12.02.2020
TAALERI PLC’S STOCK EXCHANCE RELEASE 12 FEBRUARY 2020 AT 8.30 (EET)
TAALERI PLC’S FINANCIAL STATEMENTS BULLETIN 2019: STRONG SECOND HALF YEAR - DIVIDEND PROPOSAL FOR 2019 IS EUR 0.32 PER SHARE
The Group in January-December 2019
- Income was EUR 67.2 (72.5) million.
- Continuing earnings grew 6.3 per cent to EUR 55.3 (52.0) million.
- Performance fees totalled EUR 5.2 (8.1) million.
- Income from investment operations was EUR 6.7 (12.2) million.
- Operating profit was EUR 16.5 (23.9) million, or 25 (33) per cent of income.
- Earnings per share were EUR 0.39 (0.76).
- Assets under management grew 23 per cent to EUR 7.1 (5.7) billion.
- Insurance exposure grew 10.3 per cent and totalled EUR 1.8 (1.7) billion.
- The Board of Directors’ proposes a dividend of EUR 0.32 per share.
The Group in July-December 2019
- Income was EUR 36.3 (37.3) million.
- Continuing earnings grew 22.2 per cent to EUR 30.7 (25.2) million.
- Performance fees were EUR 5.6 (2.5) million.
- Income from investment operations was EUR -0.1 (9.2) million.
- Operating profit was EUR 10.1 (11.5) million, or 28 (31) per cent of income.
- Earnings per share were EUR 0.21 (0.44).
| Group key figures | 2019 | 2018 | H2/2019 | H2/2018 | Long-term target |
| Earnings key figures | |||||
| Continuing earnings, MEUR | 55.3 | 52.0 | 30.7 | 25.2 |
|
| Growth in continuing earnings, % |
6.3 | 6.3 | 22.2 | 5.4 | > 15.0 |
| Income, MEUR | 67.2 | 72.5 | 36.3 | 37.3 | |
| Operating profit, MEUR | 16.5 | 23.9 | 10.1 | 11.5 | |
| Operating profit, % | 24.5 | 33.0 | 27.8 | 30.9 | > 20.0 |
| Profit for the period, MEUR | 11.5 | 21.6 | 6.6 | 12.2 | |
| Return on equity*, % | 9.3 | 18.9 | 10.9 | 21.1 | > 15.0 |
|
Balance sheet key figures |
|||||
| Equity ratio, % | 46.6 | 51.4 | > 30.0 | ||
|
Group’s capital adequacy ratio, % |
207.4 | 186.0 | |||
| Per share key figures | |||||
| Earnings/share, EUR | 0.39 | 0.76 | 0.21 | 0.44 | |
| Equity/share, EUR | 4.45 | 4.26 | |||
| Share closing price, EUR | 8.42 | 7.10 | |||
| Other key figures | |||||
| Cost/income ratio | 74.7 | 67.0 | 70.6 | 68.9 | |
|
Number of full-time Employees, average |
186 | 183 | 183 | 187 | |
|
Market capitalization, MEUR |
238.3 | 201.0 | |||
|
Assets under management, BEUR |
7.1 | 5.7 | |||
|
Guaranty insurance portfolio, BEUR |
1.8 | 1.7 |
* annualized
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 2018, unless otherwise stated.
Taaleri publishes its Financial Statements Bulletin 2019 as a PDF file attached to this stock exchange release. The report is also available at https://www.taaleri.com/en/investor-relations/reports-and-presentations
CEO ROBIN LINDAHL
”2019 was a record year for the stock markets both in Finland and internationally. The positive market development as well as an increase in assets under management also supported Taaleri's success in 2019. Assets under management grew by 23 per cent to EUR 7.1 billion from the beginning of the year. The development of continuing earnings in the Group was particularly strong in the second half of the year, growing by 22 per cent. The year-on-year growth was 6 per cent. Successful exits by private equity funds in the second half of the year increased performance fees to EUR 5.2 million for the full year. Income decreased to EUR 67.2 million, mainly due to the weak performance in Other Operations, which were particularly affected by the decline in the value of Fellow Finance shares. Operating profit in 2019 decreased to EUR 16.5 million, or 24.5 percent of income, while operating profit in the second half of the year was 27.8 per cent of income. Full-year earnings per share were EUR 0.39.
The wealth management business was particularly successful in the second half of the year: with increased continuing earnings, increased commissions and cost awareness, the second half operating profit totalled EUR 10 million. The challenging equity market at the end of 2018 had a negative impact on continuing earnings in early 2019, but during the second half of the year, performance returned to its growth path and continuing earnings increased by 20 per cent. Garantia's result, at fair value, was strong and totalled EUR 14.5 million: premiums written in insurance operations grew by 14 per cent, claims ratio remained low at 12.1 per cent and income on investment operations, at fair value, was 8.1 per cent. Taaleri Energia's continuing income doubled from last year, due to the successful fund raising of the Taaleri SolarWind II fund and good development of the projects in Taaleri SolarWind I projects. The delay in the 336 MW Truscott-Gilliland wind farm in Texas burdened earnings and Energia's operating profit was EUR -2.6 million. Overall, I am satisfied with Taaleri’s second half of the year development, although the whole year's result remained satisfactory.
During the year, we established three private equity funds focusing on impact investments: Wind IV, SolarWind II and Päiväkotikiinteistöt (Daycare Properties), which were well received by our clients. The aim of impact investing is not only financial gain, but also significant social or environmental benefit. Other funds and investments provided by us also developed and successfully raised new capital. Our equity funds have again excelled in both domestic and international comparisons. At the end of the year, three wind farms managed by Taaleri Tuulitehdas I and Taaleri Tuulitehdas II and Taaleritehdas Asuntorahasto II were successfully exited, yielding performance fees of EUR 5.2 million during the year. On behalf of the new owners, Taaleri Energia will continue to operate the sold wind farms under a managed account agreement.
Year 2019 was also a significant milestone for Taaleri’s internationalization. Taaleri Energia launched several international wind and solar power projects, and, for example, the European Investment Bank (EIB) has already invested in our SolarWind II fund. Internationalization in line with our strategy enables a new growth path for our company.
For Garantia Insurance Company, which forms our Financing segment, the year was characterized by the rollout of a new strategy focusing on dispersed consumer and business portfolios. Garantia's competitive advantage in the market is based on an extensive network of co-operation and partnerships, a customer-oriented approach, strong solvency and risk-selection expertise.
Taaleri's goal is strong but controlled growth and improving our profitablity. We believe in the scalability of our business and the potential for faster-than-market growth. The constantly changing operating environment requires organizations to have increasingly more cross-sectoral expertise and ability to execute. To strengthen the synergy between Taaleri's segments and the realization of the company's growth targets, we expanded our Executive Management team membership with the appointment of Titta Elomaa, CEO of Garantia Insurance Company Ltd, Kai Rintala, Managing Director of Taaleri Energia Ltd. and Perttu Purhonen, who also was appointed as the new Head of Wealth Management.
It is estimated that climate change will create both business threats and opportunities for companies. Initiatives and actions to mitigate climate change and to adapt to it are becoming increasingly prevalent year after year also in the finance sector. In addition to responsible investing, our discussions with clients are more and more often about impact investing. Already since 2010, Taaleri has invested in projects pursuing not only financial benefits, but also sizable social and environmental benefits. Taaleri's vision on how we can use capital and ownership to create a better future for us and for the next generations inspires us all and guides our activities.
We received excellent recognition from our clients in September when Taaleri was selected as Finland's best wealth manager in Arvopaperi business magazine's survey. I want to thank our clients for their trust, as well as our bankers, portfolio managers and other experts , and all our partners for their outstanding work and for the past year. Confidence in the future looks strong.”
OPERATING ENVIRONMENT 2019
Growth in the Finnish economy and imports slowed in 2019. Unemployment remained nearly unchanged compared to the previous year, even though development varied quite a lot on a monthly basis. Concerns about a trade war between the United States and China and the uncertainty of how Brexit would affect the markets had an impact on the EU economy and on general sentiments. Despite this, the Finnish stock markets did well, and 2019 proved to be a very good investment year, as investment returns were driven by the light central bank policy and the expectations of economic recovery in 2020.
In September 2019, the European Parliament declared a global climate emergency. Climate change mitigation and preparedness for the risks of change are the new normal that will change the rules of the game in all areas and sectors. Companies constantly declared their carbon-neutral goals and strengthening the EU position as a global climate leader was among the priorities of the EU Finnish Presidency. In an increasing number of countries, industrial-scale renewable energy is the cheapest way to build new energy production, will result in intensifying competition for high-quality impact investments, especially on the renewable energy front.
FINANCIAL RESULTS 1 JANUARY–31 DECEMBER 2019
Income and operating profit
Segment specific income and operating profit
| 2019 | 2018 | Change, % | H2/2019 | H2/2018 | Change, % | |
| EUR million | ||||||
| Group income | 67.2 | 72.3 | -7.1 | 36.3 | 37.3 | -2.5 |
| Wealth Management | 42.9 | 48.7 | -12.0 | 25.7 | 19.0 | 34.8 |
| Financing | 21.3 | 12.5 | 70.3 | 10.8 | 6.3 | 71.7 |
| Energia | 4.6 | 2.3 | 103.1 | 3.2 | 1.2 | 170.7 |
| Business segments, total | 68.8 | 63.5 | 8.3 | 39.7 | 26.5 | 49.7 |
| Other operations | -1.6 | 8.8 | -118.5 | -3.4 | 10.3 | -133.3 |
| Group operating profit/loss | 16.5 | 23.9 | -30.8 | 10.1 | 11.5 | -12.1 |
| Wealth Management | 11.8 | 16.8 | -30.1 | 9.7 | 2.7 | 263.1 |
| Financing | 12.7 | 4.9 | 156.9 | 6.6 | 2.5 | 159.4 |
| Energia | -2.6 | -2.3 | 12.4 | -1.0 | -1.4 | -30.4 |
| Business segments, total | 21.9 | 19.5 | 12.4 | 15.4 | 3.8 | 302.6 |
| Other operations | -5.3 | 4.4 | n.a. | -5.2 | 7.7 | n.a. |
The Group's share of the result of associated companies is taken into account in the segment-specific income. Segment information is presented on page 34 in the Financial Statements.
January–December 2019
The Group’s income in January-December 2019 was EUR 67.2 (72.5) million. In the second half of the year, the Group's continuing earnings began to grow following the weak performance at the beginning of the year. Continuing earnings grew 6.3 percent and totalled EUR 55.3 (52.0) million in 2019. The Group’s fee and commission income was EUR 46.1 (45.6) million, of which the performance fees accounted for EUR 5.2 (8.1) million. Net income from insurance operations was EUR 21.3 (12.3) million, of which net income from guaranty insurance operations totalled EUR 12.0 (13.0) million. The net return on investments in insurance operations totalled EUR 9.2 (-0.7) million, and the return on investments, at fair value, was 8.1 (-1.7) per cent. The income of Taaleri’s business segments, Wealth management, Financing and Energia, grew by 8.3 per cent to EUR 68.8 (63.5) million and the operating profit grew by 12.4 per cent to EUR 21.9 (19.5) million.
Taaleri Group’s investment operations without Garantia’s investment operations yielded EUR -2.5 (12.9) million, which includes a fair value change of EUR -4.3 million from the Fellow Finance ownership. The comparison year, 2018, included profit of EUR 13.8 million from the Fellow Finance ownership, write-downs of EUR 5.4 million from geothermal projects in Germany, and the additional earn-out of EUR 4.9 million from a wind project.
The Group’s operating profit was EUR 16.5 (23.9) million and represented 24.5 (33.0) per cent of the Group's income.
The administrative costs totalled EUR 33.7 (30.2) million. Personnel costs totalled EUR 24.2 (21.7) million, which included variable salaries of EUR 5.4 (2.5) million. Other administrative expenses totalled EUR 9.5 (8.4) million and other operating expenses EUR 5.2 (8.4) million. With the introduction of IFRS 16, other operating expenses decreased by EUR 1.6 million, and depreciation and amortization increased accordingly by EUR 1.4 million and interest expenses EUR 0.2 million,
Profit for the financial period 2019 amounted to EUR 11.5 (21.6) million and the comprehensive income EUR 13.2 (20.3) million.
July–December 2019
The Group’s income was EUR 36.3 (37.3) million. The Group’s continuing earnings increased by 22.2 per cent to EUR 30.7 (25.2) million. The Group’s fee and commission income was EUR 28.4 (20.0) million, of which the performance fees accounted for EUR 5.6 (2.5) million. Net income from insurance operations was EUR 10.8 (6.1) million, of which guaranty insurance operations totalled EUR 6.6 (7.2) million and net income from investment operations totalled EUR 4.2 (-1.1) million. The return on investments in insurance operations, at fair value, was 2.9 (-1.6) per cent. The income of Taaleri’s business segments, Wealth management, Financing and Energia, grew by 49.7 per cent to EUR 39.7 (26.5) million and the operating profit quadrupled and was EUR 15.4 (3.8) million.
The Group’s investment activity generated a total of EUR -0,1 (9.2) million during July-December 2019. Taaleri Group’s investment operations without Garantia’s investment operations yielded EUR -4.3 (10.3) million, which includes a fair value changes of EUR 5.5 million from the Fellow Finance ownership. The investment operations of the comparison period, July-December 2018, included profit of EUR 13.8 million from the Fellow Finance ownership and write-downs of EUR 3.1 million from geothermal projects in Germany.
The Group’s operating profit was EUR 10.1 (11.5) million and represented 27.8 (30.9) per cent of the Group's income. The Group’s administrative costs totalled EUR 16.7 (16.0) million, of which personnel costs amounted to EUR 11.9 (11.5) million. Other operating costs totalled EUR 2.8 (4.7) million.
Profit for the period amounted to EUR 6.6 (12.2) million and the comprehensive income was EUR 6.5 (11.3) million.
Taaleri’s balance sheet, investments and financing
The balance sheet total of the Taaleri Group was EUR 269.7 (238.0) million. The Group’s investments were EUR 173.5 (162.2) million, corresponding to 64.3 (68.1) per cent of the Group’s balance sheet total.
The Group’s interest-bearing liabilities amounted to EUR 75.6 (61.8) million, which consisted of EUR 34.9 (54.8) million in Taaleri Plc bond programs, EUR 25.9 (7.0) million in liabilities to credit institutions and the ten-year Tier 2 bond at EUR 14.8 million issued by Taaleri Plc during the financial year. The bond strengthened Taaleri's solvency and the funds raised will be used for general business purposes. Liabilities totalled EUR 144.0 (115.6) million and equity stood at 125.7 (122.4) million.
The equity ratio of Taaleri Group remained strong and was 46.6 (51.4) per cent.
OUTLOOK
Short-term risks and concerns
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 Energia 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 Energia segment’s earnings are also affected by the success of its own investments in energy projects.
The Financing 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 operating profit target is at least 15 percent growth in continuing earnings, at least 20 per cent of income, its return-on-equity target is at least 15 per cent and its equity ratio target is at least 30 per cent.
The company strives to increase the amount of dividend it distributes and to annually distribute a competitive dividend, 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 9,072,198.40 be paid for the financial year 2019. The parent company’s distributable funds were EUR 52,548,478.35, which includes EUR 7,505,697.80 in net profit for the year. The dividend is to be paid in one instalment.
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 20 March 2020. The dividend payment date proposed by the Board is 27 March 2020.
The Board of Directors’ report and financial statements will be available at www.taaleri.com on 26 February 2020 at the latest.
Helsinki, 12 February 2020
Taaleri Plc
Board of Directors
Additional info:
CEO Robin Lindahl, 358 50 595 9616, robin.lndahl@taaleri.com
CFO Minna Smedsten, 358 40 700 1738, minna.smedsten@taaleri.com
Head of Communications and IR Sophie Jolly, 358 40 828 7317, sophie.jolly@taaleri.com or investors@taaleri.com
Web cast presentation in English
An English presentation will be available from 12 February 2020 at 15:00 EET at https://www.taaleri.com/en/investors/reports-and-presentations. The web cast is conducted in Finnish.
Financial information
The Annual General Meeting is scheduled to be held in Helsinki on 18 March 2020.
Taaleri Plc will release the January–June 2020 half-year financial report on 13 August 2020 at approx. 8:30 a.m.
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, Financing, and Energy. In addition, the Group makes investments from its own balance sheet.
At the end of 2019, Taaleri had assets under management totalling EUR 7.1 billion and 5,500 wealth management customers. Taaleri Plc has some 4,700 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
www.fellowfinance.fi/en
Sophie Jolly, Head of Communications and IR, tel. 358 40 828 7317, sophie.jolly@taaleri.com
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