United Bankers Plc
16 February 2024 at 9:00 EET
United Bankers Plc's Financial Statements Bulletin 2023: Record profit supported by new strategic funds
This stock exchange release is a summary of the United Bankers' Financial Statements Bulletin 1 January - 31 December 2023. The complete Financial Statements Bulletin with tables is attached to this release and is also available on the company's website at www.unitedbankers.fi.
The figures in this release are unaudited.
January-December 2023 in brief
- The Group's revenue (income from operations) in the financial period amounted to EUR 52.1 million (EUR 48.6 million in 1-12/2022).
- The Group's adjusted EBITDA amounted to EUR 19.1 million (EUR 18.5 million in 1-12/2022) and adjusted operating profit to EUR 16.9 million (EUR 16.6 million in 1-12/2022).
- The profit for the financial period amounted to EUR 13.8 million (EUR 12.9 million in 1-12/2022).
- Earnings per share were EUR 1.24 (EUR 1.19 in 1-12/2022).
- Assets under management at the end of the financial period amounted to EUR 4.6 billion (EUR 4.4 billion as at 31 December 2022). The growth in assets under management was driven in particular by the new funds launched during the year. Two of these, the UB Forest Industry Green Growth Fund I LP, a private equity fund investing in innovations in the forest and bio-industry, and the UB Renewable Energy Fund (AIF), investing in renewable energy projects and power plants, represent new pillars of the Group's fund business.
- Net fee income from wealth management in the financial period amounted to EUR 43.6 million (EUR 41.4 million in 1-12/2022). Management fees from the funds continued to grow steadily.
- Net fee income from capital markets services amounted to EUR 0.7 million (EUR 1.7 million in 1-12/2022). The Group's capital markets business suffered from a very low level of market activity.
- The cost-to-income ratio at the end of the financial period deteriorated to 0.67 (0.65).
- The Board of Directors proposes a distribution of funds of EUR 1.00 per share (a dividend of EUR 0.50 and an equity repayment of EUR 0.50) be payable for the financial period. It is proposed to distribute the funds in two instalments.
- Guidance for 2024: The company estimates its adjusted operating profit to increase from 2023 levels.
July-December 2023 in brief
- The Group's revenue (income from operations) in the latter half of the year amounted to EUR 27.4 million (EUR 25.2 million in 7-12/2022).
- The Group's adjusted EBITDA in the latter half of the year amounted to EUR 11.1 million (EUR 10.1 million in 7-12/2022) and adjusted operating profit to EUR 9.9 million (EUR 9.1 million in 7-12/2022).
- Earnings per share were EUR 0.74 (EUR 0.65 in 7-12/2022).
Consolidated key figures (The figures are presented in more detail in the appendix of the financial statements bulletin)
7-12/2023 | 7-12/2022 | change %* | 1-12/2023 | 1-12/2022 | change %* | |
Key Income Statement Figures | ||||||
Revenue, MEUR | 27.4 | 25.2 | 8.8 | 52.1 | 48.6 | 7.4 |
Adjusted EBITDA, MEUR | 11.1 | 10.1 | 9.8 | 19.1 | 18.5 | 3.5 |
Adjusted operating profit, MEUR | 9.9 | 9.1 | 8.7 | 16.9 | 16.6 | 2.2 |
Adjusted operating profit, % of revenue | 36.2 | 36.2 | -0.1 | 32.5 | 34.1 | -4.9 |
Operating profit, MEUR | 10.0 | 9.1 | 9.9 | 17.0 | 16.5 | 2.8 |
Profit for the period, MEUR | 8.4 | 7.1 | 18.1 | 13.8 | 12.9 | 7.5 |
Profitability | ||||||
Return on Equity (ROE), % | 29.2 | 28.9 | 0.9 | 27.8 | 27.9 | -0.3 |
Return on Assets (ROA), % | 19.1 | 18.9 | 0.6 | 18.7 | 17.2 | 9.0 |
Key Balance Sheet Figures | ||||||
Equity ratio, % | 67.7 | 67.1 | ||||
Capital adequacy ratio, % | 24.1 | 24.0 | ||||
Key Figures Per Share | ||||||
Earnings per share, EUR | 0.74 | 0.65 | 12.5 | 1.24 | 1.19 | 4.1 |
Earnings per share, EUR (diluted) | 0.73 | 0.65 | 13.9 | 1.23 | 1.16 | 6.0 |
Equity per share, EUR | 4.75 | 4.49 | ||||
Distribution of funds per share | 1.00** | 0.90*** | ||||
Other key figures | ||||||
Cost-to-income ratio | 0.63 | 0.63 | -0.5 | 0.67 | 0.65 | 2.3 |
Assets under management at the end of the period, bn EUR | 4.6 | 4.4 | 3.9 | |||
Number of clients at the end of the period | 14,600 | 14,400 | ||||
Personnel at the end of the period (FTE)**** | 160 | 148 |
* The percentage change has been calculated using the actual figures, the figures shown in the table have been rounded
** The Board of Directors' proposal concerning distribution of funds for the 2023 financial period: a dividend of EUR 0.50 and an equity repayment of EUR 0.50.
*** Dividend for the 2022 financial period confirmed by the Annual General Meeting of Shareholders on 22 March 2023. A dividend of EUR 0.75 and an equity repayment of EUR 0.15.
****The number of personnel stated has been converted to full-time equivalent
As its key financial figures, United Bankers presents adjusted EBITDA and adjusted operating profit, which the company uses to illustrate the profitability and result of the Group's business operations as a going concern. Adjusted key figures are used to improve comparability between reporting periods. The adjusted key figures are adjusted for the impacts of corporate transactions influencing comparability, as well as certain material non-operating items. More information on the calculation of the key figures is available in the tables section of the financial statements bulletin.
Group revenue and profit performance 2023
(comparison figures as at 31 December 2022)
In 2023, United Bankers' revenue and result reached another record high, despite the continuing challenges in the market environment, this time in the form of sharply rising interest rates, in particular. During the financial period, the revenue of the United Bankers Group (income from operations) increased to EUR 52.1 million (EUR 48.6 million), which was an increase of 7.4 per cent on the comparison period. The Group's adjusted EBITDA for the financial period increased by 3.5 per cent to EUR 19.1 million (EUR 18.5 million).
The positive revenue and profit performance was driven, above all, by the continued steady increase in fund management fees. However, the Group's relative profitability deteriorated slightly during the period, and the operating profit margin settled at 32.5 per cent (34.1 per cent). Profitability was burdened by investments aimed at building growth, such as new funds and promoting international sales. However, the growth targeted with these investments did not reach its full potential in 2023. The Group's adjusted operating profit increased by 2.2 per cent from the previous year to EUR 16.9 million (EUR 16.6 million) and operating profit by 2.8 per cent to EUR 17.0 million (EUR 16.5 million). Earnings per share amounted to EUR 1.24 (EUR 1.19). Return on equity decreased slightly but remained at the excellent level of 27.8 per cent (27.9 per cent).
United Bankers' wealth management segment continued to perform well during the financial period. The segment's revenue increased to EUR 50.6 million and EBITDA to EUR 20.0 million. A particularly positive development was that the share of recurring fee income of total fee income continued to rise. Fund management fees continued to grow steadily, rising by 12 per cent compared to the reference period. In addition to the growth in fund capital, the increase in management fees was also driven by the fact that the capital was increasingly focused on more profitable funds. A significant share of the management fees and their increase during the financial year was generated by United Bankers' forest funds and the new UB Forest Industry Green Growth private equity fund. Total management fees generated by real estate funds also increased slightly, despite the challenging market conditions.
By contrast, the amount of performance fees from funds decreased slightly from the comparison period. The decrease was mainly due to the weak performance of real estate funds, which did not generate any performance fees during the financial year. In previous financial years, real estate funds have generated a significant share of the performance fees. As a whole, the funds' performance fees remained at a relatively good level, however, as they were supported by the strong performance fees generated by the forest funds and the new UB Renewable Energy Fund.
Overall, fund net fee income represented 86 per cent of net fee income in the wealth management segment and almost 85 per cent of all the net fee income in the Group. Income from asset management, which includes discretionary asset management, was close to the previous year's level. Sales of structured investment products grew and the fee income generated by these products rose significantly during the financial period.
The exceptionally low level of activity on the market in terms of mergers and acquisitions continued to weigh on the performance of the Group's capital markets services in 2023. The segment's revenue decreased from the comparison period to EUR 0.7 million and EBITDA remained at EUR -0.3 million.
Positive returns on the Group's own investments helped to increase the result for the financial period. In addition, the general rise in interest rates improved the interest margin on client assets, which also had a positive impact on the performance of the wealth management segment.
The Group's expenses increased from the previous financial period, but the pace of the increase in expenses levelled off. The work involved in setting up new funds and promoting international sales contributed to costs in 2023. General cost inflation was also reflected in costs. Administrative costs including personnel and other administrative costs increased by 7.6 per cent to EUR 26.0 million (EUR 24.2 million). Total personnel expenses increased by 8.5 per cent to EUR 19.0 million (EUR 17.5 million) and other administrative expenses by 5.3 per cent to EUR 7.0 million (EUR 6.6 million). Depreciation, amortisation and impairment increased to EUR 2.2 million (EUR 1.9 million) as a result of higher IT investments and the refurbishment of the premises at United Bankers' headquarters in Helsinki. Overall, the Group's cost-to-income ratio deteriorated from the previous year to 0.67 (0.65).
The number of personnel in full-time equivalents increased by 8 per cent on the previous year and was 160 at the end of the year (148 employees). Of these, a total of 10 were temporary employees (6 employees). Recruitment of new employees was carried out to support the portfolio management and support functions of the new funds, to improve the customer experience and to support IT and systems development. The rise in personnel expenses is explained not only by the increase in the number of employees, but also by the salary increases implemented in the Group. As a result of the general trend in inflation, employees' salaries were increased across the board in the first half of 2023. In addition, a one-off 'inflation allowance' of EUR 1,000 was paid to all employees in January to help them cope with soaring costs in their daily life.
In the summer, United Bankers launched a project to reform and simplify the Group structure. The aim of the arrangement was to reduce the number of companies in the United Bankers Group and to consolidate operations requiring authorisations into two subsidiaries. The intra-group arrangements were implemented by mergers and a demerger of subsidiaries wholly owned by United Bankers, and they became effective at the turn of the year. For more information on the arrangement, see the section on Changes in Group structure. In connection with the arrangement, the Group's insurance business was centralised in Finland and UB Life's Luxembourg branch was closed. United Bankers also reduced the number of its offices.
The Group continued to develop its IT systems and digital services during the year. The aim is to complete the first phase of the largest system reform in the Group's history during the first half of 2024. The reform will significantly simplify the system infrastructure, enabling, among other things, more efficient operations and more agile development of digital services.
CEO's review
Patrick Anderson
The year 2023 was one of escalating and expanding wars around the world. Unfortunately, it seems that the conflicts and the spread of disinformation are here also to stay. Transitioning from one crisis to another has made it increasingly difficult to predict the operating environment every year.
It was a mixed year for the markets. The equity, fixed income and timberland markets performed very well, while the Finnish real estate and equity markets were much more subdued.
For the United Bankers Group, 2023 was the strongest year in terms of revenue and operating profit in the company's 37-year history and the fifth consecutive record-breaking year. Revenue increased by 7.4 per cent to EUR 52.1 million. Our adjusted operating profit increased by 2.2 per cent to EUR 16.9 million and profit for the financial period rose by 7.5 per cent to EUR 13.8 million. Net subscriptions to our funds were EUR 187 million in the positive and management fees increased by more than 12 per cent compared to the previous year. Our cost-to-income ratio deteriorated slightly to 0.67 (0.65 in 2022).
While it was a strong year in terms of the figures, in both absolute terms and relative to most of our competitors, it was also a mixed year in terms of business. Our forest funds, our energy funds and our wealth management business delivered excellent returns to our clients. The forest, energy and private equity funds also attracted the majority of our net subscriptions in 2023, totalling around EUR 183 million. Our private equity fund UB Forest Industry Green Growth Fund I and UB Renewable Energy Fund (AIF), which invests in renewable energy development projects, will provide new momentum for our future growth, as their combined capital already reached around EUR 150 million in their launch year. Our forest fund family, which is so important to us, saw its capital grow by almost 20 per cent during the year. Activity around structured products was also much greater for the second year in a row, thanks to moderate market volatility and higher interest rates than in previous years.
On the other hand, the difficult year slowed down our total sales in general and the returns of our real estate funds to our clients were slightly negative in this period. The capital markets services segment did not live up to the previous year and also fell short of our targets due to the very quiet transaction market. Moreover, we were not spared from the effects of general inflationary pressures on our costs in the financial year just ended.
Despite our slower-than-normal growth, we were able to deliver on our strategy with excellent performance. In a nutshell, this meant simplifying our business and focusing on the launch of new core funds. During the year, we simplified our group structure through mergers and by consolidating authorisations, we decreased the number of our offices, we actively continued to wind down the business operations of UB Finance and improved both our internal processes and systems. At the time of writing, the biggest internal system reform in the company's history is now in its final stages. The work to improve efficiency will never be over, but in 2023 we progressed at a faster pace than usual in this area.
To accelerate our growth, we launched three new funds that operate at the core of our strategy. The new funds invest in forests, physical infrastructure (energy) and forest-related private equity. I firmly believe that physical infrastructure and private equity will grow alongside our existing pillars as new growth areas - complementing the existing areas and strengthening them with synergies. Through our fund selection, we want to play a stronger role in addressing global environmental challenges while delivering excellent risk-adjusted returns to our clients. All our core funds are working on global solutions, and through them we can make a difference, which is significantly greater than our size, in the mitigation of climate change, for example. Megatrends provide us with tailwinds.
When you consider the objective data on our performance last year, it is clear that we are on the right track. In all the surveys we commissioned, the ratings and reviews of our clients, both institutional and private investors, clearly improved on the earlier ones. Our strong commitment to sustainability has made us one of the leading financial institutions in Finland, and this is now also the case in the eyes of our most demanding clients. In 2023, we drafted our climate roadmap, which centres around short- and long-term climate targets in accordance with the Science Based Targets initiative (SBTi). We are among the first in the Finnish financial sector to commit to setting these targets.
According to the Reputation&Trust survey, our company's reputation among investors clearly strengthened, even though the reputation of listed companies was otherwise generally on the decline. We have met hundreds of new institutional clients across Central and Northern Europe and have received very encouraging feedback from them. Part of the feedback came in the form of subscriptions: a total net amount of around EUR 187 million in new fund capitals, mainly to funds at the core of our strategy. The number of our shareholders also increased by more than 30 per cent during the year and our share is the only one on the Helsinki Stock Exchange that has delivered a positive total return to its shareholders for six consecutive calendar years. So, on many fronts, we are moving in the right direction - gaining market share and building on an increasingly predictable business.
As the days get longer and spring approaches, I would like to thank our fantastic clients for their strong trust in us during this unusual year and our incredible UB team for their amazing team spirit yet again in the demanding operating environment. I would also like to thank our partners for their help, support and strong expertise. Together, we create first-class customer experiences for our clients. The work done in 2023 and the record profit provide an excellent basis for us to continue creating value for our clients and other stakeholders. Our fund family is now exceptionally strong and we are now more focused on fundraising than in previous years. Our goal is that an increasing share of this will start to come from international investors.
Financial guidance for 2024
The company estimates its adjusted operating profit to increase from 2023 levels.
Board of Directors' proposal concerning distribution of funds
United Bankers Plc's result for the financial period 1 January - 31 December 2024 amounted to EUR 8,565,224.08. The company's distributable assets as at 31 December 2023 were EUR 32.0 million, of which the appropriations of retained earnings are EUR 8.6 million and the distributable funds in the reserve of invested unrestricted equity fund are EUR 23.4 million.
The Board of Directors proposes to the Annual General Meeting of Shareholders that based on the balance sheet adopted for the financial period ended on 31 December 2023, a total dividend of EUR 0.50 per share be paid and an equity repayment of EUR 0.50 per share be paid from the reserve of invested unrestricted equity fund. The total dividend distribution in accordance with the proposal, calculated at the number of shares outstanding at the date of the financial statements, amounts to EUR 5,377,163.50 and the total equity repayment, calculated at the number of shares outstanding at the date of the financial statements, amounts to EUR 5,377,163.50. No dividend or equity repayment shall be payable on treasury shares held by the company.
The Board of Directors proposes that the distribution of funds would be paid in two instalments so that the dividend would be paid in April and the equity repayment in October. The Board of Directors has further resolved that distribution of funds shall continue to be paid in two instalments. The dividend shall be paid to a shareholder who is registered in the company's shareholders' register maintained by Euroclear Finland Ltd on the record date for dividend payment, 26 March 2024. The dividend is proposed to be paid out on 4 April 2024. The equity repayment shall be paid to a shareholder who is registered in the company's shareholders' register maintained by Euroclear Finland Ltd on the record date for equity repayment, 27 September 2024. The equity repayment is proposed to be paid out on 4 October 2024. The Board of Directors proposes it be authorised, if necessary, to decide on a new equity repayment record date and payment date, if the rules of Euroclear Finland Ltd or the regulations concerning the Finnish book-entry system change or otherwise require it.
No material changes have taken place in the company's financial position since the end of the financial year. The proposed dividend distribution and equity repayment do not, according to the Board of Directors, endanger the solvency of the company.
Publication of Financial Statements and the Annual General Meeting 2024
Financial Statements, Operating and Financial Review, Remuneration Report and the Corporate Governance Statement of the United Bankers Group will be published in connection with United Bankers' Annual Report during week 9.
United Bankers Plc's Annual General Meeting will be held on Friday 22 March 2024 at 13.00 in Helsinki. The company delivers a notice on the website www.unitedbankers.fi no later than three weeks prior to the Annual General Meeting. United Bankers Plc's Half-Year Financial Report for the period of 1 January through 30 June 2024 will be published on or about 23 August 2024.
Press conference
United Bankers will present the result to analysts and press at the company headquarters, Aleksanterinkatu 21 A, 4th floor, 00100 Helsinki today, on Friday 16 February 2024 at 11.30 am in Finnish. It is also possible to participate the press conference virtually. To participate in the event, please sign up in advance to ir@unitedbankers.fi.
For further information, please contact:
Patrick Anderson, CEO, United Bankers Plc
Email: patrick.anderson@unitedbankers.fi
Telephone: +358 400 244 544, +358 9 25 380 236
Katri Nieminen, CFO, United Bankers Plc
Email: katri.nieminen@unitedbankers.fi
Telephone: +358 50 564 4787, +358 9 25 380 349
Investor Relations: ir@unitedbankers.fi
United Bankers in brief:
United Bankers Plc is a Finnish expert on wealth management and investment markets, established in 1986. United Bankers Group's business segments include wealth management and capital markets services. In asset management, the Group specialises in real asset investments. United Bankers Plc is majority-owned by its key personnel and the Group employs 160 employees (FTE) and 31 agents (31 December 2023). In 2023, the United Bankers Group's revenue totalled EUR 52.1 million and its adjusted operating profit amounted to EUR 16.9 million. The Group's assets under management amount to approximately EUR 4.6 billion (31 December 2023). United Bankers Plc's shares are listed on Nasdaq Helsinki Ltd. The Group companies are subject to the Finnish Financial Supervisory Authority's supervision. For further information on United Bankers Group, please visit www.unitedbankers.fi.
DISTRIBUTION:
Nasdaq Helsinki
Main media
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