Taaleri Oyj : Interim Statement Q1 2021 (pdf)

TAALERI PLC

Q1 INTERIM STATEMENT

1 JANUARY-31 MARCH 2021

TAALERI PLC'S INTERIM STATEMENT 1 JANUARY-31 MARCH 2021

Taaleri sold its wealth management operations and revised its strategy - a strong result in the first quarter

On 10 March 2021, Taaleri announced the sale of the wealth management operations to Aktia. 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.

January-March 2021, IFRS reporting, continuing operations

• Income from continuing operations in accordance with IFRS amounted to EUR 12.1 (-2.2) million and operating profit to EUR 4.7 (-8.1) million.
• Earnings per share were EUR 0.13 (-0.30) for continuing operations, EUR 0.11 (0.09) for discontinued operations and EUR 0.25 (-0.20) for income for the period.
• After the review period, Taaleri called an extraordinary general meeting to make resolutions on the distribution of dividend and on the equity repayment. The Board of Directors proposes a distribution of funds of EUR 1.00 per share.

January-March 2021, segment reporting, continuing operations

• Segment reporting income was EUR 13.7 (-0.8) million.
• Continuing earnings grew by 5.5 per cent to EUR 8.9 (8.4) million. The continuing earnings of the Private Asset Management segment amounted to EUR 4.2 (4.6) million. The continuing earnings of the Strategic Investments segment, i.e. Garantia, were EUR 3.6 (3.3) million.
• Performance fees were EUR 0.8 (0.0) million and investment operations generated EUR 4.0 (-9.2) million.
• Segment reporting operating profit was EUR 5.1 (-7.5) million, corresponding to 37.4 (negative in the comparison period) per cent of income. Furthermore, the operating profit of discontinued operations was EUR 3.5 (2.2) million.
• The assets under management in the Private Asset Management segment amounted to EUR 1.7 (1.7) billion.

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. 20), 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 interim statement 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.

The IAS 34 standard was not observed in the preparation of this interim statement. The information in the interim statement has not been audited. See page 16 for further information of the accounting policies of this interim statement.

Group key figures

						Long
Group key figures, continuing					term
operations in segment reporting	1-3/2021	1-3/2020	Change, %	2020	target
	Earnings key figures
	Continuing earnings, MEUR	8.9	8.4	5.5%	35.9
	Growth in continuing earnings, %	5.5%	n/a	n/a	n/a	> 15.0
	Income, MEUR	13.7	-0.8	n/a	40.0
	Operating profit, MEUR	5.1	-7.5	n/a	9.1
	Operating profit, %	37.4%	n/a		22.8%	> 25.0
	Profit for the period in consolidated income
	statement, MEUR	6.8	-5.6	n/a	13.1	> 15.0
	Return on equity*, %	20.7%	-18.9%		10.1%
Balance sheet key figures
	Equity ratio, %	48.1%	43.3%		49.7%
	Group's capital adequacy ratio, %	163.7%	183.4%		216.2%
Other key figures
	Cost/income ratio excluding investment	75.8%	74.8%		78.1%
	operations
	Cost/income ratio	62.9%	182.1%		74.6%
	Number of full-time employees in continuing	102	88		92
	operations, average
	Assets under management in Private Asset	1.7	1.5		1.7
	Management segment, BEUR
	Assets under management in Group, BEUR	8.0	6.5		7.6
	Guaranty insurance portfolio, MEUR	1,736	1,762		1,817
*Annualised
Interim Statement Q1 2021	2

REVIEW BY CEO ROBIN LINDAHL

The first quarter of 2021 was very significant for Taaleri and for the future of the company. We announced that we were selling our wealth management operations to Aktia Bank Plc, presented our revised strategy and held the first Capital Markets Day in the history of the company, which turned out to be a delightfully popular event. In future, our growth will be driven by private equity funds focusing on renewable energy and other alternative investments. Our vision is to be a Nordic forerunner in alternative investments focusing on sustainability.

The transaction of the wealth management operations was completed as planned after the review period on 30 April for the purchase price of EUR 120 million. As a result of the transaction, Taaleri will recognise a capital gain of approximately EUR 110 million. Following the execution of the transaction, we invited our shareholders to an extraordinary general meeting to decide on the distribution of additional dividend to our shareholders. Taaleri's Board of Directors' proposal on the distribution of funds is EUR 1.00 per share. According to our updated dividend policy, we will distribute to our shareholders at least 50 per cent of the profit for the financial year and the capital that the company does not need for growth investments or to fulfil its targets for solvency.

We can be very satisfied with Taaleri's first quarter amid the major changes underway. The Group's continuing earnings grew to EUR 8.9 (8.4) million and income increased to EUR

13.7 (-0.8) million. The operating profit of continuing operations was EUR 5.1 (-7.5) million, corresponding to 37 per cent of income.

The business operations of the Private Asset Management segment's largest business Renewable energy developed steadily during the review period and fund projects progressed on schedule. The continuing earnings were lower than in the comparison period due to the closing of the SolarWind II fund during the comparison period. The final closing of the SolarWind II fund, which will take place during the second quarter, was prepared during the review period.

During the first quarter, our real estate business focused on growing our investment period funds and preparing the divestment of funds in the exit phase. We were also preparing for the Aktia transaction, as a result of which the assets managed by the real estate business grew as we expanded our operations to external portfolio management mandates.

In our new bioindustry business, we focused on starting operations, preparing the first fund and identifying future projects. Our goal is to launch the fund in the second half of the year. Furthermore, the infrastructure business transferred to Taaleri as a part of the Aktia transaction is preparing its first fund, which is planned to be launched already during the second quarter.

Garantia Insurance Company Ltd, which forms our Strategic Investments segment, continued its solid business operations in accordance with its own strategy. Investment returns that had been hard-hit by the pandemic during the comparison period increased significantly, but the net income from guaranty insurance operations also grew. The latter was affected by the opening of a new distribution channel in October 2020, which significantly increased the residential mortgage guaranty portfolio and, as a result, the earned premiums. The combined ratio describing the financial performance of insurance operations was at a very good level at 38.6 per cent.

The first quarter of the wealth management operations, included in discontinued operations, was strong. The continuing earnings from wealth management grew by 6.3 per cent to EUR 8.0 (7.6) million, and the income grew by

29.8 per cent to EUR 11.3 (8.7) million. The operating profit increased by 58.0 per cent to EUR 3.5 (2.2) million, including the direct expenses pertaining to the sale of the wealth management operations.

I am very excited to work together with all our employees, investors, partners and shareholders to steer Taaleri ahead in our new phase of development. At the same time, we are upholding the values and principles that are close to our hearts. Through our operations, we channel capital towards economically profitable undertakings that have a lasting positive impact on the environment and society at large. We know from experience that sustainability and profitability thrive side by side. We believe that they will become increasingly linked in the coming years.

Interim Statement Q1 2021

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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.

OPERATING ENVIRONMENT AND MARKET PROSPECTS

The operating environment of Taaleri's continuing operations developed positively during the first quarter of 2021. The global confidence in the recovery of economy following the COVID-19 pandemic improved as vaccinations progressed, although the epidemiological situation continued to be difficult in several European countries and strict restrictions decelerated the opening of the economy.

The renewable energy operating environment remained largely unchanged during the review period. The price of emission allowances reached record level, which will help steer the market towards renewable energy. We expect the solar and wind power market in particular to continue to grow.

In the real estate market, activity has continued to increase during the beginning of the year, and the operating environment is returning to normal as the restrictions caused by the COVID-19 pandemic are being lifted. Investor interest has been the strongest in the investment categories where the impacts of the pandemic have been the most moderate, and we expect to continue to see strong demand of rental homes, public properties and logistics facilities.

Bioindustry is attracting a lot of market interest, and we believe that this interest will only increase as awareness of the industry and its potential grows.

The operating environment and market situation of Garantia Insurance Company Ltd remained steady at the beginning of the year, and the housing market situation further improved. The credit standing of both corporate customers and consumers has remained good despite the COVID-19 pandemic and no significant changes have occurred in the risk position of our guaranty insurance portfolio. The positive development of the housing market is expected to continue.

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. Taaleri's wealth management operations were transfer 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.

After the review period, 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 pays EUR 10 million of the purchase price by directing 974,563 new Aktia shares to Taaleri. The subscription price per share for the new shares is EUR 10.2610. In addition, Taaleri received the net cash of the divested operations, approximately EUR 4 million, and dividends paid by Taaleri Wealth Management Ltd to Taaleri Plc during the beginning of the year, totaling EUR 7.2 million. Taaleri will recognise a capital gain of approximately EUR 110 million on the sale in the second quarter of 2021.

Interim Statement Q1 2021

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FINANCIAL RESULT

Income and operating profit

Group key figures, continuing
operations in segment reporting, EUR million	1-3/2021	1-3/2020	Change, %	2020
Income	13.7	-0.8	n/a		40.0
Private Asset Management	5.2	5.5	-5.1%	21.9
Strategic Investments (Garantia)	7.0	-4.1	n/a	17.2
Other	1.5	-2.1	n/a	0.9
Operating profit	5.1	-7.5	n/a	9.1
Private Asset Management	-0.1	1.4	-106.2%	3.7
Strategic Investments (Garantia)	5.4	-5.7	n/a	10.2
Other	-0.2	-3.2	93.6%	-4.8

The Group's share of the result of associated companies is taken into account in the segment income. Segment information is presented on page 24.

January-March 2021

Income from the Group's continuing operations in the review period totalled EUR 13.7 (-0.8) million. Continuing earnings grew by 5.5 per cent to EUR 8.9 (8.4) million. Performance fees of continuing operations were EUR 0.8 (0.0) million and earnings from investment operations was EUR 4.0 (-9.2) million. The Group's continuing investment operations without Garantia generated EUR 0.5 (-1.8) million. The net income from insurance operations totaled EUR 7.0 (-4.1) million, consisting of net income from guaranty insurance operations of EUR 3.6 (3.3) million and net income from investment operations of EUR 3.4 (-7.4) million. The return on investment of insurance operations at fair value was 2.1 (-8.8) per cent.

The operating profit of the Group's continuing operations was EUR 5.1 (-7.5) million, corresponding to 37.4 (negative in the comparison period) per cent of the income of the continuing operations. The operating expenses of the Group's continuing operations were EUR 8.5 (6.7) million of which personnel costs amounted to EUR 4.1 (2.5) million.

In the consolidated income statement, which applies the IFRS 5 standard, the income from continuing operations totalled EUR

12.1 (-2.2) million. In the consolidated income statement, the income of continuing operations was EUR 3.7 (-8.3) million, the income of discontinued operations was EUR 3.2 (2.7) million, the profit for the period was EUR 6.8 (-5.7) million and the Group's comprehensive income was EUR 6.6 (-9.7) million.

Balance sheet, investments, and financing

At the end of March, Taaleri Group's balance sheet total was EUR 271.8 (268.0) million. The Group's cash and cash equivalents totalled EUR 26.7 (25.8) million, excluding cash and cash equivalents of assets classified as held for sale, and investments EUR 212.0 (194.8) million, corresponding to 78.0 (72.7) per cent of the Group's balance sheet total.

The Group's interest-bearing liabilities amounted to EUR 62.2 (64.7) million and consisted of EUR 35.0 (34.9) million in Taaleri Plc bond programmes, EUR 12.4 (14.9) million in liabilities to credit institutions and EUR 14.8 (14.8) million in Taaleri Plc Tier 2 bond. Liabilities totalled EUR 141.0 (134.8) million and equity stood at 130.8 (133.2) million.

The equity ratio of Taaleri Group remained strong at 48.1 (49.7) per cent.

BUSINESS SEGMENTS, CONTINUING OPERATIONS

Taaleri's continuing operations include two reported segments: Private Asset Management, which is divided to Renewable energy and Other private asset management, and Strategic Investments, which includes Garantia. In group Other is presented Group's non-strategic investments, Taaleri Kapitaali and Group operations not included in the business segments.

Private Asset Management

In reporting, the Private Asset Management segment is divided into Renewable energy and Other private asset management. Renewable energy includes Taaleri Energia, which develops and invests in industrial-scale wind and solar power projects. It also manages investments throughout their lifecycle. The other areas within Private Asset Management include Taaleri's real estate, bioindustry and infrastructure businesses. Group investments that support the core business and the development of the businesses reported under the Private Asset Management segment are reported under the segment.

Interim statement Q1 2021

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