Taaleri Oyj ($TAALA)

Good afternoon, and welcome to the presentation of Taaleri's First Quarter 2026 Results. My name is Linda Tierala, and I'm heading Investor Relations here at Taaleri. Presenting today, we have, as usual, our CEO, Ilkka Laurila; and our CFO, Lauri Lipsanen. And there's a Q&A session after the presentation. [Operator Instructions] But with that, I'm happy to hand over to Ilkka. Please go ahead.

Thank you, Linda. Maybe before we start, it's to kind of summarize the first quarter development is that we had a very strong quarter behind us. Overall performance improved quite significantly compared to previous year and the key drivers being mainly improved insurance service result as well as the Private Asset Management, especially in renewable energy. But then if you take a look at the highlights of the first quarter, continuing earnings grew 13%, up to EUR 10.5 million. And as I said, it's mainly driven by currently a strong insurance service result as well as the continuing earnings from the renewable energy business. Operating profit also improved significantly versus a year ago, up to EUR 2.1 million with a nice operating profit margin improving up to 17%. Maybe highlighting the performance of the current year, the insurance service result increased by 21% almost year-on-year, up to EUR 3.8 million. The insurance revenue increased 4.2%, up to EUR 4.9 million, while at the same time, premiums received, which is a proxy for the cash flow increased by 15.7%. And that combined with the fact that simultaneously, Garantia was able to strengthen its solvency ratio with almost 25%. So nice growth, nice improvement in cash flow and strengthened solvency ratio and therefore, also the risk position. Market share, and that's from operational perspective, driven by the market share increase, especially in the residential mortgage guarantees, which strengthened further during the first quarter and also clearly increasing activity in corporate finance arrangement. Renewable energy also grew at 9.3%, and exit processes progressed quite nicely. We have lots of processes ongoing and the energy business continued preparation of those processes. And finally, 2 strategic initiatives were also completed. So we -- after the review period, we acquired majority of the Nordic Science Investments, which is the science-driven venture capital, which expands our offering in that area. And in addition, we've also published that we are launching our private credit strategy later on. And so if you take a look at our strategic priorities for this year, Garantia has captured growth potential. Like I said, it was able to increase the insurance revenue, increase the market share and at the same time, also strengthening its risk position. Private Asset Management, also good progress in their expansion into venture capital, establishing private credit business. And then on the other hand, we also started the preparation of the next vintage renewable energy fund. And as we have stated that we are selectively utilizing M&A as one of the growth engines for Taaleri. And in that area, we made that first acquisition, namely Nordic Science Investments, which now means that with these new kind of growth adventures, we are now also involved in the venture capital and direct lending. This is a familiar slide from the Capital Markets Day. Darker blue illustrates those that we are currently in and the lighter blue, which we have said that we have ongoing processes and now, let's say, 2 of those are in the completion phase venture capital and direct lending. And that will further increase our offering and expand our offering in these products and sectors. Then key figures for the first quarter, maybe focusing on the bottom side of the slide, LTM numbers. So continuing earnings, LTM, almost 10% growth, up to EUR 43.3 million. Revenue increased 4%, up to EUR 65.2 million. Operating profit slightly declined, 4.4% versus the LTM period earlier. But then on the other hand, one of our financial targets is to improve operating profit from continuing earnings. And in that, we had that 26% increase on an LTM basis. And then on the other hand, our investments at fair value is at EUR 226 million. So if you would like to kind of give a proxy for what the shareholder gets when owns our shares, it's the operating profit from continuing earnings added with the investments at the fair value, added with the liquid assets and the performance -- accrued performance fees. So that's the kind of what the shareholder of Taaleri actually owns and gets by acquiring our shares. Then going through different business segments, starting with Garantia. Expansion of the volume was quite nice. So the insurance service result increased at 21% from the comparison period, like already said, the market share in residential mortgage guarantees increased despite that they had a quite soft housing market. And that's obviously a result of the increased awareness of Garantia's product and services. And then on the other hand, is a good proof point of the kind of the quality and the service level that they are able to provide through our customers. Then on the other hand, demand for the corporate guarantees strengthened by approximately 50% compared to previous quarter, meaning the Q4 '25. And that's also driven by the continuous activity with the customers. So the customer management at Garantia is -- has developed quite nicely during the last quarters, and now we are seeing the results of the customer activity. Claim expenses remained at the low level and the combined ratio was at 21.8%. And like I said, simultaneously, which is the most important thing in Garantia's case, solvency ratio and therefore, the risk position still further strengthened by almost at 25%, even though that the operational growth and the profitability development was good. So then if you take a look at the investment income from the investment operations, net total was at negative EUR 1.4 million. So that the P&L recognized investment income was at positive EUR 0.8 million, but then offset by negative EUR 2.3 million investment income, meaning the fair value changes in other comprehensive income. And then on the graph, you can see that the premiums on an LTM basis has increased 32% compared to 27% on the previous quarter. So that's also increased on an LTM basis quite significantly. No major changes in the insurance portfolio split. But then on the other hand, investment portfolio declined EUR 9 million, which is exactly the amount that the Garantia paid during the first quarter as a dividend to the parent company. So that's explaining the investment portfolio decline from EUR 166 million to EUR 157 million. Then further to Private Asset Management, starting with the renewable energy business, nice growth, 9%, driven by SolarWind III Fund, which was closed at the end of last year. The operating profit improved to EUR 2 million with a quite solid almost 29% operating margins. Renewable energy focused during the quarter on the fund operations and the execution of the exit processes in many of the previous fund vintages and also started its preparation of the next vintage. AUM remained on that stable EUR 1.8 billion. Then continuing with Private Asset Management, continuing earnings developed positively. However, the profitability was deteriorated by the fact that there was this one-off negative impact driven by the Joensuu Biocoal project. But in spite of that, in the Bioindustry business, they were focusing on the value creation and the preparation of the follow-on investments and financing rounds for the existing portfolio companies. Then on the other hand, good development in the real estate as well, so that the operational performance of the funds actually improved through increased occupancy rates, especially within the larger funds. And then Eden Living, our JV with the Keva, entered into financing arrangement, which obviously supports the portfolio operations going forward as well. Transaction activity also picked up. So Eden Living acquired 2 assets in first quarter and 2 additional assets actually after the reporting period. Then finally, the third segment, namely investments. Net income declined due to the write-off of related to Biocoal Development. But then on the other hand, the total amount of -- total fair value of the investment remained at EUR 69 million. And that's the key driver there was the positive fair value change in the Truscott Gilliland East Wind wind farm in Texas. If we take a closer look at the investment portfolio, 72% now is categorized under the development capital, no major changes in there. And we haven't made during the first quarter new investments in there. But then if you take a look at the operational development of these 5 development capital investments, starting with the Fintoil. As a reminder, clear majority of that is -- of the production is related to renewable fuels. And there was -- the market remained on a positive side and developed quite strongly. But then on the other hand, the smaller business, namely biochemicals, demand and the price for tall oil rosin and the tall oil rosin remained weak during the first quarter. But if you take a look at the '25 numbers, you can see that the revenue increase was plus 43% and EBITDA increased 34%. So -- and those are obviously nice numbers in any business, but especially in this kind of process industry-related refinery business. Although it's fair to say that Fintoil partly still is in the ramp-up phase from the operational perspective. Then Toriparkki, nice volume growth in '25. 7% in parking volumes, and that has continued quite strong also during the first quarter. So very strong development. You can then argue that it might be driven by the winter cold -- cold winter months, but there's also other good operational development in that business, and that's also developing quite strongly. Oribalt, our wholesale business -- pharmacy wholesale business in Baltics and the online pharmacy business grew there quite rapidly, and it's also picking up in '26. So good development, operational development also within the Oribalt's business. Finally, Ren-Gas, starting first with the macro and the market development. Many countries have now implemented and continue to implement the RED III regulation on a national level. I think the most important was that the Germany -- the Bund stock in Germany published that they are implementing this, and that will have obviously a positive impact for the Ren-Gas business, but also then on the other hand, should support Fintoil business as well. First project in Tampere is ready-to-build stage. And the other -- or the next 3 projects also are progressing quite nicely and that they already have environmental permits. And as a reminder, Ren-Gas case, it's dependent on the offtake agreement and then the next phase after the offtake agreement is the financing of the projects and then it is on a financial investment decision phase. Then it's time to hand over to Lauri, who will walk you through with the latest financial development.

Thank you, Ilkka. Hi, I'm Lauri Lipsanen, Taaleri Group CFO. And although Ilkka already present some key financials, I'll deep down those a bit. Yes. Taaleri has 4 sources of revenue, of which continuing earnings create a strong foundation for profitability, whilst other revenue sources have been fluctuating through the historical period. In Q1, the revenue in total was EUR 12.6 million, driven by Private Asset Management and Garantia as stated already by Ilkka, whilst other revenue components were immaterial. You can see from the chart that net income from investment operations was only EUR 0.2 million, mainly because of the fact that high volatility in both equity markets and interest rates, coupled with the Biocoal Development investment write-down limited the incurring income from investments. Also, Biocoal impacted on the cost base. And in total, the Biocoal related impact for the Q1 result was minus EUR 1.7 million. And as a result, operating profit ended up this EUR 2.1 million. However, when compared to the prior year, we can see that operating profit increased by EUR 1.6 million to EUR 2.1 million, mainly driven by the strong performance in Garantia and renewable energy. Also, net income from investment operations, the delta was positive by EUR 1.4 million as in Q1 2025, the investment result was burdened by the high market turbulence a year ago. And the expenses, excluding billed expenses, that has mainly been impacted by the aforementioned Biocoal write-downs. You can see on the left-hand side that the continuing earnings development in terms of revenue has been fairly stable, whereas other than continuing earnings have been fluctuating. And the fluctuation behind the other than continuing earnings have been largely driven by the net investment income. And for instance, in Q1 2025, as stated, there was a high market turbulence. And in Q3 2025, it was positively impacted by material positive fair value changes. This fluctuation in other than continuing earnings has also impacted in operating profit being the key driver behind the fluctuation in terms of EBIT. The composition of revenue is more balanced when we look those on an LTM basis. Growth in continuing earnings have been 10%, whilst other than continuing earnings have been slightly declining. In terms of operating profit, profitability has declined slightly, mainly driven by those other than continuing earnings, which have been impacted on an LTM basis by the performance fees of EUR 2 million or EUR 1.8 million in more detail booked for Q4 2024. This year, lack of new performance fees recognized and lower investment income are the main drivers why total operating profit has declined recently. It should be, however, emphasized, like Ilkka said, that operating profit from continuing earnings have been developing positively trend-wise. Then an outlook for Garantia. Despite the weak development of the Finnish housing market has continued. Garantia's insurance revenue has increased by 6% on a last 12-month basis. The insurance service result has remained fairly stable in proportion to the insurance revenue. As a result, total operating profit of Garantia has been increasing on an LTM basis. But when adding the full result other comprehensive income covering Garantia's all fair value changes, the profitability has been quite stable. And this is how the reported P&L looks like. However, the underlying performance has been stronger. On the left-hand side, you can see that with black bars, the cash-based premiums received has increased by 32% on an LTM basis, driven by strengthened market position and increase in sales. Sales volumes in residential mortgage guarantees, whilst the revenue shown in light gray have increased with the delay due to IFRS accounting principles. On the right-hand side, you can see that compound annual ratio was strong again in Q1 and the claims ratio was close to 0, mostly because of the positive changes in estimated claims that have incurred during the previous financial year. You can see on the left-hand side, Garantia's return on equity at fair value. It was again excellent in Q1, and the solvency ratio has remained strong. Garantia paid half the dividend of EUR 18 million in March to the parent company, Taaleri Plc. Then a couple of words regarding Private Asset Management. Continuing earnings have been growing by 18% on an LTM basis, mostly driven by the final closing of SolarWind III that took place in Q4. However, when you look at the profitability development, the trend has been slightly declining recently. And that is to the fact that, for instance, the Q3 '25 LTM operating profit was boosted by the aforementioned performance fee of EUR 1.8 million booked in Q4 2024. There is also a slight negative gap between Q4 '25 and Q1 '26, and that is mainly related to the Biocoal related receivable write-downs. Fair value of the Investment segment investment portfolio declined by EUR 1.5 million. and that was mainly driven by the 2 drivers. First, Biocoal impact of minus EUR 0.9 million; and secondly, the Alisa Bank's fair value change of minus EUR 1.2 million or 34%. And to recap in this table, the fair value might deviate from the balance sheet value depending on the basis of accounting. And specifically in this table, what is visible is the difference between Turun Toriparkki's fair value of EUR 16.4 million and the balance sheet value of EUR 10.3 million. As a side note, this balance sheet value declined by EUR 0.5 million in Q1 to the fact that Turun Toriparkki distributed funds by EUR 0.6 million to Taaleri Plc. At last, let's have a short outlook on Taaleri's balance sheet. Both assets total and equity ratio remains strong. Asset total were EUR 304 million and equity ratio of 73%. The value of total investments declined by EUR 9 million, which was mainly related to the fact that Garantia distributed the dividend -- first dividend grants of EUR 9 million. Total liquidity was EUR 56 million at the quarter end, including the unused revolving credit facility of EUR 30 million and the overdraft facility of EUR 10 million. The total liquidity was further strengthened this week as we signed a long-term loan agreement of EUR 30 million, enabling flexible implementation of strategic initiatives. And after this quarter end, Taaleri has distributed the first dividend tranche of EUR 4.2 million in April and second tranche will be paid in October. And now Ilkka will present an outlook for 2026.

Thank you. So no major changes in the outlook, starting with the Private Asset management. Renewable energy business continuing earnings expected to decline compared to '25 due to the subsequent management fees, which were recognized in '25. In addition, there's a lot of planned exits like explained, which obviously then will have an impact on the fee base when they are executed. Then with the other funds, Private Asset Management businesses, the further development of the new products which are according to our operated strategy will further deteriorate the profitability of the other Private Asset Management business. So there the operating profit is expected to remain negative for this year as well. Garantia insurance revenue expected to grow in '26 and profitability of the insurance operation expected to remain stable. Then on the other hand, it's quite obvious that how the investment operations will develop in Garantia's case, it's very much dependent on the overall market development in the equity markets as well, especially in the interest rates development and the market. In the Investment segment, operating profit in '26 will depend obviously as well pretty much on the -- how the fair values will change within the different development capital investments. Then on the other hand, fund investments as well as the other investments. And obviously, if we would have a major exits there or the exits overall, that will also have a significant impact on the investment segment's result. Then on the other group, which is basically most of that businesses relates to our cost structure, and that is expected to remain approximately at the level of the previous year and therefore, giving us -- supporting our scalability of the growth. But that's the highlights and the development of the first quarter. Then I think we have a time for the Q&A.

Thank you for the presentation. Yes. So now you have an opportunity to ask questions and you may do so through the box in the webcast platform. And for those of you who are following presentation here line, please wait for the microphone before you ask your question. The first question comes from Sauli Vilen from Inderes.

About the new EUR 30 million credit line you took, can you like open up more like why exactly did you do it since you obviously would need it to your day-to-day operations. And you already have lots of flexibility already like EUR 40 million or so in just the credit facilities.

Well, that's the -- like I said that is to support our liquidity. And obviously, if there is opportunities then obviously, that enables us to grasp those opportunities. But just as a reminder that the other EUR 30 million is actually a revolving credit facility, which is a bit kind of different from the structural perspective.

But just to be clear, you can use these both, right?

Yes. Simultaneously. Yes.

Then about your fundraising, like if you roll back historically, Aktia played kind of a big role in your distribution when we talk -- think about the previous vintages you raised. Now you are about to enter a new phase when you raise simultaneously several funds. So how you see your distribution capabilities at the moment? And do you still see need for a partner to fill in some gaps on that field?

Yes, we are looking for partners as well. But then on the other, as a reminder, 2/3 of the AUM came from the international LPs. So that's the clear majority. And hopefully, that will also grow in the future when the fund sizes will grow. But then on the other hand, we have, like you said, built the capability in-house now we have good people and good team, which is ready to -- ready for the further fundraising in renewable energy and also obviously, in other fund strategies.

Then continuing on that about the SolarWind IV, you said that you are now building the capability to start to launch the fundraising. So should we expect the fundraising to launch during H2?

We haven't stated the exact time, but as you see from the corporate structure changes, we have started the preparation for the next vintage, but we haven't stated the exact time line and when we will kick off with the fundraising. But the preparation has started because lots of the capacity in SolarWind III has already been invested, and that's why we made -- started the legal structure changes at the beginning of this year.

Then finally, on the Canadian bio plant or can you walk us through the decision-making process like why you decided not to continue? Obviously, it relates to the Joensuu, I guess, but...

Yes, that relates to Joensuu. So Joensuu would have been kind of the book for the Canadian project, especially from the technological perspective. So basically, you need a raw material, you need a technology and you need the customers. And now obviously, it proved that the technology that was utilized in Joensuu has had quite significant issues, which obviously had an impact for the Biocoal project in Joensuu and that then further after analyzing other technological opportunities globally in Biocoal, we made a conclusion that at the moment, there is no such technology that we would like to proceed with and made a conclusion to discontinue our Canadian operations as well.

It's Patrick Campbell from Nordea. Going back to Garantia, the combined ratio was clearly lower on a year-on-year basis and also quarter-on-quarter, which is a positive. But how should we think about Garantia's combined ratio going forward, assuming that more exposure is taken on the corporate side?

Yes. We expect that to remain at a great level as it has been. Of course, there will be fluctuation driven by IFRS changes. And of course, nobody knows what's going to happen with the claims, but the expectation is that it remains at a really good level.

All right. And then maybe could you explain some of the concrete measures that are contributing to Garantia's overperformance considering that the market has been quite weak?

Yes. Happy to do so. So I think the key driver there is that -- which is part of our strategy as we communicated our current strategy in this case, as we communicated in our Capital Markets Day that the increased awareness, continued activity with the customers are finally bearing fruits. And that's the -- I think that's one of the key drivers in there. So we are seeing kind of continuous increase in the customer activity. It doesn't mean that the Garantia has made any changes when it comes to the risk taking. So they continue. I think the key thing to understand is that the key criteria in that business is to keep up the disciplined risk management and the risk position and that also strengthened during the first quarter. But I think it's all about the customers and developing products and the services so that we can see the increase in the customer activity.

All right. And then maybe going on to the new initiatives, private credit and venture capital. Could you maybe break down the vision behind these initiatives? And when do you expect these to kind of start supporting other Private Asset Management?

Well, the vision, obviously, is that -- well, it is our strategy, like we said that we are kind of selectively going to expand to new strategies during the strategy period, and they are now 2 that we have selected at this stage. The vision, obviously, with the NSI, first of all, is to -- like we said, is to grow significantly in the next vintage. We see that is -- that with the science-driven deep tech venture capital investments, there's -- it is quite niche and there's a clear demand on the LP side so that we have a strong belief that we are able to grow both international as well as the scale of the business significantly with the next vintage and then go to further vintages. Then with the private credit, well, maybe starting with the market. Obviously, I think everybody that follows the financial media have seen the turmoil on that market. But I would like to highlight that, that turmoil is related to U.S. markets, which has its specific features. It's the evergreen -- listed evergreen structures, lots of insurance flowing into private credit business, and that has created, let's say, unnormal risk-taking position within the funds. It kind of has build the, let's say, the risk management of those funds in the U.S. market. And that combined with the fact that lots of that financing has been flowing to different SaaS businesses, which are -- have been also focus areas of the buyout funds during the several years. And that's obviously now distorted by the -- and disrupted by the AI. And so there's several kind of components, evergreen structure combined with the kind of not so liquid assets and then the kind of the businesses that they have been financing. But that's not the case in the Europe and even much less in the Nordics, and that's where we see the opportunity. So Nordic market is completely -- in a completely different position. It's very bank centralized and bank-dominated market, especially here in Finland. And there, we see clear opportunity, especially now when we kind of hopefully see that the European LP capital flow will remain in the European market and demand therefore for that sort of fund and strategy will continue to strengthen here in the Nordics and in the Europe. So that's why we entered into that market now. I think the timing from the Nordic perspective is actually quite good at the moment.

Great. And then maybe a final question going to renewable energy. You obviously have a few funds in the exit phase. What are you kind of seeing in the market? And when should we kind of expect exits to materialize?

They will materialize when there is a buyer and the seller find the common place and put the names on the paper. You never know and it's impossible to budget the kind of this sort of process, but there's lots of activity. And let's say that the -- slightly you can be more positive continuously because I think the overall transaction market is developing positively, and we are seeing more and more activity in the market. So that's also one of the reasons why we have such lots of activity in that area.

Yes. It's again [ Sauli ] from Inderes still. Continuing on the older wind funds, you obviously have close to EUR 20 million or so receivables on those. So a lot of stake in that sense. Can you talk about the -- like the outlook on those specific assets in Finland. On the other hand, interest rates have gone up, which should be negative. But on the other hand, I guess the electricity market outlook in Finland has become kind of better because of the data center boom taking more -- gathering more speed, et cetera. So how do you see that market developed if you compare the current situation for like 6 months ago or so?

Well, it's -- let's say, it's -- I think the net-net, it's slightly positive, but there's a lot of different factors that are moving in different directions. Obviously, there's -- like you said, there's lots of data center investments, which have been published lately, although not ready yet, but obviously, in a few years' time, will increase demand significantly. Then on the other hand, there's lots of projects in wind and solar and also in batteries that are in a ready-to-build phase that they are able to support when the demand -- if the demand increases. But I think the net-net is that it is slightly positive, and that's also why we are, I think, seeing increased activity in the market, also in the transaction market.

Then a couple of housekeeping ones. Any idea when you will close the NSI? I guess it's due to the Finnish financial authority to decide?

Let's hope that as soon as possible, it's the authorities' approval that defines the actual date.

And on the Garantia, you mentioned the corporate. I think you said the -- what was the word interest or so has grown 50% year-on-year, but your portfolio is flat. Were you talking about inquiries or...

Yes, yes. Inquiries.

That's clear. Then finally, about the forestry fund, you obviously have like a tail in that on the performance fee, at least United Bankers forest funds have gone through the roof. So there should be kind of high chance that you receive some fees there. So when was the deadline for that again?

Well, I can't actually remember the exact baseline. I don't know if you have it in your mind, but there's nothing to, let's say, publish at this stage on that area. And that's not, let's say, not fully linked to the value development of the assets.

[Operator Instructions] And there are some questions here online. So the first one is regarding the credit facility. And if you could just provide a bit more information on what the impact will be on the return on capital and on the balance sheet efficiency?

Well, this is pure speculation. So obviously, when you have more loans in your balance sheet and if you're able to generate profits from that, it should improve your return on equity.

Great. Thank you. And then there's a question on Garantia. So you mentioned in Q4 that Garantia had some international projects. So what's the development in Garantia's international business? And are there any new contracts?

Well, we haven't and we will not publish every contract that we will have internationally. But let's put it that way that the activity is there and there is a clear demand for Garantia services also in that area.

Great. Thank you. And if there are no further questions at this point, it's my pleasure to thank the presentation -- the people presenting and then also wish you a wonderful rest of the afternoon.

Thank you, and have a nice afternoon. Thanks a lot.