Audited results of Invalda INVL for 2017
“The year was also successful for our clients, whose number and investments grew in light of the asset management results that were achieved. We’re happy with the expansion of Invalda INVL’s strategic asset management business. We think the focused efforts that are currently underway will bear fruit within a few years and be reflected in Invalda INVL’s share price,” said Darius Šulnis, the president of Invalda INVL.
He was positive about the profit earned in 2017, most of which was due to investment activity – gains on the shares of Šiaulių Bankas and the sale of Litagra’s trading business. “The latter transaction allowed us to realize part of the value that’s been created over time and accumulate resources for new investments,” Darius Šulnis said.
Asset management business
During 2017 the Invalda INVL group earned EUR 34.6 million for its clients. At year-end, client assets entrusted to the group’s asset management companies for management totalled EUR 611.5 million, or 20.2% more than at the end of 2016 (EUR 508.7 million). The number of clients increased 6.8% during the year to 190 600.
The assets of people saving for old age grew the fastest, with those of 2nd pillar pension fund clients in Lithuania and Latvia rising 27% in 2017 to EUR 374 million. Ever more people are also coming to understand the benefits of long-term saving: 3rd pillar pension fund assets in the two countries increased 33.5% to EUR 22.3 million.
The assets of mutual funds, which are attracting a majority of their new clients in Nordic markets, rose 22.2% during 2017 to EUR 87.4 million, while those of managed client portfolios in Lithuania and Latvia grew 10.3% to EUR 43.9 million.
Alternative assets under management, meanwhile, decreased 2.8% during the year to EUR 83.9 million.
The Lithuanian INVL Asset Management introduced several new products for informed investors in 2017 including two mutual funds: the INVL Baltic Forests Fund I and the INVL Partner Energy and Infrastructure Fund. It also took over management of the 3rd pillar Swedbank Supplementary Pension Fund. For its part, INVL Asset Management in Latvia in August launched the passively managed 2nd pillar pension plan INVL Index Direct.
Revenues from the asset management business grew 40% during 2017 to EUR 7.1 million and a net profit of EUR 586 000 was earned.
Investments in the asset management business – which includes the asset management companies INVL Asset Management in Lithuania and Latvia, the wealth-management service provider INVL Finasta in Lithuania and several smaller companies – totalled EUR 8 million at the end of 2017. The main asset management business is accounted for at acquisition cost. In management’s opinion, the fair value of this business exceeds its book value.
“Thanks to the work of the largest and strongest team of investment professionals in the Baltics, in 2017 most of the products we manage were the best in their categories. That encouraged a significant increase in the number of clients and growth of their investments,” Darius Šulnis said.
He said the intention in 2018 was for this business to grow both organically and through acquisitions. In a transaction completed in early 2018, INVL Asset Management in Lithuania acquired a 51% stake in the asset management company Mundus, which operates in the private debt market.
Investments in controlled companies and funds
INVL Baltic Real Estate
At the end of 2017, the 32.1% equity stake that Invalda INVL held in the real estate investment company INVL Baltic Real Estate had a value of EUR 10.036 million, for a gain of EUR 2.09 million from the start of the year.
“We’re happy with the results that INVL Baltic Real Estate has achieved and with its development. Seeking to increase the shares’ liquidity and accumulate funds for new investments, we’ve announced the intention to relinquish up to 22% of INVL Baltic Real Estate’s shares while retaining ownership of a stake of over 10%,” Darius Šulnis said.
According to unaudited figures, the equity of INVL Technology, a company that invests in IT businesses, grew 17.3% in 2017 to EUR 23.146 million. Invalda INVL owns 13.9% of INVL Technology’s shares, which at the end of 2017 were worth EUR 2.521 million. “We hope the growth in value of business holdings will also positively influence the price of the shares on the exchange,” Darius Šulnis said.
INVL Baltic Forests Fund I
During 2017, EUR 0.5 million was invested (by group company INVL Asset Management) in the newly established INVL Baltic Forests Fund I, comprising 10% of all issued units of the fund. A 10.8% profit was earned from this investment.
“Forests are an attractive asset class that correlates little with the equity and bond markets. We think the chosen strategy of first of all focusing on safe growth of value rather than on the size of the fund is a rational investment alternative for our clients. That is also confirmed by investors’ big interest in this product,” Darius Šulnis said.
INVL Emerging Europe Bond Subfund
In order to put the money obtained from the Litagra sale to work short term, Cedus Invest, which is owned by Invalda INVL, in late 2017 invested EUR 8.5 million in the INVL Emerging Europe Bond Subfund, which is managed by INVL Asset Management.
Invalda INVL’s 6.79% stake in Šiaulių Bankas, which is listed on the Nasdaq Vilnius exchange, had a value of EUR 18.1 million at the end of 2017. A gain of EUR 6.6 million was earned on this investment during the year.
“We see that the bank’s strategy of being closer to its clients, reacting to their needs more quickly and working with small and medium-size business is bearing fruit and letting it show stably growing results for its principal activities and generate a large return on equity for investors. We’re also pleased by the increase in the bank’s credit rating during 2017,” Darius Šulnis said.
The value of Invalda INVL’s 36.9% stake in the agribusiness company Litagra was EUR 9.972 million at the end of 2017. “The year’s most important event in this business was the sale of Litagra’s trading business to Achema Group. We kept the primary crop production and feed business,” Darius Šulnis said.
Cedus Invest, a company owned by Invalda INVL, received EUR 9.4 million for 36.9% of LP Group, which controls Litagros Prekyba together with its Latvian subsidiary and Joniškio Elevatorius.
The value of the facility management company Inservis (together with companies Priemiestis and Jurita) fell 27.3% in 2017 to EUR 3.579 million. “After several years of growth, Inservis’s results worsened last year. We’re taking measures, including also management changes, to ensure growth of the business and its earnings in 2018 and beyond,” Darius Šulnis said.
The value of other investments, including cash, at the end of 2017 was EUR 5.2 million.
Invalda INVL’s liabilities at the end of 2017 totalled EUR 2.18 million, of which EUR 1.316 million comprised a deferred profit tax liability due to an increase in the value of financial assets.
1. Annual information for 2017 of Invalda INVL and management confirmation;
2. Key information about Invalda INVL for 2017