18.02.2021
TAALERI PLC FINANCIAL STATEMENTS BULLETIN 18 FEBRUARY 2021 at 8:15 EET
Taaleri Plc Financial Statements Bulletin 2020: Strong second half of year – operating profit increased by 46 per cent to EUR 14.8 million
July–December 2020
- Income increased by 18.5 per cent to EUR 43.3 (36.3) million.
- Continuing earnings decreased 1.8 per cent to EUR 30.2 (30.7) million. The continuing earnings of Wealth Management decreased by 12 per cent to EUR 18.6 (21.2) million mainly due to the lower transaction-based income. The continuing earnings of the Energy segment increased by 57 per cent to EUR 5.1 (3.2) million and the continuing earnings of the Insurance segment increased by 17 per cent to EUR 7.7 (6.6) million.
- Performance fees were EUR 4.9 (5.6) million.
- Income from investment operations was EUR 8.2 (-0.1) million.
- Operating profit increased by 46.2 per cent to EUR 14.8 (10.1) million, or 34 (28) per cent of income.
- Earnings per share were EUR 0.46 (0.21).
January–December 2020
- Income increased by 3.3 per cent to EUR 69.5 (67.2) million.
- Continuing earnings grew 7.1 per cent to EUR 59.2 (55.3) million. The continuing earnings of Wealth Management decreased by 3 per cent, but the continuing earnings from assets under management increased by 8 per cent. The continuing earnings of the Energy segment doubled to EUR 9.2 (4.6) million and the Insurance segment’s continuing earnings increased by 21 per cent to EUR 14.6 (12.1) million.
- Performance fees totalled EUR 7.1 (5.2) million.
- Income from investment operations was EUR 3.2 (6.7) million.
- Operating profit increased by 6.6 per cent to EUR 17.6 (16.5) million, or 25.3 (24.5) per cent of income.
- Earnings per share were EUR 0.46 (0.39).
- Assets under management grew 4.2 per cent to EUR 7.4 (7.1) billion.
- Insurance exposure totalled EUR 1.8 (1.8) billion.
- The Board of Directors’ proposes a dividend of EUR 0.32 per share for 2020. The Board of Directors’ has decided that the unpaid dividend of EUR 0.16 for 2019 will not be paid.
Group key figures
| H2/2020 | H2/2019 | 2020 | 2019 | Long-term target | |
| Earnings key figures | |||||
| Continuing earnings, MEUR | 30.2 | 30.7 | 59.2 | 55.3 | |
| Growth in continuing earnings, % | -1.8 | 22.2 | 7.1 | 6.3 | > 15.0 |
| Income, MEUR | 43.1 | 36.3 | 69.4 | 67.2 | |
| Operating profit, MEUR | 14.8 | 10.1 | 17.5 | 16.5 | |
| Operating profit, % | 34.3 | 27.8 | 25.3 | 24.5 | > 20.0 |
| Profit for the period, MEUR | 11.7 | 6.6 | 13.1 | 11.5 | |
| Return on equity*, % | 18.5 | 10.9 | 10.1 | 9.3 | > 15.0 |
| Balance sheet key figures | |||||
| Equity ratio, % | 49.7 | 46.6 | > 30.0 | ||
| Group’s capital adequacy ratio, % | 216.2 | 207.4** | |||
| Per share key figures | |||||
| Earnings/share, EUR | 0.42 | 0.21 | 0.46 | 0.39 | |
| Equity/share, EUR | 4.75 | 4.45 | |||
| Share closing price, EUR | 8.12 | 8.42 | |||
| Other key figures | |||||
| Cost/income ratio excluding investment operations |
79.9 | 70.8 | 76.7 | 83.7 | |
| Cost/income ratio | 65.9 | 70.6 | 74.6 | 74.7 | |
|
Number of full-time employees, average |
195 | 183 | 192 | 186 | |
| Market capitalization, MEUR | 229.8 | 238.3 | |||
| Assets under management, BEUR | 7.4 | 7.1 | |||
| Guaranty insurance portfolio, BEUR | 1.8 | 1.8 |
* Annualized
** Capital adequacy ratio includes the Board of Director’s dividend proposal for 2019, of which the Board of Directors has decided on 18 February 2021 not to distribute EUR 4.5 million
Income statement items are compared with figures for the corresponding period last year. The balance sheet is compared to the situation at the end of 2019, unless otherwise stated.
Taaleri publishes its Financial Statements Bulletin 2020 as a PDF file attached to this stock exchange release. The report is also available at www.taaleri.com/en/investor-relations/reports-and-presentations.
CEO ROBIN LINDAHL
Taaleri’s result for the second half of 2020 was strong, driven by the Energy and Insurance segments. From July to December, the Group’s income increased by 18.5 per cent to EUR 43.3 million and operating profit by 46 per cent to EUR 14.8 million. The result was improved especially by investment returns, which strengthened towards the end of the year.
All in all, we can be satisfied with Taaleri’s year in a challenging operating environment. The Group’s income increased slightly to EUR 69.5 million, and operating profit increased to EUR 17.6 million, representing 25 per cent of income.
For the Wealth Management segment, the second half of the year was weaker than in the previous year due to the COVID-19 pandemic, but the trend took a positive turn towards the end of the year. Continuing earnings from assets under management grew, but continuing earnings other than those based on assets under management remained below the previous year’s level. During July–December, assets under management took an upward turn, and in the last quarter sales increased to the best figures of the year. The segment’s expense awareness remained good in the second half of the year.
I am especially pleased that in the SFR survey, institutional investors chose our wealth management as the best in Finland in challenger category. Particularly, investors appreciated our customer service, vision and resources.
Launched in June, our digital wealth management service specialising in impact investment has been well received by existing and new customers. The service offers all investors the opportunity to invest in new projects benefiting the environment and society through a wide-spread ETF portfolio.
In accordance with our strategy, we continued the development of our real estate business into a separate operational unit. Our goal is to significantly increase the assets under management of real estate funds by seeking growth in new scalable products and expanding the investor base. During the financial year we launched our first special investment fund that invests in real estate, called Taaleri Real Estate. The fund started its investment activities towards the end of the year by acquiring rental homes, which are among the safest real estate categories in the COVID-19 market environment.
The Energy segment had a strong year and its continuing earnings doubled from last year. The continuing earnings for the second half of the year increased by 57 per cent to EUR 5.1 million, and the operating result showed a profit. The SolarWind II fund, which invests in industrial-scale wind and solar power plants, reached EUR 320 million in investment commitments in November. The fund has been invested in by many major domestic and international institutional investors, and I am very proud of the international breakthrough achieved by our skilled Energy team. The fund will remain open to investors until June 2021, and its maximum size is EUR 400 million.
In the Insurance segment, Garantia turned in its best insurance technical result ever. In the second half of the year, the company’s income increased by 26 per cent to EUR 13.6 million and operating profit by 39 per cent to EUR 9.2 million. The combined ratio for the financial year was 37 per cent and the excellent result was due to successful underwriting, low claims incurred and low operating expenses. The investment return increased towards the end of the year and was moderate, given the chosen level of risk. Garantia started underwriting residential mortgage guarantees with a new banking partner. The issuance of guarantees to OP Financial Group’s mortgage customers began at the beginning of October.
The COVID-19 pandemic is not over, although vaccines promise to alleviate the situation this year. I would like to warmly thank our staff for their committed and hard work and our customers for their trust in us during these exceptional times. Despite the unpredictability of the operating environment, we are determined to continue developing and implementing the company’s strategy. Our goal this year too is to offer our customers profitable investments for the benefit of the environment and society alike.
OPERATING ENVIRONMENT
The COVID-19 pandemic had global public health and economic impacts in 2020. Central banks and governments responded to the crisis with rapid and substantial stimulus measures. Central banks lowered interest rates and launched bond purchase programmes which, despite the weak economic situation, kept financing conditions rather good and helped avert a global wave of bankruptcies. Governments introduced direct and indirect support measures. Investments in renewable energy were placed at the heart of the European Union’s EUR 750 billion support package.
In the investment market, the year was unstable. The COVID-19 pandemic initially led to a sharp decline in stock prices, but the large-scale monetary stimuli in the United States and Europe and the positive news on the development of the COVID-19 vaccine led to a reversal in price development. At the end of the year, many stock exchange prices rose to record levels, but regional differences were large.
In the real estate investment market, transaction volumes have been at a record high in recent years. In the spring the COVID-19 pandemic temporarily stopped the transaction market almost completely, but towards the end of the year the market clearly picked up. Uncertainties in the user market directed capital to the safest real estate categories: housing, public real estate and logistics.
The renewable energy market developed well, and we see especially the solar and wind power markets continuing to grow.
The effects of the pandemic on the Finnish economy began to be felt in the first quarter of the year, and in the second quarter the gross domestic product reduced markedly compared to the same time period the previous year. Although the economy showed signs of recovery from the third quarter on, preliminary estimates have it that the gross domestic product fell by 3–4 per cent over the previous year.
The strong financial position of Finnish enterprises, their proven ability to adapt to the conditions and the support measures taken by the public sector towards enterprises contributed to the success of Finnish enterprises under the circumstances. Even the Finnish housing market was hardly affected by the pandemic crisis. The housing market slowed down temporarily in the spring, but the market quickly returned to normal during the summer.
FINANCIAL RESULT 1 JANUARY 2020–31 DECEMBER 2020
Income and operating profit
| EUR million | H2/2020 | H2/2019 | Change, % | 2020 | 2019 | Change, % |
| Group income | 43.3 | 36.3 | 19.2% | 69.5 | 67.2 | 3.4% |
| Wealth Management | 24.7 | 26.9 | -8.2% | 46.7 | 44.5 | 4.7% |
| Insurance | 13.6 | 10.8 | 25.7% | 17.2 | 21.3 | -19.2% |
| Energy | 5.1 | 3.2 | 57.0% | 9.2 | 4.6 | 99.5% |
| Other operations | 1.9 | -3.4 | neg | 0.1 | -1.6 | neg |
| Eliminations | -2.0 | -1.2 | -3.7 | -1.7 |
| Group operating profit/loss | 14.8 | 10.1 | 45.8% | 17.6 | 16.5 | 6.3% |
| Wealth Management | 5.9 | 9.7 | -39.2% | 12.1 | 11.8 | 3.2% |
| Insurance | 9.2 | 6.6 | 39.1% | 9.9 | 12.7 | -21.9% |
| Energy | 0.1 | -1.0 | neg | 0.2 | -2.6 | neg |
| Other operations | -0.4 | -5.2 | 92.1% | -4.7 | -5.3 | 11.9% |
The Group's share of the result of associated companies is taken into account in the segment-specific income.
July–December 2020
The Group’s income increased by 18.5 per cent to EUR 43.3 (36.3) million. The Group’s continuing earnings decreased by 1.8 per cent to EUR 30.2 (30.7) million. The Group’s fee and commission income was EUR 26.2 (28.4) million, of which the performance fees accounted for EUR 4.9 (5.6) million. Net income from insurance operations was EUR 13.6 (10.8) million, of which guaranty insurance operations totalled EUR 7.7 (6.6) million and net income from investment operations totalled EUR 5.9 (4.2) million. The return on investments in insurance operations, at fair value, was 6.4 (2.9) per cent.
The Group’s investment activity generated a total of EUR 8.2 (-0.1) million during July-December 2020. Taaleri Group’s investment operations without Garantia’s investment operations yielded EUR 2.3 (-4.3) million.
The Group’s operating profit was EUR 14.8 (10.1) million and represented 34.1 (27.8) per cent of the Group's income. The Group’s administrative costs totalled EUR 19.2 (16.7) million, of which personnel costs amounted to EUR 14.7 (11.9) million. The increase of personnel costs was mainly related to the Energy segment, the establishment of the Real estate business and variable salaries. Other operating costs totalled EUR 3.0 (2.8) million.
Profit for the period amounted to EUR 11.7 (6.6) million and the comprehensive income was EUR 14.3 (6.5) million.
January–December 2020
The Group’s income in January-December 2020 increased by 3.3 per cent to EUR 69.5 (67.2) million. Continuing earnings grew 7.1 per cent to EUR 59.2 (55.3) million in 2020, which is below the Group’s long-term target (over 15 per cent growth). The continuing earnings of Energy and Insurance segments outperformed the long-term targets, but Wealth Management did not meet the long-term target. The Group’s fee and commission income was EUR 49.2 (46.1) million, of which the performance fees accounted for EUR 7.1 (5.2) million. Net income from insurance operations was EUR 17.2 (21.3) million, of which net income from guaranty insurance operations totalled EUR 14.6 (12.0) million. The net return on investments in insurance operations totalled EUR 2.5 (9.2) million, and the return on investments, at fair value, was 1.8 (8.1) per cent.
Taaleri Group’s investment operations yielded EUR 3.2 (6.7) million. Taaleri Group’s investment operations without Garantia’s investment operations yielded EUR 0.6 (-2,5) million, which includes a fair value change of EUR -2.3 (-4.3) million from the Fellow Finance ownership.
The Group’s operating profit was EUR 17.6 (16.5) million, which represents a growth of 6.6 per cent. The operating profit represented 25.3 (24.5) per cent of the Group's income and exceeds the Group’s long-term operating profit target (more than 20 per cent).
The administrative costs totalled EUR 34.0 (33.7) million. Personnel costs totalled EUR 25.2 (24.2) million, which included variable salaries of EUR 5.3 (5.4) million. Other administrative expenses totalled EUR 8.8 (9.5) million and other operating expenses EUR 5.9 (5.2) million.
Profit for the financial period 2020 amounted to EUR 13.1 (11.5) million and the comprehensive income EUR 12.9 (13.2) million. The Group’s return on equity was 10.1 (9.3) per cent and below the Group’s long-term target (more than 15 per cent). Return on equity remained weak due to the Group’s high capitalization.
Taaleri’s balance sheet, investments and financing
The balance sheet total of the Taaleri Group was EUR 268.0 (269.7) million. The Group’s cash and cash equivalents totalled EUR 25.8 (20.1) million and investments EUR 194.8 (173.5) million, corresponding to 72.7 (64.3) per cent of the Group’s balance sheet total.
The Group’s interest-bearing liabilities amounted to EUR 64.7 (75.6) million, which consisted of EUR 34.9 (34.9) million in Taaleri Plc bond programs, EUR 14.9 (25.9) million in liabilities to credit institutions and the ten-year Tier 2 bond at EUR 14.8 (14.8) million issued by Taaleri Plc during the financial year 2019. Liabilities totalled EUR 134.8 (144.0) million and equity stood at 133.2 (125.7) million.
The equity ratio of Taaleri Group remained strong at 49.7 (46.6) per cent and exceeded the Group’s long-term target 30 per cent.
OUTLOOK
Short-term risks and concerns
The coronavirus pandemic will continue to cause uncertainty in 2021. However, the global economy is likely to recover as coronavirus vaccinations progress and the restrictive measures in the global economy can be lifted. The most significant external uncertainties affecting the Group’s operating profit are changes in the operating and regulatory environment and the development of the financial markets globally and especially in Finland.
The results of the Wealth Management and the Energy segments are influenced by the development of assets under management, which depends among other things on the progress of private equity fund projects and the development of capital markets. Profit development is also influenced by the realization of performance fees, which are tied to the success of the investment operations. The Energy segment’s earnings are also affected by the success of its own investments in energy projects.
The Insurance segment’s guaranty insurance business and investment activities have a major impact on Taaleri’s operational income and capital adequacy.
The Other operations returns consist of the market value changes in investments and of sales profits/losses gained as well as returns of loans granted. The earnings and results of the Other operations may thus vary significantly between periods under review.
Long-term financial targets
Taaleri’s long-term targets are at least 15 per cent growth in continuing earnings, operating profit at least 20 per cent of income, return-on-equity at least 15 per cent and equity ratio at least 30 per cent.
The company aims to distribute a growing competitive dividend annually, with consideration to the company's financial and financing situation as well as the Group’s capital adequacy requirement.
Board of Directors´ Dividend Proposal
The Board of Directors proposes that a dividend of EUR 0.32 per share, a total of EUR 9,057,798.40 be paid for the financial year 2020. The parent company’s distributable funds were EUR 57,284,919.13, which includes EUR 9,265,339.98 in net profit for the year. The dividend is to be paid in one instalment. In addition, the Board of Directors has decided that an unpaid dividend of EUR 0.16 per share for 2019 will not be paid.
The dividend will be paid to shareholders who are registered in the list of shareholders maintained by Euroclear Finland Ltd on the record date, which is 29 March 2021. The dividend payment date proposed by the Board is 7 April 2021.
The Board of Directors’ report and financial statements will be available at www.taaleri.com on 4 March 2021 at the latest.
Helsinki, 18 February 2021
Taaleri Plc
Board of Directors
Additional info
CEO Robin Lindahl, 358 50 595 9616, robin.lindahl@taaleri.com
CFO Minna Smedsten, 358 40 700 1738, minna.smedsten@taaleri.com
Head of Communications and IR Siri Markula, 358 40 743 2177, siri.markula@taaleri.com
Webcast
A live webcast for analysts and media will be held on 18 February 2021 at 14:00. The event is in Finnish. The webcast can be followed online at taaleri.videosync.fi/2021-02-18-0q4osavuosi/register. The event will be recorded and available later with English subtitles on Taaleri's investor pages at https://www.taaleri.com/investors/reports-and-presentations.
Financial information
The annual report and financial statements for 2020 as well as the annual summary 2020 will be published on the company's website no later than 4 March 2021, as previously announced.
The Annual General Meeting is scheduled to be held on Thursday, 25 March 2021 in Helsinki.
Taaleri reports its result in 2021 as follows:
- 7 May 2021: Interim report for the period January-March 2021
- 19 August 2021: Half-year Financial Report for the period January-June 2021
- 5 November 2021: Interim report for the period January-September 2021
Taaleri in brief
Taaleri is a Finnish financial services company, whose parent company, Taaleri Plc, is listed on Nasdaq Helsinki main market. The Taaleri Group comprises three business areas: Wealth Management, Insurance, and Energy. In addition, the Group makes investments from its own balance sheet. At the end 2020, Taaleri had assets under management totalling EUR 7.4 billion and over 6,000 wealth management customers. Taaleri Plc has some 6,000 shareholders. Taaleri’s operations are supervised by the Finnish Financial Supervisory Authority.
More information about our company and services:
www.taaleri.com/en
www.taalerivarainhoito.com/en
www.taalerienergia.com
www.taalerikapitaali.com/en
www.garantia.fi/en
Siri Markula, Head of Communications and IR, tel. 358 40 743 2177, siri.markula@taaleri.com
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