407
TOTAL COMPREHENSIVE INCOME FOR THE 685 1 164 7 895 3 183 4 241
PERIOD
Undiluted earnings per share, EUR 0,07 0,02 0,16 0,04 0,04
Diluted earnings per share, EUR 0,07 0,02 0,16 0,04 0,04
Earnings per average share,
EUR *) 0,08 0,02 0,17 0,04 0,04
*) Weighted average number of shares outstanding during the period.
CONSOLIDATED BALANCE SHEET, EUR 1 000
30.9.2011 30.9.2010 31.12.2010
ASSETS
LONG-TERM ASSETS
Tangible fixed assets 163 71 50
Intangible assets 19 510 4 741 4 574
Investments available for sale
Other shares and participations 49 - -
Private equity investments 41 242 37 862 40 625
Deferred tax assets 81 1 931 1 684
CURRENT ASSETS
Other assets 1 236 209 217
Accrued income and advance payments 626 271 224
Investments available for sale
Financial securities 45 166 -
Cash 10 963 3 993 4 112
TOTAL ASSETS 73 915 49 244 51 486
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY 69 159 42 124 44 229
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liability 1 248 828 946
CURRENT LIABILITIES
Accounts payable and other liabilities 3 508 792 510
Financial liabilities - 5 500 5 800
TOTAL LIABILITIES 4 756 7 120 7 256
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 73 915 49 244 51 486
CONSOLIDATED CASH FLOW STATEMENT, EUR 1 000
1-9/11 1-9/10 2010
CASH FLOW FROM OPERATIONS
Operating profit 7 555 1 597 1 829
Depreciation and write-downs 628 538 710
Investments available for sale,
change 3 867 -3 564 -4 752
Change in working capital
Business receivables, increase (-)
decrease (+) -1 176 0 39
Interest-free debt, increase (+)
decrease (-) 2 998 152 -130
Interest-bearing debt, increase (+)
decrease (-) -5 800 2 500 2 800
Total change in working capital -3 978 2 652 2 709
Cash flow from operations before
financial items and taxes 8 071 1 222 496
Interests received 21 5 10
Interests paid -384 -432 -633
Taxes -1 968 -349 -371
CASH FLOW FROM OPERATIONS 5 741 447 -498
CASH FLOW FROM INVESTMENTS
Investing activities in investments 703 -2 15
CASH FLOW FROM INVESTMENTS 703 -2 15
CASH FLOW FROM FINANCING
Income from share issue 391 - -
Purchase of own shares 0 -7 -31
Sale of own shares - - 1 085
Other changes 15 -21 -34
CASH FLOW FROM FINANCING 406 -28 1 020
INCREASE/DECREASE IN LIQUID ASSETS 6 851 417 537
Liquid assets on 1 Jan. 4 112 3 575 3 575
Liquid assets on 30 Sept. 10 963 3 993 4 112
Liquid assets contain cash and bank deposits.
CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY, EUR 1 000
Share Reserve for Other Fair Retained Total
capita invested reserve value earnings
l unrestricted s reserve
equity
Shareholders' 11 384 29 614 -1 769 -7 701 7 439 38 968
equity on 1
Jan. 2010
Comprehensive 2 362 2 362
income
Profit (loss) 821 821
for the period
--------------------------------------------------------------------------------
Total 2 362 821 3 183
comprehensive
income
Purchase of own -7 -7
shares
Other changes -21 -21
--------------------------------------------------------------------------------
Shareholders' 11 384 29 614 -1 775 -5 339 8 239 42 124
equity on 30
Sept. 2010
Shareholders' 11 384 29 614 0 -6 819 10 051 44 229
equity on 1
Jan. 2011
Comprehensive 2 673 2 673
income
Profit (loss) 5 222 5 222
for the period
--------------------------------------------------------------------------------
Total 2 673 5 222 7 895
comprehensive
income
Purchase of own 0 0
shares
Share issue 17 017 17 017
Other changes 18 18
--------------------------------------------------------------------------------
Shareholders' 11 384 46 631 0 -4 147 15 291 69 159
equity on 30
Sept. 2011
SEGMENT INFORMATION, EUR 1 000
1-9/11 Asset Corpora Group Group,
te
Manageme Finance Investme administra Eliminati total
nt nts tion ons
Net sales 5 420 1 696 6 818 0 -300 13 634
Operating profit 1 631 628 6 518 -1 222 0 7 555
Profit (loss) for 1 631 628 6 518 -3 555 0 5 222
the period
Long-term
assets 10 073 9 599 41 323 50 61 046
The item presented in the operating profit line under Group
administration
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
30 September 30 September
2011 2010
Profit (loss) for the period (EUR 1 000) 5 222 821
Undiluted earnings per share, EUR 0.16 0.04
Diluted earnings per share, EUR 0.16 0.04
Earnings per average share, EUR *) 0.17 0.04
Equity per share, EUR 2.07 1.85
Equity per average share, EUR *) 2.29 1.90
Return on investment, ROI % p.a. 7.0 3.7
Return on equity, ROE % p.a. 6.9 2.7
Equity to assets ratio, % 93.6 85.5
Share price at the end of period, EUR 1.63 1.51
Number of personnel at the end of period 63 13
Private equity investments to equity
ratio, % 59.6 89.9
Private equity investments and investment
commitments to equity
ratio, % 83.2 129.1
*) 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 4 254
Return of capital from private equity funds -7 169
Changes in the value of private equity funds
in fair value reserve 3 533
Book value of private equity funds on 30 Sept. 2011 41 242
REMAINING COMMITMENTS
On 30 September 2011, eQ Plc's remaining commitments in private
equity funds stood at EUR 16.3 million (EUR 16.5 million on 30 Sept. 2010).
Other liabilities totalled EUR 1.9 million at the end of the period under review
(EUR 0.1 on 30 Sept. 2010).
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