In the second quarter, Evli’s net revenue and operating profit increased, driven by a one-time profit impact from the Bregal Milestone partnership arrangement, positive market development and performance-related fees earned through successful portfolio management.
Despite the challenging market environment, funding for alternative investment funds proceeded successfully. Evli collected more than EUR 80 million in net subscriptions in the second quarter. Cooperation with Bregal Milestone to accelerate the international growth of Allshares’ incentive business progressed as expected and the first acquisitions in Sweden were completed.
Financial performance January-June 2024 (comparison period 1–6/2023)
- Net revenue was EUR 72.2 million (EUR 52.2 million). Comparable net revenue after eliminating the effects from the corporate transaction was EUR 55.0 million (45.7 million).
- Operating profit was EUR 37.2 million (EUR 19.1 million). Comparable operating profit after eliminating the effects of the from the corporate transaction was EUR 22.2 million (16.9 million).
- Operating result of the Wealth Management and Investor Clients segment increased to EUR 18.2 million (EUR 17.8 million).
- Operating result of the Advisory and Corporate Clients segment increased to EUR 2.2 million (EUR 1.8 million).
- At the end of June, net assets under management amounted to EUR 18.7 billion (EUR 16.8 billion), including assets managed by associated companies. Assets under management excluding the associated companies amounted to EUR 16.4 billion (EUR 14.7 billion).
- Return on equity was 37.9 percent (22.6%).
- The ratio of recurring revenue to operating costs was 125 percent (128%).
- Earnings per share, fully diluted, were EUR 1.10 (EUR 0.52).
Financial performance April-June 2024 (comparison period 4-6/2023)
- The Group's net revenue was EUR 29.3 million (EUR 26.4 million).
- The Group's operating profit was EUR 12.1 million (EUR 9.8 million).
- Diluted earnings per share amounted to EUR 0.31 (EUR 0.26).
Revenue growth was supported by increased commission income from traditional funds and performance-based fees
Economic growth in the United States continued to be strong in the second quarter, as in the early part of the year, but remained subdued in Europe. Consumer price growth in the United States slowed less than expected, resulting in expectations of interest rate cuts shifting further into the future. In Europe, on the other hand, consumer price growth slowed, and the European Central Bank lowered its key interest rate to 4.25 percent in June. Share prices rose slightly in April-June in the United States, Europe, and emerging markets. Share prices also rose in Finland.
“In the second quarter, Evli Group's net revenue increased by approximately 11 percent to EUR 29.3 million. Revenue growth was supported by increased commission income from traditional funds, performance-based fees recognized during the quarter, stronger invoicing in the Corporate Finance unit than in the previous year, and income from the company's own balance sheet. Net revenue growth was dampened by the arrangement carried out with Bregal Milestone in March, as a result of which the incentive business company Allshares Oy will be reported as an associated company in the future,” Evli’s CEO Maunu Lehtimäki says.
The Group's operating profit for the second quarter increased by 24 percent to EUR 12.1 million (EUR 9.8 million). Evli's return on equity for the first half of the year was 37.9 percent (22.6%). The ratio of recurring revenue to operating expenses was 125 percent (128%). The Group's solvency and liquidity were at an excellent level.
The Wealth Management and Investor Clients segment's net revenue increased by 16 percent in the second quarter and was EUR 24.1 million (EUR 20.8 million). The Advisory and Corporate Clients segment's net revenue decreased by 60 percent in the second quarter to EUR 2.0 million (EUR 5.0 million) due to the corporate arrangement concerning Allshares Oy.
“As a result of positive market development and net subscriptions, managed client assets increased to EUR 18.7 billion (EUR 16.8 billion). Evli Fund Management Company's mutual fund capital, including alternative investment products, was approximately EUR 13.3 billion (EUR 12.2 billion),” Lehtimäki says.
In the area of responsibility, Evli continued engaging with the investee companies independently and participated in the collaborative engagement through the CDP 2024 Non-Disclosure Campaign. In addition, Evli signed the investor letter Finance Statement on Plastic Pollution to support a global plastics treaty.
Outlook unchanged for 2024
The business environment is expected to remain uncertain and difficult to predict in 2024. The expansion of geopolitical risks, fears of inflation and interest rates, 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.
