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Taaleri Plc’s Half-Year Financial Report 1 January–30 June 2021: A strong growth of 27% in Taaleri’s continuing earnings in the second quarter – a record result of EUR 114.1 million due to the divestment of the wealth management operations

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TAALERI PLC STOCK EXCHANGE RELEASE 19 AUGUST 2021 AT 8:00 (EEST)

Taaleri Plc’s Half-Year Financial Report 1 January–30 June 2021: A strong growth of 27% in Taaleri’s continuing earnings in the second quarter – a record result of EUR 114.1 million due to the divestment of the wealth management operations

On April 30, 2021, Taaleri completed the sale of its wealth management operations to Aktia and recognized a tax-free gain of EUR 111.1 million on the transaction. Taaleri applies the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations in the classification, presentation, and recognition of sale of the wealth management operations.

The development of the Group's continuing operations is mainly described according to segment reporting, where the costs related to the sale of wealth management operations have been allocated to discontinued operations. Taaleri's business consists of the Private Asset Management and Strategic Investments segments and the Other Group.

April–June 2021, segment reporting, continuing operations

  • The income in accordance with segment reporting grew by 10.4% to EUR 14.3 (13.0) million.

  • Continuing earnings grew by 27.2% to EUR 11.2 (8.8) million. The continuing earnings of the Private Asset Management segment grew by 37.1% to EUR 5.6 (4.1) million, and the continuing earnings of the Strategic Investments segment by 25.4% to EUR 4.6 (3.6) million.

  • Performance fees were EUR 0.0 (0.0) million and investment operations generated EUR 3.2 (4.2) million.

  • The operating profit in accordance with segment reporting was EUR 4.4 (5.9) million, corresponding to 30.9% (45.2) of income.

  • The operating profit of discontinued operations for April was EUR -0.2 (1.7) million, including EUR 1.3 million in costs related to sales.

  • The assets under management in the Private Asset Management segment grew by 27.5% to EUR 2.1 (1.7) billion.

AprilJune 2021, IFRS reporting, continuing operations

  • Income from continuing operations in accordance with IFRS grew by 40.6% to EUR 17.0 (12.1) million, and operating profit was EUR 2.7 (5.7) million. A total of EUR 1.8 million in non-recurring expenses were attributed to the divestment of the wealth management operations.

  • The operating profit of discontinued operations totalled EUR 112.1 (2.2) million, which consists of a profit of EUR 111.1 million from the sale of the wealth management operations and EUR 1.0 million of net operating profit from the wealth management operations in April.

  • The result was EUR 114.1 (7.1) million due to the divestment of the wealth management operations.

  • Earnings per share were EUR 0.08 (0.17) for continuing operations, EUR 3.95 (0.07) for discontinued operations and EUR 4.03 (0.25) for the result of the period.

  • The Extraordinary General Meeting decided on 28 May 2021 to pay an additional distribution of assets of EUR 1.00 per share.

January–June 2021, segment reporting, continuing operations

  • The income in accordance with segment reporting more than doubled to EUR 28.0 (12.2) million mainly due to fair value changes in investment operations.

  • Continuing earnings grew by 16.6% to EUR 20.1 (17.2) million. The continuing earnings of the Private Asset Management segment grew by 13.6% to EUR 9.9 (8.7) million, and the continuing earnings of the Strategic Investments segment by 17.8% to EUR 8.2 (6.9) million.

  • Performance fees were EUR 0.8 (0.0) million and investment operations generated EUR 7.1 (-5.0) million.

  • The operating profit in accordance with segment reporting was EUR 9.5 (-1.7) million, corresponding to 34.1% of income.

  • The operating profit of discontinued operations for January–April was EUR 3.3 (January–June 2020 3.9) million, including EUR 1.6 million in costs related to sales.

January–June 2021, IFRS reporting, continuing operations

  • Income from continuing operations in accordance with IFRS amounted to EUR 29.2 (9.9) million and operating profit to EUR 7.5 (-2.4) million. A total of EUR 2.1 million in non-recurring expenses were attributed to the divestment of the wealth management operations.

  • The operating profit of discontinued operations totalled EUR 116.1 (5.2) million, which consists of a profit of EUR 111.1 million from the sale of the wealth management operations and EUR 5.0 million of net operating profit from the wealth management operations in January–April.

  • Earnings per share were EUR 0.21 (-0.12) for continuing operations, EUR 4.06 (0.17) for discontinued operations and EUR 4.27 (0.04) for the result of the period.

There are differences in the figures in the Group's consolidated income statement and segment reporting due to the application of IFRS 5. In the consolidated income statement (p. 23), intra-group income and expenses between discontinued and continuing operations have been eliminated. In segment reporting, income and expenses between discontinued and continuing operations are presented as transactions outside the Group. The earnings figures in the explanatory section in this half-year financial report represents the Group's continuing operations according to segment reporting, unless otherwise stated. The chosen presentation will improve the comparability of segment reporting in the coming years.

This half-year financial report has been prepared in accordance with IAS 34. The information in the half-year financial report has not been audited. See page 19 for further information of the accounting policies of this half-year financial report.

REVIEW BY CEO ROBIN LINDAHL

The most significant event of the second quarter of 2021 was, of course, the divestment of the wealth management operations, which was completed at the end of April for the sales price of EUR 124 million. We recorded a profit of EUR 111 million from the sale and returned a total of EUR 37 million to our shareholders during the review period.

We implemented our renewed strategy in the second quarter by investing in private equity funds focused on renewable energy and other alternative investments as planned. Through our operations, we towards economically profitable undertakings that have a lasting positive impact on the environment and society.

I am particularly pleased with the excellent 27% increase in second-quarter continuing earnings, which reflects the progress of our strategy. Continuing earnings grew in both Private Asset Management and Garantia Insurance Company Ltd. The income from continuing operations increased to EUR 14.3 million, and operating profit from continuing operations was EUR 4.4 million, representing 31% of income. The Group’s profit for the second quarter totalled EUR 114.1 million, including capital gains from the divestment of the wealth management operations. Assets under our management grew to EUR 2.1 billion.

In the Private Asset Management segment, in line with our strategy, we are strongly focused on business growth and development, which is reflected in the segment’s second quarter results. Operating profit decreased from the corresponding period, mainly due to investments in business growth. The ramp-up of the new and developing operations will affect the segment’s result throughout the strategy period due to the nature of private asset management business.

The largest business of Private Asset Management, i.e. the renewable energy business, successfully completed the last closing of the SolarWind II fund in the second quarter. The fund reached total investment commitments of EUR 354 million, which exceeded the target size of EUR 300 million. In the second quarter, the fund invested in two large-scale domestic wind farms, which are expected to be in production by the end of next year. Projects under construction and development proceeded as planned, and project proposals for the future look promising.

Real estate business experienced major changes in the second quarter. The business expanded to external portfolio management mandates as Aktia outsourced its portfolio management and property management functions to Taaleri in connection with the wealth management operations transaction. At the same time, Aktia’s real estate team was transferred to Taaleri. During the reporting period, the Taaleri real estate team conducted an extensive international tender for the sale of Taaleri Housing Fund VI, which was completed very successfully after the reporting period for the purchase price of approximately EUR 145 million. The real estate team is currently preparing the launch of a new housing fund during the third quarter.

The bioindustry business is preparing to launch its first private equity fund towards the end of the year. We are a pioneer in private asset management business in investments focused on bioindustry, and we believe that the fund will attract a lot of interest. During the review period, our bioindustry team, together with Taaleri Investments Ltd, developed a cooperation model in line with the Group’s strategy. The first concrete result of this is Taaleri’s investment in the Finnish company Tracegrow, which produces organic fertiliser from waste batteries. Thanks to the cooperation model, the first bioindustry private equity fund will be able to finance Tracegrow’s future factory investments.

The infrastructure team transferred to Taaleri in connection with the Aktia transaction launched its first fund during the review period. Taaleri Infra I invests in local and regional infrastructure projects. Our goal is to grow the infrastructure business rapidly in the coming years.

In our Strategic Investments segment, Garantia continued its solid business operations in accordance with its own strategy. Net income from guaranty insurance operations grew 25.4% to EUR 4.5 million. Net income from investment operations was EUR 2.2 million. The combined ratio describing the profit development of insurance operations was impressive at 23.1%.

We will continue to implement our determined strategy during the rest of the year in both the private asset management business and Garantia Insurance Company Ltd. In the second quarter, we also launched the first fund products with Aktia, and we will continue to actively develop Taaleri’s private equity funds and cooperation models during the current quarter. During the second quarter, we entered into financial, personnel and corporate arrangements, the results of which will begin to show in the third quarter.

I would like to thank our employees and partners for the tremendous work they have done, both in the divestment of the wealth management operations and in the launch of the new Taaleri. We also have an excellent starting point for continuing the fruitful work in the second half of the year.

GROUP KEY FIGURES

Group key figures, continuing
operations in segment reporting

4–6/2021

4–6/2020

Change, %

1–6/2021

1–6/2020

Change, %

2020

Earnings key figures

Continuing earnings, MEUR

11.2

8.8

27.2%

20.1

17.2

16.6%

35.9

Income, MEUR

14.3

13.0

10.4%

28.0

12.2

129.9%

40.0

Operating profit, MEUR

4.4

5.9

-24.7%

9.5

-1.7

n/a

9.1

Operating profit, %

30.9%

45.2%

34.1%

neg

22.8%

Profit for the period in consolidated income statement, MEUR

114.1

7.1

>100%

120.9

1.4

>100%

13.1

Return on equity*, %

262.7%

24.3%

138.2%

2.4%

10.1%

Balance sheet key figures

Equity ratio, %

72.3%

46.0%

72.3%

46.0%

49.7%

Group’s capital adequacy ratio, %

349.6%

161.5%

349.6%

161.5%

181.5%

Other key figures

Cost/income ratio excluding investment operations

83.7%

80.4%

85.6%

79.9%

83.6%

Cost/income ratio

65.2%

54.4%

63.8%

113.0%

77.0%

Number of full-time employees in continuing operations, average

108

88

23.7.%

106

86

22.4%

92

Assets under management in Private Asset Management segment, BEUR

2.1

1.6

2.1

1.6

1.7

Guaranty insurance portfolio, MEUR

1,725

1,847

1,725

1,847

1,817

*Annualised

OUTLOOK AND FINANCIAL TARGETS

Taaleri does not publish a short-term outlook. However, the company has set itself targets related to growth, profitability and return on invested capital.

Taaleri’s long-term targets include:

  • Continuing earnings growth at least 15 per cent

  • Operating profit at least 25 per cent of income

  • Return on equity at least 15 per cent.

The company’s goal is to distribute to its shareholders at least 50 per cent of the profit for the financial year as well as the capital that the company does not need for growth investments or to fulfil its targets for solvency.

THE SALE OF WEALTH MANAGEMENT OPERATIONS

Taaleri announced on 10 March 2021 to sell its wealth management operations to Aktia Bank Plc by the agreement signed at the same date. As part of the transaction, the companies agreed to a cooperation that supports the strategies of both companies, in which Aktia will sell Taaleri’s alternative investment products to its customers. In the transaction Taaleri’s wealth management operations were transferred to Aktia, including Taaleri Wealth Management Ltd, Taaleri Fund Management Company Ltd, Taaleri Tax Services Ltd and Evervest Ltd. Approximately 100 employees of Taaleri transferred to Aktia, and five employees of Aktia’s real estate and infrastructure business shifted to Taaleri. Taaleri also acquired business operations for the portfolio management of Aktia’s special investment fund investing in real estate as well as the Aktia Infra I Ky fund. The agreement also stipulates that Taaleri will act as the portfolio manager for Aktia’s special investment funds investing in real estate in the future.

On 30 April 2021 Taaleri Plc completed the sale of its wealth management operations to Aktia. The divested business was sold at its enterprise value (excluding liabilities and cash) of EUR 120 million. Aktia paid EUR 10 million of the purchase price by directing 974,563 new Aktia shares to Taaleri, changes in fair value of which are reported in segment reporting under Strategic Investments segment. In addition, Taaleri received the net cash of the divested operations, EUR 3.7 million, and dividends paid by Taaleri Wealth Management Ltd to Taaleri Plc during the beginning of the year, totaling EUR 7.2 million. Taaleri recognized a gain of EUR 111.1 million on the sale in the second quarter of 2021. The transaction involved in January-June non-recurring expenses of EUR 2.1 million, presented in accordance with IFRS as part of continuing operations in consolidated income statement. Liabilities related to the transaction are described in more detail in the note 1 Discontinued operations and the sale of the subsidiary.

The sale of the wealth management business will have significant effects on the strategy, regulation, administration and earnings development of the entire Taaleri Group. Taaleri renewed its strategy in the spring and will focus on private equity funds focusing on renewable energy and other alternative investments. Taaleri's regulatory framework will change significantly with the sale of the investment services business.

WEBCAST PRESENTATION FOR ANALYSTS AND MEDIA

A live webcast for analysts and the media will be held on 19 August 2021 at 11 a.m. (EEST). The event is in Finnish. The webcast can be followed online at https://taaleri.videosync.fi/2021-08-19-taaleriosavuosiraporttiq2. The event will be recorded and will also be available later on Taaleri's investor pages at www.taaleri.com/investors/reports-and-presentations.

Helsinki, 19 August 2021
Taaleri Plc
Board of Directors

For further information, please contact:
CEO Robin Lindahl, +358 50 595 9616, robin.lindahl@taaleri.com
CFO Minna Smedsten, +358 40 700 1738, minna.smedsten@taaleri.com
Head of Communications and IR Siri Markula, +358 40 743 2177, siri.markula@taaleri.com

Distribution:
Nasdaq Helsinki
Key media
www.taaleri.com

Taaleri in brief

Taaleri is a Nordic investment and asset manager with an emphasis on renewable energy and other alternative investments. We channel capital towards economically profitable undertakings that have a lasting positive impact on the environment and society. We are a signatory of the UN Principles for Responsible Investment (UNPRI) since 2010. Taaleri’s vision is to be a Nordic forerunner in alternative investments focusing on sustainability.

Taaleri has two business segments: Private Asset Management and Strategic Investments. Private Asset Management consists of renewable energy, real estate, bioindustry and infrastructure businesses. The Strategic Investments segment includes Garantia Insurance Company Ltd.

Taaleri has EUR 2.1 bn of assets under management in its private equity funds and co-investments. The company has approximately 120 employees. Taaleri Plc is listed on Nasdaq Helsinki.

www.taaleri.com

Siri Markula, Head of Communications and IR, tel. +358 40 743 2177, siri.markula@taaleri.com


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