Annual Report
eQ in
Key Figures
eQ in Brief
CEO’s Review
Business Areas
Asset Management
Corporate Finance
Investments
Sustainability
Report by the Board of Directors
Consolidated Key Ratios
Financial Statements
Auditor’s Report
Corporate Governance
Corporate Governance Statement
Remuneration Report
Board of Directors
Management Team
Performace Fees of Private Equity Funds
Information about Capital Adequancy
Information to the Shareholders
Contents
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Key Figures
NET REVENUE
.
EUR MILLION
: . MEUR
EARNINGS PER SHARE
.
EUR
. EUR
COST/INCOME RATIO
,%
.%
DIVIDEND AND REPAYMENT OF
EQUITY PER SHARE
.
EUR
. EUR
MARKET CAP
,.
EUR MILLION
. MEUR
NUMBER OF SHAREHOLDERS
,
,
NUMBER OF PERSONNEL
ASSETS UNDER MANAGEMENT
WITHOUT REPORTING SERVICES
.
EUR BILLION
. BN EUR
AND IN TOTAL
.
EUR BILLION
. BN EUR
OPERATING PROFIT
.
EUR MILLION
. MEUR
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
eQ in brief
eQ is a Finnish group of companies that concentrates
on asset management and corporate finance
operations. The share of the parent company
eQ Plc islisted on Nasdaq Helsinki. The Group
oers its clients services related to mutual-, real
estate- and private equity funds, discretionary
asset management, investment insurance policies,
and a large range of mutual funds oered by
international partners. The asset management
clients are institutional investors and private
individuals. In addition, Advium Corporate Finance
Ltd, which is part of the Group, oers services
related to mergers and acquisitions, real estate
transactions and equity capital markets.
0
10
20
30
40
50
60
70
80
2015 2016 2017 2018 2019 2020 2021
NET REVENUE DEVELOPMENT
MEUR
Asset Management Corporate Finance Investments
Group Administration
Group
56.7
78.9
30.5
35.4
40.7
45.4
50.6
0
10
20
30
40
50
60
2015 2016 2017 2018 2019 2020 2021
OPERATING PROFIT DEVELOPMENT
MEUR
13.2
16.2
20.1
22.4
26.3
30.8
47.7
Asset Management Corporate Finance Investments
Group Administration
Group
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
CEO’S REVIEW
eQ Group’s result
wasexcellent in 2021
eQ’s growth in 2021 was very strong, and its profit has already grown for 31
consecutive quarters. The net revenue of the Group during the financial period
was EUR 78.9 million and the operating profit EUR 47.7 million. Net revenue
grew by 39% and operating profit by almost EUR 17 million, which is an increase
of 55% on the previous year. The profit for the year was EUR 38.1 million and
earnings per share were 97 cents. The Group’s cost/income ratio continued to
fall and amounted to 39.5%.
All segments of the group grew strongly. Last year, eQ Asset Management’s
net revenue grew by 23 % and operating profit by 26% to EUR 40.3 million.
The cost/income ratio of the Asset Management segment was at an excellent
level, 37.7%. The net revenue of Advium grew by 67% from the year before to
EUR 6.9 million. The operating profit was EUR 2.7 million, compared with the
previous year’s EUR 1.1 million. The business operations of the Investments
segment consist of private equity and real estate fund investments made from
eQ Group’s own balance sheet. Its operating profit grew markedly from the year
before to EUR 7.1 million.
eQ Asset Management is the leading
institutional asset manager in Finland
According to the study conducted by SFR last year, eQ is the most popular
institutional asset manager in Finland, and what is best, investors regarded eQ
as the best company in the market in their quality assessments the third year
in a row. SFR interviews the approximately 100 largest Finnish institutional
investors annually.
The overall assessment of quality consists of several dierent criteria, and
according to the interviewees, return on investments is the most important
of them. Of all eQ funds registered in Finland that eQ manages itself 85%
surpassed their benchmark indices in 2021, and during the past three years,
the corresponding figure has been 83%. The eQ Europe Dividend Fund won the
Lipper Nordics 2021 best “Equity Europe Income Fund” award measured by three
and five year returns. The return of the eQ Community Properties Fund since
2012 has been 8.9% annually. Last year, the return of the fund was 8.2%. The
eQ Commercial Properties Fund has given an annual return of 8.5% since
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
establishment and 8.9% last year. The returns of the private equity funds and
asset management programmes were also excellent in 2021, and as a result
of the active M&M market, there were much more capital calls and above all
returns than during the previous, quieter year.
The interest in alternative investment products has grown for several years
now, both in Finland and internationally. The aim is to increase the portfolio’s
return expectation and diversify the investment portfolio. eQ Asset Manage
-
ment is the clear market leader in Finland among the providers of alternative
investment products.
eQ Care Fund was the first Finnish open real estate fund. It was established
in 2012, and last year the name was changed to eQ Community Properties
Fund. The eQ Commercial Properties Fund was established in 2014. In 2020,
we expanded our real estate investments to housing by establishing the eQ
Residential Fund. Net subscriptions in eQ’s real estate funds increased markedly
in 2021, totalling EUR 353 million. The assets managed under real estate asset
management were EUR 2.3 billion at the end of the year, and the real estate
assets of the funds totalled almost EUR 3.0 billion.
The strong growth of eQ’s private equity asset management continued last
year. We raise capital yearly to funds investing in Europe and the US, alter
-
nately, and in 2021 it was America’s turn. In the final closing of the eQ PE XIII
US private equity fund, the size of the fund grew to USD 318 million. The total
assets raised to the US PE funds since 2015 exceed USD 700 million. The eQ PE
XIII US Fund makes investments in private equity funds that invest in unlisted
small and mid-sized companies in Northern America. At the end of October, we
also established our first eQ VC Fund at EUR 36 million. The eQ VC fund invests
in the best venture capital funds in the US. During the first months of 2021,
we also launched three new private equity asset management programmes
and extended the agreements of three existing programmes and increased the
investment amounts. In addition, we held the final closing of our third fund
investing in the European private credit market, eQ Private Credit III. Its size
grew to EUR 54 million. In all, were raised almost EUR 600 million to our private
equity funds and asset management programmes in 2021, and the asset man
-
aged under them totalled EUR 3.2 billion at the close of the year.
We increase our eorts in sustainability
Sustainability has for years been one of the cornerstones of our operations and
part of all our business operations. We act in a responsible and sustainable man
-
ner as eQ Group and integrate sustainability systematically and in practice to
eQ Asset Management’s investment operations and Advium’s corporate finance
operations.
Even though eQ Group, based on its size and operations, is not obliged to draw
up a sustainability report required by the Finnish Accounting Act, we have
decided to voluntarily report on sustainability to investors and other major
stakeholders, now already for the fifth time. The sustainability report is part of
our Annual Report.
Responsible investment is not a separate consideration for eQ, as ESG is part of
all investment operations. In practice this means that sustainability is contin
-
uously and systematically integrated in the selection, monitoring and reporting
of investees in all investment areas of eQ. Each investment team has a person
who has deeper knowledge of responsible investment and who supports and
co-ordinates the work of portfolio managers and analysts. eQ’s Director for
Responsible Investment is responsible for the co-ordination and development.
We draw up an ESG report on all equity and bond investments twice a year and
on real estate and private equity funds once a year.
We regularly report to PRI (UN’s Principles for Responsible Investment) on sus
-
tainability in our investment process, our concrete engagement activities in the
investees and our development initiatives regarding the responsible investment
approach. The ratings we have received are excellent.
We are committed to continuously developing sustainability in co-operation
with our clients. We wish to oer our clients concrete solutions that support
their needs even with regard to sustainability, now and in future.
Advium has a good market position
The M&A market was active in 2021. The positive development of the equity
and bond markets promoted the realisation of transactions planned by both
companies and private equity actors.
Advium’s market position and share remained strong, and during the financial
year, we acted as advisor in seven finalised M&A transactions. The most
important of these were the divestment of Nordkalk to SigmaRoc for EUR 500
million, the merger of Purmo with Virala Acquisition Company (VAC) and the
purchase of Nettix Oy by Alma Media.
Real estate transaction activity grew from 2020. Advium acted as advisor
to the seller in two published transactions in 2021. The major transaction
towards the end of the year was the divestment of Espoo Hospital, where the
“eQ Asset Management is the clear
market leader in Finland among
the providers of alternative
investmentproducts.”
Mikko Koskimies
CEO
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
city of Espoo sold the hospital for EUR 300 million. This deal was signed in
January2022.
Group balance sheet and dividend proposal
The Group has no interest-bearing loans, and its balance sheet is very strong.
The profit of the Group was EUR 0.97 per share. Due to the strong balance sheet
and capital adequacy, the Board of Directors have decided to propose to the
Annual General Meeting a dividend of EUR 1.00, i.e. the entire profit for 2021,
and an equity repayment of EUR 0.03 per share be paid out to the shareholders.
Thanks to our clients, personnel and partners
The number of eQ’s clients also grew strongly in 2021, and the investment
returns of the client portfolios were excellent. I want to thank all our clients
for excellent co-operation and the trust that they have shown in our services.
Circumstances restricted personal contacts considerably, and I hope that we
will be able to meet you much more face to face this year.
2021 was another challenging year for the entire personnel. We have had to
adjust to exceptional circumstances, both at work and at leisure due to the
COVID-19 situation. People have worked both at home and at the oce, and
exceptional circumstances still prevail. Despite this, we have succeeded excel
-
lently in our business operations. The results of the study on well-being at work,
which is conducted twice a year, were excellent in 2021 as well. The study
covers the personnel’s commitment, well-being at work, satisfaction with the
work community and the work of the superior, for instance. On a scale 1 to 5,
the personnel gave satisfaction and well-being at work the grade 4.3, which is
an excellent level. According to the study, the employees also recommend eQ
Group as a working place. The eNPS value that describes this was very high at
44 (on a scale from -100 to +100, where 0 to +20 is good, over 20 excellent and
over 40 a top result).
Top performance requires very professional, engaged and motivated people.
Iwant to thank the entire personnel for their excellent achievements in 2021.
In addition to the clients and personnel, my warm thanks go to all our partners.
Outlook for 2022
As for sales, the year 2021 was very good for eQ Asset Management. In January
2022, the eQ PE XIV North and eQ PE SF IV private equity funds raised a record
amount of EUR 281 million in the first closings of the funds, and the eQ VC Fund
grew to USD 56 million. This strengthens our view that the demand for alterna
-
tive investment products continues to be strong among investors. In addition,
eQ will begin to accrue the catch up share of private equity funds’ performance
fee in the income statement in 2022, which will further strengthen the result.
Consequently, we expect the net revenue and operating profit of the Asset
Management segment to grow in 2022. In accordance with our disclosure pol
-
icy, we do not issue profit guidance for the Corporate Finance and Investments
segments. The results of these segments are highly dependent on factors that
are not dependent on the company. Therefore, their operating profits may vary
considerably and are dicult to foresee.
Mikko Koskimies
CEO
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
The Asset Management segment consists of eQ Plc’s subsidiary, the investment
firm eQ Asset Management Ltd, and other Group companies engaged in asset
management operations, the most important of which is eQ Fund Management
Company Ltd.
The aim of eQ Asset Management is to oer its clients good investment returns,
innovative asset management services and excellent customer services.
Through its own organisation and international partners, eQ can oer its clients
an extensive and international range of investment solutions. eQ Asset Man
-
agement oers its clients services related to mutual, real estate and private
equity funds, discretionary asset management and investments insurance
policies.
eQ has a wide range of actively managed and successful funds, which oer
diversified investment alternatives with dierent strategies. The investment
range covers 23 traditional mutual funds registered in Finland, private equity
and real estate funds as well as funds managed by our international partners,
covering all major investment categories and markets. At the end of the finan
-
cial period 2021, the assets managed by the Group, excluding assets covered by
private equity reporting services, were EUR 9,187 million and altogether EUR
11,584 million.
eQ Asset Management is the leading institutional asset manager in Finland. SFR
interviews the approximately 100 largest Finnish institutional investors annu
-
ally. According to the study conducted by SFR in 2021, eQ is the most popular
institutional asset manager in Finland, and what is best, investors regarded
eQ as the best company in the market in their quality assessments already the
third year in a row.
The principles of responsible investments cover all of eQ’s investment areas.
There is more information on eQ Group’s sustainable business and responsible
investment operations in a separate section of the Annual Report.
In 2021, eQ Asset Management’s net revenue increased by 23% to EUR
64.9million. Profitability continued to improve, and the operating profit grew
by 26% to EUR 40.3 million. Demand continues to be strong among investors,
above all for alternative investment products. eQ raised USD 318 million to the
eQ PE XIII US private equity fund and USD 36 million to the new eQ VC venture
capital fund. The net subscriptions in eQ’s real estate funds totalled almost
EUR 355 million. Within traditional asset management, 85% of all eQ mutual
funds registered in Finland that it manages itself surpassed their benchmark
indices in 2021.
Asset Management
The Asset Management segment consists of eQ Plc’s subsidiary,
the investment firm eQ Asset Management Ltd, and other Group
companies engaged in asset management operations, the most
important of which is eQ Fund Management Company Ltd.
Key figures
Asset Management –/ –/ Change
Net revenue, MEUR . . %
Operating profit, MEUR . . %
Cost/income ratio, % . . -%
Personnel as full-time resources %
Fee and commission income,
Asset Management, MEUR –/ –/ Change
Management fees
Traditional asset management
. . %
Real estate asset management . . %
Private equity asset management . . %
Management fees, total . . %
Performance fees
Traditional asset management
. . %
Real estate asset management . . %
Private equity asset management . - n/a
Performance fees, total . . %
Other fee and commission income . . %
Fee and commission income, total . . %
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Traditional asset management mutual funds
Funds of the partners and other asset management
Open real estate funds
Closed real estate funds
Private equity funds
Private equity asset management programmes
Real estate
25%
Private Equity
35%
Traditional
40%
eQ’S ASSETS UNDER MANAGEMENT
Without private equity reporting services
EUR 9.2 bn and in total EUR 11.6 bn.
.
.
.
.
.
.
31 Dec. 2021
EUR
. bn
eQ Asset Management is the leading
institutional asset manager in Finland
The position of eQ Asset Management as the choice of professional Finnish
investors has been further consolidated in 2021. In the annual SFR study,
institutional clients regarded eQ Asset Management as the quality-wise best
asset manager in Finland, already the third time in a row. The quality assess
-
ments cover investment return, ESG, customer services and asset management
resources, for instance. The approximately 100 largest institutional investors in
Finland are interviewed in SFR’s study. eQ Asset Management is also the clearly
most commonly used asset manager – no less than 70% of the interviewed
institutional investors use eQ Asset Management’s services (66% in 2020).
eQ
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Source: SFR research 2021
SFR RESEARCH: MOST USED INSTITUTIONAL
ASSET MANAGERS
eQ
Source: SFR research 2021
SFR RESEARCH: ASSET MANAGEMENT
QUALITY REVIEW (1–5)
. . . . . . . .
.
.
.
.
.
.
.
.
.
.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Strong year for eQ’s real estate funds
eQ’s real estate funds once more showed their strength in 2021, and the returns
were excellent. In 2021, the return of the eQ Commercial Properties Fund was
8.9% and that of the eQ Community Properties Fund 8.2%. The outlook of the
funds is strong and net rental income is at a good level. In 2021, we succeeded
well both in rental operations and the purchase of new objects.
The eQ Commercial Properties Fund agreed on a EUR 800 million green financ
-
ing package in August 2021, and the Community Properties Fund on corre-
sponding financing of EUR 700 million in November 2021. These arrangements
replace previous financing agreements and enable an extensive future growth
potential for the funds.
The situation of the eQ Commercial Properties and Community Properties funds
is very good. Active rental operations continue, development and construction
projects are taken forward and new projects are being planned. In 2022, eQ will
also established another residential fund, eQ Residential II. eQ Residential II
will make investments in the Helsinki Metropolitan Area, Tampere and Turku.
Unlike the eQ Commercial Properties and eQ Community Properties funds, eQ
Residential II is restricted to professional investors only in a closed-end fund
structure.
eQ has already raised more than USD700million
to PE funds in North America
In 2021, eQ Asset Management’s fourth private equity fund that makes invest-
ments in North America, eQ PE XIII US Fund, raised a record amount of USD 318
million. The size of eQ’s previous private equity fund eQ PE XI US fund, which
was established in 2019, is UDS 217 million. The funds raised to the US PE funds
since 2015 exceed USD 700 million.
The eQ PE XIII US Fund makes investments in private equity funds that make
equity capital investments in unlisted small and mid-sized companies located
in the US and Canada. The management company of all four US funds is eQ with
RCP Advisors in Chicago as advisor. RCP is responsible for the choice of invest
-
ment objects and enables allocations to the most interesting funds.
The majority of eQ’s clients make investments in eQ’s private equity funds
systematically, i.e. they build up a portfolio with investment commitments
every year. eQ introduces to the market a fund that makes investments in
Europe every second year and a fund that makes investments in the US every
second year. In 2022, eQ established a private equity fund that invests in North
America, eQ PE XIV North, which held its first closing in January 2022 at EUR
196 million, and eQ also raises funds to the fourth secondary market fund eQ PE
SF IV, which held its first closing at EUR 85 million. eQ’s private equity funds are
only intended for professional investors.
eQ established its first venture capital fund
In 2021, eQ Asset Management established a venture capital fund called eQ VC
and raised USD 36 million to the fund in its first closing. In January 2022, the
size of the fund grew to USD 56 million in the fund’s second closing. The target
size of the fund is USD 50–100 million, and the raising of funds will continue in
2022.
eQ VC will invest in early and late stage venture capital funds making equity
investments in approximately 200 technology start-up companies predomi
-
nantly in the US. The fund’s investment advisor responsible for fund screening
and securing allocation is TrueBridge Capital Partners. TrueBridge is a leading
venture capital firm with superior track record. TrueBridge is part of the same
group as RCP Advisors, with whom eQ has a strong strategic relationship since
2015 focusing on US lower middle market private equity.
The return dispersion in the venture capital market is very broad and the best
start-up founders seek financing from fund managers with a proven track record
of backing and rapidly scaling the most successful start-ups historically. Con
-
sequently, manager selection is critical in this asset class and a prerequisite for
generating outsized returns for investors.
eQ’s goal is to build a long-term partnership with TrueBridge and to bring a
new eQ VC fund to market every other year. eQ VC is open only to professional
clients.
“eQ’s real estate funds once more
showed their strength in 2021, and the
returns were excellent.”
“eQ’s goal is to build a long-term
partnership with TrueBridge and
to bring a new eQ VC fund to market
every other year.”
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Corporate Finance
eQ’s corporate finance services are oered by eQ Plc’s subsidiary Advium Corporate
Finance Ltd. The services cover mergers and acquisitions, large real estate transactions,
equity capital markets, and advisory services in general. The clients are mainly Finnish
companies that make corporate or real estate transactions in Finland and abroad, but also
international companies engaged in corporate and real estate transactions in Finland.
Advium is one of the most experienced and highly esteemed advisors in Finland.
Since its establishment in 2000, the company has carried out approximately
230 corporate and real estate transactions, and in many of them, at least one of
the parties has been an international actor. The total value of the transactions
has been more than EUR 20 billion.
In 2021, Advium acted as advisor in 9 finalised transactions, and its net revenue
was EUR 6.9 million and operating profit EUR 2.7 million. During the year,
Advium acted as advisor when Nordkalk was sold to SigmaRoc, when Purmo
was merged with Virala Acquisition Company (VAC) and when Alma Media
acquired Nettix Oy, for instance.
It is typical of the corporate finance business that clients pay a success fee
when the transaction has been carried out. Consequently, the transaction dates
of the transactions have a major impact on invoicing, and the net revenue may
vary considerably.
Key figures
Corporate Finance –/ –/ Change
Net revenue, MEUR . . %
Operating profit, MEUR . . %
Cost/income ratio, % . . -%
Personnel as full-time resources %
SINCE APPROXIMATELY M&A AND REAL ESTATE
TRANSACTIONS VALUE OVER
EUR BN
Advium acted as Rettig Group’s advisor in the
first de-SPAC transaction in the Nordics
One of Advium’s highlights during 2021 was the process leading up
to the merger of Purmo Group and Virala Acquisition Company (VAC).
Purmo Group, a leader in sustainable indoor climate comfort solu-
tions in Europe, has been formed during the last 50+ years follow-
ing Rettig Group’s acquisition of Purmo Tuote Oy in 1970. In 2020,
the company reported net sales of EUR 671 million and EBITDA of
EUR 85 million.
Since the 2010s Rettig Group has been transforming from an
industrial conglomerate into a leading investment company. The
merger of Purmo Group into VAC and subsequent listing repre
-
sented a solution that is strategically perfectly aligned, supporting
Rettig Group’s objective of being an active owner developing best-
in-class companies while retaining a 73% ownership position in the
company.
The process was navigated by Advium in largely uncharted waters
on a tight schedule. In addition to customary due diligence and
transaction negotiations, the structure of the de-SPAC transaction
required full IPO readiness preparations, clearance of regulatory
approvals and the acceptance by VAC’s EGM.
The merger was completed on 31 December 2021, and trading of
Purmo Group’s share on the ocial list of Nasdaq Helsinki Ltd
commenced on 3 January 2022 at a share price of EUR 14.75, some
45% higher than the pre-announcement level.
Going forward, Purmo Group will pursue its organic and M&A-
driven growth agenda as a publicly traded company.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Investments
The business operations of the Investments segment consist of private equity
and real estate fund investments made from eQ Group’s own balance sheet.
During the financial period 2021, the operating profit of the Investments seg-
ment totalled EUR 7.1 million, and at the end of the period, the fair value of pri-
vate equity and real estate fund investments was EUR 18.8 million. The amount
of the remaining investment commitments was EUR 7.2 million.
During the financial period 2021, the investment objects returned capital for
EUR 3.5 million and distributed a profit of EUR 3.2 million. Capital calls totalled
EUR 2.6 million. The net cash flow from the investments during the period was
EUR 4.1 million.
In 2021, eQ Plc made a USD 1.0 million investment commitment in the eQ PE
XIII US private equity fund and a USD 1.0 million commitment in the eQ VC
fund. The considerable increase in the M&A activity of unlisted companies had
a positive impact on the portfolio’s cash flow, value changes and realised profits
in 2021.
As for the income from own investment operations, eQ’s net revenue is rec
-
ognised for eQ due to factors independent of the company. As a result, the
segment’s result may vary considerably.
Key figures
Investments –/ –/ Change
Operating profit, MEUR . -. ,%
Fair value of investments, MEUR . . %
Investment commitments, MEUR . . %
Net cash flow of investments, MEUR . . %
THE VALUE OF PRIVATE EQUITY AND
REAL ESTATE FUND INVESTMENTS
. MEUR
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
We work in a responsible and sustainable manner as eQ Group, and integrate
sustainability systematically and practically with eQ Asset Management’s
investment activity and Advium’s corporate finance operation. Our values “hon
-
est, open, competent and ecient” are at the core of the Group’s work culture.
They guide the work of every eQ employee and constitute the foundation for
daily co-operation with clients, partners and other key stakeholders.
We have developed sustainability purposefully in recent years. The most
important development project in 2021 was the preparation of a sustainability
classification for all of eQ’s investment products. While working on product
classifications at all our investment teams, we also evaluated what various
classification requirements mean for the current investment strategies and
practices of our products and for ESG reporting, and what we should perhaps
develop further.
During the autumn we also updated the Code of Conduct concerning the Group.
The Code of Conduct describes joint rules based on eQ’s values and the general
principles guiding behaviour, decision-making and business operation that every
eQ employee must follow.
Customer satisfaction and wellbeing at work are objectives that steer our oper
-
ation. Despite the prolonged COVID-19 pandemic, the satisfaction of both our
clients and employees has remained at an extremely high level, and we are very
grateful for this.
We now publish our Sustainability Report for the fifth time as part of the Annual
Report. For us it is very important to report about sustainability in our opera
-
tions to our shareholders, clients and other key stakeholders in a trans parent
manner. We have also actively and for a long time encouraged our investees to
report on corporate responsibility and to develop the contents and quality of
their reports.
At present, we look at the year 2022 with great interest. Our own work on
sustainability continues by, e.g., bringing changes arising from the EU’s Regu
-
lation on sustainability-related disclosures and the Taxonomy Regulation to a
concrete level in all our areas of investment. In the big picture, amendments to
statutes at the EU level are intended to increasingly promote the direction of
cash flows toward sustainable development projects. Do we investors currently
have enough relevant data at our disposal for making investment decisions
which, at the same time, also promote the financing of sustainable develop
-
ment and the green transition? This question undoubtedly gives many people
pause for thought, and building a sustainable portfolio requires patience. As the
availability and quality of responsibility data improve, the view of investments
becomes more diversified. For instance, a company reviewed by Scope 3 emis
-
sions may be very dierent from the sustainability perspective than by data on
Scope 1 and Scope 2 emissions alone.
It is time to thank our clients. You challenge us to ponder topical new themes
and trends in responsibility and sustainability, and to develop our approach on
this basis. We will be happy to meet this challenge going forward.
Let us continue to work together as we have done thus far.
Sanna Pietiläinen
Director, Responsible Investment
Sustainability is a key part of eQ’s
business operation and corporate culture
“Our values ‘honest, open, competent
and ecient’ guide the work of every eQ
employee and constitute the foundation
for daily co-operation with clients,
partners and other key stakeholders.”
Sanna Pietiläinen,
Director for Responsible Investment
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Sustainability and its
reporting in eQ Group
Purpose of sustainability reporting
eQ Group is a Finnish group of companies that concentrates on asset manage-
ment and corporate finance business. The parent company eQ Plc’s shares are
listed on Nasdaq Helsinki.
The purpose of sustainability reporting is to describe eQ Group’s role as a
responsible actor in relation to its stakeholders and society at large. eQ wishes
to ensure the transparency and openness of its operations by regularly and
extensively reporting on its sustainability work and its development, both at
company level and in its investment operations. Even though eQ Group, based
on its size and operations, is not obliged to draw up a non-financial report
required by the Finnish Accounting Act, since 2017 the Board of Directors of
eQ Plc has decided to voluntarily report on its sustainability to shareholders,
clients and other major stakeholders.
This report follows Nasdaq’s ESG global reporting guide
for public and private companies published in May
2019 (ESG Reporting Guide 2.0 – A Support Resource
for Companies) for the parts that are relevant to eQ’s
operations.
Sustainability Report 2021
eQ Group’s responsible operations
Responsible operations are a key part of eQ’s entire business. We act in a
responsible and sustainable manner as eQ Group and integrate this work sys
-
tematically and in practice to eQ Asset Management’s investment operations
and Advium’s corporate finance operations. eQ’s values (below) are at the core
of the Group’s work culture. They guide the work of each eQ employee and con
-
stitute the foundation for daily co-operation with clients, partners and other
key stakeholders.
HONEST
We are honest and reliable, true
to our word. We act correctly
and responsibly. We comply with
the regulation of the financial
industry and eQ’s joint rules.
OPEN
We are easily approachable
and discuss all matters openly.
Wedo not cover up mistakes or
problems, we learn from them.
Werejoice successes together.
Wealso respect dissimilarity.
COMPETENT
We want to understand our
clients’ needs. We constantly
develop our professional skills
andprocedures. We dare to
question matters. We share
information, provide assistance
and give feedback.
EFFICIENT
We do what we promise briskly
and carefully. We do the work,
we do not simply talk and plan.
We work diligently and with
anuncompromising attitude
together with our clients,
colleagues and partners.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
eQ encourages the companies in which it invests to transparent stakeholder
information and the development of sustainability reporting, regardless of the
size of the company or the regulatory requirements. More information about
sustainability, the related principles and other relevant documents can be found
on eQ’s website (www.eq.fi/en/about-eq-group/sijoittajat/vastuullisuus).
Sustainability themes
eQ has in its business four material subject areas that create the framework for
sustainability. The sustainability themes have been approved by eQ Plc’s Board
of Directors. The section below describes in detail what these four themes
mean in practice:
At Group level, the Management Team is responsible for sustainability, and
the work is conducted in close co-operation with eQ’s Director for Respon
-
sible Investment. eQ Plc’s Board of Directors receives annual reports on how
sustainability has been carried out within the company as well as on future
development plans.
We provide our employees with continuous training in sustainability matters.
In 2021 the training was focused on eQ Group’s updated version of the Code
of Conduct, which is described in detail in section 6.4 of this Report. Upon
the launch of the Code of Conduct, eQ also internally deployed the new eQ
Whistleblower reporting channel. In its induction programme, eQ commits new
employees to comply with and implement eQ’s principles and procedures on
responsible investing. In 2021 the company organised two induction trainings
for new employees related to sustainability.
As a result of the successful sustainability performance at Group level, eQ
Plc has been given the international ISS ESG Prime responsibility rating. ISS
assesses how responsibility matters are carried out by a company with regard
to environmental, social and governance aspects. The ISS ESG Prime rating
is awarded to companies that reach or exceed the criteria for the best ESG
practices defined by ISS ESG. eQ Plc was among the best tenth in its sector
regarding responsible operations.
eQ Plc is included in the Nasdaq OMX Sustainability Finland index. The index
consists of 40 companies ranked best on Nasdaq Helsinki in terms of sustaina
-
bility criteria. In order to promote openness and transparency eQ has already for
four years reported key ESG ratios describing operations based on sustaina
-
bility reporting to the ESG database maintained by Nasdaq. In recognition of
this, Nasdaq has awarded eQ Plc with the “Nasdaq ESG Transparency Partner”
certificate.
STRONG CORPORATE
GOVERNANCE AND HIGH
ETHICAL STANDARDS
• Adherence to the law and the
company’s internal instructions,
commitments, policies (such as
the policy on conflicts of interest)
and Code of Conduct in all
operations
• eQ’s transparent reporting – the
pricing of asset management
products, for example, is presented
openly and clearly, both ex-ante
and ex-post
• Proactive activities against
corruption, bribery and money
laundering, as well as promoting
these activities in the entire sector
• eQ Group’s sustainability report
CLIENTS
• An honest, open, competent and
ecient partner to eQ’s clients
• In-depth understanding of
customer needs and meeting
theseneeds
• Monitoring customer satisfaction,
e.g. SFR 2021 no. 1 regarding
overall quality
THE ENVIRONMENT
• Green electricity in use on eQ’s
premises (hydropower)
• For example, minimizing the use
of plastic, taking recycling into
account on the premises, favouring
public transport and alternative
ways of travelling (Environmen
-
tally friendly guidelines to eQ’s
employees since 2019)
• Training on environmental matters
for our employees
• Support for the Baltic Sea Action
Group (BSAG) since 2019. The
support is channelled through the
BSAG share of the eQ Blue Planet
Fund, and in 2021 it amounted to
almost EUR 160,000
PERSONNEL
• Equal and diverse work community
• Wellbeing at work and work ability
– workplace ergonomics, fitness
tests, monitoring the quality of
indoor air
• Early support programme
• eQ – opportunity for professional
development
• Monitoring job satisfaction
“As a result of the successful
sustainability performance at
Group level, eQ Plc has been given
the international ISS ESG Prime
responsibility rating.”
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
eQ Asset Management has for several years acted as an active forerunner for
responsible investing. eQ signed the UN Principles for Responsible Investment
(PRI) in 2010. eQ is an active member of Finnish Venture Capital Association,
Invest Europe, Rakli, Finsif (Finland’s Sustainable Investment Forum), and
Finance Finland. eQ is also a signatory to CDP’s Climate Change Programme and
encourages companies to specify emission reduction targets for their own oper
-
ation, based on science, through the Science Based Target Initiative organised
by the CDP. eQ is also a member of the GRESB (Global Real Estate Sustainability
Benchmark) with regard to the company’s real estate investments.
Responsibility and sustainability are a key part of eQ Asset Management’s
investment activities and processes. The goal is to identify investments that
benefit from sustainable operation and their potential for return, and to reduce
the risk in investments. Sustainability risks and opportunities are taken into
account systematically and practically in the selection, monitoring and report
-
ing of investments in all of eQ’s areas of investing. The sustainability risk refers
to an event or a circumstance related to the environment, society or govern
-
ance practices whose realisation could have an actual or potential significant
negative impact on the value of the investment. The material nature of sustain
-
ability risks varies in dierent sectors and business models, and investments
can also be exposed to sustainability risks through their value chains.
eQ Asset Management’s principles for responsible investment form a framework
to eQ’s investment operations and their processes. The principles cover all
asset classes, and their application depends on the asset class and investment
method. These principles have been approved by eQ Asset Management’s Board,
and they are based on policies on responsible investing specified by the Board.
The corporate governance principles of eQ Asset Management Ltd are available
on eQ’s website.
Everyone who works on investment activity at eQ understands, recognises and
takes into account the potential sustainability risks and opportunities pertain
-
ing to investments. In addition to sustainability ESG analyses, it is an important
part of a portfolio manager’s job to have a regular engagement dialogue with the
investees. Each investment team also has a dedicated person who has deeper
knowledge of sustainable investing. The coordination of work on sustainable
investing, its development and training are the responsible of eQ’s Director for
Responsible Investment.
Implementation of the EU regulation on sustainability-related disclosures was
at the centre of such training in 2021. Obligations imposed by regulation have
hardly changed eQ Asset Management’s vision and practices relating to respon
-
sibility and sustainability. Sustainability and its consistent and practical devel-
opment have been at the core of eQ’s operation for a very long time. However,
last year all of eQ’s investment teams carefully studied and evaluated what
various classification requirements mean for the current investment strategies
and practices of eQ’s products and for ESG reporting, and what should perhaps
be developed further. The company also sought lessons and understanding of
climate questions by listening to the path to carbon neutrality of Nestlé, the
world’s largest food and beverage company, in 2050. During the autumn eQ’s
real estate teams acquired more knowledge and expertise for climate work
concerning real estate investments.
eQ Plc’s Board of Directors is reported once a year on implementation of sus
-
tainability and sustainable investing and on future development activities in all
of eQ’s areas of investing. eQ Fund Management Company’s Board regularly dis
-
cusses engagement activities with investees. eQ also annually reports to PRI on
the company’s practices in sustainable investing and on concrete engagement
activities in the investees.
Reported areas
eQ Asset
Management’s
result *
Median of
respondents
Strategy and Governance A+ A
Private Equity A+ A
Listed Equity – Incorporation of ESG A+ A
Listed Equity – Active Ownership:
I Active interaction with
investments A+
II Voting at General Meetings C
B B
Property A B
* The table shows grades received by eQ Asset Management for 2020 PRI reporting. PRI reporting scale
E to A+ PRI is reforming the reporting, so the 2021 results are not available yet. In the spring of 2021,
however, eQ reported on sustainability.
Training and conversations with clients are a material part of eQ’s customer
work. We listen to our clients and learn from them. In 2021 eQ organised for its
clients two ESG webinars, the first one on the contents of the EU regulation
on sustainability-related disclosures and its implementation, in general, in oper
-
ations by actors in the financial markets. The subject of the other ESG webinar
focused on sustainability classification of eQ’s products and on observing sus
-
tainable development in the choice of companies. eQ’s ESG experts have also
Responsible and sustainable investing at eQ Asset Management
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
been active on several domestic and international forums in order to promote
the distribution of information based on best sustainability practices.
In the following chapters, eQ briefly presents the most important events con
-
cerning ESG matters in 2021 in the various asset classes. There is more detailed
information about our responsible investment operations and the ESG matters
that we monitor in our investees in the ESG reports per asset class.
Equity and fixed income investments
Observing sustainable development in eQ’s
equity and fixed income investments
Taking into account the risks and opportunities related to responsibility and
sustainability, besides the traditional financial indicators, is part of the portfolio
manager’s day-to-day work. We aim at excellent long-term return. Portfolio
managers go through all investments with sustainability indicators specified
for each fund. Actively managed equity and fixed income funds promote the
reduction of carbon emissions in the companies held.
Corporate emission details and their trends and reporting are some of the envi
-
ronment-related themes monitored. eQ also evaluates how environmental ques-
tions are taken into account in business operations and how companies promote
sustainable procedures. As an example of this procedure, last year eQ Emerging
Dividend fund invested in a Chinese environmental technology company called
China Everbright Environment, which focuses on infrastructure construction
projects in, e.g. the waste to energy sector and on consultation in environmen
-
tal resource management. The company co-operates with the government and
contributes to the reduction of China’s emissions in waste management, in
particular. Another example is Kempower, an investment in the eQ Finland fund;
eQ participated in its initial public oering last year. The company’s ecient
electric charging technology enhances the charging of electric vehicles and
buses. This facilitates the electrification of both private motoring and public
transport and, ultimately, the reduction of emissions.
Funds
Article Article Article
The fund promotes environmental
and social characteristics and the
companies in which the investments
are made follow good
The fund has sustainable
investment as its objective
FIXED INCOME FUNDS
Money Markets
eQ Euro Short Term
x
Government Bonds
eQ Government Bond
x
Investment Grade Credit
eQ Euro Floating Rate
x
eQ Euro Investment Grade x
eQ Euro Investment Grade Bond Index (Vanguard) x
High Yield Credit
eQ High Yield
x
Emerging Markets Credit
eQ Emerging Markets Corporate Bond HC
x
eQ Emerging Markets Corporate Bond Local Currency x
EQUITY FUNDS
Finland
eQ Finland
x
Europe
eQ Euroope Dividend
x
eQ Nordic Small Cap x
eQ Europe Active (Fidelity) x
eQ Europe Stock Index (Vanguard) x
North America
eQ US Stock Index (Vanguard)
x
Emerging Markets
eQ Emerging Dividend
x
eQ Emerging Markets Small Cap x
eQ Frontier Markets x
Japan
eQ Japani Stock Index (Vanguard)
x
Global
eQ Blue Planet
x
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
One governance-related theme to which eQ pays attention is the composition
of a company’s board of directors. The contents of our funds are monitored
quarterly to detect any violations of the UN’s Global Compact principles. In
fixed income funds, eQ favours reasonably priced ESG loans (incl. green bonds
and sustainability-linked bonds). Thus we aim to promote the financing of
sustainable development and the green transition in fixed income funds. The
share of ESG loans in funds has increased in the past three years. In the eQ Euro
Investment Grade and eQ Emerging Markets Corporate Bond funds the share of
ESG loans was approximately 25% and in the eQ High Yield fund over 10%.
eQ’s portfolio managers have a direct dialogue with companies in both positive
and negative questions pertaining to sustainability. One of the most important
areas of active influence is promoting the availability of sustainability reporting
and improving its contents and quality, and how companies adopt the emission
reduction target based on science. Portfolio managers also contact companies
in cases of possible violations of norms. During the period 1 Jan. 2021 to 31
Dec. 2021 we carried out altogether 50 engagement activities in our equity
and fixed income funds in the following areas: 3 within governance, 14 within
social responsibility, 30 regarding the availability of the sustainability report, 1
regarding environmental responsibility and 2 regarding the follow-up of a ver
-
ified violation of a norm. Periodically, eQ also participates in joint engagement
initiatives together with other investors.
The preparation of a sustainability classification for eQ’s equity and fixed
income funds was an important development project last year. While working
on product classifications, we also evaluated what various classification
requirements mean for the current investment strategies and practices of eQ’s
products and for ESG reporting, and what should perhaps be developed further.
Detailed descriptions of the investment processes, methods and indicators of all
equity and fixed income funds for monitoring sustainability are available in fund
prospectuses on eQ’s website. The section below describes in detail what the
sustainability classification (Article 9) of eQ Blue Planet equity fund is based.
eQ Blue Planet – aimed at making sustainable
investments (financial product according to Article 9)
eQ Blue Planet Fund makes investments globally in companies whose
business is centrally linked to smarter use of the Earth’s critical
resources, sustainable consumption and implementation of social
responsibility. The fund’s investments should be sectors and companies
that represent a considerable leap in sustainability.
The key factor when selecting companies is how significant sustaina
-
bility is in the company’s strategy and, for example, whether it has a
climate goal according to the Paris Agreement. It takes into account the
company’s emissions throughout its production value chain, all the way
to final use. A science-based commitment also means that the objec
-
tives are assessed by an outside party.
At present, 80 per cent of the weight of the eQ Blue Planet fund is on
companies with an ambitious or scientifically accepted emission reduc
-
tion target. Behind every investment decision there is also at least one
other important sustainability criterion.
Real estate investments
Real estate investments have a carbon neutrality target
in terms of in-use energy consumption by 2030
Special investment funds eQ Commercial Properties, eQ Community Properties
and eQ Residential II fund, which is about to be launched, are classified as
financial products according to Article 9 of the EU regulation on sustainabili
-
ty-related disclosures, whose target is to make sustainable investments.
At the end of 2020, a carbon neutrality target in terms of in-use energy con
-
sumption was set for all of eQ’s real estate investments by 2030. The carbon
neutrality target set guides practical actions in eQ’s real estate investing
concerning both the property purchasing process and development measures
promoting responsibility and sustainability in properties during the owner
-
ship period. Measures for reaching this target are specified in the low-carbon
roadmap concerning eQ’s real estate investments. The realisation of the target
is monitored and reported to investors annually.
Responsibility and sustainability are part of the due diligence process when
properties are purchased. This includes matters related to soil, energy e
-
ciency, background information on the tenant, and availability of public trans-
port. Energy-ecient and eco-friendly choices of materials and design decisions
are preferred at new sites. Since early 2018, electricity generated from
renewable sources has been used in investments made by real estate funds. In
addition, we always evaluate the possibilities of using geothermal, solar energy
and green district heating in our new sites.
The construction, maintenance and use of properties emphasises safety, good
health and functionality for individuals who work with users, builders and
owner services. Responsibilities of clients and socially responsible procedures
are considered when acquiring services and materials. All agreements (such as
on building contracts and with service providers) include eQ’s Code of Conduct
for suppliers as an enclosure.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
During the ownership period, measures are taken in separate properties in order
to promote responsibility and sustainability. Consumption data (energy, water
and waste) of all sites is collected, deviations are monitored, and action is
taken based on such date. In additions, energy eciency is improved through
measures relating to ventilation, heating and cooling systems, lighting and heat
insulation of structures. The carbon footprint (tCO
2
) serves as an important
indicator in monitoring the realisation of the sustainability objective. The trend
in the carbon footprint in relation to the target set is reported annually in the
ESG report. The other indicators are energy consumption (MWh), water (m
) and
waste (t).
We use the BREEAM (Building Research Establishment’s Environmental Assess
-
ment Method) certification to assess the operability of both an individual prop-
erty and related maintenance functions, identify any shortcomings and select
areas of development. The funds intend to apply for a Breeam In-Use certificate
for all sites, on the Very Good level at the very least. At the fund level, we
utilise the GRESB (Global Real Estate Sustainability Benchmark) in developing
operations and in comparing eQ’s funds and their performance with other actors
and the markets.
Another key aspect is co-operation with significant stakeholders. As examples,
we can mention regular customer satisfaction surveys for tenants and recom
-
mendations on responsibility in lease agreements.
eQ is committed to constantly developing the responsibility and sustainability
of the funds. We look at our operations as a “permanent owner”, which means
that it is important to carry out sustainable solutions on a long term in order to
develop both our own processes and the technical features of the real estate
investments. eQ also wants to be make an active contribution to the industry
and its practices.
The next section describes the 2021 key sustainability activities in eQ’s real
estate investments.
GRESB-results
The strong trend in the GRESB results continued. eQ Community Properties
and eQ Commercial Properties both received three stars of the maximum five
starts (participants in the GRESB assessment since 2019). Both funds saw an
improvement of more than ten points. Also, the funds were awarded the GRESB
Green Star for the second time already.
Green financing
In July eQ Commercial Properties agreed on a significant financing package (800
MEUR) with a Nordic funding consortium, and in November a similar financing
arrangement (700 MEUR) was implemented for the eQ Community Proper
-
ties special investment fund. Both financing packages are classified as green,
responsible funding with regard to the bank loans. In this context, green financ
-
ing means that at least the number of properties equal to the loan amount must
meet a certain level of Breeam In-Use certification.
Identification of climate risks
Climate work at eQ is in progress. Regarding its real estate investments, eQ
has already taken several measures to reduce the climate impacts of the real
estate funds and to mitigate climate change. eQ has specified for its real estate
investments material physical risks (such as storms, rise in average temperature
and changes in precipitation) and transitional risks (such as stricter obligations
in emissions reporting) and their financial impacts in various climate scenarios.
eQ Residential
A total of 1,408 homes on 20 sites will built for the eQ Residential fund. At
the turn of the year the fund owned 17 sites, three of which were completed.
All the residential investments will be certified (BREAAM In Use) once they
have been completed. A solar power plant will be built on all sites. Two sites
under construction will have geothermal energy. All the sites are new and have
a good energy classification (energy category B at a minimum). According to
current information, 200 of the homes have the best energy category A. The
eQ Residential fund under construction and the eQ Residential II fund about to
be launched will be included in the GRESB sustainability assessment in 2023
according to the current estimate.
eQ Commercial Properties GRESB results
eQ Community Properties GRESB results
GRESB Average
Peer
2019 2020 2021
GRESB Average
Peer
2019 2020 2021
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Private equity, private credit and
venture capital investments
More ESG indicators used by private equity
investors in target companies
Factors associated with sustainability and responsibility are systemati-
cally taken into account in private equity investments. The starting point of
sustainable investing is the broad integration of ESG into the processes that
include fund selection and monitoring, and investor reporting. In Northern
European funds (incl. asset management programmes), eQ is responsible for
manager selection and holds sustainability conversations with the managers
before making an investment decision. In funds that invest in North America
and private credit loans, where eQ’s partner handles manager/loan selection,
eQ requires the partner to meet the sustainability criteria and to make an ESG
due diligence report in selecting investments. In late 2021 eQ launched its first
venture capital fund in co-operation with TrueBridge Capital from the United
States. Although venture capital funds are often pioneers in thinking related to
responsibility, it appears that systematic monitoring of responsibility factors is
even less frequent that in private equity investments, for example. eQ and True
-
Bridge jointly monitor and develop procedures on this matter.
Responsibility is always part of an investment decision. As part of the invest
-
ment process, eQ aims to extensively identify sustainability and sustainability
risks and opportunities associated with target funds. In an ESG due diligence
report, eQ assesses the sustainability and responsibility of the target fund’s
management company from the following perspectives, among others:
• the management company’s attitude toward responsibility,
• policies, commitments and other guidelines that steer responsible investing,
• how the fund manager handles responsibility matters,
• integration of responsibility into decision-making on investments and
monitoring of investees, and the tools and ESG indicators used in support of
such monitoring, and
• ESG reporting to investors.
During the due diligence process, eQ specifies for every fund a responsibility
assessment and monitors and reports its development on an annual basis. eQ’s
goal is to include objectives related to sustainability and responsibility in each
target fund’s legal documentation.
eQ evaluates and monitors the realisation and development of sustainability
and responsibility at private equity and private credit investments by, e.g. an
annual ESG survey sent to target funds and in conversations with target funds.
eQ also actively participates in target funds’ annual general meetings and in the
work of advisory boards.
The contents of eQ’s ESG survey sent out since 2017 has remained mostly
unchanged, so the ESG trend can be consistently monitored at management
companies and their target funds. If a target fund receives a poor responsibility
assessment as a result of the ESG survey and eQ does not see a positive trend in
development, the matter is brought up in conversations with the target fund’s
management company.
The 2020 ESG survey was sent to 104 management companies in January 2021.
It covered 160 target funds and an estimated 1,000 target companies. The sur
-
vey received responses from 97.1% (101) of the management companies. A total
of 17 ESG events were observed in eQ’s target funds for which the management
companies have submitted their explanations. The results of the 2020 survey
demonstrate that matters relating to responsibility are increasingly more often
included in both ordinary monitoring of target companies and the reporting
required. The results showed a very positive trend in ESG matters:
• a positive trend in the responsibility grades of target funds,
• monitoring of ESG indicators at target companies has increased,
• contents of ESG policies have been updated in general,
• main responsibility for ESG has been increasingly dedicated to an individual
or a specific ESG committee, and
• Implementation of the EU regulation on sustainability-related disclosures
(2019/2088) was in progress or being planned at more than half of the
respondents in spring 2021. eQ uses the survey to actively monitor the reali
-
sation of diversity at management companies and their portfolio companies.
The ESG survey concerning the year 2021 has already been sent to management
companies of target funds for their responses. Climate questions were included
as a new theme in the survey. eQ is, first and foremost, interested in hearing
how perspective related to climate change are taken into account in investment
processes, how common the setting of a carbon neutrality target is, and to
which extent emission figures are calculated for investments.
At the outset, eQ classifies all private equity, private credit and venture capital
funds as financial products according to Article 6 of the EU regulation on
sustainability-related disclosures. Although responsibility has an increasingly
important role in target funds, a considerable share of the funds are Article 6
products. eQ already promotes the fulfilment of conditions under Article 8 in
target funds. In late 2021 we saw the introduction to the marketplace of sev
-
eral private equity funds under Article 9 and the first ones under Article 9, and
the first actors also imposed carbon neutrality goals.
The significance of responsibility in investing by private equity funds is con
-
stantly growing, and eQ believes that the managers will lead the development
in this field as well.
Besides its own operation, eQ also wants to actively promote the implemen
-
tation and development of responsible investing practices in the private equity
sector. eQ is the chair of the ESG working group and the working group for
sustainable financing at the Finnish Venture Capital Association.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Environmental responsibility
Mitigation of climate change is an important theme both in eQ Group and in eQ
Asset Management’s investment activities. eQ has a significant opportunity
to promote sustainable development through responsible investing, in
particular.
In recent years eQ has started to pay more and more attention to the
environmental impacts of its own operation, and to develop its pro
-
cedures in an increasingly more sustainable direction. In late 2021,
on the basis of the current operating principles, eQ outlined and
prepared an environmental policy concerning eQ Group that con
-
sists of five themes (1. recycling, sorting and cleaning, 2. move-
ment, 3. food, 4. procurement, and 5. energy and water). The next
area of development will be setting indicators and goals for these
themes and reporting on them in future sustainability reports.
“Mitigation of climate change is an
important theme both in eQ Group
and in eQ Asset Management’s
investment activities.”
RECYCLING, SORTING AND
CLEANING
Improving recycling and guidance
as well as using environmentally
friendly cleaning products
MOVEMENT
Public transport ticket supported
by the employer and using a
remote connection (TEAMS etc.)
when reducing unnecessary travel
FOOD
Salads, organic packaging
as well as favouring
other local food products
MANAGEMENT
Improving continuously
environmental matters.
Internal working group
ENERGY AND WATER
Reducing electricity
consumption and using
renewable energy sources
(hydropower)
PROCUREMENT
Favouring environmentally friendly
and durable products (including Fair
Trade products, bubble water tap) and
reducing paper consumption
COMMUNICATION
AND ENGAGEMENT
Communicating sustainable practices in
the work community and training in key
environmental matters as well as monitoring
and reporting the development of these
themes with the eQ Group’s sustainability report
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Own energy consumption of the organisation
Electricity consumption, kWh , , , , ,
Origin of electricity:
Share of renewable energy, % % % % % %
Share of nuclear power, % % % % % %
Share of fossil fuels, % % % % % %
Specific carbon dioxide emissions of electricity, g/kWh
Nuclear fuel used in electricity, mg/kWh . . . . .
Carbon dioxide emissions of electricity, total, kg ,
Carbon dioxide emissions of electricity per net revenue, g/EUR . . . . .
Electricity consumption per rented oce square metre, kWh
Electricity consumption per person, kWh , , , ,
eQ Group’s own business places a relatively minor direct burden on the envi-
ronment. Energy use is primarily related to the consumption of energy on the
premises. Companies in eQ Group have used fully renewable energy in their own
electricity consumption since 2018. The premises have been rented. Conse
-
quently, the heat and water consumption as well as the air conditioning (district
cooling) is included in the rent, and consumption data regarding them are not
available from the lessor. The quality of indoor air is also an important consider
-
ation with regard to the health and wellbeing of our employees. For this end, eQ
purchased in the spring of 2019 a system that monitors the quality of indoor air
(temperature, humidity, CO
2
, fine particles) to the oces.
eQ encourages its employees to use public transport and other alternative ways
of travelling. The employees are oered a travel ticket as employee benefit and
part of the overall salary, and the employees also have access to eQ’s joint pub
-
lic transport travel cards when travelling in the near-by area during the working
day. The company prefers direct flights, and when possible, negotiations are
conducted with remote negotiation technologies. eQ also reports the total CO
2
emissions for work-connected flights of our employees and, as a new key ratio,
the amount of emissions per person. The CO
2
emissions of the Group’s air travel
remained at a very low level in 2021, largely due to the COVID-19 pandemic.
The lessor of the premises used by eQ is responsible for waste management.
eQ takes care of the sorting and recycling of the oce waste produced on its
premises. In 2021, special attention was paid to reducing the amount of waste
and increasing recycling, as in previous years. During the past year, we carried
out the measures introduced in 2019 regarding the sorting and recycling of
oce waste. These measures were:
• drawing up eco-friendly guidelines to eQ’s employees and arranging training
on them,
• going over to double-sided printing,
• removing individual waste bins for mixed waste and the reassessment of the
present sorting containers,
• giving up plastic bottles, and
• the use of recyclable and permanent tableware.
eQ Group’s environmentally friendly guidelines are always presented when new
employees are being trained. eQ also reports on the consumption of paper at its
premises. Going over to double-sided printing could be seen as a positive trend
in the consumption data. In 2021, paper consumption was reduced significantly
from the preceding year. eQ has not been engaged in legal proceedings or claims
concerning environmental accidents.
Other environmental responsibilities*
Other indirect greenhouse gas emissions
Travelling by air, CO
2
emissions, kg , , , , ,
Travelling by air, CO
2
emissions, kg per person
Use of material
Paper consumption, total, kg , , , ,
Paper consumption, kg per person
*The table shows an estimate of carbon dioxide emissions of air travel and paper consumption. Paper consumption is reported based on paper purchased.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Social responsibility
eQ as employer
The aim of eQ Group is to act as a responsible employer. The personnel is eQ’s
most important resource, as professional and committed employees are the key
to the success of the clients and eQ.
The financial year 2021 was still strongly characterised by the COVID-19 pan
-
demic. eQ continued to implement the procedures prepared for the coronavirus
situation in the spring of 2020, in order to secure a safe operating environment
for eQ’s employees, clients and partners and to minimise infections. Similarly
to the previous year, eQ purchased masks to all employees and strongly recom
-
mended their use as well as social distancing according to the guidelines issued
by the Finnish Institute for Health and Welfare. Coronavirus vaccination is part
of eQ’s occupational health care agreement. Vaccination of occupational health
care clients became possible at the Hospital District of Helsinki and Uusimaa
(HUS) in late 2021. eQ has encouraged its employees to utilise this opportunity.
The COVID-19 situation has caused challenges for every employee’s coping at
work. Despite the prolonged COVID-19 pandemic, the Group personnel’s com
-
mitment and satisfaction have remained at an extremely high level. The results
of the biannual study on well-being at work were excellent in 2021 as well. The
study deals with the personnel’s commitment, well-being at work, satisfaction
with the work community and the work of the superior. On a scale from 1 to
5, job satisfaction and well-being at work received the score 4.3 (2020: 4.3).
According to the study, the employees also recommend eQ Group as employer.
The eNPS value that describes this was very high at 44 (on a scale from -100
to +100, where 0 to +20 is good, over 20 excellent and over 40 a top result).
The response rate was also high at 89.3% (2020: 92.3%). The personnel study
is one of eQ’s most important tools for developing internal working methods
and the quality of managerial work. At team-specific meetings, the results are
discussed in detail, and potential development measures and goals are agreed
for monitoring them.
eQ invests in the well-being of its personnel by oering extensive occupational
health care, exercise benefit vouchers and other welfare services, for instance.
The emphasis of occupational health care lies strongly on preventive measures.
Development discussions are conducted with the entire personnel in all Group
companies. The discussions are conducted at least once a year and they assess
the performance of the previous period and set targets for the following one as
well as assess, e.g. the need to develop the employee, managerial work and the
work community.
eQ’s employees may participate in training oered by the employer and part
-
ners, in other external training, or study independently. The Group is favourably
disposed to studies at the employees’ own initiative. All studies are supported.
Calculated as full-time resources, eQ Group had 96 employees at the end of
2021 (2020: 94). When calculating full-time resources, part-time employees and
those on parental and study leave have been included. Altogether 102 persons
had an employment relationship with eQ (2020: 103), and 11 of them worked
part-time (2020: 9). Part-time employees are used in seasonal tasks or projects.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Of the personnel, 39% were women (2020: 40%) and 61% men (2020: 60%). The
average age of the personnel was 41.2 years (2020: 41.3), and the employee
turnover in 2021 was 8.7% (2020: 4.2%). In 2021, the average sick leave of the
personnel was 1.7 days per person (2020: 2.7) and there were no occupational
accidents (2020: 0).
Equal pay between genders
eQ Group pays the same salary to employees for the same or similar work
regardless of gender. Similar in this respect means that the central require
-
ments, expertise, responsibility, workload and working conditions are on the
same level. The job title is not decisive. Instead, the remuneration system is
based on how demanding the work is.
Equality
Equality, justice, and non-discrimination are important principles for eQ Group.
eQ has drawn up an equality plan, which comprises the measures for promoting
equality and the agreed follow-up measures. The plan is assessed and updated
on a regular basis and covers all Group companies. The plan is available to all
employees of eQ Group on the Group’s internal website.
Health and Safety Policy
eQ Group has drawn up a policy for promoting health and safety at work and
for maintaining the working capacity of the employees. It covers the needs to
develop working conditions as well as the impacts and development needs of
factors related to the work environment. The policy is available to all employees
of eQ Group on the Group’s internal website. eQ Group also uses the early sup
-
port method.
Personnel
Personnel as full-time resources
Permanent employment relationship
Temporary employment relationship
Employment relationship, total
Share of temporary employees, % . .% .% .% .%
Full-time, total
Part-time, total
Age and gender distribution, no.
18–30 years total, (F/M) (/) (/) (/) (/) (/)
31–40 years total, (F/M) (/) (/) (/) (/) (/)
41–50 years total, (F/M) (/) (/) (/) (/) (/)
51–60 years total, (F/M) (/) (/) (/) (/) (/)
61– years total, (F/M) (/) (/) (-/) (-/) (-/)
Total (/) (/) (/) (/) (/)
Average age of employees, years . . . . .
Employment relationships
based on gender, no. and %
Female (%) (%) (%) (%) (%)
Male (%) (%) (%) (%) (%)
Employee turnover (%) .% .% .% .% .%
Sick leaves during the year, day per person . . . . .
Registered accidents
SATISFACTION
AND WELLBEING
AT WORK
.
SCALE
NUMBER OF
PERSONNEL
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Principles related to human rights violations and child labour
eQ Group has not drawn up separate principles related to human rights viola-
tions or child labour. All operations of the Group are located in Finland, at one
single oce. Therefore the Group can monitor operating practices related to the
employees in a reliable manner.
Board diversity
eQ Plc’s Board of Directors aims to promote the diversity of the Board’s compo-
sition for its part. When assessing diversity, the Board takes into consideration,
for instance, the age and gender of the directors, their education and profes
-
sional experience, individual characteristics and experience that is essential
with regard to the task and the company operations. eQ Plc has defined as goal
regarding the equal representation of genders on the Board that there should
always be representatives of both genders on eQ Plc’s Board of Directors. The
Board aims at reaching this goal and maintaining it primarily by informing eQ
Plc’s owners actively about it.
During the financial period 2021, eQ Plc’s Board met the preconditions set for
the company diversity, including the goal of having representatives of both
genders on the Board. The following persons were on eQ Plc’s Board of Directors
during the financial period 2021 from the Annual General Meeting: Janne Larma
(Chair) Georg Ehrnrooth (Vice Chair), Nicholas Berner, Timo Kokkila, Lotta Kopra
and Tomas von Rettig. The directors have versatile experience from sectors that
are of importance to the company, such as the investment and finance sector
and the real estate sector. In addition, the diverse work experience and educa
-
tion of the directors as well as their international experience complement each
other. eQ Plc’s Annual General Meeting elects the directors.
The Board of Directors of the company has monitored diversity issues in the
company during the financial period 2021.
Diversity of the Board of Directors on 31 December 2021
Directors, total %
Female %
Male %
Board members who are independent of the company %
Board members who are independent of the major
shareholders %
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Governance
Board – separation of powers and transparent practices
In addition to acts and regulations applicable to listed companies, eQ Plc com-
plies with the Finnish Corporate Governance Code published by the Securities
Market Association on 1 January 2020. The entire Code is publicly available
on the website of the Securities Market Association at (www.cgfinland.fi/en).
eQ Plc draws up annually a Corporate Governance Statement required by the
Corporate Governance Code separately from the report by the Board of Direc
-
tors. The Corporate Governance Statement and other information that shall
be disclosed in accordance with the Corporate Governance Code as well as the
company’s financial statements, report by the Board of Directors and auditors’
report are available on eQ Plc’s website (www.eq.fi/en/about-eq-group).
eQ’s largest shareholders, who as a rule represent at least one-half of the num
-
ber of shares in the company and the votes these represent, submit a proposal
to the Annual General Meeting (AGM) on the number of Board members, the
members of the Board of Directors and their remuneration. eQ Plc’s Annual
General Meeting is ultimately responsible for the election of Board members
and preparations for the election. The company’s Articles of Association do not
include a provision on appointment of Board members in any specific order.
Each person elected as a member of the Board must have the competence
required by the task and enough time to handle it. The company contributes to
the work of the Board by providing Board members with sucient information
about the company’s operation. Five to seven members can be elected to eQ
Plc’s Board of Directors, and the members of the Board select a chair from
among their number. Board members are elected for one year at a time. In 2021
a full-time Chair was appointed for eQ Plc’s Board whose duties, besides serving
as Chair, include developing eQ’s strategy together with the CEO. The appoint
-
ment of the full-time Chair of the Board took eect on 1 April 2021, after the
Annual General Meeting. In the Corporate Governance Report, the company
states the number of Board meetings held during the financial period and the
members’ average attendance at Board meetings.
The company discloses the following personal and ownership information on
Board members: name, gender, year of birth, education, main occupation, key
work experience, international experience, start date of Board membership,
key positions of trust, and shareholdings in the company. The statement also
includes any dependency of the company or the company’s significant share
-
holders, and any grounds why the Board member is not deemed to be independ-
ent. Members of eQ Plc’s Board of Directors must provide the Board and the
company with adequate information so their competence and independence can
be evaluated, and report any changes in this information.
The Board’s charter, the minutes of meetings and other documents on Board
operations are not publicly available. The main tasks included in the charter are
listed in the Corporate Governance Statement. The company discloses informa
-
tion about events that concern the Group in accordance with valid legislation
and the company’s disclosure policy. The company’s disclosure policy is availa
-
ble on eQ’s website (www.eq.fi/en/about-eq-group).
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Remuneration
eQ’s remuneration system is based on the strategy and long-term goals defined
by the Board, and it is one of the major tools used for reaching the Group’s
long-term and short-term strategic goals. The remuneration system contributes
to good, ecient and comprehensive risk management within eQ Group and
prevents above all detrimental risk-taking. The remuneration systems must
also take into account sustainability risks related to eQ Group and its business
operations. The aim of comprehensive risk management is to take into consid
-
eration the goals, values and interests of the Group companies, funds under
management and the investors, for instance. The remuneration of the company
management is not separately dependent on meeting certain ESG criteria.
In addition to eQ Group’s Remuneration Principles, eQ Plc has a Remunera
-
tion Policy for the governing bodies, required by the Corporate Governance
Code, which accounts for the remuneration of the Board and the CEO. The
Remuneration Policy for governing bodies is presented to the Annual General
Meeting for consideration at least every four years and always when major
changes have been made in it. eQ Group’s Remuneration Principles and the
Remuneration Policy for the governing bodies can be found on eQ’s website
(www.eq.fi/en/about-eq-group/hallinnointi/palkitseminen).
eQ Plc publishes annually a Remuneration Report regarding the governing bod
-
ies at the same time as the Annual Report. The Remuneration Report regarding
the governing bodies for 2021 has been drawn up in accordance with the Corpo
-
rate Governance Code for listed companies that entered into force on 1 January
2020, and the Board of Directors has reviewed it on 3 February 2022.
The Remuneration Report regarding the governing bodies accounts for the
remuneration paid to the Board of Directors and CEO during the previous
financial period, how the Remuneration Policy for the governing bodies has been
applied during the previous financial period and how remuneration promotes
the company’s financial success on a longer term. The Remuneration Report
also compares the development of the Board’s and CEO’s remuneration with
the development of the average remuneration of company employees and the
company’s financial development during the five previous financial periods. eQ
Plc’s Remuneration Report regarding the governing bodies is available on eQ’s
website (www.eq.fi/en/about-eq-group/hallinnointi/palkitseminen).
In addition to the Remuneration Policy and Report regarding the governing
bodies, eQ presents in the remuneration section of its website informa
-
tion about the remuneration principles for the Board, CEO and the rest of
the Management Team. Information about the remuneration of the Board,
CEO and the rest of the Management Team is available on eQ’s website
(www.eq.fi/en/about-eq-group/hallinnointi/palkitseminen).
Application of collective labour market agreements
No collective agreements are applicable to eQ Group’s employees, nor are they
covered by the universally applicable collective agreement in Finland.
Code of Conduct
eQ Group’s Code of Conduct describes joint rules based on eQ’s values and the
general principles guiding behaviour, decision-making and business operation
that every eQ employee must follow. The Code of Conduct also serves as an
“umbrella” for eQ’s other internal guidelines that contain detailed operational
instructions from various sectors. Still, the Code of Conduct cannot cover all
situations we encounter, so advice must always be asked in new and unclear
situations. By honest, open, competent and ecient action, eQ earns the trust
and respect of clients, other stakeholders, the surrounding society and the
financial markets.
eQ requires its partners to act in a responsible manner. All agreements in real
estate investments (such as on building contracts and with service providers)
include eQ’s Code of Conduct for suppliers as an enclosure. eQ Group has found
other, separate Codes of Conduct concerning subcontractors unnecessary due
to the small number of direct subcontractors and their minor significance for
the business operation.
eQ Group’s Code of Conduct was updated in the autumn of 2021. The previous
Code of Conduct was drawn up in 2016. The personnel survey conducted in May
served to launch the updating process. The purpose of the survey was to deter-
mine, anonymously and on a one-time basis, the practical realisation of the old
Code of Conduct regarding any abuses and problems observed by employees, as
well as the culture of intervention in these and the appropriate action. Another
purpose was to increase awareness of the themes chosen and their impor
-
tance, and to help employee reflect on their own actions. The survey received
responses from 76% of the Group’s employees, and its results were discussed at
eQ’s personnel event and teams.
Contents of the old Code of Conduct were used in updating the new version,
and new and topical themes where a need for development had been detected
were added. Observations from the personnel survey in the spring were also
taken into account in the updating work. The themes of eQ Group’s updated
Code of Conduct are:
• Complying with regulation and acting correctly
• Clients’ interests, eQ’s interests, and management of conflicts of interest
• Information security and data protection
• Intervention in abuses and problems
• Trust and confidentiality
• Responsibility and responsible investment activities
• Equality, diversity and respect
• Cooperation with stakeholders
• Reputation management
• Cooperation and development of competence
• Occupational safety and wellbeing at work
• Prevention of financial crimes
• Oering and accepting gifts and hospitality
• Sponsorship, donations and partnerships
The Code of Conduct is available on eQ’s website
(www.eq.fi/en/about-eq-group/hallinnointi/code-of-conduct).
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Taxes, EUR 1,000
Taxes paid
Income tax, Finland , , , , ,
Eective tax rate .% .% .% .% .%
Charges of tax-like nature payable by the employer
(employee pension, social security and unemployment charges)
, , , , ,
Taxes remitted
Withdrawal from salaries, Finland
, , , , ,
Charges of tax-like nature payable by the employee , , , ,
(employee pension, unemployment charges)
Value-added tax paid, Finland ,
Tax withdrawn from dividend and equity repayment, Finland , , ,
from the salaries amounted to EUR 6.5 million (2020: EUR 6.5 million) and the
other tax-like charges totalled EUR 1.5 million (2020: EUR 1.4 million).
The value-added tax remitted by eQ Group in 2021 totalled EUR 0.7 million
(2020: EUR 0.4 million). In addition, part of the value-added tax included in
purchases is paid by eQ, as the operations are partly exempted from VAT.
The taxes withdrawn from the dividend and equity repayment that eQ Plc paid
in 2021 totalled EUR 1.2 million (2020: EUR 1.2 million).
eQ has not received any public subsidies for its operations.
Tax transparency
As part of this sustainability report, eQ reports its financial impact on society
in form of taxes and charges of tax-like nature. Transparent reporting is part of
responsible operations and governance. eQ Group does not have a separate tax
strategy approved by the Board. The Group pays its taxes to Finland.
eQ Group is a major taxpayer. In 2021, the income tax for eQ’s taxable profit
paid in Finland totalled EUR 9.6 million (2020: EUR 6.2 million). The Group’s
eective tax rate was 20.1% (2020: 20.2%).
As employer, eQ pays charges related to pension, unemployment and social
security and remits the withholding from the salaries to tax authorities. The
charges of tax-like nature related to the personnel that eQ Group paid in 2021
totalled EUR 3.3 million (2020: EUR 3.0 million).The withholdings that eQ made
External validation of the report
This report has not been validated by an external party.
The Firm of Authorised Public Accountants KPMG Oy Ab has audited eQ Plc’s
financial statements for the financial period 1 January to 31 December 2021.
eQ Plc’s Board and CEO are responsible for the other information in the Annual
Report. This report is included in eQ’s Annual Report and treated as ”other
information”, as defined in the Auditors’ Report. Even though the auditors
do not audit other information, they have in their report assessed whether
the other information essentially conflicts with the financial statement and
information obtained by the auditors or if it otherwise seems to be incorrect for
essential parts.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Operating environment
The sentiment at the beginning of 2021 was hopeful. In Western countries,
population received COVID-19 vaccines and economies could open up. Combined
with extensive recovery measures, this clearly accelerated economic growth.
China continued to go its own way and managed to keep the number of COVID-19
infections very small with strict lockdown measures. The prognosis for the growth
outcome in 2021 was 5.6% in the US, 5.1% in the euro zone and 8.1% in China.
Towards the end of the year, the new Omicron variant caused concern and some
countries closed their economies once more. This had minor impacts on economic
growth and the investment market, however.
Inflation accelerated clearly in 2021. The supply problems caused by COVID-19 and,
simultaneously, the allocation of demand to goods instead of services, so-called
green transition, and the strong economic growth accelerated the increase in all
prices. The highest inflation rates were seen in the US, where the 12-month change
in the consumer price index was 7% in December and the change in the core inflation
index 5.5%. Central banks indicated that inflation is a temporary phenomenon that
is to a large extent related to COVID-19, but towards the end of the year, the debate
on a tighter monetary policy increased, above all in the US. Towards the end of
the year, central banks in both the US and Europe announced that they would cut
purchase programmes. The Fed indicated that it planned to raise its key policy rate
several times in 2022. This announcement, together with situation between Russia
and Ukraine, made above all the equity market nervous early in 2022.
Expectations on increasing interest rates raised concerns in the equity market.
In the autumn, additional worries were caused by the second largest real estate
developer in China, which ended up in a debt crisis and deteriorated the outlook of
the entire real estate sector. The strong economic growth and increasing profits
of companies calmed down the market, however, and equities gave an excellent
return in the whole year. The highest return in euros came from S&P 500, no less
than 37.9%. The return in dollars was 28.2%. European equities gave a 25.1% return
and Finnish equities a 25.3% return, calculated with the MSCI index. The return of
emerging markets remained at 4.9%. The reason for this was, above all, the slow
pace of COVID-19 vaccinations in other countries than China, and as for China, its
own regulatory measures directed to dierent sectors.
Interest income was negative in 2021 with the exception of high yield loans and
corporate loans in local currencies of emerging economies. The euro government
bond index gave a return of -3.4%, the euro IG corporate loan index -1.0% and the
euro hedged emerging market corporate loan index -2.2%. The index return of high
yield loans was 3.2%.
Major events during the financial period
eQ Plc’s Annual General Meeting was held on 24 March 2021. Nicolas Berner, Georg
Ehrnrooth, Timo Kokkila, Lotta Kopra and Tomas von Rettig were re-elected to the
Board. Janne Larma was elected as new member. From 1 April 2021, Janne Larma is
a full-time Chair of the Board. Previously he has acted as CEO of eQ Plc since 2011.
The Vice Chair of the Board is Georg Ehrnrooth.
eQ Plc’s Board appointed Mikko Koskimies CEO of eQ Plc from 1 April 2021. Mikko
Koskimies will also continue as CEO of eQ Asset Management Ltd after the
appointment.
As a result of the changes in the company management, Janne Larma left the
Management Team of eQ Group and Mikko Koskimies chairs the Management Team
from 1 April 2021.
During the period, the number of eQ Plc’s shares increased with new shares
subscribed for with option rights. The number of shares increased by 45,000 shares
on 18 March 2021 and by 715,000 shares on 17 May 2021.
Group net revenue and result development
During the financial period, the Group’s net revenue totalled EUR 78.9 million (EUR
56.7 million from 1 Jan. to 31 Dec. 2020). The Group’s net fee and commission
income was EUR 71.6 million (EUR 56.7 million). The Group’s net investment income
from own investment operations was EUR 7.3 million (EUR 0.0 million), including the
return from private equity and real estate fund investments and liquid fixed income
funds.
The Group’s expenses and depreciation totalled EUR 31.2 million (EUR 26.0 million).
Personnel expenses were EUR 26.7 million (EUR 21.5 million), other administrative
expenses EUR 2.1 million (EUR 2.0 million) and the other operating expenses were
EUR 1.3 million (EUR 1.4 million). Depreciation was EUR 1.0 million (EUR 1.1 million).
Report by the Board of Directors
1 January to 31 December 2021
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
The salary expenses increased from the year before above all due to result-related
remuneration. The increase was also influenced by the change in postponed share-
based bonuses due to the strong increase in the share price (EUR 1.2 million from
1 Jan. to 31 Dec. 2021). Based on regulations that were previously in force in the
finance sector, part of the decided bonuses has been postponed and bound to eQ’s
share price. In future, bonuses will no longer be postponed.
The Group’s operating profit was EUR 47.7 million (EUR 30.8 million) and the profit
for the period was EUR 38.1 million (EUR 24.6 million).
Business areas
Asset Management
eQ Asset Management oers versatile and innovative asset management services to
both institutions and individuals. The Asset Management segment consists of the
investment firm eQ Asset Management Ltd and other Group companies engaged in
asset management operations, the most important of which is eQ Fund Management
Company Ltd.
Mutual funds and asset management
At the end of the period, eQ had 23 traditional mutual funds registered in Finland.
The returns of eQ’s fixed income funds varied during the year as a result of the rise in
long interest rates and narrowing of credit risk margins. The best returns came from
the eQ Emerging Markets Corporate Bond LC and eQ High Yield funds. The return of
the eQ Government Bond Fund was, on the other hand, negative. The returns of all
our fixed income funds exceeded the returns of their benchmark indices, and the eQ
Emerging Markets Corporate Bonds and eQ Euro Investment Grade funds gave the
best returns.
In 2021, the returns of all our equity funds were very good, the best returns being
almost 35%. The best returns came from the eQ Nordic Small Cap, eQ Europe Small
Cap and eQ Frontier Markets funds. The returns of almost all our equity funds
exceeded their benchmark indices, and the biggest positive dierences were seen
in the eQ Emerging Markets Dividend, eQ Nordic Small Cap and eQ Europe Small
Cap funds. The eQ Europe Dividend Fund won the Lipper Nordics 2021 best “Equity
Europe Income Fund” award measured by three and five year returns.
Of the funds managed by eQ, no less than 85% surpassed their benchmark indices in
2021, and in the past three years, 83% of the funds managed by eQ have surpassed
their benchmark indices. The average Morningstar rating of funds managed by
eQ was 3.5 stars at the end of the year. The returns of the discretionary asset
management portfolios that eQ manages varied between +0.2 and +28.4% based on
the allocation of the investment portfolio. The return of portfolios that only invest
in Finnish shares was +25.5%. The ESG ratings of the eQ funds are better than the
average, and eQ obtained excellent ESG ratings in the 2020 PRI assessment.
Private equity
The first close of the new eQ PE XIII US private equity fund was held at the end
of January 2021 at USD 131 million. In the final close, the size of the fund grew to
USD 318 million. The assets raised to the US PE funds since 2015 exceed USD 700
million. The eQ PE XIII US Fund makes investments in private equity funds that
invest in unlisted small and mid-sized companies in Northern America. During the
first months of 2021, eQ also launched three new private equity asset management
programmes and extended the agreements of three old programmes and increased
the investment amounts. The first close of the eQ VC Fund was held at the end of
October at USD 36 million. The eQ VC fund invests in the best venture capital funds
in the US. During the period under review, we also held the final closing of our third
fund that invests in the European private credit market, eQ Private Credit III. Its size
grew to EUR 54 million.
During the period, eQ’s private equity team won the “Best LP, Regional Strategy”
award at the 11th Private Equity Exchange gala arranged in Paris. eQ was awarded
for its Northern European lower midmarket strategy.
eQ’s private equity ESG integration and reporting are at an excellent level and the
company continues with the development work. At the end of the period, the assets
in private equity funds managed by eQ totalled EUR 2,203 million (EUR 1,814 mil
-
lion) and the assets managed under private equity asset management programmes
were EUR 1,001 million (EUR 856 million).
eQ will begin to accrue the catch up share of private equity funds’ performance fee
in the income statement in 2022. More information about the estimated returns and
performance fees is available in the annual report.
Real estate investments
The net subscriptions in the eQ Finnish Real Estate Fund were EUR 59 million during
the period under review. At the end of the year, the size of the fund was EUR 745
million, and its real estate property amounted to almost EUR 1.2 billion. The return
of the fund in 2021 was 8.9% and since establishment 8.5% p.a. The fund has almost
2,200 unit holders.
During the period under review, new net subscriptions for EUR 269 million were
made in the eQ Community Properties Fund. At the end of the year, the size of the
fund was EUR 1,437 million, and its real estate property amounted to EUR 1.7 billion.
The return of the fund in 2021 was 8.2% and since establishment 8.9% p.a. The fund
has almost 4,700 unit holders.
In May 2020, eQ established a new real estate fund eQ Residential. At the end of
2020, the size of the fund was EUR 75 million, and its final closing was held in May
2021 at EUR 100 million. The investment operations have proceeded excellently, and
the fund invests more than EUR 300 million in residential real estate. eQ Residential
makes investments in the Helsinki metropolitan area, Tampere and Turku. The fund
targets complete residential buildings and aims to manage approximately 1,500
rental units in total. In practice, the entire investment capacity of the fund was
used by the end of the period under review, and we decided to establish a new eQ
Residential II Fund during the first quarter of 2022. Unlike eQ Community Properties
and eQ Commercial Properties funds, the eQ Residential funds are targeted at
professional investors only and have a closed-end fund structure.
During the period under review, we made some amendments to the rules of the eQ
real estate funds, which entered into force on 15 April 2021. At the same time, we
changed the name of the popular eQ Care Fund to eQ Community Properties Fund to
better correspond to the use of the properties owned by the fund.
Overall, eQ’s real estate funds had real estate property worth almost EUR 3.0 billion
at the end of the year, and eQ has become a major Finnish real estate investor.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
In 2021, eQ’s real estate funds also participated in the GRESB sustainability
assessment for the third time. The results improved further and clearly exceed both
the average results of companies participating in the GRESB assessment and the
results of the funds’ peers.
Assets under management and clients
The assets managed by eQ Asset Management totalled EUR 11,584 million at the
end of the period. Growth during the period was EUR 2,611 million (EUR 8,973
million on 31 Dec. 2020). At the end of the period, the assets managed by mutual
funds registered in Finland totalled EUR 4,264 million (EUR 3,439 million), and the
assets increased by EUR 825 million during the period under review. The assets
managed by the real estate funds totalled EUR 2,282 million (EUR 1,862 million).
The assets managed by the private equity funds and asset management programmes
totalled EUR 3,203 million (EUR 2,670 million).
Assets under management, EUR million / / Change
eQ mutual funds , , %
of which eQ equity, fixed income
and balanced funds , , %
of which eQ real estate funds , , %
Closed-end real estate funds %
Funds of partners and other asset
management , , %
eQ private equity funds , , %
Private equity asset management
programmes , %
Total excl. reporting services , , %
Private equity reporting services , , %
Total , , %
Result of the Asset Management segment
During the period under review, the net revenue of the Asset Management
segment increased by 23% and the operating profit by 26% to EUR 40.3 million
(EUR 32.1 million from 1 Jan. to 31 Dec. 2020). Performance fees increased to
EUR 11.4 million. Part of the performance fees accrued from the Amanda IV
private equity fund. Performance fees typically fluctuate strongly per quarter
and financial period. The cost/income ratio was 37.7% (39.0%). Calculated as
full-time resources, the Asset Management segment had 76 employees at the
end of the period under review.
Asset Management –/ –/ Change
Net revenue, MEUR . . %
Operating profit, MEUR . . %
Cost/income ratio, % . . -%
Personnel as full-time resources %
Fee and commission income,
Asset Management, MEUR –/ –/ Change
Management fees
Traditional asset management
. . %
Real estate asset management . . %
Private equity asset management . . %
Management fees, total . . %
Performance fees
Traditional asset management
. . %
Real estate asset management . . %
Private equity asset management . - n/a
Performance fees, total . . %
Other fee and commission income
. . %
Fee and commission income, total . . %
Corporate Finance
In the Corporate Finance segment, Advium Corporate Finance acts as advisor in
mergers and acquisitions, large real estate transactions and equity capital markets.
In 2021, the size of the M&A market developed favourably in general and in the
fourth quarter as well. The positive development of the equity and bond markets
contributed to the execution of transactions planned by companies and private
equity actors. One distinctive feature seen during the year was, however, that the
M&A market has also suered somewhat from the strong equity market, as most of
the private equity exit processes ended in a stock exchange listing.
Advium’s market position and share remained strong, and during the financial year,
we acted as advisor in seven finalised M&A transactions. The most important of
these were the divestment of Nordkalk to SigmaRoc for EUR 500 million, the merger
of Purmo with Virala Acquisition Company (VAC) (value EUR 685 million) and the
purchase of Nettix Oy by Alma Media (value EUR 170 million).
The real estate transaction activity grew from 2020. The strong debt financing
market and low interest rate environment had a positive impact. Advium acted
as advisor to the seller in two published transactions in 2021. The clients were
Schroders, the Association of Finnish Pharmacies and Helsingfors Gymnastikklubb.
The major transaction towards the end of 2021 was a transaction where the city
of Espoo sold Espoo Hospital to LähiTapiola Yhteiskuntakiinteistöt Ky for EUR 300
million. This deal was signed in January 2022.
Result of the Corporate Finance segment
In 2021, Advium’s net revenue was EUR 6.9 million, compared with EUR 4.1 million
the year before. The operating profit was EUR 2.7 million (EUR 1.1 million from 1 Jan.
to 31 Dec. 2020). The segment had 15 employees at the end of December. At the
close of the year, the volume and quality of the stock of assignments was good.
It is typical of corporate finance business that success fees have a considerable
impact on invoicing, due to which the result of the segment varies considerably from
quarter to quarter.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Corporate Finance –/ –/ Change
Net revenue, MEUR . . %
Operating profit, MEUR . . %
Cost/income ratio, % . . -%
Personnel as full-time resources %
Investments
The business operations of the Investments segment consist of private equity and
real estate fund investments made from eQ Group’s own balance sheet.
During the period, the operating profit of the Investments segment was EUR 7.1 million
(EUR -0.1 million from 1 Jan. to 31 Dec. 2020). The recovery from the COVID-19 crisis
had a positive impact on the result of the segment during the financial period. At the
end of the period, the fair value of the investments was EUR 18.8 million (EUR 15.7 mil
-
lion on 31 Dec. 2020) and the amount of the remaining investment commitments was
EUR 7.2 million (EUR 7.1 million). In 2021, eQ Plc made a USD 1.0 million investment
commitment in the eQ PE XIII US private equity fund. In addition, eQ Plc made a USD
1.0 million investment commitment in the eQ VC private equity fund. In December
2021, eQ Plc also decided to make a EUR 1.0 million investment commitment in the eQ
PE XIV North private equity fund to be established in January 2022.
During the period, the investment objects returned capital for EUR 3.5 million (EUR
1.8 million from 1 Jan. to 31 Dec. 2020) and distributed a profit of EUR 3.2 million
(EUR 0.3 million). Capital calls totalled EUR 2.6 million (EUR 1.6 million). The net
cash flow from investments during the period was EUR 4.1 million (EUR 0.6 million).
The value changes of investments recognised through profit or loss were EUR 4.1
million during the period (EUR -0.3 million).
The income of eQ’s Investments segment is recognised due to factors independent
of the company. Due to this, the segment’s result may vary considerably.
Investments –/ –/ Change
Operating profit, MEUR . -. ,%
Fair value of investments, MEUR . . %
Investment commitments, MEUR . . %
Net cash flow of investments, MEUR . . %
Balance sheet, financial position and capital adequacy
At the end of the period, the consolidated balance sheet total was EUR 110.8 million
(EUR 91.5 million on 31 Dec. 2020) and the shareholders’ equity was EUR 80.0 mil
-
lion (EUR 67.5 million). During the period, the shareholders’ equity was influenced by
the profit for the period of EUR 38.1 million, the dividend distribution of EUR -24.9
million, the repayment of equity of EUR -2.3 million from the reserve for invested
unrestricted equity, the subscription for new shares with option rights of EUR 1.4
million and the accrued expense of EUR 0.2 million related to the option scheme and
enter in shareholders’ equity.
At the end of the period, liquid assets totalled EUR 35.1 million (EUR 21.5 million)
and liquid investments in mutual funds EUR 20.9 million (EUR 14.9 million). The
Group’s short-term receivables amounted to EUR 5.1 million (EUR 7.6 million) at the
end of the period.
The lease liability related to premises and entered in the balance sheet was EUR 1.2
million (EUR 2.0 million) at the end of the period, the share of short-term liabilities
being EUR 0.9 million (EUR 0.9 million). eQ has concluded a follow-up agreement on
the rented premises and an agreement on the expansion of premises, which are con
-
ditional. If the prerequisites associated with the conditional agreements are fulfilled,
the amount of the lease liability will increase by about EUR 5 million in 2022.
Short-term interest-free debt was EUR 29.7 million (EUR 21.9 million). The Group
had no interest-bearing loans at the end of the period (EUR - million). eQ’s equity to
assets ratio was 72.1% (73.8%).
A new IFD/IFR regime for investments firms entered into force on 26 June 2021. eQ
Asset Management Ltd, as investment firm, and eQ Plc as the holding company,
apply the regulations. According to the new regulations, the most restrictive capital
requirement for eQ at the end of the financial period is defined on the basis of fixed
overheads. The minimum capital requirement based on fixed overheads was EUR 4.7
million. At the end of the period, the Group’s own funds based on capital adequacy
calculations totalled EUR 10.8 million.
Capital adequacy, EUR 1,000
IFR
Dec.
eQ Group
CRR
Dec.
eQ Group
Equity , ,
Common equity tier 1 (CET 1) before deductions , ,
Deductions from CET 1
Intangible assets
-, -,
Unconfirmed profit for the period -, -,
Dividend proposal by the Board* -, -,
Common equity tier 1 (CET1) , ,
Additional tier 1 (AT1)
Tier 1 (T1 = CET1 + AT1) , ,
Tier 2 (T2)
Total capital (TC = T1 + T2) , ,
Own funds requirement according to the most
restrictive requirement (IFR) , -
Fixed overhead requirement , -
K-factor requirement -
Absolute minimum requirement -
Risk-weighted items total – Total risk exposure , ,
Risk-weights, total (CRR) - ,
of which credit risk - ,
of which market risk – currency risk - ,
of which fixed overhead risk - -
Common equity tier (CET1) /
own funds requirement, % .% -
Tier 1 (T1) / own funds requirement, % .% -
Total capital (TC) / own funds requirement, % .% -
Common equity tier 1 (CET1) / risk weights, % .% .%
Tier 1 (T1) / risk weights, % .% .%
Total capital (TC) / risk weights, % .% .%
*The dividend and equity repayment proposed by the Board exceeding the profit for the period.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
A new IFD/IFR regime for investments firms entered into force on 26 June 2021. eQ
Asset Management Ltd, as investment firm, and eQ Plc as the holding company,
apply the regulations. The comparison information on capital adequacy has been
presented according to the previous regulations (CRD/CRR).
Major risks and uncertainties related to the operations
The major single risk of the Group is the dependence of the operating income on
changes in the external operating environment. The result of the Asset Management
segment depends on the development of the assets under management, which is
dependent of the development of the capital market, for instance. On the other
hand, the management fees of private equity funds and closed real estate funds are
based on long-term agreements that produce a stable cash flow. The realisation of
the performance fee income that is dependent on the success of the investment
operations also influences result development. The performance fees of the asset
management operations may consist of performance fees paid by mutual funds and
real estate funds, profit shares that private equity funds pay to the management
company, and performance fees from asset management portfolios. Performance
fees may vary considerably by quarter and financial period.
Success fees, which depend on the number of mergers and acquisitions and real
estate transactions, have a considerable impact on the result of the Corporate
Finance segment. These vary considerably within one year and are dependent on
economic trends.
The risks associated with eQ Group’s own investment operations are the market
risk and currency risk, for instance. Of said risks, the market risk has the greater
impact on investments. The company’s own investments are well diversified, which
means that the impact of one investment made by one individual fund in one single
investment object on the return of investments is often small. The income from eQ
Group’s own investment operations is recognised in dierent quarters due to factors
independent of the company, depending on the exits from private equity funds. The
income from investment operations may vary considerably from quarter to quarter.
The Group’s liquidity is monitored continuously, and good liquidity is maintained by
only investing the surplus liquidity in objects with a low risk, which can be turned
into cash rapidly and at a clear market price. The liquidity is influenced by the capital
calls and returns of the own private equity and real estate fund investments.
Board of Directors, Management Team, CEO and auditor
eQ Plc’s Annual General Meeting was held on 24 March 2021. Nicolas Berner, Georg
Ehrnrooth, Timo Kokkila, Lotta Kopra and Tomas von Rettig were re-elected to the
Board. Janne Larma was elected as new member. At its constituent meeting, the
Board elected Janne Larma Chair of the Board and George Ehrnrooth Vice Chair of
the Board. eQ Plc’s Board had ten meetings during the financial period 2021, average
attendance being 98%.
On 31 December 2021, eQ Group’s Management Team has consisted of the following
persons:
• Mikko Koskimies, eQ Plc and eQ Asset Management Ltd, CEO
• Staan Jåfs, eQ Asset Management Ltd, Director, Head of Private Equity
• Antti Lyytikäinen, eQ Plc, CFO
• Juha Surve, eQ Asset Management Ltd, Director, Group General Counsel
The CEO of the Group was Janne Larma until 1 April 2021, after this date Mikko
Koskimies. The company auditor was KPMG Oy Ab, a firm of authorized public
accountants, with Tuomas Ilveskoski, APA, as auditor with main responsibility since
the Annual General Meeting.
Personnel
At the end of the period, the number of Group personnel calculated as full-time
resources was 96 (94 persons on 31 December 2020). Calculated as full-time
resources, the Asset Management segment had 76 (75) employees and the Corpo
-
rate Finance segment 15 (14) employees. Group administration had 5 (5) employees.
The overall salaries paid to the employees of eQ Group during the period totalled
EUR 26.7 million (EUR 21.5 million from 1 Jan. to 31 Dec. 2020). The salary expenses
increased from the year before above all due to result-related remuneration. The
increase was also influenced by the change in postponed share-based bonuses
due to the strong increase in the share price (EUR 1.2 million from 1 Jan. to 31 Dec.
2021). Based on regulations that were previously in force in the finance sector, part
of the decided bonuses has been postponed and bound to eQ’s share price. In future,
bonuses will no longer be postponed.
Loans to related parties
eQ Plc’s receivables from related parties have been described in further detail in
Note 32 to the Financial Statements.
eQ Plc’s share
Authorisations
The AGM authorised the Board of Directors to decide on a share issue and/or the
issuance of special rights entitling to shares referred to in Chapter 10 Section 1
of the Limited Liability Companies Act, in one or several transactions, comprising
a maximum total of 3,500,000 new shares. The amount of the authorisation
corresponded to approximately 9,00% of all shares in the company on the date of
the notice of the AGM.
The authorisation can be used in order to finance or carry out potential acquisitions or
other business transactions, to strengthen the balance sheet and the financial position
of the company, to carry out the company’s incentive schemes or for any other pur
-
poses decided by the Board. Based on the authorisation, the Board shall decide on all
matters related to the issuance of shares and special rights entitling to shares referred
to in Chapter 10 Section 1 of the Limited Liability Companies Act, including the recip
-
ients of the shares or the special rights entitling to shares and the amount of the con-
sideration to be paid. Therefore, based on the authorisation, shares or special rights
entitling to shares may also be issued to certain persons, i.e. in deviation of the share
-
holders’ pre-emptive rights as described in said Act. A share issue may also be exe-
cuted without payment in accordance with the preconditions set out in the Limited
Liability Companies Act. The authorisation cancels all previous corresponding authori
-
sations and is eective until the next AGM, no longer than 18 months, however.
Shares and share capital
At the end of the period on 31 December 2021, the number of eQ Plc’s shares was
39,632,198 and the share capital was EUR 11,383,873.00.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
During the financial period, on 18 March 2021, the number of shares increased
by 45,000 shares subscribed for with option rights 2015. The subscription price
of the new shares totalled EUR 112,050.00. In addition, the number of eQ Plc’s
shares increased by 715,000 shares subscribed for with option rights 2015 during
the period on 17 May 2021. The subscription price of the new shares totalled EUR
1,279,850.00. The entire subscriptions were entered in the reserve for invested
unrestricted equity.
The closing price of eQ Plc’s share on 31 December 2021 was EUR 25.75 (EUR 16.75
on 31 Dec. 2020). The market capitalisation of the company was thus EUR 1,020.5
million (EUR 651.1 million) at the end of the financial period. During the financial
period, 2,089,680 shares were traded on Nasdaq Helsinki (2,721,819 shares from
1 Jan. to 31 Dec. 2020). In euros, the turnover was EUR 48.9 million (EUR 35.8
million).
Option schemes
At the end of the financial period, eQ Plc had one option scheme, the Option
Scheme 2018. The option scheme is intended as part of the commitment system
of the Group’s key personnel. The 2015 Option Scheme, which was in force at the
beginning of the financial period, has ended during the period, and all outstanding
options related to the 2015 Option Scheme were exercised as a result of the share
subscriptions made.
Option scheme 2018
At the end of the period, altogether 1,775,000 options had been allocated from
option scheme with a purchase price 2018. The subscription period of shares with
option rights 2018 will begin on 1 April 2022 and end on 1 April 2024. No options of
the option scheme 2018 can any longer be allocated.
The terms and conditions of the option scheme have been published in a stock
exchange release of 26 October 2018, and they can be found in their entirety on the
company website at www.eQ.fi/en.
Own shares
On 31 December 2021, eQ Plc held no own shares.
Shareholders
Major shareholders
Number
of shares
% of votes
and shares
Fennogens Investments S.A. ,, .%
Anchor Oy Ab ,, .%
Chilla Capital S.A. ,, .%
Teamet Oy ,, .%
Oy Cevante Ab ,, .%
Fazer Jan ,, .%
Procurator-Holding Oy , .%
Lavventura Oy , .%
Linnalex Ab , .%
Pinomonte Ab , .%
Pohjolan Kiinteistökehitys Oy , .%
Umo Invest Oy , .%
Leppä Jukka-Pekka , .%
Sever Match Oy , .%
Mononen Matti , .%
Leenos Oy , .%
Johansson Ole , .%
Louko Antti Jaakko , .%
Nacawi Ab , .%
Viskari Jyri , .%
Others ,, .%
Total ,, .%
The information is based on the situation in the shareholders’ register kept by
Euroclear Finland Ltd on 31 December 2021.
Ownership structure by sector on 31 December 2021
Number
of shares
% of votes
and shares
Corporations ,, .%
Financial and insurance institutions , .%
Public sector entities , .%
Households ,, .%
Foreign ,, .%
Other
, .%
Total ,, .%
1
The item Others comprises non-profit organisations.
Ownership structure according to number of shares held
Number of shares
per shareholder
Number of
shareholders % of shareholders
1–100 , .%
101–500 , .%
501–1,000 .%
1,001–5,000 .%
5,001–10,000 .%
10,001–50,000 .%
50,001–100,000 .%
100,001–500,000 .%
500,001– .%
Total , .%
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Number of shares
per shareholder
Number
of shares % of shares
1–100 , .%
101–500 , .%
501–1,000 , .%
1,001–5,000 ,, .%
5,001–10,000 , .%
10,001–50,000 , , .%
50,001–100,000 ,, .%
100,001–500,000 ,, .%
500,001– ,, .%
Total ,, .%
Nominee registered shares
Of the company shares, 443,266 were nominee-registered, representing 1.12% of
the votes and shares.
Other information on the share
The following information on the company share is found in the Notes to the
Financial Statements: holdings of the company management and directors and the
number of company shares and share types.
Corporate governance
In addition to acts and regulations applicable to listed companies, eQ Plc complies
with the Finnish Corporate Governance Code published by the Securities Market
Association on 1 January 2020. The entire Code is available on the website of the
Securities Market Association at www.cgfinland.fi/en.
Proposal for the distribution of profit
The distributable means of the parent company on 31 December 2021 totalled EUR
64,090,948.98. The sum consisted of retained earnings of EUR 41,698,740.48 and
the means in the reserve of invested unrestricted equity of EUR 22,392,208.50.
The Board of Directors proposes to the Annual General Meeting that a dividend of
EUR 0.97 per share be paid out. The proposal corresponds to a dividend totalling EUR
38,443,232.06 calculated with the number of shares at the close of the financial
year. Additionally, the Board proposes to the AGM that an equity repayment of EUR
0.03 per share be paid out from the reserve of invested unrestricted equity. The
proposal corresponds to an equity repayment totalling EUR 1,188,965.94 calculated
with the number of shares at the close of the financial year. The dividend and equity
repayment shall be paid to those who are registered as shareholders in eQ Plc’s
shareholder register maintained by Euroclear Finland Ltd on the record date 25
March 2022. The Board proposes 1 April 2022 as the payment date of the dividend
and equity repayment.
After the end of the financial period, no essential changes have taken place in the
financial position of the company. The Board of Directors feel that the proposed
distribution of dividend and equity repayment do not endanger the liquidity of the
company.
Events after the period
eQ Plc’s shareholders with more than 60% of the company shares and votes have
made a proposal to the Annual General Meeting to be held on 23 March 2022
regarding the number of directors, their remuneration and the principles for compen
-
sating expenses as well as the election of the directors. The shareholders propose
that the composition of the Board will remain unaltered and that Nicolas Berner,
Georg Ehrnrooth, Timo Kokkila, Lotta Kopra, Janne Larma and Tomas von Rettig are
re-elected to the Board.
The first close of the eQ PE XIV North private equity fund was held at the end of
January 2022 at EUR 196 million. eQ Plc made an investment commitment of EUR
1.0 million to the fund. eQ also established its fourth secondary market fund eQ PE
SF IV. The first close of the fund was held at EUR 85 million. The second close of the
eQ VC private equity fund was held at USD 56 million.
Outlook
As for sales, the year 2021 was very good for eQ Asset Management. In January
2022, the eQ PE XIV North and eQ PE SF IV private equity funds raised a record
amount of EUR 281 million in the first closings of the funds, and the eQ VC Fund
grew to USD 56 million. This strengthens our view that the demand for alternative
investment products continues to be strong among investors. In addition, eQ will
begin to accrue the catch up share of private equity funds’ performance fee in the
income statement in 2022, which will support eQ’s result.
Consequently, we expect the net revenue and operating profit of the Asset Man
-
agement segment to grow in 2022. In accordance with our disclosure policy, we do
not issue profit guidance for the Corporate Finance and Investments segments. The
results of these segments are highly dependent on factors that are not dependent
on the company. Therefore, their operating profits may vary considerably and are
dicult to foresee.
Helsinki, 3 February 2022
eQ Plc
Board of Directors
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Consolidated Key Ratios
EUR 1,000
INCOME STATEMENT
Fee and commission income, net
, , , , ,
Net income from financial assets , , , ,
Net revenue , , , , ,
Operating profit (loss) , , , , ,
% of net revenue . . . . .
Profit (loss) for the period , , , , ,
BALANCE SHEET
Claims on credit institutions and liquid assets
, , , , ,
Financial assets , , , , ,
Intangible and tangible assets , , , , ,
Other assets and receivables , , , , ,
Total assets , , , , ,
Total equity , , , , ,
Liabilities , , , , ,
Total liabilities and equity , , , , ,
EUR 1,000
PROFITABILITY AND OTHER KEY RATIOS
Return on investment, ROI % p.a.
. . . . .
Return on equity, ROE % p.a. . . . . .
Equity to assets ratio, % . . . . .
Gearing, % -. -. -. -. -.
Cost/income ratio, %
Group . . . . .
Asset Management . . . . .
Corporate Finance . . . . .
Number of personnel as full-time resources
at the end of the period
Number of personnel as full-time resources, average
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
EUR 1,000
SHARE-RELATED KEY RATIOS
Earnings per average share, EUR
. . . . .
Diluted earnings per average share, EUR . . . . .
Equity per share, EUR . . . . .
Equity per average share, EUR
. . . . .
Dividend, EUR 1 000
, , , , ,
Dividend per share
. . . . .
Dividend per earnings, %
. . . . .
Repayment of equity, EUR 1 000
, , , , ,
Repayment of equity per share
. . . . .
Dividend and repayment of equity, total, EUR 1,000 , , , , ,
Dividend and repayment of equity, total per share . . . . .
Eective dividend and equity repayment yield, % . . . . .
Price/earnings ratio, P/E . . . . .
Adjusted share price development, EUR
Average price
. . . . .
Highest price . . . . .
Lowest price . . . . .
Closing price . . . . .
Market capitalisation, EUR 1,000 ,, , , , ,
Share turnover, 1,000 shares , , , , ,
% of total number of shares . . . . .
Share turnover, EUR 1,000 , , , , ,
Adjusted number of shares, 1,000 shares
Average during the year
, , , , ,
At the end of the year , , , , ,
Weighted average number of shares outstanding during the period
The Board’s dividend proposal
The Board’s proposal for repayment of equity from the reserve for invested unrestricted equity
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
RETURN ON INVESTMENT, ROI (%)
profit or loss + interest expenses
x
equity + interest-bearing financial liabilities (average)
RETURN ON EQUITY, ROE (%)
profit or loss
x
equity (average)
EQUITY TO ASSETS RATIO (%)
equity
x
balance sheet total - advances received
GEARING (%)
interest-bearing liabilities - financial assets - cash in hand and at bank
x
equity
COST/INCOME RATIO (%)
administrative expenses + other operating expenses + depreciation
(excl. agreement depreciation)
x
net revenue
EARNINGS PER SHARE, EPS
profit or loss for the period attributable to equity holders of the parent company
adjusted average number of shares during the period
EQUITY PER SHARE
equity
adjusted number of shares at the balance sheet date
DIVIDEND PER SHARE
dividend
adjusted number of shares at the balance sheet date
DIVIDEND PER EARNINGS (%)
dividend per share
x
earnings per share
REPAYMENT OF EQUITY PER SHARE
repayment of equity from the reserve for invested unrestricted equity
adjusted number of shares at the balance sheet date
EFFECTIVE DIVIDEND AND EQUITY REPAYMENT YIELD (%)
dividend and equity repayment per share
x
adjusted share price at the balance sheet date
PRICE/EARNINGS RATIO, P/E
adjusted share price at the balance sheet date
earnings per share
MARKET CAPITALISATION
number of shares on 31. Dec. x closing price on 31. Dec
SHARE TURNOVER (%)
number of shares traded during the period
x
average number of shares during the period
Calculation of Key Ratios
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Financial Statements 2021
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Change in Consolidated Shareholders’ Equity
Principles for preparing the
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Parent Company Financial Statements
Income Statement
Balance Sheet
Cash Flow Statement
Notes to the Financial Statements
Proposal for the Distribution of Profits
Signatures and Auditors’ Note
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eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Consolidated Income Statement
EUR 1,000 Note no.
Fee and commission income 5 72,152 57,193
Interest income 6 7 1
Net income from financial assets 7 7,314 32
Operating income, total 79,473 57,226
Fee and commission expenses 8 -574 -459
Interest expenses 9 -19 -23
NET REVENUE 78,880 56,744
Administrative expenses 10
Personnel expenses -26,683 -21,523
Other administrative expenses -2,141 -1,979
Depreciation on tangible and intangible assets 11 -1,050 -1,086
Other operating expenses 12 -1,346 -1,399
OPERATING PROFIT (LOSS) 47,660 30,757
PROFIT (LOSS) BEFORE TAXES 47,660 30,757
Income tax 13 -9,582 -6,148
PROFIT (LOSS) FOR THE PERIOD 38,078 24,610
Consolidated Statement of Comprehensive Income
EUR 1,000 Note no.
Other comprehensive income: - -
Other comprehensive income after taxes - -
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 38,078 24,610
Profit for the period attributable to:
Equity holders of the parent company
Non-controlling interest - -
Comprehensive income for the period attributable to:
Equity holders of the parent company
Non-controlling interest - -
Earnings per share calculated from the profit of
equity holders of the parent company: 14
Earnings per average share, EUR
Diluted earnings per average share, EUR 0,93 0,60
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Consolidated Balance Sheet
EUR 1,000 Note no. .. ..
ASSETS
Liquid assets
Claims on credit institutions 15 35,069 21,372
Financial assets 16, 26–29
Financial securities 20,943 14,920
Private equity and real estate fund investments 18,817 15,656
Intangible assets 17
Fair value and brands 29,212 29,212
Client agreements 208 308
Other intangible assets 131 240
Tangible assets 18
Right-of-use assets
Other tangible assets 301 349
Other assets 19 4,525 6,969
Accruals and prepaid expenditure 20 502 544
Income tax receivables 52 55
Deferred tax assets 21 44 66
TOTAL ASSETS 110,842 91,476
EUR 1,000 Note no. .. ..
LIABILITIES AND EQUITY
LIABILITIES
Other liabilities 22
Accruals and deferred income 23 19,103 14,956
Lease liabilities 24 1,187 2,035
Income tax liabilities 4,249 1,722
TOTAL LIABILITIES 30,887 23,931
EQUITY 30
Attributable to equity holders of the parent company:
Share capital
Reserve for invested unrestricted equity 24,247 25,190
Retained earnings 6,247 6,362
Profit (loss) for the period 38,078 24,610
TOTAL EQUITY 79,955 67,545
TOTAL LIABILITIES AND EQUITY 110,842 91,476
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Consolidated Cash Flow Statement
EUR 1,000
Cash flow from operations
Operating profit 47,660 30,757
Depreciation and impairment 1,050 1,086
Interest income and expenses 13 22
Transactions with no related payment transactions -3,894 389
Financial assets - private equity funds 910 243
Change in working capital
Business receivables, increase (-) / decrease (+) 2,500 -2,776
Interest-free debt, increase (+) / decrease (-) 3,555 2,506
Change in working capital, total 6,055 -270
Cash flow from operations before financial items and taxes 51,794 32,227
Interests received 7 1
Interests paid -19 -23
Income taxes -5,321 -4,542
Cash flow from operations 46,460 27,663
Cash flow from investments
Investments in tangible and intangible assets -70 -739
Investments in other investments - liquid mutual funds -6,018 -4,916
Cash flow from investments -6,088 -5,655
Cash flow from financing
Dividends/equity repayments
-27,242 -23,750
Option issue with a subscription price - -18
Subscription of new shares 1,392 1,407
Deduction of lease liability capital -834 -568
Cash flow from financing -26,685 -22,930
Increase/decrease in liquid assets 13,688 -922
Liquid assets on 1 Jan. 21,453 22,375
Liquid assets on 31 Dec. 35,141 21,453
Change in Consolidated Shareholders’ Equity
EUR 1,000 Equity attributable to equity holders of the parent company
Share
capital
Reserve
for invested
unrestricted
equity
Retained
earnings Total
Total
equity
Shareholders' equity on 1 Jan. 2021 11,384 25,190 30,972 67,545 67,545
Comprehensive income
Profit (loss) for the period
Other comprehensive income - - -
Total comprehensive income 38,078 38,078 38,078
Dividends/equity repayments -2,335 -24,907 -27,242 -27,242
Subscription of new shares 1,392 1,392 1,392
Options granted 182 182 182
Shareholders' equity on 31 Dec. 2021 11,384 24,247 44,325 79,955 79,955
Shareholders' equity on 1 Jan. 2020 11,384 26,482 27,251 65,117 65,117
Comprehensive income
Profit (loss) for the period
Other comprehensive income - - -
Total comprehensive income 24,610 24,610 24,610
Dividends/equity repayments -2,682 -21,069 -23,750 -23,750
Subscription of new shares 1,407 1,407 1,407
Option issue with a subscription price -18 -18 -18
Options granted 180 180 180
Shareholders' equity on 31 Dec. 2020 11,384 25,190 30,972 67,545 67,545
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
1 Principles for preparing the Consolidated
Financial Statements
Basic information
the company is Helsinki , Finland . eQ Plc and its subsidiaries form eQ Group (”eQ” or
”the Group”). The parent company eQ Plc ’s shares are listed on Nasdaq Helsinki. eQ
Group is a group of companies that concentrates on asset management and corporate
finance operations. eQ Asset Management offers versatile asset management services
to institutions and private individuals. Advium Corporate Finance, which is part of the
Group, offers services related to mergers and acquisitions, real estate transactions and
equity capital markets.
A copy of the consolidated financial statements is available on the company website at
www.eQ.fi/en and at the head office of the parent company, address Aleksanter inkatu
The consolidated financial statements have been prepared for the 12-month period
1 January to 31 December 2021. The Board of Directors of eQ Plc has approved the
consolidated financial statements for publication on 3 February 2022. According to
the Finnish Limited Liability Companies Act, the Annual General Meeting shall have
the right to adopt, reject or amend the financial statements after their publication.
The consolidated financial statements have been presented in euros, which is the
operating and disclosure currency of the parent company. The figures are presented
in thousand euros, unless otherwise stated.
Principles for preparing the Financial Statements
eQ Plc’s consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards, IFRS, approved by the EU. The IAS and
IFRS standards and SIC and IFRIC interpretations valid on 31 December 2021 have
been applied when preparing the statements.
eQ Group will introduce each new IFRS standard and interpretation as of its
eective date or, if the eective date is some other date than the first day of a
financial period, as of the beginning of the financial period following the eective
date. The Group has applied the amended standards and interpretations that entered
into force on 1 January 2021. The amendments have not had any essential impact on
the Group’s financial statements.
Preparation principles requiring management
assessment and use of estimates
Preparation of financial statements in accordance with IFRS requires the use of
estimates and assumptions that aect the amount of assets and liabilities on the
balance sheet at the time of preparation, the reporting of contingent assets and
liabilities, and the amount of profits and costs during the reporting period. The
estimates are based on the management’s current best view, but it is possible that
the outcome diers from the values used in the financial statements.
Major areas where the management has made assessments are related to assessing
control in private equity and real estate funds in form of limited partnerships
managed by the Group (note 34 Shares in entities not included in the consolidated
financial statements).
The future assumptions and uncertainty factors related to the values on the closing
date of the reporting period that cause a significant risk of essential changes in the
book values of the Group assets and liabilities during the following financial period
have been presented below:
Definition of fair value: The fair value of private equity fund investments is defined
according to International Private Equity and Venture Capital Guidelines, as no
external market price is available for them. The fair value of real estate owned by the
real estate funds is based on a fair value defined by an external evaluator (note 28
Value of financial assets across the three levels of the fair value hierarchy). Private
equity and real estate fund investments have been classified at level 3 in the fair
value hierarchy.
Impairment testing: The Group tests the goodwill and brands with an unlimited
useful life for impairment annually. The recoverable amounts of the cash-generating
units have been defined based on value in use. The preparation of these calculations
requires the use of estimates (note 17 Intangible assets).
Recognising revenue from contracts with customers: Revenue is recognised at an
amount that recognises revenue to depict the transfer of promised goods or services
to the customer in an amount that reflects the consideration to which eQ expects
to be entitled in exchange for those goods or services. There is more detailed
information on estimates regarding recognising revenue requiring management
assessment in the revenue recognition section.
Notes to the Consolidated Financial Statements
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Consolidation principles
The consolidated financial statements comprise all Group companies. Subsidiaries
are companies over which the Group exercises control. Control arises when a Group
by being party to an entity is exposed to the entity’s variable income or is entitled
to its variable income and it can influence this income by exercising control over the
entity.
The Group’s internal holding has been eliminated and the subsidiaries have been
consolidated by using the acquisition method. Acquired subsidiaries are consolidated
from the moment the Group has gained control and transferred subsidiaries until
control is terminated. All internal transactions, receivables, debts and the internal
distribution of profits have been eliminated in the financial statements.
The consolidated financial statements comprise the parent company eQ Plc and the
following subsidiaries:
• eQ Asset Management Ltd
• eQ Fund Management Company Ltd
• eQ Life Ltd
• eQ Private Equity GP Ltd
• eQ Residential GP Ltd
• Advium Corporate Finance Ltd
Se
gment reporting
provided to the highest operative decision-makers and prepared in accordance with
IFRS standards. The highest operative management is responsible for assessing
the results of the business segments. In the Group, the CEO is responsible for this
function. Within the Group, decisions regarding the assessment of the segments’
results are based on the operating profit, i.e. the segments’ result before taxes.
The business segments consist of business units with dierent types of products
and services as well as dierent income logics and profitability. The pricing between
the segments is based on fair market value. The income and expenses that directly
belong to the business areas or can on sensible grounds be allocated to them
are allocated to the business areas. In segment reporting, Group administrative
functions are presented under the item Other. The unallocated items presented
under the item Other also comprise interest income and expenses and taxes. The
highest operative decision-making body does not follow assets and liabilities at
segment level, due to which the Group’s assets and liabilities are not presented as
divided between the segments.
The Asset Management segment comprises services related to funds, discretionary
asset management, investments insurance policies and a wide range of mutual
funds oered by international partners. The Corporate Finance segment comprises
services related to mergers and acquisitions, real estate transactions and equity
capital markets. The business operations of the Investments segment consist of
private equity and real estate fund investments made from eQ Group’s own balance
sheet.
Foreign currency transactions
The consolidated financial statements are presented in euros and foreign currency
transactions are converted to euros using the exchange rates valid on the day of the
transaction. Foreign currency receivables and liabilities are converted to euros using
the exchange rates on the balance sheet date.
The gains and losses arising from foreign currency transactions and the translation
of monetary items are presented through profit and loss. The foreign currency
dierences are included in the net income from foreign exchange dealing.
Revenue recognition principles
eQ Group receives administrative fee income related to the asset management
operations from funds and asset management portfolios and pays fee repayments
related to these to customers. The management fees and fee repayments of the
asset management operations, included in the net income from operations, are
recorded per month and mainly invoiced afterwards in periods of one, three, six
or twelve months. These fees are typically calculated based on the capital in the
fund or client portfolio or the original investment commitment and the agreed
commission percentage over time.
The performance fees, which depend on the success of investment operations,
are also included in the fee and commission income from asset management. The
performance fees from asset management may consist of performance fees paid by
mutual funds and non-UCITS funds (including equity and real estate funds), perfor
-
mance fees (profit shares) that private equity funds pay to management companies,
and performance fees from asset management portfolios. eQ Group takes into
consideration the requirement of limiting the assessment of variable consideration
when defining the consideration from fees that it expects to be entitled to.
The performance fees of open-end real estate funds are accrued per quarter based
on the return of the fund during each quarter. The ultimate performance fee that eQ
receives from an open-end real estate fund is determined on the basis of the fund’s
annual return, and it may change from the amount recognised during an earlier
quarter. eQ recognises the performance fees of real estate funds for each quarter
only to a likely amount so that no major annulments will have to be made afterwards
in the accumulated recognised returns.
It is possible for eQ Group to obtain a performance fee (carried interest) based on the
return of the fund from the private equity funds that it manages. The performance
fee, which is based of fund agreements and belongs to the management company, is
not obtained until the return rate defined by the hurdle rate (IRR) has been achieved
at cash flow level. Typically, the performance fee will become payable first towards
the end of a fund’s life cycle. If the return from the fund remains below the hurdle
rate, the management company receives no performance fee. When the hurdle rate
has been reached, the management company will receive the coming cash flow until
the entire performance fee accumulated this far has been obtained (catch up stage).
After the catch up stage, the cash flows distributed by the fund will be divided
between the management company and investors according to the fund agreement
(e.g. 7.5% / 92.5%). eQ Group will begin to accrue performance fees from private
equity funds belonging to the management company, when the Group has assessed
that it will not be necessary to later make any considerable cancellation in the
accrued and booked income. The possible risk of default is also assessed regarding
performance fees, and, if necessary, part of the income is left unrecognised.
eQ Group also receives monthly fees and success fees related to corporate finance
operations. The monthly fees are recognised over time and the success fees, which
are treated as variable consideration, are dependent on the implementation of
projects. The success fee income related to corporate finance projects is entered as
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
income for the period during which the payment obligation has been carried out and
the outcome of the project can be assessed in a reliable manner. When necessary, eQ
Group takes into consideration the requirement of limiting the assessment of varia
-
ble consideration. The expenses arising from a project are expensed immediately.
The asset items related to contracts with customers consist of management
fee receivables, other fee receivables and sales receivables, which are presented
separately in the Notes. No asset items from receivables from customer contracts
that would fulfil the precondition for entering them on the balance sheet have
arisen. The liabilities related to customer contracts mainly consist of fee repayment
liabilities. The Group takes advantage of the tools available and does not recognise
the amount of transaction prices for unrealised payment obligations in contracts the
original expected duration of which is one year at the most, or if the amount of the
consideration received of the customer and recognised as income corresponds to the
value of the transferred services for the customer.
The net income from financial assets included in the operating income includes the
profit distributions from private equity and real estate fund investments made from
the Group’s own balance sheet, the changes in fair value entered through profit or
loss as well as sales profits and losses. Profit distributions are entered in the income
statement first when cash flows from funds have been realised. The value changes
through profit or loss of other direct investments as well as sales profit and losses
are also entered among the net income from financial assets.
Financial assets and liabilities
The Group’s financial assets are classified into the following groups in accordance
with the IFRS 9 standard:
a) valued at amortised acquisition cost,
b) entered at fair value through profit or loss and
c) valued at fair value with other items of comprehensive income.
The classification is based on the business model defined by the Group and the
contractual cash flows of financial assets. In connection with the original recogni
-
tion, the Group values an item belonging to financial assets at fair value, and if the
item is some other than an item to be entered among financial assets at fair value
through profit or loss, the transaction expenses arising directly from the item are
either added or subtracted. In connection with the original recognition, the financial
liabilities at fair value though profit or loss are entered on the balance sheet at fair
value, and the transaction expenses are recognised through profit or loss.
To the group financial assets valued at amortised acquisition cost are classified
financial assets the operating model of which aims at keeping the financial assets
and collecting the cash flows based on contract that only consist of the payment
of capital and interests. This group comprises sales receivables, loan receivables
and other receivables as well as liquid assets. The assets in the group are valued at
the periodised acquisition cost using the eective interest method. The book value
of short-term sales receivables and other receivables is considered to correspond
to their fair value. These items are short-term assets, if it is expected that they
are realised within 12 months from the close of the reporting period. The Group’s
sales receivables are mainly short-term receivables. The Group recognises the
deduction regarding expected credit losses from financial assets valued at amortised
acquisition cost.
To the group financial assets at fair value though profit or loss are items belonging to
financial assets that are classified at fair value through profit or loss in connection
with the original disclosure. eQ Plc’s private equity and real estate fund investments
and investments in mutual funds are classified among financial assets at fair value
through profit or loss. Liquid investments in mutual funds are included in financial
securities on the balance sheet. The fair value of mutual fund investments is defined
by using quoted market prices and rates. Private equity fund investments are valued
in accordance with a practice widely used in the sector, International Private Equity
and Venture Capital Guidelines. The fair value of the private equity and real estate
fund investment is the latest fund value reported by management company of the
fund, added with the capital investments and less the capital returns that have
taken place between the balance sheet date and the report. The fair value of real
estate owned by real estate funds is based on a fair value defined by an external
evaluator. On the reporting date, the Group had no items valued at fair value through
other items of comprehensive income. Financial assets are derecognised when the
Group has lost the agreement-based right to the cash flows or when it has to a
significant degree transferred the risks and return outside the Group. Liquid assets
consist of cash and comparable items. Claims on credit institutions payable on
demand are also included in liquid assets in the cash flow statement.
Financial liabilities are classified as follows:
a) valued at amortised acquisition cost,
b) valued at fair value through profit or loss
In connection with the original recognition, the Group values financial liabilities at
fair value, and if the item is some other than a financial liability to be entered at fair
value through profit or loss, the transaction expenses arising directly from the item
are either added or subtracted. In connection with the original recognition, financial
liabilities at fair value though profit or loss are entered on the balance sheet at fair
value, and the transaction expenses are recognised through profit or loss.
The financial liabilities entered at amortised acquisition cost consist of inter
-
est-bearing loans and interest-free liabilities, and they are valued among amortised
acquisition cost using the eective rate method. The dierence between the
obtained amount and repayable amount is entered in the income statement using
the eective rate method during the loan period. Financial liabilities are classified as
being short-term, unless that Group has an absolute right to postpone the payment
of the liability at least 12 months from the end of the reporting period. Accounts
payable are classified as short-term liabilities if they fall due within 12 months. eQ
Group did not have any other interest-bearing liabilities than lease liabilities at the
reporting moment. eQ Group had no financial liabilities valued at fair value through
profit or loss at the reporting moment. Financial liabilities or their part are derecog
-
nised first when the debt has ceased to exist, i.e. when the specified obligation has
been fulfilled or annulled or its validity has been terminated.
Impairment of financial assets
The Group assesses whether there is reliable proof of the impairment of a single item
or a group of items included in financial assets. eQ recognises credit losses from sales
receivables at an amount that corresponds to the expected credit losses during the
entire life cycle of the receivables, based on the simplified procedure included in IFRS
9. The expected credit losses are assessed based on historical data on previously
realised credit losses, and the model also takes into account the information on future
economic conditions available at the time of the assessment. eQ Group does not give
credits and it mostly has short-term sales receivables. The receivables, including sales
receivables, of the asset management operations mainly consist of fee receivables
from funds managed by eQ. The credit loss risk of these fee receivable is very low.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Tangible and intangible assets
Tangible assets are entered on the balance sheet at original acquisition cost less
depreciation and impairment. Acquisition cost comprises the cost arising directly
from the acquisition.
Intangible assets include the goodwill generated from corporate acquisitions. The
goodwill arising in the combination of business operations is entered in the amount
at which the transferred consideration, the share of non-controlling interests in the
object of the acquisition and the previously owned share together exceed the fair
value of the acquired net assets.
Goodwill is valued at original acquisition cost minus impairment. No depreciation is
booked for goodwill, but it is tested annually for impairment. Goodwill is allocated to
cash-generating units.
Other intangible assets are brands, customer agreements, software licenses and
other intangible rights. Customer agreements acquired in connection with corporate
acquisitions are entered into intangible assets under customer agreements. No
depreciation is booked for intangible assets that have an unlimited useful life, but
they are tested annually for impairment. Intangible assets with a limited useful
life are entered as costs into the income statement as straight-line depreciation
according to plan during their useful life. Depreciation has been calculated based on
the useful life from the original acquisition costs as straight-line depreciation.
The depreciation periods according to plan by asset type are as follows:
• Machinery and equipment 3 to 10 years
• Customer agreements 4 years
• Software and other intangible rights 3 to 5 years
Impairment and impairment test
The balance sheet values of other long-term tangible and intangible assets are
tested for impairment at each balance sheet date and always when there is indica
-
tion that the value of an asset may have been impaired. In the impairment test, the
recoverable amount of the assets is tested. The recoverable amount is the higher of
an asset item’s net sales price or its value in use, based on cash flow. An impairment
loss is entered in the income statement, if the book value of the asset is higher than
the recoverable amount.
The need for impairment is assessed at the level of cash-generating units, i.e. the
lowest unit level that is mainly independent of other units and the cash flow of
which can be separated from other cash flows. For the testing of impairment, the
recoverable amount of the asset item has been defined by calculating the asset
items’ value in use. The calculations of the value in use are based on five-year cash
flow plans approved by the management. The future income cash flows of asset
management are based on assets that are managed under asset management agree
-
ments. The development of the assets under management and the future income
cash flow of asset management operations are influenced by the development of the
capital market, for instance. The income cash flow of the corporate finance oper
-
ations is markedly influenced by success fees, which are dependent on the number
of corporate and real estate transactions. These vary considerably within one year
and are dependent on economic trends. The estimate on the income cash flow of
the corporate finance operations is based on the management’s view on the number
of future transactions. The future cash outflows of the impairment calculations are
based on the Group management’s cost estimates for the future. In the calculations,
the management uses as discount rate before taxes, which reflects the view on the
time value of money and the special risks related to the asset item.
Leases
eQ Group enters almost all leases that it concludes on the balance sheet. An asset
(the right to use the leased item) and a financial liability to pay rentals are entered
on the balance sheet. The only exceptions are leases on short-term and low-value
items, on which eQ Group applies the simplifications allowed by the standard. The
major leases concluded by eQ Group are related to leased premises and storage
facilities in connection with the premises. The leases on premises are fixed-term
and they do not include options for continuance or termination, covenants or, for
instance, variable leases based on net sales. The minor leases that eQ Group has
entered into are related to rented IT equipment. A straight-line depreciation for a
right-of-use asset and calculated interest expenses for the lease liability are entered
in the income statement.
eQ Group recognises the right-of-use asset and lease liability from the day when
the lease agreement enters into force. A right-of-use asset is originally valued at
acquisition cost, which includes the lease liability at its original valuation, the leases
paid up to the date of commencement of the agreement deducted with any possible
incentives related to the lease agreement as well as any direct costs arising for the
group during the initial stage. Depreciation on a right-of-use asset is recognised as
straight-line depreciation from the commencement of the agreement, according to
its useful life or the lease period, depending on which is shorter. A right-of-use asset
is tested for impairment, if necessary, and any impairment is recognised through
profit or loss. A lease liability is originally valued at the present value of the lease
payments that have not been paid when the agreement enters into force. The Group
uses as discount rate the Group’s incremental borrowing rate. Later on, the lease
liability is valued at the periodised acquisition cost using the eective rate method.
The lease liability is redefined when a change has occurred in future lease payments
resulting from the index or if some other change takes place in the cash flows
according to the original terms of the lease. When the lease liability is redefined
in such a manner, a corresponding adjustment is made to the book value of the
right-of-use asset, or it is recognised through profit or loss, if the book value of the
right-of-use asset has been reduced to zero.
Employment pensions
The Group’s pension arrangement is a contribution-based arrangement, and the
payments are entered in the income statement for the periods to which they apply.
The pension coverage of the Group’s personnel is arranged with a statutory TyEL
insurance policy through an insurance company outside the Group.
Share-related payments
The Group has incitement arrangements where the payments are made as equity
instruments. Option rights are valued at fair value on their grant date and expensed
in the income statement during the period when the right arises. The expenses are
presented among expenses arising from fringe benefits. The fair value of granted
options on the grant date has been defined by using the Black-Scholes price-setting
model.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Income tax
The taxes based on Group company earnings for the period are entered into
the Group’s taxes, as are the adjustments of taxes from previous periods and
the changes in deferred taxes. The tax based on the period‘s taxable income is
calculated from the taxable income based on the valid tax rate. The tax impact of
items entered directly into shareholders’ equity is similarly entered directly into the
shareholders’ equity.
Deferred taxes are calculated based on the debt method from all temporary
dierences in accounting and taxation in accordance with the valid tax rate
legislated before the end of the financial year. The deferred tax receivable is entered
to the amount in which taxable income is likely to arise in future, against which the
temporary dierence can be exploited. The most significant temporary dierences
are typically generated from valuing the net value of the acquired companies at fair
value.
Earnings per share
Earnings per share are calculated by dividing the profit for the period belonging
to the parent company’s shareholders with the weighted average number of
outstanding shares during the financial period. When calculating earnings per
share adjusted with dilution, the diluting eect of the conversion into shares of
all diluting, potential ordinary shares is taken into consideration in the weighted
average number. The Group’s share options are diluting instruments, i.e. instruments
that increase the number of ordinary shares.
Dividend distribution
No booking has been made for the dividend proposed by the Board of Directors to
the AGM in the financial statements and it has not been taken into account when
calculating distributable retained profits. The dividend is only taken into account
based on the AGM decision.
2 Risk management
eQ Group defines risk as an unexpected change in future economic outcome. The
purpose of risk management is to make sure that the risks associated with the
company’s operations are identified, assessed and that measures are taken regarding
them. Risk management shall see to it that manageable risks do not jeopardise the
business strategy, critical success factors or earning power. Risk management com
-
prises all the measures that are needed for the cost-ecient management of risks
arising from the Group’s operations. Risk management is a continuous process that
is assessed at regular intervals. The aim of this is to make sure that risk management
is adapted to the changing operating environment.
eQ Plc’s Board supervises that the CEO takes care of eQ Plc’s day-to-day admin
-
istration according to the instructions and orders issued by the Board. The Board
supervises that risk management and control are organised in a proper manner. eQ
Plc’s Board approves the principles for risk management and defines the company’s
organisation structure as well as the authorities, responsibilities and reporting
relations. The executive management is responsible for the implementation of the
risk management process and control in practice. It is the duty to the executive
management to see to it that internal instructions are maintained and make sure
that they are sucient and functional. The management is also responsible for
making sure that the organisation structure functions well and is clear and that the
internal control and risk management processes function.
eQ Group comprises a fully owned subsidiary of eQ Plc, eQ Asset Management Ltd,
which is an investment firm. A permanent risk management function consisting of
risk experts, which is independent of the other operations, is led by the Chief Risk
Ocer and responsible for risk management at eQ Asset Management Ltd. eQ Asset
Management Ltd, as investment firm, and eQ Plc as the holding company, apply the
IFR regulations on capital adequacy. Below is a presentation of the major risks of eQ
Group and the investment firm.
Risks related to operations
Financial risk
Financial risks are divided into market, liquidity and credit risks. The aim of the
management of financial risks is to cut down the impacts of fluctuations in interest
rates, foreign exchange rates and prices and other uncertainties as well as to
guarantee sucient liquidity.
Market risk
Market risk means the risk that changes in market prices may pose. Interest rate,
currency and price risks are regarded as market risks. The business operations of
Group companies do not as such comprise taking own positions in the equity or bond
market for trading purposes. Therefore, there are no market risks in this respect.
Interest rate risk
Interest rate risk means the uncertainty of the cash flow and result that results
from changes in interest rates. The business operations of Group companies do not
as such comprise taking own positions in the bond market for trading purposes.
Therefore, there are no market risks in this respect. The possible interest rate risk of
the Group mainly arises from short and long-term interest-bearing loans.
Loans with variable interest rates expose the Group to an interest rate risk, which
can be hedged with interest rate swaps, when necessary. The interest rate risk is
also managed through the planning of the balance sheet structure. The Group did
not have any interest-bearing loans at the end of the reporting period.
Currency risk
Currency risk means the uncertainty of the cash flow and result arising from
changes in exchanges rates. The Group company operations are mainly denominated
in euros, which means that there is no significant currency risk in this respect.
eQ Plc’s private equity and real estate fund investments are mainly euro-denom
-
inated, which means that the investment operations do not expose the Group to
any significant currency risk. eQ does not separately monitor changes arising from
foreign exchange rates but regards them as part of the change in the investment
object’s fair value. eQ’s private equity and real estate fund investments are divided
into dierent currencies as follows:
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Private equity and real estate fund investments in foreign currencies and change in
fair value in euros:
31 Dec. 2021
decrease in
value against
the euro
Currency Euro % % %
EUR million . . .%
USD million . . .% -. -.
.
31 Dec. 2020
decrease in
value against
the euro
Currency Euro % % %
EUR million . . .%
USD million . . .% -. -.
.
Price risk
Price risk means the possibility of loss due to fluctuations in market prices.
The Group’s parent company eQ Plc makes investments in private equity and real
estate funds from its own balance sheet. eQ Plc’s investments are well diversified,
which means that the impact of one investment in a company, made by one
individual fund, on the return of the investments is often small.
The major factors influencing the value of eQ’s investments in private equity funds
are the values of the companies included in the portfolio and factors influencing
them, such as the:
• financial success of the underlying company
• growth outlook of the underlying company
• valuation of peers
• valuation method selected by the management company of the fund.
The price risk of eQ’s private equity fund portfolio has been diversified by making
investments in dierent sectors and geographic areas. The impact of one individual
risk on the value of eQ’s private equity fund portfolio is small, owing to ecient
diversification. The price development of the real estate in eQ’s real estate fund
portfolio and the development of the rental market are dependent on, e.g. general
economic development. The leases on the properties have an essential impact on
the value of the objects in the real estate funds. The price risk of a real estate fund is
also influenced by the under-utilisation of the real estate and the required return as
well as the operating and financing costs of the real estate, for instance.
The impact of the price risk of the private equity and real estate fund portfolio on
shareholders’ equity:
At the end of 2021, a 10% change in the market value of the private equity and real
estate fund portfolio corresponded to a change of EUR 1.5 million in the sharehold
-
ers’ equity (EUR 1.3 million on 31 Dec. 2020).
Liquidity risk
Liquidity risk means the risk that the company’s liquid assets and possibilities of
getting additional financing are not sucient for covering business needs. Liquidity
risk arises from the unbalance of cash flows.
The Group’s liquidity is monitored continuously, and good liquidity is maintained by
only investing the sur-plus liquidity in objects with a low risk, which can be turned
into cash rapidly and at a clear market price. The liquidity is also influenced by the
capital calls and returns of the own private equity and real estate fund investments.
The Group’s major source of financing is a positive cash flow.
The table below describes the maturity analysis of debts based on agreements.
Maturity distribution of debts, EUR 1,000
31 Dec. 2021
less than
year – years over years total
Loans from financial
Institutions - - - -
Accounts payable and
other liabilities - -
Lease liabilities - ,
Total , - ,
31 Dec. 2020
less than
year – years over years total
Loans from financial
Institutions - - - -
Accounts payable and
other liabilities - -
Lease liabilities , - ,
Total , , - ,
Credit risk
Credit risk means that a customer or counterparty does not fulfil its obligations
arising from a credit relation and that the security that may have been issued is
not sucient for covering the receivable. The Group’s contractual counterparties
are clients, who buy the company’s services, and partners. The Group does not give
any actual credits, which means that the credit risks mainly arise from the own
investment portfolio. eQ Plc has tried to manage the credit risk related to private
equity and real estate fund operations by diversifying the investments well.
In addition, eQ Group may invest surplus liquidity in accordance with an investment
policy that it has approved. Liquid assets are invested in fixed-income funds with
short maturity and continuous liquidity, in bank deposits or other corresponding
short-term interest rate instruments with a low risk where the counterparties are
solid and have a high credit rating. The credit risk of the asset management and
corporate finance operations is related to commission receivables from clients,
which are monitored daily.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Operational risks
Operational risks may arise from inadequate or failed internal processes, people and
systems, or from external events. Operational risks also cover legal and reputation
risks, and they are managed by, for instance, developing internal processes and
seeing to it that the instructions are good and that the personnel is oered sucient
training.
Legal risks are included in operational risks and can be related to agreements
between the Group and dierent partners. The Group tries to identify these risks by
going through any agreements thoroughly and using the help of external experts,
when necessary.
The Group carries out a self-assessment of operational risks annually. The aim is to
identify operational risks, assess the probability and impacts of each separate risk
and try to find out ways of decreasing the risks.
In the self-assessments, the key employees of dierent functions assess all
potential operational risks in their operating environment. The Group tries to define
the expected value for risk transactions, i.e. the most likely amount of loss during
the year. The expected value is calculated by multiplying the assessed number of
risk occurrences and the assessed amount of one single loss in euros. The results of
this assessment are used for planning the measures with which operational risks are
cut down.
Risks arising from business operations and external operating environment
The sources of income in Group operations have been diversified to dierent sources
of income. Consequently, the Group can prevent excessive dependence on one single
source of income.
The major single risk of the Group is the dependence of the operating income on
changes in the external operating environment. The result of the asset management
operations depends on the development of the assets under management, which is
dependent of the development of the capital market, for instance. The management
fees of private equity funds and closed-end real estate funds are based on long-term
agreements that produce a stable cash flow, however. The result of the corporate
finance operations is markedly influenced by success fees, which are dependent
on the number of corporate and real estate transactions. These vary considerably
within one year and are dependent on economic trends.
The Group tries to manage the risks associated with its business operations through
a flexible, long-term business strategy, which is reviewed at regular intervals and
updated when necessary.
The impact of the risks associated with the external operating environment
(business, strategic and reputation risks and risks arising from changes in the
compliance environment) on the Group’s result, balance sheet, capital adequacy
and need of capital is assessed continuously as part of the day-to-day operations
and at regular intervals in connection with the top management’s strategy planning
process. The regular planning assesses the impact on the result, balance sheet and
capital adequacy. In the assessment, the company’s assets must clearly exceed the
minimum requirement set by authorities even in the alternative scenario. The Group
aims to maintain a sucient equity buer with which it can meet any risks posed by
the external operating environment.
Other risks
Risks associated with property and indemnity risks
The Group has insurance policies for property, interruption and indemnity risks. The
coverage of the insurance policies is assessed annually. The Group also protects its
property with security control and passage rights.
Risks associated with the concentration of business
eQ Group oers asset management services and mutual funds to its clients, includ-
ing individuals, companies and institutional investors. In addition, the Group oers
asset management and advisory services related to private equity investments
as well as corporate finance services. In normal situations, there are no essential
concentration risks in the Group’s operations that would have an impact on the need
of capital, at least not to any significant extent, which means that there is no need
to maintain a separate risk-based capital regarding the concentration of operations.
3 Capital management
The aim of the Group’s capital management is to create an ecient capital structure
that ensures normal operating preconditions and growth opportunities for the
Group as well as the suciency of capital in relation to the risks associated with
the operations. The Group can influence the capital structure through dividend
distribution and share issues, for instance. The capital managed is the shareholders’
equity shown on the balance sheet. At the end of the accounting period 2021, the
shareholders’ equity amounted to EUR 80.0 million and the equity to assets ratio
was 72.1% The main source of financing is the positive cash flow of operations. The
Group’s net gearing has been presented in the table below. The ratio is calculated by
dividing net debt with shareholders’ equity. The Group management monitors the
development of net debt as part of capital management.
Net gearing
EUR 1,000
Interest-bearing financial liabilities (incl. lease liability) , ,
Financial securities , ,
Liquid assets , ,
Net debt -, -,
Total shareholders’ equity , ,
Net gearing, % -.% -.%
The suciency of capital is assessed by comparing the available capital with the
capital needed for covering risks. The starting point of capital planning consists of
the assessments of the future development of business and the possible impacts
of the risks associated with the operations on the operations. The plans take into
consideration the viewpoints of dierent stakeholders, e.g. authorities, creditors and
owners.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
4 Segment information
The Asset Management segment comprises services related to funds, discretionary
asset management, investments insurance policies and a wide range of mutual
funds oered by international partners. The Corporate Finance segment comprises
services related to mergers and acquisitions, real estate transactions and equity
capital markets. The business operations of the Investments segment consist of
private equity and real estate fund investments made from eQ Group’s own balance
sheet.
EUR 1,000
1 Jan. to 31 Dec. 2021
Asset
Management
Corporate
Finance Investments Other Eliminations Group total
Fee and commission income , , - - ,
From other segments - - - - -
Interest income - - -
Net income from financial assets - - , ,
Other operating income - - - - -
From other segments - - - - -
Operating income, total , , , - ,
Fee and commission expenses - - - - -
To other segments - - - - -
Interest expenses - - - - -
NET REVENUE , , , - ,
Administrative expenses
Personnel expenses -, -, - -, -,
Other administrative expenses -, - - - -,
Depreciation on tangible and intangible assets - - - - -,
Other operating expenses - - - - -,
OPERATING PROFIT (LOSS) , , , -, ,
Income tax -, -,
PROFIT (LOSS) FOR THE PERIOD -, ,
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
EUR 1,000
1 Jan. to 31 Dec.
2020
Asset
Management
Corporate
Finance Investments Other Eliminations Group total
Fee and commission income , , - - ,
From other segments - - - - -
Interest income - - -
Net income from financial assets - - -
Other operating income - - - - -
From other segments - - - - -
Operating income, total , , - ,
Fee and commission expenses - - - - -
To other segments - - - - -
Interest expenses - - - - -
NET REVENUE , , - - ,
Administrative expenses
Personnel expenses -, -, - -, -,
Other administrative expenses -, - - - -,
Depreciation on tangible and intangible assets - - - - -,
Other operating expenses - - - - -,
OPERATING PROFIT (LOSS) , , - -, ,
Income tax -, -,
PROFIT (LOSS) FOR THE PERIOD -, ,
The fee and commission income of the Asset Management segment from other
segments comprises the management fee income from eQ Group’s own investments
in private equity funds. The corresponding expenses are allocated to the Invest
-
ments segment. Under the item Other, income from other segments comprises the
administrative services provided by Group administration to other segments and the
undivided interest income and expenses. The item Other also includes the undivided
personnel, administration and other expenses allocated to Group administration.
The taxes not distributed to the segments are also presented under the item Other.
The highest operative decision-making body does not follow assets and liabilities at
segment level, due to which the Group’s assets and liabilities are not presented as
divided between the segments.
eQ Plc does not have any single clients the income from which would exceed 10% of
the total income.
Geographic information:
Net revenue per country, EUR 1,000
Domicile
Finland , ,
Other countries - -
Total , ,
External net revenue is presented based on domicile.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Notes to the Income Statement
5 Fee and commission income
EUR 1,000
Asset management fees
Management fees
Traditional asset management
, ,
Real estate asset management , ,
Private equity asset management , ,
Management fees, total , ,
Performance fees
Traditional asset management
, ,
Real estate asset management , ,
Private equity asset management , -
Performance fees, total , ,
Other fee and commission income
Asset management fees, total , ,
Corporate finance fees , ,
Total , ,
6 Interest income
EUR 1,000
Other interest income
Total
7 Net income from financial assets
EUR 1,000
Private equity and real estate fund investments
Profit distribution from funds ,
Changes in fair value and losses , -
Total ,
Other investment operations
Changes in fair value
Sales profits/losses -
Total -
Total ,
8 Fee and commission expenses
EUR 1,000
Custody fees - -
Other fees - -
Total - -
9 Interest expenses
EUR 1,000
To credit institutions -
Other interest expenses - -
Interest expenses of lease liabilities - -
Total - -
10 Administrative expenses
EUR 1,000
Expenses related to employee benefits
Short-term employee benefits
Salaries and remuneration -, -,
Other indirect employee costs - -
Share-related payments - -
Benefits after end of employment
Pension costs - defined contribution plans -, -,
Total -, -,
Other administrative expenses
Other personnel expenses - -
IT and connection expenses -, -
Other administrative expenses - -
Total -, -,
Total -, -,
11 Depreciation
EUR 1,000
Depreciation on tangible assets - -
Depreciation on right-of-use assets - leased premises - -
Depreciation on intangible assets
Depreciation on client agreements
- -
Depreciation on other intangible assets - -
Total -, -,
Leases with a low value have not been entered in the balance sheet and no depreciation
is recorded on them. A total of EUR 39 thousand of low-value leases is included in the
administrative expenses of the income statement.
12 Other operating expenses
EUR 1,000
Expert fees - -
Audit fees
Audit fees - -
Other services - -
Total - -
Other expenses
Premises - -
Other expenses -, -,
Total -, -,
Total -, -,
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
13 Income tax
EUR 1,000
Direct taxes for the financial period -, -,
Changes in deferred taxes -
Total -, -,
Tax reconciliation
Profit (loss) before taxes
, ,
Taxes calculated with the parent company's tax rate -, -,
Income not subject to tax
Non-deductible expenses - -
Taxes for previous financial periods
Consolidations and eliminations - -
Taxes in income statement -, -,
Deferred taxes have been calculated using tax rates valid up to the balance sheet date.
14 Earnings per share
EUR 1,000
Earnings per share attributable to equity holders of the
parent company , ,
Shares, 1,000 shares* , ,
Earnings per share calculated from the profit of equity
holders of the parent company:
Earnings per share, EUR
, .
Diluted earnings per share, EUR , .
* Calculated using the weighted average number of shares.
Notes to the Consolidated
Balance Sheet
15 Claims on credit institutions
EUR 1,000
Repayable on demand
From domestic credit institutions , ,
Total , ,
16 Shares and participations
EUR 1,000
Financial assets
Private equity and real estate fund investments
Book value on 1 Jan. , ,
Increases , ,
Decreases -, -,
Value adjustment ,
Permanent impairment - -
Book value on 31. Dec. , ,
Financial securities
Book value on 1 Jan. , ,
Increases , ,
Decreases -, -,
Value adjustment
Sales profit (loss) -
Book value on 31 Dec. , ,
17 Intangible assets
EUR 1,000
Other intangible assets
Other intangible assets, acquisition cost on 1 Jan. , ,
Increases
Decreases - -
Other intangible assets, acquisition cost on 31 Dec. , ,
Accumulated depreciation and impairment on 1 Jan. -, -,
Depreciation for the period - -
Accumulated depreciation and impairment on 31 Dec. -, -,
Other intangible assets on 31 Dec.
Client agreements
Client agreements, acquisition cost on 1 Jan.
-
Increases/decreases -
Client agreements, acquisition cost on 31 Dec.
Accumulated depreciation and impairment on 1 Jan. - -
Depreciation for the period - -
Accumulated depreciation and impairment on 31 Dec. - -
Client agreements on 31 Dec.
Goodwill
Goodwill, acquisition cost on 1 Jan. , ,
Increases/decreases - -
Goodwill, acquisition cost on 31 Dec. , ,
Accumulated depreciation and impairment - -
Goodwill on 31 Dec. , ,
Brands
Brands, acquisition cost on 1 Jan. , ,
Increases/decreases - -
Brands, acquisition cost on 31 Dec. , ,
Accumulated depreciation and impairment - -
Brands on 31 Dec. , ,
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Goodwill and value of brands
eQ Plc has in its consolidated balance sheet goodwill generated from corporate
acquisitions related to the asset management and corporate finance operations.
The goodwill associated with the asset management operations is related to the
acquisition of Finnreit Fund Management Company Ltd in September 2013, the
acquisition of Icecapital Asset Management Ltd in November 2012, the acquisition
of eQ Asset Management Group Ltd in March 2011, and the acquisition of Mandatum
Private Equity Fund Ltd in December 2005. The goodwill associated with corporate
finance operations is related to the acquisition of Advium Corporate Finance Ltd in
March 2011.
Allocation of goodwill to cash-generating units, EUR million:
Dec. Dec.
Asset Management . .
Corporate Finance . .
Additionally, a total of EUR 4.0 million concerning asset management and corporate
finance operations has been allocated to intangible assets by calculating fair values
for the acquired brands. In connection with the acquisition of eQ Asset Management
Group Ltd, EUR 2.0 million was allocated to the eQ brand by calculating a fair value
for the brand. In connection with the acquisition of Advium Corporate Finance Ltd,
EUR 2.0 million was allocated to the Advium brand by calculating a fair value for the
brand. The useful lives of the brands have been deemed as unlimited, as their strong
recognisability supports the management’s view that they will generate cash flows
during a period of time that cannot be defined.
Allocation of brands to cash-generating units, EUR million:
Dec. Dec.
Asset Management . .
Corporate Finance . .
Impairment testing
No depreciation is booked for intangible assets that have an unlimited useful life,
but they are tested annually for impairment. For the testing of impairment, the
recoverable amount of the assets item has been defined by calculating the asset
item’s value in use. The calculations are based on five-year cash flow plans approved
by the management.
The future income cash flows of asset management are based on assets that are
managed under asset management agreements. The development of the assets
under management and the income cash flow of asset management operations
are influenced by the development of the capital market, for instance. The income
cash flow of the corporate finance operations is markedly influenced by success
fees, which are dependent on the number of corporate and real estate transactions.
These vary considerably within one year and are dependent on economic trends. The
estimate on the income cash flow of the corporate finance operations is based on
the management’s view on the number of future transactions. The future expense
cash flows of the impairment calculations are based on the Group management’s
cost estimates for the future.
Cash flow that extends beyond the five-year prognosis period has been calculated
by using the so-called final value method, in which the management’s conservative
estimate on the long-term growth of the cash flow has been applied when defining
growth. An annual growth of 1% has been used as the growth factor of the final
value.
In the calculations, the management uses as discount rate before taxes, which
reflects the view on the time value of money and the special risks related to the
asset item. In 2021, the discount rate was 7.6% (7.4% in 2020).
The impairment tests show no need to book impairment for goodwill or brands.
Sensitivity analysis
The impairment test calculations have been subjected to sensitivity analyses by
using poorer scenarios than the actual prognoses. With these scenarios, we wanted
to study the change of the value in use by changing the basic assumptions of value
definition. The future income and expense cash flows, discount rate and growth
speed of the final value were changed in the sensitivity analyses. The scenarios were
formed by changing the assumptions as follows:
• by using annually an income cash flow that is 20% lower than the original
prognosis at the most
• by using annually an expense cash flow that is 20% higher than the original
prognosis at the most
• by using 0% growth in the final value calculations
• by using a 4% higher discount rate at the most
Based on the sensitivity analyses, none of the scenarios alone changes the recov
-
erable amount to such an extent that it would lead to a situation where the book
value exceeds the value in use. The management feels that the above-described
theoretical changes made in the basic assumptions of the scenarios should not be
interpreted as any proof for their likelihood. Sensitivity analyses are hypothetical
and must therefore be treated with certain reservation.
As for corporate finance operations, a relatively possible change in the central
assumption, based on which the recoverable amount has been defined, can result
in a situation where the book value of goodwill and brand value exceeds the
recoverable amount. If the operating profit level of the corporate finance operations
is 77% lower than in 2021 in each year during the following five-year period, partial
write-down of goodwill is possible. The corporate finance operations’ value in use
exceeds the book value of the goodwill and brand in the 2021 goodwill test by EUR
26.2 million. The result of the corporate finance operations is markedly influenced
by success fees, which are dependent on the number of corporate and real estate
transactions. These vary considerably within one year and are dependent on
economic trends.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
18 Tangible assets
EUR 1,000
Right-of-use assets - leased premises
Right-of-use assets on 1 Jan.
, ,
Increases
Decreases -
Depreciation for the period - -
Right-of-use assets on 31 Dec. ,
Other intangible assets
Machinery and equipment, acquisition cost on 1 Jan.
, ,
Increases
Decreases - -
Machinery and equipment, acquisition cost on 31 Dec. , ,
Accumulated depreciation and impairment on 1 Jan. - -
Depreciation for the period - -
Accumulated depreciation and impairment on 31 Dec. -, -
Machinery and equipment on 31 Dec.
Other tangible assets on 1 Jan.
Other tangible assets on 31 Dec.
Other tangible assets, book value on 31 Dec.
19 Other assets
EUR 1,000
Sales receivables , ,
Management fee receivables , ,
Other receivables ,
Total , ,
Age distribution of sales receivables:
Sales receivables EUR 64 thousand, age distribution: not due
Sales receivables EUR 959 thousand, age distribution: fallen due for less than 1 month
20 Accruals and prepaid expenditure
EUR 1,000
Other accruals
Other prepaid expenditure
Total
21 Deferred tax assets and liabilities
EUR 1,000
Deferred tax assets
Temporary dierences in leases
Deferred tax assets
Deferred tax liabilities
Deferred tax assets (-) / tax liabilities (+), net - -
The deferred tax assets are booked up to the amount of the probable future taxable
income against which unused tax losses can be utilised.
22 Other liabilities
EUR 1,000
Accounts payable
Fee repayment liabilities , ,
Other liabilities
Total , ,
23 Accruals and deferred income
EUR 1,000
Holiday pay , ,
Other accruals , ,
Total , ,
24 Lease liabilities
EUR 1,000
Lease liabilities - premises , ,
The amount of lease liabilities related to low-value leases was EUR 8 thousand at the
end of the year. Low-value lease liabilities have not been entered in the balance sheet.
eQ has concluded a follow-up agreement on the rented premises and an agreement on
the expansion of premises, which are conditional. If the prerequisites associated with
the conditional agreements are full-filled, the amount of the lease liability will increase
by about EUR 5 million in 2022.
25 Balance sheet items denominated in
domestic and foreign currencies
31 Dec. 2021
EUR 1,000
Other than
EUR EUR Total
Balance sheet items
Claims on credit institutions
- , ,
Other assets , , ,
Total , , ,
Other liabilities - , ,
Total - , ,
31 Dec. 2020
EUR 1,000
Other than
EUR EUR Total
Balance sheet items
Claims on credit institutions
- , ,
Other assets , , ,
Total , , ,
Other liabilities - , ,
Total - , ,
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
26 Financial assets and liabilities
EUR 1,000
Book
value
Interest income
and expenses
Profits
and losses
Impairment
loss
Dividend
income
Financial assets
Financial assets at fair value through profit or loss
, , - -
Financial assets valued at periodised acquisition cost
Sales receivables and other receivables , - - - -
Liquid assets , - - -
Total , , - -
Financial liabilities
Accounts payable and other liabilities
- - - -
Lease liabilities , - - - -
Total , - - - -
EUR 1,000
Book
value
Interest income
and expenses
Profits
and losses
Impairment
loss
Dividend
income
Financial assets
Financial assets at fair value through profit or loss
, - - -
Financial assets valued at periodised acquisition cost
Sales receivables and other receivables , - - - -
Liquid assets , - - - -
Total , - - -
Financial liabilities
Accounts payable and other liabilities
- - - -
Lease liabilities , - - - -
Total , - - - -
27 Fair values
EUR 1,000
Fair
value
Book
value
Fair
value
Book
value
Financial assets
Financial assets at fair value
through profit or loss
Private equity and real estate
fund investments , , , ,
Financial securities , , , ,
Sales receivables
and other receivables , , , ,
Liquid assets , , , ,
Total , , , ,
Financial liabilities
Accounts payable and other
liabilities
Lease liabilities , , , ,
Total , , , ,
The table presents the fair values and book values of financial assets and liabilities
per balance sheet item. The valuation principles of fair values are presented in the
principles for preparing the financial statements.
The original book value of sales receivables and accounts payable corresponds
to their fair value, as the eect of discounting is not material considering their
maturity.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
28 Value of financial assets across the three
levels of the fair value hierarchy
Dec.
EUR 1,000 Level Level
Financial assets at fair value through profit or loss
Private equity and real estate fund investments
- ,
Financial securities , -
Total , ,
Level 3 reconciliation:
At fair value through profit or loss
Private equity and
real estate funds
Opening balance ,
Calls ,
Returns -,
Change in fair value ,
Closing balance ,
Dec.
EUR 1,000 Level Level
Financial assets at fair value through profit or loss
Private equity and real estate fund investments
- ,
Financial securities , -
Total , ,
Level 3 reconciliation:
At fair value through profit or loss
Private equity and
real estate funds
Opening balance ,
Calls ,
Returns -,
Change in fair value
Permanent loss -
Closing balance ,
Level 1 comprises liquid assets the value of which is based on quotes in the liquid
market. A market where the price is easily available on a regular basis is regarded as
a liquid market.
The fair values of level 3 private equity funds are based on the value of the fund
according to the management company of the private equity fund and their use in
widely used valuation models. Private equity fund investments are valued in accord
-
ance with a practice widely used in the sector, International Private Equity and
Venture Capital Guidelines. The fair values of level 3 real estate fund investments
are based on the value of the fund according to the management company. The
valuation of real estate owned by a fund is based on a value defined by an external
valuer.
During the period under review, no transfers took place between the levels of the
fair value hierarchy.
29 Private equity and real estate fund investments
Market value
Remaining investment
commitment
EUR 1,000
Funds managed by eQ:
Funds of funds:
eQ VC
eQ PE XIII US
eQ PE XII North
eQ PE XI US
eQ PE X North
eQ PE IX US
eQ PE VIII North , ,
eQ PE VII US , ,
eQ PE VI North , ,
Amanda V East , ,
Amanda IV West
Amanda III Eastern PE , ,
Total , , , ,
Real estate funds:
eQ Residential
Market value
Remaining investment
commitment
EUR 1,000
Funds managed by others:
Large buyout funds
,
Midmarket funds
Venture funds ,
Total , , , ,
30 Equity
Description of equity funds:
Reserve for invested unrestricted equity:
The reserve for invested unrestricted equity includes other investments of equity
nature and the subscription price of shares that is not specifically recognised in
share capital.
Shares and share capital:
EUR 1,000 Number of shares Share capital
1 Jan. 2021 ,, ,,
Decreases - -
Increases , -
31 Dec. 2021 ,, ,,
During the period under review, the number of eQ Plc’s shares increased with new
shares subscribed for with option rights. The number of shares increased by 45,000
shares on 18 March 2021 and by 715,000 shares on 17 May 2021.
Each share in eQ Plc holds one vote, and all shares have equal rights. The shares
do not have any nominal value. All issued shares have been paid in full. The major
shareholders have been presented in the Report by the Board of Directors.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Own shares
At the end of the period, on 31 December 2021, eQ Plc held no own shares.
Management holdings
The shares held by the management are specified in more detail in the note
concerning related parties.
31 Contingent liabilities and securities
EUR 1,000
Remaining investment commitments in private equity
and real estate funds , ,
Other liabilities - less than one year
Other liabilities - exceeding one year
but less than five years
Total , ,
eQ Group has issued a security for a lease with a balance sheet value of EUR 0.2
million. The security, which has been issued as a mutual fund share, is included in
financial securities under financial assets on the balance sheet.
32 Information on related parties
The Group’s related parties are the parent company, subsidiaries, associated
companies as well as the members of the Board and Management Team, including
the CEO. The spouses and other close relatives of the above-mentioned persons
are also regarded as related parties. Entities in which said persons exercise control
are also considered related parties. The members of the Board, CEO and the Group’s
Management Team are regarded as key executives.
Salaries and remuneration of executives
EUR 1,000
Salaries and remuneration, Janne Larma, CEO
(1 Jan. to 31 March 2021)
Salaries and remuneration, Mikko Koskimies, CEO
(1 April 2021-) -
Salaries and remuneration of other members
of the Management Team , ,
During the financial period 2021, Janne Larma was CEO of eQ Plc from 1 Jan. To 31
March. From 1 April onwards, Mikko Koskimies was CEO.
The retirement age and pension of the CEO and other members of the Management
Team are determined in accordance with the Finnish Employees Pensions Act. The
CEO and other members of the Management Team do not have any supplementary
pension schemes.
Statutory pensions
EUR 1,000
Statutory pension of Janne Larma, CEO
Statutory pension of Mikko Koskimies, CEO
Statutory pensions of other members
of the Management Team
The Group executives have been granted 350,000 rights to subscribe for options
in the 2018 option scheme with a subscription price, of which 100,000 to Mikko
Koskimies, CEO. Janne Larma, full-time Chair of the Board, has been granted
100,000 rights to subscribe for options in the 2018 option scheme
with a subscription price.
The Board of Directors has no share-related rights or other remuneration schemes.
The AGM held on 24 March 2021 decided that the directors be paid the following
remuneration:
Chair of the Board EUR 5,000, Vice Chair of the Board EUR 4,000 and the other
directors EUR 3,000 per month. In addition, the directors are paid of fee of EUR 500
for each Board meeting that they attend.
In addition, Janne Larma, full-time Chair of the Board, is paid a monthly salary of
EUR 50,000 per month from 1 April 2021 based on an agreement on chairing the
Board of Directors.
Transactions with related parties and receivables from related parties
Other transactions with related parties:*
EUR 1,000
Sales
Receivables
* eQ Group has oered persons regarded as related parties and the entities that they control asset
management services. Normal market terms are applied to transactions with related parties.
Holdings of the Board and Management Team in eQ Plc on 31 Dec. 2021:
The table below shows the personal holdings of the members of the Board and the
Management Team and companies under their control.
Shares
Share of
votes and
shares, %
Janne Larma ,, .%
Georg Ehrnrooth* ,, .%
Nicolas Berner , .%
Timo Kokkila , .%
Lotta Kopra .%
Tomas von Rettig , .%
Mikko Koskimies ,, .%
Staan Jåfs , .%
Antti Lyytikäinen , .%
Juha Surve , .%
* Georg Ehrnrooth, together with his brothers Henrik Ehrnrooth and Carl-Gustaf Ehrnrooth, holds a
controlling interest in Fennogens Investments S.A.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
33 Subsidiaries
The following subsidiaries are part of the Group at the end of the financial year:
Company Domicile
Holding /
share of votes
eQ Asset Management Ltd Finland %
eQ Fund Management Company Ltd Finland %
eQ Life Ltd Finland %
Advium Corporate Finance Ltd Finland %
eQ Private Equity GP Ltd Finland %
eQ Residential GP Ltd Finland %
34 Shares in entities not included in the
consolidated financial statements
eQ Group has investment commitments in the following private equity and real
estate funds in form of limited partnerships that are under the Group’s management
and that have not been consolidated in eQ Group as subsidiaries. eQGroup’s shares
in structured entities that are not consolidated as subsidiaries had a total market
value of EUR 15.1 million on 31 December 2021 (EUR 13.9 million on 31 Dec. 2020).
In 2021, the Group received from said funds management fees totalling EUR 12.9
million (EUR 8.3 million 1 Jan. to 31 Dec. 2020) and a profit distribution from own
investments totalling EUR 3.1 million (EUR 0.1 million).
eQ has assessed that it does not exercise control in said private equity funds based
on the size of eQ’s own investment commitment compared with the size of the
fund, exposure to the fund’s variable income and the right to manage significant
functions. These private equity fund investments are included in financial assets
entered in the balance sheet at fair value through profit or loss.
The presented balance sheet values describe the possible maximum loss to which
eQ Group is exposed. eQ Group has not given any other commitments on financial
support nor does the Group currently have any intention of giving financial support
to the structured entities not included in the consolidated financial statements in
the foreseeable future. The private equity funds have been financed with investment
commitments by investors. More information about eQ Group’s risks related to
private equity investments can be found in Note 2.
EUR 1,000
31 Dec. 2021
Size of
the fund
eQ’s original
commitment
Market
value of eQ’s
investment
eQ’s
remaining
commitment
eQ VC ,
eQ PE XIII US ,
eQ Residential , ,
eQ PE XII North , ,
eQ PE XI US ,
eQ PE X North , ,
eQ PE IX US ,
eQ PE VIII North , , ,
eQ PE VII US , , ,
eQ PE VI North , , ,
Amanda V East , , ,
Amanda IV West , ,
Amanda III Eastern PE , , ,
Total ,, , , ,
EUR 1,000
31 Dec. 2020
Size of
the fund
eQ’s original
commitment
Market
value of eQ’s
investment
eQ’s
remaining
commitment
eQ Residential , ,
eQ PE XII North , ,
eQ PE XI US ,
eQ PE X North , ,
eQ PE IX US ,
eQ PE VIII North , , ,
eQ PE VII US , , ,
eQ PE VI North , , ,
Amanda V East , , ,
Amanda IV West , ,
Amanda III Eastern PE , , ,
Total ,, , , ,
35 Option schemes
eQ Plc’s Board of Directors has decided to grant option rights to key employees
in the eQ Group selected by the Board. Each option right entitles the holder to
subscribe for one new share in eQ Plc. The option rights are intended as part of the
commitment scheme of key employees.
The option rights are valued at fair value on the date of their issue and entered as
expense in the income statement during the period when the right arises. The fair
value of the issued options on the day of issue has been defined by using the Black-
Scholes option pricing model.
Option scheme 2015:
options
Number of options ,,
Share subscription period begins April
Share subscription period ends April
The option scheme 2015 has ended during the financial period 2021, and all
outstanding options of the option scheme 2015 at the beginning of the financial
period were exercised as a result of share subscriptions.
Number of issued options at the beginning
of the period ,, ,,
Options granted during the period - -
Options returned during the period - -
Number of issued options at the end of the period ,, ,,
Exercised options by the end of the period ,, ,
Number of outstanding options ,
Exercisable options at the end of the period ,
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Option scheme 2018:
options
Number of options ,,
Share subscription period begins April
Share subscription period ends April
Share subscription price
The original share subscription price with an option right is EUR 7.88. The subscrip-
tion price of the share subscribed for with the option right will be reduced with the
amount of the dividend and equity repayment that have been decided on before
the share subscription on the record date of the distribution of divided or equity
repayment. The subscription price on 31 December 2021 was EUR 6.02.
Number of issued options at the beginning
of the period ,, ,,
Options subscribed for during the period - -
Options returned during the period - ,
Number of issued options at the end of the period ,, ,,
Exercised options by the end of the period - -
Number of outstanding options ,, ,,
Exercisable options at the end of the period
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Parent Company Income Statement (FAS)
EUR Note no.
Fee and commission income 2 ,. ,.
Net gainson trading in securities and foreign currencies 3
Net gains on trading in securities ,,. -,.
Income from equity investments 4
From Group undertakings ,,. ,.
From other companies ,,. ,.
Interest income 5 , . .
INVESTMENT FIRM INCOME ,,. ,.
Fee and commission expenses 6 -,. -,.
Interest expenses 7 -,. -,.
Administrative expenses
Personnel expenses 8
Salaries and remuneration
-,,. -,,.
Indirect employee costs
Pension costs -,. -,.
Other indirect employee costs -,. -,.
Other administrative expenses
9 -,. -,.
Depreciation and impairment on tangible and intangible assets 10 -,. -,.
Other operating expenses 11 -,. -,.
Fair value losses of other financial assets 12 - -,.
OPERATING PROFIT (LOSS) ,,. -,,.
Appropriations 13 ,,. ,,.
Income tax 14 -,,. -,,.
PROFIT (LOSS) FOR THE FINANCIAL PERIOD ,,. ,,.
Parent Company Balance Sheet (FAS)
EUR Note no. Dec. Dec.
ASSETS
Liquid assets
,. ,.
Claims on credit institutions
Repayable on demand 15 ,,. ,,.
Shares and participations 16, 24 ,,. ,,.
Shares and participations in Group undertakings 16 ,,. ,,.
Intangible assets 17
Other intangible assets
, . ,.
Tangible assets 17
Other tangible assets ,. ,.
Other assets 18 ,,. ,,.
Accruals and prepaid expenditure 19 ,. ,.
TOTAL ASSETS ,,. ,,.
LIABILITIES AND EQUITY
LIABILITIES
Liabilities to the public and public sector entities
Other ,,. ,,.
Other liabilities 20
Other liabilities ,,. ,,.
Accruals and deferred income 21 ,. ,.
TOTAL LIABILITIES ,,. ,,.
EQUITY 25
Share capital
,,. ,,.
Unrestricted equity
Reserve for invested unrestricted equity ,,. ,,.
Retained earnings ,,. ,,.
Profit (loss) for the period ,,. ,,.
TOTAL EQUITY ,,. ,,.
TOTAL LIABILITIES AND EQUITY ,,. ,,.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Parent Company Cash Flow Statement (FAS)
EUR 1,000
Cash flow from operations
Operating profit , ,
Adjustments:
Depreciation and impairment
Interests received -
Interests paid
Dividends received -, -
Transactions with no related payment transactions -, -
Financial assets - private equity and real estate funds
Change in working capital
Business receivables, increase (-) decrease (+) -,
Interest-free liabilities, increase (+) decrease (-) -, -
Total change in working capital -,
Cash flow from operations before financial items and taxes , ,
Interests received
Interests paid - -
Dividends received ,
Taxes -, -,
Cash flow from operations , ,
EUR 1,000
Cash flow of investments
Investing activities in tangible and intangible assets - -
Investing activities in investments -
Investing activities in other investments - liquid mutual funds -, -,
Cash flow from investments -, -,
Cash flow from financing
Dividends paid -, -,
Subscription of new shares , ,
Option issue with a subscription price - -
Cash flow from financing -, -,
Increase/decrease in liquid assets ,
Liquid assets on 1 Jan. , ,
Liquid assets on 31 Dec. , ,
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
1 Principles for preparing the Financial Statements
General
When preparing the financial statements, the company has followed the Ministry
of Finance Decree on financial statements and consolidated financial statements
of credit institutions and investment firms (78/2018) and the Financial Supervision
Authority’s regulations and guidelines on accounting, financial statements, and
report by the Board of Directors for the financial sector (2/2016).
Valuation principles and methods as well as
periodization principles and methods
Fee and commission income is recorded when the income can be defined in a reliable
manner and it is likely that the company benefits from the financial advantage
related to the transaction. Dividend income is recorded when the right to the
dividend has arisen.
Interest income and expenses are recorded based on time by using the eective
interest method and taking into account all contractual terms of the financial
instrument. Interests that have not been received on the closing date are recorded
as interest income and receivable among accruals and the unpaid interests as
interest expenses and liabilities among accrued expenses.
The profit shares from the private equity and real estate fund investments made
from eQ Plc’s own balance sheet are entered as income from equity investments.
The value changes of private equity fund and real estate investments recorded
through profit or loss are entered among the net gains on trading in securities. The
value changes through profit or loss as well as sales profits and losses of invest
-
ments in mutual funds are also entered among the net gains on trading in securities.
Financial assets are classified into the following groups in accordance with the IFRS
9 standard Financial Instruments:
a) valued at amortised acquisition cost,
b) entered at fair value through profit or loss
c) valued at fair value with other items of comprehensive income.
eQ Plc’s private equity and real estate fund investments and investments in mutual
funds are classified among financial assets at fair value through profit or loss.
Financial liabilities as classified as follows:
a) valued at amortised acquisition cost
b) valued at fair value through profit or loss
eQ Plc had no financial liabilities valued at fair value through profit or loss at the
reporting moment.
Depreciation principles
Tangible and intangible assets are entered in the balance sheet at acquisition cost
less depreciation according to plan and impairment. The depreciation according to
plan is calculated as straight-line depreciation based on the useful life of tangible
and intangible assets. Depreciation has been calculated from the month the assets
were taken into use. The depreciation period of intangible assets is 3 to 5 years and
that of machinery and equipment 3 to 10 years.
Foreign currency items
The receivables and debts in foreign currencies have been translated to euros
according to the rate prevailing on the balance sheet day.
2 Fee and commission income
EUR 1,000
From other operations
3 Net gainson trading in securities and foreign currencies
EUR 1,000
Net gains on trading in securities
From financial assets/liabilities entered at fair value
through profit or loss
Changes in fair value ,
Sales profits/ losses -
Total , -
4 Income from equity investments
EUR 1,000
Dividend income from Group undertakings ,
Profit shares from financial assets valued at fair value ,
Total ,
5 Interest income
EUR 1,000
Other interest income
Total
Notes to the Parent Company Financial Statements
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
6 Fee and commission expenses
EUR 1,000
Other fees - management of investments
eQ Asset Management - -
Limit fees - -
Total - -
7 Interest expenses
EUR 1,000
To Group undertakings - -
To credit institutions - -
Other interest expenses -
Total - -
8 Personnel expenses
EUR 1,000
Salaries and remuneration -, -,
Pension costs - -
Other indirect employee costs - -
Total -, -,
Average number of personnel during the period -
permanent
Change during the financial period - -
9 Other administrative expenses
EUR 1,000
Other personnel expenses - -
IT and connection costs - -
Other administrative expenses - -
Total - -
10 Depreciation and impairment
EUR 1,000
Depreciation on intangible and tangible assets - -
A depreciation specification per balance sheet item is presented under intangible and
tangible assets.
11 Other operating expenses
EUR 1,000
Expert fees - -
Fees to the auditor
Audit fees - -
Other services - -
Total - -
Leases on premises and other rental expenses - -
Other expenses - -
Total - -
12 Impairment losses from other financial assets
EUR 1,000
Group shares - -
13 Appropriations
EUR 1,000
Group subsidies received , ,
Group subsidies issued -
Total , ,
14 Income tax
EUR 1,000
Income tax for the period
Income tax for operations
-, -,
Deferred taxes -, -,
Total -, -,
15 Claims on credit institutions
EUR 1,000
Repayable on demand
From domestic credit institutions
, ,
16 Shares and participations
EUR 1,000
Shares and participations
Financial assets: Private equity and real estate
fund investments , ,
Financial assets: Units in mutual funds , ,
Other participations
Shares and participations in Group undertakings , ,
Total , ,
- of which at acquisition cost , ,
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
17 Intangible and tangible assets
EUR 1,000
Other intangible assets
Acquisition cost on 1 Jan.
Increases
Acquisition cost on 31 Dec.
Accumulated depreciation on 1 Jan. - -
Depreciation for the period - -
Accumulated depreciation on 31 Dec. - -
Book value on 31 Dec.
Other tangible assets
Acquisition cost on 1 Jan.
Increases -
Acquisition cost on 31 Dec.
Accumulated depreciation on 1 Jan. - -
Depreciation for the period - -
Accumulated depreciation on 31 Dec. - -
Book value on 31 Dec.
18 Other assets
EUR 1,000
Receivables from Group undertakings , ,
Other receivables
Total , ,
19 Accruals and prepaid expenditure
EUR 1,000
Other accruals
Total
20 Other liabilities
EUR 1,000
Accounts payable
Liabilities to Group undertakings
Income tax liabilities , ,
Other liabilities
Total , ,
21 Accruals
EUR 1,000
Other accruals
22 Items denominated in domestic and
foreign currencies and Group items
31 Dec. 2021
EUR 1,000 EUR
Other than
EUR Total
From Group
under-
takings
Balance sheet items
Claims on credit institutions
, - , -
Other assets , , , ,
Total , , , ,
Liabilities to the public and
public sector entities , - , ,
Other liabilities , - ,
Total , - , ,
31 Dec. 2020
EUR 1,000 EUR
Other than
EUR Total
From Group
under-
takings
Balance sheet items
Claims on credit institutions
, - , -
Other assets , , , ,
Total , , , ,
Liabilities to the public and
public sector entities , - , ,
Other liabilities , - ,
Total , - , ,
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
23 Fair values of financial assets and liabilities
EUR 1,000
Fair
value
Book
value
Fair
value
Book
value
Financial assets
Claims on credit institutions
, , , ,
Shares and participations , , , ,
Shares and participations
in Group undertakings , , , ,
Total , , , ,
Financial liabilities
Liabilities to the public
and public sector entities
, , , ,
Total , , , ,
The table shows the fair values and book values of financial assets and liabilities
per balance sheet item. The assessment principles of fair values are presented in
principles for preparing the financial statements.
Level 1 comprises liquid assets the value of which is based on quotes in the liquid
market. A market where the price is easily available on a regular basis is regarded as
a liquid market.
The fair values of level 3 instruments are based on the value of the fund according
to the management company of the fund and their use in widely used valuation
models. Private equity investments are valued in accordance with a practice widely
used in the sector, International Private Equity and Venture Capital Guidelines. The
fair values of level 3 real estate investments are based on n the value of the fund
according to the management company. The valuation of real estate owned by a
fund is based on a value defined by an external valuer.
24 Value of financial assets across the three
levels of the fair value hierarchy
Dec.
EUR 1,000 Level Level
Financial assets at fair value through profit or loss
Private equity and real estate fund investments - ,
Financial securities , -
Total , ,
Level 3 reconciliation - Financial assets at fair value
through profit or loss
Private equity
and real estate
Opening balance ,
Calls and returns -
Impairment loss ,
Closing balance ,
Dec.
EUR 1,000 Level Level
Financial assets at fair value through profit or loss
Private equity and real estate fund investments - ,
Financial securities , -
Total , ,
Level 3 reconciliation - Financial assets at fair value
through profit or loss
Private equity
and real estate
Opening balance ,
Calls and returns -
Change in fair value
Permanent impairment loss -
Closing balance ,
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
25 Equity
EUR 1,000
Share capital on 1 Jan. , ,
Share capital on 31 Dec. , ,
Restricted equity, total , ,
Reserve for invested unrestricted equity on 1 Jan. , ,
Increases/decreases - -,
Reserve for invested unrestricted equity on 31 Dec. , ,
Retained earnings
Retained earnings on 1 Jan. , ,
Dividend -, -,
Other changes
Retained earnings on 31 Dec. , ,
Profit (loss) for the period , ,
Non-restricted equity, total , ,
Equity on 31 Dec. , ,
Calculation of distributable assets on 31 Dec.
Retained earnings , ,
Profit for the period , ,
Reserve for invested unrestricted equity , ,
Distributable assets , ,
The share capital of the company consists of 39,632,198 shares. All shares carry one
vote.
Other notes
26 Pledges, mortgages and obligations
EUR 1,000
eQ Plc's investment commitments in private equity
funds, remaining commitment , ,
Leasing agreements and leases less than one year
Leasing agreements and leases exceeding one year
but less than five years ,
Total , ,
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Proposal for the distribution of profits
The distributable means of the parent company on 31 December 2021
totalled EUR 64,090,948.98. The sum consisted of retained earnings of
EUR 41,698,740.48 and the means in the reserve of invested unrestricted
equity of EUR 22,392,208.50.
The Board of Directors proposes to the Annual General Meeting that a dividend
of EUR 0.97 per share be paid out. The proposal corresponds to a dividend
totalling EUR 38,443,232.06 calculated with the number of shares at the end
of the financial year. Additionally, the Board proposes to the AGM that a repay
-
ment of equity of EUR 0.03 per share be paid out from the reserve of invested
unrestricted equity. The proposal corresponds to a repayment of equity
totalling EUR 1,188,965.94 calculated with the number of shares at the end of
the financial year. The dividend and repayment of equity shall be paid to those
who are registered as shareholders in eQ Plc’s shareholder register maintained
by Euroclear Finland Ltd on the record date 25 March 2022. The Board proposes
1 April 2022 as the payment date of the dividend and repayment of equity.
After the end of the financial period, no essential changes have taken place
in the financial position of the company. The Board of Directors feel that the
proposed distribution of dividend and equity repayment do not endanger the
liquidity of the company.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Signatures to the Report by
the Board of Directors and Financial Statements
Helsinki, 3 February 2022
Auditor’s note
The auditors’ report over the audit has been issued today.
Helsinki, 3 February 2022
KPMG Oy Ab
Firm of Authorised Public Accountants
Tuomas Ilveskoski
APA
Janne Larma
Chair of the Board
Timo Kokkila Lotta Kopra Tomas von Rettig
Georg Ehrnrooth
Vice Chair of the Board
Mikko Koskimies
CEO
Nicolas Berner
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Auditor’s Report
To the Annual General Meeting of eQ Plc
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of eQ Plc (business identity code 1625441-9) for the year ended 31 December, 2021. The
financial statements comprise the consolidated balance sheet, income statement, statement of comprehensive income, statement
of changes in equity, statement of cash flows and notes, including a summary of significant accounting policies, as well as the
parent company’s balance sheet, income statement, statement of cash flows and notes.
In our opinion
— the consolidated financial statements give a true and fair view of the group’s financial position, financial performance and cash
flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU
— the financial statements give a true and fair view of the parent company’s financial performance and financial position in
accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with
statutory requirements.
Our opinion is consistent with the additional report submitted to the Board of Directors.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are
further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the parent company and of the group companies in accordance with the ethical requirements that are
applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group
companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any
prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided
have been disclosed in note 12 to the consolidated financial statements.
We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis for our opinion.
Materiality
The scope of our audit was influenced by our application of materiality. The materiality is determined based on our professional
judgement and is used to determine the nature, timing and extent of our audit procedures and to evaluate the eect of identified
misstatements on the financial statements as a whole. The level of materiality we set is based on our assessment of the magnitude
of misstatements that, individually or in aggregate, could reasonably be expected to have influence on the economic decisions of
the users of the financial statements. We have also taken into account misstatements and/or possible misstatements that in our
opinion are material for qualitative reasons for the users of the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The significant risks of material
misstatement referred to in the EU Regulation No 537/2014 point (c) of Article 10(2) are included in the description of key audit
matters below.
We have also addressed the risk of management override of internal controls. This includes consideration of whether there was
evidence of management bias that represented a risk of material misstatement due to fraud.
This document is an English translation of the Finnish auditor’s report. Only the Finnish version of the report is legally binding.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT
Recognition of fee and commission income
(Principles for preparing the consolidated financial statements and Note 5 page 56)
— The assets managed by eQ Group entitle to management fees
on the grounds of agreements with customers. Management
fees make up a significant item in the Group’s income
statement.
— Performance fees and fees from the corporate finance
segment also make up a substantial part in the formation of
the Group’s result and may vary considerably from year to year.
— Calculation of fee and commission income is system-based
relying on fee agreements and other source data. The
functionality of the control environment of IT systems has
a substantial importance in respect to the accuracy of the
calculations.
— Appropriate timing of the recognition of fee and commission
income at correct amount is relevant in respect to the
accuracy of the financial statements.
— We evaluated the business processes and IT systems related
to fee and commission income and assessed the associated
key controls. Our audit procedures also included comparing
the accounting data kept in subledgers to that in the general
ledger, and substantive procedures performed in respect of
fee income. In addition, we have evaluated the accuracy of the
timing and the amount of revenue recognition.
— Regarding corporate finance fees, we assessed the monitoring
procedures used as the well as timing and the amount of
revenue recognition under projects by reference to the terms
of customer contracts.
— We inspected the calculation model of performance fees and
compared the parameters used to individual fund agreements
and the rules of investment funds.
— We inspected the accounting treatment of fees and
commissions and the appropriateness of the notes in relation
to the requirements of the IFRS 15 standard.
Valuation of private equity fund investments
(Principles for preparing the consolidated financial statements and Notes 16, 26–29 pages 57, 60–61)
— The determination of fair values for investments is based
on the valuation principles as described in the principles for
preparing the consolidated financial statements of eQ Group.
With respect to illiquid assets in eQ’s investment portfolio, fair
values are provided by fund managers. In accordance with the
IFRS 9 standard, changes in the value of equity investments
are recognized in profit or loss.
— Private equity fund investments is a significant item in eQ
Group’s financial statements, and therefore the valuation of
said assets is considered a key audit matter.
— We assessed eQ Group’s valuation process as well as the
compliance with the principles for preparing the consolidated
financial statements. In addition, we inspected the
consistency of the accounting treatment in relation to the
requirements of the IFRS 9 standard.
— As part of our year-end audit procedures, we compared the fair
values used in the financial statements with the valuations
provided by fund managers. In addition, we reconciled the
balance sheet values of private equity funds with separate
monitoring of the funds.
— We also assessed the appropriateness of the disclosures made
in relation to investment assets.
Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give
a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial
statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial state
-
ments in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for
such internal control as they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent
company’s and the group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and
using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting
unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but
to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial
statements.
As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
— Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sucient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the eectiveness of the parent company’s or the group’s
internal control.
— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclo
-
sures made by management.
— Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of
accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or
the group to cease to continue as a going concern.
— Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and events so that the financial statements give a true and fair
view.
— Obtain sucient appropriate audit evidence regarding the financial information of the entities or business activities within
the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General Meeting on 1.1.2014, and our appointment represents a total period of
uninterrupted engagement of 8 years
Other Information
The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the
report of the Board of Directors and the information included in the Annual Report, but does not include the financial statements
and our auditor’s report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor’s report, and
the Annual Report is expected to be made available to us after that date. Our opinion on the financial statements does not cover
the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility
also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and
regulations.
In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements
and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Other opinions
We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the use of the result
and other free equity shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the
Members of the Board of Directors of the parent company and the Managing Director should be discharged from liability for the
financial period audited by us.
Helsinki, 3 February, 2022
KPMG OY AB
Tuomas Ilveskoski
Authorised Public Accountant, KHT
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Corporate Governance Statement 2021
Introduction
eQ Plc (the company) is a Finnish public limited liability company the shares of which
are listed on Nasdaq Helsinki Ltd (Helsinki Stock Exchange).
This Corporate Governance Statement has been drawn up separately from the report
by the Board of Directors. eQ Plc’s Board of Directors has reviewed this Corporate
Governance Statement on 3 February 2022 This statement and other information
that shall be provided in accordance with the Corporate Governance Code as well as
the company’s financial statements, report by the Board of Directors and auditors’
report are available on eQ Plc’s website (www.eQ.fi/en). The statement is not part of
the ocial financial statements.
In addition to acts and regulations applicable to listed companies, eQ Plc has during
2021 complied with the Finnish Corporate Governance Code 2020 published by
the Securities Market Association that entered into force on 1 January 2020. The
entire Code is available on the website of the Securities Market Association at
www.cgfinland.fi/en.
In 2021, eQ Plc complied with the Finnish Corporate Governance Code 2020 without
any departures.
Descriptions Concerning Corporate Governance
General Meeting of Shareholders
The General Meeting is eQ Plc’s highest decision-making body, at which the share-
holders participate in the supervision and control of the company. eQ Plc convenes
one Annual General Meeting (AGM) during each financial period. Extraordinary
General Meetings may be convened when necessary. Shareholders exercise their
right to vote and voice their views at the General Meeting.
eQ Plc provides shareholders with sucient information about the agenda of the
General Meeting in advance. The advance information is provided in the notice of the
General Meeting, other releases and on the company website. The General Meeting
is organised in such a way that shareholders can eectively exercise their ownership
rights. The goal is that the CEO, Chair of the Board, and a sucient number of
directors attend the General Meeting. A person proposed as director for the first
time shall participate in the General Meeting that decides on his or her election,
unless there are well-founded reasons for the absence.
The Annual General Meeting of eQ Plc was held on 24 March 2021.
Board of Directors
Composition of the Board
The General Meeting elects the directors. The director candidates put forward to
the Board shall be mentioned in the notice of the General Meeting if the candidate
is supported by shareholders holding at least 10 per cent of the total votes carried
by all the shares of the company, provided that the candidate has given his or her
consent to the election. The candidates proposed after the delivery of the notice of
the meeting will be disclosed separately. In its Corporate Governance Statement,
the company states the number of Board meetings held during the financial period
as well as the average attendance of the directors. The directors are elected for one
year at a time.
The company’s Articles of Association do not contain any provisions on the manner
of proposing prospective directors. eQ Plc’s major shareholders, who as a rule
represent at least one half of the number of shares and votes in the company, make
a proposal on the number of directors, the directors and their remuneration to the
AGM.
A person elected director must have the qualifications required by the work of a
director and sucient time for taking care of the duties. The company facilitates
the work of the Board by providing the directors with sucient information on the
company’s operations. eQ Plc’s Board of Directors consists of 5 to 7 members. The
Board of Directors elects the Chair from among its members. A full-time Chair of the
Board was appointed to eQ Plc’s Board of Directors in 2021. The full-time Chair of
the Board’s duties include, in addition to being the Chair of the Board, for example,
developing eQ’s strategy together with the CEO. The appointment of the full-time
Chair of the Board begun on 1 April 2021. It is eQ Plc’s AGM solely that ultimately
elects the directors and makes preparations for their election.
The company reports the following biographical details and holdings of the directors:
name, gender, year of birth, education, main occupation, primary work experience,
international experience, date of inception of Board membership, key positions
of trust, and shareholdings in the company. In addition, eQ reports the directors’
independence of the company or its major shareholders together with the reasoning
for determining that a board member is not independent.
The members of eQ’s Board of Directors shall provide the Board and the company
with sucient information for the evaluation of their qualifications and independ
-
ence and notify of any changes in such information.
The Annual General Meeting held on 24 March 2021 elected the following persons to
the Board:
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Janne Larma, born 1965, male, member of the Board since 2021, Chair of the Board
since 24 March 2021, M. Sc. (Econ)
Key positions of trust: Notalar Oy, Chair of the Board of Directors, 1995–; Inkoo
Shipping Oy, Member of the Board, 2014–; Rettig Group Oy Ab, Member of the
Board, 2020–; Svenska handelshögskolan, Member of the Board, 2019–; Meripuolus
-
tussäätiö SR, Member of the Board, 2017–.
Primary work experience: eQ Plc, CEO, 2011–2021; eQ Pankki Oy, Member of
Management Team, 2004–2009; Advium Corporate Finance Oy, Managing
Director, 2000–; Enskilda Securities, management position in investment banking,
1998–2000; Alfred Berg, investment banking, 1993–1998; Kansallis-Osake-Pankki,
investment banking, 1988–1992.
Janne Larma is not independent of the company, as he is the full-time Chair of the
Board, has been the company’s CEO since 2011 until 1 April 2021, and is also involved
in the same stock option program as the company’s current management. Janne
Larma is not independent of the company’s major shareholder Chilla Capital S.A.,
where he is a significant shareholder.
Georg Ehrnrooth, born 1966, male, member of the Board since 2011, Chair of the
Board until 24 March 2021 and Vice Chair of the Board from 24 March 2021, studies
in agriculture and forestry
Key positions of trust: Sampo Plc, member of the Board, 2020–; Louise and Göran
Ehrnrooth Foundation, Chair of the Board, 2013–; Fennogens Investments S. A, Chair
of the Board, 2009–; Anders Wall Foundation, member of the Board, 2008–; Paavo
Nurmi Foundation, member of the Board, 2005–.
Primary work experience: Management positions in family owned companies with
responsibility for finance and investments, 2008–; eQ Plc and eQ Bank Ltd, CEO, 2005.
Georg Ehrnrooth is not independent of the company on the basis that he has served
for more than ten consecutive years on the Board of the company, including six
years as Chair and one year as the Vice Chair. In addition, Georg Ehrnrooth is not
independent of the company’s major shareholder Fennogens Investments S.A, where
he is a significant shareholder.
Nicolas Berner, born 1972, male, member of the Board since 2013, Master of Laws
Key positions of trust: Berner Ltd, member of the Board, 2006–.
Primary work experience: Berner Ltd, CFO, 2011–; Hannes Snellman Attorneys Ltd,
partner, 1998–2011.
Independent of the company and significant shareholders.
Timo Kokkila, born 1979, male, member of the Board since 2016, M.Sc. (Eng.)
Key positions of trust: Ilmarinen Mutual Pension Insurance Company, member of
the Board, 2017–; Valmet Automotive Ltd, member of the Board, 2016–; SRV Group
Plc, Vice Chair of the Board, 2021–, and member of the Board, 2010–; Pontos Ltd,
member of the Board, 2007–.
Primary work experience: Pontos Group, CEO, 2016–; Pontos Group, Investment
Director, 2011–2015; SRV Group Plc, Manager, Project Development, 2008–2011;
SRV Group Plc, Project Development Engineer, 2006–2008; Kampin Keskus Oy,
Development Engineer, 2004–2006.
Independent of the company and significant shareholders.
Lotta Kopra, born 1980, female, member of the Board since 2019, M. Sc. (Econ)
Key positions of trust: Nightingale Health Plc, member of the Board, 2021–; Solteq
Plc, member of the Board, 2018–.
Primary work experience: Spinnova Oy, Chief Commercial Ocer, 2019–; Bearing
-
Point, Executive level, 2015–2018; Magenta Advisory, Founder, Chair of the Board,
2010–2015; Finland and Nordics, Management consultant, 2004–2010.
Independent of the company and significant shareholders.
Tomas von Rettig, born 1980, male, member of the Board since 2019, BBA, CEFA
certificate
Key positions of trust: Rettig Group Oy Ab, Chair of the Board, 2019–; Purmo Group
Oy Ab, Chair of the Board, 2016–; Terveystalo Oyj, Vice Chair of the Board, 2017–;
Rettig Capital Oy Ab, member of the Board, 2014–.
Primary work experience: Rettig Group Oy Ab, CEO, 2016–2019; Rettig Group Oy
Ab, vice president business development, vice president corporate finance and develop
-
ment, 2011–2015; Rettig Asset Management Oy Ab, portfolio manager, senior portfolio
manager, 2008–2011; Skandinaviska Enskilda Banken, Middle Oce, 2006–2008.
Independent of the company, but not independent of its significant shareholders.
Tomas von Rettig is a shareholder and member of the Board of Rettig Capital Oy Ab,
an indirect parent company of Anchor Oy, which is a significant shareholder of eQ Plc.
Shares and share-related rights of the Board members and entities that they control
in the company at the end of the financial period on 31 December 2021:
Member of the Board Security Holding
Nicolas Berner Share ,
Georg Ehrnrooth Share ,,
Timo Kokkila Share ,
Lotta Kopra Share
Janne Larma
Option right
Share
,
,,
Tomas von Rettig Share ,
Operations of the Board of Directors
eQ Plc’s Board of Directors has drawn up a written charter covering its operations.
Below is a list of the most important principles and duties presented in the charter.
In order to carry out its duties, the Board of Directors:
• confirms the company values and manners of operating and monitors their
implementation
• confirms the company’s basic strategy and continuously monitors that it is
up-to-date
• based on the strategy, approves the annual plan of operation and budget and
supervises their outcome
• reviews and approves the interim reports, report by the Board of Directors and
financial statements
• defines the company’s dividend policy and makes a proposal on dividend
distribution to the AGM
• convenes General Meetings
• makes proposals to the General Meeting, when necessary
• decides on major investments, corporate acquisitions and divestments and on
investments that exceed two million euros
• confirms the organisation structure
• appoints and dismisses the CEO
• sets personal targets for the CEO annually and assesses their outcome
• appoints and dismisses the members of the Management Team, defines their areas
of responsibility and decides on the terms of their employment
• decides on so called unconventional related party transactions that are not
conducted in the ordinary course of eQ’s operation and which are not made on
ordinary commercial terms
• monitors and assesses related party transactions at least once a year
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
• reviews the Remuneration Policy for Governing Bodies of eQ at least once a year
and presents the policy to the General Meeting of the company for consideration
at least every four years
• reviews eQ Group’s remuneration principles at least once a year
• decides on the incentive schemes and annual bonuses of the CEO and the
personnel
• goes through the major risks related to the company’s operations and their
management at least once a year and gives instructions on them to the CEO,
when necessary
• meets the auditors at least once a year
• convenes at least once a year without the executive management
• assesses its own operations at least once a year
• assesses the independence of its members
• confirms its own charter, which is reviewed annually
• handles other matters that the Chair of the Board or the CEO has proposed to
the agenda of a Board meeting; the directors also have the right to put matters on
the Board agenda by informing the Chair of this.
During the financial period 2021, the Board of Directors of eQ Plc convened ten (10)
times, average attendance being 98%. Attendance at the Board meetings 2021:
Member of the Board
Nicolas Berner
/
Georg Ehrnrooth /
Timo Kokkila /
Lotta Kopra /
Janne Larma /
Tomas von Rettig /
The majority of the members of eQ Plc’s Board of Directors are independent of the com-
pany and half of the members of the Board are independent of the company’s significant
shareholders. The Board of Directors assesses the independence of the directors and
states on the company website which of the directors have been deemed independent.
When evaluating independence, the circumstances of private individuals or legal enti
-
ties regarded as related parties will be taken into consideration in all situations. Compa-
nies belonging to the same group as a company are comparable with that company.
Principles on the diversity of the Board of Directors
The Board’s aim is to promote, for its part, the diversity of the Board’s composition.
When assessing diversity, the Board takes into consideration, for instance, the age
and gender of the directors, their education and professional experience, personal
qualities and experience that is essential with regard to the task and the company
operations. Regarding the equal representation of genders on the Board, eQ Plc has
defined as its goal that there should always be representatives of both genders on
eQ Plc’s Board of Directors. The Board aims at reaching this goal and maintaining it
primarily by informing eQ Plc’s owners actively about it. During the financial period
2021, eQ Plc’s Board met the preconditions of diversity set by the company, including
the goal of having representatives of both genders on the Board. The directors have
versatile experience in sectors that are of importance to the company operations,
such as the investment and financial sector and real estate sector. In addition,
the work experience and education of the directors as well as their international
experience complement each other. The directors are elected by eQ Plc’s AGM.
The Board of Directors of the company has monitored the development of the
company’s diversity during the financial period 2021.
CEO and his duties
The CEO is in charge of the day-to-day administration of the company in accordance
with the rules and regulations of the Finnish Limited Liability Companies Act and
instructions and orders issued by the Board of Directors. The CEO may take measures
that, considering the scope and nature of the operations of the company, are unusual
or extensive with the authorisation of the Board. The CEO ensures that the account
-
ing practices of the company comply with the law and that finances are organised in
a reliable manner. eQ Plc’s Board of Directors appoints the CEO.
Mikko Koskimies, M.Sc. (Econ) (born 1967) was appointed the CEO of eQ Plc on 1
April 2021 and he has been the CEO of eQ Asset Management Ltd since 2012.
Key positions of trust: St1 Nordic Corporation, member of the Board, 2007–; Urlus-
Säätiö Sr, Chair of the Board, 2012–.
Primary work experience: eQ Asset Management Ltd, CEO, 2012–; Pohjola Bank,
member of the Executive Committee and Executive Director responsible for asset
management business unit and Pohjola Asset Management Ltd, Managing Director,
2005–2012; Alfred Berg Asset Management Ltd, Managing Director, 1998-2005;
Nordea Group, several positions in senior management, 1989–1997, of which Merita
Bank Luxembourg S.A., 1993–1997.
Prior to 1 April 2021, the CEO of the Company was the company’s current full-time
Chair of Board Janne Larma. The company discloses the same biographical details
and information on the holdings of the CEO as of the directors.
eQ Plc does not have substitute for the CEO.
Shares and share-related rights of the CEO and entities that he controls in eQ Plc at
the end of the financial period on 31 December 2021:
Name Task in the organisation Security Holding
Mikko
Koskimies
CEO 2018 Option right
Share
,
,,
Other Management Team members
eQ Group has a Management Team that convenes regularly every month. The status
of the Management Team is not based on company law, but in practice it has a
significant role in the organisation of the company management. The Management
Team consists of the persons heading the company’s operative business, the CFO and
Group General Counsel. The main duty of the Management Team is to assist the CEO.
eQ Group’s Management Team on 31 December 2021:
Mikko Koskimies, born 1967, M.Sc. (Econ), Chair, eQ Plc, CEO (from 1 April 2021) and
eQ Asset Management Ltd, CEO
Staan Jåfs, born 1974, M.Sc. (Econ), eQ Asset Management Ltd, Head of Private Equity
Antti Lyytikäinen, born 1981, (M.Sc. (Econ), eQ Plc, CFO
Juha Surve, born 1980, Master of Laws, M.Sc. (Econ), eQ Asset Management Ltd,
Group General Counsel
Shares and share-related rights of the other Management Team members and entities
that they control in eQ Plc at the end of the financial period on 31 December 2021:
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Name Task in the organisation Security Holding
Staan Jåfs Director, Private Equity,
eQ Asset Management Ltd
2018 Option right
Share
,
,
Antti
Lyytikäinen
CFO, eQ Plc 2018 Option right
Share
,
,
Juha Surve Group General Counsel,
eQ Asset Management Ltd
2018 Option right
Share
,
,
Descriptions of Internal Control Procedures and
theMain Features of Risk Management Systems
Control and risk management related to the financial reporting process
The objective of the financial reporting process is to produce timely financial infor-
mation and to ensure that decision-making is based on reliable information. The aim
is to ensure that the financial statements and interim reports are prepared according
to applicable laws, generally accepted accounting principles and other requirements
on listed companies.
The financial reporting process produces eQ Group’s monthly and quarterly reports.
The Management Team of the Group reviews eQ Group’s result and financial
performance monthly. The Group management presents the result and financial
position of the Group quarterly to the Board of Directors. The Board of Directors of
eQ Plc supervises that the financial reporting process produces high-quality financial
information. The CEO is responsible for eQ Group’s internal risk management.
The Group’s subsidiaries report their results monthly to the parent company. The
financial administration of the Group takes care of the bookkeeping of the subsidi
-
aries. At Group level, this will make it easier to ensure that the financial reporting of
the subsidiaries is reliable. The Group’s interim reports and financial statements are
prepared in accordance with the IFRS reporting standards. The financial administra
-
tion of the Group monitors the changes that take place in IFRS standards.
Based on risk assessments, the company has developed measures for controlling the
risks pertaining to financial reporting, which make sure that financial reporting is
reliable. The companies use various reconciliations, checks and analytical measures,
for instance. The financial administration of the Group prepares monthly analyses
of income statement and balance sheet items, both at company and segment level.
In addition, tasks related to risk-exposed work combinations are separated, and
there are appropriate approval procedures and internal guidelines. The reliability
of financial reporting is also supported by various system controls in the reporting
systems. Other basic principles of control are a clear division of responsibility and
clear roles as well as regular reporting routines.
Risk management overview
The purpose of the Group’s risk management is to make sure that the risks associ-
ated with the company’s operations are identified, assessed and that measures are
taken regarding them. eQ Plc’s Board supervises that the CEO takes care of eQ Plc’s
day-to-day administration according to the instructions and orders issued by the
Board. The Board also supervises that risk management and control are organised
in a proper manner. The executive management is responsible for the practical
implementation of the risk management process and control.
eQ Group comprises a fully owned subsidiary of eQ Plc, eQ Asset Management Ltd,
which is an investment firm. A permanent risk management function is responsible
for risk management at eQ Asset Management Ltd. The risk management function,
which is independent of the other operations, consists of risk experts and is led by
the Chief Risk Ocer. eQ Asset Management has a risk management committee,
which the Chief Risk Ocer convenes regularly. The risk management committee
reviews the follow-up reports of risk management-related operations and decides on
corrective measures, for instance. It also approves new products, changes made in
products and counterparties.
General description of internal control
eQ Plc’s Board of Directors is responsible for arranging sucient and well-function-
ing internal control. Internal control covers all functions within eQ Group, which
means that eQ Plc steers and controls the operations of the subsidiaries in order to
make sure that the result of its operations is reliable. The business operations are
steered by the Group’s operating principles, decision-making powers and company
values that cover the entire Group. eQ Plc takes into account the Group structure
and the nature and extent of the operations when arranging internal control.
eQ Group’s internal control system covers financial and other control. Internal
control is carried out by the Board, CEO and other superior management as well as
the entire personnel. The aim of internal control is to make sure that the operations
of the entire Group are ecient and contribute to the achievement of the goals and
targets, reporting is reliable and that the Group follows laws and other regulations.
In addition, the aim of internal control is to ensure that information, eQ Plc’s assets
and client assets are secured in a sucient manner and that internal procedures and
information systems are arranged properly and in order to support operations.
eQ Group has a notification channel through which an employee can report mis-
demeanors or other misconduct within the eQ Group anonymously and confidentially
(eQ Whistleblower). Authorized persons process notifications and only they have
access to the information in the notifications. The notification channel was
improved during 2021 so that the channel is now entirely on a server outside the
company and allows for discussions with an anonymous notifier.
Internal control is above all based on financial reports, management reports, risk
reports and reports of internal control. The company’s central operations are steered
according to internal operating policies and practices.
Other Information to be Provided in the CG Statement
Internal audit
The Group does not have a separate internal audit organisation. The CEO together
with the heads of the business units, is responsible for the day-to-day supervision of
the company’s operational business in the first line, and the Risk Management and
Compliance unit, which is independent of the business, oversees the operations in
the second line and reports directly to the Board, if necessary. The CEO may assign
external evaluators to carry out audits on areas that the CEO deems necessary. The
CEO reports the observations to the Board of Directors.
Principles concerning related party transactions
eQ’s Group Administration is responsible for managing related party matters at
Group level and for maintaining the related party register, in accordance with
principles on the management of related party matters approved by eQ Plc’s Board
of Directors. The management of each company that is a member of the Group is
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
responsible for ensuring that any related party transactions at the Group are made
in accordance with the approved principles. At eQ Group, all business transactions
within the Group and related party transactions are always made on arm’s-length
terms and as part of the company’s normal business operations. Group companies
can oer their services to related party individuals or organisations under their
control or influence on market terms, and ordinary assignments are implemented
in the ordinary course of business of the company. Related party transactions are
allowed, provided that they promote the purpose and interest of the company and
are commercially justified.
The Board of Directors regularly monitors and evaluates transactions between
eQ Plc and the company’s related parties, and assesses how contracts and other
legal transactions made between the company and its related parties meet the
requirements on the ordinary course of business and arm’s-length terms. Primarily,
all related parties are personally responsible for ensuring that eQ is informed of any
related party transactions they make. eQ also monitors related party transactions
on a business segment basis, and eQ Plc’s CFO is responsible for reporting related
party transactions to the Board of Directors annually. Related party transactions
that are not conducted in the ordinary course of eQ’s operation and which are not
made on ordinary commercial terms are “unconventional business transactions”.
Only eQ Plc’s Board of Directors can make decisions on implementation of uncon
-
ventional business transactions. The Board of eQ Group’s parent company always
decides on all related party loans to related parties or entities outside the eQ Group.
eQ complies with the obligations of the Finnish Corporate Governance Code 2020
for listed companies and the IFRS standards (IAS 24) on related party disclosures.
As required by the standard, eQ discloses, in the consolidated financial statements
or separate financial statements, the related party relationships and transactions
and outstanding balances of the parent company or an investor with joint control
or significant control over the investment target with related parties, which are
presented in accordance with the IFRS. eQ also discloses in the company’s annual
report information to be presented on the basis of the Finnish Limited Liability
Companies Act, concerning loans, liabilities and commitments to related parties and
the main terms thereof, if the business transactions are material and implemented
on unconventional terms.
eQ Plc publishes, by a stock release, related party transactions that are significant
for the company’s shareholders.
Central procedures of insider administration
In its insider administration, eQ Plc complies with the applicable Finnish and EU
legislation (including the Market Abuse Regulation 596/2014), rules and regulations
issued by the Finnish Financial Supervisory Authority as well as the Guidelines for
Insiders issued by the Helsinki Stock Exchange (insider regulations). eQ Plc has
drawn up guidelines on insider issues and trading. The company has informed the
company management, insiders and persons covered by the trading restriction of the
insider guidelines.
Managers and persons closely associated with them are obliged to inform the
company and the Financial Supervisory Authority of their trading in company shares
or other financial instruments. The company discloses the information that it has
received without delay with a stock exchange release. At eQ, such managers (cov
-
ered by the disclosure obligation) are the CEO and directors as well at the members
of the Management Team appointed by the Board. eQ maintains a list of managers
and persons closely associated with them. This list is not an insider list.
The company maintains insider lists required by insider regulations of persons who
have access to inside information. These lists are not public. The information on
eQ Plc’s managers required by regulations and the insider lists are maintained by
Euroclear Finland Ltd. The information in the insider lists is available to the Financial
Supervisory Authority for the supervision of the securities market.
eQ’s permanent insiders are only persons who, due to their tasks or position, have per-
manent access to all inside information in the listed company and who have the right to
make decisions on the company’s future development and the arrangement of business.
eQ’s permanent insiders comprise the directors, CEO and the members of the Group’s
Management Team appointed by the Board of Directors. In addition to insider lists, eQ
maintains a list of persons covered by the so-called extended trading restriction.
eQ Plc’s closed period commences 30 days prior to the disclosure of an interim report
(first and third quarter), half-yearly report or financial statements report and ends at
the end of the day of the disclosure.
The company has informed the company management, insiders and persons covered
by the extended trading restriction of the insider guidelines. The company has a
designated person in charge of insider issues (Compliance Ocer), who carries
out tasks related to the management of insider issues, training in insider matters,
maintenance of the insider lists and the supervision of trading. The knowledge of
other employees about insider matters is maintained and their need of training
assessed continuously.
Audit
Election of the Auditors
The proposal for the election of an auditor prepared by the Board of Directors of
the company is disclosed in the notice of the General Meeting. If the Board has not
arrived at a decision on the prospective auditor by the time the notice is sent, the
candidacy will be disclosed separately.
The Board of eQ Plc organized a statutory audit firm appointment procedure in
accordance with the EU Audit Regulation (537/2014) for the audit of the financial
year 2021. Following a comprehensive assessment based on selection criteria, KPMG
Oy Ab was the Board’s primary recommendation for an auditor for a term ending at
the end of the Annual General Meeting 2022. The company’s Annual General Meet
-
ing elected KPMG Oy Ab as auditor in accordance with the Board’s recommendation.
In 2021, the company auditor was KPMG Oy Ab, a firm of authorized public account
-
ants, with Tuomas Ilveskoski, APA, as auditor with main responsibility.
KPMG Oy Ab has acted as eQ Plc’s auditor since 2014 and Tuomas Ilveskoski, APA,
has acted as auditor with main responsibility since the Annual General Meeting
2021. The decision on continuing with the period of the auditor with main responsi
-
bility and the auditing firm is made annually at the AGM, and the auditor with main
responsibility and the auditing firm are changed at least in accordance with the valid
regulations.
Auditors’ fees
The independent auditors have been paid the following fees in 2021: for the audit
and closely related services a total of EUR 47,600 (2020: EUR 93,871) and for other
services than audit a total of EUR 8,200 (2020: EUR 14,093).
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Introduction
This remuneration report for governing bodies has been drafted in accordance with
the instructions concerning remuneration in the Finnish Corporate Governance Code
2021 for Finnish listed companies. In 2020, the remuneration for the Board of Direc
-
tors and the CEO of eQ Plc was in compliance with the company’s remuneration
policy for governing bodies.
The remuneration system shall support eQ Group’s long-term goals, such as
improving the profitability of the business in a long term, sucient capital adequacy,
return on investments and cost eciency. In eQ Group, the aim of the remuneration
system is also to encourage and reward the employees for their personal perfor
-
mance and contribution to the development of eQ Group’s profitability and for acting
in accordance with eQ Group’s strategy. Further, the aim is to commit the employees
to act in accordance with the strategy, goals, values and long-term benefits of the
eQ Group.
eQ Group’s strong financial performance during the last five years is reflected in the
remuneration of the CEO, particularly in the increase of the variable remuneration
components. The following table presents the remuneration development for the
Board of Directors and CEO in comparison to the average remuneration development
for the Group’s employees and the Group’s economic development for the previous
five financial years.
Salary and
remuneration - EUR
CEO ,,* , , , ,
change, % % % % % %
Chair of the Board ,** , , , ,
change, % % % % -% %
Other Board members ,*** , , , ,
change, % % % % % %
Board, in total , , , , ,
change, % % % % % %
Employee, in average , , , , ,
change, % % % % % %
Operating profit - MEUR . . . . .
change, % % % % % %
* includes CEO Janne Larma from 1 January to 31 March 2021 and CEO Mikko Koskimies from 1 April to 31
December 2021
** includes, in addition to the remuneration paid on the basis of Board membership, the salary based on
the service contract of Janne Larma, the full-time Chair of the Board, as of 1 April 2021
*** The number of Board members increased by one in 2021
Remuneration of the Board of Directors
Compensation and remuneration of the Board
The Annual General Meeting decides upon the remuneration of the Board of Direc-
tors. In 2021, the Annual General Meeting decided that the members of the Board
of Directors shall receive remuneration according to following: Chair of the Board
5,000 euros per month, Vice Chair of the Board of Directors receives 4,000 euros per
month and the directors 3,000 euros per month. The Annual General Meeting also
decided that the directors shall be paid EUR 500 for each Board meeting that they
attend. The travel and lodging costs of the Board members shall be compensated
in accordance with the company’s expense policy. The remuneration is paid in
cash. The full-time Chair of the Board has entered into a service contract with
the company and is paid a fixed salary in cash (monthly salary and fringe benefits)
in addition to the remuneration paid on the basis of the Board’s membership. The
full-time Chair of the Board is not covered by the eQ Group’s performance-based
annual bonus scheme.
Remuneration Report for Governing Bodies 2021
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
In 2021, the members of the Board of Directors have been paid remuneration as
follows:
Remuneration
- EUR
Annual
remuneration
Meeting
fees in total
Other
compensation Total
Nicolas Berner , , - ,
Georg Ehrnrooth , , - ,
Timo Kokkila , , - ,
Lotta Kopra , , - ,
Janne Larma* , , ,** ,
Tomas von Rettig , , - ,
Total , , , ,
* Full-time Chair of the Board as of 1 April 2021, Remuneration paid to Janne Larma from 1 January to 31
March 2021 is shown in more detail below under the CEO’s remuneration information.
** Salary paid to the full-time Chair of the Board as of 1 April 2021
The full-time Chair of the Board’s participation in the option programs
Based on the service contract, the full-time Chair of the Board may be granted
shares, options or other share-based rights as part of the long-term commitment
scheme. The other members of eQ Plc’s Board of Directors have no share-related
rights, nor are they covered by any other remuneration system.
The eQ Group has an option program 2018, on the basis of which eQ Group has
issued option rights and option subscription rights to key persons, which aim for
long-term commitment to the company. In accordance with the terms and condi
-
tions of the option program for 2018, the options have a three-year retention period
after which they are available for subscription. The terms and conditions contain no
other special terms related to ownership.
The full-time Chair of eQ Plc’s Board of Directors is covered by the 2018 option
program and has initially received 100,000 option rights as part of the commitment
plan.
The share subscription period for the option program 2018 begins on 1 April 2022
and ends on 1 April 2024.
Remuneration of the CEO
The salary of the CEO and other benefits
The Board of Directors appoints the CEO and decides on the CEO’s salary, benefits
and other terms related to the CEO’s service. It is important for the company that
the salary of the CEO is competitive, as the commitment of the CEO and sucient
incentives are vital with regard to the company’s success.
The remuneration of the CEO consists of a fixed salary in cash (monthly salary and
fringe benefits) and an annual performance bonus. The amount of the annual bonus
is determined based on achievement of personal goals and the result of eQ Group. eQ
Plc’s Board decides on the amount and distribution of the annual bonuses taking into
consideration, e.g. the above presented main principles of remuneration.
According to the regulations in force at the time of payment of the variable
remuneration accrued in 2020 and paid in 2021, if the variable remuneration
component of the CEO has exceeded EUR 50,000 annually, 50 per cent of the
variable remuneration has been deferred to be paid during the following three years
(even payments each year). 50 per cent of the deferred remuneration has been linked
to the development of eQ Plc’s share price during the deferral period. eQ Plc’s Board
shall annually decide on the interest possibly payable to the remaining part of the
deferred remuneration. With the change in the remuneration regulations, the part
of the variable remuneration in excess of EUR 50,000 for variable remuneration
accrued in 2021 and to be paid in 2022 will no longer be deferred to be paid during
the following three years.
In 2021, the CEOs were paid the following salaries and other remuneration:
Remuneration paid during 2021 - EUR
Fixed remuneration Variable remuneration
Annual salary
(incl. fringe benefits)
Part of the overall
remuneration Annual bonus*
Part of the overall
remuneration
Granted
share-related rights Total
CEO Janne Larma
1 Jan – 31 Mar 120,551 21% 454,320 79% - ,
CEO Mikko Koskimies
1 Apr – 31 Dec 459,818 100% - 0% - ,
Total 580,369 56.1% 454,320 43.9% - ,,
* Represents the aggregate amount of bonuses paid in 2021. The earnings periods for the bonuses paid in 2021 are defined in the table below. The annual bonus paid to the CEO is always based on the preceding year’s
performance.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
The table below presents the earnings periods for the variable remuneration paid
to the CEO Janne Larma in 2021 (deferred remuneration falling due for the previous
years):
Specification of variable remuneration paid during 2021 - EUR
For year
2020*
For year
2019*
For year
2018*
For year
2017* Total
211,238 74,671 104,050 64,361 ,
* The annual bonus of the CEO is always based on the preceding year’s performance.
The following table presents the remuneration to the CEO Janne Larma falling
due (including deferred variable remuneration), which has not yet been paid on 31
December 2021. The unpaid deferred variable remuneration for each earnings period:
Deferred variable remuneration* - EUR
For year 2018 For year 2019 For year 2020 Total
302,642 201,089 145,435 ,
* Including changes in stock prices and dividend consideration.
The variable remuneration to be due of the CEO Mikko Koskimies that has been
earned during 2021 and not yet been paid out by the date of this report was
EUR 789,758 in aggregate.
The terms of the CEO’s service are specified in the CEO’s service contract. Both
parties may give notice on the CEO’s service contract with a period of notice of six
months. When notice is given by the company for whatever reason or if the contract
is terminated through mutual agreement by the company and the CEO, the CEO is
entitled to a severance pay corresponding to his or her overall remuneration for six
months preceding the termination of the contract, which is paid on the day when
the contract is terminated.
The retirement age and pension of the CEO are determined in accordance with the
Finnish Employees Pensions Act. The CEO does not have a supplementary pension
scheme.
The CEO’s participation in the option programs
eQ Group has option program 2018, based on which, eQ Group has issued option
rights and option subscription rights to key persons, which aim for long-term com
-
mitment to the company. In accordance with the terms and conditions of the option
program 2018, the options have a three-year retention period after which they are
available for subscription. The terms and conditions contain no other special terms
related to ownership.
As part of the engagement system, the CEO is covered by the option program and
has initially received 100,000 option rights based on option program 2018.
The share subscription period for the option program 2018 begins on 1 April 2022
and ends on 1 April 2024.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Janne Larma
Chair of the Board
Member of the Board since 2021
Born: 1965
Education:
M.Sc. (Econ.), Hanken Svenska handelshögskolan
Primary working experience:
2011–2021 eQ Plc, CEO
2004–2009 eQ Bank, Member of Management Team
2000– Advium Corporate Finance Ltd, Managing Director
1998–2000 Enskilda Securities, management position in
investment banking
1993–1998 Alfred Berg, investment banking
1988–1992 Kansallis-Osake-Pankki, investment banking
Primary positions of trust:
Notalar Oy, Chair of the Board of Directors; Inkoo Shipping
Oy, Member of the Board; Rettig Group Oy Ab, Member of
the Board; Svenska handelshögskolan, Member of the Board;
Meripuolustussäätiö SR, Member of the Board
Not independent of the company and not independent of its
significant shareholders.
Board of Directors
eQ Plc Board of Directors 31 December 2021:
Georg Ehrnrooth
Vice Chair of the Board
Member of the Board since 2011
Born: 1966
Education:
Studies in agriculture and forestry, Högre Svenska
Läroverket, Åbo
Primary working experience:
2008– Management positions in family-owned companies
responsible for finance and investments
2005 eQ Corporation and eQ Bank Ltd, Chief Executive
Ocer
Primary positions of trust:
Sampo Plc, Member of the Board; Paavo Nurmi Foundation,
Member of the Board; Anders Wall Foundation, Member of
the Board; Louise and Göran Ehrnrooth Foundation, Chair
of the Board; Topsin Investments S.A., Chair of the Board;
Fennogens Investments S.A., Chair of the Board
Not independent of the company and not independent of its
significant shareholders.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Nicolas Berner
Member of the Board since 2013
Born: 1972
Education:
LL.B, University of Helsinki
Primary working experience:
2011– Berner Ltd, Chief Financial Ocer,
1998–2011 Hannes Snellman Attorneys Ltd, Partner
Primary positions of trust:
Berner Ltd, Member of the Board
Independent of the company and significant shareholders.
Timo Kokkila
Member of the Board since 2016
Born: 1979
Education:
M.Sc. (Eng.), University of Technology Espoo
Primary working experience:
2016– Pontos Group, CEO
2011–2015 Pontos Group, Investment Director
2008–2011 SRV Group Plc, Manager, Project Development
2006–2008 SRV Group Plc, Project Development Engineer
2004–2006 Kampin Keskus Oy, Development Engineer
Primary positions of trust:
Ilmarinen Mutual Pension Insurance Company, Member of the
Board; Valmet Automotive Ltd, Member of the Board; SRV Group
Plc, Vice Chair of the Board; Pontos Ltd, Member of the Board
Independent of the company and significant shareholders.
Lotta Kopra
Member of the Board since 2019
Born: 1980
Education:
M.Sc. (Econ.), HSE
Primary working experience:
2019– Spinnova Oy, Chief Commercial Ocer
2015–2018 BearingPoint, Executive level
2010–2015 Magenta Advisory, Founder, Chair of the board
2004–2010 Finland and Nordics, Management consultant
Primary positions of trust:
Solteq Ltd, Member of the Board; Nightingale Health Plc, Member
of the Board
Independent of the company and significant shareholders.
Tomas von Rettig
Member of the Board since 2019
Born: 1980
Education:
BBA (Bachelor of Business Administration), Arcada University of
Applied Sciences
CEFA -degree, Hanken Svenska handelshögskolan
Primary working experience:
2016–2019 Rettig Group Oy Ab, CEO
2011–2015 Rettig Group Oy Ab, vice president business
development, vice president corporate finance and development
2008–2011 Rettig Asset Management Oy Ab, portfolio manager,
senior portfolio manager
2006–2008 Skandinaviska Enskilda Banken, Middle Oce
function
Primary positions of trust:
Rettig Group Oy Ab, Chair of the Board; Purmo Group Oy Ab, Chair
of the Board; Terveystalo Oyj, Vice Chair of the Board; Rettig
Capital Oy Ab, Member of the Board
Independent of the company, but not independent of its
significant shareholders.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Management Team
eQ Group’s Management Team 31 December 2021:
Mikko Koskimies, Chair
Mikko Koskimies, M.Sc. (Econ), (born 1967) is CEO of eQ Plc and
eQ Asset Management Ltd and has worked with eQ since 2012.
He previously worked as a Managing Director of Pohjola Asset
Management Ltd and was a member of the Executive Committee
of Pohjola Bank. Mikko Koskimies also worked from 1998 to
2005 as a Managing Director of Alfred Berg Asset Management
Ltd. During the years from 1989 to 1997 he worked within the
current Nordea Group. From 1993 to 1997 Mikko worked in Private
Banking for Merita Bank Luxembourg S.A. in Luxembourg.
Staan Jåfs
Staan Jåfs, M.Sc. (Econ), (born 1974) is responsible for the
private equity asset management and group’s own private equity
investment operations. Staan has worked in the private equity
business since 2000 and with eQ since 2007. Previously in 2000-
2007 he worked at Proventure Ltd as CFO, responsible for the
group’s financial administration.
Antti Lyytikäinen
Antti Lyytikäinen, M.Sc. (Econ.), (born 1981) is CFO of eQ Group.
Antti has worked among financial sector since 2004 and with
eQ since 2011. From 2008 to 2011 he worked at Aberdeen Asset
Management and was responsible for the financial management of
group’s property funds. Prior to that he worked as an Auditor e.g.
in the Financial Services -division of KPMG.
Juha Surve
Juha Surve, LL.M and M.Sc. (Econ.), (born 1980) is Group General
Counsel of eQ Plc, and he also acts as a secretary of the Board
of eQ Plc. Juha has worked among financial sector and capital
markets since 2003 and with eQ since the beginning of year 2012.
From 2008 to 2012 he worked at Castrén & Snellman Attorneys
Ltd expertising in M&A transactions, capital markets and
corporate law. Prior to that he gained over five years’ experience in
various asset management related duties e.g. in OP-Pohjola Group
and Nordea Bank.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Performance based fees of
private equity funds managed by eQ
It is possible for eQ Group to obtain a performance based fee (carried interest) based
on the return of the private equity fund or asset management programme that
eQ manages. The performance based fee, which is based of fund agreements and
belongs to the management company, is not paid until the return rate defined by the
hurdle rate (IRR) has been achieved at cash flow level. Typically, the performance fee
will become payable first towards the end of a fund’s life cycle. If the return from the
fund remains below the hurdle rate, the management company receives no perfor
-
mance fee. When the hurdle rate has been reached, the management company will
receive the coming cash flow until the entire performance fee accumulated this far
has been obtained (catch up stage, catch up share 100%). After the catch up stage,
the cash flows distributed by the fund will be divided between the management
company and investors according to the fund agreement (e.g. 7.5% / 92.5%).
Based on the strong value creation of the private equity funds managed by eQ, eQ
will begin to accrue the catch up share of private equity funds’ performance fee in
the income statement in 2022. eQ Group will begin to accrue the catch up share
of performance fees when the Group has assessed that it will not be necessary to
later make any considerable cancellations in the accrued and recognised income.
Accruals will be recognised for the funds that fulfil the requirements and that are
assessed, based on cash flows, to pay carried interest in the following five years, the
investment period of which has ended, and regarding which eQ has received return
assessments of the final returns from the targets funds’ management companies.
After the catch up stage, the performance fees will be booked in the income
statement according to the cash flow distributed by the fund and divided between
the management company and investors (e.g. 7.5% / 92.5%).
The estimated returns and performance fees for each separate fund have been
presented below. The catch up share to be recognised in 2022 income statement is
estimated to be round EUR 7.2 million.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Funds – 31 December 2021
Fund Fund size Vintage year Hurdle rate Performance fee
eQ’s share of the
performance fee Present TVPI Estimated TVPI
Estimate on
reaching the hurdle
rate (cash flow)
Estimated catch up
share, total MEUR
Estimated future
performance fees,
total MEUR
Performance fees
accrued presently in the
fund’s value, MEUR
)
Amanda III MEUR .% .% % .x .x Will not reach n/a n/a n/a
Amanda IV MEUR .% .% % .x .x Has reached n/a . .
Amanda V MEUR .% .% % .x .x . . .
eQ PE VI MEUR .% .% % .x .x . . .
eQ PE VII MUSD .% .% % .x .x . . .
eQ PE VIII MEUR .% .% % .x .x . . .
eQ PE IX MUSD .% .% % .x .x . . .
eQ PE X MEUR .% .% % .x .x After n/a . .
eQ PE XI MUSD .% .% % .x .x After n/a . .
eQ PE XII MEUR .% .% % .x .x After n/a . .
eQ PE XIII MUSD .% .% % n/a .x After n/a . n/a
eQ PE SF II MEUR
)
.% .% % .x .x . . .
eQ PE SF III MEUR
)
.% .% % .x .x After n/a . .
PE programmes MEUR – –% .–% % n/a n/a – after . . .
eQ VC MUSD
)
.% .% % n/a n/a After n/a n/a n/a
Total . . .
of which covered by
the catch up accrual . . .
of which accrual for 2022 .
The return estimates that eQ has presented are based on assessments obtained from the target funds’ management companies regarding the funds that are fully invested and where that investment periods of the target funds have ended. Otherwise, the estimates are based on eQ’s own assessment model.
)
The amount of the performance fee that eQ would receive, if the investments of the funds were sold at present market value.
)
Capital covered by the performance fee MEUR 75.
)
Capital covered by the performance fee MEUR 104.
)
First closing.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Information about capital adequacy
Capital adequacy management
eQ Group comprises a fully owned subsidiary of eQ Plc, eQ Asset Management Ltd,
which is an investment firm. eQ Asset Management Ltd, as investment firm, and
eQ Plc as the holding company, apply the new IFD/IFR regime for investments firms
which entered into force on 26 June 2021. This section presents information about
the capital adequacy management and calculations of eQ Group (Pillar III).
Capital adequacy management is a central part of pillar 2 of the capital adequacy
regulations. According to them, investment firms are obliged to consider their
capital adequacy in relation to risks in a more extensive manner than just fulfilling
the calculated capital adequacy requirements set out in the first pillar. In the
capital adequacy management process, the company builds a motivated view of
essential risks and the risk-based capital need required by them, which is not the
same as the capital adequacy requirement of pillar 1 and may deviate from it. The
capital adequacy management process deals with risks that are not taken into
consideration in pillar 1 capital adequacy requirements, including qualitative risks.
The capital adequacy management process also takes a stand on the sucient level
of risk management and internal control regarding each separate risk. The capital
adequacy management process is carried out at least once a year and a capital plan
describing the capital need, the suciency of capital and capital adequacy is drawn
up based on the process.
The goals and practises of risk management at eQ Group have been presented in the
Notes to the Financial Statements. Information about the corporate governance
and remuneration in eQ Group can be found as part of the Annual Report and on eQ’s
website.
Capital adequacy
According to the IFR-regulations, the most restrictive capital requirement for eQ
at the end of the financial period is defined on the basis of fixed overheads. The
minimum capital requirement based on fixed overheads was EUR 4.7 million. At the
end of the period, the Group’s own funds based on capital adequacy calculations
totalled EUR 10.8 million. Detailed information on the Group’s capital adequacy can
be found in the following section.
Capital adequacy, EUR 1,000
IFR
Dec.
eQ Group
CRR
Dec.
eQ Group
Equity
, ,
Common equity tier 1 (CET1) before deductions
, ,
Deductions from CET1
Intangible assets
-, -,
Unconfirmed profit for the period
-, -,
Dividend proposal by the Board*
-, -,
Common equity tier 1 (CET1)
, ,
Additional tier 1 (AT1)
Tier 1 (T1 = CET1 + AT1)
, ,
Tier 2 (T2)
Total capital (TC = T1 + T2)
, ,
Own funds requirement according to the most
restrictive requirement (IFR) , -
Fixed overhead requirement
, -
K-factor requirement
-
Absolute minimum requirement
-
IFR
Dec.
eQ Group
CRR
Dec.
eQ Group
Risk-weighted items total – Total risk
exposure , ,
Risk-weights, total (CRR)
- ,
of which credit risk
- ,
of which market risk - currency risk
- ,
of which fixed overhead risk
- -
Common equity tier (CET1) / own funds
requirement, % .% -
Tier 1 (T1) / own funds requirement, %
.% -
Total capital (TC) / own funds requirement, %
.% -
Common equity tier 1 (CET1) / risk weights, %
.% .%
Tier 1 (T1) / risk weights, %
.% .%
Total capital (TC) / risk weights, %
.% .%
Excess of total capital compared with the
minimum level , ,
Total capital compared with the target level
(incl. a 25% risk buer for the requirement) , ,
*The dividend and equity repayment proposed by the Board exceeding the profit for the period.
A new IFD/IFR regime for investments firms entered into force on 26 June 2021. The comparison
information on capital adequacy has been presented according to the previous regulations (CRD/CRR).
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Composition of regulatory own funds (EU IF CC1), 1,000 EUR
(a) (b)
Amounts
Source based on
reference numbers/
letters of the balance
sheet in the audited
financial statements
Common Equity Tier 1 (CET1) capital: instruments and reserves
1
Own funds
,
2
Tier 1 capital
,
3
Common equity tier 1 capital
,
4
Paid up capital instruments
, Row , CC
6
Retained earnings
, Row , CC
8
Other reserves
, Row , CC
11
(-) Total deductions from common equity tier 1
-,
17
(-) Goodwill
-, Row , CC
18
(-) Other intangible assets
-, Rows , and , CC
25
(-) Other deductions
-,
Own funds: reconciliation of regulatory own funds to balance sheet in the audited financial statements (EU IF CC2)
(a) (b) (c)
Balance sheet as in
audited financial statements Under regulatory scope of consolidation Cross reference to EU IFCC
As at period end, , EUR As at period end, , EUR
Assets - Breakdown by asset classes according to the balance sheet in the audited financial statements
1
Liquid assets
2
Claims on credit institutions
,
3
Financial assets
4
Financial securities
,
5
Private equity and real estate fund investments
,
6
Intangible assets
7
Fair value and brands
, Row , CC
8
Client agreements
Row and , CC
9
Other intangible assets
Row and , CC
10
Tangible assets
11
Right-of-use assets
12
Tangible assets
13
Other assets
,
14
Accruals and prepaid expenditure
15
Income tax receivables
16
Deferred tax assets
17
Total Assets
,
Liabilities - Breakdown by liability classes according to the balance sheet in the audited financial statements
18
Other liabilities
,
19
Accruals and deferred income
,
20
Lease liabilities
,
21
Income tax liabilities
,
22
Total Liabilities
,
Shareholders’ Equity
23
Share capital
, Row , CC
24
Reserve for invested unrestricted equity
, Row , CC
25
Retained earnings
, Row , CC
26
Profit (loss) for the period
,
27
Total Shareholders' equity
,
Audited consolidated balance sheet and regulatory own funds under regulatory scope of consolidation are equal.
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Own funds: main features of own instruments (EU IF CCA)
1 Issuer eQ Plc
2 Unique identifier ISIN: FI0009009617
3 Public or private placement Public
4 Governing law(s) of the instrument Finnish law, EU's IFR regulation 2019/2033, EU's CRR regulation
575/2013
5 Instrument type CET1
6 Amount recognised in regulatory capital (MEUR) 11,4
7 Nominal amount of instrument n/a
8 Issue price n/a
9 Redemption price n/a
10 Accounting classification Shareholders' equity
11 Original date of issuance 1 Nov 2000
12 Perpetual or dated Perpetual
13 Original maturity date No maturity
14 Issuer call subject to prior supervisory approval n/a
15 Optional call date, contingent call dates and redemption
amount
n/a
16 Subsequent call dates, if applicable n/a
Coupons / dividends
17 Fixed or floating dividend/coupon Floating
18 Coupon rate and any related index n/a
19 Existence of a dividend stopper No
20 Fully discretionary, partially discretionary or mandatory (in
terms of timing)
Fully discretionary
21 Fully discretionary, partially discretionary or mandatory (in
terms of amount)
Fully discretionary
22 Existence of step up or other incentive to redeem No
23 Noncumulative or cumulative Non-cumulative
24 Convertible or non-convertible Non-convertible
25 If convertible, conversion trigger(s) n/a
26 If convertible, fully or partially n/a
27 If convertible, conversion rate n/a
28 If convertible, mandatory or optional conversion n/a
29 If convertible, specify instrument type convertible into n/a
30 If convertible, specify issuer of instrument it converts into n/a
31 Write-down features n/a
32 If write-down, write-down trigger(s) n/a
33 If write-down, full or partial n/a
34 If write-down, permanent or temporary n/a
35 If temporary write-down, description of write-up mechanism n/a
36 Non-compliant transitioned features No
37 If yes, specify non-compliant features n/a
38 Link to the full term and conditions of the instrument
(signposting)
See equity note of the consolidated financial statement
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Information to the shareholders
eQ Plc’s share
eQ Plc’s share is traded on Nasdaq Helsinki. At the end of 2021, the company had
had 7,883 shareholders (7,261 shareholders on 31 Dec. 2020). The largest sharehold
-
ers have been presented in the Report by the Board of Directors.
• Symbol: EQV1V
• Sector: Financial Services
• Market capitalisation classification: Mid Cap companies
Why to invest in eQ’s share
eQ Group’s profit growth has been strong and profitability at a good level during the
recent years. eQ aims also in the futuWre in a strong growth, constant cost-e
-
ciency and to pay competitive dividend.
eQ aims at creating value for its shareholders through profitable and growing
business areas. eQ Asset Management has a strong position as a service provider
for the most professional investors in Finland. About 70 per cent of 100 largest
institutional investors in Finland use eQ Asset Management’s services and eQ has
been ranked as No.1 in overall quality (SFR-survey 2021). eQ Asset Management
has an excellent product oering. Demand for alternative investment products such
as real estate and private equity funds in recent years. In the Corporate Finance
-segment advisory services are oered by Advium Corporate Finance, which is one
of the most experienced and highly esteemed advisors in Finland.
2017 2018 2019 2020 2021
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
NUMBER OF SHAREHOLDERS
7,883
5,048
5,451
5,945
7,261
2017 2018 2019 20212020
0
5
10
15
20
25
30
35
SHARE PRICE DEVELOPMENT 2017 TO 2021
EUR
OMXHeQ Plc
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
Calendar in 2022
In connection with the publication of the financial reports, eQ
will arrange a result presentation for investors, analysts and
representatives of the media. The interim and half year reports will
be available on eQ’s website at www.eQ.fi/en.
eQ also has committed personnel. Personnel owns about 40 per cent of eQ Plc and
personnel’s satisfaction is at an excellent level according to the personnel surveys.
Professional and committed employees are the key to good customer services,
investment operations and advisory.
Annual General Meeting
eQ Plc’s Annual General Meeting (AGM) will be held on Wednesday 23 March 2022.
Detailed information and instructions for participation can be found on the company
website at www.eQ.fi/en.
Dividend distribution
The Board of Directors proposes to the 2022 Annual General Meeting that a dividend
of EUR 0.97 per share be paid out. Additionally, the Board proposes to the AGM that
an equity repayment of EUR 0.03 per share be paid out from the reserve of invested
unrestricted equity. Record date of the dividend and equity repayment is 25 March
2022 and payment date 1 April 2022.
Analysts following eQ Plc
The analysts mentioned below follow eQ Plc. eQ is not responsible for their
comments or assessments.
• Inderes Oy, Sauli Vilén, +358 44 025 8908, sauli.vilen@inderes.fi
• Inderes Oy, Matias Arola, + 358 40 935 3632, matias.arola@inderes.fi
• OP Corporate Bank Plc, Antti Saari, +358 10 252 4359, antti.saari@op.fi
Investor relations, contact information
Antti Lyytikäinen, CFO
+358 40 709 2847
antti.lyytikainen@eQ.fi
ANNUAL REPORT
WEEK
ANNUAL GENERAL
MEETING
MARCH
RECORD DATE OF
THE DIVIDEND AND
EQUITY REPAYMENT
MARCH
PAYMENT DATE OF
THE DIVIDEND AND
EQUITY REPAYMENT
APRIL
Q
INTERIM REPORT
APRIL
HALF YEAR
FINANCIAL REPORT
AUGUST
Q
INTERIM REPORT
OCTOBER
eQ in Business Areas Sustainability Report by the Board of Directors Financial Statements Corporate Governance To the Shareholders
