The year 2022 was particularly significant for Evli with two large and successful M&A transactions. In the partial demerger carried out in the spring, Evli focused on investment services and the banking business was merged with Fellow Finance. EAB Group Plc merged with Evli at the beginning of October, which further strengthened Evli's position as Finland's leading asset manager. At the same time, the alternative investment funds continued to grow, driven by strong client demand. Over the past two years, Evli has managed to more than double the assets under management in alternative investment funds.
- Net revenue was EUR 96.1 million (Carve-out 1–12/2021: EUR 116.2 million).
- Operating profit was EUR 30.9 million (EUR 56.6 million). Operating profit excluding non-recurring items related to mergers and acquisitions was EUR 37.1 million.
- Operating result of the Wealth Management and Investor Clients segment decreased to EUR 27.4 million (EUR 44.8 million).
- Operating result of the Advisory and Corporate Clients segment decreased to EUR 4.2 million (EUR 7.4 million).
- At the end of December, assets under management amounted to EUR 16.0 billion (EUR 17.5 billion) on a net basis.
- Return on equity was 20.4 percent (50.4%).
- Earnings per share, fully diluted, was EUR 0.81 (EUR 1.58). The corresponding earnings per share excluding non-recurring items related to the corporate transactions was EUR 1.00.
- The Board of Directors proposes that a total of EUR 1.15 per share be distributed to shareholders for the financial year 2022, of which EUR 0.80 per share would be dividends and EUR 0.35 per share would be distribution from the reserve for unrestricted equity.
- The ratio of recurring revenues to operational costs was 123 percent (135%).
Financial performance October-December 2022
- The Group's net revenue was EUR 29.4 million (EUR 35.0 million).
- The Group's operating profit for the period was EUR 5.0 million (EUR 17.0 million). Operating profit excluding non-recurring items related to mergers and acquisitions was EUR 9.8 million.
- Earnings per share, fully diluted, amounted to EUR 0.12 (EUR 0.49). The corresponding earnings per share excluding non-recurring items related to the corporate transactions was EUR 0.26.
- EAB Group Plc merged into Evli Plc on October 1, 2022. The figures of EAB Group Plc are included for the last quarter of the year in the financial statements bulletin.
The weakness in the market and operating environment was reflected in Evli’s performance in the fourth quarter
The year 2022 was historically weak for investments. All major asset classes, equities, government bonds and corporate bonds, fell in value as the war in Ukraine, geopolitical tensions, rising energy prices and wildly rampant inflation, plus the policy rate hikes to contain it, all took their toll. The rise in the US dollar also led to higher budget deficits and debt servicing costs in many emerging economies and increased their risk of default. The prices of growth stocks, especially tech companies, which rose to great heights during the era of low interest rates and quantitative easing, fell particularly hard. The few stocks that rose in value were mainly found in the energy and weapons industries.
The weak market development levelled off in the last quarter of the year as investors saw the first signs of a possible slowdown in inflation. Despite this, the normalisation of the interest rate environment, the weakened purchasing power for consumers, as well as global economic uncertainties and the continuation of the war, are all expected to push Europe into a recession during the current year.
“The year 2022 was particularly significant for Evli with two large and successful M&A transactions. In the spring, Evli carried out a partial demerger. In the transaction, Evli focused on providing investment services and merged its banking operations with Fellow Finance to form a new digital bank, Fellow Bank Plc. Evli is a significant owner of the bank created by the merger. In the autumn, Evli strengthened its position as Finland's leading asset manager by the merger of EAB Group Plc into Evli. The corporate transactions contributed to the negative impact on Evli's profitability during the 2022 financial year, but positive synergies are expected in the coming years”, says Maunu Lehtimäki, CEO of Evli.
“The weakness in the market and operating environment was reflected in Evli’s performance in the fourth quarter. Net turnover decreased by approximately 16 percent to EUR 29.4 million and the Group's operating profit fell by about 70 percent to EUR 5.0 million. Fee income from alternative investment products and the incentive business increased, but fee income from traditional funds and the Corporate Finance unit was well below the previous year. The decline in fee income was driven by lower asset values, increased redemptions, and a slowdown in M&A activity. In addition, the result for the fourth quarter was negatively impacted by non-recurring items related to the merger with EAB Group Plc”, Maunu Lehtimäki continues.
In January-December, Evli's return on equity was 20.4 percent (50.4%). The ratio of recurring income to operating expenses, on the other hand, was 123 percent (135%). The Group's solvency and liquidity were at an excellent level.
Outlook for 2023
The year 2023 will start in an uncertain mood, due to increased interest rate and inflation fears, risen geopolitical risks and a market downturn. Evli has managed to strengthen its market position as a result of the corporate transactions made during 2022. With synergies from the arrangements and the non-recurring costs allocated to 2022, we expect the operating result to be well above the comparison period (EUR 30.9 million in 2022).
Read more: Evli Plc’s Financial Statements Bulletin 1–12/2022
