Evli Plc’s Interim Report January–September 2024

EVLI PLC INTERIM REPORT, OCTOBER 25, 2024, AT 2:00 PM (EET/EEST)

Evli Plc’s Interim Report January–September 2024

SOLID THIRD QUARTER

Highlights of the period

• International sales has shown clear signs of improvement. The activity of international clients has increased since the summer, and net sales in the third quarter of the year were clearly positive.
• Fund management fees increased compared to the comparison period. Both new sales and successful portfolio management contributed positively to the rise.
• Institutional investors once again ranked Evli as Finland’s best asset manager in Kantar Prospera’s annual client survey. Evli was also placed first in sustainable investing expertise. Evli has been ranked at the top of the survey for 12 consecutive years based on overall quality assessment.

Financial performance January-September 2024 (comparison period 1–9/2023)

• Net revenue was EUR 96.7 million (EUR 78.0 million). Comparable net revenue after eliminating the effects of the corporate transaction was EUR 79.6 million (EUR 69.4 million).
• Operating profit was EUR 47.7 million (EUR 29.3 million). Comparable operating profit after eliminating the effects of the corporate transaction was EUR 32.7 million (EUR 26.9 million).
• Operating result of the Wealth Management and Investor Clients segment increased to EUR 29.5 million (EUR 26.3 million).
• Operating result of the Advisory and Corporate Clients segment increased to EUR 2.5 million (EUR 1.5 million).
• At the end of September, net assets under management amounted to EUR 18.7 billion (EUR 17.1 billion), including assets managed by associated companies. Assets under management excluding the associated companies amounted to EUR 16.3 billion (EUR 14.7 billion).
• Return on equity was 35.8 percent (22.8%).
• The ratio of recurring revenue to operating costs was 136 percent (133%).
• Earnings per share, fully diluted, were EUR 1.38 (EUR 0.80).

Financial performance July-September 2024 (comparison period 7-9/2023)

• The Group's net revenue was EUR 24.5 million (EUR 25.9 million). Comparable net revenue after eliminating the effects of the corporate transaction was EUR 24.5 million (EUR 23.7 million).
• The Group's operating profit was EUR 10.5 million (EUR 10.2 million). Comparable operating profit after eliminating the effects of the corporate transaction was EUR 10.6 million (EUR 10.0 million).
• Diluted earnings per share amounted to EUR 0.27 (EUR 0.28).

OUTLOOK UNCHANGED FOR 2024

The business environment is expected to remain uncertain and difficult to predict in 2024. The expansion of geopolitical risks, and concerns about the sustainability of economic growth increase uncertainty in the markets.

Despite the challenging market environment, Evli has succeeded in strengthening its position in the market. Growth has been supported by a wide product range and customer base. Due to the one-off impact from the corporate arrangement, the strong position and growth prospects, we estimate that the operating profit will significantly exceed the level of the comparison period.


KEY FIGURES DESCRIBING THE GROUP’S FINANCIAL PERFORMANCE

* Dividend approved by the Annual General Meeting 2024. The dividend has been paid on 25.3.2024.
** The number of employees of Allshares Oy is not included in the 1–9/2024 personnel figures.


CEO MAUNU LEHTIMÄKI

Economic growth in the United States continued to be strong in the third quarter, as in the early part of the year, but remained subdued in Europe. In the US, there were signs of a slowdown in the rise of consumer prices and a cooling in the labor market during the summer, thereby prompting the Federal Reserve, the central bank of the United States, to cut interest rates by half a percentage point in September. The European Central Bank, which started interest rate cuts already in June, further lowered its key interest rate to 3.5 percent at its September meeting. Central banks both in the US and in Europe are expected to continue their interest rate cuts well into next year, possibly up to 2026.

In addition to the economic and interest rate outlook, the market monitored closely the developments in geopolitical risks. The focus was on the upcoming presidential election and its potential impacts on the country’s economic, trade, and foreign policies. Generally, the US turning inward and rising protectionism, as well as a possible trade war between the US and China, are perceived as threats.

In the third quarter, income from capital markets was positive in all main markets and in Finland. Returns on fixed income investments were strong across all interest rate asset classes, and equity returns were mostly reasonable or good, too. In the real estate market, the decline in prices appears to have levelled off as a result of the interest rate cuts, but a genuine recovery will require an improvement in vacancy rates and a pickup in transaction activity. There were no significant changes in the valuations of private equity investments during the quarter.

Evli Group’s net revenue in the third quarter decreased by six percent to EUR 24.5 million (EUR 25.9 million). Taking into account the corporate restructuring of the incentive business carried out in March, comparable revenue was slightly higher than in the previous year. Commission income from traditional funds as well as advisory fees performed best, both of which increased significantly. Fee income from private equity funds and asset management was at the previous year’s level. As a result of the slowdown in trading activity, brokerage income fell. Income from the company’s own balance sheet was at the previous year’s level.

The Group’s operating profit for the third quarter increased by three percent to EUR 10.5 million (EUR 10.2 million). Evli’s return on equity for the first nine months was 35.8 percent (22.8%). The ratio of recurring revenue to operating expenses was 136 percent (133%). The Group’s solvency and liquidity were at an excellent level.

The Wealth Management and Investor Clients segment’s net revenue increased by 6 percent in the third quarter and was EUR 22.4 million (EUR 21.2 million). As a result of positive market development and net subscriptions, managed client assets increased to EUR 18.7 billion (EUR 17.1 billion). Evli Fund Management Company’s mutual fund capital, including alternative investment products, was approximately EUR 13.4 billion (EUR 12.0 billion). Net subscriptions of traditional investment funds amounted to approximately EUR -20 million during the third quarter. The largest net subscriptions were targeted to Evli European High Yield fund, which invests in lower-rated corporate bonds, and to Evli GEM fund, which invests in emerging markets equities.

The Advisory and Corporate Clients segment’s net revenue decreased by 63 percent in the third quarter to EUR 0.9 million (EUR 2.5 million). The decrease in net revenue is a consequence of the corporate arrangement in which the incentive business became an associated company of the Group and is therefore no longer part of segment reporting. Advisory fees received from M&A activities increased compared to the corresponding period of the previous year. The unit’s mandate base is good, and there are clear signs of pickup in the M&A market from the previous year’s exceptionally low level.

The key areas of Evli’s strategy, international sales and alternative investment products, developed positively during the quarter. Net subscriptions by international clients amounted to EUR 100 million and international clients accounted for 19 percent (19 %) of Evli’s total fund capital, including alternative investment products. Sales of alternative investment products totaled EUR 22 million (EUR 19 million) during the quarter.

In the area of responsibility, Evli continued engaging with the investee companies, both independently and together with other investors. During the third quarter of the year, Evli continued as an active investor participant in the Nature Action 100 initiative, which engages with 100 companies that are systemically important regarding nature and biodiversity loss and encourages companies to take more ambitious action to reduce nature loss. Furthermore, Evli signed the 2024 Global Investor Statement to Governments on the Climate Crisis, that aims to accelerate the private capital flows needed for a transition to a climate-resilient, nature-positive economy. During the third quarter, Evli also presented its child rights research in an event hosted by UNICEF Sweden.


EVLI PLC


Additional information:
Maunu Lehtimäki, CEO, Evli Plc, tel. +358 (0)50 553 3000, maunu.lehtimaki@evli.com
Juho Mikola, CFO, Evli Plc, tel. +358 (0)40 717 8888, juho.mikola@evli.com


Evli Plc

We see wealth as an engine to drive sustainable progress. We draw on our heritage, broad expertise, and Nordic values to grow and manage wealth for institutions, corporations and private persons in a responsible way.

We are the best fund house in the Nordics¹ and the leading asset manager in Finland² offering a broad range of services including mutual funds, asset management and capital markets services, alternative investment products, equity research as well as Corporate Finance services. Responsible investing is integrated in every investment decision and our expertise is widely acknowledged by our clients. Evli has Finland's best expertise in responsible investment³.

Evli Group employs around 270 professionals and Evli has approximately EUR 18.7 billion in client assets under management (net 9/2024). Evli Plc’s B shares are listed on Nasdaq Helsinki Ltd. More information at www.evli.com.

¹ Morningstar Awards 2024 (c). Morningstar, Inc. All Rights Reserved. Awarded to Evli for the Best Fund House in Finland and Sweden. Lipper Fund Awards 2023, the category Small Fund Companies.
² Kantar Prospera External Asset Management Finland 2015, 2016, 2017, 2018, 2019, 2021, 2022, 2023, 2024. Kantar Prospera Private Banking 2019, 2020 Finland.
³ SFR Scandinavian Financial Research Institutional Investment Services Finland 2021, 2022. Kantar Prospera External Asset Management 2017, 2018, 2019, 2020, 2023, 2024 Finland.


Distribution: Nasdaq Helsinki, main media, www.evli.com