Invalda INVL, one of the Baltic region’s leading asset management groups, had equity capital at the end of 2016 of EUR 52.7 million, or EUR 4.55 per share. During the year the group’s net equity per share grew 10.7%. The company had a profit of EUR 4.8 million in 2016, which is 13.9% more than the previous year.
“It was a good year for the majority of those who entrusted their assets to the Invalda INVL group – in all we earned more than 35 million euros for clients. The good management results also led to growth in clients’ trust: the group’s assets under management at year-end exceeded 500 million euros,” said Darius Šulnis, the CEO of Invalda INVL. He said most of Invalda INVL group’s profit was due to growth in the value of the own investments.
Asset management
The Invalda INVL group’s assets under management grew 55% in 2016 to EUR 508.7 million, while the number of clients increased from 166,700 to 178,400 during the year. The most significant contributions to the growth of assets under management came from growth of 2nd pillar pension fund assets as well as the assumption of the management of alternative assets, namely the closed-end investment companies INVL Technology and INVL Baltic Real Estate.
“We consider 2016 a good year, since we created value and were the most rational choice for the majority of our clients. The creation of value for the people and institutions that chose us is the main reason we were able to grow in size and strength during 2016,” Šulnis said.
Revenue from assetmanagement activities in 2016 was EUR 5.1 million, with a loss of EUR 0.6 million due to investments in business expansion and customer acquisition costs. Investments in the asset management business on Invalda INVL’s balance sheet, accounted for using the equity method, were EUR 7.5 million at the end of 2016.
Investments in controlled companies
INVL Baltic Real Estate
At the end of 2016, Invalda INVL held a 32.08% equity stake in INVL Baltic Real Estate, the value of which at the share price on the exchange was EUR 8.2 million. In 2016 Invalda INVL invested EUR 6.22 million in newly issued shares of this real estate investment company.
“INVL Baltic Real Estate completed the tasks that were planned for 2016, which with successful management in 2017 should significantly boost the flow of leasing income and at the same time the value of the portfolio. We believe that should positively affect the value of the investment and the share price,” Šulnis said.
INVL Technology
The equity value of INVL Technology, a company that invests in IT businesses, decreased 18.6% in 2016 to EUR 19.7 million. Invalda INVL owns 13.9% of INVL Technology’s shares, which at year-end were worth EUR 3 million.
“Currently INVL Technology is in an investment cycle where the basis for the creation of future value is the proper formation of the portfolio of companies and development strategy, so we don’t give too much importance to its losses. We’re hopeful that already this year INVL Technology’s portfolio companies will improve their results and that will be reflected in a profit for 2017,” Šulnis said.
Other investments
Litagra
The Invalda INVL group owns 36.9% of the shares of the agribusiness company Litagra, which were valued at EUR 15.4 million at the end of 2016.
“In the agricultural business it was a mixed year. On the one hand, low prices for agricultural production led to somewhat worse operating results. Still, we approved significant investments of 5 million euros in the construction of a new cattle complex. In addition, the company’s reorganization and the strategic changes that are underway, along with higher milk prices and rising investment prices, should increase the value of this Invalda INVL investment,” Darius Šulnis said.
In 2017, the shareholders of Litagra signed an agreement on ceding the company’s trading business.
Šiaulių Bankas
Invalda INVL owns 6.8% of the shares of Šiaulių Bankas, which is listed on the Nasdaq Vilnius exchange. At the end of 2016, the market value of the stake was EUR 11.5 million, or EUR 5.1 million euros more than a year earlier.
“Šiaulių Bankas achieved its best operating results ever in 2016. That not only allowed it to earn a record profit, but also demonstrated that the bank’s business model is competitive and sustainable and can generate a big return on equity. From Šiaulių Bankas we expect further successful operation and growth in its share price,” Šulnis said.
Facility management
Invalda INVL owns 100% of the shares of the facility management companies Inservis, Priemiestis and Jurita, which were valued at EUR 4.9 million at the end of 2016.
“Our assessment of last year is neutral. We think that as property owners entrust building maintenance to professional managers, the market for these services will continue growing. We believe that the Inservis group of companies will successfully operate and develop in this competitive environment,” Šulnis said.
Other investments
The value of other investments during 2016 increased from EUR 2.1 million to EUR 2.4 million.
Balance sheet
Invalda INVL’s net asset value at the end of 2016 was EUR 52.681 million, or 9.5% more than a year earlier. The net asset value per share was EUR 4.55.
Operating plans and forecasts
The Invalda INVL group’s priority is to ensure the successful management of the assets entrusted to it by clients. “In 2017 we’ll continue to expand the range of investment solutions and products on offer, seeking to ensure that the products we manage are among the best choices in the market in their categories,” Darius Šulnis said.
He said one of the main goals is the creation of a private equity fund that invests in the Baltics, which would enable a continuation of the activities developed since 1991 of investing in the region’s companies, growing and developing them and creating value for all the interested parties while also contributing to the growth of the Baltic countries.
With the Invalda INVL group’s assets under management having exceeded EUR 500 million in 2016, it’s planned to continue growing and investing in organic expansion of the asset management business and, if opportunities arise, to make new acquisitions. “The priority will continue to be not short-term financial objectives, but qualitative and quantitative growth of the asset management business and the creation of long-term value,” Šulnis said.
Changes in the value of Invalda INVL’s own investments have a significant impact on the company’s financial results.
Šulnis said that, assuming no significant changes in the global and Lithuanian political and business climate, there are solid grounds to expect that 2017 will be successful both for the group’s historic investments and for investments in products managed by the Invalda INVL group.
The financial statements of the company published today will be presented for approval to a meeting of the shareholders of Invalda INVL which will take place on 28 April this year. Other issues which will also be considered at the meeting include the re-election of the company’s current board members for a new four-year term, the election of audit committee members for a new term, and the presentation for approval of the rules of the audit committee which have been adjusted in accordance with changes of legislation. In addition, continuing the implementation of the option policy approved by shareholders in 2016, the share price and number of shares for offering options contracts to employees in 2017 will also be proposed for approval.
Invalda INVL, operating since 1991, is one of the leading asset management groups in the Baltic countries. Companies the group owns in Lithuania and Latvia manage more than 20 mutual, real estate and pension funds (2nd and 3rd pillar), alternative investments, individual portfolios, private equity and other financial instruments. At the end of 2016 the group’s companies were managing over EUR 500 million of assets entrusted to them by more than 170,000 clients in Lithuania and Latvia as well as international investors. The shares of Invalda INVL have traded on the Nasdaq Baltic securities exchange since 1995.